Riding the Float

After Entero-Vioform and bottled water, the U.S. tourist's surest solace the world over is probably Manhattan's 112-year-old American Express Co. For the timid traveler, Amexco's 392 offices in 33 countries will shoulder every burden, from interpreting to selecting sights. Helping tourists pays off: two weeks ago. President Howard L. Clark, 46, announced Amexco's eighth dividend increase (from 30-c- to 35-c- a quarter) in ten years. At heart, however, Amexco is not really a tourist agency but a bank. The cornerstone of its prosperity is a curious nest egg called "the Float."

The Float stems from Amexco's estimated $2 billion-a-year sales of its famed blue traveler's checks. The average traveler's check is not cashed until almost three months after it is bought. As a result, Amexco has a continuous pool of cash--now amounting to about $400 million--on which it pays no interest and earns around 3% yearly. "Central banks apart," remarked London's Financial Times recently, "there is probably no other financial institution in the world that manages to obtain a supply of 'free money' on this kind of scale by issuing its own paper."

The Careful Caretaker. Amexco is conservative with the Float, invests it chiefly in government bonds and tax-free municipals. "We take good care of other people's money," says Clark, an earnest lawyer and C.P.A., who became president of Amexco three years ago.

Amexco takes good care of its own money too. Earnings last year were $9,200,000, and 1962 promises to be even better. The travel business has bounced back from a slowdown last year, and even Amexco's credit card operation, a consistent money loser since its introduction in 1958, has finally moved into the black. To turn the trick, Clark a year ago increased credit card dues from $6 to $8 a year, tightened credit and ordered his 100-man security force to pick up cards from deadbeats.

Long Way to So. Under Clark, Amexco is putting increased emphasis on its financial operations. Though it is already licensed as a banking firm in 15 countries (not including the U.S.), Amexco, with $300 million in deposits, still ranks far below such globe-girdling banking networks as those operated by New York's Chase Manhattan or First National City. But Amexco's regional managers are currently engaged in a doorbell-ringing campaign to line up more commercial banking business. In line with this drive, the company recently announced plans to put up a new commercial banking office in the City of London. Encouraged by the profitability of its 49% interest in Hertz Rent a Car abroad, Amexco is also actively seeking more overseas activities in which to invest. Says Howard Clark: "We have a long way to go to realize our potential. And a large part of that potential is outside the U.S."

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