Making It into the Top 30

American Express is added to the blue-chip stock index

American Express last week joined the most exclusive club in U.S. business: the often quoted Dow Jones index of 30 leading industrial companies. No one was more surprised than Amex officials when they learned that they were replacing the ailing Manville Corp. on the blue-chip list that includes Exxon, General Motors, A. T. & T. and other giant firms. Said Amex Chairman James Robinson III: "We are simply delighted." Added Sanford Weill, chairman of the firm's executive committee and Shearson/American Express, the second largest U.S. brokerage: "I pinched myself to make sure it was true."

The addition of American Express (1981 sales: $7.2 billion) startled many Wall Streeters, since it was the first financial firm to join the so-called 30 industrials. The new arrival, though, reflected the trend of the U.S. economy away from the smokestack industries and toward services.

While the 132-year-old Amex is mainly known for its credit cards, travelers checks and a worldwide network of travel agencies, those businesses now account for only about 35% of the company's profits, which totaled $518 million last year. The largest slice of earnings, nearly 40%, came from Fireman's Fund Insurance Companies, the world's largest insurer of movie productions and the eighth biggest American property and liability underwriter. The brokerage business from its subsidiary Shearson contributed another 20% to earnings. Additional parts of the diversified corporate empire include Mitchell Beazley Ltd., the British publisher of the bestselling manual The Joy of Sex, and half ownership of Warner Amex Cable Communications Inc., which has more than 1 million cable television subscribers in 27 states.

Originally a carrier of mail and general goods between the East and the Midwest, Amex introduced the first travelers check in 1891. The business has been a bonanza for the firm, which charges a 1% fee for issuing the checks and then puts the cash it receives in high-yielding investments. Competition in the field is now fierce, but Amex still has about half of the estimated $40 billion annual business.

Although Diners' Club first issued credit cards in 1950, American Express leaped ahead after introducing its green card in 1958. The firm now has some 14 million pieces of plastic in use, against about 2 million for Diners' Club. Visa and MasterCard, which issue their cards through banks, are far bigger. Each has about 70 million cards in circulation. But Amex insists that its members are more affluent and use their cards more often.

Amex paid nearly $1 billion in stock for Shearson last year and became a giant in the new financial services field. Shearson/American Express has already introduced a new account that combines a charge card, brokerage services, checking and money-market funds into a single package.

Since the Dow industrial index was first established in 1897, the company has periodically updated the list of companies. The most recent changes were in 1979, when IBM Corp. and Merck & Co. were added in place of Chrysler Corp. and Esmark Inc. In the latest round, Dow Jones briefly considered adding Weyerhaeuser Co., a lumber producer, or Hewlett-Packard Co., an electronics firm, but finally decided that a financial services concern would best represent the changing structure of American business.

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