Insurance Company of North America , “ the oldest American stock fire and marine life insurance company ” in the United States , founded in Philadelphia in 1792 . Its acquisition of Blyth reflected its desire to diversify into the financial services business , which was a relatively unfamiliar area for the firm ’ s management . INA ’ s chairman and CEO was John T . Gurash , an Oakland native , who spent the majority of his career in the insurance industry . At the time of the merger , Gurash stated , “ This move emphasizes INA ’ s plans to engage in the financial services business on a truly sophisticated basis .”
As a result of the merger , Blyth found itself at the center of an ongoing controversy at the NYSE regarding the public ownership of brokerage firms . Blyth had rejoined the NYSE in 1965 , but because NYSE ’ s rules prohibited “ public ownership of member firms ,” Blyth & Co . had to resign as a result of the INA acquisition . After the merger , Blyth & Co . recorded two years of deficits , which was attributed to losing its membership in the NYSE . The firm also continued to experience turnover at the executive level . By 1972 , INA “[ lost ] confidence in and [ was ] apparently dissatisfied with its investment in Blyth .” It decided to merge “ its Blyth subsidiary with another investment firm , Eastman Dillon , Union Securities Co ., to form Blyth Eastman Dillon & Co . Inc .”
Blyth Eastman Dillon & Co ., Inc . ( 1972 )
Eastman Dillon , Union Securities was itself the result of a 1956 merger between Eastman Dillon , a Philadelphia investment banking house founded in 1912 , and Union Securities , the investment company of private bank J & W Seligman & Co ., founded in 1939 . Like Blyth & Co ., Eastman Dillon , Union Securities believed the merger would help them “ achieve economies of scale ” in order to reduce overhead costs and take advantage of the capital by institutional investors . In July 1974 , Blyth Eastman Dillon “ closed 10 of its 55 offices ,” including six offices in California . Two months later , it closed eight more .
Changes were also made at the executive level . At the time of the merger , Willard S .
Prospectus for the Ford Motor Company IPO , showing 10,200,000 shares at a value of $ 5 each . Blyth & Co . Inc . is listed first as the lead underwriter .
Boothby , Jr ., a Philadelphia native and Lehigh graduate , who was the president of Eastman Dillon , became president and CEO of the newly-combined firm . Paul Conley , a Chicago native and Loyola University graduate , who had started at the Blyth Chicago office in 1934 , was named chairman . Frank L . Mansell , a University of Nebraska and Harvard Business School graduate , who was with Lee Higginson Corporation before going to Blyth in 1952 , became vice chairman . Then , in 1974 , James F . Cleary , who had been with Eastman Dillon Union Securities since 1951 , took over as president and COO . Conley retired that year . Boothby took his place as chairman . With the exception of Mansell , by the early 1970s , the leaders of the Blyth firm were all former members of Eastman Dillon .
In 1975 , a change in leadership also took place at Blyth Eastman Dillon ’ s parent company . That year , Ralph S . Saul , the former co-chief executive of First Boston Corporation and former president of the American Stock Exchange , became chairman and CEO of INA Corporation . Born in Brooklyn , Saul graduated from the University of Chicago and Yale Law . He later said that when he joined the firm , “ INA needed to be turned around . It needed waking up .” In 1978 , Saul recruited Alvin V . Shoemaker , a Wharton and University of Michigan law graduate , from First Boston to be president and chairman of the operating committee .
Blyth Eastman Paine Webber ( 1980 )
Since 1973 , rumors had circulated that Blyth Eastman Dillon was considering a merger with Paine Webber , Jackson Curtis , Inc ., the brokerage unit of Paine Webber , Inc ., “ one of Wall Street ’ s largest brokerage and investment-banking firms .” At the time , INA and Paine Webber ’ s chairman and CEO , James W . Davant , denied those rumors . But in 1979 , with Blyth Eastman Dillon still incurring quarterly losses , INA Corporation decided “ to sell its interest in Blyth Eastman Dillon ,” making Paine Webber Inc . the majority partner of a newly-named firm : Blyth Eastman Paine Webber .
By merging with Blyth Eastman Dillon , Davant had hoped to put “ Paine Webber on par with the biggest Wall Street players .” Unfortunately , the merger did not end well . Paine Webber experienced
“ massive operational problems ” that stemmed from issues in reconciling Blyth Eastman Dillon and Paine Webber ’ s processing systems . These problems led not only to a SEC censure , but also to significant financial losses .
The company ’ s troubles were exacerbated by another round of personnel defections that had happened very soon after the merger . According to The New York Times , “ when the firm ’ s top executives found out that the company was sold from under them , they were outraged . An enormous talent drain followed .”
Mansell continued as chairman and chief executive of the new Blyth Eastman Paine Webber , but Boothby , the chairman of Blyth Eastman Dillon , retired in 1980 . In 1981 , Shoemaker returned to First Boston to become chairman of the executive committee . Davant stepped down as chief executive of Paine Webber , Inc . in 1980 and as chairman in 1981 .
Davant ’ s replacement was Donald B . Marron , a New York native and graduate of the City University of New York , who had joined Paine Webber Inc . after selling “ his former firm , Mitchell Hutchins , to Paine Webber in 1977 .” Under Marron ’ s leadership as chairman and CEO , the firm responded to the operational crisis by cleaning “ up its back office and [ cutting ] expenses by chopping its work force by hundreds .”
The reorganization continued in 1984 when Paine Webber merged “ three major operating subsidiaries — Paine , Webber , Jackson & Curtis ; Paine Webber Mitchell Hutchins and Blyth Eastman Paine Webber … into one operating subsidiary , to be called Paine Webber ,” later called Paine Webber Group . At that time , Blyth ’ s name was erased from the company , and the history of the bank came to an end .
Susie J . Pak is an Associate Professor in the Department of History at St . John ’ s University ( New York ). A graduate of Dartmouth College and Cornell University , she is the author of Gentlemen Bankers : The World of J . P . Morgan ( Harvard University Press ), a Trustee of the Business History Conference , co-chair of the Columbia University Economic History Seminar and a member of the editorial advisory board of the Business History Review . She is also a member of the Financial History editorial board .
www . MoAF . org | Winter 2018 | FINANCIAL HISTORY 17