Accounting And Auditing

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Accounting and Auditing

Accounting and Auditing

The first was the development of the remarkably efficient accounting and auditing system which enables the company to transact its tremendous financial business. This was largely the work of Ralph T. Reed and Edward T. Krach. They went on to study all the varied activities of the company, introducing better techniques. As Reed puts it, "We grew by constantly striving to improve our methods.

The second innovation was the establishment of Inspectors Department, which grew into the extraordinarily efficient detective service of the American Express Company, first set up by Del Richer in 1922.

Richer was a plain and kindly man who understood and was tolerant of ordinary weaknesses. But he had an iron firmness in handling crooks. He liked to deal with them personally and he soon had a wide acquaintance in the underworld. His primary object was to protect American Express financial paper and the people who bought it. When a loss was reported to him, his method of procedure was to seek out the probable criminal by inquiry among his less respectable friends, get the man on the plush carpet in his office, and, shaking a stern and uncompromising finger at him, order him to disgorge or else! In the case of minor losses this system was almost invariably successful. It was especially effective when the victim had been deceived by a confidence man into signing the Cheques himself, in which case they were, of course, not forgeries at all and the holder had no legal way of recovering them. Richer believed in operating his department in a spirit of justice tempered by mercy.

The Inspectors Department soon proved its value. American Express Cheques rapidly became too hot to handle, and first-rate criminals would have nothing to do with them.

A "big shot" of the early Gangster Era who came to grief because he monkeyed with American Express Travellers Cheques was Gerald Chapman. In 1921 Chapman pulled the last great mail robbery in the United States. With two fellows in crime he held up a United States Post Office truck and made off with £1,346,350 worth of loot - largely in stocks and bonds. The holdup was carefully planned, with three changes of cars provided and a secure hideaway waiting. One of the greatest concentrations of detectives in history bayed on Chapman's trail and lost it. He very nearly got away with the boodle - he would have but for one, small error.

While Chapman and Company were waiting for their sizzling hot stocks and bonds to cool off, they ran short of cash. To ease their pecuniary embarrassment they embarked on the comparatively trifling operation of holding up an American Express Company truck in Niagara Falls, New York. That was their Waterloo.

American Express told Special Agent Gordon McCarthy to track down the person or persons unknown who had molested their money truck. McCarthy was an unlikely-looking detective, earthy and middle-aged, but he was indefatigable. Stolen Travellers Cheques began appearing in Milwaukee, Indianapolis, and Cleveland. Wherever one was cashed McCarthy went with probing questions. Gradually he built up a description of the criminals. Finally the Cheques began appearing in New York. McCarthy tore back to the city; the scent was getting hot.

A good detective must be lucky as well as skilful. McCarthy was both. He was close at hand when a seedy individual was apprehended trying to pass a stolen Cheque in a New York department store. One glance told McCarthy that the forlorn creature was not one of the gang, but the man offered to take the detective to meet the person who had given him the Cheque. McCarthy disguised himself as a "hot paper dealer" from Chicago and met the new suspect in an underworld dive. The description McCarthy had of one of the criminals fitted the fellow like a tailor-made tuxedo.

The rest was easy. Postal Inspector Joseph J. Doran, co-operating with McCarthy, set a trap and all three criminals fell into it. Chapman was sent to Atlanta for a twenty-five-year term. Not the million in stocks and bonds, but a ten-dollar Travellers Cheque put him there.

In 1938 the American Express met its first large-scale challenge from the underworld. A gang of counterfeiters under the suzerainty of Bugs Moran, who was Al Capone's rival for command of Chicago, prepared to issue £300,000 worth of counterfeit Travellers Cheques. By chance a Chicago lawyer was approached by the counterfeiters. He tipped off American Express. That was the only part chance played in the drama; the rest was relentless, logical pursuit.

Samples of the counterfeit Cheques were obtained before one was ever passed, and when the professional passers started for Pittsburgh to begin operations, they were unknowingly accompanied by three detectives, who arrested them as they tried to cash the first Cheques. The whole ring went to jail, including the high-and-mighty, supposedly untouchable Bugs Moran.

In addition to investigating all cases involving lost and stolen financial paper, the Inspectors Department handles all "transactions in difficulty." These include troubles in any branch of the company's business. The department, as presently constituted, is global in scope and microscopic in method. It handles an average of 2,500 files a day.

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WHILE THE TRAVEL DEPARTMENT was the object of special attention during the period of transition after the American Express Company relinquished the express business, other services were also expanded. Foreign exchange became for a while a very important activity of the company. Prior to World War I there had been comparatively little interest among American bankers in foreign exchange. Now it suddenly became a principal preoccupation of financial circles, and many banks began to organize foreign departments. However, since American Express had been in the business for many years and therefore had more experience and technical knowledge of the subject than most, it was for a long time a leader in this field.

Another American Express activity which was strongly pushed was the freight-forwarding business. In the rapid development of foreign trade after World War I, commercial letters of credit became an important instrument to facilitate the flow of... see: GLASS EYES AND GANGSTERS

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