Interview with George Briggs in Seattle on the 10th of June of 1994. Briggs had been head of marketing at United California Bank.

We start off discussing the first meeting that led to Mastercard.

MP: Ross Buell was the political contact, and that was considered marketing for Wells Fargo.

GB: We at UCB had no one.

MP: BofA didn't have a centralized marketing. The head of advertising was the head of marketing.

GB: Yeah. Charlie Stewart

GB: They already had Bankamericard, and they understood what it would do. And they didn't have a problem.

MP: And wasn't there a PNB also?

GB: They were a little behind that. Yeah.

MP: Mellon, yeah, Mellon understood the business.

GB: That's right. And actually, then, now we're getting away far afield, into areas that I didn't work at all, and that was when they started to set up regional card associations, ya know, Rocky Mountain Card Association, Atlantic Coast, all that. And then they would sell all the banks in their area, set up their own credit-authorization center, just like we'd done in the West. But I wasn't involved with it by that time.

MP: You had Chicago. You finally talked these two guys into joining Western States.

GB: Yeah. Jack Whittle was there too.

MP: Right!

GB: There was the Continental guy. What was the name ?

MP: I knew Jack.

GB: First of Chicago. Or was Jack Continental?

MP: Jack was Continental.

GB: I think he was Continental,

-----------------

MP: Lets go back to the first meeting. When I arrived you were all discussing Salveson. Who else was there?

GB: Not Monroe Blum who was the operations guy from Crocker? He was the guy who was there. [pause]. I want to call him Jack-something, but I canít remember.

MP: Monroe was head of, was sort of advertising. They didn't really have a marketing idea.

GB: No, Monroe was advertising. He was put on the committee, on the advertising part of the marketing committee, when we were doing the evaluation of agencies and things like that. And Ross was there part of the time.

MP: And Ross was what they called marketing at Wells.

GB: Right.

MP: And Jack Elmer was an EVP already at that point.

GB: But he was consumer credit.

MP: Jack?

GB: Yes. He was not marketing.

MP: No, he had no marketing background.

GB: No. He was a consumer-credit guy. And, Fred Huber was the other executive vice president.

MP: That's it.

GB: At UCB, who would be comparable?

MP: Later.

GB: To Elmer, because he was there in the early days, who, he assigned --Bottoms, when they started to put the structure together to make it happen, they had to have an operating committee, with some working people, and a marketing committee with some working people. I was on the marketing committee and Bottoms was on the operating committee. When they finally structured it, he ended up going with them to be the head of the operation. California Bank Card Association, it was called.

MP: Yeah. The meeting I went to was before we ended up going over to the law offices.

GB: Before we went to Morrison Forrester?

MP: Yeah. Everyone was concerned with Salveson,because Salveson had approached everybody independently, and everyone said, well, we certainly don't want Salvizon doing this for us, because we knew that he was just a hustler.

GB: He didn't have any real ideas of his own, he would take your idea and then he would go and see the next person and feed it off, and that person would embellish that idea because it wasn't a bad idea, but they would build on it. Then he would take that and go to the third person, and then by the time he had made the loop with the four banks, he had put together what the bank's thought, but they had not shared any of it themselves yet, and then it made him look like he knew what he was talking about. He didn't know a damn thing about it. And he was willing to jump from here to here, clear over all the things you had to do in the banking structure and regulatory structure, to get it done, in terms of money transfers and stuff like that. He did [slurpy sucking sound] right straight through it, because he didnít understand that part of it.

MP: There were a lot of people like Salvison in those days. I don't know when they stopped coming to banks.

GB: Salvison

MP: They were still doing it at the end of the '60s.

GB: Oh yeah, Salvison

MP: Marching around with Telecredit and all kinds of banking ideas.

GB: Salvison didn't go away. He sued a couple times, it got settled once, then he sued again. There were lots of different kinds of things. I had a call from the attorneys for, um, then, First Interstate' lawyers, UCB, big firm in Los Angeles, oh, Melveny and Meyers, or somebody like that

MP: Yeah, that's logical.

GB: And they had been asked to take on this evaluation of the charge-card business because of a complaint. Salveson was in the middle of this, saying that we had fixed charge-card interest rates and the discount rates and all those kinds of things. And so they were trying to gather up all this information. Of course, Bottoms was dead. Huber was dead. They were two of the key people that UCB or First Interstate would have turned to. They had my name, and they tracked me down. I was in Seattle. And this was just in the last ten years, now. I'm not talking about twenty-five years ago, I'm talking about ten years ago, or less. And I went to San Francisco about three times and gave depositions, and I know that they were taking depositions from Wells Fargo, and of course Bank of America was involved because the theory was that all the banks had conspired to have 18% as your charge-card rate, and had conspired to do that, it wasn't a marketplace thing that caused that. And, the last I heard it just sort of collapsed, I mean, they either reached some kind of settlement, or the judge threw it out, or something.

MP: Yeah.

GB: He never went away.

-------------------------

MP: Lets see if we can get the mood to remember the early meetings. It looks to me, my, what memory of the mood before we went to Morrison, before the meeting at Morrison. You were the only person who really appreciated the card. Jack Elmer and Ross Buell, and the operations fellow from Crocker, were very cynical about whether a card had a chance or not. They were very dubious. I think, Ross didn't really pay much attention, but he went along with whatever Jack Elmer said. But Elmer was the one who was a little bit skeptical. And you were the one that was really pushing them. At that point, what was it that had convinced you that it was possible, if we did it together?

GB: Well, I think the market research said that the public wasn't opposed to a new card, but they weren't particularly excited about a single bank, particularly one that had a market share of 50%, being the issuer of the card, that there was no evidence that they were just gonna run out and exclusively be your customer and only yours for the use of this card. So, the card was proving that it had customer appeal, but only if it had broad use, which meant you had to have a lot, and the merchant would say, hey! I like the card, but it didn't mean anything to me if only three out of my three-hundred customers who come in here have the card. So you had to have real depth of distribution of the card, as well as a very broad merchant base, to make the thing work. You couldn't get there without having multiple banks, or a great big bank. The issue of putting your names on the card of the individual banks and all of that, came about later, and of course that kicked BofA into the "Visa" name business, because they couldn't compete as a single bank.

MP: Yeah. I remember the date, when BofA changed the name to Visa.

GB: That was separate issue.

MP: Yeah.

GB: But, that was after we announced what we were doing.

MG: Very wisely.

GB: We were already established.

MP: Yeah, yeah. But it was before we entered the market. They did it about halfway from the first Morrison and Forrest meeting to the date the first Mastercard hit the market.

GB: Well, they had to because they knew, well, everybody knew what we were doing, because we had to do it publicly, if you remember.

MP: Oh yeah.

GB: The issue was that we couldn't exclusively operate this and leave any bank out who wanted to be in. That's why every bank in the state of California was invited. Half of them told us we were crazy. Remember the couple meetings that we held? [MP laughs] We had one in San Franciscoó

MP: The big meetings! Yes!!

GB: And one in Los Angeles.

MP: Where did we hold that meeting?

GB: Well, we held one in a hotel in San Francisco.

MP: It was at the Palace.

GB: Yeah!

MP: God!

GB: And we had a big sign up there and all this kind of stuff.

MP: I remember that one. Oh, boy! That's right. Half the banks in California! There were sixty banks that came to that meeting.

GB: Yeah, that's right. And they were all invited to join the California Bankcard Association, if they would like to. We even went out, if you remember, to make the thing look good, this is, we're jumpin ahead because this was after the initial beginnings of this, when we created the association, and invited two directors from two small banks, one north, one south, to be on the board with the four of our banks.

MP: Or EVPs, yeah.

GB: Organizing banks, we'll call 'em. And that was to give us some breadth and some size and something to show to the rest of the California bankers, that there was a place for everybody. They didn't believe it. It took a long time for, what was the name, the guy from Bank of Stockton -- Dorry? Was that his name?

MP: Oh, I dunno.

GB: And then Bud

MP: Bud I remember.

GB: óMilligan from Bank of A. Levy in Oxnard.

MP: Milligan I liked, yeah, I remember him.

GB: And the other guy I think was Bank of Stockton.

MP: Yeah.

GB: He was Dorry or something like that.

MP: All right, well. The first meeting, how did we pick Morrison? Whose lawyer was that?

GB: I think that was Wells.

MP: Then it was, it would've been Morrison.

GB: Morrison & Forrester.

MP: Morrison & Forrester.

GB: Yeah.

MP: And they were on Bush Street, in the Standard Oil building?

GB: I think so.

MP: I just remember going over to the office.

GB: The old 225 Bush?

MP: Yeah.

GB: Yeah.

MP: I remember going over to the Bush Street building, but.

GB: The issue for them was to put a case together for the Justice Department that would satisfy them on a look/see basis that this was not anti-competitive.

MP: And that it was going to be the equivalent of the, of a bank clearinghouse. That it was the legal equivalent of a bank clearinghouse.

 

GB: But it had to have a public marketing name and image, which a bank clearinghouse doesnít have. The bank clearinghouse is clearly an internal operating thing and they got away with that. This is an externaló. Do you like the airplanes going over?

 

MP: I want to make sure I can hear it. Itís clear.

 

GB: Thatís a Boeing airplane. [MP laughs]. We only fly Boeing airplanes in and out of Seattle. Anyway. The real issue was to make sure that they would permit you to organize it under a common name and a common logo and a common advertising, but maintain independent marketing to your own customer, or to your customers, cardholders, and merchants, and of course thatís where it got veryó

 

MP: Yeah. Welló

 

GB: ósticky on the merchantsí side, as you ÖÖÖÖ.

 

MP: Well, we also, yeah, we also scrambled after merchants as soon as the, [chuckles], as soon as it realized that they were falling off the trees.

 

GB: Thatís right. Well, and the other thing was that BofA at the very beginning tried to tell our merchants that they couldnít use the imprinting device that they had gotten from BofAó

 

MP: [chuckling]. Right.

 

GB: You remember that?

 

MP: Yes [through giggles]!

 

GB: ówith a Mastercharge card. And we said, fine, weíll give you one, but you can use anyó. The merchants told íem to go to hell and they just immediately had to, everybody use everybodyís machine. You know, the machine became incidental to íem. They wanted to charge for it. You remember? We were gonna make a lotta money selliní íem?

 

MP: Oh! I remember!

 

GB: The merchants, No. They donít need to do that. And so you ended up giving them machines.

 

MP: This is a sideline. Do you remember who the guy was that started Bankamericard at BofA? And got, was let go over the problem that his machines were defective.

 

[pause]

 

GB: What was the name of their installment guy who was actually, they actually were gonna stop the Bankamericard, because it had lost money for the first two or three years. What the heck was his name?

 

MP: Yeah, I canító

 

GB: Big guy. I can see him. Ken?

 

MP: Not Ken Wilber?

 

GB: No, no. No no no.

 

MP: Thatís much later, and itís at another bank.

 

GB: No. No. No, I can see him. Itís like Larson or something.

 

MP: There was a Ken Larson.

 

GB: Yeah.

 

MP: At BofA.

 

GB: Big guy?

 

MP: Yeah! Very big.

 

GB: And he was one ofó

 

MP: He was personal credit.

 

GB: Yeah, but he was a credit-card guy.

 

MP: Oh [drawn out a bit].

 

GB: And that almost got lost about a year ?203 of BofA, before the Mastercharge thing came about, they were having struggles to get in the thing. They almost let the thing go. And then it started to catch on, and then of course it caught on pretty well, and then it got all the other banksí attention. Probably never wouldíve heard, if weíd never gone into the business, Bank of America would have sat there and tried to do something with it and not very wisely, by the way, and we never wouldíve had to worry about it. But we went in and we picked the giant and then showed him how to do it, by making it available to other banks and making it nationwide, and powee! Now ya got two things like that and nobody could control. Theyíre out of control right now. [MP chuckling and mumbling something] With Mastercharge and Visa. They really are!

 

MP: Yeah, they are.

 

GB: Theyíre up here someplace, fightiní each other over national or internationaló

 

MP: International issues.

 

GB: Issues, andó

 

MP: And then ya come up with a new marketing device every three weeks, and they sign some new agreement with General Motors, oró

 

GB: Yeah. And it usually doesnít come toó

 

MP: Unitedó

 

GB: ófruition, ya know, they, itís some big planning idea and it just falls apart because it costs too much money, but, itís really interesting how itís just escalated itself up to here. Itís just not even in the banking business any more.

 

MP: No.

 

GB: It used to have an officer in the bank who was on the board of Mastercharge or he would be responsible for the card. Now itís an operating division off someplace else and those guys, people running the Mastercharge division at First Interstate probably donít have any idea how that card started, or why it started, or its history or anything, if you went and talked to íem. Or Bank of America or anyplace else.

 

MP: They donít, no, they donít.

 

GB: Itís a totaló

 

MP: Even BofA itself doesnít know its own history.

 

GB: No.

 

MP: Theyíve, Iíve tried. I remember the first meeting at Morrison and Forrester, but a lot happened at that meeting. Because first of all, they started to tell us they were gonna get the antitrust approval. And the decision was made to hire an operations research firm in Cherry Hill, New Jersey, to come back and tell us how to set up the operation.

 

GB: ?Grandsley.

 

MP: Yeah. And, Iím tryiní to remember that, yeah, but Iím trying to remember, I donít remember the name of theó, Cherry Hill, New Jersey, research firm, but. But, Elmer was alreadyó

 

GB: Art ?Cransley was the name of theó

 

MP: Cransley was the guyó

 

GB: Was the principle.

 

MP: ówho came out here to make the presentation.

 

GB: Yeah, he was the principle of the company, one of the principles.

 

MP: But it had another name, like ORC, or OJR, something like that. But also at the first meeting, the decision was, it was already obvious that Jack Elmer was the chairman or the president of this organization, even before it had a name.

 

GB: I think the guys had agreed to theó

 

MP: Okay.

 

GB: Between, when the first meeting, the first couple meetings were held, I think that between Huber and Elmer, [drumming sound], our friend at Crocker, who I [pause] canít remember.

 

MP: Ah, youíll remember.

 

GB: We invited security to join.

 

MP: Yeah, well.

 

GB: And they said no, weíve got ready reserveó

 

MP: Security ÖÖÖÖÖ.

 

GB: ówe donít need it.

 

MP: [chuckling] Those jerks! I remember them, too!

 

GB: And, ya know? And turned us down and said they werenít interested in it. Bank of Cal asked to join.

 

MP: Well, I went to, I went to ?Debreadville and ?Debreadville said, Put Glenn ?Mowry on that.

 

GB: Yeah, right. And, because of the situation, there was no way you could turn anybody down, but we did agree, and the lawyers did agree, if you recall, that we could hold it to those four because of the size, the impossibility of managing it if you got too many people to get anything done. So they agreed, as long as you were willing to share, once you had something put together, with all the other banks in California. And so it couldnít be exclusive, but we could be quote/exclusiveó

 

MP: [chuckling] Into the executive committee!

 

GB: In the planning part of this thing.

 

MP: Yeah.

 

GB: And the executive part of the committee, and so on.

 

MP: At what point were the two committees created? The marketing and the operations.

 

GB: Pretty early on, because they didnít have a name, they didnít have a design, they didnít have an idea of what they were gonna do after they had approval for theó, but they never got approval from the Justice Department.

 

MP: But, but Morrison and Forrester said that there was a refusal to take any action.

 

GB: Right. What they got was a nocontest kind of a look/see and say, We see nothing wrong with this and we wonít raise any issues. Given that, then you could go forward, and thatís when a lot of us could, well, I should say ÖÖÖÖÖ, he was on the committee, there were operating people from each of the four banks, and the marketing committees were ÖÖÖÖÖ

 

MP: Yeah. By then, we had already, Bank of Ameró, Bank of Cal had hired, had moved their personal-loan fellow into, onto the Mastercard.

 

GB: We didnít have a name, when it started.

 

MP: No, no! I know! I remember the name story very well.

 

GB: And we had lots of, ya know, lots of different names we looked at.

 

MP: We started with California Bankcard Association.

 

GB: And that was the name of the association.

 

MP: The first legal organization.

 

GB: Thatís right. That was the one that was legally established, California Bankcard Association.

 

MP: How quickly did it, the Nevada people change it.

 

GB: [chuckles]. Uh. Well, that wasnít until after, after we had had those meetings with the California banks, though. To tell íem what the plan was. Because shortly thereafter, we talked to Nevada, we talked to Arizona, we talked to Washington and Oregon. And I was talking to Chicago, New York, and ?Hugh ?Redhedet at ?Mellon, who already had their own card. They had a card, a Mellon card, that looked like, a little bit like the Bankamericard. It was green and yellow, not blue, but it was the same idea ÖÖÖÖ., and it was sort of imitated after the original Bankamericard. And he immediately saw the value of a nationwide card that had a common name, that each bank could issue. But of course, ?Redhead was, to me, the first of the real honest-to-god bank marketing people. He was before his time by a whole bunch of years, as you know. And I was having a little bit of a ?following in Chicago convincing Chicago tható

 

MP: Well, the Chicagoís a separate story, because they had already started their own, wholly owned mistake. [laughs]

 

GB: And screwed everything, everything up totally. But they did jump on board. The biggest problem there was to convince them that they would take what they had started and make it fit into the Bankamerió, uh, the Mastercharge thing. And the same thing in New York. The guy that I had the most success with and empathy with was John ?Leware, who was the marketing guy at Chemical Bank, at that time. Heís now Federal Reserve Board governor, ya know, after he went up to Boston and was the president of ?Shamet I think ÖÖÖÖÖ, then became the Federal Reserve board chairman. Anyway. Those conversations were going on just to see whether we could get a thrust out here to go, you knew you had to go national. It had to be something that was going to attract people from all around and you could use it in travel and entertainment, as well as retail shopping kind of things.

 

MP: There was only about a three-month interval from the first California Bankcard Association until we got all those banks into the Palace.

 

GB: Yup.

 

MP: During that time, they almost finished the operations study, they were out, and they mixed the operation and the marketing study together. ?Fudman was hired, and ?Footman went to work on the name and the design.

 

GB: Right.

 

MP: And, I already, ?Fudman remembers exactly who did the graphic design. I was in on all the focus-group meetings on the design. People to this day canít believe, and they say I should write an article on it. But we were aiming at women, we were aiming at department stores, and the overlapping circles, we just showed íem to women, and the women liked it. And the color was taken directly from Bankamericard [chuckling].

 

GB: The ?opposites. I mean, they were blue and gold and so we wereó

 

MP: Yeah! Right.

 

GB: We were red and gold, or whatever you wanted to call that color.

 

e his father-in-law was the chairman. What was the guyó

 

MP: Well, you talked the two of íem into it. Because by theó

 

GB: Well, yeah, with some help of other people that were also interested.

 

MP: Who wouldíve helped on it?

 

GB: ?Redhead at Mellon. As soon as he told them that he was gonna go with it, then they realized that it was worth at least listening to it.

 

MP: But, almost the same time that we got the upstate New York bank, the Midland. [GB affirmative sound]. And thatís the story ?Fudmanmbol

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rough transcription from audio tape 5/4/96

by mlo/snflwr for Michael Phillips/Social Thought

 

["............" = words I can't make out, even to transliterate, sometimes because voices overlap or background noise or laughter obscures, or voice goes dim or unintelligible. A question mark (?) in front of a word indicates I'm guessing or transliterating.]

 

 

 

GEORGE BRIGGS 6/10/94

 

 

Michael Phillips (MP): This is a test. .Ý.Ý.

 

George Briggs (GB): óyour head hard or a talk to ÖÖÖÖ the Bankamericard campaign, which was got us all into this whole thing to start with. The reason the whole card thing came along was because Bankamericard was causing some concern to the consumer-credit guys, Hank, and he wanted to know why we couldnít have a card of our own. And, UCB and Wells Fargo each went out into the field to do research. Unbeknownst to the other that they were doing research on the question of, could you support a card, could that bank support a card like Bank of America. San Jose already had their card, you remember they were there before Bankamericard, if you remember.

 

MP: The very old San Jose, first card.

 

GB: Yeah, the first card, but they were very local to San Jose, but it was there, and BofA, the Bankamericard didnít bother them too much ícause   , ^ _ d e f g ~  Ä Ø ░ E F n o ) * z { 

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MP: And they were uniquely in department stores, which nobody was at the time.

 

GB: Thatís right. And just in their market, doing a fine job. Well, it was during that research that we discovered Wells Fargo was in the field, and of course Wells Fargo discovered that UCB was in the field. And then, one day we had a meeting and said, I assume you found out what I found out, that was, you couldnít, we werenít big enough to run a card in California, and take on Bankamericard. And that led to the question of, could you combine it, which obviously leads you to the biggest, toughest question of all, is the legal justice, antitrust question. After you got over whether your own bank ?management even lets you think about that.

 

MP: Did you start in í64 or í65 looking at the credit-card question?

 

GB: Oh, it was í64. By í65, we were beginning to put some pieces together. I think it was in í64 that the research was done. Maybe even í63.

 

MP: But byó

 

GB: I know it was í64.

 

MP: By í65 you knew Wells was in it.

 

GB: Oh! By, oh yes! by í65 we were beginning to put together the organization that would do the structure of the card, and the planning for it, and go into the Justice Department to get, I think they went to the Justice Department in í65.

 

MP: All right. Theó

 

GB: I donít know, can you get to Morris and Forrester and get theiró

 

MP: Oh yeah.

 

GB: óget the legal files out?

 

MP: Yeah. Thereís a, in í65, thatís when I can remember what, from that point on I can remember, because, as my brother said, everything started when you started! [laughs]. Whenever you started, thatís when the event started. And when I started was in August or September of í65. ÖÖÖ.. í65 or í66?

 

GB: No, we were already going by í65.

 

MP: We were in the field by í66, okay, so it was í65. í62. Yeah, of course! I was with BofA for four years, starting in í62. The, because I walked into the meeting that had you, ?Ross ?Buell, Jack Elmer, and somebody from Crocker.

 

GB: Um.

 

MP:tions, so when anybody else hears about it, then Wells says shouldnít we invite Crocker, or shouldnít we invite Bank of Cal, or shouldnít we invite Security ÖÖ., which is really, if youíre gonna do that. We werenít really very anxious to invite anybody at the beginning because we didnít know what we were talkiní about yet. Ya hate to get a big meeting there and say well, why are we here! [both chuckle]. Ya know. Until we got into it. But thatís how it started, thatís really how it started.

 

MP: You w" Ç É Ñ Ö Ü á 8 â ä ã å ç é è ê ë í ì î                                                                                                                              µ Х и И ╣ ║ ª º й æ ø ¿ ¡ ¬ ├ ─ ┼ к « » ╔   À Ã Õ ╬ ¤ &endash; &emdash; "  ' ' ÷ О ÿ ┘ ┌ ¤ Ð ð Þ þ ý · Р с С D Ê Á Ë È Í Î Ï Ì Ó Ô ­ Ò Ú Û Ù ш Ш э ¯ щ Щ ч ¸ § ■      ere the two of you. Thatís what I thought. ÖÖÖÖ

 

GB: And it was almost a chance, not a chance meeting, but, he wasnít in Los Angeles to see me, he was in there to do something else and he came to see me because we were both doing the same thing. And then out of that came the idea, well, letís talk to our managements, letís hold a meeting, and from there it just stepped along.

 

MP: Itís too bad I didnít, Elmer died about two years ago, living in Santa Rosa, but he was an incredibly forceful man. He didnít say much, and he was forceful.

 

GB: A strong man. Strong man.

 

MP: Yeah. And when he said something, he meant it. He didnít joke about anything. He wasó

 

GB: Stuck to his guns. Stuck to his comments, to his promises.

 

MP: He was a very traditional banker.

 

GB: Absolutely.

 

MP: He looked like bankers all looked in those days.

 

GB: Yeah. Itís too bad that you didnít get to know Fred ?Huber, who was a very interesting senior guy also, to go along with our unknown Crocker man. What the hell was his name? [pause]. Iíll think about it probably, and itís come to me next month.

 

MP: [chuckles]. Well, call me, Iíll put it in. Weíll just gross mass substitute it.

 

GB: Iíll have to, ÖÖÖÖ do I have anything, I donít really think I have any files ÖÖÖ

 

MP: Nobody does.

 

GB: I didnít keep anything, ya know, that would give the names on there.

 

MP: Yeah, shit. Morrison Forrester probably has the minutes of all the early meetings.

 

GB: They have his name.

 

MP: But nobody else would. Do you remember any lawyers at Morrison that youíve dealt with? ÖÖÖ depositions.

 

GB: No, Iíve been trying to think of, there was one man, who was one of the senior partners in Morrison, who was the, once this got started, was the legal counsel, and was to be present at all of our meetings. Itís a wonder that ?Futman didnít come up with it, becauseó

 

MP: He couldnít remember any more names.

 

GB: Because Iím sure he remembers, ícause we couldnít hold a meeting without him being there. We did hold a few, but, when they werenít there, but [chuckles], we technically [MP chuckling too] werenít síposed to have an official meeting without the representing from Morrison Forrester.

 

MP: I canít remember. All right. Well.

 

 

[end of recording]

 

#

 

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rough transcription from audio tape 5/4/96

by mlo/snflwr for Michael Phillips/Social Thought

 

["............" = words I can't make out, even to transliterate, sometimes because voices overlap or background noise or laughter obscures, or voice goes dim or unintelligible. A question mark (?) in front of a word indicates I'm guessing or transliterating.]

 

 

 

GEORGE BRIGGS 6/10/94

 

 

Michael Phillips (MP): This is a test. .Ý.Ý.

 

George Briggs (GB): óyour head hard or a talk to ÖÖÖÖ the Bankamericard campaign, which was got us all into this whole thing to start with. The reason the whole card thing came along was because Bankamericard was causing some concern to the consumer-credit guys, Hank, and he wanted to know why we couldnít have a card of our own. And, UCB and Wells Fargo each went out into the field to do research. Unbeknownst to the other that they were doing research on the question of, could you support a card, could that bank support a card like Bank of America. San Jose already had their card, you remember they were there before Bankamericard, if you remember.

 

MP: The very old San Jose, first card.

 

GB: Yeah, the first card, but they were very local to San Jose, but it was there, and BofA, the Bankamericard didnít bother them too much ícause they sorta had their little ÖÖÖÖ niche.

 

MP: And they were uniquely in department stores, which nobody was at the time.

 

GB: Thatís right. And just in their market, doing a fine job. Well, it was during that research that we discovered Wells Fargo was in the field, and of course Wells Fargo discovered that UCB was in the field. And then, one day we had a meeting and said, I assume you found out what I found out, that was, you couldnít, we werenít big enough to run a card in California, and take on Bankamericard. And that led to the question of, could you combine it, which obviously leads you to the biggest, toughest question of all, is the legal justice, antitrust question. After you got over whether your own bank ?management even lets you think about that.

 

MP: Did you start in í64 or í65 looking at the credit-card question?

 

GB: Oh, it was í64. By í65, we were beginning to put some pieces together. I think it was in í64 that the research was done. Maybe even í63.

 

MP: But byó

 

GB: I know it was í64.

 

MP: By í65 you knew Wells was in it.

 

GB: Oh! By, oh yes! by í65 we were beginning to put together the organization that would do the structure of the card, and the planning for it, and go into the Justice Department to get, I think they went to the Justice Department in í65.

 

MP: All right. Theó

 

GB: I donít know, can you get to Morris and Forrester and get theiró

 

MP: Oh yeah.

 

GB: óget the legal files out?

 

MP: Yeah. Thereís a, in í65, thatís when I can remember what, from that point on I can remember, because, as my brother said, everything started when you started! [laughs]. Whenever you started, thatís when the event started. And when I started was in August or September of í65. ÖÖÖ.. í65 or í66?

 

GB: No, we were already going by í65.

 

MP: We were in the field by í66, okay, so it was í65. í62. Yeah, of course! I was with BofA for four years, starting in í62. The, because I walked into the meeting that had you, ?Ross ?Buell, Jack Elmer, and somebody from Crocker.

 

GB: Um.

 

MP:tions, so when anybody else hears about it, then Wells says shouldnít we invite Crocker, or shouldnít we invite Bank of Cal, or shouldnít we invite Security ÖÖ., which is really, if youíre gonna do that. We werenít really very anxious to invite anybody at the beginning because we didnít know what we were talkiní about yet. Ya hate to get a big meeting there and say well, why are we here! [both chuckle]. Ya know. Until we got into it. But thatís how it started, thatís really how it started.

 

MP: You w" Ç É Ñ Ö Ü á 8 â ä ã å ç é è ê ë í ì î  ñ ó ò ô ö õ ú ù û ü Ý ° ¢ £ § Ц ¶ ß ® © ™ ´ ¨ Г Æ Ø ░ ± ▓ │   µ Х и И ╣ ║ ª º й æ ø ¿ ¡ ¬ ├ ─ ┼ к « » ╔   À Ã Õ ╬ ¤ &endash; &emdash; "  ' ' ÷ О ÿ ┘ ┌ ¤ Ð ð Þ þ ý · Р с С ^                                                                                                          ere the two of you. Thatís what I thought. ÖÖÖÖ

 

GB: And it was almost a chance, not a chance meeting, but, he wasnít in Los Angeles to see me, he was in there to do something else and he came to see me because we were both doing the same thing. And then out of that came the idea, well, letís talk to our managements, letís hold a meeting, and from there it just stepped along.

 

MP: Itís too bad I didnít, Elmer died about two years ago, living in Santa Rosa, but he was an incredibly forceful man. He didnít say much, and he was forceful.

 

GB: A strong man. Strong man.

 

MP: Yeah. And when he said something, he meant it. He didnít joke about anything. He wasó

 

GB: Stuck to his guns. Stuck to his comments, to his promises.

 

MP: He was a very traditional banker.

 

GB: Absolutely.

 

MP: He looked like bankers all looked in those days.

 

GB: Yeah. Itís too bad that you didnít get to know Fred ?Huber, who was a very interesting senior guy also, to go along with our unknown Crocker man. What the hell was his name? [pause]. Iíll think about it probably, and itís come to me next month.

 

MP: [chuckles]. Well, call me, Iíll put it in. Weíll just gross mass substitute it.

 

GB: Iíll have to, ÖÖÖÖ do I have anything, I donít really think I have any files ÖÖÖ

 

MP: Nobody does.

 

GB: I didnít keep anything, ya know, that would give the names on there.

 

MP: Yeah, shit. Morrison Forrester probably has the minutes of all the early meetings.

 

GB: They have his name.

 

MP: But nobody else would. Do you remember any lawyers at Morrison that youíve dealt with? ÖÖÖ depositions.

 

GB: No, Iíve been trying to think of, there was one man, who was one of the senior partners in Morrison, who was the, once this got started, was the legal counsel, and was to be present at all of our meetings. Itís a wonder that ?Futman didnít come up with it, becauseó

 

MP: He couldnít remember any more names.

 

GB: Because Iím sure he remembers, ícause we couldnít hold a meeting without him being there. We did hold a few, but, when they werenít there, but [chuckles], we technically [MP chuckling too] werenít síposed to have an official meeting without the representing from Morrison Forrester.

 

MP: I canít remember. All right. Well.

 

Charlie ?Stewart.

 

[tape turnover]

 

GB: óput all the rest of us to shame.

 

MP: Oh, yeah! Well, Bank of America, when everybody else was three million, was thirty ?billion!

 

GB: Thatís right. Thatís why Charlie was happy to be the advertising manager. It didnít make any difference, but, he ?got the rest of it.

 

MP: Now, did you, by the way, did you pick up the Evans group? For ?Seafirst? Or did you have another agency?

 

GB: Uh, no. They had, [pause], what was the name of the agency we had? It was way before Evans. [pause].

 

MP: Did it ever become one of the national ones? That merged with a national one?

 

GB: Oh, yeah.

 

MP: Like ?Gray, or.

 

GB: No, no no. It was like ?McCann?

 

MP: Oh ÖÖÖ..

 

GB: Or one of those, that was here.

 

X: There was a ?Wells ?Rich ?Green office here for a while.

 

GB: No, it wasnít Wells Rich. Is that who you mean? Wells Rich Green.

 

?MP: No.

 

X: ?YFK?

 

GB: Wells, Wells Rich of course had some companies that we were interested in, like Braniff and that kinda stuff, because of [chuckles] ?Mary. But, I think it was ?McCann was, had them for the longest period of time that I can recall. ?Ken ?Erickson. Seattle.

 

MP: And ?Footcone kept Mastercard, and took it nationally, so, that stayed for quite a while. I donít know who has it now.

 

GB: I donít either.

 

MP: I was, I was out of it, by then it was a totally independent organization, having its own office, its own life, its own building.

 

GB: Well, it was getting that way anyway when the California bank card then started to move, and then you got it into the Western states bank card, and you had ?Gary ?Southerd, remember?

 

MP: Gary was the first president.

 

GB: First president of the operating company kind of thing, and thatís when the operating committee that Bottoms was the chief honcho on, and then when we went national, he ended up getting hired on a national basis.

 

MP: Did they actually move the headquarters to somewhere else?

 

GB: New York.

 

MP: To New York?

 

GB: Yeah. A lot ÖÖÖÖ. New York.

 

MP: As soon as the national was formed?

 

GB: Yeah.

 

MP: They took the San Francisco boys and moved them to New York. Did ?Southard go?

 

GB: No! No no.

 

MP: Just Bottoms.

 

GB: Yeah, Bottoms was actually not a ?staffer, he was a banker then, he got hired to go to New York when they created the national organization. But that was a couple years after that.

 

MP: Yeah.

 

GB: Ya know.

 

MP: It was long after I was out of banking that all of that happened.

 

GB: Well, I donít know long after that, but it was,MP: And then ochre ÖÖÖÖ.

 

GB: And they wereó

 

MP: They had a ?stripe ÖÖÖÖ..

 

GB: ólines, and so ours were circles. And of course, ÖÖÖ.., I remember ?Fudman trying to say, Now that really represents the way you map the world, you know how youó

 

MP: Yeah! [laughs!!]

 

GB: Címon. The whole reason for tható

 

MP: We all ÖÖÖÖ.

 

GB: ówas to be different than the stripes! You have circles instead of stripes.

 

MP: We also knew that women preferred the circles.

 

GB: Sure.

 

MP: Very.

 

GB: That was what it had to be in the early í70s or into the í60s or early í70s.

 

MP: It was í70s.

 

GB: Okay.

 

MP: By the í70s it was all international, but, there was no need to do anything. The system worked by itself!

 

GB: Right. Well, theyíd go off andó

 

MP: Operations people just solved their own problems day to day. Where do I send these cards? And how do I stay in touch?

 

GB: And the biggest problem they had was the communication from banks on card authorization. So when you really get down to the bottom lresearch said.

 

MP: Yeah.

 

GB: And the Mastercharge, Master Credit, Mastercard.

 

MP: Right. We had all three names. We pickedó

 

GB: Yes. And at one point in its history has used all three names.

 

MP: Yeah. ?Fudman tells the story that when, I remember, I guess we startedó

 

GB: You got rid of ?credit right away.

 

MP: ówith Mastercard. But Mastercard, he said, after we started using it we found that there was a bank somewhere near St.ÝLouis that owned the name in that county, and that we had to pay $25,000 to get it? Did you have to, did you get involved in that? Or just, that was ?Fudmanís problem.

 

GB: Well, it wasnít ?Fudmanís, I think they used the lawyers to do it. But ?Futman may have found it when he tried to trademark, and register the name.

 

MP: Now, by this time, ?Salvison was already asking for settlement, which Iíve understood he got almost over 200,000 dollars. And we still, the card wasnít out, but he had gotten a $200,000 settlement. Was that through Morrison and Forrester or?

 

GB: I, oh, I donít remember. I donít remember the exact amount. I knew he got a settlement, and it was paid for by all the banks, in, ya know, ÖÖÖÖ The only funds that the organization had would be coming out of the individual banks anyway until they set up a structure for making money.

 

MP: By then, Glenn ?Mowry was so confident it was gonna work, he didnít care what we put into it. Then, we had to scramble. Well, everyone thought that it was gonna be hard, because the initial question was, How hard is it gonna be to get merchants to take more cards? From our point of view, they had a lot of credit cards. Dinerís Card, Carte Blancheó

 

GB: Very definitely. Carte Blanche, Dinerís, American Express.

 

MP: And Bankamericard.

 

GB: And Bankamericard and of course in San Jose you had the San Jose card also.

 

MP: But we thought it was gonna be hard for them to go for it. And we came up with a lot of store designs, and it turned out to be exactly the opposite.

 

GB: Window decals.

 

MP: Yeah.

 

GB: And everything that youíd put up. And we wanted stores to also have applications, and which bank was gonnaó

 

MP: Which bank was gonna have the applications stack!

 

GB: óget the applications, thatís right.

 

MP: Thatís right.

 

GB:

 

 

 §&endash;/Цý=¶ß®Ý©Ý™ You remember that?And they were all

And they were always in the stores.

 

MP: And we found that the stores didn    _ d b h ô ö þ

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  ý¿! ít need to be talked into this. They were lining up in the branches wanting to sign up for it.

 

GB: Yeah.

 

MP: And they tended to fall with whatever bank they were doing the most business with.

 

GB: Absolutely. And then there when it got to be a little bit of competition with the big boys on your merchant discount.

 

MP: Yeah. And everyone knew better than, by then, the Chicago debacle was well established and everybody knew better than to cut rates. And it was always a debate between 3й% and 5% anyway.

 

GB: Well, and where is, where was the floor for authorization? On what kind of merchants are you willing to let the first fifty or hundred or twenty or ten dollars go by without doing a credit check? Ya know, one kind of merchants youíd do that on because the average bill is gonna be up there, and they had, thatís why there were different rates for different kinds of merchants, once you began to analyze what was going on in the use of the card in that merchant field. And, but if you went to Standard Oil Company, and, to convince them, they had no reason that they would want to pay a 2 or 3 or 5 or 6 percent discount, when most of their customers already had the Standard Oil card, except if you could convince them that youíd get some people that were not Standard Oil customers, using Standard Oil cards, and of course we all had this great idea that we now had the universal card they wouldnít need theirs anymore and they would use this one card for everything. You know, buy their airline tickets, buy their gasoline, we were gonna get to groceries, although nobody had enough guts to really say they wanted to go sell grocery stores. We had a couple of our directors, which youíll recall, you morally said it was wrong to buy groceries on credit. It was okay to buy gasoline on credit, and then consume it at a ÖÖÖÖÖ.., but you couldnít buy groceries on credit. I donít know why they felt that way, but we really did, and so that they stayed away from the grocery chains, at the initial number of years, actually, it wasnít just the first years.

 

MP: Oh no, it was a long time.

 

GB: It was a number of years.

 

MP: BofA had already had bad experience, somebody probably learned what the BofA experience was. But, now, donít run out on me, tape.

 

GB: No, itís working.

 

MP: What was the Chicago experience? Because this, I donít think we had the Mastercard actually in customer ?heads until the March of í66. Somewhere between December of í65 and March of í66, Chicago had their debacle. They had issued twenty, thirty, cards to individuals, because they were all ?unit banks, and the individuals had many, many accounts.

 

GB: Then it was the two banks competing with each other, too, Continental and First of Chicago were each trying to outdo the other one, and so we had this, they knew that you had to have mass distribution of cards in order to satisfy the merchants and you had to have lots of merchants in order to make the card worthwhile. And they were just issuing it to anybody without, almost without anybody asking for them. So what would happen is they were mailing cards out to, ya know, theyíd get a telephone book and they would mail íem to everybody on the street, and theyíd just get dropped into the mailboxes. Well, the people threw íem away or didnít know what they were, and so people were ending up with briefcases full. There was a story you know when the guy walks in to the Continental and says, ìWhat will you give me for this briefcase?î And he opens it, I mean he must have had five thousand credit cards in there, all of which were valid! [MP chuckling softly]. And he couldíve just gone everyplace, you know. And so that they just, they had a terrible time, and the people who didnít want them then refused to pay when somebody went out and charged on it, so they had an awful time on this. They had no controls at all.

 

MP: They also competed down to zero on a lot of merchant discounts. They didnít understand the role of the merchant discounts.

 

GB: Thatís right. And, but those, when they began, their cards were, First of Chicago card and whatever the Continental card was called. And, they role that I was trying to do was to convince them that there was a role for me to play, well, why didnít they slow down, pick up what we had done operationally, put their name, First National Bank of Chicago, on top of a Mastercharge card.

 

MP: So that was the firstó

 

GB: And I went over, I had a meeting in Chicago, or New York, about every other month, at the very longest, sometimes every month. Iíd fly in there, and these guys would all meet with me. Hugh would come down from Pittsburgh, and maybe ?Leware from New York, and weíd sit around and have dinner and talk about whatís going on, what our progress was, trying to convince them to go. And Pittsburgh signed on just like that, just quick as can be. They were ready to go as fast as we were.

 

MP: Yeah. Mellon unders tells. Thatís a great story, of how they had been kicked out of BofA and he went back there and listened to this pompous arrogance, and all of a sudden he said, ìDidnít you kicked out of BofA?î [chuckling]. And they said, ìYes, and weíre ready to kill! get even with them!î Thatís the fellow who died and whose first obituary was the one I saw.

 

GB: He was probably one of the early Mastercharge board members or something like that, ícause when they got the national organization going, they had guys from all around the country.

 

MP: Yeah, he was one of the first ÖÖÖ..

 

GB: Guys from Seattle on the original Mastercharge board because Seattle First National Bank had their own card. And they finally went with Mastercharge, but they were, at the beginning they thought they could have their own card.

 

MP: Well, ?Fudman had to confront the interbank issue. I mean I remember he firstó

 

GB: And the symbol on theó

 

MP: ójust thought about putting the ?eye [or I] on the back of it. But who did the work? And who, what did the committee committee decide about that? Who was gonna talk to Interbank? And, I donít even know how many banks were in Interbank by then. It was still mostly New York.

 

GB: Well, East Coast, yeah.

 

MP: And it wasnít working, it wasnít doing anything. It was just an idea. And they have the name.

 

GB: But they were also a source that if you brought íem in, you brought in a whole lot of people then. You could market to them more easily because youíd been accepted. So, making some arrangement with them would be to your advantage, then, instead of having to individually go sell each bank and kick the door in for you to get in to íem, you could do it in a concerted effort with all of íem. And I think that worked that way.

 

MP: Can you rememberó

 

GB: Who was the head of Interbank?

 

MP: Yeah! I canít. Can you remember any of the names? Or even the size of the Interbank? It wasnít, but they extended from Ohio to Massachusetts. And a smattering of banks in that area.

 

GB: I donít remember, now, I probably did [chuckling].

 

MP: I do remember our earliest card designs had an I on the bank of it.

 

GB: Yes, it did.

 

MP: Because we knew from very early on that we wanted that association.

 

GB: And it was Interbank finally went away, and the Mastercharge organization took over, but they had to get approval from California in order to use the name and the logo and all that, because the California Bank Card Association were the ones that registered the name and the logo, and they then granted it to all these other organizations so that could useó, so thatís why Mastercharge is a national name now.

 

MP: How, were you in on any of the meetings of the organization of national Mastercharge?

 

GB: I was not.

 

MP: Who did that? I know, the Bank of California fellow, whose name Iíve completely forgotten, was very active in traveling around the country, doing ÖÖÖÖÖ. things.

 

GB: Well, the Interbank group is where, part of where it got started, because that already, that was already a forum, so to speak, for all of this. And the creation of these regional bank-card-association groups gave you the operating basis all around the country to go national.

 

MP: Okay. And what anecdotal stories do you remember? [chuckles]. Dominoes. Who was the dominoes group? I know ?Fudman used to play dominoes with two or three of the people on the marketing committee.

 

 

GB: That was probably after my time.

 

MP: Yeah, well, he stayed on it for many years.

 

GB: I ,know it. Ed Wilson was, came to, from ?footcone in Los Angeles and to the UCB office when I left, it was í68.

 

MP: Did you leave UCB in í68? Where did you go then?

 

GB: ?Siefers.

 

MP: That early?! And ?Seafirst had been one of the people dragging their feet.

 

GB: Yeah. They were already, had their own card, but they were dragging their feet on joining Mastercharge.

 

MP: But once they did, this area was saturated.

 

GB: Yeah. Because the other banks ÖÖÖÖ.. And of course the Oregon banks, one went for Mastercharge and one went for Bankamericard, ÖÖÖÖ.. the other ones. The one who went for Mastercharge decided they better go for Bankamericard because they couldnít afford to let the other one have it, but they hadnít cleared up the idea that you could have both, because the Arkansas decision hadnít been made. You remember that came down fairly early on, when the court ruled that you could in fact issue both, and it was illegal for either one of the cards to preempt the other one if the bank chose to issue a card. Thatís why half the banks now issue both Mastercharge, they may have aó

 

MP: Oh, yeah.

 

GB: óit may be principally a Mastercharge bank, but theyíve got íem both.

 

MP: Were you still in marketing at ?Seafirst?

 

GB: Yes.

 

MP: So this was one of your responsibilities.

 

GB: Yeah, we had a guy who ran the card and he ended up on the Mastercharge board, his name was Dick ?Janing, and he had come out of consumer credit, he was a consumer-credit thinker. ?Ed ÖÖÖÖ.. not a marketing person particularly. But I had some fun doing other things. I created cash machines. We had the first cash machines in the United States. Firstó

 

MP: Which did youó

 

GB: ÖÖÖÖÖ.

 

MP: Was it Otis? Oró

 

GB: Oh, no. ?Docutel.

 

MP: The first was ?Docutel, all right. Where did you put it?

 

GB: We had them in, I ordered, Iím the first one who ordered more than two, we ordered a hundred. We had about a hundred branches.

 

MP: Outside?! [chuckles]

 

GB: Oh, yeah!

 

MP: At night, and open?

 

GB: Oh, yeah! We never had a problem. Also, from day one, charged 25Ýcents a withdrawal. The original cash machine in 1970, I think it was í70 when we put it in, was just a cash spitter. I mean, thatís all it did. You put your card in.

 

MP: Oh yeah. Thatís all it did.

 

GB: And you plugged in your number and it gave you 25Ýbucks or 50Ýbucks or whatever it was. The first thing you had to do and the reason it was easy for us, was, first we had a single statement with a single account number. And the account number was the same as their charge card. So we tied your checking account, your savings account, and your charge card all under one number. One card. So when Iíd give íem a cash machine, I didnít have to issue new cards. Your card goes in there. You go to some other bank and talk to íem about putting a cash machine, in and they had to issue cards, because their charge card had nothing to do with their checking account.

 

MP: Everybody did, everybody did that.

 

GB: And soó

 

MP: The wrong way.

 

GB: So we, the first thing we did, in 1968 and í69 was put in single-statement banking and, secondly, it was cash machines, and the third was pay-by-phone, which fell on its face. And itís still being, the same system is still being sold and marketed around the United States, that we created. Itís absolutely the same one. And we created it in 1972, and it was a wonderful system. Yankelovitch did my research for me, and it came sailing out. I was gonna make, it was just gonna make aó, people were willing to five, six, dollars a month for this thing, it was just the greatest thing since sliced bread. The problem was you could sell 3,000 customers every month and youíd close 2,000 accounts. Because they wouldnít be used. Theyíd just say we donít want it. You never could get the volume going. And what it really turns out is, research was, and it didnít say this until you went back and worked it over. People didnít, werenít so much objecting to writing checks, because bank-by-phone is getting away with that. It was seeing their level of cash go down. Thatís what bothered them. They didnít mind writing the check, but they hated to balance it every year and find out it was less than they thought. So, the phone thing didnít solve the problem. Government solves that problem.

 

MP: Now, there was another decision that we made, well, Visa was already out before we had, already changed its name before we were about to issue our cards.

 

GB: About the time, right. It was really close to the same time.

 

MP: But, I did the research, focus groups again, with ?Hugh ?Schwartz, to see how customers would react to unsolicited cards, and, of course, it was a strong hostility to unsolicited cards. And, it turns out they didnít mind if you send them a ìyou will receive a card in a week or two; if you donít want it, phone this number.î That spread throughout the system immediately.

 

GB: Everybody used it.

 

MP: Everybody just sent the letters out [chuckling] in advance, once they realized this is all you needed to do.

 

GB: Well, donít forget you were sharing information with everybody.

 

MP: Oh, yeah. I wasó, and ?Fudman was carrying it to the committees and everyone was convinced as soon as they saw it. Are there other things that you remember that we did because we were sharing information? Because that was really a unique thing when we hadó

 

GB: Yeah. The only thing we tried really hard not to get hung up on was things like interest rates, which would really catch the Justice Department. Or discount rates, which, common selling tools or how to sell an oil company versus a department store.

 

MP: There was enormous focus on oil companies, as I remember. We never got íem, but everybody thought they had to be in.

 

GB: Well, we got Standard Oil to agree with it, because my dad was the president of Standard Oil, Standard Stations, which ran all the Standard, and the marketing vice-president for the corporation. So I had an easy door to go through.

 

MP: [chuckles]. All right, this is the part of the story we gotta have on tape.

 

GB: [amused] No no no. But I mean, I was able to talk to them and we really got a lot of interest in the thing, but we kept running up against the fact that they had more cards out than we had cards out. And, discount was not something that they really needed to pay us, unless we could show that we were gonna enhance and increase their penetration. And that was the real, the real cutting edge. And so you get down to the point, well, are you gonna let íem use the card for no discount, which probably would have been a very smart idea, and is being done practically now.

 

MP: Yeah.

 

GB: Except in that day and age, we were really afraid that some other good customer over here that you were charging 4%, and was a good customer in a lot of other ways from a bank standpoint, this is the bank now talking. Says, ìNow wait a minute. You canít give these guys this without having it turn into a problem with your other customers over here.î So we never got around to it. Youíd never give it away. Got awful close. Airlines were the same way, if you recall.

 

MP: Oh, yeah! They had the hard, they had the most coverage.

 

GB: [whoosh sound] Just like that. And because we knew we had to be in the travel business.

 

MP: They were down, almost 2%.

 

GB: Thatís right. They were 2%.

 

MP: I remember all the discussion about should we tolerate 2%. Could we survive on it? And everyone said that we have to have the airlines. What other issues do we remember? It was telephone, mail order, use of it by mail orders, everyone had mixed feelings about that. I guess some banks went with it, some didnít.

 

GB: I think banks in the first few years used every kind of solicitation device they could. Some of them were more successful than others. The ones that were crazy, they all stayed away from the Chicago just unsolicited mass mailing. I mean they just mailed íem out. ìHereís your card.î And, that I donít think happened in California any place that Iím aware of. And I think they knew their business there.

 

MP: Is there any way to remember Crocker? Crocker had already merged with ?Anglo-American, three or four years earlier.

 

GB: Oh, yes.

 

MP: It was Crocker-Anglo by then. It was becoming Crocker. Who was that guy?

 

GB: Well, you had Citizens Bank in Los Angeles. Theyíd merged with Crocker, hadnít they?

 

MP: Yes! Thatís it!!

 

GB: And there was Crocker Citizens.

 

MP: Crocker Citizens, then Crocker Anglo, Crocker Anglo and then Crocker Citizens, and then Crocker.

 

GB: And then they just dropped, they dropped the Citizens off it, but there was CCó

 

MP: Crocker was never a together bank, in any way. [chuckles, sighs]

 

GB: They guy who was there representing, it was this operations man. He was a good, tough guy, but he was an operations type, not a marketing type. Been in the bank a long time. And it was a 25ó

 

MP: Well, you were the first, you were the very first real marketing person on banking.

 

GB: Twenty-five ÖÖÖÖÖ. One of the early ones.

 

MP: On the West Coast, there was nobody earlier.

 

GB: That, ine, anybody can market it, in their own area ÖÖÖ..

 

MP: ÖÖÖ. Nobody any trouble.

 

GB: But the real problem was when you traveled to Chicago and you presented your card and they wanted to know whether they should accept the card or not for the purchase of your goods. And how theyíd get it authorized to do that. That was really where they scrambled all around to get an authorization system that would work on a national basis. And that took a long time to make, to get it to work right. If you remember, thatís why this, these floors were established, so they wouldnít have to check everybody out. And then somebody would whammed, you know, on the floor was fifty bucks and you could buy a tire in those

days foró

 

MP: Tires wereó

 

GB: ófor $49, and so people wouldó

 

MP: And theyíre easy to sell, ÖÖÖÖ.

 

GB: Yeah! Theyíd be buying 49-dollar tires all the time. That kinda stuff. But that was, thatís sort of the growing pains of gettin °the thing started.

 

MP: Yeah. Well, the loss, the early-day losses were teeny compared to what theyíre totally willing to accept these days.

 

GB: And everybody was worried about it the whole time.

 

MP: I know.

 

GB: Even when they were small, they were worried about it exploding in their face. Now they donít seem to pay any attention to it.

 

MP: No. But it was under, it was ?total ÖÖÖÖ.. BofA at half of 1%, which was still almost double the commercial, personal, loan rate. They were hysterical. A half of 1%! This is gonna kill us. Today, the banks are as high as 2.3% losses on credit cards and they donít sneeze. [chuckles]

 

GB: I know it. Theyíre lookiní at this high-end volume over here on this other side, enormous interest ÖÖÖÖ thatís right.

 

MP: And they still consider this a non-bank function. And non-bank functions are the source of most banksí revenues these days. Theyíre not making it on checking accounts.

 

GB: Well, theyíre not makiní it on commercial loans as much as theyíd like to.

 

MP: On commercial loans ÖÖÖÖ.

 

GB: And where they should, because their commercial-loan volumes are down.

 

MP: Everybody else is in the banking business.

 

GB: Yeah. When we showed íem how to do commercial paper, a long time ago.

 

MP: That was the end! of commercial-loan banking.

 

GB: That was really the [chuckles] the beginning of the end of heavy-duty commercial loans. You still have, youíre still there, but a big chunk went out.

 

MP: Well, the biggest customers just start issuing their own commercial paper, until there was an enormous market.

 

GB: Thatís right.

 

MP: And then the auto companies started doing their own financing.

 

GB: Financing.

 

MP: And that became a major industry. Then the insurance companies started doing mortgage lending. That does, has left very little for banks today. I donít know who else [chuckling] is gonna get in there.

 

GB: Well, there still are charge-card people all around too, besides Mastercharge and Visa, but these are so big now that I think that American Express is the one thatís got the biggest chance to have any dent, and even they donít have the chance to knock íem off, in my view.

 

MP: No. They donít.

 

GB: Theyíre too expensive ÖÖÖÖ..

 

MP: We ought to stop this thing. There we go. No, itís, so, Elmer came down to your office.

 

GB: Yeah. Elmer was in Los Angeles for some business, what I donít, I canít remember. But anyway, he came into the office, and identified the fact that they had been doing the research in the field and knew we had been doing the research in the field, assumed that weíd gotten the same kinds of results, and what are we, ya know, is there something that can come from this and should we talk about it, and would it be appropriate to have some kind of a joint meeting and see if we could go forward in a, ya know, both of us agreeing, to each other, that we couldnít do it by ourselves, but we might be able to do it together. The two banksó

 

MP: Now those, the two of you together wouldíve been almost 30% of the market.

 

GB: I would be comparable, big enough, we felt, to take on Bankamericard and take on, and put a card in the market that would be acceptable. So, we both agreed weíd go back and talk to our managements to see if our managements would be willing to have us have the meeting. And from that came the meeting youíre talking about, the next one, where the other banks came in, and where all the people came together, because each of our managements had agreed, and of course everybody was afraid of the anti-trust implica