Bonds go to the masses

In 1911, National City Bank set up an investment affiliate. It was modeled on the First Security Co. founded in 1908 by First National Bank, a blue- ribbon corporate bank which National City Bank acquired almost half a century later. The National City Company initially served as a holding company for stakes in other banks in New York, Philadelphia, Boston, Washington, Indianapolis, and Kansas City, as well as Cuba, where it had an interest in Banco de Habana. In 1916, the affiliate acquired Wall Street securities firm N.W. Halsey and Co. with branches in four cities on the U.S. East Coast and two in Europe. Over the next three years, the National City Company expanded significantly. By 1919, it employed more than 1,650 people in 31 cities. It had more than 10,000 miles of telegraph cables, including the first transcontinental wire to be used exclusively by an investment bank. In due course, the affiliate acquired the bank's own bond department, creating the foundation of a global securities firm. The investment bank developed strong sales and marketing teams, which adopted modern advertising techniques. Until then "it was considered almost unethical for bond dealers to seek business in ways approved by general merchandisers," the president of National City Company, Charles Mitchell, told trainees in 1919. Partly buoyed by the government drive to sell war bonds to the public in 1917, the National City Company began merchandising corporate bonds like any other daily household item. As Mitchell said, "we took from the experience of successful manufacturers and distributors those pages which had spelled success for them — lessons they had learned in advertising and publicity, and in industrial education." Mitchell praised the government for educating the public about investment during its campaigns to sell war bonds. "Government financing," he said, has provided a "liberal education for most people and materially benefited us." That education was partly thanks to National City Bank president Frank Vanderlip. Based on his experience in marketing Spanish-American war bonds for the Treasury, Vanderlip accepted a request by the New York Federal Reserve Bank that he should organize publicity for the first war-bond campaign in mid-1917.