Term Paper on "Charles Merrill: Visionary, Leader, and Wall Street"

Quoted Instructions for "Charles Merrill: Visionary, Leader, and Wall Street" Assignment:

This is a case assignment. Thanks.

MGT 506 Strategic Leadership

Module 1

Background Materials

To say that definitions of leadership, in management literature, are abundant is to grossly understate. Each theory has merit in terms of elucidating some nuance in the CEO's character or some aspect of the CEO's role. To be sure, the CEO directs others, sets the tone, creates a vision, influences task-related activities, and influences behavior, and more . However, to get to the bottom of things, leadership, in terms of management, is founded on the concept of "power over other". This has a harsh connotation, to be sure. But that need not be the case.

Leadership theory, for the CEO expresses the ingredients of how the leader helps others perform to their maximum potential in reaching a vision which the CEO sets for his organization. But isn't leadership really as much about management as it is about vision? Traditionally, theories of leadership tend, in general, to focus on effective management rather than leadership. It should be no surprise to anyone, then, that we discussed this distinction in the preliminary module of the course before coming to leadership theory in our first substantive course module. We began our general discussion on the issue of "vision". Modern leadership theories, then, are beginning to assess these more intangible issues of leadership, rather than simply looking at the CEO as the most influential manager. The CEO's impact on the organization, its direction, its goals, seems to characterize theories of leadership today more than in the past.

Required Materials:

Blair, G. (1997). Practical Aspects of Leadership. Retrieved April 14, 2004, from http://www.see.ed.ac.uk/~gerard/MENG/ME96/index.html?http://oldeee.see.ed.ac.uk/~gerard/MENG/ME96/index.html

Cohen, W. (2003). Got Vision? The Stuff of Heroes Newsletter. 12 (1) Retrieved April 14, 2004, from http://www.stuffofheroes.com/Vol.%201,%20No.%2012.htm

Kotelnikov, V.(2002). Leadership Vs. Management. The Business E-Coach. Retrieved April 14, 2004 from http://www.1000ventures.com/business_guide/crosscuttings/leadership_vs_mgmt.html

McNamara, C. (1999). New paradigm in Management, from http://www.mapnp.org/library/mgmnt/paradigm.htm

McNamara, C. (1999). Suggested Competencies for Effective Leadership in Organizations. Retrieved April 14, 2004, from http://www.mapnp.org/library/ldr_dev/cmptncy/cmptncy.htm#anchor4293089819

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Module 1

Case Assignment- 3 pages needed

For the case assignment, I want you to look at the career of Charles Merrill, who founded the brokerage firm of Merrill Lynch after the Great Depression of 1929 in the U.S. Starting from nothing Merrill not only founded a successful firm, but changed an industry. First, read the article

Selling Stock to the Masses

Click on the title to take you directly to the ProQuest Library. If you have difficulty and need to find the article in ProQuest yourself, the full citation is:

Vickers, Marcia (2004). "Selling Stocks to the Masses". Business Week. April 19 (3879). p 22.

Abstract (Document Summary)

For the decade following the 1929 stock market crash, Charles E. Merrill burnished a revolutionary idea of bringing Wall Street to Main Street by democratizing the stock market. In 1940, he gave his vision shape by creating the brokerage firm now known as Merrill Lynch & Co. Merrill was one of the first "wire houses," with branches across the nation linked by telegraph. When Merrill died in 1956, Merrill Lynch was the largest brokerage in the US, with nearly a half-million clients.

Full Text (570 words)

Copyright 2004 The McGraw-Hill Companies, Inc.

AFTER THE 1929 stock market crash, mistrust of financial markets soared. Millions of ordinary investors had lost their jobs, fortunes, or both. But as their dreams turned to dust, Charles E. Merrill was just starting to pursue his. Over the next decade he burnished a revolutionary idea: Bring Wall Street to Main Street by democratizing the market. In 1940, he gave his vision shape by creating the brokerage firm now known as Merrill Lynch & Co.

Merrill believed passionately that the middle class should be able to profit from quality stocks. Until then, Wall Street catered to the ultra-rich. A veteran of the bad old pre-Securities & Exchange Commission days, when the stock market was rife with promoters and con artists, he instilled a strong code of ethics at the firm, seeking a level playing field for average investors. He insisted on keeping research honest by separating it from banking and paying brokers a salary rather than commissions alone. One wonders what he would have made of today's mutual-fund and analyst scandals.

Short in stature and bull-like in tenacity, Merrill was an unlikely revolutionary. Called "Good-Time *****" by friends with whom he loved to party, the charming Southerner had humble roots. His father, a country doctor, ran a pharmacy where ***** worked as a boy, stocking shelves and serving customers. After moving to New York in 1909, he took a job at George H. Burr & Co., a small bond-sales firm. He excelled at the job but soon discovered he was often pushing the bonds of companies teetering on bankruptcy. Occasionally, he had to tell customers they'd lost their shirts -- a task he hated.

Merrill left Burr in disgust. Within two years he had started a small partnership with former roommate and soda-fountain-equipment salesman Edmund C. Lynch. They underwrote and sold securities for mass retailers such as grocer Safeway Inc. and McCrory Stores. The firm's motto: "Investigate, then invest." By 1928, Merrill was telling anyone within earshot that stocks were overheated. Many thought he was nuts. But he cashed out of the firm and the market in the spring of 1929, well before the October crash.

By then, he had a controlling interest in Safeway and began running it. He learned to make big profits by selling discounted, high-volume products. The knowhow served him well when he leaped back into the brokerage business in 1940. Merrill was one of the first "wire houses," with branches across the nation linked by telegraph. The firm pumped out "How to Invest" ads and articles. And from gleaming Airstream trailers, it ran free seminars preaching lifetime investing.

When ***** Merrill died in 1956, Merrill Lynch was the largest brokerage in the U.S., with nearly a half-million clients -- and it's still the biggest. Today, the firm focuses more on affluent clients and earns huge investment-banking revenues.

Other financial giants, such as J. Pierpont Morgan and Warren E. Buffett, loom large over the past century. But Merrill left a unique legacy. Democratization of the stock market -- an idea he conceived and gave form -- was a radical trend that retains its power today. He paved the way for the investor class. In 1940, just 16% of Americans invested in stocks. Now over 50% do -- thanks to the explosion of 401(k) plans, the wide availability of mutual funds, lower trading costs, and accessible research. Thanks, also, to Good Time *****.

Credit: Marcia Vickers

In a 3 page paper, using the background materials (please reference at least 1 background source and the article above in your response) address the following:

In what way(s) did Charles Merrill influence his company's strategy and the entire securities industry by his leadership? What type of leader do you think he was? Would you call him a manager or a leader? Why?

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