Kidder Peabody & Co. history

A private Boston banking firm founded by Henry Kidder, Francis Peabody, and Oliver Peabody in 1865. Previously, the firm had been known as Thayer & Co., founded by John Eliot Thayer in 1824. The firm became one of the better-known private banks and investment banks in the country by the 1890s, performing traditional banking and securities related services for corporate clients.

Kidder Peabody also became an adviser and major shareholder in the Santa Fe Railroad and by the turn of the 20th century became allied with J. P. Morgan & Co. Originally the firm was the banker to what would become the AMERICAN TELEPHONE AND TELEGRAPH CO. but had to delegate some of the business to Morgan. That alliance led to Kidder being named one of the members of the “money trust” by the Pujo Committee examining American banking in 1912.

The firm’s long alliance with Morgan also led to its rescue in 1930 after the firm failed. After being reorganized, it again assumed a premier position among investment banks with a stronger presence on Wall Street. It continued to be an ally of Morgan and extended its activities into MERGERS and acquisitions and trading as well. After the Glass-Steagall Act was passed, the firm remained on the top of Wall Street’s leading investment banks and was continually ranked among the top 10 underwriters until the 1960s. It also continued a strong presence in mergers and acquisitions and developed its investment advisory services, which had begun in the 1920s.

When investment banks began to expand in the 1960s, the firm fell behind. In the mid-1970s, it acquired the old firm of CLARK DODGE & CO., mostly for its investment advisory services, and merged them with its own. For the next 20 years, Kidder remained a medium-size firm slightly outside the top rung of Wall Street firms.

A lack of capital caused the firm to be sold to the GENERAL ELECTRIC CO. in 1985, and the conglomerate maintained control until 1995, when Kidder was sold to Paine Webber. A scandal in the Treasury bond department caused large losses for the firm and its parent, and GE finally divested itself of the investment banking firm rather than pour more money into it. Paine Webber eventually closed the firm after repercussions from the scandal continued to plague Kidder, and its name disappeared from Wall Street, 170 years after the firm was originally started in Boston. Along with DREXEL BURNHAM LAMBERT, it was one of the few major Wall Street houses to disappear in the 1990s.

See also INVESTMENT BANKING.

Further reading

• Carosso, Vincent. More Than a Century of Investment Banking: The Kidder Peabody & Co. Story. New York: McGraw-Hill, 1979. 
• Geisst, Charles R. The Last Partnerships: Inside the Great Wall Street Money Dynasties. New York: McGraw-Hill, 2001.