American Express backed a slip of paper with its own money

In the 1880s an American traveling in Europe carried a letter of credit — a personal introduction from a home bank asking a foreign correspondent to advance cash against it. It worked only in cities with an existing correspondent relationship, and required a local banker to personally trust an unfamiliar signature and an unfamiliar document. Even American Express president James C. Fargo was refused cash on his own letter of credit in a small European town, despite running one of America's largest companies.

Carrying cash instead solved the trust problem but created a worse one: theft, robbery, and loss meant total, irrecoverable ruin, a growing danger for the era's expanding population of immigrants and travelers moving money across borders. Neither option let an ordinary merchant anywhere safely accept payment from a traveler they had never met.

Marcellus Flemming Berry designed a cheque signed once by the purchaser at time of sale and countersigned in front of the merchant at time of use, so anyone could check the two signatures matched with their own eyes — backed by American Express's guarantee to refund any cheque lost or stolen, and to honor genuine signatures even against fraud attempts, a cost American Express absorbed itself.

Designed a cheque signed at purchase and countersigned in front of the merchant, making trust a mechanical signature match, with Amex absorbing fraud and theft risk.

Double-signature check made verification mechanical, not subjective.

Amex's refund guarantee removed traveler's downside from theft or loss.

Amex absorbing fraud risk made merchants accept cheques from strangers.

Credible guarantee turned a trust problem into a balance-sheet problem.

When strangers must trust each other, don't make them more trusting; put your institution's guarantee between them so they only trust your balance sheet.

Amex cheques became internationally accepted currency by the 1890s, built on that guarantee — cementing Amex as a trusted global brand. The signature-match-plus-full-refund design became the industry template for traveler's cheques for the next century, and cemented American Express as a brand synonymous with guaranteed trust rather than any single service.