H.M. Payson & Co.

International Directory of Company Histories, Volume 69 (1998) by Ed Dinger

H.M. Payson & Co.

One Portland Square Portland, Maine 04101 U.S.A. Telephone: (207) 772-2761 Web site: http://www.hmpayson.com

Private Company Incorporated: 1854 NAIC: 523100 Securities and Commodity Contracts Intermediation and Brokerage

H.M. Payson & Co., based in Portland, Maine, is one of the oldest independent investment firms in the United States. Primarily providing investment advice and trust management services, Payson has a well-earned reputation for honesty and prudence. Although small, the firm maintains its own research staff and as a result has avoided the herd mentality of Wall Street and avoided such pitfalls as the technology bubble of the late 1990s. Payson has more than $1.6 billion in assets under management and serves more than 1,100 individuals, trusts, endowments, and foundations.

Corporate Beginnings: Mid-1800s

The man behind the founding of H.M. Payson was Henry Martyn Payson, born in Portland, Maine, in 1821, the son of a minister who moved his family to the area after graduating from Harvard. The life of the younger Payson was beset with tragedy. When he was just six years old his father died, followed 20 years later by even worse misfortune. He married and had a son, but the child was sickly and died when he was only six months old. Payson's grief was then deepened by the subsequent death of his wife, who had never recovered from the loss of her child. At the time, the hardware store he co-owned failed, forcing him into bankruptcy. The year was 1849 and across the country in California gold had been discovered, prompting a wide swath of society to make their way to the goldfields of northern California in hopes of realizing their fortune. With no family or business to keep him in New Hampshire, Payson became part of the gold rush that made its way to the nation's untamed West Coast. He traveled by ship, arriving in San Francisco in January 1850. He soon learned that prospecting for gold was backbreaking work that made few people wealthy. He shoveled dirt into a sluice and screened for minute particles of gold during every daylight hour, yet he only made enough money to sustain himself. After four years of witnessing folly and suffering misery, he returned to Portland, but during his wilderness years he learned something of the way in which financial agents worked. He also brought back a hard-earned knowledge about the foolishness of get-rich-quick schemes, and an appreciation for a cautious approach to doing business. Perhaps of more importance, he returned to a growing city, whose population in the past 20 years had doubled to 25,000. Portland had eight banks, a thriving timber trade, and was also involved in sugar refining and rail stock manufacturing. Moreover, Maine's economy in general was improving at a steady clip, spurred by railroad construction that linked the once isolated state to Canada and the larger U.S. cities to the south, as did the Magnetic Telegraph Company, whose lines provided communication direct to Boston and beyond.

In 1854, to take advantage of the increased need for financial middlemen to continue Maine's development, Payson set himself as a stock and bond broker and a dealer in paper money, this at a time when state banks printed their own currency to supplement the limited amount of gold and silver coins that the federal government was able to mint. Nevertheless, a great deal of Payson's business for the first 20 years involved transactions in gold, as he cashed drafts and acceptances from California and London institutions.

Involvement in Water Bonds Dating to 1860s

Payson first became involved in water bonds when the Portland Water Company was formed in 1866, the same year that a great fire destroyed more than 200 acres in the heart of Portland, including Payson's own offices. It was a major blow to the local economy, given that an estimated $10 million in property was destroyed and only a third was insured. Payson helped to buoy the city's confidence by immediately making a public declaration that he would rebuild his office on the old site and vowed to be back in business there within six months. In many respects, a reliable water supply available to combat fires was of even greater importance during this period than healthy drinking water. New York City, for example, was in great need of unpolluted water, but it was only due to the threat of large-scale fires that the leading American city saw fit to build a modern water works.

In Portland the idea to tap into nearby Sebago Lake was first suggested in 1854, due to a drought that led to a short supply of water, but it was not until February 1866 that the Portland Water Company was incorporated. The fire that devastated the city on July 4 helped to spur the actual launch of the company. Water from Sebago finally began serving Portland in November 1869. Unfortunately, the company was poorly funded and managed. The main had not been properly laid, significantly hampering the flow of water. After the company twice succumbed to bankruptcy, Payson in the early 1870s was induced to join the board and help place the company on a solid financial footing. He was instrumental in securing the funds necessary to improve the infrastructure and turn Portland Water into a profitable business. It also marked Payson's entry into the water business, which became a main interest of the company for several decades.