Salomon Brothers & Co. was formed in January, 1910 as a partnership of three brothers (Arthur, Herbert and Percy) plus a clerk, Benjamin Levy, to continue their father's business of money brokerage. The firm was long on ambition but short on capital, and in April of that year had to merge with Martin Hutzler & Co. because the latter had a seat on the New York Stock Exchange, which Salomon Brothers could not afford. But the principal activity of the firm was issuing and trading bonds, whose importance during the early part of the century eclipsed that of equities in the raising of new capital funds. The issuers were American railroads and other corporations as well as foreign governments. The United States Government was absent from the capital markets because its expenditures were modest and it had no deficit. The firm's clients were financial institutions and trusts who were generally required to invest only in bonds. Starting first with bankers' acceptances, the firm moved into rail equipment trust certificates, tax anticipation notes, federal land bank notes, and foreign currency obligations. It became one of the first primary dealers in government paper, and in 1922 it moved its headquarters to 60 Wall Street, with branch offices in Boston, Chicago, Philadelphia, Minneapolis and Cleveland. There were numerous big bond firms with lots of capital, but none ventured as far as Salomon to the extent of its market making. Salomon always made a market in everything it sold and was the one firm where a bid for a debt instrument could be obtained. By the 1950s bond offerings were considered unsalable if Salomon would not touch them. Being outside of Wall Street's establishment, the firm broke the "capital strike" in 1935 with an offering of first mortgage bonds for Swift & Co. The boycott had been created by the issuing houses as a protest to Joseph Kennedy's tough new SEC regulations. Most public offerings were turned into private placements. Salomon went ahead anyway and earned grudging respect from the other houses. Still it needed more origination business and in 1962 it teamed up with Merrill Lynch, Lehman Brothers and Blyth & Co. to form "the Fearsome Foursome" to get more competitive bidding opportunities. In the mid-1960s it began to transfer its institutional relationships to stocks as well as bonds and became a major player in block trading. For decades the historical syndicates were considered to be absolutely sacrosanct. Once a firm was in a particular syndicate as a major, it was a major for life. Dillon Read and Kuhn Loeb were in a special bracket that excluded others who felt they were more capable. The landmark issue that broke all historical ties came in 1979 when IBM Corporation replaced its traditional lead manager, Morgan Stanley, with Salomon Brothers and Merrill Lynch. Morgan Stanley was in part responsible because of its policy not to have co-managers or to appear in tombstones unless it was first. In one stroke the IBM deal simply said that companies were free to choose their own investment bankers and not be dominated by historical circumstances. John Gutfreund is credited with laying the groundwork. During the 1960s, he would call up the major firms such as Dillon Read in the midst of a large debt offering and simply buy a major portion of the transaction. The bonds were sold and g4radually major corporations realized the tremendous placing capacity of Salomon. Barely noticed in the 1950s, Salomon was instrumental in helping to save New York City from bankruptcy in 1975 and the Chrysler Corporation in 1980. The latter's deficit exceeded $1 billion in 1979 and it had run out of all available funds. Salomon coordinated a rescue plan that included unprecedented federal loan guarantees of $1.5 billion. From 1981 until 1986, it had a stormy marriage with Phibro Corp. (née Philipp Brothers) which ended in divorce. Salomon Brothers was always a loose federation of independent traders and salesmen, cooperating more like a medieval guild than a structured corporation. In 1970 the firm moved to One New York Plaza and created the largest private trading floor in the world, commonly referred to as "the room." The Hutzler name was dropped that year when the firm reverted to its original Salomon Brothers. It opened offices in London in 1971 and Tokyo in 1980 so that it now maintains round-the-clock trading activities with a portfolio of approximately $11 billion, adhering to one of Arthur Salomon's principal tenets, to stand prepared to repurchase whatever it sold. In 1997, the firm combined with Smith Barney Inc. Read about Salomon Smith Barney, Inc.