Finance History | 120 Montgomery Street — May Day on the Twenty-Fourth Floor

People treat Charles Schwab as a Texas campus that always ran a zero-commission app.

The first discount book sat on Montgomery Street.

In April 1971 the firm was incorporated in California as First Commander Corporation, a subsidiary set up to publish an investment newsletter and take brokerage orders. Charles R. Schwab and partners bought it out the same year. The name became Charles Schwab and Co. in 1973.

The change that made the firm matter arrived from Washington.

On 1 May 1975 the Securities and Exchange Commission ended fixed brokerage commissions. The date is still called May Day on trading desks.

The day before, Schwab came in early to a small office on the twenty-fourth floor at 120 Montgomery Street. The New York market opened three hours ahead. He had little capital, a young family in a Sausalito apartment, and a bet that ordinary investors would pay less than the old NYSE schedule if someone would take the order.

The first branch outside San Francisco opened in Sacramento. A Los Angeles office followed. First-year discount sales reached $1.3 million.

Bank of America bought the firm in 1983 and sold it back in 1987. Headquarters later sat at 211 Main Street, then moved to Westlake, Texas.

The mechanism was simple. When the commission cartel broke, a West Coast office that would take a small order at a posted price took the flow the wire houses did not want.

Photo: 100 Montgomery Street, the Equitable Building that shares the same block, via Wikimedia Commons.