审计学 参考文献 E F Hutton CASH Case.pdfVIP

CASE 2.8 E.F. HUTTON COMPANY, INC. Edward F Hutton was born into a poor family in New York City in 1876. Fatherless at the age of ten and lacking a high school education, Hutton drifted from one job to another in New York City’s financial district until his mid- twenties. When Hutton was twenty-seven, his personal fortunes took a turn for the better after he married the daughter of a well-to-do broker. In 1904, with the financial backing of his father-in-law, Hutton founded a small brokerage firm, E.F. Hutton Company, Inc. Ever the opportunist, Hutton recognized the growth po- tential for his industry in California and opened a San Francisco office of his firm in 1905. E.F. Hutton Co. was the first brokerage with operations on both coasts and the first to have a private telegraph wire connecting New York City and San Francisco. With this communications link, Hutton’s firm had the ability to com- plete bi-coastal securities transactions in a matter of three minutes. The devastating San Francisco earthquake of 1906 contributed heavily to the early financial success of E.F. Hutton Co. Hutton’s direct telegraph line to New York City was one of the few, possibly the only, communication linkages to the East Coast immediately following the 1906 quake. Because no other Wall Street brokerage firms were aware of the earthquake for several hours, the Hutton firm was able to use that short period of time to pile up large trading profits for itself and its customers. Such ingenuity was cultivated and rewarded at E.F. Hutton Co. over its entire existence. Top management was disdainful of bureaucratic policies, centralized decision making, and organizational charts, all of which they believed stifled employee creativity. Instead, Hutton employees were encouraged to exercise thei