d to grow by pursuing its strategy of seeking new investor groups, aiming information and advertising campaigns at small investors. Merrill Lynch was the first NYSE member to incorporate (in 1959) and go public (in 1971). During the 1960s, it diversified into government securities, real estate financing and sales, and asset management and consulting.
In the 1970s, under Donald Regan (later Ronald Reagan's secretary of the treasury and chief of staff), the company introduced the patented Cash Management Account and built up its investment banking, insurance, and foreign operations.
Merrill Lynch's underwriting business expanded significantly during the 1980s. It became the global leader in offerings and advised on one of the largest mergers, Kohlberg Kravis Roberts's leveraged buyout of RJR Nabisco. After the 1987 crash, Merrill Lynch retrenched and reorganized, eliminating its less profitable segments (merchant banking, real estate, and its mortgage insurance business) and closing some overseas offices. In addition to increasing the proportion of earnings from management and other fees and reducing dependence on commissions, Merrill Lynch moved to reduce its junk bond holdings and curtail its granting of "bridge" loans to ailing companies. To reduce staff turnover (approximately 14 percent of its professional staff leaves annually), the company introduced new training and pay procedures in 1990 that reward long service and reduce dependency by inexperienced staff members on commission earnings.
In 1990 the stock market rebounded, followed in 1991 and 1992 by a recovery in merchant and investment banking, with a record number of new issues worldwide. Merrill Lynch received permission to buy a seat on the Seoul exchange in 1991. In 1994 and 1995 Merrill Lynch was hit with a dozen lawsuits related to the bankruptcy of Orange County because it had sold the county the derivatives whose loss in value had precipitated its col...