Joe Ricketts in his St. Bernard’s
Academy yearbook photo.
worked again. When I knew him, he spent
the day in his rocker, looking out the
window.
From then on, my mother was very,
very conscious of the social standing her
family had lost, and she was bound and
determined to get back to where they had
been. When she left the house, she was
always dressed properly—no one but us
kids ever saw her dressed for houseclean-
ing. In church, we all had to be neat and
clean, my younger brothers and me in our
sport coats and freshly ironed shirts. My
parents made it very clear to me: If you
wanted what she called a nice life, you
had to make it yourself. You had to work
hard every day, and when you got what
you were after, you had to keep working
hard because you could lose it all. And so,
I understood early on that I had to suc-
ceed on my own. Looking back, I see that
I made that success my life’s mission. I
was fortunate to live in the United States,
where we had free enterprise.
The opportunity came in the 1970s
when the government deregulated stock
commissions. For over 180 years, the com-
missions received by stockbrokers had
been fixed by the predecessor of the New
York Stock Exchange. The buyer and seller
were not allowed to negotiate the fee. That
might have made sense when there were
few trades that happened slowly, but with
the rise of mutual funds and other changes
that increased and sped up trading, these
fixed commissions came to the attention
of regulators. Prominent economists sug-
gested that reduced commissions would
increase trading and stimulate the econ-
omy. The government made the decision
to phase out the fixed commissions, with
the big change coming in May 1975.
I was a stockbroker in those days, work-
ing for Dean Witter. Most brokers I knew
believed that the rule changes wouldn’t
hurt us as long as we all kept charging
the same commissions we had always
charged. That didn’t make sense to me. I
had observed small businesses through-
out the region, and it seemed there was
always someone willing to lower prices as
a way to win customers. One of my col-
leagues, Bob Perelman, had owned and
run a grocery store, and he said that when
he introduced lower-cost products, what
we called “plain label” canned goods, the
name brands lost customers to the gener-
ics. Now, Bob and I were coming to the
same thought: Why should we stay at a
full-service broker and lose the customers
who want a lower price? Why not become
the new brokers who get to welcome those
customers?
How exactly would we do it? What
steps would it take? We had no idea. We
were so unprepared, so inexperienced,
so just plain stupid that it is hard for me
now to believe it. To begin with, we didn’t
know what would happen after a customer
called us and requested a trade. Somehow,
the buyer’s money got to the seller, and
the seller’s stock certificate (a physical
16 FINANCIAL HISTORY | Fall 2019 | www.MoAF.org
piece of paper with monetary value) got to
the buyer, and records of this trade were
provided to the buyer, the seller, the stock
exchange and the government. That was
called clearing. We didn’t know the first
thing about it.
“We knew bubkes,” Bob would say later.
“We knew bull. I knew nothing, and Joe
knew less.”
We asked the Omaha National Bank
Trust Department to do our clearing for
us, but they refused. They didn’t know
what clearing was, either. By chance, they
referred us to a small storefront firm
across the street that underwrote bonds
and also had the licenses you needed to
sell stocks. Their bond business was doing
poorly, so we offered to buy them out.
Cliff Rahel, who ran the small firm,
didn’t want to sell, but he said he might
be willing to partner with us. He liked the
idea that we would bring new energy and,
especially, new money into his company.
In those days, it was much harder to come
by venture capital than it is today. At first,
he suggested that he would put in $25,000
to recapitalize, and that Bob and I together
could put in another $25,000, making him
the senior partner and Bob and me the
junior ones.
We said no. We appreciated that he
had knowledge, licenses and connections
that we needed, but he couldn’t be above
us. “We’re going to be equal partners,” we
told him. “If you can’t do an equal partner
arrangement, we’re not interested.”