The Thayer firm never had more than two partners, and its office staff never numbered more than a half-dozen clerks. John Thayer continued as senior partner until his death on September 29, 1857, at which time Nathaniel became head of the firm. By then his share of the business and profits had increased to 50 percent.
At this time the firm was located in the Union Bank Building at 40 State Street. Also occupying quarters in that three-story corner structure were five banks, four insurance companies, nine "loan and fund associations", several private banking and brokerage houses, as well as the Boston Stock and Exchange Board, the latter having moved there from its old location in March 1853.
Contemporary directories, which previously had classified J. E. Thayer & Brother as brokers, increasingly listed the firm as a banking house. The change in classification appears to have been meaningless. No significant alterations occurred in its functions. The firm continued to engage in a wide variety of banking and brokerage activities, much as it had done when the elder Thayer was in charge.
Like many other Atlantic seaboard banking and brokerage houses at the time, J. E. Thayer & Brother was a diversified, unspecialized house. Its most important functions included carrying investment accounts for individuals, acting as brokers for individuals, estates, and institutions (The Massachusetts Hospital Life Insurance Company was a Thayer client), and bidding for state and federal bonds. The firm also invested and traded in Massachusetts real estate and Western lands as well as in new and old securities of banks, insurance companies, and railroads. Dealing in foreign exchange was still one of its principal activities. During the early 1840s the firm was the largest seller of exchange in Boston, competing vigorously with the American representative of London's Baring Brothers & Co.
Although the sum total of Thayer & Brother's activities continued essentially unchanged, after 1840 the firm and its partners personally became increasingly involved in railroad affairs. The elder Thayer's originally hesitant interest and small investments in railroad properties grew substantially after his brother Nathaniel joined the firm. In 1846 the firm, together with John Murray Forbes, a thirty-three year old wealthy former China trader, helped launch the private corporation that bought the state-owned Michigan Central Railroad and made itself the financial representative of the new company.
Nathaniel Thayer was an even more active railroad promoter and financier. Not only did he invest his own money in these enterprises, but it was largely through his efforts that the firm became an important distributor of railroad securities and, on occasion, also accepted the task of serving as transfer agent of the roads it helped finance. Unlike the elder Thayer, who appears to have served only on the directorate of two roads the Eastern and the Hannibal and St. Joseph-Nathaniel was on the board of at least six by the time he retired from the banking and brokerage business.
Financing railroads widened Thayer & Brother's business to include some important investment banking functions. To protect its investments and those of its clients, the firm assumed an increasing responsibility toward the companies it financed. In addition to accepting railroad directorships, the partners, as individuals, also served as the companies' financial advisers and, through the firm, provided them with various other banking facilities.
Thayer & Brother's growing importance as railroad promoters and bankers occurred at a time when the firm was becoming increasingly active in other business and financial areas as well. During the 1850s and early 1860s the firm developed strong ties with several banks in Boston and with others elsewhere in New England, either through a personal investment of a partner or by securing representation on their directorates. Both partners took an active role in organizing the Boston Five Cents Savings Bank in 1854. Meanwhile the firm continued its earlier correspondent relationship with several banking and brokerage houses in New York City. It developed close ties with McCalmont & Co. of London, a competitor of the Barings in the sale of American securities in England. In the late 1850s McCalmont became the Thayer firm's chief English correspondent in exchange and securities transactions. Association with this house gave Thayer & Brother improved access to the London capital market just at the time when Nathaniel Thayer himself and his house became increasingly occupied with railroad finance.
As a railroad financier, Nathaniel Thayer operated on two levels. He was a partner and then head of an important, well connected house that dealt extensively in railroad securities and provided the companies that issued them with a wide variety of advisory and banking services. At the same time, he was also a heavy individual investor in many of these enterprises. The two roles remained largely separate, with the latter becoming increasingly more important, especially after his brother's death in 1857.
Nathaniel Thayer's railroad interests expanded greatly during the Civil War. He invested in more lines, not only in New England, but in New York, Pennsylvania, and in several Middle Western states, including Michigan, Missouri, Illinois, and Ohio. The amounts he invested also grew substantially. Most of his purchases, which included both stocks and bonds, were made in 1863 or later. Some of his largest railroad holdings at the beginning of 1865 were in securities of the Chicago, Burlington & Quincy ($540,000), Pittsburgh, Fort Wayne & Chicago ($380,000), and Hannibal and St. Joseph ($200,000). Except for his investments in two middle Atlantic carriers (the Philadelphia & Reading [$365,000] and the Philadelphia, Wilmington, & Baltimore [$380,000]), Thayer's principal holdings were in western roads. His growing interest in these properties stemmed in no small part from his close association with John Murray Forbes.
Besides his railroad holdings, Thayer also was interested in several land companies, mines, and textile firms. In 1864 he added to his investments by buying into the Chicago Rolling Mill Company, the first industrial securities he purchased other than textile issues. That same year he also bought into the American Telegraph Company, which subsequently was made part of the Western Union system. Thayer's growing personal investments, which amounted to some $3 million in 1865, led him to relinquish his other business responsibilities and devote himself entirely to managing his holdings and participating more actively in the affairs of the companies in which he invested, particularly railroads.
Thayer's decision to become an active capitalist on his own account in the Forbes tradition necessitated a reorganization of his banking and brokerage business. On April 1, 1865, Thayer left his State Street office and moved to 62 Exchange Place, where he continued to operate the firm as a trust estate. At the time of his death, on March 7, 1883, he was worth some $16 million. "How wonderfully the property rolled up, since the trial-balance we took in 1857", Francis H. Peabody wrote his brother Oliver. Both men certainly were in a position to appreciate the spectacular growth of Thayer's fortune, each having served as a clerk in J. E. Thayer & Brother for almost twenty years from the mid-1840s until 1865, when the firm was reorganized and a new one, Kidder, Peabody & Co., was established to take over the "exchange and stock business" of the old one.
At the time of the reorganization, J. E. Thayer & Brother was one of Boston's leading private banking and brokerage houses, well-known and respected in American and English financial circles. Brown, Shipley & Co. and the London House of Brown Brothers & Co., at the time one of America's most prestigious and influential international banking partnerships, considered the Thayer firm as "possessed of good means". The firm's resources, the knowledge, experience, reputation, and connections of its partners, attracted to Thayer & Brother a distinguished clientele of prominent and wealthy Bostonians who depended upon the firm for investment advice and services. Business executives, particularly railroad officials, also turned to Thayer & Brother for the capital they needed to improve and expand their properties. The firm's banking experience, traditions, and business practices, as well as many of its clients, passed to Kidder, Peabody & Co.
