The Capital Group Companies

Our founder,
Jonathan Bell Lovelace
(1895-1979)

The year was 1931, and Capital Research and Management Company — the original Capital company — was newly organized. At that time, the stock market crash of 1929 had left many investors almost penniless, and the country was still embroiled in the worst depression in American history. Widespread pessimism over the future of business hovered like a threatening black cloud. Meanwhile, more than 40% of the banks had closed and one out of every four Americans found themselves out of work.

But in California the founder of the Capital organization, Jonathan Bell Lovelace, emerged almost unscathed from the market crash and subsequent depression. During the Roaring '20s, JBL (as he came to be called within the company) spent much of his time at the investment banking/brokerage firm of E.E. MacCrone & Co. in Detroit, developing his investment research techniques and earning a reputation for achieving impressive investment results. By 1929 he could see no logical relationship between stock market prices and their underlying values.

It turns out he was right. But he had been unable to convince his associates at MacCrone that there was risk of a major downturn. So he sold his 10% interest and withdrew from the firm in the late summer of 1929, left Detroit, and took most of his personal investments out of the market and the firm well before the worst of the market losses occurred.

JBL then moved to California, where within two years he again entered the financial world. This time it was through his own business.

In 1932, a year after JBL founded Capital, trustees of a closed-end investment trust called The Investment Company of America (ICA) approached JBL to help reorganize the trust, which he had helped form in 1926 when he had been at MacCrone & Co. It was a complicated situation, but after extended discussions, JBL agreed, and the reorganized ICA began operations in December 1933 under Capital's management. In 1939 shareholders approved a change to an open-end mutual fund, and ICA went on to become one of the largest and most successful mutual funds in the world — and the flagship of American Funds.

In the beginning, the company consisted primarily of JBL, several former associates from his Detroit years and a handful of consultants. Since those early years, many more individuals and events have played major roles in shaping Capital's history. And the small company founded in 1931 has grown into a thriving global investment management complex.