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Echoes Dispatches From Economic History

When did Thanksgiving, once the most docile and pious of holidays, turn into the launching pad for the shopping season?

Until the mid-1970s, Black Friday had always been a notorious Wall Street episode in September 1869, when financier Jay Gould brazenly tried to corner the nation's gold supply.


John Steele Gordon

How the Dow Distorts the History of Wall Street: Echoes

about 4 years ago

On Nov. 23, 1954, the Dow Jones Industrial Average, after 25 long years, finally surpassed the high it had hit on Sept. 3, 1929. It remains, by far, the longest period between new highs on the Dow in the 115-year history of the index. And the story behind that long recovery tells us a lot about how statistics can distort our view of the past.

The day after the Dow reached its high of 381.17 in 1929, the market suddenly tumbled in the afternoon, with an unheard-of 2 million shares changing hands in the last hour of trading. For the next six weeks, the index trended downward until, on Oct. 24, it collapsed on extraordinary trading volume. A group of bankers intervened with $20 million in buy orders and stabilized the market.


Kirsten Salyer

Weekly Links: Echoes

about 4 years ago

Each week, we'll be collecting interesting economic commentary for a roundup of quick reads. Did you come across a great story or blog post that we missed? Leave a note in the comments below.

Paul Krugman on British austerity then and now


Maury Klein

How Corporations Created Our Time Zones: Echoes

about 4 years ago

At noon on Nov. 18, 1883, Americans experienced for the first time something called Standard Railway Time. It was the brainchild of a group of railroad executives who had met in Chicago the month before. In the interests of streamlining and standardizing their booming businesses, they had  divided the nation into four time zones based on the 75th, 90th, 105th and 120th meridians.

Their decision applied solely to railroad schedules, the only thing over which they had authority. But it would soon change the life of every American.


Robert E. Wright

Wall Street's Long History of Violence: Echoes

about 4 years ago

If you're fretting over the increasingly assertive "Occupy Wall Street" movement, don't -- at least not yet. The financial system has faced much worse and persevered, mostly unscathed. But violence against capitalism, and the banking industry in particular, is part of our national heritage, and could return under the right circumstances.

The biggest threat to the financial system's existence came not during the New Deal, when major players like Goldman Sachs successfully negotiated regulatory reforms with a (relatively) rational government, but rather during what could be termed the Age of Anarchism.


Philip Scranton

This Week in the Great Depression: Echoes

about 4 years ago
This Week in the Great Depression

Welcome to "This Week in the Great Depression." It's the fall of 1931, and Britain just weeks ago abandoned the gold standard. Nervous dollar holders have made a raid on U.S. bullion, with almost $450 million earmarked for shipment in less than a month.

Rumors from Berlin suggest that the Soviet Union is about to default on many millions in deutsch mark debt for equipment and materiel shipped east in the 1920s. Worse, Germany's guarantees against nonpayment are worthless, as its coffers are nearly empty. Apparently, the USSR won't transfer any funds that are due to the U.K., France and the U.S. either. Britain's Malayalam Plantations recently announced they had begun closing all their rubber estates in South India due to low prices, keeping their "valuable European staff" while dismissing local workers who had tended their 19,000-acre sites.

Echoes: Stock Ticker

On Nov. 15, 1867, Wall Street experienced an important -- arguably its most important -- technological breakthrough, as the first stock ticker went “online.”

Stock symbols, volume and price were typed into a machine and then relayed over telegraph wires to tickers, which printed the information onto thin strips of paper, called ticker tape.


It's difficult in today's world to turn the volume any higher on the importance of entrepreneurship and innovation. Virtually every organization -- from Alcoa to Al Qaeda, from Zipcar to Zenith Bank -- has made those attributes part of its strategy. Vision statements from businesses, churches, schools and NGOs often sound as though their authors were channeling Joseph Schumpeter.

Amid the paeans to Steve Jobs after his death -- the special issues of magazines, TV tributes, superficial comparisons to Edison and so on -- I'd like to call attention to another American original, now almost forgotten, who would be celebrating his 98th birthday this week: Malcolm Purcell McLean.


Regina Lee Blaszczyk

The Jobs and Wozniak of Georgian England: Echoes

about 4 years ago

With the death of Steve Jobs, and the publication of Walter Isaacson's much-hyped biography of him, everyone is talking about entrepreneurship and design.

The media describe Jobs as an innovative visionary, whose love of the clean-cut Modern look of the German Bauhaus inspired him to remake the geeky beige desktop computer into a user-friendly object of desire. Isaacson argues that by extending that design philosophy to all of Apple's products -- from the iMac to the iPod, the iPhone to the iPad -- Jobs became the most important entrepreneur in the most important industry of the early 21st century.


What do you do when you've lost your job and winter is coming? That's the dilemma now facing more than 13 million Americans who are out of work. It's also the dilemma that faced more than 10 million Americans in November 1933.

By then, the Great Depression was four years old, the nation's new president, Franklin D. Roosevelt, had been in office for seven months, and the U.S. was about to enter one of the worst winters in its history.


This week marked the 104th anniversary of the night that ultimately gave birth to the Federal Reserve.

On Nov. 2, 1907, John Pierpont Morgan assembled the presidents of several prominent trust companies in the library of his Fifth Avenue mansion. The illiquidity of their firms had caused what is known today as the Panic of 1907. Morgan forced those rich and powerful men to wait and worry, and by the next morning he had strong-armed them into an agreement that ended the crisis.


Stephen Mihm

Welcome to the New Echoes Blog: Stephen Mihm

about 4 years ago

History doesn’t repeat itself. Sometimes, though, it rhymes.

That idea animates our revamped "Echoes" blog, dedicated to the history of economics, business, finance and, above all, capitalism. Our contributors will aim to unearth parallels between past and present, highlighting how the economic crises of our own era are perhaps not as unique as we think.


the Editors

A Note to Echoes Readers

about 4 years ago

Thanks for visiting Echoes, Bloomberg View's economic history blog. We'll be on a brief break, then starting up again in early November. Please check back then.


Joseph J. Thorndike

A Trade-In for the Corporate-Income Tax: Echoes

about 4 years ago

Taxes wear out. Like a new car, they start out fresh and shiny (if lacking that new-car smell). After a few years, things start to go wrong. Eventually, as failures become more frequent and repairs less durable, the time arrives for a trade-in.

We have reached that point with the corporate-income tax. With more than 100 years under its belt, it had a pretty good run. Over the years, it raised a lot of money, regulated some unsavory business practices and helped make the tax system more progressive.


Andrew Mellon would back it. That's the recent analysis of the "Buffett Rule," a plan to reform the tax law that would require top earners, including those who make much of their money from investments, to pay the same percentage of their earnings as those in the middle class do.

The rule was suggested by Warren E. Buffett, the chief executive officer of Berkshire Hathaway Inc., this summer in an op-ed in the New York Times. "My friends and I have been coddled long enough by a billionaire-friendly Congress," the so-called Oracle of Omaha wrote. "It's time for our government to get serious about shared sacrifice." President Barack Obama has since endorsed the idea.


Joseph J. Thorndike

How a Vaccine Tax Keeps Your Kids Healthy: Echoes

about 4 years ago

In 1974, a British researcher suggested that the pertussis vaccine might cause brain damage. A flood of lawsuits followed, and the cost of the shot began to climb. So did anxiety among drugmakers. A suit against one manufacturer resulted in a judgment of $1.1 million, or more than half the total market for the vaccine.

Immunization is scary. Kids are afraid of needles, and parents are worried about autism. The New York Times described a "climate of fear about vaccines in general" that has recently arisen, one in which false alarms can quickly lead to decreased rates of use. Some politicians fear the effect mandatory vaccines have on individual freedom and social morality, as Amity Shlaes discussed in her column this week.


Republicans can't stop talking about the vaccine for human papilloma virus. Governor Rick Perry of Texas, a presidential candidate, is under fire for having issued an executive order in 2007 that allowed his health commissioner to mandate inoculation against the virus for girls entering sixth grade.

Since HPV can lead to cancer, Perry thought he was saving lives. Some critics charged he was infringing on parents' rights with his rule. One of his opponents, Representative Michele Bachmann of Minnesota, even quoted a mother who alleged her child suffered brain damage from the vaccine, suggesting the dispute was about safety. That claim has served for debunking fodder for a week now.


In 1977, Congress first gave the Federal Reserve a dual mandate to promote both “maximum employment” and “stable prices.” At the Republican presidential debate on Sept. 12, the major candidates argued that the Fed should instead focus squarely on the goal of long-run price stability.

Responding to a question about the Fed, Rick Santorum said: “make it a single charter instead of a dual charter” institution, and no candidate disagreed. Most piled on. “Its focus needs to be narrowed,” said Herman Cain. “We need to have a Fed that is working towards sound monetary policy,” said Rick Perry. “The Federal Reserve has a responsibility to preserve the value of our currency,” said Mitt Romney.


Joseph J. Thorndike

Public Won't Oppose More Stimulus, if It's Useful: Echoes

about 4 years ago

U.S. President Barack Obama might like to call it a "jobs bill," but opponents of his $447 billion recovery measure prefer a different label: stimulus.

And why wouldn't they? Over the past two years, the notion of using government spending to jump-start a recovery has been thoroughly discredited with voters, if not with most economists.


On his blog at the New York Times, Paul Krugman recently evoked the "Broken Window" parable to illustrate the merits of government spending in bad times.

Krugman contends that such spending generates economic activity that otherwise wouldn't occur, and thus creates growth. President Barack Obama essentially endorsed the same idea in the jobs plan he announced last week. CNBC's Larry Kudlow, among others, makes the contrary case, that such spending reallocates economic activity to less efficient areas, thereby slowing growth.


About Echoes

Echoes is Bloomberg View's economic history blog. It is edited by Stephen Mihm, an associate professor of history at the University of Georgia and the author, with Nouriel Roubini, of "Crisis Economics: A Crash Course in the Future of Finance," and of "A Nation of Counterfeiters: Capitalists, Con Men and the Making of the United States."

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