Echoes Dispatches From Economic History
John Steele Gordon
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.READ MORE
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.READ MORE
Robert E. Wright
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.READ MORE
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.READ MORE
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.READ MORE
Peter A. Coclanis
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.READ MORE
Regina Lee Blaszczyk
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.READ MORE
Jason Scott Smith
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.READ MORE
Gregory D.L. Morris
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.READ MORE
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.READ MORE
Joseph J. Thorndike
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.READ MORE
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.READ MORE
Joseph J. Thorndike
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.READ MORE
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.READ MORE
John B. Taylor
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.READ MORE
Joseph J. Thorndike
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.READ MORE
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.READ MORE
John B. Taylor
I was in a hotel room in Tokyo on Sept. 11, 2001, preparing for negotiations at the Japanese finance ministry. I had just been sworn in as U.S. Treasury Under Secretary for International Affairs. We immediately cancelled our meetings and were soon on a C-17 military jet flying back to the U.S. To get back faster we refueled in midair over Alaska that night. The pilot invited me to watch the procedure from the cockpit; it was the most impressive combination of advanced technology, hand-eye coordination, precision teamwork and raw nerve that I had ever observed.
Our pilot approached the tanker jet from underneath, using a specially designed joystick with a monitoring device consisting of rows of lights that turned red or green depending on whether our plane was coming up at the right position relative to the tanker. These two huge jets were zooming through the dark at something like 500 miles per hour, so close that I could see the faces of the guys in the tanker as they lowered the fuel hose. After a while the tank registered full, and we headed home across Canada. As we flew into U.S. airspace there were no commercial airliners to be seen. The plane’s radar screen was nearly blank.READ MORE