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Echoes Dispatches From Economic History


You’ve got to hand it to Lucy van Pelt. She called it as she saw it. “Look, Charlie, let’s face it,” she barked in “A Charlie Brown Christmas.” “We all know that Christmas is a big commercial racket. It’s run by a big eastern syndicate, you know.”

As we conclude yet another season of that commercial racket, we are tempted to think that Christmas had once been a pure holiday, full of wonder and free of capitalistic corruption. Yet there is little evidence that such a day ever existed -- and certainly not in the U.S. In fact, the American Christmas ascended to its central place on the national calendar as a result of an intense marriage between sentiment and commerce, an example of healthy, if uneasy, codependency.

Great Blizzard of 1888

In this age of extreme weather, blizzards seem more and more frequent, with increasing costs to the U.S. economy.

There is no shortage of smart solutions to minimize the impact. Sometimes, however, the expense of beating the weather can exceed the benefits, as the backers of district steam heat in New York City found out more than a century ago.

Post Office

As Christmas approached in 1966, Chicago’s banks gave criminals the best gift of all: free credit cards.

They didn’t do this intentionally, of course, but that holiday season the city’s banks put thousands of credit cards into criminal hands, with disastrous consequences. Although embarrassing and costly, the Chicago credit card fiasco did have an upside: It eventually led to consumer protections that are still with us today.


Philip Scranton

Christmas in Crisis

about 3 years ago
King George V

Retailers rightly see Christmas shopping as the crowning moment of a year’s consumption. In December 1932, they were understandably nervous, all across the capitalist world. After a tough year in commerce, a boost in sales would be eagerly welcomed.

F.W. Woolworth store

By all accounts, dollar stores are doing quite well. Reports for the third quarter of 2012 show that the largest of them -- Family Dollar Stores Inc. (FDO), Dollar General Corp. (DG) and Dollar Tree Inc. (DLTR) -- are all enjoying booming sales.

Such one-price stores have been popular since the 19th century, offering an eclectic and ever-changing inventory at steep discounts. They have provided an efficient way for manufacturers and distributors to dispose of goods that are otherwise difficult to sell. And they have brought an array of consumer goods within reach of even the most cash-strapped Americans.


Kirsten Salyer

Economic History Roundup

about 3 years ago
Weekly Links

The Texas Tribune on the "illegals" in the 1830s
Bloomberg Businessweek on how the bar code took over the world
Federal Reserve Bank of St. Louis on lessons from the Fed's first 100 years
Federal Reserve Bank of Cleveland on the panic of 1907
Barry Ritholtz on the average daily change of the S&P 500 in December over the years
Hagley Museum and Library on the Pennsylvania Railroad
International Business Times on the history of failed doomsday prophecies
History News Network on the myth of the skyscraper index

Read more from Echoes online.

Federal Reserve Board

On Dec. 26, 1912, Representative Carter Glass visited New Jersey Governor Woodrow Wilson at his home in Princeton. The snows were piled high, and Wilson, the president-elect, was in bed with a cold.

Although he had canceled other appointments, Wilson insisted on seeing Glass -- who, he knew, was bringing a legislative proposal for a new system of coordinating bank reserves. Then as now, the U.S. had recently experienced a financial panic, and many argued that the monetary system was largely to blame.


Edward Tenner

Joseph Woodland’s Lessons for Inventors

about 3 years ago

The New York Times rarely honors inventors with a front-page obituary. But it gave one to N. Joseph Woodland, who received the original patent on bar coding in 1952 for the principle he had developed with his college classmate Bernard Silver.

Woodland’s epiphany came as he sat on a beach, running his fingers through the sand, contemplating ways to encode data about products. It struck him that he could adopt Morse code, which he had learned as a Boy Scout, visually -- in a series of lines of varying width that could be read with a scanner.


Philip Scranton

Nomads of the Depression

about 3 years ago
Depression Refugees

Millions of Americans lost their homes in the aftermath of the 1929 stock-market crash. The struggles of this army of the displaced created unique social challenges for a financially fraught government and revealed the impact of the deepening economic crisis on the U.S. worker and his family.

"Every group in society is represented in their ranks, from the college graduate to the child who has never seen the inside of a schoolhouse," Newton Baker, the chairman of the Welfare and Relief Organization, wrote in 1932. "We think of the nomads of the desert -- now we have the nomads of the Depression."


Stuart Banner

The First Time Tech Ruined the Music Business

about 3 years ago
Music Business

The music business was in turmoil at the turn of the century. Technological innovation had made songs much easier to copy, and established artists foresaw their sales plummeting.

The companies that had once dominated the industry were rapidly losing ground to upstarts who produced new devices for playing music. The established companies urged Congress to tighten up the law to prohibit copying, while the innovators argued that any such change would only harm consumers.


Saul Steinberg, one of the high-flying corporate raiders of the postwar U.S., who died last week, led the way for a generation of aggressive financiers. He was from the start a canny investor with seemingly unlimited reserves of adrenaline.

And before the giants of private equity popularized leveraged buyouts in the public imagination, there was Saul Philip Steinberg: archetype.

Operation Twist

Anyone who has been following Federal Reserve Chairman Ben S. Bernanke’s latest foray into unconventional monetary policy, nicknamed Operation Twist, may think the Fed is up to something new.

It isn’t, really: Operation Twist is a modern cover of an early 1960s classic by the same name, a policy initiated during John F. Kennedy’s administration and dubbed “Twist” after Chubby Checker’s inescapable 1960s dance craze.


Philip Scranton

Working on the Railroad

about 3 years ago
Steam Engine

On Dec. 4, 1932, the Wisconsin Central Railway declared bankruptcy. Despite a $5 million emergency advance from the federal Reconstruction Finance Corporation, the company was poised to default on $44 million in bonds.

It was the ninth railroad to seek reorganization since 1929, and its troubles were symptomatic of a once-mighty industry that had failed to adapt to a changing economy, and now faced a crisis as the Great Depression deepened.


Kenneth Lipartito

When the Army Invaded Montgomery Ward

about 3 years ago
Sewell Avery

Many corporate executives have defied the government. How many have been willing to be carried from their offices by soldiers for doing it?

Sewell Avery was. In 1944, Avery, the head of retail giant Montgomery Ward, was ordered by President Franklin D. Roosevelt to settle a strike with his workers. When he refused, the government took over his company. In an iconic photo of the era, two soldiers hold Avery in a sitting position, his arms crossed, a look of insubordination on his face, as they remove him from the building.


Kirsten Salyer

Economic History Roundup

about 3 years ago
Weekly Links

The Atlantic on the biggest bank bailouts in history
The Public Domain Review on commentator Will Rogers's message to bankers (audio)
Real Time Economics on the slow growth in disposable income since the recession
History News Network on the hollowing out of the U.S.
National Review Online on how history shows higher taxes don't mean higher revenue
Owen Zidar on 50 years of federal income tax changes
Wonkblog on the death of think tanks
New Bedford Whaling Museum on a historic whaling database

Read more from Echoes, Bloomberg View's economic history blog.

International Longshoremen's Association

Striking clerks at the nation’s largest port complex, in Southern California, agreed to return to work on Dec. 5, leaving Americans puzzled why a dispute involving a few hundred office workers could threaten the timely arrival of holiday gifts across the country and affect about $1 billion in trade a day.

The answer, of course, can be found in history -- in this case, the history of labor relations at the dawn of the container era.


Kirsten Salyer

On Repeal Day, Cheers to Alcoholic Stimulus

about 3 years ago
Prohibition repeal

If ever there was a time to celebrate your constitutional right to a glass of beer, today's the day.

On Dec. 5, 1933, the U.S. ratified the 21st Amendment, ending 13 years of Prohibition. What had started as a question of morality ended as a matter of economics. The country was in the midst of the Great Depression, and the government needed its liquor levies.


Elizabeth Tandy Shermer

How Tax Arbitrage Ended GE’s Foray Into Silicon Valley

about 3 years ago
General Electric: Tax Arbitrage

The construction equipment manufacturer Caterpillar Inc. (CAT) recently joined a long line of businesses that have threatened to move their operations because of onerous state taxes. The historical record offers some sobering lessons for those contemplating such a move.

In the years after World War II, chief executives began a sustained flight from the Northeast, Midwest and Pacific Coast. Their eagerness to relocate was a response to the continued experimentation by local and state governments with the kind of progressive taxation that New Dealers had promoted during the 1930s.


Philip Scranton

When the Depression Incited an Oil Crisis

about 3 years ago

In late November 1932, Reza Shah Pahlavi, who had seized control of the Persian government in 1925, canceled a petroleum deal that the U.K.'s Anglo-Persian Oil had held for three decades.

Persia, now known as Iran, believed that its royalties since World War I had been two-thirds lower than what they should have been, and it wanted a new deal.


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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