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Learn about what happened in business in today's past

September 1st:

1862: The San Francisco Stock and Exchange Board is founded by 37 brokers to organize trading in silver and gold mining stocks -- primarily based at the booming Comstock Lode in Virginia City, Nev.
Source: Eliot Lord, Comstock Mining and Miners (Howell-North Books, San Diego, CA, 1980 [reprint of original 1883 edition]), p. 131.

1929: The total market capitalization of all the stocks listed on the New York Stock Exchange reaches $82.11 billion. (The value of all securities, including U.S. and foreign stocks and government bonds, peaked that day at $136,409,448,062.) The biggest sector by far is the utilities industry, with $14.79 billion in market value, followed by railroads, petroleum, chemicals, and automobiles. By July 1, 1932, the market value of all listed stocks will shrivel to $12.70 billion, an 84.5% loss.
Source: Barrie A. Wigmore, The Crash and Its Aftermath: A History of Securities Markets in the United States, 1929-1933 (Greenwood Press, Westport, CT, 1985), pp. 640-643; New York Stock Exchange Report of the President, May 1, 1930-May 1, 1931 (New York Stock Exchange, 1931), p. 35.

1932: How bad can it get? In the depths of the Depression, Wall Street takes its own pulse and detects only faint signs of life. In the bond market, 19.4% of all debt issued by foreign governments and corporations has defaulted, along with 14% of real-estate debt, 7.2% of all U.S. industrial bonds, 5.4% of utility debt, 3.5% of railroad issues, and 1.8% of all municipal bonds. The Dow Jones Industrial Average is at 73.67, down from 381.17 just three years earlier—an 80.7% loss.
Source: Barrie A. Wigmore, The Crash and Its Aftermath: A History of Securities Markets in the United States, 1929-1933 (Greenwood Press, Westport, Ct., 1985), p. 400; Phyllis S. Pierce, ed., The Dow Jones Averages 1885-1980 (DowJones Irwin, Homewood, IL, 1982), not paginated; http://www.djindexes.com

1936: The National Association of Securities Dealers (NASD) is incorporated to oversee the conduct of brokerage firms. (Over the years, critics will point out that the NASD’s variable degrees of toughness toward its own members are a good reminder of the two main meanings of the word “oversight.”)
Source: Sources Museum of American Financial History.

1711: The South Sea Company is chartered in London to trade with Latin America, sell annuities and manage the public debt. It shortly becomes the heart of the greatest speculative boom Britain has ever seen, as the stock rises more than 800% in a few months in 1720--and then, just as quickly, the worst bust in British history, as it loses roughly 80% of its value in a matter of weeks.
Source: John Carswell, The South Sea Bubble (The Cresset Press, London, 1960), p. 57.

1831: The Madrid Stock Exchange (La Bolsa de Madrid) is established.
Source: Museum of American Financial History (http://www.financialhistory.org).

1846: Elias Howe patents his sewing machine, which can buzz 250 stitches across a bolt of cloth in a single minute--outracing the fastest human hands by a factor of five.
Source: http://lcweb2.loc.gov/ammem/today/jul09.html

1960: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela convene in Baghdad to form the Organization of the Petroleum Exporting Countries (OPEC), which nearly brings the industrial world to its knees in the 1970s by jacking up the price of oil.
Source: http://www.opec.org/

1789: Alexander Hamilton is nominated, confirmed and sworn in as the nation’s first Secretary of the Treasury.
Source: Ron Chernow, Alexander Hamilton (New York: Penguin, 2004), p. 288; http://www.ustreas.gov/education/history/events/09-sep.html#11

1988: The savings-and-loan crisis worsens as Financial Corp. of America, parent of the country’s second-largest savings & loan company, files for Chapter 11 bankruptcy protection. And the Federal Home Loan Bank Board, which oversees the floundering thrift industry, announces that it will merge five more failed savings & loans today—for a total of 49 bailouts since August 18, at a cost of $11 billion.
Source: The Wall Street Journal, September 12, 1988, p. A3.

1836: The New York Stock Exchange prohibits its members from trading in the streets outside. But open-air trading persists under the nickname of "the Curb," which ultimately becomes the American Stock Exchange.
Source: http://www.nyse.com/about/timeline/1047054055615.html

1968: As tech stocks boom, H. Ross Perot takes his Electronic Data Systems public for $16.50 a share, or 118 times earnings. (Perot had steadfastly kept his company private, refusing 17 offers to do an IPO, until investment banker Ken Langone declared that he could sell the stock for over 100 times earnings.) By early 1970, the stock is at $160.
Source: John Brooks, The Go-Go Years (Weybright and Talley, New York, 1973), pp. 16-18.

1982: Forbes publishes its first "rich list" of the 400 wealthiest people in America. The first Forbes Four Hundred (minimum net worth for inclusion: $100 million) contains just 13 billionaires, ten of whom derive their fortunes from the oil industry. America's richest man is shipping magnate Daniel K. Ludwig, worth "above $2 billion." Warren Buffett clocks in at $250 million; Bill Gates is nowhere to be found. The only tech billionaire is Hewlett-Packard co-founder David Packard, and the list includes fewer than a dozen technology fortunes -- including such now-forgotten giants as Kenneth Olsen of Digital Equipment Corp. ($157 million) and An Wang of Wang Laboratories ($320 million).
Source: Forbes Magazine, September 13, 1982, pp. 100-170; information kindly provided by Forbes senior editor Peter Newcomb.

1996: It's Friday the 13th, and Wall Street is awash in the usual superstitious worries that the market will tumble—but the Dow Jones Industrial Average surges up by 1.2% to close above 5800 for the first time, finishing the day at 5838.52.
Source: http://www.djindexes.com

1939: Russian émigré Igor Sikorsky ties a heavy rope to his VS-300 "direct-lift aircraft," fires up its engine, and gets the ungainly-looking thing to rise about two feet off the ground for a few seconds. With its main propeller in horizontal position, the "whirlybird" is the world's first practical helicopter.
Source: The Wall Street Journal, May 24, 1989, p. B2; http://www.sikorskyarchives.com/vs300iis.html; http://www.sikorskyarchives.com/vs-300.html

1960: Pres. Dwight D. Eisenhower signs into law the Real Estate Investment Trust Act of 1960, which creates REITs, enabling retail investors to buy shares in commercial real estate for the first time.
Source: Press release from the National Association of Real Estate Investment Trusts, September 14, 2000 ("REITS Turn 40"), at www.nareit.com

1890: Baring Brothers, one of England’s leading investment banks, has disclosed that its loans to what we would now call “emerging markets,” like Argentina and Chile, have gone bad and that the firm will go bust unless the Bank of England comes to its aid. The Bank steps in, rounding up a rescue syndicate of other investment banks and assuming 28.5 million pounds’ worth of Barings’ liabilities. “Thus was averted what would probably have been the greatest panic in the world’s history.”
Source: Clement Juglar, A Brief History of Panics and Their Periodic Occurrence in the United States (G.P. Putnam’s, New York, 1916; reprinted, Fraser Publishing Co., Burlington, VT, 1993), pp. 140-141.

1958: LIFE Magazine highlights a strange new phenomenon: The public is investing in the stock market as never before. "On the average," reports LIFE, "500,000 new customers a year have been getting into the market and 8.6 million Americans now own some kind of common or preferred stock…. To an extent which our founding fathers could never have foreseen, we live today under a genuine people's capitalism, in which the stock market has become everybody's business." The Dow Jones Industrial Average is around 500, but a "prominent market observer" (probably choosing to remain anonymous because his forecast sounds so crazy) predicts that "Just inflation alone will some day carry the Dow-Jones average over 1,000." Imagine that.
Source: LIFE, September 15, 1958, pp. 93-106.

1777: Nathan Mayer Rothschild, the world’s greatest merchant banker, is born in a decrepit, eight-foot-wide house in the Judengasse ghetto of Frankfurt, Germany, to Mayer Amschel Rothschild, a mail-order antique dealer, and Gutle Schnapper Rothschild.
Source: Victor Gray and Melanie Aspey, eds., The Life and Times of N.M. Rothschild, 1777-1836 (N.M. Rothschild & Sons, London, 1998), p. 9; Niall Ferguson, The House of Rothschild: Money’s Prophets, 1798-1848 (Viking, New York, 1998), pp. 38, 44.

1908: William Crapo Durant, the nation’s leading maker of wooden wagons and buggies, incorporates the General Motors Co. Durant knows that if GM succeeds, it will put his current industry out of business—and he goes ahead anyway. GM will serve as a holding company for the stock of Durant's Buick Motor Co., the biggest “motorcar” producer in the country--and will ultimately encompass dozens of other automakers and related companies.
Source: Alfred P. Sloan, Jr., My Years with General Motors (eds. John McDonald and Catharine Stevens, Doubleday, Garden City, NY, 1964), pp. 4-5.

1920: Slightly before 12 noon, a massive charge of dynamite goes off in a horse-drawn wagon parked in front of the Wall Street headquarters of J.P. Morgan & Co. Thirty people are killed immediately, another ten are mortally wounded, and hundreds are injured in a fierce hail of shrapnel and flying glass. "RED PLOT SEEN IN BLAST," declares The New York Times, but no “Bolshevik” involvement is ever proven and, to this day, the crime has never been solved. Several buildings along Wall Street are still scarred from the blast.
Source: Frederick Lewis Allen, Only Yesterday: An Informal History of the 1920s (John Wiley & Sons, New York, 1997, reprint of 1931 ed.), pp. 52-53; John Brooks, Once in Golconda: A True Drama of Wall Street, 1920-1938 (Harper & Row, New York, 1969), pp. 1-11; The New York Times, September 17, 1920, pp. 1-5; Museum of American Financial History, New York.

1929: The Standard & Poor’s 500-stock index (calculated retroactively) hits 31.86, its peak for the Roaring Twenties bull market. It does not close above that level until September 22, 1954. When you hear that stocks “always outperform in the long run,” do you realize how long “long” can be?
Source: David M. Blitzer, chief investment strategist, Standard & Poor’s Corp.

1998: Stock markets take a worldwide pounding after Federal Reserve Chairman Alan Greenspan tells Congress that there are no plans for coordinated global interest-rate cuts. Despite the Russian debt crisis, Greenspan says he sees no immediate need to relieve the “peripheral gusts” of “financial turmoil.” The Dow Jones Industrial Average slumps 216.01 points, or 2.67%, to close at 7873.77; the NASDAQ loses 2.58%, while Japanese stocks fall 2.4%, German stocks drop 3.9%, and the French market slumps 5.5%. Analysts are uniformly pessimistic, but in three weeks the U.S. stock market bottoms out and then heads straight up.
Source: The Wall Street Journal, September 18, 1998, pp. C1, C2, C7; http://www.federalreserve.gov/boarddocs/testimony/1998/19980916.htm

1873: Jay Cooke & Co. of Philadelphia, one of the nation’s largest investment banks, collapses as a result of failed speculations in railroad stocks--triggering the Panic of 1873. Cooke--and the entire financial world--were taken completely by surprise. Just the night before, he had lavishly entertained Pres. Ulysses S. Grant at the Cooke family mansion in Chelton Hills, PA.
Source: Henry Clews, Twenty -Eight Years in Wall Street (Irving Publishing, New York, 1888), p. 513-514; Charles P. Kindleberger, “The Panic of 1873,” in Eugene N. White, ed., Crashes and Panics: The Lessons from History (Dow Jones-Irwin, Homewood, Ill., 1990), p. 80; Jean Strouse, Morgan: American Financier (Random House, New York, 1999), p. 151; http://www.phlx.com/exchange/history.html; http://www.harpweek.com/09Cartoon/BrowseByDateCartoon.asp?Year=2001&Month=October&Date=11

1926: The Great Miami Hurricane smashes into Florida with 138-mph winds, killing 243 people and, in a single devastating stroke, ending the speculative Florida land boom.
Source: http://www.nhc.noaa.gov/pastdead.html; http://www.nhc.noaa.gov/pastdeadlya1.html; http://www.accuweather.com/iwxpage/paws/news/991231wacky.htm; Frederick Lewis Allen, Only Yesterday: An Informal History of the 1920s (John Wiley & Sons, New York, 1997, reprint of 1931 ed.), p. 212.

1974: At a seminar sponsored by the Institute of Chartered Financial Analysts, Benjamin Graham declares that his valuation formulas enable him to estimate that the fair value of the Dow Jones Industrial Average is around 750. The Dow closes that day at 651.91, but it surges 3.4% the next day as word of Graham’s analysis spreads--and it rises past 750 just six months later.
Source: Martin S. Fridson, book review of Janet Lowe’s The Rediscovered Benjamin Graham, in Financial Analysts Journal, Nov./Dec. 1999, p. 128; http://www.djindexes.com

1931: This message is a light-hearted reminder that his mother is about to leave on vacation. In fact, the Bank, referring to itself by the common nickname "Old Lady," means that it is about to abandon the gold standard -- a decision Norman has vehemently opposed for years. He ignores the telegram, the Bank assumes Norman accepts the decision, and the next day the Bank announces that it is suspending payments in gold.
Source: Peter L. Bernstein, The Power of Gold: The History of an Obsession (John Wiley & Sons, New York, 2000), p. 315; Barrie A. Wigmore, The Crash and Its Aftermath: A History of Securities Markets in the United States, 1929-1933 (Greenwood Press, Westport, Ct., 1985), p. 301.

1974: U.S. Secretary of the Treasury William E. Simon predicts that interest rates, then around 8%, will soon fall. The Dow leaps 3.4% on the good news. Over the next seven years, interest rates proceed to double.
Source: Robert J. Shiller, “Do Stock Prices Move Too Much to Be Justified by Subsequent Changes in Dividends?” in Richard H. Thaler, ed., Advances in Behavioral Finance (Russell Sage Foundation, New York, 1993), p. 147; Phyllis S. Pierce, ed., The Dow Jones Averages 1885-1980 (DowJones Irwin, Homewood, IL, 1982), not paginated; http://www.djindexes.com

2000: The International Monetary Fund issues its World Economic Outlook report, forecasting that "growth is projected to increase in all major regions of the world, led by the continued strength of the U.S. economy, the robust upswing in Europe, the consolidation of the recovery in Asia and the rebound from last year's slowdown in emerging markets." Just weeks later, most regions of the world are tilting toward recession.
Source: The Global Slowdown Surprises Economists and Many Companies, The Wall Street Journal, December 21, 2000, p. A1; http://www.imf.org/external/np/tr/2000/TR000919.HTM