Historical Thought for the Day
March 1, 2010
Thought for the day:
Save when you can and not when you have to.
–John D. Rockefeller, in Ron Chernow, Titan: The Life of John D. Rockefeller, Sr.
This day in financial history:
1821: On one of the quietest days in Wall Street history, the market is open, but not a single share of stock changes hands. (Only three days earlier, trading volume was also zero.)
1938: The governing committee of the New York Stock Exchange meets and agrees unanimously to expel former president Richard Whitney, who has embezzled hundreds of thousands of dollars' worth of securities from trust funds under his oversight.
1971: Pres. Richard M. Nixon signs legislation providing a 10% increase in Social Security benefits (and a hike in the payroll tax rates, from 5% of the first $7,800 in wages to 5.15% of the first $9,000). A retiree who would have received $500 a month at the beginning of 1969 would be receiving $759 per month, or 51.8% more, by the end of 1972.
1997: The Dow Jones Industrial Average, two months short of its 101st birthday, gets a jolt of juice as the editors of The Wall Street Journal replace "old-economy" stocks Bethlehem Steel, Texaco, Westinghouse Electric and Woolworth with Hewlett-Packard, Johnson & Johnson, Travelers Group and Wal-Mart.
1950: Henry Wells, William G. Fargo, and John Butterfield meet at the Mansion House in Buffalo to join their separate companies -- Wells & Co.; Livingston, Fargo & Co.; and Butterfield and Watson -- into a single firm with a monopoly over express shipping in the northeast. They capitalize their American Express Co. with $150,000 in stock. At first, AmEx specializes in shipping small valuables like bond certificates, currency, and financial contracts -- plus live poultry, pianos, and firecrackers.
1992: Chambers Development Co., one of the nation's hottest growth stocks, drops from $30.50 to $11.50, or 62%, on news that the landfill company's own accounting may be garbage. The day before, Chambers announced that it would no longer capitalize its development costs -- wiping away $48 million in earnings. Just over six months later, Chambers restates its books for 1989, 1990, and 1991, slashing its earnings for those years by $240 million. It's yet another reminder that if you don't question a growth company's accounting before you buy it, you may end up with no growth and a lot of shrinkage.
1720: Shares in the South Sea Co., the hot new seller of speculative annuities, take off on the sharpest upswing the young British stock market has ever seen, rocketing from 218 to 320 by March 21 on rumors of financial chaos in France. But by year-end the shares will be nearly worthless, and investors will nearly beat several stockbrokers to death.
1792: Wall Street has its first major crash in history, on "Black Monday," as 6% Treasury bonds lose 10% of their value and shares in the Bank of the United States drop 12%. Speculator William Duer, a friend of Alexander Hamilton, has borrowed too much money and is about to be thrown in debtors' prison, spreading panic through the cobblestone streets of downtown Manhattan.
Source: Richard Sylla, "William Duer and the Stock Market Crash of 1792," Friends of Financial History, No. 46 (1992), pp. 26-29.
1992: America Online, Inc. goes public on NASDAQ at the original price of $11.50.
Source: Jason Zweig
