Archive for the ‘Business’ Category

Why Stocks Tumbled in 1917 and Rose in 2017

In November 1917, the prices of most stocks were between 20 and 70 percent below where they had stood a year before. The plummet was so steep that rumors abounded that the Stock Exchange would be entirely shut down, permanently.

This article from the time interviewed former Director of the U.S. Mint George E. Roberts for his analysis of the stock market’s plummet. He laid the blame at four causes, quoting directly:

1.) The demands of the Liberty Loan. Every one [sic] has subscribed or has pledged to subscribe about all the spare cash he can must for the coming few months.

2.) The collateral demands of the war, the Red Cross, the hundred and one charities which reach forth on every hand to waylay the pocketbook.

3.) The vast needs for new and quick industrial investments to meet the munition and supply demands of the war.

4.) The uncertainty of the immediate future. Those who have available cash hesitate to invest it in stocks or bonds, even at the present ridiculously low prices. They would rather wait a bit and see what the Winter brings forth.

The market eventually self-corrected. In fact, if you had invested $1,000 in Coca-Cola stock during its original 1919 initial public offering, two years after this article was published, that stock would be worth $9.8 million today.

A century later in 2017, the opposite question is being asked: why does the stock market keep going up? Derek Thompson of The Atlantic recently wrote an excellent article analyzing this question after the Dow reached a new record high.

Thompson, like Roberts a century before him, laid out three or four reasons for the stock market’s performance:

1. It’s simple: Corporations everywhere are making a bunch of money.

2. A1 chaos doesn’t drive the business cycle.

3. There aren’t many obvious signs of bubbles, or causes for imminent corrections.

Thompson’s reason #2 in particular on its face may seem to contradict Roberts in 1917, since Roberts’ theory was that the page-A1 chaos of the time — namely World War I — was exactly what was driving the business cycle.

Then again, WWI truly consumed everything about the economy, politics, culture, and life. By contrast, Trump’s headline-driving tweet of the day usually generates more of a “Wasn’t that interesting?” response (or “Wasn’t that terrifying?” depending on who you ask) rather than proving transformative to the markets.

Usually… but not always. After Trump tweeted attacking their respective companies, Amazon’s stock market value dropped $5 billionBoeing dropped $550 million, and Toyota lost $1.2 billion in five minutes.

Why Stocks Tumbled: No Business Panic and No Prospect of One, Says George E. Roberts, Banker — Wartime Causes of Low Prices (PDF)

From Sunday, November 11, 1917

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Written by Jesse

November 8th, 2017 at 12:28 pm

Posted in Business,War

Enter America as Chief Fur Trader

World War I had unexpected effects on the fur market, not least because of… the invention of the submarine?!

“American buyers and American furs no longer play the parts they formerly did in England. The submarine is one of the chief reasons. It has caused a scarcity of ocean freight space and a big jump in war risk insurance on cargoes.”

Another factor was the plummeting number of materials (read: animals) brought into the U.S. from other nations.

“Another way in which the war has affected the fur situation has been to cut down the supplies of skins received from other countries… However, as a result of depleted supplies, prices have advanced sharply, particularly on skins of animals not native of this country…

“It has been ably aided by Fashion, which is figuratively crying for furs and still more furs. Proof that the women of the country are responding to the cry is seen in the fact that, despite the higher prices, the fur trade as a whole is enjoying one of the best seasons it has ever had.”

Today, animal skins are a $40 billion business — although according to Kopenhagen Fur, the global production of fur has dropped dramatically in recent years.

Enter America as Chief Fur Trader: Foreign Countries Formerly Ran the Business of Selling Pelts, but New York and St. Louis Are Now the Leading Markets (PDF)

From Sunday, September 30, 1917

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Written by Jesse

September 29th, 2017 at 12:01 pm

Posted in Business,Development

Business Men in Control of American Colleges

Evans Clark, a professor of history and politics and Princeton, lamented the increased influence of members of the business community on American universities in 1917. Clark perceived these board of trustees or regents as often lacking either familiarity or best interests of the school they represented:

Princeton University, however, is legally not the Faculty and students, the community citizenship, but a group of twenty-nine men in no way responsible to them, and none of whom lives or functions at the university. These twenty-nine men at Princeton, and other small groups like them in every college and university community, are in law rulers whose power is absolute.

They have the legal authority to employ and dismiss whomsoever they wish in the service of their institution — the President, the professors, administrative officers, janitors, and day laborers. And no one of these, it is well to note, has any more constitutional security of tenure than another. They can discharge a janitor who complains that his wages are low, or an instructor who makes the fact known to his classes.

That Trustees and Regents to not exercise in practice every one of the powers granted to them by law is proof not of any lack of authority, but merely a lack of desire to do so.

It’s an increasing issue now: according to a 2015 Atlantic article, “Twenty percent of U.S. college presidents in 2012 came from fields outside academia, up from from 13 percent six years earlier, according to the American Council on Education.”

Business Men in Control of American Colleges: Member of Princeton’s Teaching Force Criticises Condition Which He Regards as a Baneful Autocracy in Higher Education (PDF)

From Sunday, June 10, 1917

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Written by Jesse

June 8th, 2017 at 3:26 pm

Posted in Business,Education

Three Film Stars Get $1,000,000 a Year Each

Charlie Chaplin, Mary Pickford, and Douglas Fairbanks were earning a then- staggering $1 million per year in 1917. $1 million in May 1917 would be worth $17.5 million today. How does that compare to the highest-grossing movie stars now? That would only make Chaplin the 24th-highest paid movie star in the world last year.

Forbes ranked Dwayne Johnson as the highest-paid actor of 2016 at $67.5 million. Chaplin would be sandwiched between Matthew McConaughey at #23 with $18 million and Chinese film star Chan Bingbing with $17 million.

What’s fascinating look at the last is how many of the top 25 highest-paid actors may not be worth the salary. Many just in the past year alone have starred in box office domestic underperformers, relative to studios’ pre-release hopes: #3 Matt Damon with The Great Wall, #5 Johnny Depp with Alice Through the Looking Glass, #7 Ben Affleck with Live By Night, #8 Vin Diesel with xXx: The Return of Xander Cage, #13 Brad Pitt with Allied, #19 Scarlett Johansson with Ghost in the Shell, #20 Will Smith with Collateral Beauty, #23 Matthew McConaughey with Gold,

 

 

Three Film Stars Get $1,000,000 a Year Each: Motion Picture Business, at Pinnacle of Success, Sees No Sign of Waning Popularity — Tax Talk Stops Boasting of Profits (PDF)

From Sunday, May 27, 1917

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Written by Jesse

May 26th, 2017 at 4:06 pm

Man’s Labor the Best, British Committee Decides; Woman Handicapped

As men entered World War I, women were called upon to perform traditionally male roles involving more physical labor and brawn. The British Health of Munition Workers Committee found:

“that, compared with man, woman has less strength, less endurance; that she can undergo neither such long hours nor such long periods of labor; that she cannot stand the strain of night work; that her body, physiologically different from man’s, is subject to ‘certain ailments and forms of physical disability’ that are ‘readily caused or at least accentuated’ by various forms of body activity, and that these ailments are ‘far-reaching in effect’; that the lifting and carrying of heavy weights, ‘all sudden, violent, or physically unsuitable movements in the operating of machines,’ and prolonged standing, are ‘highly provocative causes of trouble to women and girls.'”

Anybody who still claims that men have more stamina and women need more “days off” should read the news this week. Ivanka Trump had to fill in for her father at an event that he dropped out from citing “exhaustion.”

Man’s Labor the Best, British Committee Decides; Woman Handicapped: The Frailer Sex Lacks Nothing in Patriotism, But Needs More “Days Off” — Endurance in Munition Plants (PDF)

From Sunday, May 27, 1917

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Written by Jesse

May 25th, 2017 at 3:59 pm

Posted in Business,Life

Wealthy Men Willing to Pay Higher Taxes

The top income bracket always tries to fight increased taxes, but historically just about the only time they willingly acquiesce is during wartime, when abrupt increased governmental expenditures are required. What made 2001-02 so unprecedented was that President George W. Bush simultaneously lowered tax on the top income bracket while launching war and requiring increased government outlays. (Bush lowered taxes for all income groups, not just the wealthiest.) The result was a large spike in deficits and debt as a percentage of GDP. Although, to be fair, those numbers would increase even more under Bush’s successor Barack Obama — and will almost certainly increase even further under Donald Trump given his plans for lower taxes and higher expenditures.

Wealthy Men Willing to Pay Higher Taxes: Victor Morawetz Says the Government Must Remember It Cannot Get Funds of People Twice, by Taxation and Bonds (PDF)

From Sunday, May 6, 1917

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Written by Jesse

May 5th, 2017 at 1:54 pm

Posted in Business,Politics,War

Cost of Home Here Has Soared in Decade

 

The most expensive New York City apartment in 1907 was $6,000. A decade later, in 1917, it had quintupled to $30,000. Those were the days. By 2017, the most expensive NYC apartment cost $100.5 million — and even that could be shattered by an estimated rumored $250 million apartment that’s currently under construction.

Cost of Home Here Has Soared in Decade: Highest Apartment Rent Ten Years Ago $6,000, Now Above $30,000 — Private Houses Are No Longer Choicest Residences (PDF)

From Sunday, April 29, 1917

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Written by Jesse

April 29th, 2017 at 12:01 pm

Posted in Business,Development

U.S. Has Nearly as Much Gold as All Europe

The total amount of gold in 1917 was about $3.08 billion. Today that’s more than tripled to $11.04 billion, according to the Treasury Department. About 56 percent of that is held in the famed and heavily-guarded Fort Knox location in Kentucky.

The U.S. has had a long and complicated relationship with gold. American money used to be backed up by a gold standard since 1879, until President Franklin D. Roosevelt largely took the country off it in 1933. We were formally and fully taken off the gold standard by President Richard Nixon in 1971, and some critics such as former U.S. Rep. Ron Paul criticize this decision as being one of the key factors in subsequent inflation and the Great Recession of 2008-09.

U.S. Has Nearly as Much Gold as All Europe: Precious Metal Has Been Sent Across Atlantic Until We Have Accumulated $3,089,000,000 (PDF)

From Sunday, April 29, 1917

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Written by Jesse

April 28th, 2017 at 12:01 pm

Posted in Business

Each Worker Loses 9 Days Yearly by Illness

In 1917, the average worker lost nine days annually due to illness, according to Frederic W. Loughran, then medical adviser to the New York State Insurance Fund. In 2013, the average worker only called in sick 4.9 days per year. This even though the average full-time private sector employee had eight paid sick days off.

Each Worker Loses 9 Days Yearly by Illness: Lack of Attention to Principles of Modern Industrial Hygiene Responsible at Present for Enormous Waste in Our Factories (PDF)

Published Sunday, April 8, 1917

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Written by Jesse

April 8th, 2017 at 3:25 pm

Posted in Business

War Brings Huge Increase in United States Peanut Crop

Between 1908 and 1916, the total value of U.S. peanuts more than quadrupled. Why? Because the cotton crop had been nearly wiped out boll weevils, leaving far more land for peanuts to be planted. As a result, the price per peanut bushel had doubled or more within only a few years. The more you know.

The final sentence’s prediction that “Down in the cotton country they are saying that we are soon to see the rise of peanut barons” never quite came true, as best I can tell from quick research.

War Brings Huge Increase in United States Peanut Crop (PDF)

From Sunday, March 25, 1917

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Written by Jesse

March 29th, 2017 at 7:01 am

Posted in Business,War

Lowering the Cost of Living for the Navy

Here’s an element of navy/military spending that seems obvious once it’s brought up, yet might never have entered your brain before:

“Suppose, for instance, that you had about 65,000 men, the great majority of them young, healthy, and hungry, to clothe and feed. Suppose that when you bought flour you bought it by the millions of pounds; that you meat purchases totaled nearly 18,000,000 pounds a year; that you had to buy almost 25,000,000 pounds of cabbages, onions, potatoes, carrots, cauliflowers, and other fresh vegetables annually; that your sugar and coffee and canned good purchases were proportionately large; that when you bought eggs the order specified a few hundred thousand; that you bought every twelve months more than 1,700,000 pounds of butter, not to mention scores of other foods which America’s bluejackets and marines must have and do get, what would you do about it?

That was in 1917. If anything, today those numbers for the Navy are almost certainly larger. I couldn’t find numbers related to the cost of food for today’s military, but the number of active duty Navy members currently stands at 323 thousand.

A few months ago I covered a talk from Secretary of the Navy Ray Mabus, yet somehow this subject of food never came up.

Lowering the Cost of Living for the Navy: How One of the Newly Appointed Rear Admirals, as Paymaster General, Tackled a Vexatious Problem and Solved It (PDF)

From Sunday, January 28, 1917

 

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Written by Jesse

January 29th, 2017 at 3:10 pm

Posted in Business,War

George C. Boldt’s Life a Continuous Romance

george-c-boldts-life-a-continuous-romance

Ah, the days when “the most famous hotel man in the world” didn’t inherit the business from his father, but achieved his status through grit and determination after starting in the kitchen.

George C. Boldt’s Life a Continuous Romance: Reminiscences of Waldorf-Astoria’s Proprietor, Who Rose from the Kitchen to be the Most Famous Hotel Man in the World (PDF)

From December 10, 1916

 

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Written by Jesse

December 7th, 2016 at 10:34 pm

Posted in Business,Life

U.S. Leads in Financial Power

From November 5, 1916

u-s-leads-in-financial-power

U.S. Leads in Financial Power: To Say That Our Prosperity Rests on War Orders Is Indefensible, Declares Secretary of the Treasury (PDF)

Secretary of the Treasury William G. McAdoo — who later served as a U.S. senator from California in the 1930s — in 1916 penned this essay arguing that the U.S. had the strongest economy in the world. At the time, the U.S. was just emerging into contention for that title, and by a few years subsequently — and certainly by a few decades subsequently — there was no debate on the subject.

Interestingly, one of the facts that McAdoo uses to argue his case was that the U.S. possessed about $2.63 billion of gold at the time, or about one-third of the world’s gold. That would prove to be a significantly less important metric once Franklin Delano Roosevelt took the country off the gold standard in 1933.

This 1916 excerpt about that year’s presidential election, written by the Democratic Secretary of the Treasury, also contains some eerie parallels with Donald Trump and the 2008 financial crash and recession that began under George W. Bush’s administration:

Mr. Hughes [the Republican nominee] warns us that our prosperity is merely “temporary.” How does he know that it is? How can he foretell the future? The very assertion discredits him, because he assumes a power of infallible prophecy which belongs to God alone. He is a candidate for the Presidency, the prize for which some men in this country have been willing to sell their veracity and their souls. Mr. Hughes has no convincing issue. He has advanced no reason that appeals to the judgment of his fellow-citizens for turning President Wilson out and putting Mr. Hughes in. What must he do, therefore, to make an impression?

His one hope is to excite the fears of the American people and make them believe that he is the only man who can save them. Mr. Hughes cannot guarantee the prosperity or the future of the country. Neither can the Republican Party. The Roosevelt panic of 1907, the worst in our history, is conclusive proof of Republican incompetence.

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Written by Jesse

November 3rd, 2016 at 3:28 pm

Posted in Business

The Wages of the Locomotive and Its Driver

From September 17, 1916

wages-of-the-locomotive

The Wages of the Locomotive and Its Driver: Comparison of the Work and Pay of the Trainmen and the Trains Considered as Representatives of Labor and Capital (PDF)

The men (and they were all men) who works on the railroads wanted pay raises in 1916, in an article that echoes present-day debates. Should the federal minimum wage should be increased from its current $7.25 to $12, as Hillary Clinton endorses? What worker protections are the 327,000+ Uber drivers entitled to?

This article also contains the first infographic I’ve come across in these archived Sunday Magazine posts, one visualizing the rise in railroad stock prices over the preceding two years. Infographics generally did not achieve widespread use in print until USA Today was created in the 1980s, rendering the sight of one here striking — usually articles would just print tables of numbers in lieu of visualizations.

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Written by Jesse

September 15th, 2016 at 5:44 pm

Posted in Business

China’s Industrial Revolution Now In Progress

From August 27, 1916

China's Industrial Revolution 2

China’s Industrial Revolution Now In Progress: Chow Tsz-Chi, Former Minister of Commerce and Agriculture, Points Out the Opportunities In His Country for Americans (PDF)

If you thought China was advancing a century ago, China’s economy overtook the U.S. to become the world’s largest in 2014, according to the International Monetary Fund. To some extent that’s an unfair comparison because China has about quadruple the U.S. population, but still — the U.S. had the world’s largest economy for many decades and was once thought by many to be unbeatable.

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Written by Jesse

August 25th, 2016 at 11:23 am

Posted in Business,Development

Why American Business Is Constantly Pounded

From August 20, 1916

Why American Business

Why American Business Is Constantly Pounded: James A. Emery, Counsel for Council of Industrial Defense, Discusses Influences at Work in Congress and State Legislatures (PDF)

James Emery bemoaned the state of business in 1916:

“There never was a time when it has been so easy to excite popular feeling against business; there never was a time when so many organized influences have been working to substitute laws of equalization for equal laws, to turn our States into social laboratories conducting experiments at the expense of the well-to-do and successful.”

The government and the public were against business back in 1916? The top corporate tax rate than was 2 percent. Today it’s 35 percent.

The percentage of American public expressing “a great deal or quite a lot” of confidence in big business declined from 34 percent in 1975 to only 18 percent in 2016. (I couldn’t find data going back to 1916, when polling was much less common, but it seems to reasonable to assume that confidence was even higher back then, considering that the general trend in the past century has been declining confidence in virtually every American institution.)

 

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Written by Jesse

August 19th, 2016 at 4:13 pm

Posted in Business

One Auto For Each 25 Americans by January 1

From August 6, 1916

One Auto For Each

One Auto For Each 25 Americans by January 1: Remarkable Increase in Number of Cars Owned in This Country Will Soon Bring Total to 3,946,664, Valued at $2,000,000,000 (PDF)

These numbers have certainly skyrocketed in the past year. According to the U.S. Department of Transportation, as of 2014 there were 260.3 million total registered highway vehicles. For cars specifically, as of 2006 (the most recent year for which statistics were available) there were 135.3 million registered passenger cars. That’s approximately one auto for every 2.2 or 2.3 Americans, a far more even ratio than the one auto for every 25 Americans back in 1916. And those numbers are likely to level even further as last year was the best year for auto sales in American history with 17.5 million, due largely to an improving economy and low gasoline prices.

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Written by Jesse

August 3rd, 2016 at 5:49 pm

Posted in Business,Life

Is The Moving Picture To Be The Play Of The Future?

From August 20, 1911

IS THE MOVING PICTURE TO BE THE PLAY OF THE FUTURE?

IS THE MOVING PICTURE TO BE THE PLAY OF THE FUTURE? Inventions Which Will Vastly Increase Its Capabilities — How These Dramas Are Obtained and Why Actors Give Up the Stage to Enter This New Profession. (PDF)

In 1911, the motion picture industry was just beginning to boom. Movies were still silent, and black-and-white, but this article predicts how the industry will change once color and sound are added.

Is it too much to say that the moving picture is the theatrical show of the future? Yes, if we have got always to see simple black-and-white pictures, soundless and colorless; no, if the invention is to take the course which it seems destined to take, and to develop hugely into the spoken word, the musical accompaniment, and the hiring of the greatest singers to take part in the humblest of plays.

At the time, movies were churned out like ephemeral novelties. They were shown for one night, and the actors were unknown. But over time, people began to recognize some of their favorite actors who appeared in many films. They would cheer for them when they appeared on screen. But they had no idea who the actors were. Stage acting is where the fame and glory was. But it, too, had its drawbacks.

The moving-picture business is making greater and greater appeals to stage people every day. In most cases the pay is better than that on the stage. Then the employment is steady. The bane of the theatrical business has always been the long season of unemployment. A moving-picture actor works fifty-two weeks in the year, and for him there is no long drought in which he parades the Rialto hungrily and pulls his belt closer to keep his appetite in control and wistfully haunts the booking offices. Besides, he has a chance at family life; he can live with the folks.

There is one heavy drawback, and that is the absence of a chance for fame. Every actor wants to make a reputation, and until now the moving-picture man has merely got the cash and let the credit go. His name appears in no programme, his acting gets only a cash reward. But that is coming to an end. The names of the casts are posted int he Motion Picture Magazine, the organ of the trade; their pictures are painted there, and, as has been said, the Edison Company has started the innovation of printing regular programmes with the full case, just as is done on every stage. When the other companies fall into line the last step in securing the full dignity of the stage to the moving-picture actor will have been taken.

The audiences themselves are compelling it. Where plays by certain stock companies are shown the spectators get to known the faces of the actors and to find their favorites. It is a common thing for an audience in many parts of the country to burst out in applause when the face of some favorite actor appears on the screen or to hiss some well-known villain. Naturally such audiences are consumed with curiosity to know the names of the heroes they are cheering, and the companies must yield to the demand. The publication of the photographs and names of the leading stock actors and actresses is a sign of it.

It’s a fascinating read from a time when people were still experimenting with the business and technology of a new industry. The article ends by noting: “We are just at the dawn of the moving picture as a feature of modern life… It is impossible to conjecture how great a part it may play in our civilization by, say, the dawn of the twenty-first century.”

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Written by David

August 15th, 2011 at 11:00 am

Babies Who Earn A Man’s Wage And Support Families

From July 30, 1911

BABIES WHO EARN A MAN'S WAGE AND SUPPORT FAMILIES

BABIES WHO EARN A MAN’S WAGE AND SUPPORT FAMILIES: To the Business Man and the Business Woman Is Now Added the Business Baby — They Understand Their Trade and Take an Interest in It. (PDF)

You have to admit, they are cute kids. The one on the far left is Marie Borgreve, “who takes posing seriously and, at four years, assumes the dignity of forty.” I think she looks a bit like Kiernan Shipka, who plays Sally Draper on Mad Men.

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Written by David

July 28th, 2011 at 9:30 am

Why Does Your Grocer Trust You?

From July 30, 1911

WHY DOES YOUR GROCER TRUST YOU?

WHY DOES YOUR GROCER TRUST YOU? The Problem of Giving Credit Sometimes Hard to Solve. (PDF)

An interesting look at personal credit.

“Mr. Brown left in a hurry this morning and forgot to give me any money.”

“I haven’t the change, but I’ll drop in to-morrow and pay.”

A retail grocer of the upper west side of New York says that he and every other butcher, grocer, and small store-keeper in the fairly good residence sections of the city hears these phrases again and again. They are half glad and half sorry each time a woman leans over the counter and apologetically says one or the other of them. It means more business and a new, steady customer, it is true, but on the other hand one more account on the books and credit instead of cash.

[…]

Yet the retailer keeps on trusting.

See also J. Wellington Wimpy who will gladly pay you Tuesday for a hamburger today.

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Written by David

July 26th, 2011 at 11:00 am

Posted in Business