On this day in economic and financial history...
The bear market of 1987 hit the Dow Jones Industrial Average (^DJI 0.69%) with the force of an earthquake. Its last major aftershock hit on Oct. 26, 1987, when the index fell 8% after a few days that almost felt like a recovery from the crash that occurred just a week prior. It would be another decade before the Dow suffered a comparable decline, and it remains the index's second-largest percentage drop of any period following the Great Depression.
Gloom prevailed all around Wall Street. Jack Baker of Shearson Lehman Brothers -- at the time a subsidiary of American Express (AXP 2.56%) -- moaned to a Washington Post journalist that it felt like "slow death." Shearson CEO Peter A. Cohen even took the unusual step of assuring his troops that the company would support them if they suffered any financial or emotional distress as a result of the sudden crash.
Reports also trickled in of market-related suicides, echoing the Great Crash of 1929. Unlike their predecessors, however, some of the ruined investors of 1987 felt justified turning their rage against others, as well. One murder-suicide in Miami, which resulted in the death of one innocent stockbroker and the wounding of another, prompted Chicago Tribune columnist Mike Royko to warn Washington leaders that the Mel Gibson film The Road Warrior could serve as a template for America's future.
Within a year the Dow had gained 21% and nearly recovered to pre-crash levels. Within five years it had grown 81%. The grimness of Oct. 26, 1987 was quickly forgotten as the market surged through one of the greatest extended bull markets in history.
Into the heart of the Great Lakes
After eight years of construction, the Erie Canal was finally completed on Oct. 26, 1825. The $7 million project quickly transformed the Great Lakes frontier as a flood of settlers spread across the region and helped turn New York into the commercial powerhouse it has remained to this day. The canal greatly enhanced New York City's economic might, but it also contributed to the growth of Albany, Buffalo, Syracuse, and Rochester.
Rochester, in particular, has been home to a number of notable companies, many of which were established when the Erie Canal was still frequently used. Western Union (WU 0.75%) began as the New York and Mississippi Valley Printing Telegraph Company in 1851. (Thankfully, the name was changed to something more manageable before long.) Film pioneer Eastman Kodak was founded in Rochester in 1889. Xerox (XRX) was originally established in Rochester as a photographic paper manufacturer in 1906, the same year as national newspaper giant Gannett (GCI) established itself in the city.
Rochester is no longer the economic powerhouse it once was, but the city maintains a leading role in the state economy with a regional GDP of about $47 billion. Buffalo comes close with $45 billion in regional GDP, and the Albany area generates about $41 billion. None of these cities can touch New York City's $1.3 trillion economy -- but then, few cities can.
