On this day in economic and financial history ...
It's a new year, filled with excitement and promise. Around the world, billions will wake up this morning feeling a little bit different from how they felt last night. The business world is no different. Just as the last day of the year was a big one for major events in the corporate and economic sphere, the first day is also a big day -- perhaps the biggest of the year, as a large number of important events occur when December gives way to January. Let's take a quick tour of some of the major events that have taken place on Jan. 1 throughout history.
After the chokehold breaks
Jan. 1, 1984, may have been a big day for many companies, but for the former Bell System monopoly, it was a day when nine companies felt a great deal smaller. The government's successful antitrust case resulted in seven regional Bell Operating Companies and two former AT&T (NYSE: T ) holdings, all of which now own a part of the Bell System brand.
The seven post-divestiture Baby Bells are now all -- with one exception -- part of either AT&T or Verizon (NYSE: VZ ) . AT&T is composed of the former Ameritech, BellSouth, Pacific Telesys, and Southwestern Bell (later SBC), as well as the post-divestiture AT&T long-distance operation itself. Verizon began its new life as Bell Atlantic, and later acquired NYNEX, another Baby Bell. The Verizon you know today is the result of the NYNEX-enhanced Bell Atlantic's acquisition of GTE, which was the largest non-Bell phone company for some time until the 2000 buyout.
Of the Baby Bells, only US West remains separate from the Big Two, as it became part of Qwest in 2000 and CenturyLink (NYSE: CTL ) in 2011.
Post-breakup, AT&T held $34 billion in assets and retained 373,000 employees, out of more than a million employed in the monopolistic Bell System. Today's AT&T has 130,000 fewer employees but more than $230 billion in additional assets. AT&T has remained part of the Dow Jones Industrial Average (DJINDICES: ^DJI ) since 1939, because although post-divestiture AT&T was removed from the index in 2004, SBC was inducted in 1999, and the company has remained part of the Dow ever since.
What's in a name?
The aluminum giant known as Alcoa (NYSE: AA ) was originally established in Pennsylvania as the Pittsburgh Reduction Company. It changed its name to the Aluminum Company of America, or Alcoa, on Jan. 1, 1907. Alcoa grew into an aluminum monopoly, resulting in a landmark antitrust case in 1938 that would be dismissed over a narrow interpretation of the monopoly regulations. Alan Greenspan would later criticize this case in his days as a young economist, arguing that Alcoa was unfairly targeted for simply being too good at making aluminum.
Alcoa joined the Dow in 1959 and has been part of the index ever since.
The luck of the toss
On Jan. 1, 1939, Bill Hewlett and Dave Packard, two Stanford University graduates, formalized a partnership begun two years earlier, deciding on the order of their company's name with a coin toss. Thus Hewlett-Packard (NYSE: HPQ ) was born, becoming the unofficial heart of the as-yet-unnamed Silicon Valley, and narrowly avoiding the clunkier-sounding name Packard-Hewlett.
HP would go public in 1957, and it became a leader in pre-PC computing. However, it would not regain its stature as a computer maker until the 1990s, which culminated in its induction to the Dow in 1997.
The dawn of American steel
Construction on Andrew Carnegie's first steel mill began on Jan. 1, 1873. This plant, the Edgar Thomson Steel Works, was the result of Carnegie's discovery of the Bessemer process, which enabled the inexpensive and consistent production of high-quality steel. The plant was built for an estimated $1.2 million, becoming the first cornerstone of Carnegie Steel, which made Carnegie one of the wealthiest men in the world.
In 1901, Carnegie sold his company to a cadre of super-investors led by J.P. Morgan, who merged the company with two other major steelmakers to create U.S. Steel (NYSE: X ) . The Edgar Thompson Steel Works remains active to this day as part of U.S. Steel's Mon Valley Works, making it one of the oldest continually active steel plants in the world.
The first travelers' checks (or cheques) were issued on Jan. 1, 1772, by the London Credit Exchange Company. They were to be used in 90 European cities by the few travelers who could afford to visit 90 different possible European cities in the 18th century. It was not until the late 1800s that American Express (NYSE: AXP ) popularized the checks on a large scale, and that push to popularize their use has made AmEx the largest issuer of travelers' checks to this day. However, travelers' checks have become far less common since the advent of credit cards.
The first homesteader
Daniel Freeman became the first person to take advantage of the newly instituted Homestead Act when he filed his claim shortly after midnight on Jan. 1, 1863. This act, which would be amended and supplemented with others over the years, opened the floodgates for America's move to the West just as the Civil War was rumbling into high gear. By stripping out the cost requirements previously necessary to lay claim to a parcel of land, and replacing it with residency and land-improvement requirements, the government at last allowed millions of America's working poor to build a life for themselves on their own property.
Only 60% of applicants, representing nearly a million households, made it through the grueling five-year term on the wild prairies of America's Midwest. Those successful homesteaders would eventually lay claim to 270 million acres of American soil between 1863 and 1934 -- about 10% of all the land in the country.
Opening the gateway to America
On Jan. 1, 1892, a brand-new federal immigration station opened on Ellis Island, N.Y. This was the first major effort by the federal government to regulate immigration to the United States, and it would become an iconic gateway for over 12 million new residents over the following 62 years.
Unfortunately, this first wooden building would burn to the ground in 1897, destroying records that dated back to 1855. In 1900, a better structure took its place, which would soon handle a massive wave of immigration that peaked in 1907, when 1.3 million people streamed through the island's checkpoints. Today, about 100 million people, or a third of all Americans, can trace their ancestry to immigrants whose first contact with America happened on Ellis Island.
Warning: Smoking is bad
The United States and its tobacco industry have a long, complicated relationship. The breakdown in that relationship began more than four decades ago, when the first health-warning labels were forced onto cigarette packages beginning on Jan. 1. 1966. The very first warning was simple and a bit ambiguous, saying only "CAUTION: cigarette smoking may be hazardous to your health." Over the years, the tobacco industry came under stricter and stricter regulations, coupled with greater and greater levels of legal pressure. This culminated in a mammoth settlement in 1998 that would extract $206 billion from the tobacco manufacturers over the 25 years that were to follow, in addition to perpetual health-care-related payments to the 46 states that had filed lawsuits against the industry.
Despite these oppressive restrictions, tobacco manufacturers have been among the best-performing stocks on the entire market. Altria (NYSE: MO ) was the single best stock from the 1950s to the first decade of the new millennium, gaining nearly 20% per year the entire time.
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