On this day in economic and financial history...
The first known case of Spanish influenza was reported on March 8, 1918 in Camp Funston, a part of Fort Riley in Kansas. Within three days, more than 100 American soldiers were hospitalized, and hundreds more had reported ill. The virus mutated and became more dangerous in the fall as the war neared its end, and by the winter of 1918 deaths numbered into the millions. Up to 40% of the global population fell ill, and between 50 million and 100 million people are estimated to have lost their lives. Roughly 2.5% of the population in most primary combatant nations died, and up to 3% of the entire world's population perished, making it one of the worst disasters in human history.
The flu affected many parts of human civilization. Dr. Andrew Price-Smith has argued that its impact on the Central Powers helped tip the war toward the Allies toward the end of 1918. Economies worldwide also suffered. The U.S. economy went into recession from August of 1918 through March of 1919, and both the amusement and life insurance industries were particularly hard-hit. Who wants to go to a carnival when the whole world is falling ill?
However, the Dow Jones Industrial Average (DJINDICES: ^DJI ) actually rose throughout the pandemic period, gaining 81% from the end of 1917 to the end of 1919. A research brief published by Fidelity Investments during the bird flu panic of 2006 notes that markets have risen during more recent (but less deadly) pandemics as well: The 1957 Asian flu pandemic occurred during a strong postwar surge in the Dow, and the Hong Kong flu pandemic of 1968 also took place in the middle of a period of moderate market strength. We can go all the way back to the world's first (and stupidest) bubble, Tulipmania, to see evidence of widespread death and disease pushing market prices higher. Death is the ultimate risk, after all; a diseased investor just might be more willing to go all-in.
What took you so long?
The New York Stock Exchange (UNKNOWN: NYX.DL ) formalized its organization by drafting a constitution and renaming itself the "New York Stock and Exchange Board" on March 8, 1817. It had been 25 years since several stockbrokers gathered beneath a buttonwood tree on Wall Street to establish the city's first stock exchange.
Over the years, the Exchange endured devastating fires, crippling financial panics, technological transformations, and the growth of the securities industry into its high-tech, high-frequency modern form. In the 21st century, the Exchange became part of NYSE Euronext after merging with Europe's leading electronic exchange. NYSE Euronext's $14.1 trillion total market capitalization (as of the end of 2012) makes it by far the world's largest exchange; the Nasdaq, at $4.6 trillion, is less than a third the size.
No more eight-tracks for us!
Philips (NYSE: PHG ) first publicly demonstrated the compact disc on March 8, 1979. This was the endgame of an intense research battle between the Dutch electronics company and Sony (NYSE: SNE ) , which had developed and publicized similar prototypes as early as 1976. Philips' successful demonstration convinced Sony to combine forces, which resulted in the creation of a CD manufacturing and playback standard that was published the following year. It took three more years to move CDs into commercial production, which began in 1982 with the release of Billy Joel's 52nd Street and the initial sales of Sony's first CD player in Japan.
CDs began overtaking cassettes in the mid-1980s. In 1988, more than 400 million CDs were manufactured around the world. CDs reached their sales peak at the turn of the 21st century, and by 2007, more than 200 billion CDs had been sold around the world since Billy Joel first switched to the format in 1982. Today, the format is quickly becoming obsolete due to the advances of Blu-ray discs, which Sony also helped to develop, and the increasing ease of transferring large digital files without the need for physical media. Those 200 billion CDs could hold a total of about 134 exabytes of data, which is about 145 billion gigabytes. It seems like a lot until you realize that the world's Internet users generated that much data traffic in about three months in 2012.
A sweet start to a global craze
Americans eat more than 3 billion pounds of chocolate each year, and the earliest foundations of that industry were laid on March 8, 1765, when Irish immigrant John Hannon began producing chocolate in a water mill just outside of Boston. This is among the earliest known examples of American chocolate-production, and it's also notable for being the oldest continuously producing chocolate maker in the world. You've probably never heard of Hannon, who died at sea in 1779. You might have heard of his first financier, the man who bought out Hannon's business after his death and continued it under his own name: James Baker.
Baker's Chocolate, originally producing only a dissolvable chocolate cake for cocoa-like drinks and actual baking chocolate, remained under control of the Baker family for more than a century. It expanded nationally during the California Gold Rush and was eventually sold in 1896 after the death of fourth-generation owner William Henry Pierce, a step-nephew of the Baker clan. A series of acquisitions spread out through the 20th century brought the Baker's Chocolate brand to Kraft (NASDAQ: KRFT ) . Kraft, despite being the top-ranked producer in the world according to the International Cocoa Organization, is just one small part of what is expected to be a $98 billion global chocolate industry in 2016.
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