On this day in economic and financial history...
The early aviation industry was one of boundless promise for the right entrepreneurs. At first, it seemed the Wright Brothers might be the ones who dominated: They had the patents and the know-how. But less than two decades after their historic Kitty Hawk flight, the Wrights' company had merged with a primary competitor. No one had yet managed to turn aviation toward civilian uses, which would turn out to be far broader than the array of military aircraft built during aviation's early days.
William Boeing was the dominating force the aviation industry had lacked. His company, formed in 1916 (the same year as the Wright merger), quickly became a leader in aircraft manufacturing, particularly in the growing field of civilian airmail delivery aircraft. By 1925 Boeing (NYSE:BA) expanded into airmail transport, and within four years this sprawling enterprise would become the de facto monopoly of the airline industry.
On Feb. 1, 1929, Boeing Airplane and Transport Corporation became the United Aircraft and Transport Corporation. Within a year this new company (previously enhanced by the acquisition of another major air transport company) added Pratt & Whitney, some other notable aircraft and aircraft parts manufacturers, and National Air Transport, the first airline to provide cross-country service. William Boeing's new enterprise was now in control of the aviation industry, from the plant to the tarmac.
United Aircraft and Transport also included big-name aviation companies like Sikorsky and Northrop in its roster. Its airline operations were rechristened United Air Lines (NASDAQ:UAL), and in the days before passenger transport was common, this subsidiary nevertheless managed to dominate airmail delivery. The United Aircraft and Transport empire quickly caught the eye of Congress, particularly after the Air Mail scandal became a public embarrassment for both the Hoover and Roosevelt administrations.
Air mail would not have succeeded in the early years without government subsidy, which soon led to consolidation under three companies, including United Air Lines. This government-endorsed triparty monopoly -- and a series of fatal crashes in 1933 -- led to a Congressional investigation that produced the Air Mail Act of 1934. The Act barred the combination of manufacturing and transport operations and forced Boeing to break his enterprise apart. Boeing took the opportunity to step down from leadership and sold his stock in the company, which was quickly split into three of modern aviation's current leaders: transport company United Air Lines (now United Continental), Boeing, and United Aircraft, which became United Technologies. Boeing was to be the western manufacturing concern, and United Aircraft would build planes in the east.
Both Boeing and United Technologies have been members of the Dow Jones Industrial Average (DJINDICES:^DJI) for decades, which makes this one of three monopolies to see two post-divestiture companies inducted into the index. The others are Standard Oil, which is represented today by ExxonMobil and Chevron, and AT&T, which is represented by itself (though today's AT&T is more closely related to SBC Communications) and Verizon.
We are all Keynesians now
John Maynard Keynes first published his landmark book The General Theory of Employment, Interest and Money in February of 1936. Arriving in the depths of the Great Depression, Keynes' General Theory led to a revolution in modern economic thought -- particularly with regard to employment and demand, but also with regard to consumption and investment. This wide-ranging, influential book can hardly be summarized properly here, but its legacy can most clearly be seen in some of the policies of the New Deal, as well as subsequent expansions of these policies following World War II. Nobel Laureate economist Paul Krugman is the current standard-bearer of a more modern Keynesian worldview, continuing the outspoken promotion of generally liberal economic policies for which Keynes is known.
Thomas Edison, moviemaker
The "Black Maria" Kinetograph Theater film-production studio, the first of its kind in the United States, opened for business on Feb. 1, 1893. One of prolific inventor Thomas Edison's many business ventures, the Black Maria (pronounced "Mah-RYE-uh") was built at a cost of $637.67, or a little under $16,000 when adjusted for inflation. The studio was an unqualified success at popularizing Edison's kinetograph and kinetoscope, predecessors to modern film cameras and projectors. That May at the Brooklyn Institute of Arts and Sciences, Edison made his first demonstration of films shot at the Black Maria. A year after the studio's completion, the first film ever copyrighted was finished there, titled The Edison Kinetoscopic Record of a Sneeze. Here it is, in all its glory:
The kinetoscope was quickly replaced by better technology, but it was a commercial success while it lasted. The first kinetoscope theater opened in New York in 1894, charging a quarter for admission. If patrons had paid that price to watch that sneeze, it would have cost them about five cents per second. In modern terms, that would be like paying $13,000 to watch The Hobbit. One hopes that moviegoers in Edison's day got more than five seconds for their quarter.
Calculate your profits
Hewlett-Packard (NYSE:HPQ) unveiled the world's first handheld scientific calculator in February of 1972. The HP-35, so called because of its 35 keys, provided the technically inclined the ability to perform trigonometric, logarithmic, and exponential functions with ease. It was the first HP product to contain both the integrated circuit and the light-emitting diode, and it had arisen out of co-founder Bill Hewlett's challenge to his engineers to take the company's existing desktop-sized calculator and shrink it down to fit in his pocket.
At a cost of $395 (more than $2,000 today), the company expected few sales -- 10,000 would have been enough to recoup development costs. Instead, more than 300,000 calculators sold in its first three years on the market, and demand was so intense that the company had to warn eager buyers of potential shortages. The engineer's slide rule, a fixture at workplaces for decades, was soon rendered obsolete.