On this day in economic and business history...
The first two Home Depot (NYSE:HD) warehouse stores opened to the public on June 21, 1979. That day, the Atlanta area got its first glimpse of a truly colossal retail future: Each store was stocked with more than 250,000 different products and was so large that a local radio personality quipped, "If these stores were any bigger, they'd be paying Alabama sales tax." Home Depot's own corporate blog recounts the extreme eagerness of co-founders Arthur Blank and Bernie Marcus to get people in and shopping:
Bernie and Arthur handed their kids 700 $1 bills and sent them into the parking lots of the stores. Yup, they were paying people to go in and spend money. After a slow day, the kids still had $1 bills in their hands. ...
In addition to filling an important need in the marketplace, the company took a "whatever it takes" approach to customer service from the very beginning. "We had so few customers that if I saw someone leaving a store empty-handed, I took it personally," Bernie Marcus wrote in Built from Scratch, the book that chronicles the company.
He'd follow the would-be customer out into the parking lot, asking what they were looking for that we didn't carry, then offer to hand-deliver the item himself. (After ordering the item for future stock, he would head to a competitor or wholesaler to pick it up, taking care to scrape off the stickers.)
The co-founders' persistence paid off. Five years later, Home Depot began trading on the Big Board, and it was already a billion-dollar company with 19 stores and roughly $250 million in annual sales. There were 100 Home Depots by 1990 and 1,000 stores by 2000.
The year before it crossed the four-digit store mark, Home Depot joined the Dow Jones Industrial Average (DJINDICES:^DJI) as only the second retail-store enterprise out of 30 components. In the 13 years that followed, Home Depot became the best-performing addition out of a rather ill-timed group, more than doubling the gains of both the next-best addition and the Dow itself. Today, Home Depot is widely considered one of the housing industry's most important bellwethers, and its earliest shareholders have enjoyed one of the greatest rides of all time: In the first 20 years of Home Depot's life as a public company, a single share (with dividends reinvested) gained more than 123,000%.
Desalting the seas
The first desalination plant in the world began operating on June 21, 1961 after a ceremonial button-press from the desk of President John F. Kennedy gave suitable pomp to the historic moment. The term for this new technology hadn't been settled yet -- The Washington Post called it a "water factory," and The New York Times used the popular phrase "desalting plant" in its headline -- but its importance was nevertheless notable enough to draw participation from the highest levels of American government. Kennedy himself called it:
An important stride toward the achievement of one of the oldest dreams of man -- extracting fresh water from the seas. ... The American people are ready and willing to share the fruits of our research -- and the knowledge of our technicians -- with those nations and peoples who wish to work side by side with us to enlarge the supplies of water available to mankind.
The plant, built and operated by Dow Chemical (NYSE:DOW), was to purify a million gallons of seawater each day at a cost ranging from $1 to $1.25 per thousand gallons. The government had agreed to subsidize the plant's operation at a modest loss, expending between $0.70 and $0.95 per thousand gallons to distribute the water to the city of Freeport and to Dow's operations. At its costliest, the plant would cost the government about $350,000 per year.
Today, there are roughly 15,000 desalination plants at work around the world, and by 2016 there may be enough processing capacity for 107 million cubic meters of water per day -- equal to approximately 28.3 billion gallons of fresh water. However, an innovation in graphene-sheet production developed by Lockheed Martin (NYSE:LMT) could significantly improve both the efficiency and the capacity of the world's desalination plants within the next few years. Click here to read more about this promising breakthrough.
With self-taught civilian test pilot Mike Melvill at the controls, SpaceShipOne was released by its carrier craft and fired its hybrid rocket motors at an altitude of 47,000 feet over California's Mojave Desert. As Melvill steered the ship outside the atmosphere, he spent about three minutes in weightlessness.
To help dramatize the moment, Melvill opened a bag of M&M's and watched the candy float around the cockpit. "It was amazing," he said later.
SpaceShipOne reached an altitude of 62 miles, putting it into suborbital space.
Financed by Microsoft co-founder Paul Allen to the tune of $25 million and designed by pioneering aerospace engineer Burt Rutan, SpaceShipOne was built in part to claim victory in the $10 million Ansari X Prize competition. It won this prize several months later and was retired from active service.
Today, a growing range of ambitious private companies compete for the prestige (and potential profit) of sending things and people into outer space. Elon Musk's SpaceX is perhaps the most well-known, but Rutan's Scaled Composites is also working with Virgin's Richard Branson to develop and promote private space-tourism ventures. Bigelow Aerospace is another major player, and it may have the most ambitious (though still realistic for the next few years) goal of all: a privately developed commercial space station.
Reaping the rewards of innovation
The name Cyrus McCormick is indelibly linked to the mechanical reaper, which -- along with the cotton gin -- is widely considered one of the most important technological advances in farming during the early Industrial Revolution. McCormick was not the first to develop a reaper, but his tireless tinkering and relentless promotion of the machine finally brought a viable product to market -- several years after he gained his first patent for the reaper on June 21, 1834.
McCormick's father Robert had worked to develop a reaper for more than two decades, but it fell to Cyrus to develop the first one that could handle the varying field conditions of a typical farm. The McCormick reaper was one of the first to combine several steps of harvesting into one machine, and its horse-drawn design was more efficient than others of its generation that were pushed, rather than pulled behind the team. After demonstrating an early version in 1831, McCormick raced against other inventors to patent his device, as a rival announced the construction of a similar reaper in 1833.
The shortcomings of McCormick's first patented reaper and the Panic of 1837 proved major setbacks, but the McCormick family forged ahead, finally beginning to sell machines in 1840. Cyrus' continuous improvements to the 1834 design resulted in another patent in 1845, and two years later McCormick and his brother Leander moved their manufacturing operations to Chicago, which was an ideal distribution point to the vast grain fields of the American Midwest. From then on, McCormick's business grew rapidly, owing in no small part to his innovative business practices, as recounted by PBS' American Experience website:
Sales improved as [McCormick] guaranteed performance ("15 acres a day" or your money back), allowed farmers to buy on credit and pay over time, educated his customer base with demonstrations, and advertised with satisfied customer testimonials. He set a fixed price of $120 ("take it or leave it!") and removed the hassle of dickering over more money. He developed interchangeable replacement parts and had them readily available. He trained men on the mechanics of his machine and on his business and then sent them out as the first traveling salesmen. McCormick's motto was "One Price to All and Satisfaction Guaranteed."
By 1860, McCormick's company was selling more than 4,000 reapers a year despite a major patent-suit loss in 1855, which saw future President Abraham Lincoln join the defense against McCormick's suit (Lincoln was not a factor in the case).
This highly successful company became one of financier J. P. Morgan's major consolidation successes in 1902, when it was merged with several other agricultural equipment firms to form International Harvester. It became a member of the Dow in 1925 and remained until 1991, a few years after changing its name to Navistar (NYSE:NAV). The current descendant of McCormick's reaping innovations bears little resemblance to the company he founded: International Harvester's agricultural-machinery division was sold off in 1984, and Navistar is now known primarily for producing trucks and buses.
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