On this day in economic and business history ...
Less than a week after embarking on the greatest market surge in living memory, the New York Stock Exchange and the Dow Jones Industrial Average (DJINDICES:^DJI) each set new records. The Dow set a record for one-day point gains when it rose 38.81 points on Aug. 17, 1982. A day later, on Aug. 18, the NYSE recorded the first 100-million share day in its history, closing with a slight decline after a record 132.7 million shares exchanged hands. Despite the dip, investors were clearly unperturbed by the brief pause in a rapid rebound. The Los Angeles Times saw a celebratory atmosphere on the trading floor on Aug. 18:
When the exchange's closing bell clanged at 4 p.m. EDT, traders erupted in cheers and whistles as they tossed confetti high in the air. The celebration capped a day of intense activity on the Big Board floor that one supervisor likened to "playing football."
Euphoria spilled onto the Wall Street district streets. "There's a lot of Dom Perignon going out, and that's no spit," said Sam Glazer, manager of Disco Wines and Liquor, near the exchange building. ...
Even though the Dow Jones and many other stock indexes finished down slightly, the number of stocks ending higher at the close Wednesday outnumbered those closing lower by three to one -- an indication that buyers were still bidding up the price of the majority of stocks.
The previous day had very nearly broken the all-time volume record, and thanks to that day's big surge, the Dow had recorded a 7% gain just four trading days removed from its low point. By the end of 1982, the Dow had surged 35% beyond its bear-market low and was firmly ensconced at four-digit levels. Investors were gearing up for lower interest rates, and the Federal Reserve did not disappoint -- by 1985, the federal funds rate was roughly half what it had been near the end of 1981.
The NYSE experienced its first 500-million-share day during the Black Monday crash of 1987, and trading of 1 billion shares or more per day is now the norm. Automated trading is the prime driver of this trend, as it was even in 1982, which makes it far more likely that we'll eventually see a 100-billion-share day than another day in which only 100 million shares exchange hands.
Cataloguing the history of commerce
The first general-interest mail-order catalog produced in the United States (and possibly in the world) was sent to potential customers of Montgomery Ward on Aug. 18, 1872. The single-page sales pitch was targeted at the rural customers who couldn't make it into proprietor Aaron Montgomery Ward's Chicago dry-goods store. These customers had limited selections available nearby, and Ward saw an opportunity to expand his reach to many parts of the country.
Mail-order catalogs soon caught on with Ward's competitors as well as with his customers. Sears first produced its iconic catalog in 1888 and would rake in billions of sales from the bulky mailer until it ended the catalog program in 1993. Sales through mail-order catalogs were estimated at $100 billion per year in the early 1990s, and even today that market is thought to generate nearly $100 billion in annual sales. In real terms, the mail-order industry appears to be on a gradual but inexorable decline, but its persistence just goes to show that even an outdated business model can continue to work for some companies long past the point when the public has written it off.
What took you so long?
Eight years after its founding as the original Silicon Valley garage start-up, Hewlett-Packard (NYSE:HPQ) finally incorporated on Aug. 18, 1947. The company hadn't operated out of founder Dave Packard's garage since 1940, as the onset of World War II produced a widespread need for the precise electronics HP was initially known for. A decade after incorporation, HP went public at an initial valuation of $49 million. Considering that Hewlett and Packard had begun their enterprise with just $500 in cash shortly before its official 1939 founding, that's not bad at all -- over the full 19 years of HP's existence from founding to IPO, its two co-founders earned an annualized 83% rate of return.
A computing pioneer goes limp
One of the most notable companies on the vanguard of the minicomputer-cum-mainframe era fell into bankruptcy on Aug. 18, 1992. The Washington Post reported on its failure the following morning:
Wang Laboratories, the family calculator business that grew into a $3-billion-a-year computer giant in the 1980s, announced yesterday that it was filing for protection from its creditors in federal bankruptcy court in Boston after an effort to revive its sagging fortunes had run out of time and money. ...
The company said it had lost $140 million in the fiscal year ending in June. Although the results were better than the $378 million loss it reported in 1991, the company said it found itself squeezed for cash as it attempted to pay off long-term debt, close facilities, and lay off workers.
Wang Labs has since become a classic cautionary tale for the tech industry. It had been founded in 1951 by Dr. An Wang, whose iron grip on the company lifted it to great success in the 1960s with advanced desktop calculators and propelled it to its greatest glory in the 1970s and early 1980s with minicomputers and mainframes, as well as specialized word processing systems. In the pre-PC era, these machines were the only real computer option available for serious processing power.
However, just as Dr. Wang's guidance had led his company to success, his failure to foresee the rise of the PC as a superior option for business as well as home users resulted in Wang Labs' decline. Wang Labs built some early PCs, but Dr. Wang's extreme personal dislike of IBM led to the critical mistake of not building a fully compatible machine at the hardware level. Wang Labs' reliance on outdated technology (the mainframe and the minicomputer) meant that there was nothing to fall back on once this semi-proprietary PC experiment failed. Dr. Wang's insistence on installing his son as a successor also contributed to the company's failure, but that's a story of nepotism for another day.
Wang Labs emerged from bankruptcy a year later, but by then it was too late to restore the company to its old glory. Restructured as a software and services company, the new Wang Global was acquired by a Dutch network services company near the height of the dot-com boom. Its mainframe business, although no longer supported, somehow limped on. An estimated 1,000 systems were still operational in 2008 when the acquiring company announced the end of support services for the Wang VS mainframes, which had first been introduced in 1977.
Editor's note: An earlier version of this article incorrectly stated that Wang Laboratories went bankrupt in 1982, instead of 1992.