On this day in economic and business history ...
Charles and Frank Duryea demonstrated the first standardized gas-powered automobile on Sept. 21, 1893, in Springfield, Mass. It wasn't the first automobile ever built -- Karl Benz had essentially invented the gas-powered car seven years earlier -- but it was the first viable American automobile, and it also became the basis for the first "mass-produced" car in the country, to the extent that demand allowed in those days. Don H. Berkebile later wrote an in-depth perspective on this event for a Duryea exhibit at the Smithsonian's Museum of History and Technology:
On September 21 the completed carriage was rolled onto the elevator at [munitions manufacturer John W.] Russell's shop. Seeing that the running gear was too long for the elevator, they raised the front of the machine, resting the entire weight of 750 pounds on the rear wheels. Once outside the building, they pushed it into an area between the Russell and Stacy buildings. After dark, "so no one will see," Will Bemis, Mr. Markham's son-in-law, brought a horse and they pulled the phaeton out to his barn on Spruce Street. There, on Spruce and Florence Streets the first tests were made. The next day Frank wrote his brother saying, "Have tried it (the carriage) finally and thoroughly and quit trying until some changes are made. Belt transmission very bad. Engine all right."
The Duryea vehicle took a complex and circuitous route to completion. Its first engine, built in 1892, was essentially slapped together with spare parts MacGyvered into something resembling a machine. By 1893, Frank Duryea rejected this slapdash contraption and proposed a new model based on "previously tried mechanical principles." Even so, in later interviews, Frank (the engineer of the pair) expressed some embarrassment at some of the machine's deficiencies. Many of the vehicle's parts were scrounged or rigged up from what could be found in the workshop.
Despite these difficulties, public interest was high enough to produce several articles in the local newspaper, which proclaimed a week before the test drive that the Duryeas' "new motor carriage ... will revolutionize the mode of travel on highways, and do away with the horse as a means of transportation." The writer of this article should certainly be commended for such foresight at a time when the "motor wagon" did not exist as a practical matter in the United States.
The first vehicle's faults were readily identified, and after the brothers took a brief vacation (building a new industry from the ground up is hard work), work resumed and upgrades were made. In November of that year, an upgraded version of the vehicle sputtered down the streets of Springfield to the astonishment of those along its route. Early in the following year, Frank succeeded in repairing the machine's faults to the extent that it could now safely carry passengers -- a necessary step toward attracting investors and buyers.
In 1895, the Duryeas created the first American automaker, the Duryea Motor Wagon Company, to capitalize on their creation. That year, a victory in the Chicago Times-Herald race over three Benz automobiles attracted great publicity to the brothers' firm, and by the end of 1896 they had sold 13 Duryea Motor Wagons, all built to the same specifications. Another victory in a London-to-Brighton race in England in 1896 further boosted their popularity. A privately owned Duryea Motor Wagon was also involved in the world's first car accident that year on the streets of New York City, establishing at the very beginning the poor reputation of that city's motorists.
Frank left the company by the end of the century, but Charles soldiered on. The brothers' reputation was by then rock-solid among both motorists and mechanics -- no less a luminary than Ford (NYSE:F) founder Henry Ford later said: "[T]he Duryea car was a masterpiece. It did more to start the automobile business than any other car ever made." (One of the original 13 Duryea Motor Wagons now resides in the Henry Ford Museum in Dearborn, Mich.)
Charles Duryea's automotive ventures reached a peak in 1905, when his workforce produced 60 cars. However, by then the auto industry had already moved on. Oldsmobile manufactured one out of every four of the 24,000 cars made that year, and Cadillac built a further sixth. Even Ford's 1905 production of 1,600 cars far outpaced Duryea.
Undaunted, Charles Duryea twice attempted to build a "car for the people." The first, built from 1907 to 1914, never saw much success. An automobile-motorcycle hybrid, attempted in 1916, failed because of lack of funding. By then, Ford's Model T had become the American people's car, and the Duryea name faded into history.
Today, the U.S. auto industry now directly employs approximately 2.5 million Americans and sells about 14 million vehicles per year. It generates about $135 billion in taxes each year for governments at all levels. The Center for Automotive Research estimates that those directly employed by the auto industry support $500 billion in additional annual compensation for more than 8 million related private-sector jobs. All of this can ultimately trace its origins to that first ride on Sept. 21, 1893.
The Dow Jones Industrial Average (DJINDICES:^DJI) surged 11.4% higher on Sept. 21, 1932. Only three other trading days in history have ended with larger gains for the Dow, and all three also took place during the early Great Depression. What happened that day to shock the market into a buying frenzy? Nothing in particular, as The New York Times noted:
The advance on the Stock Exchange was violent at times, particularly in some of the stocks believed to have been favored recently by speculators for the decline. A maximum gain of 11 points in United States Steel preferred, for instance, could not be easily explained on any other ground than that of frightened covering. The occasion for the fright was not apparent, but it was obviously a powerful impulse in yesterday's market. ...
The action of the market suggested that Wall Street's judgment as to the significance of the recent "stabilizing" or "consolidating" movement may have been correct. ... The spontaneous buying movement yesterday, with the attendant "run-in of the shorts," indicated that the market not only had worked itself into a favorable technical position, but also that its steadfast resistance to pressure recently had helped build new confidence.
This sudden surge nearly reversed a mini-bear market within a longer-term uptrend that had begun in the summer of 1932 -- nearly, but not completely. The Dow continued to suffer until the end of the following February, at which point it was only 22% above its 1932 low point and had fallen by a third from its closing level of Sept. 21, 1932. The bulk of the Dow's recovery did not begin in earnest until after the inauguration of President Franklin D. Roosevelt.
There and back again
J.R.R. Tolkien's The Hobbit was first published on Sept. 21, 1937. Its impact on the entertainment industry is indisputably enormous, particularly when you consider that The Lord of the Rings was first devised as its sequel. Tolkien's works are widely credited with creating the high-fantasy genre, and its influence has spread into virtually every possible crevice of creativity involving swords and sorcery ever since.
The books' direct financial impact alone is incredible: The Hobbit has achieved sales of more than 100 million copies, and The Lord of the Rings, counted as a single volume, is the second-best-selling book in history, with more than 150 million copies sold to date. Even if we assume that every copy sold for roughly only $10 (highly unlikely, given LotR's typical publication as a trilogy), that works out to a bare minimum of $2.5 billion in book revenue. And the ecosystem spawned from Peter Jackson's Tolkien films has added billions more to that total in recent years.
Jackson's four Tolkien blockbusters thus far have combined for nearly $4 billion in worldwide ticket sales for Time Warner's (NYSE:TWX.DL) Warner Brothers and New Line subsidiaries. Another two Hobbit films (if you want to know why a single book was stretched into a film trilogy, a $1 billion average take should be all the explanation you need) will be released by the end of 2014.
If a work contains elves and orcs and swords and sorcery, you can be fairly sure that Tolkien's world helped inspire it in some way. It would be exhausting and nearly impossible to calculate all of these derivative works, but one of the most popular high-fantasy games of all time, Activision Blizzard's (NASDAQ: ATVI) World of Warcraft, is assumed to have generated more than $1 billion in subscription revenue a year for at least six years running.
Would Tolkien himself have approved of all this commercialization? Probably not. His son, Christopher Tolkien, responsible for the eventual publication of The Silmarillion, thinks Hollywood has warped the world of Middle-Earth. In an interview with Le Monde, conducted after the first movie trilogy's release, he noted: "The chasm between the beauty and seriousness of the work, and what it has become, has overwhelmed me. The commercialization has reduced the aesthetic and philosophical impact of the creation to nothing."
Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter, @TMFBiggles, for more insight into markets, history, and technology.
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