On this day in economic and business history...
President Woodrow Wilson established the Federal Trade Commission on Sept. 26, 1914. The FTC was one of Wilson's major legislative achievements, and the agency has served as an enforcement arm against monopolistic and unfair business practices for nearly a century. It has played important roles in many notable antitrust cases, including:
- United States v. Paramount Pictures, decided in 1948: broke up the vertically integrated Hollywood studio system, which locked non-theater-owners out of real competition.
- Federal Trade Commission v. Morton Salt, decided in 1948: prevented companies from offering quantity discounts only to the very largest customers.
- Federal Trade Commission v. Procter & Gamble (NYSE:PG), decided in 1967: reversed P&G's 1957 acquisition of Clorox, establishing the precedent that a potential competitor cannot acquire a smaller company with a dominant market share.
- United States v. Microsoft (NASDAQ:MSFT), settled in 2001: resulted in little real change to Microsoft's business practices but generated intense debate for years afterward over the role of government oversight and antitrust regulation in the digital age.
The FTC is also responsible for enforcing truth-in-advertising regulations, the Do Not Call Registry, and product labeling standards, among other key responsibilities.
The king of oil wells
California Star Oil Works struck oil in Pico Canyon, near Los Angeles, on Sept. 26, 1876. Pico Canyon Well No. 4 was far from the first effort to extract oil in the West, but it was the first commercially successful oil well to be sunk in California. Drilled far from any infrastructure in the remote Santa Susana Mountains, Pico No. 4 rewarded its resourceful field master with production of 25 barrels per day once the drill had burrowed 370 feet beneath the surface. It would eventually become one of the most remarkable oil wells in history.
The success of No. 4 began a Western oil boom that reignited a frenzy that had gone out of California's mature resource-extraction industry. Before long, the trappings of a full-fledged oil industry began to emerge near Pico Canyon. The first oil pipeline in California was built three years later to connect Pico Canyon to a nearby refinery, which was itself one of the first refineries built in the West. However, by 1879 California Star found itself short on the money needed to fully exploit the wealth of oil beneath its rigs -- No. 4 alone had increased in productivity to 150 barrels per day, and it was far from the only well in the region by this point. In desperation, the company's ownership agreed to a buyout offer from Pacific Coast Oil, which would eventually become California's largest oil company. You know it today as Chevron (NYSE:CVX).
Pico No. 4 continued to produce as Chevron grew from a regional operator into one of the world's largest oil companies. It was not capped off until 1990. Its 114 years in nonstop operation made No. 4 the oldest continuously operating oil well in the world.
Investors like Ike
The Dow Jones Industrial Average (DJINDICES:^DJI) sustained a 6.5% decline on Sept. 26, 1955 as it reacted to news of President Dwight Eisenhower's heart attack. The day's loss was pegged at $14 billion, nearly as much as was lost to the brutal month of October 1929, a stretch in which the market lost $16 billion during a 20% collapse. The New York Times expressed the day's sentiment:
Stock market trading, brokers said, appears to be dominated by the conviction that President Eisenhower would not again be a candidate and by the oft repeated assertion that only he could win in 1956 for the Republicans. Traders were credited with believing that a Democratic Administration would not be so friendly to business. ...
The volume on the New York Exchange was 7,720,000 shares, the highest figure since July 21, 1933, when 9,573,900 shares were sold. Of the 1,248 issues traded yesterday, only thirty-eight rose. ... The day saw 131 new 1955 lows.
The market did not exactly surge back from its losses, but it didn't stay down in the dumps, either. By the end of 1955, the Dow had risen 7% from its Sept. 26 closing price. Eisenhower recovered from his heart attack and went on to trounce Democrat Adlai Stevenson in the 1956 election, winning all but seven of the 48 states (Hawaii and Alaska joined the Union during Eisenhower's second term) and 85% of the Electoral College votes.
The claim that Eisenhower was friendlier to business does seem to be borne out by the Dow's total returns during his presidency and the tenures of John F. Kennedy and Lyndon B. Johnson. Over the course of Ike's two terms, the Dow gained 125%, but the eight-year tenure of the two Democratic presidents succeeding him produced total gains of just 47%. Eisenhower, however, was far from the best Republican for the stock market -- President Calvin Coolidge enjoyed real returns of 29% per year during his Roaring '20s presidency. Of course, he was also pretty lucky to bow out at the top, handing the nation's reins over to Herbert Hoover in early 1929.
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