On this day in economic and business history...

The Dow Jones Industrial Average (^DJI 0.69%) expanded to its present-day roster of 30 stocks on Oct. 1, 1928. Barron's covered the expansion and its attendant changes rather succinctly on the day it took place:

The purposes of these changes are obvious: to make the averages more representative of a greatly expanded market; to substitute for inactive or unrepresentative issues stocks of greater activity and significance, not only marketwise but as indices of the country's business; and to minimize the possibility of unusual fluctuations in any one stock distorting the averages on any given day. ...

As constituted at present, the new Dow-Jones averages of industrial stocks represent a fair cross-section of American business. Roughly, the total of the 30 stocks is composed as follows: Motors, 13%; chemicals, 9%; steel and equipments, 8%; oils, 7%; mining, etc., 11%; electrical equipment, 7%; food products, 4%; stores, 8%; farm equipments, 7%; amusements, luxuries, and miscellaneous, 26%.

The Dow's expansion to 30 components was the most notable move -- but not the last -- that its overseers would make in the 1920s, a decade in which changes to the index proceeded as frenetically as the growth of the market itself. From 1920 to 1929, the Dow changed 11 times, more than any other decade in its history. With so much changing in the American economy, it only made sense for the Dow to shift around more stocks than ever before or ever after.

Only one of the unprecedented 16 stocks that joined the Dow on Oct. 1, 1928, has remained part of the index ever since: Standard Oil of New Jersey, the largest of the "Baby Standards" created after the 1911 antitrust breakup of John D. Rockefeller's Standard Oil. It eventually changed its name to Exxon in 1973, reworking its long-standing Esso (the phonetic spelling of "S. O.," the initials of Standard Oil) brand into a new corporate identity. Exxon became ExxonMobil (XOM 0.39%) in 1999 after completing the largest energy-industry merger in American history, and it remains the largest publicly traded energy company by a wide margin.

The rise of the House of Morgan
Everyone with even passing knowledge of big banking knows about John Pierpont Morgan, the founder of JPMorgan (JPM 1.44%). However, far fewer people realize that J. P. Morgan got his start in banking thanks to the groundwork laid by his father, Junius Spencer Morgan. J. S. Morgan began his ascent to the upper echelons of London's banking world on Oct. 1, 1854, when he became partner at George Peabody's merchant banking firm. A decade later, Peabody retired, and the elder Morgan assumed control, renaming the firm J. S. Morgan & Co -- the first bank named solely after the Morgan dynasty.

J. P. Morgan's banking career began in 1857 at his father's bank, and for several years he served as the firm's American agent. Less than two months after his father assumed control of the London bank, J. P. Morgan struck out on his own with two partners to create his first independent firm. In 1871, Morgan partnered with Drexel University founder Anthony J. Drexel to create Drexel, Morgan & Co., which is the direct descendant of today's JPMorgan Chase, the largest bank in the United States.

A card for the discerning capitalist
American Express (AXP 2.56%) adopted its present business model on Oct. 1, 1958, when it launched its first credit card, less than half a month after the first credit card reached a few lucky Californian consumers. This sudden competition was not AmEx's primary motivation for entering the market -- the financial-services company had been watching the growth of "charge cards" for years, and it had even tried to purchase the pioneering Diner's Club in 1956. But negotiations broke down when AmEx executives decided that Diner's Club might diminish the company's prestige. A year later, AmEx decided to release its own card.

Publicity percolated around the launch for some time, and just as AmEx execs had foreseen, the company's undiluted prestige produced high demand. More than 250,000 cards were issued, and 17,500 merchants connected to AmEx's payment network by the October launch date, and despite (or because of) higher fees than competing cards, AmEx quickly staked out a place as the premium card. The company continues to perform exceptionally well in that market niche to this day, as its cardholders spend over twice as much annually per card as do the cardholders of its two largest competitors. Despite the fact that the 50th anniversary of AmEx's first credit card occurred in the middle of the worst recession in nearly a century, the company's bottom line was still more than 250 times larger in 2009 than it was in 1959. Two years later, after recovery brought its profits to a more normal level, AmEx earned nearly 600 times more than it had in its first year a credit card company.

Rise of the Medici dynasty
Giovanni de Bicci de Medici founded the Medici Bank in Florence on Oct. 1, 1397. Thus began the ascent of the Medicis to the halls of power in Renaissance Europe. The bank pioneered double-entry accounting, which would not be codified in print for another century, and over the course of this century the Medicis would grow into the wealthiest and most powerful family in Europe -- a sort of Renaissance-era Rothschilds. The Economist explores the ways in which the Medici Bank helped the Medici family's ascent:

The bank grew rapidly. At its widest, it had nine branches outside Florence. It also had many correspondent banks. Though the scale of its network was not new -- the Bardi and the Peruzzi, the great Italian banking houses of the early 14th century, had more branches and probably more power -- the Medici bank was the most international of its time. And it used this network to great effect for what became its biggest client: the Vatican, to which it brought the tithes and taxes due to Rome from other branches of the church commercial in Europe.

So successful was the bank that under [Giovanni's son] Cosimo de' Medici, who ruled it with an iron rod, the Medici were for a long while put in charge of papal finances. Until 1434, more than half of the bank's revenues came from its Rome "branch" (which followed the pope around on his travels). Its connections with Rome and the Vatican's reliance on it gave the bank immense clout both with other customers and with the church itself. On one occasion, the records show, the bank got the elevation of a cleric to a bishopric delayed until his father, a cardinal, had repaid his own and his son's debts.

The bank collapsed in 1494 as a result of (what else?) excessive leverage and bad debts. Fiscal mismanagement had disbursed loans to unworthy borrowers throughout Italy, leaving a bank leveraged perhaps 20-to-1 against a looming wave of defaults. The history of banking is ever the history of banking crises, and these crises have been much the same for over 600 years. Close ties between the Medicis and the Vatican paid dividends long past their banking empire's collapse in 1494 -- two decades later Giovanni di Lorenzo de Medici became Pope Leo X, the first of four Medici popes.

Revolution and repression in the Far East
A long, bloody civil war between Communists and nationalists came to a definitive end on Oct. 1, 1949, when Mao Zedong assumed leadership of the newly created People's Republic of China. This newly Communist China comprised 541 million people and boasted a nominal GDP of about $41 billion, which was equal to about 15% of U.S. GDP at the time.

Mao ruled China until his death in 1976. The country's population exploded during his leadership, reaching 930 million people by 1976. GDP had grown to $151 billion by 1976, which slightly more than doubled nominal per-capita GDP from 1949. By the standards of Western nations, this was a horrible underperformance: From 1949 to 1976, America's nominal GDP per capita increased nearly fivefold.

It was only after the Tiananmen Square protests in 1989 and former Chairman Deng Xiaoping's reformist "southern tour" that China's GDP began to truly take off. When Deng concluded his tour in 1992, China's GDP was $423 billion. Today, it stands at $7.3 trillion. The Chinese economy grew at an incredible rate of 16% per year from 1992 to 2011, leaving other countries in the dust in its continued transition toward a more market-driven economy. Who knows how powerful the Chinese economic engine might be today, had it not used the wrong fuel for so many years?