On this day in economic and business history...
The Dow Jones Industrial Average (DJINDICES:^DJI) witnessed one of the most violent days in its history on Oct. 24, 1929, which is now known as "Black Thursday." It was only a day after the Dow passed a tipping point into the Great Crash that would wipe out nearly 90% of the index's value.
The Washington Post led its business coverage with the headline "Stampede Breaks Wall Street Record." The New York Times called it "the widest break in the history of the stock market since the war, and one of the most costly to stockholders of all periods." Advanced high-speed tickers of the day, only recently installed in some elite brokerage houses, were pushed to their limits by a record-breaking exchange of 12.9 million shares. The eight-digit volume shattered the previous all-time mark by more than 4 million shares. But by the time it was over, the Dow ended up only 2% lower than the prior day's close.
A number of stocks fell precipitously in early trading, with many losing 10% or more of their value before a cavalry of bankers led by JPMorgan (NYSE:JPM) chairman Thomas W. Lamont rode in with a confidence-boosting show of support. "More than six billions of massed banking resources" were deployed, according to the Chicago Daily Tribune. The bankers' counter-stroke began with a large purchase of U.S. Steel (NYSE:X) shares above their market value. This stabilizing purchase bore eerie similarities to the final act of the Panic of 1907, when J.P. Morgan himself arranged for U.S. Steel to acquire a floundering competitor to avert widespread margin calls. What began as a rout -- the Dow was 11% lower at the open -- ended up as a deep breath before the real plunge.
Bankers presented an optimistic façade in the face of near-disaster. Lamont told reporters that his coalition felt that the sell-off was based on technical reasons rather than fundamental stock problems. Lewis E. Pierson of the Irving Trust pointed out that record-breaking earnings provided a stable fundamental base for most stocks. Charles E. Mitchell, chairman of National City Bank, agreed with Lamont's assessment, saying that the sell-off had "badly overrun itself."
However, Mitchell was hardly a proper spokesman for market rationality. Within a month, Senator Carter Glass (of Glass-Steagall fame) would say that Mitchell, "more than any 50 men ... is responsible for this stock crash." Mitchell had fueled a high-octane expansion of National City by selling $650 million (equal to nearly $9 billion today) worth of its stock in 1929 alone, and he was also responsible for inflating the value of many other stocks his bank held or managed. Mitchell's stock market shenanigans led to a criminal case against him for tax evasion in 1933.
Two trading days later, the Dow tipped into a two-day collapse without parallel in market history. The bankers could not, or would not, save the market from itself then, but they continued to present a brave and optimistic front nonetheless.
Building blocks for a patented toy empire
The world-famous LEGO blocks were first patented on Oct. 24, 1961. Awarded to Godtfred Kirk Christiansen -- son of the company's founder -- the patent for a "toy building brick" depicts LEGOs in a way that would be instantly familiar to any of the millions of children (and children at heart) who have played with these blocks over the years. Its basic system of interlocking is clear, but what's less clear is just how that system was created by this Danish toy-maker, which had been known primarily for its simplistic wooden toys.
The secret to LEGO's success lies with Kiddicraft, a rival toy-maker that had developed "self-locking building bricks" in the late 1930s. Kiddicraft, in a publicity stunt reminiscent of later LEGO stores and theme parks, even promoted these new playthings with elaborate public structures composed of thousands of neatly stacked bricks and blocks. Kiddicraft founder Hilary Fisher Page died a year before Godtfred Christiansen filed for a U.S. patent on the design, never aware of the shameless copycat effort, and LEGO eventually acquired the rights to the failed company during its vicious and somewhat ironic patent-infringement battles of the 1980s. Today, LEGO is one of the world's largest toy-makers, with $4.3 billion in annual revenue in 2012.
From sea to shining sea, telegraphically
The first transcontinental telegraph whizzed across the United States on Oct. 24, 1861, connecting the East and West coasts just as North and South were fiercely fighting the first battles of the Civil War. The effort was spearheaded by Western Union (NYSE:WU) President Hiram Sibley. His success further enhanced the company's growing power while immediately signaling the obsolescence of the Pony Express, which closed down just two days later.
Western Union's dominance of telegraph transmissions led Charles Dow to include the company on his earliest industrial averages, but it wouldn't join the true Dow Jones Industrial Average until 1916. Western Union continued these operations for 145 years -- well beyond the point when telephones and the Internet rendered the technology obsolete -- before finally closing its telegram services in 2006.
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