On this day in economic and business history...
Wall Street had a rare quiet moment on Oct. 25, 1929. The Dow Jones Industrial Average (DJINDICES:^DJI) rose by half a percentage point after a few frenetic days of trading lopped off billions in market value. Reports of a $1 billion pool of financial support -- amassed under the leadership of JPMorgan (NYSE:JPM) chairman Thomas W. Lamont -- helped calm the nerves of American investors, who traded less than half the record-breaking number of shares of the day before.
The attitude on display that day was remarkably upbeat. In a period filled with dramatic daily moves, it appears that Wall Street's insiders took this moment of calm as a sign that the prophesied "permanently high plateau" might truly be real. A number of leading financial, business, and political personalities issued reassuring statements, which would be proven quite wrong just one trading day later:
- Arthur W. Loasby, president of the Equitable Trust Co., asserted: "There will be no repetition of the break of yesterday. ... I have no fear of another comparable decline."
- M. C. Brush, president of the American International Corp., tempered his optimism, saying: "I believe that the very best stocks can be bought at approximate present prices. It is time, however, to exercise great caution."
- John M. Davis, president of the Lackawanna Railroad, pointed out record-low inventories, claiming that "with that condition there is no reason to believe that this country will not have good general business throughout the winter."
- R. B. White, president of the Central Railroad of New Jersey, dismissed all fears, saying that "business will continue in the way it has."
- Walter C. Teagle, president of the Standard Oil Company of New Jersey, noted that "production of crude oil and gasoline above current requirements continues the outstanding factor."
- J. L. Julian of the Fenner and Beane brokerage firm claimed: "The worst is over. ... General conditions are good. Our inquiries assure us that throughout the country business is sound."
President Herbert Hoover also made a gaffe reminiscent of 2008 presidential candidate John McCain's on Oct. 25, when he told financial reporters that "the fundamental business situation is on a sound basis." Of course, this came back to haunt Hoover just as McCain's statement haunted him in the closing days of the 2008 campaign.
Even comedian Will Rogers chimed in with a lighthearted contrarian letter to the editor of The New York Times that read: "Why, if the cows of this country failed to come up and get milked one night it would be more of a panic than if Morgan and Lamont had never held a meeting. Why, an old sow and a litter of pigs make more people a living than all the steel and general motor stock combined."
Little-noticed and buried in the back pages of the financial papers, the first reports of suicides by ruined stock-speculators began to trickle into the public consciousness. The Washington Post reported the hanging death of a noted Chicago realtor, whose investments had been destroyed by the chaos of the preceding week.
O Canada(ian stock exchange)!
The Toronto Stock Exchange was created on Oct. 25, 1861, in the Toronto Masonic Hall. It was a puny operation in its formative days, offering trades in only 14 firms by 1871. It was formally incorporated in 1878, and has grown over the years to become one of the world's largest exchanges, with approximately $2.1 trillion in total market capitalization in the first quarter of 2012.
Caterpillar (NYSE:CAT) traces its history back to Oct. 25, 1909, when mechanical inventor and entrepreneur Benjamin Holt and his nephew Pliny Holt acquired an Illinois factory to produce Benjamin's innovative "caterpillar-track" tractors. The factory became the base of operations for the newly formed Holt Caterpillar. Within two years the upstart manufacturer had become so popular with farmers and construction concerns that its founding 12 employees were joined by more than 600 others, and its tractors were in demand throughout the Western Hemisphere.
Holt's tractors were employed as support machinery in World War I, where their tracked design helped inspire the treads of early tanks. The postwar economy proved difficult for Holt, but the company was hardly alone in its struggles. As a result of these conditions, Holt Caterpillar merged with its chief competitor, the C. L. Best Gas Tractor Co. -- founded by a former Holt employee in 1910 -- in 1925, which marked the beginnings of Caterpillar's rise to global dominance.
Nuke your dinner
The first modern microwave oven went on sale on Oct. 25, 1955. That day, the Tappan Stove Co. placed a 220-volt unit -- which looked very much the same as the microwave you probably have in your kitchen -- on sale for $1,295, which would be more than $11,000 today. As you might expect, this astoundingly expensive alternative cooking device did not sell particularly well. It took another decade for the first successful microwave, Raytheon's (NYSE:RTN) Radarange, to hit the market. If anyone was poised to succeed in the microwave business, it was Raytheon, where the earliest microwave ovens were developed and patented in the early 1950s -- Tappan's technology was actually licensed from Raytheon.
Today, an estimated 1 billion microwave ovens are in use around the world, and more than 70 million new ovens, nearly all of them manufactured in Asia, are sold worldwide each year. Many can be found for less than $100 in the United States, which means that the cost of a microwave oven has declined by more than 99% in real terms since Tappan's first expensive effort.
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