Wall Street History: A Robber Baron And A Beer Baron
This week in financial history is dominated by two very important birthdays. One of the men brought the world fuel to heat homes, run machines and power the roaring twenties. The other brought us beer. (Missed last week's article? Wall Street History: iPhone Launch, IRS Birth And ZZZZ Best Fraud.)
IN PICTURES: 8 Ways To Survive A Market Downturn
A Pirate's Life for Me
On July 6, 1699, William Kidd, a New York businessman cum pirate hunter cum pirate, was captured in Boston. Although it rarely makes it into the write-ups about him, Kidd's misadventures were a business venture at the heart. Privateers like Kidd collected venture capital and went hunting for enemy ships - those of pirates or foreign powers that were at war. In return for tracking down enemies on the high seas, these privateers were given a royal charter to keep the majority of the booty, paying as little as 10% to the crown, and split it up among the crew and investors.
The Homestead War
In 1892, Andrew Carnegie combined his companies into one Carnegie Steel Company and named Henry Frick the chairman. Frick was staunchly anti-union and it happened that the Homestead plant went on strike in the same year he became chairman. The price of steel had dropped and the cost conscious Frick wanted to reduce wages to maintain a profit. The union was against any reduction and a lock out and strike ensued. Carnegie was out of the country and Frick was determined to break the strike. Frick brought in guards from the Pinkerton Detective Agency to protect non-union workers who were brought in to reopen the plant.
On July 6, 1892, a fight broke out between the strikers and the guard and seven people were killed. Gunfire, bombs, clubs and stones characterized the ongoing clashes between the union, non-union workers and guards. Ten people were killed and many more were wounded. The militia was eventually called in and the mill went back into operation with non-union workers. The Homestead strike was one of the most violent in American history. (Learn more about the original man of steel in The Giants Of Finance: Andrew Carnegie.)
The Cross of Gold
On July 7, 1896, the democratic party candidate, William Jennings Bryan, made a famous speech against a gold standard. The impassioned plea for bimetallism ended with the lines "You shall not press down upon the brow of labor this crown of thorns, you shall not crucify man upon a cross of gold." The republicans and sound money policy won out despite their lack of lyrical grace.
Rockefeller Is Born
Widely considered the richest man in history, John D. Rockefeller had a humble start on July 8, 1839. The future oil tycoon was the second of six children and his father led a nomadic life selling goods across the country while his mother raised the children. Rockefeller received an unusually good education for his time and found work as a clerk at a commission house at the age of 16. He left the commission house to form a partnership at the age of 24.
Rockefeller went on to build an oil empire, called Standard Oil, which can still be seen today. Standard Oil was carved up into smaller, but still sizable, chunks under the government's supervision. Although their names have changed over the years, Chevron (NYSE:CVX), Exxon Mobil (NYSE:XOM) and ConocoPhillips (NYSE:COP), among others, all share a Standard Oil pedigree. (Learn more about John D. in J.D. Rockefeller: From Oil Baron To Billionaire.)
On July 8, 1853, the U.S. established trade with Japan at the point of a canon. Commodore Mathew Perry forced the isolated nation to grant the U.S. favored nation status and open up trade routes. Touted as a huge opportunity for American exporters, the intrusion may have proved far more profitable for the Japanese. They quickly learned the new industrial techniques and experienced rapid economic progress.
The Journal Launches
On July 8, 1889, the first issue of the Wall Street Journal was published in New York. The paper grew out of a two-page newsletter run by Edward Jones and Charles Dow. Dow and Jones used the Journal to publish basic financial information, their market average and important financial news, making it much easier for the public to stay informed. Prior to the Dow Jones Average and the Wall Street Journal, there was no consistent or reliable source for stock information. The Wall Street Journal quickly became the most read financial paper in the United States and the DJIA consequently became the dominant average for people wanting to get a read on the direction of the market. (For more on Dow and his deeds, read Giants Of Finance: Charles Dow.)
On July 8, 1932, the stock market hit its lowest point during the Great Depression – the DJIA dropped to 41.22. The interesting thing is that stocks bottomed out long before the depression was over and even rallied several times despite the economic hardships. This phenomenon has been seen once again with the rally during the general economic malaise that followed the subprime meltdown and credit crises.
This Bud's For You
On July 10, 1839, Aldolphus Busch was born in Germany. Busch came to America in 1857, and entered the brewery business through Eberhard Anheuser, eventually marrying his daughter. Busch's role in the incorporated company, Anheuser-Busch, was more a salesman than brewmaster. He pushed his beer every way he could, even hiring mourners to attend saloon-keeper's funerals. When the formula for Budweiser came into his hands along with the ability to pasteurize, Busch spread the beer across the nation. He died in 1913, before prohibition would make his business illegal, and was buried in St. Louis – the heart of his beer empire. In 1957, Anheuser-Busch became the largest brewer in the nation.
We'll end on that happy note. Next week we'll celebrate the birthday of America's first millionaire, the opening of the happiest place on earth, and much more.
Catch up on the latest financial news; read Water Cooler Finance: More Spilled Oil, Fewer Jobs.