This week in financial history is a bit more positive now that we are out of September. True, October still has its fair share of crashes, failures and scandals, but as we'll see, it has a good side, as well. (Missed last week's article? Check out Wall Street History: Japan Inc, Bailout Beginnings And Tax Reform.)
The Franchise King
On October 5, 1902, Raymond Albert Kroc was born in Illinois. Kroc spent half a century without doing anything remarkable. In 1961, however, he was selling milkshakes around the country and stumbled upon the McDonald brothers and their burger joint. The brothers were successful in their existing locations, but their attempts to franchise had stalled.
Kroc bought the operation and started to introduce Henry Ford's assembly line concept to the restaurant business. He took the streamlined menu, quick service and feel of the McDonald brothers' place and replicated it all over the country. Although the name owes to the founding brothers, everything else that is McDonald's Corporation is thanks to Ray Kroc – one of the latest blooming entrepreneurs in history.
IN PICTURES: Top 7 Franchise Dangers
The man who may have inspired Ray Kroc's methodology made quite a leap himself on October 7, 1913. On this date, Henry Ford began to integrate the moving assembly line into his manufacturing process. The idea was to cut down on the movement of workers around the factory. Instead, a worker would specialize on one part of production and, when a car or motor reached that stage, it would come to the worker – not the other way around. Although this innovation is often blamed for dehumanizing production, it did allow Ford to out-produce, out-price and out-sell his competition.
Thomas Edison, the man who inspired Ford, was also active in October. On October 6, 1889, Edison projected his first experimental motion picture. He would go on to play a very important role in the early history of movies until antitrust concerns turned him off the industry.
Franklin National Bank Collapses
On October 8, 1974, Franklin National Bank went under. It was the largest bank failure in the history of the United States up to that point, with over $5 billion in assets. The causes were numerous, including old standbys like fraud and mismanagement, along with new twists involving the mafia and forex speculation. It is one of the most complex and captivating narratives in banking – one player in the story was poisoned with cyanide-laced coffee. As far as its ranking for failures, it fell out of the top 10 by the 1990s and is much, much further down the list thanks to the mortgage meltdown.
IN PICTURES: Top 7 Biggest Bank Failures
Google Buys YouTube
On October 9, 2006, Google bought YouTube for $1.65 billion. The video-sharing website was still a month away from celebrating its first anniversary, but its user base was increasing by leaps and bounds. YouTube is far and away the largest and most popular video site on the internet, just as Google is the most popular search engine. Google's dominance in video, search and other areas is increasingly making it a target for potential antitrust action. Apparently not everyone is convinced by the "do no evil" motto.
Taxes for the People, Not the Politicians
On October 10, 1973, Vice President Spiro Agnew resigned from his post over charges of extortion, bribery and tax evasion. Agnew pleaded no contest over accepting and not reporting $29,500 in bribes. He later paid another settlement of over $250,000 over some of the criminal charges. At the time, this was a massive scandal. The following year, however, President Nixon eclipsed his VP by not only evading taxes, but engaging in activities that led to the Watergate scandal.
That's all for this week. Next week we'll look at some important developments in bankruptcy, antitrust, and much more.