This week in financial history marks the anniversary of the Boston Tea Party, possibly one of the watershed moments in financial history, let alone world history. It also marks an important succession for an iconic American company and the birth of an oil tycoon. (Find out how the third-largest stock exchange in North America came to be. Check out History Of The Toronto Stock Exchange.)
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J. Paul Getty was a constant forerunner for the richest man in the world from the 1950s onward. Born on December 15, 1892, Getty received a leg up in the oil business from his father, purchasing leases in what were once thought to be dead fields. Learning the geological principles and how they applied to oil, the Gettys made millions and, for a short time, J. Paul Getty actually retired with his millions while his father soldiered on.
However, business lured him back from the playboy lifestyle. J. Paul Getty went on to create an own corporations that bought up oil all over the world, including oil wealthy Arab nations. It was a strike in Saudi Arabia that made Getty a billionaire.
Getty's personal life was not as much as a success as his work life. He married - and divorced - five times before giving it up for hopeless. Throughout his many marriages and long life, business was the one constant for Getty. His oft-quoted formula for success sums up his own life at least: rise early, work hard, strike oil.
The Original Tea Party
On December 16, 1773, anger over the Tea Act culminated in the Boston Tea Party. At the time it was simply known as the destruction of the tea at Boston harbor, but it became one of the landmarks in the fight against taxation without representation - a fight that would lead to a revolutionary war. Groups of men throwing tea off a ship has become somewhat of a cultural meme, leading to the current Tea Party with fiscal responsibility and an end of spend and tax government among its aims. Whether the new Tea Party will ever hold the same historical importance as the Boston Tea Party is yet to be seen. (Find out why this corporation was developed and how it protects depositors from bank failure. Read The History Of The FDIC.)
A Personal Finance Bestseller
On December 19, 1732, Benjamin Franklin published "Poor Richard's Almanac". It functioned as an almanac, a vocabulary builder and, most importantly, the first American book on personal finance. It contained many sayings encouraging frugality, "It is hard for an empty sack to stand upright," "A penny saved is a penny earned [modern paraphrase]," and so on.
For many, "Poor Richard's Almanac" was the only financial advice they would hear in their lifetimes. The emphasis on saving versus spending is still the base for sound financial advice today. Franklin's book sold around 10,000 copies a year for 25 years, making it the first personal finance bestseller as well.
Neutron Jack Takes the Helm
On December 19, 1980, General Electric's board approved Jack Welch as the new CEO following the retirement of Reg Jones. This was the culmination of a bruising succession battle between several top managers at the company. In choosing Welch, however, GE did not disappoint. Taking charge officially in April of 1981, Welch immediately began changing GE's corporate culture and even its core identity as he tinkered with the business model. (From the barter system to commemorative coins, we look at the history of U.S. money. See History Of Coinage In The U.S.)
Welch dismantled much of the hierarchy at GE and began cutting underperforming businesses - many of them traditional GE units. The cuts earned him the nickname "Neutron Jack," for eliminating all the people but leaving the buildings standing. However, the unloading of lagging businesses and forays into new fields steered GE towards two decades of rapid growth. Welch's reign at the top is still considered one of the most masterful CEO performances of all-time.
That's all for this week in finance. Next week we'll look at the end of the USSR, oil shocks and much more. Until then.
Find out what happened in financial news this week. Read Water Cooler Finance: Barack Obama Vs. The World.