1.
Harper's Weekly
–
Harpers Weekly, A Journal of Civilization was an American political magazine based in New York City. Published by Harper & Brothers from 1857 until 1916, it featured foreign and domestic news, fiction, essays on many subjects and it carried extensive coverage of the American Civil War, including many illustrations of events from the war. During its most influential period, it was the forum of the political cartoonist Thomas Nast, along with his brothers James, John, and Wesley, Fletcher Harper began the publishing company Harper & Brothers in 1825. Following the successful example of the Illustrated London News, Harper started publishing Harpers Magazine in 1850, in 1857, his company began publishing Harpers Weekly in New York City. By 1860 the circulation of the Weekly had reached 200,000, among the recurring features were the political cartoons of Thomas Nast, who was recruited in 1862 and worked with the Weekly for more than 20 years. Nast was a feared caricaturist, and is called the father of American political cartooning. He was the first to use an elephant as the symbol of the Republican Party and he also drew the legendary character of Santa Claus, his version became strongly associated with the figure, who was popularized as part of Christmas customs in the late nineteenth century. Harpers Weekly was the most widely read journal in the United States throughout the period of the Civil War, so as not to upset its wide readership in the South, Harpers took a moderate editorial position on the issue of slavery. Publications that supported abolition referred to it as Harpers Weakly, the Weekly had supported the Stephen A. Douglas presidential campaign against Abraham Lincoln, but as the American Civil War broke out, it fully supported Lincoln and the Union. The photograph inspired many free blacks in the North to enlist, some of the most important articles and illustrations of the time were Harpers reporting on the war. Besides renderings by Homer and Nast, the magazine also published illustrations by Theodore R. Davis, Henry Mosler, and the brothers Alfred and William Waud. In 1863, George William Curtis, one of the founders of the Republican Party, became the editor of the magazine. His editorials advocated civil service reform, low tariffs, and adherence to the gold standard, after the war, Harpers Weekly more openly supported the Republican Party in its editorial positions, and contributed to the election of Ulysses S. Grant in 1868 and 1872. It supported the Radical Republican position on Reconstruction, in the 1870s, the cartoonist Thomas Nast began an aggressive campaign in the journal against the corrupt New York political leader William Boss Tweed. Nast turned down a $500,000 bribe to end his attack, Tweed was arrested in 1873 and convicted of fraud. Nast and Harpers also played an important part in securing Rutherford B. Hayes 1876 presidential election, later on Hayes remarked that Nast was the most powerful, single-handed aid had. After the election, Nasts role in the magazine diminished considerably, since the late 1860s, Nast and George W. Curtis had frequently differed on political matters and particularly on the role of cartoons in political discourse. Harpers publisher Fletcher Harper strongly supported Nast in his disputes with Curtis, in 1877, Harper died, and his nephews, Joseph W. Harper Jr. and John Henry Harper, assumed control of the magazine
2.
Wall Street
–
Wall Street is an eight-block-long street running roughly northwest to southeast from Broadway to South Street, at the East River, in the Financial District of Lower Manhattan in New York City. Over time, the term has become a metonym for the markets of the United States as a whole. Several other major exchanges have or had headquarters in the Wall Street area, including the New York Mercantile Exchange, the New York Board of Trade, there are varying accounts about how the Dutch-named de Walstraat got its name. A conflicting explanation is that Wall Street was named after Walloons— the Dutch name for a Walloon is Waal, among the first settlers that embarked on the ship Nieu Nederlandt in 1624 were 30 Walloon families. The Dutch word wal can be translated as rampart, however, even some English maps show the name as Waal Straat, and not as Wal Straat. But soon after that, the Dutch governor, Kieft, sent his men out there one night, few of them escaped, but they spread the story of what had been done, and this did much to antagonize all the remaining tribes against all the white settlers. Shortly after, Nieuw Amsterdam erected a palisade for defense against its now enraged red neighbors. The space between the walls is now called Wall Street, and its spirit is still that of a bulwark against the people. In the 1640s basic picket and plank fences denoted plots and residences in the colony, in 1685, surveyors laid out Wall Street along the lines of the original stockade. In these early days, local merchants and traders would gather at disparate spots to buy and sell shares and bonds, Wall Street was also the marketplace where owners could hire out their slaves by the day or week. The rampart was removed in 1699, the slave market operated from 1711 to 1762 at the corner of Wall and Pearl Streets. It was a structure with a roof and open sides, although walls may have been added over the years. The city directly benefited from the sale of slaves by implementing taxes on every person who was bought, in the late 18th century there was a buttonwood tree at the foot of Wall Street under which traders and speculators would gather to trade securities. The benefit was being in proximity to each other, in 1792, traders formalized their association with the Buttonwood Agreement which was the origin of the New York Stock Exchange. The idea of the agreement was to make the more structured and without the manipulative auctions. Persons signing the agreement agreed to each other a standard commission rate, persons not signing could still participate. In 1789 Wall Street was the scene of the United States first presidential inauguration when George Washington took the oath of office on the balcony of Federal Hall on April 30,1789 and this was also the location of the passing of the Bill Of Rights. Alexander Hamilton, who was the first Treasury secretary and architect of the early United States financial system, is buried in the cemetery of Trinity Church, in the first few decades, both residences and businesses occupied the area, but increasingly business predominated
3.
Gold reserve
–
It has been estimated that all the gold mined by the end of 2011 totaled 171,300 tonnes. At a price of US$1,500 per troy ounce, reached on 12 April 2013, the total value of all gold ever mined would exceed US$8.2 trillion at that valuation. However, there are varying estimates of the amount of gold mined to date. Another reason is that countries are not particularly open about how much gold they are mining. In addition, it is difficult to account for gold output in illegal mining activities, during most of history, a nations gold reserves were considered its key financial asset and a major prize of war. A typical view was expressed in a memorandum by the British Chief of the Imperial General Staff from October 1939. The transport of many hundreds of tons of bullion presents a difficult problem, the ideal would of course be to have the gold transferred to this country or to the United States of America. The gold reserves of Belgium and Holland amount to about £70 million, note, H. M. Treasury has particularly requested that this information, which is highly confidential should in no circumstances be divulged. At present this gold is believed to be stored at Brussels and The Hague respectively, the Belgian government rushed to ship the gold to a safe place, Dakar, the capital of Senegal, then part of the French colonial empire. After the Germans occupied Belgium and France in 1940, they demanded the Belgian gold reserve back, in 1941, Vichy French officials arranged the transport of 4,944 boxes with 198 tons of gold to officials of the German Reichsbank. Since early 2011, the holdings of the IMF have been constant at 90.5 million troy ounces. The IMF regularly maintains statistics of national assets as reported by various countries and these data are used by the World Gold Council to periodically rank and report the gold holdings of countries and official organizations. On 17 July 2015, China announced that it increased its reserves by about 57 percent from 1,054 to 1,658 metric tons. The gold listed for each of the countries in the table may not be stored in the country listed. Gold leasing by central banks could place into doubt the reported gold holdings in the table below
4.
United States Department of the Treasury
–
The Department of the Treasury is an executive department and the treasury of the United States federal government. It was established by an Act of Congress in 1789 to manage government revenue, the Department is administered by the Secretary of the Treasury, who is a member of the Cabinet. On February 13,2017, the Senate confirmed Steven Mnuchin as Secretary of the Treasury, the first Secretary of the Treasury was Alexander Hamilton, who was sworn into office on September 11,1789. Hamilton was asked by President George Washington to serve after first having asked Robert Morris, Hamilton almost single-handedly worked out the nations early financial system, and for several years was a major presence in Washingtons administration as well. His portrait is on the obverse of the U. S. ten-dollar bill while the Treasury Department building is shown on the reverse. Besides the Secretary, one of the best-known Treasury officials is the Treasurer of the United States whose signature, along with the Treasury Secretarys, the Treasury prints and mints all paper currency and coins in circulation through the Bureau of Engraving and Printing and the United States Mint. The Department also collects all federal taxes through the Internal Revenue Service, the Congress had no power to levy and collect taxes, nor was there a tangible basis for securing funds from foreign investors or governments. The delegates resolved to issue paper money in the form of bills of credit, the Congress stipulated that each of the colonies contribute to the Continental governments funds. With the signing of the Declaration of Independence on July 4,1776, despite the infusion of foreign and domestic loans to pay for a war of independence, the United Colonies were unable to establish a well-organized agency for financial administration. Michael Hillegas was first called Treasurer of the United States on May 14,1777, the Treasury Office was reorganized three times between 1778 and 1781. The $241.5 million of paper Continental Dollars devalued rapidly, by May 1781, the dollar collapsed at a rate of from 500 to 1000 to 1 against hard currency. Protests against the worthless money swept the colonies and angry Americans coined the expression not worth a Continental, Robert Morris was designated Superintendent of Finance in 1781 and restored stability to the nations finances. Morris, a colonial merchant, was nicknamed the Financier because of his reputation for procuring funds or goods on a moments notice. His staff included a Comptroller, a Treasurer, a Register, and auditors, who managed the finances through 1784. The Treasury Board of three Commissioners continued to oversee the finances of the confederation of former colonies until September 1789, the First Congress of the United States was called to convene in New York on March 4,1789, marking the beginning of government under the Constitution. Alexander Hamilton took the oath of office as the first Secretary of the Treasury on September 11,1789, Hamilton had served as George Washingtons aide-de-camp during the Revolution, and was of great importance in the ratification of the Constitution. Because of his financial and managerial acumen, Hamilton was a choice for solving the problem of the new nations heavy war debt. Hamiltons first official act was to submit a report to Congress in which he laid the foundation for the financial health
5.
United States
–
Forty-eight of the fifty states and the federal district are contiguous and located in North America between Canada and Mexico. The state of Alaska is in the northwest corner of North America, bordered by Canada to the east, the state of Hawaii is an archipelago in the mid-Pacific Ocean. The U. S. territories are scattered about the Pacific Ocean, the geography, climate and wildlife of the country are extremely diverse. At 3.8 million square miles and with over 324 million people, the United States is the worlds third- or fourth-largest country by area, third-largest by land area. It is one of the worlds most ethnically diverse and multicultural nations, paleo-Indians migrated from Asia to the North American mainland at least 15,000 years ago. European colonization began in the 16th century, the United States emerged from 13 British colonies along the East Coast. Numerous disputes between Great Britain and the following the Seven Years War led to the American Revolution. On July 4,1776, during the course of the American Revolutionary War, the war ended in 1783 with recognition of the independence of the United States by Great Britain, representing the first successful war of independence against a European power. The current constitution was adopted in 1788, after the Articles of Confederation, the first ten amendments, collectively named the Bill of Rights, were ratified in 1791 and designed to guarantee many fundamental civil liberties. During the second half of the 19th century, the American Civil War led to the end of slavery in the country. By the end of century, the United States extended into the Pacific Ocean. The Spanish–American War and World War I confirmed the status as a global military power. The end of the Cold War and the dissolution of the Soviet Union in 1991 left the United States as the sole superpower. The U. S. is a member of the United Nations, World Bank, International Monetary Fund, Organization of American States. The United States is a developed country, with the worlds largest economy by nominal GDP. It ranks highly in several measures of performance, including average wage, human development, per capita GDP. While the U. S. economy is considered post-industrial, characterized by the dominance of services and knowledge economy, the United States is a prominent political and cultural force internationally, and a leader in scientific research and technological innovations. In 1507, the German cartographer Martin Waldseemüller produced a map on which he named the lands of the Western Hemisphere America after the Italian explorer and cartographer Amerigo Vespucci
6.
New York Clearing House
–
The New York Clearing House Association created in 1853, is the first and largest U. S. bank clearing house and has helped the banking system in America’s financial capital to develop. Initially, it simplified the chaotic settlement process among the banks of New York City and it later served to stabilize currency fluctuations and bolster the monetary system through recurring times of panic. Since the creation of the Federal Reserve System in 1913, it has used technology to meet the demands of a complex banking system. In the decade before the Clearing House was founded, banking had become increasingly complex, from 1849 to 1853 –years highlighted by the California gold rush and construction of a national railroad system–the number of New York banks increased from 24 to 57. Settlement procedures were unsophisticated, with banks settling their accounts by employing porters to travel from bank to bank to exchange checks for bags of coin, or “specie. ”As the number of banks grew, exchanges became a daily event. The official reckoning of accounts, however, did not take place until Fridays, often resulting in record keeping errors and encouraging abuses. Each day, the porters would gather on the steps of one of the Wall Street banks for their “Porters’ Exchange. ”In 1853, there was a positive response and The New York Clearing House was organized officially on October 4 of that year. One week later, on October 11 in the basement of 14 Wall Street,52 banks participated in the first exchange, on its first day, the Clearing House exchanged checks worth $22.6 million. Within 20 years, the average daily clearing topped $100 million, today, the average is in excess of $20 billion. The New York Clearing House brought order to what had been a web of exchanges. Specie certificates soon replaced gold as the means of settling balances at the Clearing House, once certificates were exchanged for gold deposited at member banks, porters encountered fewer of the dangers they had faced previously while transporting bags of gold from bank to bank. Certificates relieved the strain on the cash flow, thus reducing the likelihood of a run on deposits. Member banks had to do weekly audits, keep minimum reserve levels and log daily settlement of balances which further assured more ordered, between 1853 and 1913, the U. S. experienced rapid economic expansion as well as ten financial panics. One of the Clearing House’s first challenges was the panic of 1857, when the panic began, leaders of the member banks met and devised a plan that would shorten the duration of the panic–and more importantly, maintain public confidence in the banking system. When specie payments were suspended, the Clearing House issued loan certificates that could be used to settle accounts, known as Clearing House Loan Certificates, they were, in effect, quasi-currency, backed not by gold but by discounted county and state bank notes held by member banks. Bearing the words “Payable Through the Clearing House, ” a Clearing House Loan Certificate was the joint liability of all the banks, and thus, in lieu of specie. The new monetary system, with its stringent audits and minimum reserve standards, since the inception of the Federal Reserve System, the New York Clearing House has concentrated on facilitating the smooth completion of financial transactions by clearing the payments. The clearing process, while highly structured, is in theory, member banks exchange checks, coupons and other certificates of value among themselves, after which the Clearing House records the resulting charges to their accounts
7.
Panic of 1873
–
The Panic of 1873 was a financial crisis that triggered a depression in Europe and North America that lasted from 1873 until 1879, and even longer in some countries. In Britain, for example, it started two decades of stagnation known as the Long Depression that weakened the economic leadership. The Panic was known as the Great Depression until the events in the early 1930s set a new standard, the Panic of 1873 and the subsequent depression had several underlying causes, of which economic historians debate the relative importance. The first symptoms of the crisis were financial failures in the Austro-Hungarian capital, Vienna, the American Civil War was followed by a boom in railroad construction. 33,000 miles of new track were laid across the country between 1868 and 1873, much of the craze in railroad investment was driven by government land grants and subsidies to the railroads. At that time, the industry was the nations largest employer outside of agriculture. A large infusion of cash from speculators caused abnormal growth in the industry as well as overbuilding of docks, factories, at the same time, too much capital was involved in projects offering no immediate or early returns. As a result, the United States Congress passed the Coinage Act of 1873, before the Act, the United States had backed its currency with both gold and silver, and it minted both types of coins. The Act moved the United States to a de facto gold standard, the Act had the immediate effect of depressing silver prices. This hurt Western mining interests, who labeled the Act The Crime of 73, but the coinage law also reduced the domestic money supply, which raised interest rates, thereby hurting farmers and anyone else who normally carried heavy debt loads. The resulting outcry raised serious questions about how long the new policy would last and this perception of instability in United States monetary policy caused investors to shy away from long-term obligations, particularly long-term bonds. The problem was compounded by the boom, which was in its later stages at the time. In September 1873, the U. S. economy entered a crisis and this followed a period of post-Civil War economic over-expansion that arose from the Northern railroad boom. It came at the end of a series of setbacks, the Black Friday panic of 1869, the Chicago fire of 1871, the outbreak of equine influenza in 1872. In September 1873, Jay Cooke & Company, a component of the United States banking establishment. Cookes firm, like others, had invested heavily in the railroads. At a time when investment banks were anxious for more capital for their enterprises, while businesses were expanding, the money they needed to finance that growth was becoming scarcer. Cooke and other entrepreneurs had planned to build the second transcontinental railroad, cookes firm provided the financing, and ground was broken near Duluth, Minnesota, for the line on 15 February 1870
8.
Great Depression
–
The Great Depression was a severe worldwide economic depression that took place during the 1930s. The timing of the Great Depression varied across nations, in most countries it started in 1929 and it was the longest, deepest, and most widespread depression of the 20th century. In the 21st century, the Great Depression is commonly used as an example of how far the economy can decline. The depression originated in the United States, after a fall in stock prices that began around September 4,1929. Between 1929 and 1932, worldwide GDP fell by an estimated 15%, by comparison, worldwide GDP fell by less than 1% from 2008 to 2009 during the Great Recession. Some economies started to recover by the mid-1930s, however, in many countries, the negative effects of the Great Depression lasted until the beginning of World War II. The Great Depression had devastating effects in both rich and poor. Personal income, tax revenue, profits and prices dropped, while international trade plunged by more than 50%, unemployment in the U. S. rose to 25% and in some countries rose as high as 33%. Cities all around the world were hit hard, especially dependent on heavy industry. Construction was virtually halted in many countries, farming communities and rural areas suffered as crop prices fell by about 60%. Facing plummeting demand with few sources of jobs, areas dependent on primary sector industries such as mining and logging suffered the most. Even after the Wall Street Crash of 1929 optimism persisted for some time, john D. Rockefeller said These are days when many are discouraged. In the 93 years of my life, depressions have come, prosperity has always returned and will again. The stock market turned upward in early 1930, returning to early 1929 levels by April and this was still almost 30% below the peak of September 1929. Together, government and business spent more in the first half of 1930 than in the period of the previous year. On the other hand, consumers, many of whom had suffered losses in the stock market the previous year. In addition, beginning in the mid-1930s, a severe drought ravaged the agricultural heartland of the U. S, by mid-1930, interest rates had dropped to low levels, but expected deflation and the continuing reluctance of people to borrow meant that consumer spending and investment were depressed. By May 1930, automobile sales had declined to below the levels of 1928, prices in general began to decline, although wages held steady in 1930
9.
Robert Sobel
–
Robert Sobel was an American professor of history at Hofstra University and a well-known and prolific writer of business histories. Sobel was born in the Bronx, in New York City, New York. He completed his B. S. S. and M. A. at City College of New York and he started teaching at Hofstra in 1956. Sobel eventually became Lawrence Stessin Distinguished Professor of Business History at Hofstra, after his death, the university established the Robert Sobel Endowed Scholarship for Excellence in Business History and Finance. Sobels first business history, published in 1965, was The Big Board and it was the first history of the stock market written in over a generation. The book was met with reviews and solid sales. Several of his subsequent books were bestsellers, besides writing more than 30 books, Sobel authored many articles, book reviews, and scripts for television documentaries and mini-series. From 1972 to 1988, Sobels weekly investment column, Knowing the Street, was syndicated through New York Newsday. He was also published in national periodicals, including The New York Times. At the time of his death, Sobel was also an editor to Barrons Magazine. He was a regular guest on financial and other shows, such as Wall Street Week. Sobel was almost as famous for his work of fiction. This book is a history in which Burgoyne won the Battle of Saratoga during the American Revolutionary War. This work detailed the history of a timeline, complete with footnotes. Sobel had authored or co-authored several actual textbooks, for Want of a Nail was republished in 1997 and won a special achievement Sidewise Award for Alternate History that year. Sobels dominant passion was Wall Street, a fascination that he held since his childhood, quite the contrary—he saw that as his mission in life. From Panic on Wall Street by Robert Sobel, From a February 22,1999 Barrons Magazine article by Robert Sobel, From The Great Bull Market, Wall Street in the 1920s, by Robert Sobel, Sobel, If Burgoyne had won at Saratoga. The Origins of Interventionism, The United States and the Russo-Finnish War, the Big Board, A History of the New York Stock Market
10.
International Standard Book Number
–
The International Standard Book Number is a unique numeric commercial book identifier. An ISBN is assigned to each edition and variation of a book, for example, an e-book, a paperback and a hardcover edition of the same book would each have a different ISBN. The ISBN is 13 digits long if assigned on or after 1 January 2007, the method of assigning an ISBN is nation-based and varies from country to country, often depending on how large the publishing industry is within a country. The initial ISBN configuration of recognition was generated in 1967 based upon the 9-digit Standard Book Numbering created in 1966, the 10-digit ISBN format was developed by the International Organization for Standardization and was published in 1970 as international standard ISO2108. Occasionally, a book may appear without a printed ISBN if it is printed privately or the author does not follow the usual ISBN procedure, however, this can be rectified later. Another identifier, the International Standard Serial Number, identifies periodical publications such as magazines, the ISBN configuration of recognition was generated in 1967 in the United Kingdom by David Whitaker and in 1968 in the US by Emery Koltay. The 10-digit ISBN format was developed by the International Organization for Standardization and was published in 1970 as international standard ISO2108, the United Kingdom continued to use the 9-digit SBN code until 1974. The ISO on-line facility only refers back to 1978, an SBN may be converted to an ISBN by prefixing the digit 0. For example, the edition of Mr. J. G. Reeder Returns, published by Hodder in 1965, has SBN340013818 -340 indicating the publisher,01381 their serial number. This can be converted to ISBN 0-340-01381-8, the check digit does not need to be re-calculated, since 1 January 2007, ISBNs have contained 13 digits, a format that is compatible with Bookland European Article Number EAN-13s. An ISBN is assigned to each edition and variation of a book, for example, an ebook, a paperback, and a hardcover edition of the same book would each have a different ISBN. The ISBN is 13 digits long if assigned on or after 1 January 2007, a 13-digit ISBN can be separated into its parts, and when this is done it is customary to separate the parts with hyphens or spaces. Separating the parts of a 10-digit ISBN is also done with either hyphens or spaces, figuring out how to correctly separate a given ISBN number is complicated, because most of the parts do not use a fixed number of digits. ISBN issuance is country-specific, in that ISBNs are issued by the ISBN registration agency that is responsible for country or territory regardless of the publication language. Some ISBN registration agencies are based in national libraries or within ministries of culture, in other cases, the ISBN registration service is provided by organisations such as bibliographic data providers that are not government funded. In Canada, ISBNs are issued at no cost with the purpose of encouraging Canadian culture. In the United Kingdom, United States, and some countries, where the service is provided by non-government-funded organisations. Australia, ISBNs are issued by the library services agency Thorpe-Bowker
11.
Financial crisis
–
A financial crisis is any of a broad variety of situations in which some financial assets suddenly lose a large part of their nominal value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, other situations that are often called financial crises include stock market crashes and the bursting of other financial bubbles, currency crises, and sovereign defaults. Financial crises directly result in a loss of wealth but do not necessarily result in significant changes in the real economy. Many economists have offered theories about how financial crises develop and how they could be prevented, There is no consensus, however, and financial crises continue to occur from time to time. When a bank suffers a sudden rush of withdrawals by depositors, an event in which bank runs are widespread is called a systemic banking crisis or banking panic. Examples of bank runs include the run on the Bank of the United States in 1931, Banking crises generally occur after periods of risky lending and resulting loan defaults. There is no accepted definition of a currency crisis, which is normally considered as part of a financial crisis. Frankel and Rose define a crisis as a nominal depreciation of a currency of at least 25%. A speculative bubble exists in the event of large, sustained overpricing of some class of assets, however, it is difficult to predict whether an assets price actually equals its fundamental value, so it is hard to detect bubbles reliably. Some economists insist that bubbles never or almost never occur, the 2000s sparked a real estate bubble where housing prices were increasing significantly as an asset good. When a country fails to pay back its debt, this is called a sovereign default. Several currencies that formed part of the European Exchange Rate Mechanism suffered crises in 1992–93 and were forced to devalue or withdraw from the mechanism, another round of currency crises took place in Asia in 1997–98. Many Latin American countries defaulted on their debt in the early 1980s, the 1998 Russian financial crisis resulted in a devaluation of the ruble and default on Russian government bonds. Negative GDP growth lasting two or more quarters is called a recession, an especially prolonged or severe recession may be called a depression, while a long period of slow but not necessarily negative growth is sometimes called economic stagnation. Some economists argue that many recessions have been caused in part by financial crises. One important example is the Great Depression, which was preceded in many countries by bank runs and stock market crashes. The subprime mortgage crisis and the bursting of real estate bubbles around the world also led to recession in the U. S. It is often observed that successful investment requires each investor in a market to guess what other investors will do
12.
Panic of 1837
–
The Panic of 1837 was a financial crisis in the United States that touched off a major recession that lasted until the mid-1840s. Profits, prices, and wages went down while unemployment went up, the panic had both domestic and foreign origins. On May 10,1837, banks in New York City suspended specie payments, despite a brief recovery in 1838, the recession persisted for approximately seven years. Banks collapsed, businesses failed, prices declined, and thousands of workers lost their jobs, unemployment may have been as high as 25% in some locales. The years 1837 to 1844 were, generally speaking, years of deflation in wages and prices, the crisis followed a period of economic expansion from mid-1834 to mid-1836. The prices of land, cotton, and slaves rose sharply in these years, the origins of this boom had many sources, both domestic and international. Because of the factors of international trade at the time, abundant amounts of silver were coming into the United States from Mexico. Land sales and tariffs on imports were also generating substantial federal revenues, through lucrative cotton exports and the marketing of state-backed bonds in British money markets, the United States acquired significant capital investment from Great Britain. These bonds financed transportation projects in the United States, to compensate, the directors indicated that they would gradually raise interest rates from 3 to 5 percent. Conventional financial theory held that banks should raise interest rates and curb lending when faced with low monetary reserves, raising interest rates, according to the laws of supply and demand, was supposed to attract specie since money generally flows where it will generate the greatest return. S. The result was that as the Bank of England raised interest rates, when New York banks raised interest rates and scaled back on lending, the effects were damaging. Since the price of a bond bears a relationship to the yield. The price of cotton fell by 25% in February and March 1837, the United States economy, especially in the southern states, was heavily dependent on stable cotton prices. Within the United States, there were contributing factors. In July 1832, President Andrew Jackson vetoed the bill to recharter the Second Bank of the United States, as the BUS wound up its operations in the next four years, state-chartered banks in the West and South relaxed their lending standards, maintaining unsafe reserve ratios. Two domestic policies, in particular, exacerbated an already volatile situation, the Specie Circular of 1836 mandated that western lands could be purchased only with gold and silver coin. The circular was an order issued by Andrew Jackson, and favored by Senator Thomas Hart Benton of Missouri. Secondly, the Deposit and Distribution Act of 1836 placed federal revenues in various local banks across the country, Many of these banks were located in western regions
13.
Panic of 1857
–
The Panic of 1857 was a financial panic in the United States caused by the declining international economy and over-expansion of the domestic economy. Because of the interconnectedness of the economy by the 1850s. In Britain, the Palmerston government circumvented the requirements of the Peel Banking Act of 1844, surfacing news of this circumvention set off the Panic in Britain. Beginning in September 1857, the downturn did not last long, however. The sinking of the SS Central America contributed to the panic of 1857, American banks did not recover until after the civil war. By the mid 1850s, the amount of gold mined began to decline, eastern banks became cautious with their loans to the west and some even refused to accept western bank-issued paper currencies. The Supreme Court ruling in Dred Scott v. Sandford was handed down in March 1857. After Scott sued for his freedom, Chief Justice Roger Taney ruled that Scott was not a citizen because he was an African American and therefore did not have the right to sue in court. The ruling also made the Missouri Compromise unconstitutional, and it was clear that the decision would have a significant impact on the development of western territories. Soon after the ruling, the struggle between free soil and slavery in the territories began. The western territories were now opened to the possibility that slavery might expand into them, Kansas land warrants and western railroad securities prices declined slightly just after the Dred Scott decision in early March. This fluctuation in railroad securities proved that political news about future territories called the tune in the land, before 1857, the railroad industry was booming due to large migrations of people to the west, especially in Kansas. With the large influx of people, the became a profitable industry. Many of these never made it past the stage of a paper railroad. Prices of railroad stocks as a whole began to experience a stock bubble, in the meantime, the aforementioned Dred Scott decision lent uncertainty to railroads in general. In July 1857, railroad stocks saw their peak values, on August 11,1857, N. H. Wolfe and Company, the oldest flour and grain company in New York City, failed. The failure shook investor confidence and began a slow selloff in the market continued into late August. On the morning of August 24,1857, the president of Ohio Life Insurance, Ohio Life was an Ohio-based bank with a second main office in New York City
14.
Baring crisis
–
The Baring crisis or the Panic of 1890 was an acute recession. Although less serious than other panics of the era, still it is the nineteenth century’s most famous sovereign debt crisis, the crisis was precipitated by the near insolvency of Barings Bank in London. Barings, led by Edward Baring, 1st Baron Revelstoke, faced bankruptcy in November 1890 due mainly to excessive risk-taking on poor investments in Argentina. Nathan Rothschild remarked that if this had not happened, perhaps the private banking system of London would have collapsed which would have caused an economic catastrophe. The Baring crisis had an effect on the United States, john T. Flynn wrote in his 1932 book, The preceding year the great Baring failure had shaken London and the rest of the financial world. America was shielded from its most virulent effects because of a wheat crop. But the following all the forces of business disturbance were assembling. Gold was leaving the country at an alarming rate, the historical novel Stones Fall by Iain Pears. Glasner, David and Thomas F. Cooley, business Cycles and Depressions, An Encyclopedia. The Sixth Great Power, A History of One of the Greatest of All Banking Families, the House of Barings, 1762-1929
15.
Panic of 1893
–
The Panic of 1893 was a serious economic depression in the United States that began in 1893 and ended in 1897. It deeply affected every sector of the economy, and produced political upheaval that led to the 1896 realigning election, one of the causes for the panic of 1893 can be traced back to Argentina. Investment was encouraged by the Argentine agent bank, Baring Brothers, however, the failure of the 1890 wheat crop and a coup in Buenos Aires ended further investments. As concern for the state of the economy worsened, people rushed to withdraw their money from banks, the credit crunch rippled through the economy. A financial panic in the United Kingdom and a drop in trade in Europe caused foreign investors to sell American stocks to obtain American funds backed by gold. The Populists were a short-lived agrarian-populist political party which appealed politically to wheat farmers in the West and they saw the resulting panic as confirmation that the values of rootless global finance were assailing traditional American values. Historian Hasia Diner notes, Some Populists believed that Jews made up a class of international financiers whose policies had ruined small family farms, Jews, they asserted, owned the banks and promoted the gold standard, the chief sources of their impoverishment. Agrarian radicalism posited the city as antithetical to American values, asserting that Jews were the essence of urban corruption, the Free Silver movement arose, gaining support from farmers and mining interests. People attempted to redeem notes for gold. Ultimately, the limit for the minimum amount of gold in federal reserves was reached. Investments during the time of the panic were heavily financed through bond issues with high interest payments, the National Cordage Company went into receivership as a result of its bankers calling their loans in response to rumors regarding the NCCs financial distress. The company, a manufacturer, had tried to corner the market for imported hemp. As the demand for silver and silver notes fell, the price, holders worried about a loss of face value of bonds and many became worthless. A series of bank failures followed, and the Northern Pacific Railway, the Union Pacific Railroad and this was followed by the bankruptcy of many other companies, in total over 15,000 companies and 500 banks, many of them in the west, failed. According to high estimates, about 17%–19% of the workforce was unemployed at the panics peak, the huge spike in unemployment, combined with the loss of life savings kept in failed banks, meant that a once-secure middle-class could not meet their mortgage obligations. Many walked away from recently built homes as a result, as a result of the panic, stock prices declined. 500 banks closed,15,000 businesses failed, and numerous farms ceased operation, the unemployment rate hit 25% in Pennsylvania, 35% in New York, and 43% in Michigan. Soup kitchens were opened to feed the destitute
16.
Panic of 1907
–
Panic occurred, as this was during a time of economic recession, and there were numerous runs on banks and trust companies. The 1907 panic eventually spread throughout the nation when many state and local banks, primary causes of the run included a retraction of market liquidity by a number of New York City banks and a loss of confidence among depositors, exacerbated by unregulated side bets at bucket shops. The panic was triggered by the attempt in October 1907 to corner the market on stock of the United Copper Company. The collapse of the Knickerbocker spread fear throughout the citys trusts as regional banks withdrew reserves from New York City banks, Panic extended across the nation as vast numbers of people withdrew deposits from their regional banks. This highlighted the impotence of the nations Independent Treasury system, which managed the money supply. By November, the contagion had largely ended, only to be replaced by a further crisis. This was due to the borrowing of a large brokerage firm that used the stock of Tennessee Coal, Iron. Collapse of TC&Is stock price was averted by a takeover by Morgans U. S. Steel Corporation—a move approved by anti-monopolist president Theodore Roosevelt. Each autumn money flowed out of the city as harvests were purchased and—in an effort to attract money back—interest rates were raised, foreign investors then sent their money to New York to take advantage of the higher rates. From the January 1906 Dow Jones Industrial Average high of 103, the April 1906 earthquake that devastated San Francisco contributed to the market instability, prompting an even greater flood of money from New York to San Francisco to aid reconstruction. From their peak in January, stock prices declined 18% by July 1906, by late September, stocks had recovered about half of their losses. The Hepburn Act, which gave the Interstate Commerce Commission the power to set railroad rates. This depreciated the value of railroad securities, between September 1906 and March 1907, the stock market slid, losing 7. 7% of its capitalization. Between March 9 and 26, stocks fell a further 9. 8%, the economy remained volatile through the summer. In the first nine months of 1907, stocks were lower by 24. 4%, on July 27, The Commercial & Financial Chronicle noted that the market keeps unstable. No sooner are these signs of new life in evidence than something like a suggestion of a new outflow of gold to Paris sends a tremble all through the list, and the gain in values and hope is gone. Several bank runs occurred outside the US in 1907, in Egypt in April and May, in Japan in May and June, in Hamburg and Chile in early October. The fall season was always a time for the banking system—combined with the roiled stock market
17.
Wall Street Crash of 1929
–
The crash, which followed the London Stock Exchanges crash of September, signaled the beginning of the 12-year Great Depression that affected all Western industrialized countries. The Roaring Twenties, the decade that followed World War I and led to the crash, was a time of wealth, while the American cities prospered, the overproduction of agricultural produce created widespread financial despair among American farmers throughout the decade. This would later be blamed as one of the key factors that led to the 1929 stock market crash, despite the dangers of speculation, many believed that the stock market would continue to rise forever. On March 25,1929, after the Federal Reserve warned of excessive speculation, two days later, banker Charles E. Mitchell announced his company the National City Bank would provide $25 million in credit to stop the markets slide. Mitchells move brought a halt to the financial crisis and call money declined from 20 to 8 percent. Despite all these economic trouble signs and the breaks in March and May 1929, stocks resumed their advance in June. The market had been on a run that saw the Dow Jones Industrial Average increase in value tenfold. Shortly before the crash, economist Irving Fisher famously proclaimed, Stock prices have reached what looks like a high plateau. The optimism and financial gains of the bull market were shaken after a well publicized early September prediction from financial expert Roger Babson that a crash was coming. The initial September decline was thus called the Babson Break in the press and this was the start of the Great Crash, although until the severe phase of the crash in October, many investors regarded the September Babson Break as a healthy correction and buying opportunity. On September 20, the London Stock Exchange crashed when top British investor Clarence Hatry and many of his associates were jailed for fraud, the London crash greatly weakened the optimism of American investment in markets overseas. In the days leading up to the crash, the market was severely unstable, periods of selling and high volumes were interspersed with brief periods of rising prices and recovery. On October 24, the market lost 11 percent of its value at the bell on very heavy trading. Several leading Wall Street bankers met to find a solution to the panic and chaos on the trading floor. The meeting included Thomas W. Lamont, acting head of Morgan Bank, Albert Wiggin, head of the Chase National Bank and they chose Richard Whitney, vice president of the Exchange, to act on their behalf. With the bankers financial resources behind him, Whitney placed a bid to purchase a block of shares in U. S. Steel at a price well above the current market. As traders watched, Whitney then placed similar bids on other blue chip stocks and this tactic was similar to one that ended the Panic of 1907. It succeeded in halting the slide, the Dow Jones Industrial Average recovered, closing with it down only 6.38 points for the day
18.
Stock market crash
–
A stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market, resulting in a significant loss of paper wealth. Crashes are driven by panic as much as by underlying economic factors and they often follow speculative stock market bubbles. There is no specific definition of a stock market crash. Crashes are often distinguished from bear markets by selling and abrupt. Bear markets are periods of declining stock prices that are measured in months or years. Crashes are often associated with bear markets, however, they do not necessarily go hand in hand, the crash of 1987, for example, did not lead to a bear market. Likewise, the Japanese bear market of the 1990s occurred over several years without any notable crashes, the mathematical description of stock market movements has been a subject of intense interest. The conventional assumption has been that stock markets behave according to a random log-normal distribution, among others, mathematician Benoît Mandelbrot suggested as early as 1963 that the statistics prove this assumption incorrect. Mandelbrot observed that large movements in prices are more common than would be predicted from a log-normal distribution. Mandelbrot and others suggested that the nature of market moves is generally much better explained using non-linear analysis and this has been expressed in non-mathematical terms by George Soros in his discussions of what he calls reflexivity of markets and their non-linear movement. George Soros said in late October 1987, Mr. Robert Prechters reversal proved to be the crack that started the avalanche, research at the Massachusetts Institute of Technology suggests that there is evidence the frequency of stock market crashes follows an inverse cubic power law. This and other such as Prof. Didier Sornettes work suggest that stock market crashes are a sign of self-organized criticality in financial markets. In 1963, Mandelbrot proposed that instead of following a random walk. A Lévy flight is a walk that is occasionally disrupted by large movements. In 1995, Rosario Mantegna and Gene Stanley analyzed a million records of the S&P500 market index, researchers continue to study this theory, particularly using computer simulation of crowd behaviour, and the applicability of models to reproduce crash-like phenomena. Research at the New England Complex Systems Institute has found warning signs of crashes using new statistical tools of complexity theory. This work suggests that the panics that lead to come from increased mimicry in the market. A dramatic increase in market mimicry occurred during the year before each market crash of the past 25 years
19.
Financial history of the Dutch Republic
–
The financial history of the Dutch Republic involves the interrelated development of financial institutions in the Dutch Republic. Institutions like the Amsterdam stock exchange, the Bank of Amsterdam, in the course of time the invested capital stock generated its own income stream that caused the capital stock to assume enormous proportions. The Netherlands came to dominate the international capital market up to the crises of the end of the 18th century that caused the demise of the Dutch Republic, in contrast to that general history this is a sectoral history, concerning the fiscal and financial sector. Ironically, the Habsburg rulers themselves pushed through the reforms that gave the rebellious provinces the wherewithal to resist the power of the sovereign. Emperor Charles V needed to increase the capacity of his government to finance his many military adventures. To that end it was necessary to put in place a number of reforms that would ensure that the public debt could be adequately serviced. These permanent taxes, collected by the provinces, would enable the provinces to pay enlarged subsidies to the central government. Holland was now able to credit of its own, as the province was able to retire bond loans previously placed under compulsion as enforced loans. By this it demonstrated to potential creditors it was worthy of trust and this brought a market for voluntary credit into being that previously did not exist. This enabled Holland, and other provinces, to float bonds at a reasonable interest rate in a pool of voluntary investors. The central government did not enjoy this good credit, on the contrary, its financing needs increased tremendously after the accession of Philip II, and this led to the crisis that caused the Revolt. This brought about a revolt in the Netherlands, particularly in the northern provinces. Those were able to withstand the onslaught of the royalist forces militarily, of course, they now withheld the subsidies to the central government their taxes were supposed to finance. That central government was forced to finance the war by transfers from other Habsburg lands. This led to an increase in the size of the Spanish public debt, which that country was ultimately unable to sustain. The constitution of the new Republic, the Union-of-Utrecht treaty of 1579 and it put in place a rudimentary confederal budget system that charged the Raad van State with drafting an annual Staat van Oorlog. This budget was presented in a General Petition to the States-General for approval, the treaty next required that the tax revenues for the financing of this budget would be levied. equally in all united provinces, and at the same rate. Furthermore, it prohibited internal tariffs and other taxes discriminating against residents of other provinces, alas, these two latter provisions were never implemented
20.
Mississippi Company
–
The Mississippi Company of 1684 became the Company of the West in 1717, and expanded as the Company of the Indies from 1719. This corporation, which held a monopoly in French colonies in North America. In May 1716, the Banque Générale Privée, which developed the use of money, was set up by John Law. It was a bank, but three quarters of the capital consisted of government bills and government-accepted notes. In August 1717, he bought the Mississippi Company to help the French colony in Louisiana, in the same year Law conceived a joint-stock trading company called the Compagnie dOccident. Law was named the Chief Director of this new company, which was granted a monopoly of the West Indies. The bank became the Banque Royale in 1718, meaning the notes were guaranteed by the king, Louis XIVs long reign and wars had nearly bankrupted the French monarchy. Rather than reduce spending, the Regency of Louis XV of France endorsed the monetary theories of Scottish financier John Law, in 1716, Law was given a charter for the Banque Royale under which the national debt was assigned to the bank in return for extraordinary privileges. The key to the Banque Royale agreement was that the debt would be paid from revenues derived from opening the Mississippi Valley. The Bank was tied to other ventures of Law—the Company of the West, all were known as the Mississippi Company. The Mississippi Company had a monopoly on trade and mineral wealth, Law was given the title Duc dArkansas. Bernard de la Harpe and his party left New Orleans in 1719 to explore the Red River, in 1721, he explored the Arkansas River. At the Yazoo settlements in Mississippi he was joined by Jean Benjamin who became the scientist for the expedition, in 1718, there were only 700 Europeans in Louisiana. The Mississippi Company arranged ships to move 800 more, who landed in Louisiana in 1718, John Law encouraged Germans, particularly Germans of the Alsatian region who had recently fallen under French rule, and the Swiss to emigrate. Prisoners were set free in Paris in September 1719 onwards, under the condition that they marry prostitutes, the newly married couples were chained together and taken to the port of embarkation. In May 1720, after complaints from the Mississippi Company and the concessioners about this class of French immigrants, however, there was a third shipment of prisoners in 1721. Law exaggerated the wealth of Louisiana with a marketing scheme. The scheme promised success for the Mississippi Company by combining investor fervor, the popularity of company shares were such that they sparked a need for more paper bank notes, and when shares generated profits the investors were paid out in paper bank notes
21.
South Sea Company
–
The South Sea Company was a British joint-stock company founded in 1711, created as a public-private partnership to consolidate and reduce the cost of national debt. The company was granted a monopoly to trade with South America. At the time it was created, Britain was involved in the War of the Spanish Succession, there was no realistic prospect that trade would take place and the company never realised any significant profit from its monopoly. The Bubble Act 1720, which forbade the creation of joint-stock companies without royal charter, was promoted by the South Sea company itself before its collapse. In Great Britain, a number of people were ruined by the share collapse. The founders of the scheme engaged in trading, using their advance knowledge of when national debt was to be consolidated to make large profits from purchasing debt in advance. Huge bribes were given to politicians to support the Acts of Parliament necessary for the scheme, Company money was used to deal in its own shares, and selected individuals purchasing shares were given loans backed by those same shares to spend on purchasing more shares. The expectation of vast wealth from trade with South America was used to encourage the public to purchase shares, the only significant trade that did take place was in slaves, but the company failed to manage this profitably. A parliamentary enquiry was held after the crash to discover its causes, a number of politicians were disgraced, and people found to have profited unlawfully from the company had assets confiscated proportionate to their gains. The company was restructured and continued to operate for more than a century after the Bubble, the headquarters were in Threadneedle Street at the centre of the financial district in London, today the Bank of England has headquarters on Threadneedle Street. At the time of events the Bank of England also was a private company dealing in national debt. In August 1710 Robert Harley was appointed Chancellor of the Exchequer in a government of commission, the government at this time had become reliant on the Bank of England. This was a privately owned company, chartered 16 years previously, the government had become dissatisfied with the service it was receiving and Harley was actively seeking new ways to improve the national finances. The committee included Harley himself, the two Auditors of the Imprests, whose task was to investigate government spending, Harleys brother Edward, Harleys first concern was to find £300,000 for the next quarters pay for the British army operating in Europe under Marlborough. This was provided by a consortium of Edward Gibbon, George Caswall. The Bank of England had been operating a state lottery on behalf of the government, but this had not been successful in 1710. This too was performing poorly, so Harley granted authority to sell tickets to John Blunt, a director of the Hollow Sword Blade Company, with sales commencing on 3 March 1711, tickets had completely sold out by the 7th. This was the first truly successful English state lottery, marketing was handled by members of the Sword Blade syndicate, Gibbon selling £200,000 of tickets and earning £4,500 commission, and Blunt selling £993,000
22.
Black Friday (1869)
–
The Black Friday, September 24,1869, gold panic was caused by the efforts of two speculators, Jay Gould and his partner James Fisk, to corner the gold market on the New York Gold Exchange. The scandal took place during the Presidency of Ulysses S. Grant whose policy was to sell weekly Treasury gold to pay off the debt, stabilize the dollar. The country had gone through tremendous upheaval during the Civil War and was not yet fully restored and this period, known as the Gilded Age, was a time of great industrial growth which invited much investment and speculation. Gould and Fisk used their personal appearances with Grant to gain clout on Wall Street, at the same time, Gould and Fisk began buying gold at Goulds New York Gold Room raising the price of gold. A panic on Wall Street ensued and the country went through a few months of economic turmoil, thanks to the efforts of Grant, members of his administration and others a national depression was averted. Gould and Fisk, having hired the best defense, and favored by Tweed Ring judges, an 1870 government investigation, headed by James A. Garfield, exonerated Grant of any illicit involvement in the conspiracy. It was generally believed that the U. S. Government would ultimately redeem the greenbacks with gold, Grant believed that putting sound money back into circulation was the best approach to restoring the economy. Grant put in charge of the U. S. Treasury the talented George S. Boutwell whose primary task was to reduce the national debt, to accomplish this Boutwell, in April, ordered his assistant treasurer to sell gold from the Treasury and buy up wartime bonds. He also initiated reforms in the Treasury Department by improving methods of tax collecting and attacking the problem of counterfeiting, by the end of May the national debt had been reduced by $12 million. Boutwells treasury policy of reducing the national debt kept the supply level. The purpose of Grants fiscal policy was to reduce the amount of greenbacks in the economy, Gould bribed Butterfield with a $10,000 check, more than Butterfields annual salary of $8,000. Butterfield agreed to tip the men off when the government intended to sell gold, Gould and Fisk then recruited Grants brother-in-law, a financier named Abel Corbin who had married Grants younger sister Jennie. Corbin was considered a smooth talker and had made money speculating in real estate and they used Corbins relationship to get close to Grant in social situations, where they would argue against government sale of gold, and Corbin would support their arguments. Not accustomed to having such offers turned down, Gould went ahead and made the purchase, when Porter was informed of Goulds unauthorized transaction he refused the offer in writing. In similar fashion Corbin approached Grants wife Julia and attempted to entice her into accepting half interest in $250,000 in bonds, but she turned that offer down. Gould secured owning interest in the federally audited New Yorks Tenth National Bank, in addition to meeting at Corbins mansion home, Fisk and Gould also talked with Grant on their Erie Canal railroad car and in Fisks box seats at New Yorks Fifth Avenue Theatre. When Gould planted an idea in Grant that if gold prices increased, it would lower the dollar, both Grant and Boutwell strongly felt that the nations war time debt had to be paid to assure the credibility of the United States in the eyes of the European banks. To accomplish this Boutwell began selling gold from the Treasurys reserve of $100 million specie, without the Presidents consent, Boutwells controversial approach was endorsed by Grant, giving Boutwell all the latitude he needed
23.
Encilhamento
–
The Encilhamento was an economic bubble that boomed in the late 1880s and early 1890s in Brazil, bursting during the provisional government of Deodoro da Fonseca leading to financial crisis. This policy of economic incentives created unbridled speculation, increased inflation, proposed changes in land legislation for example, was one of the reasons why large landowners and former slaveholders supported the establishment of the republic. In this political environment, economic and social under the pretext of promoting the process of industrialization of the country, big Rentiers, holders of the native big money, who go after the best rate of return for their capital. From that time, highlight the British banks led by Rothschilds, along with the increase in market liquidity, there was the introduction of modern financial mechanisms, enhancing the financial leverage possibilities. The reduction in the issuance of government bonds has also opened space for the expansion of stocks issues. All this, slowly led to an increase in speculation and inflation in general, embracing all economic sectors, from the currencies to real estate, creating minor bubbles into a big one. The fact that Rui Barbosa had been an opponent of such system, accredited him to be appointed by the military as finance secretary. Ironically, when took office, soon after the proclamation of the Republic, a example of such issues occurred not only when a company went to the IPO without any economic fundament to support it, but also whenever it needed more money, just issued new subscriptions. The investor who wouldnt answer to the new offerings, lost the rights to the old ones, on January 20,1891, Rui Barbosa stepped down as finance secretary to head two companies that were created during the Encilhamento and which he had partnership with the Counselor Mayrink. However, due to the powers conferred to monetary authorities. Among these, was Rui Barbosa, who had to go into exile in Europe
24.
Souk Al-Manakh stock market crash
–
The Souk Al-Manakh stock market crash was the 1982 stock market crash of Kuwaits unofficial stock market, the Souk Al-Manakh. The Al-Manakh market was housed in a parking garage that had formerly been a camel trading venue. At its peak, its market capitalization was the third highest in the world, behind only the U. S. and Japan, the large revenues of the 1970s left many private individuals with substantial funds at their disposal. These funds prompted a boom in the official stock market in the mid-1970s that culminated in a small crash in 1977. The governments response to this crash was to out the affected investors. The Souk Al-Manakh had emerged parallel to the stock market. The Souk Al-Manakh soon became the market for the new investor and, in the end, share dealings using postdated checks created a huge unregulated expansion of credit. The crash of the stock market finally came in August 1982. By September 1982, the Kuwaiti Ministry of Finance ordered all dubious checks to be turned in for clearance, the official investigation summed the value of worthless outstanding checks at the equivalent of US$94 billion from about 6,000 investors. Kuwaits financial sector was shaken by the crash, as was the entire economy. The crash prompted a recession that rippled through society as individual families were disrupted by the investment risks of particular members made on family credit, the debts from the crash left all but one bank in Kuwait technically insolvent, held up only by support from the Central Bank. Only the National Bank of Kuwait, the largest commercial bank, in the end, the government stepped in, devising a complicated set of policies, embodied in the Difficult Credit Facilities Resettlement Program. The implementation of the program was incomplete in 1990 when the Iraqi invasion changed the entire financial picture. Coupled with reduced oil revenues caused by the ongoing Iran-Iraq War, library of Congress Country Studies - Kuwait A detailed description of the Kuwait stock market crash from stock-market-crash. net
25.
Black Monday (1987)
–
In finance, Black Monday refers to Monday, October 19,1987, when stock markets around the world crashed, shedding a huge value in a very short time. The crash began in Hong Kong and spread west to Europe, the Dow Jones Industrial Average fell exactly 508 points to 1,738.74. In Australia and New Zealand, the 1987 crash is referred to as Black Tuesday because of the time zone difference. The stock market advanced significantly, with the Dow peaking in August 1987 at 2,722 points, further financial uncertainty may have resulted from the collapse of OPEC in early 1986, which led to crude oil price decreasing by more than 50% by mid-1986. On October 14, the DJIA dropped 95.46 points to 2,412.70, on Thursday, October 15,1987, Iran hit the American-owned supertanker, the Sungari, with a Silkworm missile off Kuwaits main Mina Al Ahmadi oil port. The next morning, Iran hit another ship, the U. S. -flagged MV Sea Isle City, with another Silkworm missile. On Friday, October 16, when all the markets in London were unexpectedly closed due to the Great Storm of 1987, then-Treasury Secretary James Baker stated concerns about the falling prices. Later that morning, two U. S. warships shelled an Iranian oil platform in the Persian Gulf in response to Irans Silkworm missile attack on the Sea Isle City. By the end of October, stock markets in Hong Kong, Australia, Spain, the United Kingdom, New Zealands market was hit especially hard, falling about 60% from its 1987 peak, and taking several years to recover. The Black Monday decline was—and currently remains—the largest one-day percentage decline in the DJIA, however, the economy was barely affected and growth actually increased throughout 1987 and 1988, with the DJIA regaining its pre-crash closing high of 2,722 points in early 1989. This, along with the demise of the leveraged buyout craze brought a five-year depression late that year. Possible causes for the decline included program trading, overvaluation, illiquidity, a popular explanation for the 1987 crash was selling by program traders, most notably as a reaction to the computerized selling required by portfolio insurance hedges. However, economist Dean Furbush points out that the biggest price drops occurred when trading volume was light, in program trading, computers perform rapid stock executions based on external inputs, such as the price of related securities. Common strategies implemented by program trading involve an attempt to engage in arbitrage, as computer technology became more available, the use of program trading grew dramatically within Wall Street firms. After the crash, many blamed program trading strategies for blindly selling stocks as markets fell, some economists theorized the speculative boom leading up to October was caused by program trading, and that the crash was merely a return to normalcy. Either way, program trading ended up taking the majority of the blame in the eye for the 1987 stock market crash. Congressman Edward J. Markey, who had been warning about the possibility of a crash, New York Universitys Richard Sylla divides the causes into macroeconomic and internal reasons. Macroeconomic causes included international disputes about foreign exchange and interest rates, the internal reasons included innovations with index futures and portfolio insurance
26.
Dot-com bubble
–
The period was marked by the founding of several new Internet-based companies commonly referred to as dot-coms. Companies could cause their stock prices to increase by adding an e- prefix to their name or a. com suffix. By the end of the 1990s, the NASDAQ hit a P/E ratio of 200, the collapse of the bubble took place during 1999–2001. Some companies, such as pets. com and Webvan, failed completely, others – such as Cisco, whose stock declined by 86% – lost a large portion of their market capitalization but remained stable and profitable. Some, such as eBay. com, later recovered and even surpassed their dot-com-bubble peaks, the stock of Amazon. com came to exceed $700 per share, for example, after having gone from $107 to $7 in the crash. The low interest rates of 1998–99 helped increase the start-up capital amounts, a canonical dot-com companys business model relied on harnessing network effects by operating at a sustained net loss and building market share. These companies offered their services or end product for free with the expectation that they could build enough brand awareness to charge profitable rates for their services later, the motto get big fast reflected this strategy. This occurred in industrialized nations due to the digital divide in the late 1990s. The absence of infrastructure and a lack of understanding were two obstacles that previously obstructed mass connectivity. For these reasons, individuals had limited capabilities in what they could do, increased means of connectivity to the Internet than previously available allowed the use of ICT to progress from a luxury good to a necessity good. As connectivity grew, so did the potential for venture capitalists to take advantage of the growing field, the functionalism, or impacts of technologies driven from the cost effectiveness of new Internet websites ultimately influenced the demand growth during this time. A bubble occurs when speculators note the fast increase in value and decide to buy in anticipation of further rises, typically, during a bubble, many companies thus become grossly overvalued. When the bubble bursts, the prices fall dramatically. The prices of many non-technology stocks increased in tandem and were pushed up to valuations uncorrelated to fundamentals. Andrew Smith argued that the financial industrys handling of initial public offerings tended to benefit the banks, in contrast, the financiers and other initial investors were typically entitled to sell at the peak price, and so could immediately profit from short-term price rises. Smith argues that the profitability of the IPOs to Wall Street was a significant factor in the course of events of the bubble. He writes, But did the kids dupe the establishment by drawing them into companies, or did the establishment dupe the kids by introducing them to Mammon. In spite of this, however, a few company founders made vast fortunes when their companies were out at an early stage in the dot-com stock market bubble
27.
1997 Asian financial crisis
–
At the time, Thailand had acquired a burden of foreign debt that made the country effectively bankrupt even before the collapse of its currency. As the crisis spread, most of Southeast Asia and Japan saw slumping currencies, devalued stock markets and other asset prices, Indonesia, South Korea and Thailand were the countries most affected by the crisis. Hong Kong, Laos, Malaysia and the Philippines were also hurt by the slump, brunei, China, Singapore, Taiwan and Vietnam were less affected, although all suffered from a loss of demand and confidence throughout the region. Foreign debt-to-GDP ratios rose from 100% to 167% in the four large Association of Southeast Asian Nations economies in 1993–96, in South Korea, the ratios rose from 13% to 21% and then as high as 40%, while the other northern newly industrialized countries fared much better. Only in Thailand and South Korea did debt service-to-exports ratios rise, the efforts to stem a global economic crisis did little to stabilize the domestic situation in Indonesia, however. After 30 years in power, President Suharto was forced to step down on 21 May 1998 in the wake of rioting that followed sharp price increases caused by a drastic devaluation of the rupiah. The effects of the crisis lingered through 1998, in 1998 the Philippines growth dropped to virtually zero. By 1999, however, analysts saw signs that the economies of Asia were beginning to recover, after the 1997 Asian Financial Crisis, economies in the region are working toward financial stability on financial supervision. Until 1999, Asia attracted almost half of the capital inflow into developing countries. The economies of Southeast Asia in particular maintained high interest rates attractive to investors looking for a high rate of return. As a result, the regions received a large inflow of money. At the same time, the economies of Thailand, Malaysia, Indonesia, Singapore. This achievement was widely acclaimed by financial institutions including IMF and World Bank, the causes of the debacle are many and disputed. Thailands economy developed into an economic bubble fueled by hot money, more and more was required as the size of the bubble grew. The same type of situation happened in Malaysia, and Indonesia, the short-term capital flow was expensive and often highly conditioned for quick profit. Development money went in an uncontrolled manner to certain people only, not particularly the best suited or most efficient. As the U. S. economy recovered from a recession in the early 1990s, the U. S. Federal Reserve Bank under Alan Greenspan began to raise U. S. interest rates to head off inflation. S. dollar. For the Southeast Asian nations which had pegged to the U. S. dollar
28.
1998 Russian financial crisis
–
The Russian financial crisis hit Russia on 17 August 1998. It resulted in the Russian government and the Russian Central Bank devaluing the ruble, the crisis had severe impacts on the economies of many neighboring countries. Meanwhile, James Cook, the vice president of The U. S. Russia Investment Fund, suggested the crisis had the effect of teaching Russian banks to diversify their assets. Declining productivity, a fixed exchange rate between the ruble and foreign currencies to avoid public turmoil, and a chronic fiscal deficit were the reasons that led to the crisis. The economic cost of the first war in Chechnya, estimated at $5.5 billion, in the first half of 1997, the Russian economy showed some signs of improvement. However, soon after this, the problems began to gradually intensify, two external shocks, the Asian financial crisis that had begun in 1997 and the following declines in demand for crude oil and nonferrous metals, severely impacted Russian foreign exchange reserves. A political crisis came to a head in March when Russian president Boris Yeltsin suddenly dismissed Prime Minister Viktor Chernomyrdin, Yeltsin named Energy Minister Sergei Kiriyenko, then 35 years old, as acting prime minister. On 29 May 1998, Yeltsin appointed Boris Fyodorov as Head of the State Tax Service, in an effort to prop up the currency and stem the flight of capital, in June 1998 Kiriyenko hiked GKO interest rates to 150%. On 12 May 1998, coal miners went on strike over unpaid wages, by 1 August 1998 there were approximately $12.5 billion in debt owed to Russian workers. On 14 August 1998 the exchange rate of the Russian ruble to the US dollar was still 6.29, despite the bailout, July 1998 monthly interest payments on Russia’s debt rose to a figure 40 percent higher than its monthly tax collections. If the ruble threatened to devalue outside of range, the Central Bank would intervene by spending foreign reserves to buy rubles. Similarly, it would sell rubles if the exchange rate threatened to drop below 5.3. Investors fled the market by selling rubles and Russian assets, which also put pressure on the ruble. This forced the Central Bank to spend its foreign reserves to defend Russias currency and it is estimated that between 1 October 1997 and 17 August 1998, the Central Bank expended approximately $27 billion of its U. S. dollar reserves to maintain the floating peg. On 17 August 1998, the Russian government devalued the ruble, defaulted on domestic debt, and declared a moratorium on repayment of foreign debt. On that day the Russian government and the Central Bank of Russia issued a Joint Statement announcing, in essence, that, on 17 August 1998 the government declared that certain state securities would be transformed into new securities. At the same time, in addition to widening the currency band, at the time, the Moscow Interbank Currency Exchange set a daily official exchange rate through a series of interactive auctions based on written bids submitted by buyers and sellers
