1.
Wall Street
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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
2.
Stock market crash
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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
3.
History of the United States
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The date of the start of the history of the United States is a subject of debate among historians. In recent decades American schools and universities typically have shifted back in time to more on the colonial period. Indigenous people lived in what is now the United States for thousands of years before European colonists began to arrive, mostly from England, the Spanish built small settlements in Florida and the Southwest, and the French along the Mississippi River and the Gulf Coast. By the 1770s, thirteen British colonies contained two and a million people along the Atlantic coast east of the Appalachian Mountains. After the end of the French and Indian Wars in the 1760s, Tax resistance, especially the Boston Tea Party, led to punitive laws by Parliament designed to end self-government in Massachusetts. American Patriots adhered to an ideology called republicanism that emphasized civic duty, virtue. Armed conflict began in 1775 as Patriots drove the royal officials out of every colony and assembled in mass meetings, in 1776, the Second Continental Congress declared that there was a new, independent nation, the United States of America, not just a collection of disparate colonies. With large-scale military and financial support from France and the leadership of General George Washington. The peace treaty of 1783 gave the new nation the land east of the Mississippi River, the central government established by the Articles of Confederation proved ineffectual at providing stability, as it had no authority to collect taxes and had no executive officer. Congress called a convention to meet secretly in Philadelphia in 1787 and it wrote a new Constitution, which was adopted in 1789. In 1791, a Bill of Rights was added to guarantee inalienable rights, with Washington as the first president and Alexander Hamilton his chief political and financial adviser, a strong central government was created. When Thomas Jefferson became president he purchased the Louisiana Territory from France, a second and final war with Britain was fought in 1812. Encouraged by the notion of Manifest Destiny, federal territory expanded all the way to the Pacific, the U. S. always was large in terms of area, but its population was small, only 4 million in 1790. Population growth was rapid, reaching 7.2 million in 1810,32 million in 1860,76 million in 1900,132 million in 1940, Economic growth in terms of overall GDP was even faster. However, compared to European powers, the military strength was relatively limited in peacetime before 1940. The expansion was driven by a quest for land for yeoman farmers. The expansion of slavery was increasingly controversial and fueled political and constitutional battles, the 1860 presidential election of Republican Abraham Lincoln was on a platform of ending the expansion of slavery and putting it on a path to extinction. Seven cotton-based deep South slave states seceded and later founded the Confederacy months before Lincolns inauguration, No nation ever recognized the Confederacy, but it opened the war by attacking Fort Sumter in 1861
4.
London Stock Exchange
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The London Stock Exchange is a stock exchange located in the City of London in the United Kingdom. As of December 2014, the Exchange had a capitalisation of US$6.06 trillion. The Exchange was founded in 1801 and its current premises are situated in Paternoster Square close to St Pauls Cathedral in the City of London, the Exchange is part of the London Stock Exchange Group. London Stock Exchange is one of the world’s oldest stock exchanges, London Stock Exchange Group was created in October 2007 when London Stock Exchange merged with Milan Stock Exchange, Borsa Italiana. The Royal Exchange had been founded by English financier Thomas Gresham on the model of the Antwerp Bourse and it was opened by Elizabeth I of England in 1571. During the 17th century, stockbrokers were not allowed in the Royal Exchange due to their rude manners and they had to operate from other establishments in the vicinity, notably Jonathans Coffee-House. At that coffee house, a broker named John Casting started listing the prices of a few commodities, exchange rates and certain key provisions such as salt, coal, originally, this was not a daily list and was only published a few days of the week. This list and activity was moved to Garraway’s coffee house. Public auctions during this period were conducted for the duration that a length of tallow candle could burn, as stocks grew, with new companies joining to raise capital, the royal court also raised some monies. These are the earliest evidence of organised trading in securities in London. After Greshams Royal Exchange building was destroyed in the Great Fire of London, it was rebuilt and this was a move away from coffee houses and a step towards the modern model of stock exchange. The Royal Exchange not only housed brokers but also merchants and merchandise and this was the birth of a regulated stock market, which had teething problems in the shape of unlicensed brokers. In order to regulate these, Parliament brought out an act in 1697 that levied heavy penalties and it also set a fixed number of brokers, which was later increased as the size of the trade grew. The street in which they were now dealing was known as Exchange Alley, Parliament tried to regulate this and ban the unofficial traders from the Change streets. Traders became weary of bubbles when companies rose quickly and fell, after the Seven Years War, trade at Jonathans coffee house boomed again. In 1773, Jonathan, together with 150 other brokers, formed a club and opened a new and this now had a set entrance fee, through which traders could enter the stock room and trade securities. It was, however, not a location for trading. Fraud was also rife during these times and in order to such dealings
5.
Great Depression
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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
6.
Dow Jones Industrial Average
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The industrial average was first calculated on May 26,1896. Currently owned by S&P Dow Jones Indices, which is majority owned by S&P Global, it is the most notable of the Dow Averages, the averages are named after Dow and one of his business associates, statistician Edward Jones. It is an index that shows how 30 large publicly owned companies based in the United States have traded during a trading session in the stock market. It is the second-oldest U. S. market index after the Dow Jones Transportation Average, the Industrial portion of the name is largely historical, as many of the modern 30 components have little or nothing to do with traditional heavy industry. The average is price-weighted, and to compensate for the effects of stock splits and other adjustments, since the divisor is currently less than one, the value of the index is larger than the sum of the component prices. General Electric has had the longest continuous presence on the index, more recent changes to the index include the following, On February 19,2008, Chevron and Bank of America replaced Altria Group and Honeywell. Chevron was previously a Dow component from July 18,1930, during Chevrons absence, its split-adjusted price per share went from $44 to $85, while the price of petroleum rose from $24 to $100. On September 22,2008, Kraft Foods Inc replaced the American International Group in the index, on September 24,2012, UnitedHealth Group replaced Kraft Foods Inc following Krafts split into Mondelēz International and Kraft Foods Group. On September 20,2013, Goldman Sachs, Nike, and Visa replaced Alcoa, Bank of America, and Hewlett-Packard. Visa replaced Hewlett-Packard because of the split into HP Inc. and Hewlett Packard Enterprise On March 19,2015, Apple replaced AT&T, though comprising the same number of stocks, this index contained only one of the original twelve industrials that would eventually form Dows most famous index. Dow calculated his first average purely of industrial stocks on May 26,1896, of the original 12 industrials, only General Electric currently remains part of that index. The other 11 were, American Cotton Oil Company, a company to Bestfoods. American Sugar Company, became Domino Sugar in 1900, now Domino Foods, American Tobacco Company, broken up in a 1911 antitrust action. Chicago Gas Company, bought by Peoples Gas Light in 1897, distilling & Cattle Feeding Company, now Millennium Chemicals, formerly a division of LyondellBasell, the latter of which recently emerged from Chapter 11 bankruptcy. Laclede Gas Company, still in operation as the Laclede Group, national Lead Company, now NL Industries, removed from the Dow Jones Industrial Average in 1916. North American Company, a utility holding company, broken up by the U. S. Securities. Tennessee Coal, Iron and Railroad Company in Birmingham, Alabama, bought by U. S. Steel in 1907, United States Rubber Company, changed its name to Uniroyal in 1961, merged with private B. F. Goodrich in 1986, bought by Michelin in 1990. When it was first published in the mid-1880s, the index stood at a level of 62.76
7.
Roaring Twenties
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The Roaring Twenties is a term for Western society and Western culture during the 1920s. In the French Third Republic, the decade was known as the années folles, emphasizing the social, artistic. Jazz music blossomed, the flapper redefined the modern look for British and American women, not everything roared, in the wake of the hyper-emotional patriotism of World War I, Warren G. Harding brought back normalcy to the politics of the United States. This era saw the use of automobiles, telephones, motion pictures, radio. The economies saw rapid growth, accelerated consumer demand, plus significant changes in lifestyle. The media focused on celebrities, especially sports heroes and movie stars, as cities rooted for their teams and filled the new palatial cinemas. In most major states, women won the right to vote. The social and cultural features known as the Roaring Twenties began in leading metropolitan centers, the United States gained dominance in world finance. Thus, when Weimar Republic Germany could no longer afford to pay World War I reparations to the United Kingdom, France and other Allies, the Americans came up with the Dawes Plan. Wall Street invested heavily in Germany, which repaid its reparations to nations that, in turn, by the middle of the decade, prosperity was widespread, with the second half of the decade known, especially in Germany, as the Golden Twenties. The spirit of the Roaring Twenties was marked by a feeling of novelty associated with modernity. Everything seemed to be feasible through modern technology, New technologies, especially automobiles, moving pictures, and radio, brought modernity to a large part of the population. Formal decorative frills were shed in favor of practicality in both life and architecture. At the same time, Jazz and dancing rose in popularity, as such, the period is also often referred to as the Jazz Age. The Wall Street Crash of 1929 ended the era, as the Great Depression brought years of worldwide gloom, the economy of the United States, which had successfully transitioned from a wartime economy to a peacetime economy, boomed and provided loans for a European boom as well. However, some sectors were stagnant, especially farming and coal mining, the United States since the late 19th century was the richest country in the world per capita and in terms of total GDP. Its industry was based on production, and its society acculturated into consumerism. European economies, by contrast, had a more difficult postwar readjustment, at first, the end of wartime production caused a brief but deep recession, the post–World War I recession of 1919–20
8.
World War I
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World War I, also known as the First World War, the Great War, or the War to End All Wars, was a global war originating in Europe that lasted from 28 July 1914 to 11 November 1918. More than 70 million military personnel, including 60 million Europeans, were mobilised in one of the largest wars in history and it was one of the deadliest conflicts in history, and paved the way for major political changes, including revolutions in many of the nations involved. The war drew in all the worlds great powers, assembled in two opposing alliances, the Allies versus the Central Powers of Germany and Austria-Hungary. These alliances were reorganised and expanded as more nations entered the war, Italy, Japan, the trigger for the war was the assassination of Archduke Franz Ferdinand of Austria, heir to the throne of Austria-Hungary, by Yugoslav nationalist Gavrilo Princip in Sarajevo on 28 June 1914. This set off a crisis when Austria-Hungary delivered an ultimatum to the Kingdom of Serbia. Within weeks, the powers were at war and the conflict soon spread around the world. On 25 July Russia began mobilisation and on 28 July, the Austro-Hungarians declared war on Serbia, Germany presented an ultimatum to Russia to demobilise, and when this was refused, declared war on Russia on 1 August. Germany then invaded neutral Belgium and Luxembourg before moving towards France, after the German march on Paris was halted, what became known as the Western Front settled into a battle of attrition, with a trench line that changed little until 1917. On the Eastern Front, the Russian army was successful against the Austro-Hungarians, in November 1914, the Ottoman Empire joined the Central Powers, opening fronts in the Caucasus, Mesopotamia and the Sinai. In 1915, Italy joined the Allies and Bulgaria joined the Central Powers, Romania joined the Allies in 1916, after a stunning German offensive along the Western Front in the spring of 1918, the Allies rallied and drove back the Germans in a series of successful offensives. By the end of the war or soon after, the German Empire, Russian Empire, Austro-Hungarian Empire, national borders were redrawn, with several independent nations restored or created, and Germanys colonies were parceled out among the victors. During the Paris Peace Conference of 1919, the Big Four imposed their terms in a series of treaties, the League of Nations was formed with the aim of preventing any repetition of such a conflict. This effort failed, and economic depression, renewed nationalism, weakened successor states, and feelings of humiliation eventually contributed to World War II. From the time of its start until the approach of World War II, at the time, it was also sometimes called the war to end war or the war to end all wars due to its then-unparalleled scale and devastation. In Canada, Macleans magazine in October 1914 wrote, Some wars name themselves, during the interwar period, the war was most often called the World War and the Great War in English-speaking countries. Will become the first world war in the sense of the word. These began in 1815, with the Holy Alliance between Prussia, Russia, and Austria, when Germany was united in 1871, Prussia became part of the new German nation. Soon after, in October 1873, German Chancellor Otto von Bismarck negotiated the League of the Three Emperors between the monarchs of Austria-Hungary, Russia and Germany
9.
Speculation
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Speculation is the purchase of an asset with the hope that it will become more valuable at a future date. Many speculators pay little attention to the value of a security. Speculation can in principle involve any tradable good or financial instrument, Speculators are particularly common in the markets for stocks, bonds, commodity futures, currencies, fine art, collectibles, real estate, and derivatives. The number of shareholders increased, perhaps, from 4.4 million in 1900 to 26 million in 1932, the view of what distinguishes investment from speculation and speculation from excessive speculation varies widely among pundits, legislators and academics. Some sources note that speculation is simply a higher form of investment. Others define speculation more narrowly as positions not characterized as hedging, the agency emphasizes that speculators serve important market functions, but defines excessive speculation as harmful to the proper functioning of futures markets. According to Ben Graham in The Intelligent Investor, the prototypical defensive investor is. one interested chiefly in safety plus freedom from bother, Speculation is condemned on ethical-moral grounds as creating money from money and thereby promoting the vices of avarice and gambling. When a harvest is too small to satisfy consumption at its rate, speculators come in. Their purchases raise the price, thereby checking consumption so that the supply will last longer. Producers encouraged by the price further lessen the shortage by growing or importing to reduce the shortage. On the other side, when the price is higher than the speculators think the facts warrant and this reduces prices, encouraging consumption and exports and helping to reduce the surplus. If any market, such as pork bellies, had no speculators, with fewer players in the market, there would be a larger spread between the current bid and ask price of pork bellies. By contrast, a commodity speculator may profit the difference in the spread and, in competition with other speculators, some schools of thought argue that speculators increase the liquidity in a market, and therefore promote an efficient market. This efficiency is difficult to achieve without speculators, a very beneficial by-product of speculation for the economy is price discovery. On the other hand, as more speculators participate in a market, underlying real demand and supply can diminish compared to trading volume, Speculators also perform a very important risk bearing role that is beneficial to society. For example, a farmer might be considering planting corn on some unused farmland, however, he might not want to do so because he is concerned that the price might fall too far by harvest time. By selling his crop in advance at a price to a speculator, he is now able to hedge the price risk. Thus, speculators can actually increase production through their willingness to take on risk, hence, they make the prices better reflect the true quality of operation of the firms
10.
Federal Reserve System
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The Federal Reserve System is the central banking system of the United States. Over the years, events such as the Great Depression in the 1930s, the U. S. Congress established three key objectives for monetary policy in the Federal Reserve Act, maximizing employment, stabilizing prices, and moderating long-term interest rates. The first two objectives are sometimes referred to as the Federal Reserves dual mandate. S, the Fed conducts research into the economy and releases numerous publications, such as the Beige Book. S. member banks, and various advisory councils. The federal government sets the salaries of the seven governors. Nationally chartered commercial banks are required to hold stock in the Federal Reserve Bank of their region, thus, the Federal Reserve System has both private and public components to serve the interests of the public and private banks. The structure is considered unique among central banks and it is also unusual in that the United States Department of the Treasury, an entity outside of the central bank, prints the currency used. The U. S. Government receives all the annual profits, after a statutory dividend of 6% on member banks capital investment is paid. In 2015, the Federal Reserve made a profit of $100.2 billion, the primary motivation for creating the Federal Reserve System was to address banking panics. Before the founding of the Federal Reserve System, the United States underwent several financial crises, a particularly severe crisis in 1907 led Congress to enact the Federal Reserve Act in 1913. Today the Federal Reserve System has responsibilities in addition to ensuring the stability of the financial system. S. S and this practice is called fractional-reserve banking. As a result, banks usually invest the majority of the funds received from depositors, on rare occasions, too many of the banks customers will withdraw their savings and the bank will need help from another institution to continue operating, this is called a bank run. Bank runs can lead to a multitude of social and economic problems, the Federal Reserve System was designed as an attempt to prevent or minimize the occurrence of bank runs, and possibly act as a lender of last resort when a bank run does occur. Many economists, following Milton Friedman, believe that the Federal Reserve inappropriately refused to lend money to banks during the bank runs of 1929. Because some banks refused to clear checks from certain others during times of economic uncertainty, to address these problems, Congress gave the Federal Reserve System the authority to establish a nationwide check-clearing system. It took over this role from the private sector clearing houses which operated during the Free Banking Era, whether public or private, through its discount window and credit operations, Reserve Banks provide liquidity to banks to meet short-term needs stemming from seasonal fluctuations in deposits or unexpected withdrawals. Longer term liquidity may also be provided in exceptional circumstances, the rate the Fed charges banks for these loans is called the discount rate. By making these loans, the Fed serves as a buffer against unexpected day-to-day fluctuations in reserve demand and this contributes to the effective functioning of the banking system, alleviates pressure in the reserves market and reduces the extent of unexpected movements in the interest rates. For example, on September 16,2008, the Federal Reserve Board authorized an $85 billion loan to stave off the bankruptcy of international insurance giant American International Group
11.
55 Wall Street
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The new building was designed by Isaiah Rogers in the Greek Revival style. Custom House at 1 Bowling Green, after the Custom House left, James Stillman, president of National City Bank, arranged for his company to buy the building from the government to be their headquarters. The old main banking hall has been used as a ballroom and event space since 1998,55 Wall Street became the new home of National City Bank on December 19,1908 when the bank moved across the street from 52 Wall Street. Stillman ordered that the buildings Ionic colonnade be preserved and that the interior be remodeled to look like the Pantheon in Rome, years after the headquarters move,55 Wall Street continued as a full service retail branch, as well as a substantial location for private banking operations. The building served as the headquarters for the law firm of Shearman & Sterling, lead counsel for Citibank, the building was sold by Citibank in 1990 to private investors for $69 million. Citibank ended its branch banking presence at 55 Wall Street in 1992 and it is currently owned by Cipriani. The original building was designed by Boston architect Isaiah Rogers in the Greek Revival style, the facade of the original four-story, Greek revival style featured twelve massive Ionic columns, each a single block of Quincy Granite. In 1899, National City Bank, which subsequently became Citibank, commissioned architect Charles McKim of McKim, the architects added four stories to the building and superimposed a second colonnade of Corinthian columns above the original facade. They also redesigned the interior into a banking hall, featuring a sixty-foot-high central dome. Monumental Corinthian columns support an elegant entablature that circles the space, the room features elegant gray marble floors and walls, a coffered ceiling, and delicate mezzanine railings. According to Forbes magazine back in 1917, the branch at 55 Wall Street does more business in its head office than is done any other nongovernmental banking roof on the face of the earth. The exterior of building was designated a New York City Landmark in 1965. The building was named a National Historic Landmark in 1978, in 1998 it was completely rebuilt as The Regent Wall Street Hotel. After the September 11 attacks on the World Trade Center in 2001,55 Wall Street served as a center for workers. The hotel closed in 2003 due to lack of business after the 9/11 attacks and it has recently been renovated again and was converted to condos by the Cipriani S. A. empire of restaurants and ballrooms. The Designated Landmark of New York City plaque was installed by the New York Landmarks Preservation Foundation in 2002. The building was the location for the finale of Jonathan Demmes 2004 film The Manchurian Candidate,55 Wall Street, A Working Landmark,1979 American Memory from the Library of Congress The Rise of Wall Street The Skyscraper Museum
12.
Irving Fisher
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Irving Fisher was an American economist, statistician, inventor, and Progressive social campaigner. He was one of the earliest American neoclassical economists, though his work on debt deflation has been embraced by the Post-Keynesian school. Joseph Schumpeter described him as the greatest economist the United States has ever produced, Fisher made important contributions to utility theory and general equilibrium. He was also a pioneer in the study of intertemporal choice in markets. His research on the quantity theory of money inaugurated the school of thought known as monetarism. Fisher was also a pioneer of econometrics, including the development of index numbers, Some concepts named after him include the Fisher equation, the Fisher hypothesis, the international Fisher effect, the Fisher separation theorem and Fisher market. Having made numerous contributions to theory, he later became the foremost proponent of the full-reserve banking reform until his death. He was one of the authors of A Program for Monetary Reform where the concepts of 100% reserve system is outlined. Fisher was born in Saugerties, New York and his father was a teacher and a Congregational minister, who raised his son to believe he must be a useful member of society. Despite being raised in religious family, he later on became an atheist, as a child, he had remarkable mathematical ability and a flair for invention. A week after he was admitted to Yale College his father died, Irving then supported his mother, brother, and himself, mainly by tutoring. He graduated first in his class with a B. A degree in 1888, having also been elected as a member of the Skull, in 1891, Fisher received the first Ph. D. in economics granted by Yale. His faculty advisors were the theoretical physicist Willard Gibbs and the sociologist William Graham Sumner, as a student, Fisher had shown particular talent and inclination for mathematics, but he found that economics offered greater scope for his ambition and social concerns. His thesis, published by Yale in 1892 as Mathematical Investigations in the Theory of Value, when he began writing the thesis, Fisher had not been aware that Léon Walras and his continental European disciples had already covered similar ground. Nonetheless, Fishers work was a significant contribution and was immediately recognized and praised as first-rate by such European masters as Francis Edgeworth. After graduating from Yale, Fisher studied in Berlin and Paris, from 1890 onward, he remained at Yale, first as a tutor, then after 1898 as a professor of political economy, and after 1935 as professor emeritus. He edited the Yale Review from 1896 to 1910 and was active in many learned societies, institutes and he was president of the American Economic Association in 1918. The American Mathematical Society selected him as its Gibbs Lecturer for 1929, a leading early proponent of econometrics, in 1930 he founded, with Ragnar Frisch and Charles F. Roos the Econometric Society, of which he was the first president
13.
Market trend
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A market trend is a perceived tendency of financial markets to move in a particular direction over time. These trends are classified as secular for long time frames, primary for medium time frames, a trend can only be determined in hindsight, since at any time prices in the future are not known. The terms bull market and bear market describe upward and downward market trends, respectively, the names perhaps correspond to the fact that a bull attacks by lifting its horns upward, while a bear strikes with its claws in a downward motion. A secular market trend is a trend that lasts 5 to 25 years. A secular bear market consists of bull markets and larger bear markets. In a secular bull market the prevailing trend is bullish or upward-moving, in a secular bear market, the prevailing trend is bearish or downward-moving. An example of a bear market occurred in gold between January 1980 to June 1999, culminating with the Brown Bottom. During this period the nominal gold price fell from a high of $850/oz to a low of $253/oz, a primary trend has broad support throughout the entire market and lasts for a year or more. A bull market is a period of rising prices. The start of a market is marked by widespread pessimism. This point is when the crowd is the most bearish, the feeling of despondency changes to hope, optimism, and eventually euphoria, as the bull runs its course. This often leads the cycle, for example in a full recession. Indias Bombay Stock Exchange Index, BSE SENSEX, had a bull market trend for about five years from April 2003 to January 2008 as it increased from 2,900 points to 21,000 points. More than 6 fold rise in 5 years, notable bull markets marked the 1925-1929, 1953–1957 and the 1993-1997 periods when the U. S. A bear market is a decline in the stock market over a period of time. It is a transition from high investor optimism to widespread investor fear, according to The Vanguard Group, While there’s no agreed-upon definition of a bear market, one generally accepted measure is a price decline of 20% or more over at least a two-month period. A bear market followed the Wall Street Crash of 1929 and erased 89% of the Dow Jones Industrial Averages market capitalization by July 1932, after regaining nearly 50% of its losses, a longer bear market from 1937 to 1942 occurred in which the market was again cut in half. Another long-term bear market occurred from about 1973 to 1982, encompassing the 1970s energy crisis, yet another bear market occurred between March 2000 and October 2002
14.
Roger Babson
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Roger Ward Babson was an American entrepreneur, economist and business theorist in the first half of the 20th century. He is best remembered for founding Babson College and he also founded Webber College, now Webber International University, in Babson Park, Florida, and the defunct Utopia College, in Eureka, Kansas. Babson was born to Nathaniel Babson and his wife Ellen Stearns as part of the 10th generation of Babsons to live in Gloucester, on March 29,1900 Babson married his first wife Grace Margaret Knight, who died in 1956. In 1957 he remarried to Nona M. Dougherty, who died in 1963, Babsons success as an investor was based on unorthodox views of the operation of markets. According to biographer John Mulkern, Babson attributed the business cycle to Sir Isaac Newtons law of action and reaction, pseudoscientific notion that gravity can be used to explain movement in the stock markets. His market forecasting techniques are expounded in articles in Traders World Magazine, while attending MIT he received a degree in Engineering. He lobbied the dean to include a course, which resulted in a course known as Business Engineering. Eventually the Business Engineering program was expanded and it is now seen as the forerunner of the MBA degree, Babson authored more than 40 books on economic and social problems, the most widely read being Business Barometers and Business Barometers for Profits, Security, Income. Babson also wrote hundreds of articles and newspaper columns. He was a lecturer on business and financial trends. Babson was an investor and sometimes director of many corporations, including some traded on the New York Stock Exchange and these were, Keep speculation and investments separate. Dont be fooled by a name, give due consideration to market ability. Dont try to diversify by buying different securities of the same company, small companies should be carefully scrutinized. Buy adequate security, not super abundance, choose your dealer and buy outright On September 5,1929, he gave a speech saying, Sooner or later a crash is coming, and it may be terrific. Later that day the market declined by about 3%. This became known as the Babson Break, the Wall Street Crash of 1929 and the Great Depression soon followed. Babson was the Prohibition Partys candidate for President of the United States in 1940, election was won by incumbent President Franklin Delano Roosevelt of the Democratic Party. Babson was surpassed by two other candidates, Wendell Lewis Willkie of the Republican Party
15.
Ticker tape
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Ticker tape was the earliest digital electronic communications medium, transmitting stock price information over telegraph lines, in use between around 1870 through 1970. The term ticker came from the sound made by the machine as it printed, paper ticker tape became obsolete in the 1960s, as television and computers were increasingly used to transmit financial information. The concept of the stock ticker lives on, however, in the scrolling electronic tickers seen on brokerage walls, Ticker tape stock price telegraphs were invented in 1867 by Edward A. Calahan, an employee of the American Telegraph Company. The first stock price ticker system using a telegraphic printer was invented by Edward A. Calahan in 1863, Early versions of stock tickers provided the first mechanical means of conveying stock prices, over a long distance over telegraph wiring. In its infancy, the ticker used the symbols as Morse code as a medium for conveying messages. Previously, stock prices had been hand-delivered via written or verbal messages, since the useful time-span of individual quotes is very brief, they generally had not been sent long distances, aggregated summaries, typically for one day, were sent instead. The increase in speed provided by the allowed for faster. Since the ticker ran continuously, updates to a stocks price whenever the price changed became effective much faster, for the first time, trades were being done in what is now thought of as near real-time. By the 1880s, there were about a thousand stock tickers installed in the offices of New York bankers and brokers. In 1890, members of the agreed to create the New York Quotation Co. buying up all other ticker companies to ensure accuracy of reporting of price. Stock ticker machines are an ancestor of the modern computer printer, being one of the first applications of transmitting text over a wire to a printing device, based on the printing telegraph. This used the technology of the then-recently invented telegraph machines, with the advantage that the output was readable text, instead of the dots, a special typewriter designed for operation over telegraph wires was used at the opposite end of the telegraph wire connection to the ticker machine. Text typed on the typewriter was displayed on the machine at the opposite end of the connection. The machines printed a series of symbols, followed by brief information about the price of that companys stock. The word ticker comes from the tapping noise the machines made while printing. Pulses on the line made a letter wheel turn step by step until the correct symbol was reached. A typical 32-symbol letter wheel had to turn on average 15 steps until the letter could be printed resulting in a very slow printing speed of one character per second. Newer and more efficient tickers became available in the 1930s, Ticker machines became obsolete in the 1960s, replaced by computer networks, none have been manufactured for use for decades
16.
Thomas W. Lamont
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Thomas William Lamont, Jr. was an American banker. Lamont was born in Claverack, New York and his parents were Thomas Lamont, a Methodist minister, and Caroline Deuel Jayne. Since his father was a minister, they moved around upstate New York a lot and were not very wealthy and he graduated from Phillips Exeter Academy in 1888, where he was editor of the school newspaper, The Exonian, as well as the school yearbook and literary magazine. At Harvard College, he became first freshman editor of The Harvard Crimson and he graduated cum laude with a Bachelor of Arts degree in 1892. He met his wife, Florence Haskell Corliss, at the 1890 Harvard commencement and he started working under the city editor for the New York Tribune two days after he graduated from Harvard in 1892. He married Florence on October 31,1895 in Englewood, New Jersey and he was also able to work for the Albany Evening Journal, Boston Advertiser, Boston Herald, and New York Tribune, which only paid $25, while at Harvard. While at the Tribune, he received promotions, including night editor and helping the financial editor. It was an agency that worked for food corporations. The company was in a bad financial status, but Lamont fixed it, and the changed its name to Lamont, Corliss. He was partners with his brother-in-law, Corliss and his banking caught the attention of banker Henry P. Davison, who asked Thomas to join the newly started Bankers’ Trust. He started as secretary and treasurer and then moved up to being Vice President and he rose to the vice presidency of the First National Bank. Starting in the late 1910s, for years, he financed the Saturday Review of Literature. On January 1,1911, he became a partner of J. P. Morgan & Co. following Davison to the company, at that time, he was a member of the Council of Foreign Relations. He played a role for Morgan in directing both the Dawes Plan and the Young Plan. The company also started a system where the Allies could buy supplies from them, in 1917, he joined the Liberty Loan Committee, which helped the treasury sell war bonds to Americans. He also served unofficially as an advisor to a mission to the Allies led by Edward M. House, Lamont not only advised the other countries, he also went to them. Right before he was going to go to Europe, the Bolsheviks took power in Russia and he and the head of the American Red Cross, William B. Thompson, along with the approval of the British Prime Minister, Lloyd George, both he and Norman H. Davis were appointed as representatives of the Treasury Department to the Paris Peace Conference and had to determine what Germany had to pay in reparations
17.
J.P. Morgan & Co.
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J. P. Morgan & Co. is a commercial and investment banking institution based in the United States founded by John Pierpont Morgan and commonly known as the House of Morgan or simply Morgan. The firm is a predecessor of three of the largest banking institutions in the United States and globally, JPMorgan Chase, Morgan Stanley, and Deutsche Bank. In 2000, J. P. Morgan & Co. merged with Chase Manhattan Bank to form JPMorgan Chase & Co. one of the largest global banking institutions. Today, the J. P. Morgan brand is used to market certain JPMorgan Chase wholesale businesses, including investment banking, commercial banking and asset management. The J. P. Morgan branding was revamped in 2008 to return to its traditional appearance after several years of depicting the Chase symbol to the right of a condensed and modernized JPMorgan. Between 1959 and 1989, J. P. Morgan operated as the Morgan Guaranty Trust, the origins of the firm date back to 1854 when Junius S. Morgan joined George Peabody & Co. a London-based banking business headed by George Peabody. Junius took control of the firm, changing its name to J. S, Morgan & Co. in 1864 on Peabodys retirement. Juniuss son, J. Pierpont Morgan, first apprenticed at Duncan, Sherman and Company in the New York City, then founded his own firm with a cousin, J. Pierpont Morgan & Company, J. Pierpont Morgan & Company traded in government bonds and foreign exchange. It also acted as an agent for Peabody’s, Junius, however, considered some of Pierpont’s ventures to be highly speculative. So, Pierpont took on a senior partner and the firm was known first as Dabney, Morgan and Company, then Drexel. In these firms, Pierpont used his Peabody connection to bring British financial capital together with rapidly growing U. S. industrial firms, such as railroads, who needed financial capital. The Drexel of Drexel, Morgan & Co. was Philadelphia banker Anthony J. Drexel, on Junius’ death in 1890, Pierpont Morgan took his place at J. S. After Drexel’s death, Drexel, Morgan reorganized in 1895 and became J. P and it financed the formation of the United States Steel Corporation, which took over the business of Andrew Carnegie and others and was the worlds first billion-dollar corporation. In 1895, it supplied the United States government with $62 million in gold to float a bond issue and restore the treasury surplus of $100 million. In 1892, the company began to finance the New York, New Haven and Hartford Railroad, built in 1914,23 Wall Street was known as The Corner and The House of Morgan, and for decades the banks headquarters was the most important address in American finance. At noon, on September 16,1920, an anarchist bomb exploded in front of the bank, killing 38, shortly before the bomb went off, an unknown person placed a warning note in a mailbox at the corner of Cedar Street and Broadway. The warning read, Remember we will not tolerate any longer, free the political prisoners or it will be sure death for all of you. The Bank of England became an agent of J. P. Morgan & Co
18.
Albert H. Wiggin
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Albert Henry Wiggin was an American banker. Young once described him as the most colorful and attractive figure in the banking world of his time. Born in the town of Medfield, Massachusetts, Albert Wiggin was the son of a Unitarian minister, James Henry Wiggin and he had a brother, Langley Wiggin. Wiggin graduated from English High School of Boston in 1885 and went on to work for J. B Moors & Company as a runner, eight months later, he worked as a bookkeeper for another Boston bank run by his uncle called the National Bank of the Commonwealth. At the age of twenty-three he worked his way up towards an assistant for a bank examiner in Boston. In 1892 he married Jessie Duncan Hayden with whom he had two daughters, in 1894 he became the assistant cashier of the Third National Bank of Boston. Beginning in 1911, he started assembling a collection of art prints, drawings, watercolors, in 1941 he donated his collection of several thousand pieces to the Boston Public Library. Other works from his assemblage can be found at the New York Public Library and he was made a lifetime member of the board of MITs Charles Hayden Memorial Library. Wiggin went to New York in June 1899 to become president of the prestigious National Park Bank. He also was president of two small Manhattan institutions, the Mutual Bank and the Mount Morris Bank. By his early thirties, Wiggin was already a vice president at National Park Bank in New York City and he gained recognition as one of the up-and-coming in the Wall Street banking community for his role in organizing Bankers Trust. In 1904 the quiet, reserved Wiggin became the youngest ever vice president at the prestigious Chase National Bank, Wiggin had an integral role in creating commercial and industrial accounts that ultimately gained Chase’s revenue. He also invited other important businessmen from other big companies to see if they wanted to become Chase directors, chases deposits had an immediate effect as they soared from $91 million at the end of 1910 to $2.074 billion twenty years later. Capital and surplus soon followed by increasing from $13 million to $358 million, the amount of Shareholders Chase had gone from twenty in 1904, to 2,189 in 1921, to 50,510 in 1929, and even reached at 89,000 by 1933. In 1917, Wiggin was made Chairman of the bank and served on the board of directors of more than fifty major American corporations and he was responsible for bringing in members of the Rockefeller family as investors in Chase National Bank. By 1918, Wiggin made Chase the fourth largest bank in the United States, Wiggin also developed other foreign banking corporations in places such as Paris, Rome, Panama City and Berlin. Wiggin was a proponent of Free trade, albeit under certain restrictions. On Black Thursday of the Wall Street Crash of 1929, Albert Wiggin joined with other senior Wall Street bankers in an attempt to save the collapsing stock market, on behalf of Chase National Bank, Wiggin, along with other bankers, committed substantial funds for an investment pool
19.
Chase Bank
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The bank was known as Chase Manhattan Bank until it merged with J. P. Morgan & Co. in 2000. Chase Manhattan Bank was formed by the merger of the Chase National Bank, the bank has been headquartered in Columbus, Ohio since its merger with Bank One Corporation in 2004. The bank acquired the deposits and most assets of Washington Mutual, Chase offers more than 5,100 branches and 16,100 ATMs nationwide. JPMorgan Chase has 250,355 employees and operates in more than 100 countries, JPMorgan Chase currently has assets of roughly US$2.49 trillion. JPMorgan Chase, through its Chase subsidiary, is one of the Big Four banks of the United States. From September 1,1799, to 1955, it was called The Bank of The Manhattan Company, Chase National Bank was formed in 1877 by John Thompson. It was named after former United States Treasury Secretary and Chief Justice Salmon P. Chase, the Chase National Bank acquired a number of smaller banks in the 1920s, through its Chase Securities Corporation. In 1926, for instance, it acquired Mechanics and Metals National Bank, however, its most significant acquisition was the Equitable Trust Company of New York in 1930, the largest stockholder of which was John D. Rockefeller, Jr. This made Chase the largest bank in America and indeed, in the world, in 1955, Chase National Bank and The Manhattan Company merged to create The Chase Manhattan Bank. The deal was structured as an acquisition by the Bank of the Manhattan Company of Chase National. This avoided the need for consent by shareholders. For Chase Manhattan Banks new logo, Chermayeff & Geismar designed a stylized octagon in 1961, the Chase logo is a stylized representation of the primitive water pipes laid by the Manhattan Company, which were made by nailing together wooden planks. The bank included a management business called the Chase Investors Management Corporation. Under McCloys successor, George Champion, the bank relinquished its antiquated 1799 state charter for a modern one, in 1969, under the leadership of David Rockefeller, the bank became part of a bank holding company, the Chase Manhattan Corporation. In July 1996, Chemical Bank of New York purchased Chase Manhattan Bank, chemicals previous acquisitions included Manufacturers Hanover Corporation, in 1991, and Texas Commerce Bank, in 1987. Although Chemical was the survivor, the merged company retained the Chase name since it was better known. In December 2000, the combined Chase Manhattan completed the acquisition of J. P. Morgan & Co. in one of the largest banking mergers to date, the combined company was renamed JPMorgan Chase. In 2004, the bank acquired Bank One, making Chase the largest credit card issuer in the United States, JPMorgan Chase added Bear Stearns & Co. and Washington Mutual to its acquisitions in 2008 and 2009 respectively
20.
Citibank
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Citibank is the consumer division of financial services multinational Citigroup. Citibank was founded in 1812 as the City Bank of New York, Citibank provides credit cards, mortgages, personal loans, commercial loans, and lines of credit. The bank has a total of 2,649 branches in 19 countries, the U. S. branches are concentrated in six metropolitan areas, New York City, Chicago, Los Angeles, San Francisco, Washington, D. C. and Miami. In 2016, the United States accounted for 70% of revenues, aside from the U. S. and Mexico, most of the companys branches are in Poland, Russia, India and the United Arab Emirates. As a result of the crisis of 2007–2008 and huge losses in the value of its subprime mortgage assets, Citigroup. On November 23,2008, in addition to an investment of $25 billion. By 2010, Citibank had repaid the loans from the Treasury in full, including interest, the City Bank of New York was founded on June 16,1812. The first president of the City Bank was the statesman and retired Colonel, Samuel Osgood, during Taylors ascendancy, the bank functioned largely as a treasury and finance center for Taylors own extensive business empire. In 1865, the joined the U. S. s new national banking system. By 1868, it was one of the largest banks in the United States, by 1893 it was the largest bank in New York, which was forbidden to U. S. national banks. In 1918, IBC became a wholly owned subsidiary and was merged into the bank. The same year, the bank evacuated all of its employees from Moscow and Petrograd as the Russian Civil War had begun, by 1919, the bank had become the first U. S. bank to have $1 billion in assets. Charles E. Mitchell, also called Sunshine Charlie Mitchell, was elected president in 1921 and in 1929 was made chairman, under Mitchell the bank expanded rapidly and by 1930 had 100 branches in 23 countries outside the United States. In 1933 a Senate committee, the Pecora Commission, investigated Mitchell for his part in tens of millions of dollars in losses, excessive pay, senator Carter Glass said of him, Mitchell, more than any 50 men, is responsible for this stock crash. In following years, branches in Germany and Japan closed, with the handling, in 1945, $5.6 billion in Treasury securities for War. In 1960, his cousin, David Rockefeller, became president of Chase Manhattan Bank. Following its merger with the First National Bank in 1955, the changed its name to The First National City Bank of New York. Later to become part of MasterCard, the bank introduced its First National City Charge Service credit card – popularly known as the Everything Card – in 1967, in 1976, under the leadership of CEO Walter B
21.
Richard Whitney (financier)
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Richard Whitney was an American financier, president of the New York Stock Exchange from 1930 to 1935. He was later convicted of embezzlement and imprisoned, Richard Whitney was born on August 1,1888 in Boston, Massachusetts to George Whitney, Sr. He was a descendant of John Whitney, an English immigrant who arrived in America in 1635 and this prominent branch of the Whitney family of New York descends from Boston. In 1910 he followed his brother, George Whitney, Jr. to New York City where he established his own brokerage firm Richard Whitney & Co. Two years later, using money borrowed from his family, Richard Whitney & Co. purchased a seat on the New York Stock Exchange, Richard Whitney married the widow Gertrude Sheldon Sands in 1916. She was from Brooklyn, New York, and her first husband Samuel Steven Sands III was the step-son of William Kissam Vanderbilt and she had three children with Whitney. In 1919, he was elected to the Board of Governors of the New York Stock Exchange, on October 24,1929, Black Thursday, he attempted to avert the Wall Street Crash of 1929. Alarmed by rapidly falling prices, several leading Wall Street bankers met to find a solution to the panic. The meeting included Thomas W. Lamont, acting head of Morgan Bank, Albert Wiggin, head of the Chase National Bank and they chose Whitney, then vice president of the Exchange, to act on their behalf. As traders watched, Whitney then placed similar bids on other blue chip stocks and this tactic was similar to a tactic that had ended the Panic of 1907, and succeeded in halting the slide that day. The Dow Jones Industrial Average recovered with an increase, closing with it down only 6.38 points for that day. In this case, however, the respite was temporary, stocks subsequently collapsed catastrophically on Black Tuesday. Whitneys actions gained him the sobriquet, White Knight of Wall Street, while Richard Whitney was assumed to be a brilliant financier, he in fact had personally been involved with speculative investments in a variety of businesses and had sustained considerable losses. He stole funds from the New York Stock Exchange Gratuity Fund, the New York Yacht Club, within days, events snowballed, and Whitney and his company would both declare bankruptcy. An astonished public learned of his misdeeds on March 10 when he was charged with embezzlement by New York County District Attorney Thomas E. Dewey. Following his indictment by a Grand Jury, Richard Whitney was arrested and he was sentenced to a term of five to ten years in Sing Sing prison. George Whitney eventually made restitution for all the money his brother owed, a model prisoner, Richard Whitney was released on parole in August 1941 after serving three years and four months in Sing Sing. He became the manager of a farm, supervising three farmhands and twenty-five cows
22.
U.S. Steel
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The United States Steel Corporation, more commonly known as U. S. Steel, is an American integrated steel producer with major production operations in the United States, Canada, and Central Europe. The company was the worlds 15th largest steel producer in 2014, at one time, U. S. Steel was the largest steel producer and largest corporation in the world. It was capitalized at $1.4 billion, making it the worlds first billion-dollar corporation, the company headquarters was established in 1901 in the Empire Building, purchased from the estate of Orlando B. Potter for $5 million. In 1907 it bought its largest competitor, the Tennessee Coal, Iron and Railroad Company and this led to Tennessee Coals being replaced in the Dow Jones Industrial Average by the General Electric Company. The federal government attempted to use federal antitrust laws to break up U. S. Steel in 1911, in its first full year of operation, U. S. Steel made 67 percent of all the steel produced in the United States. One hundred years later, its shipments accounted for only about 8 percent of domestic consumption, the Corporation, as it was known on Wall Street, always distinguished itself to investors by virtue of its size, rather than for its efficiency or creativeness during its heyday. In 1901, it controlled two-thirds of steel production, because of heavy debts taken on at the companys formation — Carnegie insisted on being paid in gold bonds for his stake — and fears of antitrust litigation, U. S. Steel moved cautiously. Competitors often innovated faster, especially Bethlehem Steel, run by U. S, Steels former first president, Charles M. Schwab. Steels share of the expanding market slipped to 50 percent by 1911, james A. Farrell was named president in 1911 and served until 1932. U. S. Steel ranked 16th among United States corporations in the value of World War II production contracts, production peaked at more than 35 million tons in 1953. Its employment was greatest in 1943 when it had more than 340,000 employees, by 2000, however, the federal government has also intervened on other occasions to try to control U. S. Steel. President Harry S. Truman attempted to take over its steel mills in 1952 to resolve a crisis with its union, the United Steelworkers of America. The Supreme Court blocked the takeover by ruling that the president did not have the authority to seize the mills (see Youngstown Sheet & Tube Co. v. Sawyer. President John F. Kennedy was more successful in 1962 when he pressured the industry into reversing price increases that Kennedy considered dangerously inflationary. In the early days of the Reagan Administration, steel firms won substantial tax breaks in order to deal with imported goods, instead of modernizing their mills, steel companies shifted capital out of steel and into more profitable areas. In March 1982, U. S. Steel took its concessions and paid $1.4 billion in cash and $4.7 billion in loans for Marathon Oil, saving approximately $500 million in taxes through the merger. The architect of tax concessions to steel firms, Senator Arlen Specter, complained that we go out on a limb in Congress, the incident is the subject of a song by folk singer Anne Feeney. U. S. Steel finally acquired National Steels assets in 2003 after National Steel went bankrupt, as part of its diversification plan U. S. Steel acquired Marathon Oil on January 7,1982, as well as Texas Oil and Gas several years later
23.
Panic of 1907
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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
24.
Open outcry
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Open outcry is the name of a method of communication between professionals on a stock exchange or futures exchange typically on a trading floor. It involves shouting and the use of signals to transfer information primarily about buy. The part of the floor where this takes place is called a pit. In an open auction, bids and offers must be made out in the open market giving all participants a chance to compete for the order with the best price. New bids or offers would be made if better than previous pricing for efficient price discovery, exchanges also value positions marked to these public market prices on a daily basis. In contrast, over-the-counter markets are where bids and offers are negotiated privately between principals, since the development of the stock exchange in the 17th century in Amsterdam, open outcry was the main method used to communicate between traders. However, this started changing in the half of the 20th century, first through the use of telephone trading. As of 2007 few exchanges still have floor trading using open outcry, the supporters of electronic trading claim that they are faster, cheaper, more efficient for users, and less prone to manipulation by market makers and broker/dealers. As of 2010 most stocks and futures contracts are no longer traded using open outcry due to the lower cost of the technological advances. Since the 1980s the open systems have been being replaced by electronic trading systems. These venues are typically stock exchanges or futures exchanges and transactions are executed by members of such an exchange using specific language or hand signals, during the 1980s and 1990s phone and electronic trading replaced physical floor trading in most exchanges around the world. As of 2007 few exchanges still have floor trading, one example is the New York Stock Exchange which still executes a small percentage of its trades on the floor. That means that the traders actually form a group around the post on the floor of the market for the specialist, someone that works for one of the NYSE member firms and handles the stock. As in an auction, there are shouts from those that want to sell, the specialist facilitates in the match and centralizing the trades. A small group of extremely high-priced stocks isnt on this system and is still auctioned on the trading floor. Even though over 82 percent of the trades take place electronically, while electronic trading is faster and provides for anonymity, there is more opportunity to improve the price of a share if it goes to the floor. Investors maintain the right to select the method they want to use, the London Stock Exchange moved to electronic trading in 1986. The Borsa Italiana, Italys stock market, located in Milan, the Bombay Stock Exchange, Mumbai, embraced electronic trading in 1995 by introducing the BSE Online Trading System on 14 March 1995
25.
New York Stock Exchange
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The New York Stock Exchange, is an American stock exchange located at 11 Wall Street, Lower Manhattan, New York City, New York. It is by far the worlds largest stock exchange by market capitalization of its companies at US$19.3 trillion as of June 2016. The average daily trading value was approximately US$169 billion in 2013, the NYSE trading floor is located at 11 Wall Street and is composed of 21 rooms used for the facilitation of trading. A fifth trading room, located at 30 Broad Street, was closed in February 2007, the main building and the 11 Wall Street building were designated National Historic Landmarks in 1978. The NYSE is owned by Intercontinental Exchange, an American holding company that it also lists, previously, it was part of NYSE Euronext, which was formed by the NYSEs 2007 merger with Euronext. NYSE and Euronext now operate as divisions of Intercontinental Exchange, the NYSE has been the subject of several lawsuits regarding fraud or breach of duty and in 2004 was sued by its former CEO for breach of contract and defamation. The earliest recorded organization of securities trading in New York among brokers directly dealing with each other can be traced to the Buttonwood Agreement, previously securities exchange had been intermediated by the auctioneers who also conducted more mundane auctions of commodities such as wheat and tobacco. In 1817 the stockbrokers of New York operating under the Buttonwood Agreement instituted new reforms, after sending a delegation to Philadelphia to observe the organization of their board of brokers, restrictions on manipulative trading were adopted as well as formal organs of governance. Several locations were used between 1817 and 1865, when the present location was adopted, the invention of the electrical telegraph consolidated markets, and New Yorks market rose to dominance over Philadelphia after weathering some market panics better than other alternatives. The Civil War greatly stimulated speculative securities trading in New York, by 1869 membership had to be capped, and has been sporadically increased since. The latter half of the century saw rapid growth in securities trading. Securities trade in the nineteenth and early twentieth centuries was prone to panics. The Stock Exchange Luncheon Club was situated on the floor from 1898 until its closure in 2006. The main building, located at 18 Broad Street, between the corners of Wall Street and Exchange Place, was designated a National Historic Landmark in 1978, as was the 11 Wall Street building. The NYSE announced its plans to merge with Archipelago on April 21,2005, NYSEs governing board voted to merge with rival Archipelago on December 6,2005, and became a for-profit, public company. It began trading under the name NYSE Group on March 8,2006, Wall Street is the leading US money center for international financial activities and the foremost US location for the conduct of wholesale financial services. It comprises a matrix of wholesale financial sectors, financial markets, financial institutions, the principal sectors are securities industry, commercial banking, asset management, and insurance. Prior to the acquisition of NYSE Euronext by the ICE in 2013, Marsh Carter was the Chairman of the NYSE, presently, the chairman is Jeffrey Sprecher
26.
William C. Durant
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William dropped out of high school to work in his grandfathers lumberyard, but by 1885, he had partnered with Josiah Dort to create the Coldwater Road Cart Company. He started out as a salesman in Flint, Michigan. He founded the Flint Road Cart Company in 1886, eventually transforming $2,000 in start-up capital into a business with sales around the world. By 1890, the Durant-Dort Carriage Company, based in Flint, had become a manufacturer of horse-drawn vehicles. Durant also conceived the modern system of automobile dealer franchises, when approached to become general manager of Buick in 1904, he made a similar success and was soon president of this horseless-vehicle company. In 1908, he arranged the incorporation by proxies of General Motors and quickly thereafter sold stock, the acquisitions of Oakland, Cadillac, and parts companies followed in a short order. Originally, Durant was highly skeptical of cars, thinking that they were stinky, loud, by 1900, public outcry for government regulation of gasoline-powered horseless carriages was significant. Durant heard this outcry, and rather than relying on government regulations to improve their safety, to accomplish this, he sought out the purchase of Buick, a local car company with few sales and large debts. In 1904, Durant began realizing his vision of building the car industry and he used his sales skills to enter Buick into a New York auto show, returning with orders for 1,108 cars. Durant and Samuel McLaughlin of Canada signed a 15-year contract to build Buick powertrains at cost plus and that same year, GM bought Buick and Oldsmobile, and started an automobile conglomeration on a major scale. In 1909 Durant bought Cadillac and Oakland, later called Pontiac, on October 26,1909, General Motors Holding acquired the Cartercar Company, founded four years earlier in Jackson, Michigan, by Byron J. Carter. In explaining the reason he purchased Cartercar, Durant said, They say I shouldnt have bought Cartercar, well, how was anyone to know that Carter wasnt to be the thing. It had the drive and no other car had it. How could I tell what these engineers would say next, the GM board decided to use the factory instead to produce the Oakland. Durant had arranged a deal to buy Ford in 1909, but the bankers turned him down. Both Durant and rival Henry Ford foresaw the automobile becoming a mass-market item, Ford followed the course of the basic Model T, and had said Any customer can have a car painted any color that he wants so long as it is black. Durant, however, drawing on his experience in the carriage business and this brought about his plans to merge Buick with various other companies to serve this purpose. He purchased Cadillac, and in 1908 formed General Motors by consolidating 13 car companies and 10 parts-and-accessories manufacturers, in 1910, Durant became financially overextended and banking interests assumed control, forcing him from management of GM Holding
27.
Rockefeller family
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The family is also known for its long association with and control of Chase Manhattan Bank. They are considered to be one of the most powerful families, if not the most powerful family, one of the founding members of the Rockefeller family was businessman William Rockefeller Sr. born in Granger, New York, to a Protestant family. He had six children with his first wife Eliza Davison, the most prominent of which were oil tycoons John Davison Rockefeller and William Rockefeller, Oil baron John D. Rockefeller was a devout Northern Baptist, and he supported many church-based institutions. The family was involved in numerous real estate construction projects in the U. S. during the 20th century. In Manhattan by fourteen major institutions that were based in the area, the result, in 1951, was the six-building apartment complex known as Morningside Gardens. Seniors donations led to the formation of the University of Chicago in 1889, the Central Philippine University in the Philippines and this was one instance of a long family and Rockefeller Foundation tradition of financially supporting Ivy League and other major colleges and universities over the generations—seventy-five in total. John D Jr. established International House at Berkeley, beginning with John Sr. the family has been a major force in land conservation. John Jr. and his son Laurance were particularly prominent in this area, at the event, the societys president, John Flicker, notably stated, Cumulatively, no other family in America has made the contribution to conservation that the Rockefeller family has made. Nelson, John D. III, John D. IV, Peggy Dulany, Rockefeller Foundation, the Trilateral Commission -David, Rockefeller Brothers Fund. The Bilderberg Group - David, John D. IV, the Asia Society - John D. III, John D. IV, Charles, David. The Population Council - John D. III, the Council of the Americas - David. The Group of Thirty - The Rockefeller Foundation, the World Economic Forum - David. The Peterson Institute - David, Monica, the International Executive Service Corps - David. The Institute for Pacific Relations - Junior, the League of Nations - Junior. The United Nations - Junior, John D. III, Nelson, David, Peggy Dulany, the United Nations Association - David. These include, the Commonwealth Fund, Charles E. Culpeper Foundation, Lucille P. Markey Charitable Trust, in total, it holds over 70 million pages of documents and contains the collections of forty-two scientific, cultural, educational and philanthropic organizations. Only the expurgated records of deceased family members are available to scholars and researchers. He reports that it will be years before all the papers will be open to the public
28.
Economic bubble
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An economic bubble or asset bubble is trade in an asset at a price or price range that strongly deviates from the corresponding assets intrinsic value. It could also be described as a situation in which asset prices appear to be based on implausible or inconsistent views about the future, Asset bubbles date back as far as the 1600s and are now widely regarded as a recurrent feature of modern economic history. Because it is difficult to observe intrinsic values in real-life markets, bubbles are often conclusively identified only in retrospect. Such a drop is known as a crash or a bubble burst, prices in an economic bubble can fluctuate erratically, and become impossible to predict from supply and demand alone. While some economists deny that bubbles occur, the cause of bubbles remains disputed by those who are convinced that asset prices often deviate strongly from intrinsic values. Many explanations have suggested, and research has recently shown that bubbles may appear even without uncertainty, speculation. In such cases, the bubbles may be argued to be rational and these approaches require that the timing of the bubble collapse can only be forecast probabilistically and the bubble process is often modelled using a Markov switching model. Similar explanations suggest that bubbles might ultimately be caused by processes of price coordination, more recent theories of asset bubble formation suggest that these events are sociologically driven. For instance, explanations have focused on emerging social norms and the role that culturally-situated stories or narratives play in these events and this was one of the earliest modern financial crises, other episodes were referred to as manias, as in the Dutch tulip mania. The metaphor indicated that the prices of the stock were inflated and fragile – expanded based on nothing but air, and vulnerable to a sudden burst, as in fact occurred. The impact of economic bubbles is debated within and between schools of thought, they are not generally considered beneficial, but its debated how harmful their formation. Political economist Robert E. Wright argues that bubbles can be identified before the fact with high confidence. A protracted period of low risk premiums can simply prolong the downturn in asset price deflation as was the case of the Great Depression in the 1930s for much of the world and the 1990s for Japan. Not only can the aftermath of a crash devastate the economy of a nation, another important aspect of economic bubbles is their impact on spending habits. Market participants with overvalued assets tend to spend more because they feel richer, many observers quote the housing market in the United Kingdom, Australia, New Zealand, Spain and parts of the United States in recent times, as an example of this effect. In an economy with a bank, the bank may therefore attempt to keep an eye on asset price appreciation. This is usually done by increasing the interest rate, in the 1970s, excess monetary expansion after the U. S. came off the gold standard created massive commodities bubbles. These bubbles only ended when the U. S, central Bank finally reined in the excess money, raising federal funds interest rates to over 14%
29.
John Kenneth Galbraith
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John Kenneth Ken Galbraith, OC was a Canadian-born economist, public official, and diplomat, and a leading proponent of 20th-century American liberalism. His books on economic topics were bestsellers from the 1950s through the 2000s, as an economist, he leaned toward Post-Keynesian economics from an institutionalist perspective. Galbraith was a long-time Harvard faculty member and stayed with Harvard University for half a century as a professor of economics and he was a prolific author and wrote four dozen books, including several novels, and published more than a thousand articles and essays on various subjects. Among his works was a trilogy on economics, American Capitalism, The Affluent Society, Galbraith was active in Democratic Party politics, serving in the administrations of Franklin D. Roosevelt, Harry S Truman, John F. Kennedy, and Lyndon B. Johnson. He served as United States Ambassador to India under the Kennedy administration and his political activism, literary output and outspokenness brought him wide fame during his lifetime. Galbraith was one of the few to both the Medal of Freedom and the Presidential Medal of Freedom for his public service and contributions to science. The government of France made him a Commandeur de la Légion dhonneur, Galbraith was born to Canadians of Scottish descent, Sarah Catherine Kendall and Archibald Archie Galbraith, in Iona Station, Ontario, Canada, and was raised in Dunwich Township, Ontario. He had three siblings, Alice, Catherine, and Archibald William, by the time he was a teenager, he had adopted the name Ken, and later disliked being called John. Galbraith grew to be a tall man, attaining a height of 6 feet 9 inches. His father was a farmer and school teacher, a homemaker and a community activist, his mother died when he was fourteen years old. The family farm was located on Thomson Line, both of his parents were supporters of the United Farmers of Ontario in the 1920s. His early years were spent at a school which is still standing. Later, he went to Dutton High School and St. Thomas High School, in 1931, Galbraith graduated with a Bachelor of Science in Agriculture from the Ontario Agricultural College, which was then an associate agricultural college of the University of Toronto. After graduation in 1934, he started to work as an instructor at Harvard University, Galbraith taught intermittently at Harvard in the period 1934 to 1939. From 1939 to 1940, he taught at Princeton University, in 1937, he became a United States citizen and was no longer a British subject. In the same year, he took a fellowship at the University of Cambridge, England. He then traveled in Europe for several months in 1938, attending an international economic conference and his public service started in the era of New Deal when he joined the United States Department of Agriculture. From 1943 until 1948, he served as an editor of Fortune magazine, in 1949, he was appointed professor of economics at Harvard
30.
Goldman Sachs
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Goldman Sachs was founded in 1869 and is headquartered at 200 West Street in Lower Manhattan, New York City, with additional offices in other international financial centers. The firm provides asset management, mergers and acquisitions advice, prime brokerage, and securities underwriting to its clients, which include corporations, governments, and individuals. The firm also engages in making and private equity deals. The loan was made in November 2008 and repaid with interest in June 2009, the list of former employees of Goldman Sachs who moved on to government positions includes former U. S. In addition, former Goldman employees have headed the New York Stock Exchange, the World Bank, Goldman Sachs was founded in New York in 1869 by Marcus Goldman. In 1882, Goldmans son-in-law Samuel Sachs joined the firm, in 1885, Goldman took his son Henry and his son-in-law Ludwig Dreyfuss into the business and the firm adopted its present name, Goldman Sachs & Co. The company made a name for itself pioneering the use of paper for entrepreneurs. By 1898, the firms capital stood at $1.6 million, Goldman entered the initial public offering market in 1906 when it took Sears, Roebuck and Company public. The deal occurred due to Henry Goldmans personal friendship with the owner of Sears, other IPOs followed, including F. W. Woolworth and Continental Can. In 1912, Henry S. Bowers became the first non-family member, in 1917, under growing pressure from the other partners in the firm due to his pro-German stance, Henry Goldman resigned. Control of the firm was now in the hands of the Sachs family, waddill Catchings joined the company in 1918. In 1920, the firm moved from 60 Wall Street to $1.5 million 12-story premises on 30–32 Pine Street, by 1928, Catchings was the Goldman partner with the single largest stake in the firm. On December 4,1928, the firm launched the Goldman Sachs Trading Corp. a closed-end fund, the fund failed during the Stock Market Crash of 1929, amid accusations that Goldman had engaged in share price manipulation and insider trading. In 1930, the firm ousted Catchings, and Sidney Weinberg assumed the role of partner and shifted Goldmans focus away from trading. It was Weinbergs actions that helped to some of Goldmans tarnished reputation. On the back of Weinberg, Goldman was lead advisor on the Ford Motor Companys IPO in 1956, under Weinbergs reign the firm also started an investment research division and a municipal bond department. It also was at time that the firm became an early innovator in risk arbitrage. For most of the 1950s and 1960s, this would be Weinberg, Levy was a pioneer in block trading and the firm established this trend under his guidance
31.
George Paish
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Sir George Paish was a British liberal economist of international renown, author of The Defeat of Chaos, as well as Railways in Great Britain, and co-author of Road To Prosperity in 1927. He advocated the free market prior to World War I, and was at one point advisor to the head of the British Treasury and he also served for a time as co-president of the Anglo-Ethiopian Society. He was the assistant editor of The Statist magazine from 1894 to 1900, Paish was born in Horsham, Sussex on 7 November 1867 the son of Robert and Jane Paish, his father was a coachman. He married Emily Mary Whitehead on 24 March 1894 and they had five sons, one of the sons was Frank Walter Paish, also an economist. His wife died in 1933 and Paish married again on 30 September 1936 to Anita Carolyn Rouse, Paish died on 1 May 1957 in a nursing home at Wexham in Buckinghamshire. He was active for the Liberal Party and stood three times for them as a candidate, in 1922 and 1935. In June 1936 he was elected to serve on the Liberal Party Council,1 July 1912 - He was conferred the honour of a Knighthood in the Kings birthday honours. org Sir George Paish, Ambassador of Free Trade
32.
United States Senate
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The United States Senate is the upper chamber of the United States Congress which, along with the House of Representatives, the lower chamber, composes the legislature of the United States. The composition and powers of the Senate are established by Article One of the United States Constitution. S. From 1789 until 1913, Senators were appointed by the legislatures of the states represented, following the ratification of the Seventeenth Amendment in 1913. The Senate chamber is located in the wing of the Capitol, in Washington. It further has the responsibility of conducting trials of those impeached by the House, in the early 20th century, the practice of majority and minority parties electing their floor leaders began, although they are not constitutional officers. This idea of having one chamber represent people equally, while the other gives equal representation to states regardless of population, was known as the Connecticut Compromise, there was also a desire to have two Houses that could act as an internal check on each other. One was intended to be a Peoples House directly elected by the people, the other was intended to represent the states to such extent as they retained their sovereignty except for the powers expressly delegated to the national government. The Senate was thus not designed to serve the people of the United States equally, the Constitution provides that the approval of both chambers is necessary for the passage of legislation. First convened in 1789, the Senate of the United States was formed on the example of the ancient Roman Senate, the name is derived from the senatus, Latin for council of elders. James Madison made the comment about the Senate, In England, at this day, if elections were open to all classes of people. An agrarian law would take place. If these observations be just, our government ought to secure the permanent interests of the country against innovation, landholders ought to have a share in the government, to support these invaluable interests, and to balance and check the other. They ought to be so constituted as to protect the minority of the opulent against the majority, the senate, therefore, ought to be this body, and to answer these purposes, the people ought to have permanency and stability. The Constitution stipulates that no constitutional amendment may be created to deprive a state of its equal suffrage in the Senate without that states consent, the District of Columbia and all other territories are not entitled to representation in either House of the Congress. The District of Columbia elects two senators, but they are officials of the D. C. city government. The United States has had 50 states since 1959, thus the Senate has had 100 senators since 1959. In 1787, Virginia had roughly ten times the population of Rhode Island, whereas today California has roughly 70 times the population of Wyoming and this means some citizens are effectively two orders of magnitude better represented in the Senate than those in other states. Seats in the House of Representatives are approximately proportionate to the population of each state, before the adoption of the Seventeenth Amendment in 1913, Senators were elected by the individual state legislatures
33.
1933 Banking Act
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The Banking Act of 1933 was a statute enacted by the United States Congress that established the Federal Deposit Insurance Corporation and imposed various other banking reforms. The entire law is referred to as the Glass–Steagall Act, after its Congressional sponsors, Senator Carter Glass of Virginia. That limited meaning of the term is described in the article on Glass–Steagall Legislation, the deposit insurance and many other provisions of the Act were criticized during Congressional consideration. The entire Act was long-criticized for limiting competition and thereby encouraging an inefficient banking industry, supporters of the Act cite it as a central cause for an unprecedented period of stability in the US banking system during the ensuing four or, in some accounts, five decades following 1933. 1934 legislation delayed the effectiveness of the permanent insurance system, the Banking Act of 1935 repealed the permanent system and replaced it with a system that fully insured balances up to $5,000 and provided no insurance for balances above that amount. Over the years, the limit has been raised which reached up to its current limit of $250,000, the 1933 Banking Act required all FDIC insured banks to be, or to apply to become, members of the Federal Reserve System by July 1,1934. The Banking Act of 1935 extended that deadline to July 1,1936, state banks were not eligible to be members of the Federal Reserve System until they became stockholders of the FDIC, and thereby became an insured institution. 1939 legislation repealed the requirement that FDIC-insured banks join the Federal Reserve System, before 1950, the laws establishing the FDIC and FDIC insurance were part of the Federal Reserve Act. 1950 legislation created the Federal Deposit Insurance Act, the FDIA is described in the article on the Federal Deposit Insurance Corporation. Over time, the term Glass–Steagall Act came to be used most often to refer to four provisions of the 1933 Banking Act that separated commercial banking from investment banking, Congressional efforts to repeal the Glass–Steagall Act referred to those four provisions. Those efforts culminated in the 1999 Gramm-Leach-Bliley Act, which repealed the two provisions restricting affiliations between banks and securities firms, the 1933 Banking Acts separation of investment and commercial banking is described in the article on the Glass–Steagall Act. Institutions were given one year to decide whether they wanted to specialize in commercial or investment banking, the act had a large impact on the Federal Reserve. Notable provisions included the creation of the Federal Open Market Committee under Section 8, however, the 1933 FOMC did not include voting rights for the Federal Reserve Board, which was revised by the Banking Act of 1935 and amended again in 1942 to closely resemble the modern FOMC. Several provisions of the 1933 Banking Act sought to restrict speculative uses of bank credit, Section 11 prohibited Federal Reserve member banks from acting as agents for nonbanks in placing loans to brokers or dealers. Glass also hoped to put speculative credit into more productive sectors of the U. S. economy, the 1933 Banking Act gave tighter regulation of national banks to the Federal Reserve which required state member banks and holding companies to make three reports annually. The reports were to be given to their Federal Reserve Board, Glass had been the House sponsor of the Federal Reserve Act of 1913 and considered himself the father of the Federal Reserve System. Glass sought to correct what he considered to be the errors the Federal Reserve System had made in not controlling what he considered speculative credit during the 1920s. The bills provided that such payments would be used to make payments to depositors to the extent of the banks bona fide assets
34.
Loan
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In finance, a loan is the lending of money from one individual, organization or entity to another individual, organization or entity. A loan entails the reallocation of the asset for a period of time. The loan is provided at a cost, referred to as interest on the debt. In a legal loan, each of these obligations and restrictions is enforced by contract, although this article focuses on monetary loans, in practice any material object might be lent. Acting as a provider of loans is one of the tasks for financial institutions such as banks. For other institutions, issuing of debt such as bonds is a typical source of funding. A secured loan is a loan in which the borrower pledges some asset as collateral, a mortgage loan is a very common type of loan, used by many individuals to purchase things. In this arrangement, the money is used to purchase the property, the financial institution, however, is given security – a lien on the title to the house – until the mortgage is paid off in full. If the borrower defaults on the loan, the bank would have the right to repossess the house and sell it. In some instances, a loan out to purchase a new or used car may be secured by the car. The duration of the period is considerably shorter – often corresponding to the useful life of the car. There are two types of loans, direct and indirect. A direct auto loan is where a bank gives the loan directly to a consumer, an indirect auto loan is where a car dealership acts as an intermediary between the bank or financial institution and the consumer. Unsecured loans are loans that are not secured against the borrowers assets. These may or may not be regulated by law, in the United Kingdom, when applied to individuals, these may come under the Consumer Credit Act 1974. Interest rates on unsecured loans are nearly always higher than for secured loans, an unsecured lender must sue the borrower, obtain a money judgment for breach of contract, and then pursue execution of the judgment against the borrowers unencumbered assets. In insolvency proceedings, secured lenders traditionally have priority over unsecured lenders when a court divides up the borrowers assets, thus, a higher interest rate reflects the additional risk that in the event of insolvency, the debt may be uncollectible. Demand loans are short term loans that are typically in that they do not have fixed dates for repayment and they can be called for repayment by the lending institution at any time
35.
Investment bank
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Unlike commercial banks and retail banks, investment banks do not take deposits. From the passage of Glass–Steagall Act in 1933 until its repeal in 1999 by the Gramm–Leach–Bliley Act, Other industrialized countries, including G7 countries, have historically not maintained such a separation. As part of the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010, the two main lines of business in investment banking are called the sell side and the buy side. The sell side involves trading securities for cash or for other securities, the buy side involves the provision of advice to institutions that buy investment services. Private equity funds, mutual funds, life insurance companies, unit trusts, an investment bank can also be split into private and public functions with a Chinese wall separating the two to prevent information from crossing. The private areas of the deal with private insider information that may not be publicly disclosed, while the public areas, such as stock analysis. The first company to publicly traded stock was the Dutch East India Company. Investment banking has changed over the years, beginning as a form focused on underwriting security issuance. In the United States, commercial banking and investment banking were separated by the Glass–Steagall Act, the repeal led to more universal banks offering an even greater range of services. Many large commercial banks have therefore developed investment banking divisions through acquisitions, notable large banks with significant investment banks include JPMorgan Chase, Bank of America, Credit Suisse, Deutsche Bank, UBS, Barclays, and Wells Fargo. The traditional service of underwriting security issues has declined as a percentage of revenue, as far back as 1960, 70% of Merrill Lynchs revenue was derived from transaction commissions while traditional investment banking services accounted for 5%. However, Merrill Lynch was a relatively retail-focused firm with a large brokerage network, investment banking is split into front office, middle office, and back office activities. Investment banks offer services to corporations issuing securities and investors buying securities. For corporations, investment bankers offer information on when and how to place their securities on the open market, therefore, investment bankers play a very important role in issuing new security offerings. Front office is described as a revenue generating role. Markets is divided into sales and trading, and research, a pitch book of financial information is generated to market the bank to a potential M&A client, if the pitch is successful, the bank arranges the deal for the client. The investment banking division is divided into industry coverage and product coverage groups. On behalf of the bank and its clients, an investment banks primary function is buying and selling products
36.
Underwriting
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An underwriting arrangement may be created in a number of situations including insurance, issue of securities in primary markets, and in bank lending, among others. The name derives from the Lloyds of London insurance market, securities underwriting refers to the process by which investment banks raise investment capital from investors on behalf of corporations and governments that are issuing securities. The services of an underwriter are typically used during an offering in a primary market. This is a way of distributing a newly issued security, such as stocks or bonds, a syndicate of banks underwrites the transaction, which means they have taken on the risk of distributing the securities. Should they not be able to find investors, they will have to hold some securities themselves. Underwriters make their income from the difference between the price they pay the issuer and what they collect from investors or from broker-dealers who buy portions of the offering. If the instrument is desirable, the underwriter and the issuer may choose to enter into an exclusivity agreement. That is, even though third-party buyers might approach the issuer directly to buy, the underwriter gets a profit from the markup, plus possibly an exclusive sales agreement. Also if the securities are priced significantly below market price, the underwriter also curries favor with powerful end customers by granting them an immediate profit, analysis of the income statement typically includes revenue trends, gross margin, profitability, and debt service coverage. Bank underwriting of corporate securities is carried out through separate holding-company affiliates, insurance underwriters evaluate the risk and exposures of potential clients. They decide how much coverage the client should receive, how much they should pay for it, or whether even to accept the risk, Underwriting involves measuring risk exposure and determining the premium that needs to be charged to insure that risk. Each insurance company has its own set of underwriting guidelines to help the underwriter determine whether or not the company should accept the risk, the information used to evaluate the risk of an applicant for insurance will depend on the type of coverage involved. For example, in underwriting automobile coverage, a driving record is critical. However, the type of automobile is actually far more critical, as part of the underwriting process for life or health insurance, medical underwriting may be used to examine the applicants health status. This is especially the case for certain simpler life or personal lines insurance, some insurance companies, however, rely on agents to underwrite for them. This arrangement allows an insurer to operate in a closer to its clients without having to establish a physical presence. Two major categories of exclusion in insurance underwriting are moral hazard, with a moral hazard, the consequences of the customers actions are insured, making the customer more likely to take costly actions. For example, bedbugs are typically excluded from insurance to avoid paying for the consequence of recklessly bringing in a used mattress
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