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.
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
4.
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
5.
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
6.
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
7.
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
8.
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
9.
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
10.
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
11.
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
12.
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
13.
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
14.
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
15.
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
16.
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
17.
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
18.
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
19.
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
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