Category Archives: Fall 2012 Projects

Steve Wynn

Overview and Early Life

Steve Alan Wynn was born on January 27th, 1942. He is currently ranked 491st on the Forbes Billionaire list (Worth $2.5 Billion), he has done many tremendous things for Las Vegas in his lifetime, including but not limited to resurrection and expansion of the Las Vegas strip. All of his companies are well known and the most renowned in Las Vegas, they include the Golden Nugget, The Mirage, Treasure Island, Bellagio, Wynn, and Encore. Wynn was born Stephen Alan Weinberg, however, changed his name shortly after to Wynn to avoid anti jewish discrimination. Just before Wynn finished college his father passed away of a heart attack, after this happened Wynn decided to go into the family business which was Bingo at the time. He spent his childhood in New York then later studied at the University of Pennsylvania, where he studied Anthropology and English while being a member of the Sigma Alpha Mu fraternity.  (Logo pictured below)

Early Career 

Wynn’s first large carrer succes started in 1976 when he first moved to Las Vegas however, before this large endeavor he worked smaller jobs at smaller casinos. His first small endeavor was being involved with Frontier, a hotel in which Steve spent $75,000 to own a 5% stake in the company, entitling him to the company’s gambling profits. He was involved with Frontier for a short time, his highest position in the company being the slot machine and Keno manager, however, after the “Freidman Card Cheating Scandal” he removed himself from Frontier.

Golden Nugget

One of his first business endeavors was purchasing an old casino named the Golden Nugget. When Steve purchased this casino it was old, boring, and not attracting much business, however, once Steve renovated it and restored it the Golden Nugget became one of the most popular casinos in Las Vegas. It was attracting high end clientele and Wynn quickly became a highly sought man in Las Vegas. With this great success from the Golden Nugget in Las Vegas he soon after opened one in Atlantic City on the boardwalk in 1980. Wynn continued to hold onto the Golden Nugget (Las Vegas) until 1987 when he sold it for $440 million allowing him to further pursue interest in his company’s flagship property, The Mirage, which opened in 1989.

 

The Mirage and Treasure Island

The Mirage was Wynn’s first major strip project, which he funded the majority of the $630 million with junk bonds (Highest amount of money spent in casino history at the time). It was considered a very high risk investment when first opened because of the extreme lengths it went to in size, luxury, etc, however, it did pay off. When this casino/hotel was opened it set a new industry standard in luxury, beauty, and size. This casino boasted beautiful fountains outside of it, an indoor forest, and an outdoor volcano. It was seen as one of the best successes Las Vegas had ever seen. This so-called “Mega-Resort” started a whole new trend for resorts in Las Vegas, making Wynn somewhat of a pioneer. The unheard of size, which is 3.044 rooms was almost frowned upon at the time, believing that it would never reach full capacity. Shortly after opening The Mirage, Wynn opened Treasure Island directly next door to it. Ironically, Treasure Island used part of The Mirage’s parking lot for a portion of the building. Treasure Island boasted high-class entertainment acts such as Cirque Du Soleil and The Battle of Buccaneer Bay. Treasure Island has been rated one of Las Vegas’s most exhilarating and exciting resorts.

The Bellagio and Mirage Resorts Inc.

As you can see, with each hotel that Wynn opened, it became more and more spectacular, breathtaking, and innovative in both luxury, wow-factor, and size. The Bellagio, which was opened in 1993 with a price tag of $1.6 billion. Once again it has an unprecedented amount of rooms at 3,950, which was a first in Las Vegas history. After this casino was opened it was quoted that Forbes Magazine said “If you want to open anything Casino related in Las Vegas, you need to speak with Steve Wynn first.”. Which shows both the power and innovative views that he had in creating remarkable resorts. The Bellagio included an indoor lake, an art gallery, high-end boutiques, and restaurants. Wynn’s company also opened smaller casinos in Biloxi, Mississippi. in 2000 Wynn sold Mirage Resorts which then became MGM Mirage, Wynn then stepped down as chairman.

Late Career

Later in Wynn’s career he continued to open mega-resorts, which should be no surprise due to the fact that almost all of his business endeavors have been madly successful. Throughout his entire career, he only had to accept one buyout, and he was not pleased about it at all. In all, Steve Wynn was a pioneer for Las Vegas, many say without him Las Vegas would not be nearly the majestic and sought out vacation place it is now. Currently, Wynn is also chairman of the Moran Eye Institute at the University of Utah and a member of the Advisory Board at the canter for Strategic and International Studies in Washington, D.C. He is also a member of the Board of Trustees of the University of Pennsylvania, on the Board of the George Bush Presidential Library and most recently, was named Vice Chairman of the Kennedy Canter’s 2000 Corporate Fund Board. His most recent business venture was a $2.3 billion dollar resort in which he opened in 2008 during one of the worst recessions our country has ever seen. It is doing well, like most of his other projects, which leads to the great legacy that Steve Wynn has created for himself.

 

Sources:

 

Onlinenevada.org

 

cnn.com

 

Huffington Post

 

http://www.investingvalue.com/investment-leaders/steve-wynn/index.htm

 

http://www.forbes.com/profile/steve-wynn/

 

Ben S. Bernanke

  Ben Shalom Bernanke was born on December 13, 1953, in Augusta, Georgia, and raised in South Carolina. At 12 years old, Bernanke won the South Carolina state spelling bee, despite being initially told that he had misspelled a word. Bernanke, certain he was right, left the stage anyway. “He came back on stage and said he had spelled it correctly,” his mother Edna recalled to the Washington Post. “And he was right.” Bernanke was later eliminated at the national bee when he misspelled the word edelweiss. He taught himself calculus in high school because his school did not offer the course. He went on to score a 1590 out of 1600 on his SAT. Bernanke also played the alto saxophone. He earned a B.A. in economics from Harvard University in 1975. He was given the distinction of having the best undergraduate economics thesis and was named outstanding senior in the economics department. In 1979, Bernanke received his economics PhD from MIT and began teaching at Stanford University’s Graduate School of Business. Six years later he joined the Princeton faculty as professor of economics and public affairs. In 1996, he was named chairman of Princeton’s economics department. Before arriving at Princeton, Dr. Bernanke was an Associate Professor of Economics (1983-85) and an Assistant Professor of Economics (1979-83) at the Graduate School of Business at Stanford University. His teaching career also included serving as a Visiting Professor of Economics at New York University (1993) and at the Massachusetts Institute of Technology (1989-90). Dr. Bernanke has published many articles on a wide variety of economic issues, including monetary policy and macroeconomics, and he is the author of several scholarly books and two textbooks. He has held a Guggenheim Fellowship and a Sloan Fellowship, and he is a Fellow of the Econometric Society and of the American Academy of Arts and Sciences. Dr. Bernanke served as the Director of the Monetary Economics Program of the National Bureau of Economic Research (NBER) and as a member of the NBER’s Business Cycle Dating Committee. In July 2001, he was appointed Editor of the American Economic Review. Dr. Bernanke’s work with civic and professional groups includes having served two terms as a member of the Montgomery Township (N.J.) Board of Education, a position that he cites as being formative to his policy-making experience. Dr. Bernanke became a governor of the Federal Reserve in 2002, taking leave from his position at Princeton. Before his appointment as Chairman, Dr. Bernanke was Chairman of the President’s Council of Economic Advisers, from June 2005 to January 2006. Dr. Bernanke has already served the Federal Reserve System in several roles. He was a member of the Board of Governors of the Federal Reserve System from 2002 to 2005; a visiting scholar at the Federal Reserve Banks of Philadelphia (1987-89), Boston (1989-90), and New York (1990-91, 1994-96); and a member of the Academic Advisory Panel at the Federal Reserve Bank of New York (1990-2002). Ben S. Bernanke began a second term as Chairman of the Board of Governors of the Federal Reserve System on February 1, 2010. Dr. Bernanke also serves as Chairman of the Federal Open Market Committee, the System’s principal monetary policymaking body. He originally took office as Chairman on February 1, 2006, when he also began a 14-year term as a member of the Board. His second term as Chairman ends January 31, 2014, and his term as a Board member ends January 31, 2020. Bernanke and his wife Anna married on May 29, 1978. They have two children. 

                  

  Ben S. Bernanke was appointed Chairman of the Board of Governors of the Federal Reserve System in 2006, replacing Alan Greenspan. Congress appointed Bernanke for his knowledge of how monetary policy contributed to the Great Depression and his belief in inflation targeting. He created many innovative tools to prevent a global depression during the credit crisis. He led the Federal Reserve in taking on new roles, such as bailing out Bear Stearns and the $150 billion bailout of insurance giant AIG. The Fed loaned $540 billion to money market funds to stop a global panic. Under Bernanke, the Federal Reserve made very creative use of its tools. Prior Chairmen used only the Federal funds rate, raising it to stem inflation or lowering it to prevent recession. Between September 2007 and December 2008, Bernanke decisively lowered the rate 10 times, from 5.25% to 0%. But this wasn’t enough to restore liquidity to banks panicked by defaulting subprime mortgages. These loans had been repackaged and sold them in mortgage-backed securities that were so complicated that no one really understood who had the bad debt. As a result, banks stopped short-term lending, which was routinely done as a way to meet the Federal Reserve requirement. In response, Bernanke relaxed the requirements, lowered the discount rate, and finally provided credit itself through the discount window. When this wasn’t enough, Bernanke created the Term Auction Facility in December 2007. The TAF lent billions to banks, taking on bad debt as collateral. The TAF was meant to be temporary, until the banks marked down the bad debt and started lending to each other again. When this didn’t happen, the TAF grew larger, reaching a peak of $1 trillion by June 2008. Bernanke worked with central bankers around the world to restore liquidity when credit markets froze. He added $180 billion in dollar credit swap lines. These are agreements to keep a supply of dollars available to trade to other central banks for overnight and short-term lending. It was necessary because panicked banks were hoarding cash. They were afraid to lend to each other because they didn’t want to get stuck with derivatives based on sub-prime mortgages.

 

 

  The following link, Obama to Nominate Bernanke to 2nd Term at Fed, will give the information into what the top White House officials as well as the President have to say about Ben Bernanke and the job that he has done as the Chairman of the Fed.

  The following link, Bernanke warns of “Fiscal Cliff” danger, is a speech Dr. Bernanke gives to the Economic Club Of New York on the dangers of the “Fiscal Cliff”.

   The following link, 60 minutes interview with Ben Bernanke, is an exclusive interview with Chairman Bernanke on pressing economic issues, including unemployment, the deficit and the Fed’s controversial $600 billion U.S. Treasury Bill purchase.

  The following link, Quantitive easing, is a humorous video explaining Quantitive Easing on You Tube.

 In closing, Federal Reserve chairman Ben Bernanke announced that the Fed would launch a third round of so-called quantitative easing, or QE3 — an aggressive bond-buying program designed to lower long-term interest rates in the hopes of stimulating economic activity and reducing unemployment. The Fed said it will spend $40 billion a month purchasing mortgage debt through the end of the year, and left open the possibility of continuing the program until conditions improve. Additionally, it will continue its bond purchases as well as push back its deadline for raising short-term interest rates from 2014 to 2015 — another way the Fed’s attempted to spur growth through more borrowing and spending.

 

  Sources:

http://www.time.com/time/business/article

Huffington Post

New York Times

You Tube

CBS 60 minutes

 

H. Wayne Huizenga

You will never make money working for someone else

Wayne Huizenga

The only person to ever create three Fortune 500 Companies. Building the first one, Waste Management, Inc from a single garbage truck, followed by Blockbuster and AutoNation. Huizenga is also the only person to have owned three professional sports teams; the Miami Dolphins, Florida Marlins and the Florida Panthers.

Background

Wayne Huizenga was born December 29, 1939 in the small Chicago suburb of Evergreen Park. The first of two children born to Gerrit Henry Huizenga and Jean Huizenga.  In 1953 Gerrit Huizenga moved his family to Fort Lauderdale, Florida in hopes of taking advantage of the housing boom as a builing contractor. Huizenga’s parent divorced in 1954, his mother was awarded custody of Wayne and his younger sister Bonnie.  After graduating from Pine Crest School, Wayne returned to Chicago to be near his friends and majority of his family. He worked for a family trash removal company until enrolling at Calvin College in Grand Rapids, Michigan where he studied for three semesters before deciding college just wasn’t for him. Wayne then spent a short six months in the military, before marrying Joyce Vanderwagon in September, 1960.  The couple moved to Florida where Wayne went to work for a friend of his fathers as a garbage truck driver in Pompano Beach. Wayne and Joyce had two children before divorcing in 1966.  Wayne’s father always told him “You won’t ever make money working for someone else”. Before long Wayne Huizenga was taking the steps to create his first billion dollar company.

Starting out in 1962 with just one garbage truck and 20 commercial accounts, Wayne worked nearly 20 hours per day.  He transformed his small business into Waste Management by 1968 and continued to grow his business by merging with three Chicago based trash companies and buying out small competing businesses.  In 1972 at the age of 35 Wayne Huizenga owned the largest trash collecting business in the world profitting over $1 billion per year. Huizenga resigned from Waste Management in 1984 tired of traveling between Chicago and Fort Lauderdale, he took with his 3.7 million shares of stock worth over $100 million. As of 2010, Waste Management employed over 40,000 people.

In 1987 Huizenga along with John Melk, a Waste Management executive, purchased 43% of a chain of eight video stores for $18 million in Dallas, Texas known as Blockbuster Video. Just as he did with Waste Management, Huizenga began to buy out competing video stores nationwide. By 1992 there were over 2,000 stores and was number one in sales of the top 100 video stores in the country. In 1994, Huizenga sold his share of Blockbuster to Viacom for $8.4 billion.  In 2009 Blockbuster had 60,000 employees.

 

AutoNation was founded by Wayne Huizenga in 1996. It had grown to be the largest auto retailer in the country with 371 stores in 17 states and also the largest number of online sales.  AutoNation had roughly 20,000 employees and a profit of $20 billion. The company had some tough times from 1997-2000 and reconfigured most of the stores from used cars to new and were ranked #197 on Forbes fortune 500.

Mixing business with pleasure

In 1993 Wayne Huizenga bacame full owner of the Miami Dolphins after buying out Joe Robbe’s family for their 85%. Huizenga bringing the Marlins and Panthers, introduced baseball and hockey to South Florida. In doing this he became the only person to own three professional sports teams in a single market.

Conclusion

Harry Wayne Huizenga is an American businessman who grew Blockbuster Video, Waste Management, Inc., and AutoNation into successful companies.   He is the former owner of the National Football League’s Miami Dolphins, the National Hockey League’s Florida Panthers and the Major League Baseball’s Florida Marlins. He is extremely dedicated to his community and giving back. Through out his whirlwind life buying, selling, and creating Wayne Huizenga has managed to create thousands of jobs and make an impact on our economy.

 

Work Cited

H. Wayne – Overview, Personal Life, Career Details, Chronology: H. Wayne Huizenga, Social and Economic Impact, http://encyclopedia.jrank.org/articles/pages/6278/Huizenga-H-Wayne.html”>Huizenga

The Fortune 1000 Entrepreneur: Wayne Huizenga Gets his Start, http://www.evancarmichael.com/Famous-Entrepreneurs/3640/Creating-a-String-of-Blockbusters-How-Huizenga-Achieved-Success.html

SME5Q:Wayne Huizenga, http://www.smebranding.com/content/wayne-huizenga

Reference for Business: AutoNation, Inc-company profile, information, business description, history, background information,  http://www.referenceforbusiness.com/history2/78/AutoNation-Inc.html

 

 

 

Warren Buffett: Economic Innovator

ABOUT WARREN

At age 20, Warren Edward Buffet had saved $9,800 (approximately $94,000 adjusted inflation for 2012 US Dollar).  Buffet had saved nearly every dollar since he had made, and learned to be frugal at a young age.  Following his graduation from Ivy League Columbia University, Warren took a class through Dale Carnegie training, and shortly after decided he would begin teaching a night class on Investment Principles at the University of Omaha-Nebrasaka.

Here is a short Clip from a Documentary of Buffet speaking about his transition from college and work ethic and social skills.

 

A NATURAL INVESTOR

IN 1956, Buffet was 26, and had saved a total of $174,000 ($1.47 Million 2012 USD) and Began his first investment firm, Buffet Partnerships Ltd.  Buffet was a man of investment philosophy.  At an early age he began selling Coca-Cola and Candy Bars around the neighborhood.

Buffets investment philosophies began developing early in his life.  As a young man, Warren and a friend purchased a pinball machine for $25 put it in a babershop so it would be used by and paid for in change by people around the community.  A few months after purchasing his first pinball machine, Warren and his friend had several other machines in local businesses,  and capitalized on their small investments.

Below is a link to a graph showing what investments made in one of Buffet’s corporations Berkshire Hathaway, and the returns that would have resulted.

-Results of Investing $1000 in Berkshire Hathaway-

INVESTMENT PHILOSOPHY

Buffet’s Investment Philosophy tends to focus on and analyze the intrinsic values that a business holds, and would be known as a ‘value investor’.  It is important to recognize the potential of a business and compare it to what the market says the current success of the business is, and HOW the potential of the business, can be translated into capital returns.

Buffet looks at aspects of different businesses that are currently undervalued and then focuses on how he can make money through ownership of that business, through the potential it holds.

Warren Focus’s on a List of 6 Key Criteria for potential investment ventures.  A list is below, with a link to a more in depth article which focuses on Buffets Philosophies on investment and “value investing”.

1. Has the company consistently performed well?

2. Has the company avoided excess debt?

(The debt/equity ratio is calculated as follows: = Total Liabilities / Shareholders’ Equity)

3. Are profit margins high? Are they increasing? 

4. How long has the company been public? 

5. Do the company’s products rely on a commodity? 

6. Is the stock selling at a 25% discount to its real value? 

These are 6 key factors to the Buffet Philosophy and below is a link to a more in depth article of the research and criteria of Warrens thoughts.

Buffet Methodology 

Buffet Stands as one of the worlds wealthiest men alive.  His current Net worth is $46 Billion even after donating billions of dollars to charity and pleding 99% of his wealth away in his will.

Below is a link to Berkshire Hathaway, Buffets company with a Net Income of $10.25 Billion.  His investment skills have led to Berkshire shying from long term investments and turning to ownerships of companies as a whole. Berkshire owns a plethora of businesses including confectionery, retail, railroad, home furnishings, encyclopedias, manufacturers of vacuum cleaners, jewelry sales; newspaper publishing; manufacture and distribution of uniforms; and also electric and gas utilities companies.

Berkshire Hathaway

Buffets methodology of investment, trade deficit, and taxes open ears in congress, and he has influenced many high profilers on Wall-Street and congress both, for the US Government to disect his philosophies and ideas to stimulate the US Economy.

Value of the US dollar

Buffet predicts that in the future a majority of net ownership of the US by outsiders would be upwards of $11 Trillion dollars.  These figures lead Buffet and others to believe the value of the US dollar is declining and that the widening trade deficit is creating a devalued US dollar, and US Assets.

Buffet is often looked to for financial/economic advice and has a strong loyalty to members of congress.  His philosophies and actions set an example to US Economists and his predictions are often right.  He is a genius when it comes to anazlying the potential of a business and how to focus on making money rather than only focus on increasing the value of market shares.

Innovator

Buffet also decides to invest in the future of America and help preserve our natural resources by investing $230 million in BYD Auto, a new energy automobile business.  His 10% investment in BYD Auto returned for a 500% profit.

Buffet has taught others it is imperative to look to the future and recognize the potential for new energy sources and the effect these corporations will have on our economy.

BYD Advertisement

Buffet Is seen below discussing policy with President Obama as his viewpoint is highly respected after the long list of achievements he has made.

“According to a White House official, the two men met “to discuss the economy and our ongoing efforts to work with the private sector to stimulate growth and create jobs.”-CNBC

Here is the source of the picture above and interesting article about Buffets influence on Congress and US policy.

 

A LESSON LEARNED

It is important that we value the information and the story line, and habits of the 82 year old Billionaire, and try respect his frugalness despite having enough money to buy anything he desires.  Buffet is constantly searching and working for a better tomorrow, not only for himself, but the betterment of mankind.

As related to US Economic History, Warrens efforts have taught us that it is important to use what we know already, to base our judgement on the future success of a business.  We need to utilize the knowledge of potential that a business has and maximize that potential to returns for profit.

I think that Buffet has great philosophies on business and the current state of the US Economy and would even be a great help to stimulate the growth through his ideals.

Buffet has had great success that can translate to others, his eye for market potential is undeniable, but also a very valuable asset to any listeners that lend an ear to learning, even President Obama.

Buffet Stands as one of the worlds richest men, and I hope that viewers can come away with a different perspective of wealth and information, as well as the potential a business holds, not only its worth to Wall Street.

Works Cited:

pal8583. “Dale Carnegie – YouTube.”YouTube. N.p., n.d. Web. 3 Dec. 2012. <http://www.youtube.com/user/pal8583?v=k7gXaPY524I>.

link, clicking this. “BERKSHIRE HATHAWAY INC..” BERKSHIRE HATHAWAY INC.. N.p., n.d. Web. 3 Dec. 2012. <http://www.berkshirehathaway.com>

“U.S. economy will ‘inch’ ahead under Obama or Romney: Buffett – New York Daily News.” Featured Articles From The New York Daily News. N.p., n.d. Web. 3 Dec. 2012. <http://articles.nydailynews.com/2012-10-24/news/34713407_1_billionaire-investor-warren-buffett-bnsf-global-economy>.

“Money: Interactive Buffett Timeline – US News and World Report.” US News & World Report | News & Rankings | Best Colleges, Best Hospitals, and more. US NEWS, n.d. Web. 3 Dec. 2012. <http://www.usnews.com/usnews/biztech/

Kennon, Joshua. “Warren Buffett Biography.” Investing for Beginners. N.p., n.d. Web. 3 Dec. 2012. <http://beginnersinvest.about.com/cs/warrenbuffett/a/aawarrenbio.htm>.

Crippen, Alex . “Warren Buffett Gets New Tie from President Obama at White House Meeting.” Stock Market News, Business News, Financial, Earnings, World Markets – CNBC. N.p., n.d. Web. 3 Dec. 2012. <http://www.cnbc.com/id/38245375/Warren_Buffett_Gets_New_Tie_from_President_Obama_at_White_House_Meeting>.

” Warren Buffett: How He Does It.”Investopedia – Educating the world about finance. N.p., n.d. Web. 3 Dec. 2012. <http://www.investopedia.com/articles/01

 

Written By-Jacob Thomas

Andrew Carnegie Titan of Industry

Carnegie, 1894

In the latter half of the 19th century, manifest destiny pushed America’s western borders further and further towards to the Pacific Coast, creating explosive demand for new railway lines.  This westward expansion was largely made possible by the steel industry, along with the unwavering ambition, energy, and determination, of a visionary immigrant from Scotland named Andrew Carnegie.  Andrew Carnegie’s vertical integration techniques, as well as his willingness to embrace new technology, allowed Carnegie to deliver low-cost, high quality steel, faster than any of his competitors.  Carnegie’s obsession with reducing costs and controlling all aspects of production made him the wealthiest man in the world by 1901.  In the end, Carnegie’s steel would be used to build thousands of miles of railroad, the Brooklyn Bridge and Washington Monument leaving, behind a legacy of the self-made man, and American exceptionalism.

Early Life

Carnegie, a Scottish Immigrant, landed in New York at the age of 12 in 1848.  He found his first work in a textile mill cleaning bobbins for $1.20 a week.  He later found work as a telegraph operator for Western Union.  Carnegie understood from an early age, that one of the most important keys to success was social capital.  He therefore set out to make an impression on every client he interacted with through Western Union.  Carnegie’s strategy worked, as he managed to impress Tom Scott, a high-ranking official with the Pennsylvania Railroad who would hire Carnegie to be his personal assistant.  During the Civil War, Scott gave the responsibility of managing war-time logistics to the young Carnegie giving him a true taste of responsibility, and the awesome power and capacity of the railroad system.  It was also at this time that Tom Scott provided funds to Carnegie to invest in Wall Street, which he did so rather shrewdly, making himself a nice tidy sum.  After the war, at the age of 29, Carnegie decided to turn his attention from managing logistics and wall street speculation, to reshaping the Iron and steel industry. As Carnegie put it “My preference was always manufacturing, I wished to make something tangible.”  In 1872, Carnegie purchased 100 acres of land on the outskirts of Pittsburgh and formed Carnegie Steel.  It was in this location where he would soon build the most advanced and efficient steel mill the world had ever seen.

Rapid Growth and Vertical Integration

Ever the shrewd businessman, Carnegie quickly embraced a new technology known as the Bessemer Proces in which steel was made from pig iron by burning out carbon and other impurities by means of a blast of air forced through the molten metal.  The new process allowed Carnegie to produce better quality steel at a reduced price much more efficiently than his competitors. Within two decades of the formation of Carnegie Steel, Andrew Carnegie had succesfully increased the average weekly output of steel rails from 70 tons to 10,000 tons per week.  The increase in capacity also reduced prices from $58 a ton to $25 a ton.  All this efficiency however, took its toll on the average worker that labored 6 days of week, 12 hourse a day.

Carnegie also realized that one key to improving profitability was taking ownership of the entire supply chain.  In other words Carnegie wanted to control all aspects of production, he not only wanted to refine the steel, he wanted to mine the raw ore, transport the raw materials, refine it in a mill, then produce a tangible product such as a steel rail that could be sold at market.  Vertical integration, as it would be called, was a term first coined and implemented by Andrew Carnegie.  As one observer noted, ““from the moment these crude stuffs were dug out of the earth until they flowed in a stream of liquid steel in the ladles, there was never a price, profit, or royalty paid to any outsider.”  Carnegies aggressive cost cutting tactics troubled many industrialists who found it nearly impossible to compete.  Rather than attempt to compete with Carnegie, J.P. Morgan decided to offer the aging Carnegie a buyout.  Carnegie ended up selling his business to J.P. Morgan for $480 million making him the wealthiest man in the World.  J.P. Morgan would later merge Carnegie Steel with companies he already owned to form U.S. Steel.

Gospel of Wealth

Towards the end of his life, Carnegie turned towards philanthropy, famously stating “The man who dies rich…dies disgraced.” Over the course of his final years, Carnegie would give away upwards of $300 million of his own money building 2,500 public libraries.  Carnegie created the famous “Gospel of Wealth” in which he boldly stated that it was the duty of the wealthy to oversee every aspect of their own philanthropy urging his fellow industrialists to,  “administer surplus wealth for the good of the people.”  Carnegie’s legacy will live on, in his vast body of philanthropic work, as well as the example of the self made man

http://www.biography.com/people/andrew-carnegie-9238756

Roark, James L., et al. The American Promise: A History of the United States, Vol. II: From 1877, 5th Ed.

Nikola Tesla

Nikola Tesla

A Brief History

Born on July 10th 1856, Tesla lived in the small village of Smiljan, in the Austrian Empire, with his father, Milutin Tesla, a Serbian Orthodox priest, his mother, Duka Tesla, his older brother Dane, and three sisters, Milka, Angelina and Marica. Nikola started his studies at the lower Primary school in Smiljan but soon after tragic horse riding accident in which his older brother Dane passed away, moved with his family to the city of Gospic where he continued his lower level and primary level schooling.  In 1870, at the age of 14, Nikola moved to Karlovac, Croatia where he attended the Higher Real Gymnasium school and proceeded in finishing his 4 year term in just 3 years.
After graduating from the Higher Real Gymnasium Tesla returned home to Croatia where he unfortunately contracted “Cholera”, a bacterial disease of the small intestine, and was forced to bedrest for roughly 9 months. After he recovered, and in an effort to dodge the war draft, Tesla spent a year exploring the mountians and wilderness of Tomingaj, durning that year he spent the majority of his time reading books and becoming more physically and mentally in contact with nature.
In 1875, at the age of 19, Tesla enrolled at the Austrian Polytechnic school in Graz, Austria, but only after 3 years and a brief gambling addiction, Tesla lost his scholarship, dropped out of school and moved to Maribor where he worked as a draftsman.

The Great American Innovator

In 1884, after two years working for the Continental Edison Company in France designing and developing new electrical equipment, Tesla finally made his move to the United States where he started living in New York and working directly for Thomas Edison, solving company problems and re engineering Edison’s Direct Current motor.  After a short time with Edison, and lack of pay, Tesla decided to resign and start his own company which he named Tesla Electric Light and Manufacturing.  Just a short time after starting the company Tesla released his first great innovation with his patient of the Alternating Current motor, unfortunately with a lack of funding from investors Tesla was forced to end production on the motor and dissolve his company.  Success finally came in 1887 when he received financial backing from New York attorneys Charles Peck and Alfred Brown and started the Tesla Electric Company, where he developed the first brush less alternating current induction motor.  This was revolutionary to the time because up until this point Edison’s direct current motor was the only means of creating electricity and Telsa’s new AC motor was proven to be more effective and cost efficient.


Tesla’s AC Motor

After creating the AC motor Tesla found a fascination with Radio Waves.  He developed the first radio remote controlled boat and the idea of wirelessely transmitting electricity and another one of his most famous creations, the Tesla Coil.


The Tesla Coil

In 1900, with the financial backing of J.P. Morgan, Tesla began working on the Wardenclyffe Tower Facility.  Tesla hoped to create a wireless antenna that would be big and powerful enough to transmit electricity across the Atlantic Ocean, but shortly after the funds ran dry and Tesla could not pay back the initial loan from Morgan, he was forced to stop construction of the tower and eventually demolish the tower entirely.


The Wardenclyffe Facility

Tesla died at the age of 86 on January 7, 1943, alone and in debt.  Even though he never got to see just how useful his inventions were to the world, we should still think of him every time we start our cars or flip on a light switch.  It’s great inventors like Tesla that made this country what it is and I am thankful everyday for what he brought into this world.

Works Cited:
“Nikola Tesla.” Wikipedia. Web, 3 Dec 2012.

http://en.wikipedia.org/wiki/Nikola_Tesla

“Edison and Tesla DC VS. AC.” Franklin Russell. Web, 3 Dec 2012.

http://www.examiner.com/article/edison-and-tesla-dc-vs-ac

Warren Buffett

One of the world’s richest people, Warren Buffett has more money than the Gross Domestic Product (GDP) of more than half the world’s countries.

Early Life

Born Warren Edward Buffett on August 30,1930, in Omaha, Nebraska. His father was a stockbroker and U.S. Congressman, while his mother a homemaker. Buffett was the middle child of a triumvirate, and was notably a mathematical genius at a very young age. At the age of 11, Buffett made his first investment, purchasing 3 shares of Cities Service Preferred at $38 per share. Initially falling in price, the stock would recover and Buffett would make a small profit. Providing him with his first experience in business, Buffett was just getting started on a journey that would make him one of the richest people in the world. (“Bio. True Story”)

 Education

After graduating high school at Woodrow Wilson High School in Washington, D.C., Buffett chose to attend Wharton Business School at the University of Pennsylvania (“Wikipedia”). Before his junior year began, Buffett would transfer to the University of Nebraska–Lincoln where he would receive his B.S. in Business Administration. Continuing his education, Buffett would then attend the highly prestigious Columbia University, receiving his M.S. in economics in 1951 (Kennon).

The 1950’s

Having accumulated thousands of dollars before leaving his teenage years, Buffett’s job prospects soared throughout the 1950’s. His first job was as an investment salesman at Buffett-Falk & Co, Omaha, from 1951-1954. For the next 3 years Buffett work in New York at Graham-Newman Corp. as a securities analyst. Finally, he worked as a general partner for Buffett Partnership, Ltd, for the next 15 years. As he always had done, Buffett saved as much as possible during this time. It was not that he was making relatively little – Benjamin Graham offered him his position at Graham-Newman Corp. where he would start at $12,000/year – inflation adjusted to around $105,000 for 2012 (“Wikipedia). With his savings he would start his first partnership, Buffett Partnership, Ltd, in 1956. By the end of the decade there would be 7 partnerships Buffett had a stake in, which would become successful business ventures for him.

As if he did not have enough on his plate, Buffett had maintained a serious relationship with his girlfriend Susan Thompson, who he would marry in 1952. Their family would begin with the birth of their first child, Susan Alice Buffett the next year, followed by two more children during the decade.

Berkshire-Hathaway

Buffett’s capital increased to over $1,000,000 by January, 1962. At this juncture, Buffett decided to merge all of his partnerships into one partnership. His next investment would be into a textile manufacturing firm, Berkshire-Hathaway. After purchasing up half of the common stock, Buffett declared himself director of the company. Originally paying $14.86 per share of the company, growth would cause the price to skyrocket. In addition to this, a $0.10 dividend was paid out, a sign of how the company was doing well under new management. Buffett would begin writing financial letters to shareholders. In 1979, shares would increase from $775/share to $1,310/share (“Wikipedia”). Humbly, Buffett would continue to keep his pay at $50,000 – all of his other income would come from outside investments.

Becoming a Billionaire

Buffett became a millionaire, on paper at least, when Berkshire-Hathaway began selling class A shares on May 29, 1990 for $7,175/share (“Wikipedia”). Originally, Buffett was interested in long-term investments in publicly-quoted stock, but now he focuses on purchasing who companies as he sees fit. In fact, Berkshire-Hathway has acquired numerous insurance companies, must notibly GEICO and General Re. Moreover, they hold equity in American Express Co., and Coco-Cola. So, you may ask what happened the catapulted Buffett into one of the richest people in the world? The answer, other than all the other investments he has, lies in the stock price of Berkshire-Hathaway when they sold stock for astronomical prices. At one point, shares of Berkshire-Hathaway reached $150,000, on December 13th, 2007 (“Wikipedia”). The shares would eventually sell for $121,775 in May of the current year. Keeping in mind that Buffett owns over 23% of the economical value of stock, his value rose dramatically.

Philanthropy

The most interested and meaningful part of Buffett is the generosity he bleeds. With so much wealth you would think he would give at least half of his wealth to his children and invest the rest in his foundation, the Buffett Foundation. This is not nearly the case, as Buffett has pledged to give away 83% of his fortune to the Bill and Melinda Gates Foundation, worth over $30 billion as of 2006. This is the most charitable donation in history, and will go towards a variety of interests including health care, reducing extreme poverty, and improving educational opportunities in America. His children will receive $100,000 each if my memory recalls correctly; I found his quote on why his children will receive this amount interesting. He said, “I want to give my kids just enough so that they would feel that they could do anything, but not so much that they would feel like doing nothing” (“Wikipedia”).

Extra Information

For a deeper look into his life, BBC published an informative documentary on Buffett which can be viewed here:

Works Cited:                                                   

Kennon , Joshua. “Warren Buffett Biography.” About.com. About.com, n.d. Web. 30 Nov 2012..

“Warren Buffett. Biography.” Bio. True Story. A E Networks, n.d. Web. 29 Nov 2012.

“Warren Buffett.” Wikipedia, The Free Encyclopedia. Wikimedia Foundation, Inc. 2012. Web. 30 Nov 2012

Efficiency of Slavery

In America today, men and woman can’t fathom the fact that only 250 years ago slavery was active and flourishing. Brought over from Africa, the Dutch and England were the first to develop the slave trading with American colonies. The government and American farmers unaware the profitable outcome, make their investments.

At first about all slaves went to South Africa or the Caribbean islands to start the production of sugar. Once Americans starting realizing the profit that could be made from slave-owning, sure enough they jumped on the bandwagon. Slave investments simply returned high profits. How could anyone look away with an abundance of fresh land ready to be cultivated? Slave labor was more profitable and productive than large farms cultivated by free workers. The plantation was closely similar to a factory and the business of labor was much like an assembly line. Every individual worker was given a set task and was obligatory to perform until the plantation owner says he is finished.

The plantation hands were divided into three classes: First, the best hands, embracing those of good judgment and quick motion; second, those of the weakest and most inefficient class; third, the second class of hoe hands. Thus classified, the first class will run ahead and open a small hole about seven to ten inches apart, into which the second class will drop four to five cotton seeds, and the third class will follow and cover with a rake (Miller and Sexton).

The farmers in the upper south gradually started selling their slaves to southern planters for profits. With profits to be made southerners quickly invested more into their plantation. The government, pleased with national revenue for the time being is supportive of this, demanding of a nice discrimination in the use of labor operations. Towards the beginning of the 1800s the white males in the northern states noticed they were losing job opportunities to underclass slaves. This news was not satisfying which initiated some dispute and caused others to understand why slavery isn’t completely lucrative for the white American workers. Thomas Jefferson, a previous slave owner was a large outspoken abolitionist of the Revolutionary era. Unfortunately slavery wasn’t abolished during his lifetime, but soon after his death.

Most people look the other way when slavery is brought into picture. Typically they think how horrific, unethical owning another human could be. I look at it as how resourceful and economically correct it was at the time. There was no industry in its everyday operation that moved more systematically and precisely than the cotton plantation.

Works Cited:

Miller, Roger, and Robert Sexton. Issues in American Economic History. United States of America: South-Western, 2005. Print.

J.P. Morgan: Competitive Or Monopolistic?

John Pierpont Morgan was born April 17, 1837 in Hartford, Connecticut. He was born a very rich person. His father Junius Spencer Morgan was a partner at a firm and soon took it over as the owner retired. That firm later became known as the J.S Morgan and Company. His Grandfather was the founder of Aetna Fire Company. His grandfather also was heavily invested in railroads, steamboats, and real estate. He did all this while Hartford, Connecticut was becoming one of the wealthiest cities in the country. John was a very intelligent man and went to the University of Gottingen in Germany and learned to fluently speak German and French. He was deeply influenced by his father and felt that integrity above all things was key in successful banking. Not only integrity but also a mans character was an important aspect of a banker, because a man who could not be trusted is someone he would not trust with his money or do business with. Morgan was married only twice. His first marriage to Amelia Sturges  lasted only four months as she became ill and was diagnosed with tuberculosis and died at the age of 24. He married again three years later to Frances Louise Tracy. They had four children together, three girls and a boy. All of their children had a combination of their names. Louisa and Juliet named after  his wife and his mother whose name was Juliet both had his middle name of Pierpont. His son became a jr., and their youngest daughter was named Anne Tracy Morgan. When Morgan died March 31, 1913 in Rome, Italy he left his business to his only son.

Financial Power

J.P Morgan & Company was such as power company that even the government asked them for help in the depression of 1895. The president at the time Glover Cleveland made a deal with J.P Morgan that saved the U.S gold reserves. The deal of course was one that J.P Morgan stood to profit a substantial amount. Morgan offered to buy bonds from the United States in exchange for 62 million in European gold. Cleveland at the time with no other option in sight, since reserves would have disappeared in a few days took the deal. Cleveland was losing popularity before the deal, and after news of it broke people were outraged and more turned against him. The fact that the reserves were saved was not what people cared about. They were more upset that the banks made out on top and were selling the bonds at marked up rates.

The panic of 1907 was a short panic that lasted about 6 weeks from October to November. At this time the world was going off of the gold standard. Gold production slowed down in the 1880’s but then soon picked up again with the findings of it in places like South Africa and the supply began to grow quickly. Gold being mined nearly doubled from 1893 at $157 million to $287 only a mere five years later. Gold reached it’s peak production at $400 million in the beginning of the twentieth century, but after that it began to stagnate. Government finances began to grow tight as the demand for capital to finance consolidations of industries ballooned. Not only that but the government also needed to finance the Boer, and Russo-Japanese war. The value of bonds decreased and some could not even be sold. This had a domino effect as gold began to flow out of the U.S. Months after panic hit wall street. Knickerbocker Trust was hit hard when people began to line up outside the building to quickly convert their assets to cash. Also Lincoln Trust lost about 14 million within hours. The only man to turn to at this time was was of course Morgan. Morgan hoped that people would keep their money in banks, but of course that was not going to happen. So Morgan asked that 35 million be deposited into national banks and that the banks lend the money to the Trust Company of America which was a bank able of being saved. The panic with the Trust Company of America ended when people saw that they did not have any trouble withdrawing their money. Morgan then managed to raise millions to keep the New York Stock Exchange a float and worked on a plan to keep it that way.

Some believed that he was creating a monopoly because he made it very hard for other companies to compete against his. He had a strong hold on two industries. The railroad industry was a easy grab. This happened when he got two railroad lines to agree and negotiate on his yacht. The Corsair agreement, named after his yacht brought much more business to his firm. Another industry he had a firm hold on was the steel industry and funny how the two go hand in hand. He formed the United States Steel Company in 1901. Everything seemed fine until president William Howard Taft got into office.He did not take kindly to companies that he believed were being monopolistic. In his terms it was called trust busting. He filed about 90 lawsuits in four years. He filed a lawsuit against Morgans U.S Steel Company which highly upset his close ally Theodore Roosevelt who helped form the company. Although Theodore Roosevelt filed lawsuit against Northern Securities back in 1902 because he felt that the company united several railroads and was powerful. Although United States Steel Company pretty much did the same thing, Roosevelt just felt that Northern Securities was a ” bad monopoly”.

The government ended up losing the case against the U.S Steel Corporation. Although the Sherman Act which was pretty much a competition law was set in place to protect consumers. It’s goal was to prevent arrangements that were intended to raise the cost of goods to the consumers. Some felt that just because a person like J.P Morgan had great skills and had a great business because no one else can do it better, he should not be called a monopolist. Only if it made it impossible for other businesses to engage in fair competition.

Corporations that were organized or underwritten by Morgan

Industrial Companies

  • American Bridge Company
  • American Telephone & Telegraph
  • Federal Steel Company
  • General Electric

Railroad Companies

  • Chicago & Western Indiana Railroad
  • Erie Railroad
  • Reading Railroad
  • Northern Pacific railway

 

JP Morgan & Company On The Rise

This company roots begin way back when and was known as Drexel, Morgan & Company. Until 1895 when the named was changed to JP Morgan & Company. Over so many years they have collectively gathered many other companies making them a power house. The name now is JP Morgan Chase & Company.

“The Central Bank–Why should Uncle Sam establish one, when Uncle Pierpont is already on the job?”

Mergers and Acquisitions For The Company

  • Guaranty Trust Company of New York
  • Washington Mutual
  • Bear Stearns
  • Bank One
  • Chase Manhattan Bank

J.P Morgan Chase today is the largest bank in the United States today in terms of assets which there’s amounts to about $2 Trillion.The company has it’s hands in so many ventures it’s hard for them to fell because they always has something else to pull them back up. The most interesting things that JP Morgan ventured into was making debit cards that people use for food stamps. They say that it’s not to just about making a profit but the cards are helping serve a useful social function. The question is what hasn’t J.P Morgan & Chase ventured into? They have everything from credit cards to food stamp cards!

 

Sources

Chernow, Ron. The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance. New York: Grove, 2010. Print.
Gordon, John Steele. “A Cross of Gold.” An Empire of Wealth: The Epic History of American Economic Power. New York: HarperCollins, 2004. 268+. Print.
“J. P. Morgan.” Wikipedia. Wikimedia Foundation, 12 Mar. 2012. Web. 03 Dec. 2012. <http://en.wikipedia.org/wiki/J._P._Morgan>.
John Pierpont Morgan. N.d. Photograph. Wikimedia Commons. 29 Jan. 2010. Web. 1 Dec. 2012. <http://upload.wikimedia.org/wikipedia/commons/4/41/JohnPierpontMorgan.png>.
Nankivell, Frank A. “”The Central Bank–Why Should Uncle Sam Establish One, When Uncle Pierpont Is Already on the Job?”” Cartoon. Puck 2 Feb. 1910: n. pag. Print.
Strouse, Jean. Morgan: American Financier. New York: Random House, 1999. Print.
Young, Art. “I Like a Little Competition.” Comic strip. Wikimedia Commons. N.p., 1 Feb. 1913. Web. 26 Nov. 2012. <http://upload.wikimedia.org/wikipedia/commons/6/64/I_Like_a_Little_Competition.jpg>.
YouTube. Dir. AwakeInLA. Perf. Christopher Paton. YouTube. YouTube, 20 Jan. 2011. Web. 03 Dec. 2012. <http://www.youtube.com/watch?v=wgokq_nCmow>.

 


Thomas Edison

Thomas Edison

Thomas Edison is in most cases thought of as the man who invented the light bulb.  That statement is factual, but there is much more to Thomas Edison then just light bulbs.  He holds the fourth most U.S. patents ever at 1,093.  The world we live in would be much different without the progress he made in the fields of communication, and entertainment.

Early Years
On February 11th 1847 in Milan Ohio Thomas Elva Edison was born. He lived shortly in Milan before moving to Port Huron Michigan. Thomas as a child was known to be interested in almost anything and always asked everyone he met the same question; why? However he had a very short attention span and a lot of energy leading his mother to start home schooling him at a young age.  Allow Edison seemed to be a tad out of control, he eventually harnessed his energy to reading.  He became quickly fascinated with the sciences and in particular Isaac Newton.

Edison at 12 years old

Eventually Edison found a job at a local telegraph company in Michigan.  He worked in multiple different states for telegraph companies while at the same time practicing his favorite hobbies of experimenting and reading.  Edison finally became financially successful with his invention of a quadruplex telegraph.  With the funds from selling the telegraph he was able to buy a research laboratory called Menlo Park.  At Menlo Park, Edison came up with most of his inventions.

 

Notable Inventions

Quadruplex Telegraph: His first breakthrough, it was a telegraph that could send two signals in different directions on the same wire.

Carbon Telephone Transmitter:  Improved the microphone in the bell telephone.

Electric Light: Edison came up with a way to have a long lasting light from electricity. (incandescent light)

Motion Picture Camera: Edison helped create the Kinetograph and Kinetoscope which could record and play short films.

General Electric: Thomas Edison created Edison Electric which later merged with another company to form the GE that is known today.

Phonograph: Device to record sound.  The first sound he recorded was Marry had a little lamb.

Later Years

In the early 1900s Thomas Edison’s company had set up over 100 power stations in cities across the United States, giving their customers electricity through direct current (DC).  A man named George Westinghouse came out and proposed that through use of alternating current (AC), people could receive electricity cheaper and more efficiently.  Edison, as the marketing expert he was, then launched a series of propaganda claiming AC is dangerous and uncontrollable.  He went on to help create the electric chair using AC and he also publicly executed animals with the use of AC.  On one of the more notable executions Edison took out a fully grown circus elephant that it’s owners wanted put down.  However DC has its uses, AC eventually has 100% replaced DC in the distribution of electricity.  He eventually died  on October 18, 1931,

Conclusion

Thomas Edison definitely helped technologically advance the United States in multiple different industries.  As founder of an electric company he helped supply electricity to many different people.  He also founded the first utility company that was owned by investors.  Moreover Edison changed the way people lived with his incandescent electric lights.

Not only did he advance the electric industries, he advanced the entertainment Industries.  With his phonograph he helped further the music industry with a new way for musicians to be able to record their music and play it.  He also helped create the movie industry by creating a way to film and play back short films.  All in all, Thomas Edison helped invent many ground breaking devices and it would be a much different world without them.

Sources:

“Thomas Edison.” Wikipedia. Web. 2 Dec 2012. <http://en.wikipedia.org/wiki/Thomas_Edison

“The Biography of Thomas Edison.” Thomas Edison. Web. 2 Dec 2012. <http://www.thomasedison.com/biography.html>.

“The Life of Thomas A. Edison.” . Web. 2 Dec 2012. <http://memory.loc.gov/ammem/edhtml/edbio.html>.

“Thomas Edison Biography.” Bio. True Story. Web. 2 Dec 2012. <http://www.biography.com/people/thomas-edison-9284349?page=2>.

“The Inventions of Thomas Edison.” About.com. Web. 2 Dec 2012. <http://inventors.about.com/library/inventors/bledison.htm>.

 

 

Henry Ford – Changing the Automotive Industry

Henry Ford – Changing the Automotive Industry

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I am sure if I asked the class what is something that they couldn’t live without, it would be a car and without Henry Ford it might have been a while before automobiles became easily assailable to the general population. With the help of Henry Ford the auto industry was forever changed by the invention of the assembly line.

In this story of Henry Ford I will tell you who he was, his invention, how his invention changed the auto industry

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Who was Henry Ford?

 Henry Ford was born in 1863 to William and Mary Ford. They resided it what is now Dearborn, MI and was one of 6 children. His family owned a prosperous farm where he worked up until age 16 where he began to find his true passion, machines. Ford decided to head to the big city, Detroit, where he began work as a machine apprentice.  With the skills that Ford learned as a machine apprentice he was able to improve his Dad’s farm equipment which help the grow even more. As you can see even at a young age Ford was always trying to come up with new ways to improve productive.

In 1888, Ford married Clara Ala Bryant and they had one child, Edsel Ford. Before Ford struck rich by forming Ford Motor Company he supported his family by farming and a small sawmill.

By 1891, Ford had gained enough knowledge to land a job as an engineer with he Edison Illuminating Company. Ford was able to move up the ranks at Edison Illuminating Company which gave him enough extra money to focus more on his personal experiments dealing with internal combustion engines. After about 5 years of working on many experiments Ford was able to create his own self-propelled vehicle called the Quadricycle. The Quadricycle had for wire wheels that look similar to heavy bicycle wheels and was steered with a  tiller like a boat. The Quadricycle only had two forward speeds and no reverse.

Ford’s Quadricycle

Even though Ford was not the first person to create their own gasoline powered vehicle he was one of several automotive pioneers who helped America become a nation or motorists and a the automobile capital of the world.

Below is a link to a chronology history of Ford and his family:

http://www.hfmgv.org/exhibits/hf/chrono.asp

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Ford Motor Company

Ford Motor Company’s First Logo

Prior to Ford incorporating Ford Motor Company he along with other investors had tried to start up two other automobile companies. With the help of capital from William H. Murphy, Ford left his position at the Edison Company and created Detroit Automobile Company which was incorporated August 5, 1899. This had a short life which only lasted two years because the automobiles that were being produced were low quality and had a high price. Ford did not approve of the cheap automobiles and high prices of those cars so the company was dissolved in 1901.

Then later in 1901 Ford along with C. Harold Wills built and successfully raced a 26-horsepower automobile.  After the automobile did very well at the race it caught the attention of the investors including Murphy from Detroit Automobile Company. Due to the success of Ford’s race care, Ford and other investors, including Murphy, created Henry Ford Company in November 1901. Ford took on the position of Chief Engineer at the Henry Ford Company but Murphy brought on a engineer consultant to assist Ford. Henry Ford was very insulted with the action and he actually left Henry Ford Company. After Ford left Murphy changed to name from Henry Ford Company to Cadillac Automobile Company.

After leaving Henry Ford Company, Ford built more race cars which helped Barney Oldfield win races in 1902. After he continuing success in the race car world, Ford began talking with an old friend, Alexander Malcomson, who was a coal dealer in Detroit. After much talking, Ford and Malcomson formed Ford & Malcomson, Ltd. Right away Ford went to work on creating inexpensive automobiles that the average American could afford. Then Company would lease factory space and got a contract with the Dodge brothers to supply the Company $160,000 in parts to get the company started. The sales were slow and then the Doge Brothers wanted their first payment but the Company did not have enough money to pay them.

To help fix this problem Malcomson contacted some more investors and convinced the Doge Brothers to accept a share of a new company. In 1903 the new company was formed and that new company would become one of the largest auto manufacturer in the world and we know them as Ford Motor Company. It was started with just $28,000 of capital and as of 2006 Ford is now worth over 10 billion dollars.

Then Ford’s dream of creating an automobile that could possibly be available to any average American became a reality in 1908 with the introduction of the Model T.

1908 Model T

Ford had created a car that was being produced but at a cost of $850 (about $21,300 today) most Americans could not afford this. Ford understood that in order to achieve his goal is making cars affordability to any American he had to the cost and thus increasing productivity. The Model T continued production until 1927 and had a final total production of 15,007,034 cars and the cost go as low as $360 (about $7,000 today) In order to achieve his goal Ford created the first mass production assembly line.

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 The Assembly Line

In 1913, the first moving assembly line at Ford’s Highland Park factory was installed.

Ford Assembly Line

Ford’s idea of the assembly line came from meat packing plants from the 19th century. At these plants cows and pigs were slaughtered, dressed, and packed using overhead trolleys that took the meat from worker to worker. At the Highland Park factory ford divided building the Model T into 29 operations performed by 29 men and the 29 men were lined up along a moving belt. After implementing this assembly line the time it took to build a Model T went from 12.5 hours to 6 hours and then another year later with even more assembly line improvements the time was decrease to just 93 man-minutes.

The last major improvement to the assembly line occurred October 7, 1913 where the Model T motor, chassis, and transmission were added to the moving assembly line and now all major components of the Model T were on the moving assembly line.

With the increase productive at Ford’s factory the Model T priced dropped from $850 down to $360 by 1916 which allowed the sales to triple compared to the 1912 levels. With such a huge sales growth and average Americans now able to buy cars the Model T accounted for nearly half of all automobiles sold in the world through 1927.

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The Impact of the Assembly Line

The invention of the assembly line would change the world any many ways. For one, by making automobiles for a low cost it allowed Ford to pass that savings on to the consumers. Prior to the assembly line cars were very costly and not many Americans could afford them but after the assembly line the cost decrease dramatically and now an average American was able to afford a automobile.

The next impact is that the assembly line was adopted by other industries and this helped decreased the cost of other goods for consumers. Everything from steel working to furniture factories adopted the assembly line and this savings would be passed on to the consumers.

Also, since the automobile was not affordable and the prices of automobiles decrease dramatically  the sales of automobiles sky rocketed. This allowed Ford to hire many employees due to the high demand for his product. Ford built at the time the world’s largest industrial complex, the Rough River Plant. This complex included everything needed for automobile production. This included a steel mill, glass factory and automobile assembly line. By late 1927 all steps of the manufacturing process from refining raw materials to final assembly of the automobiles was done at the Rouge River plant. Just to give you a little prospective on how big this plant was it had a total floor space of about 7 million square feet and at capacity it employed 81,000 people.

Rouge River Factory

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Conclusion: Ford’s Legacy Lives On

In conclusion, not only had Henry Ford created one of the largest auto manufacturing companies in the world he also changed everyone’s live. Ford was the first person to make automobiles available to the average consumer and not just an item that only the super rich could afford.

Also, with his invention of the assembly line it allowed other industries to adopt this idea and decrease their production costs. This allowed the average american the ability to live a better live and be able to afford more than they would have without an assembly line. Also, Ford did pay his employees very well for the time and by doing that those employees were able to have a better living.

No matter how you look at it Henry Ford changed a lot of peoples live in the early 1900s and continues to help this world even today. His legacy will always live on due to the huge impact that he caused on almost every industry in the world.

A side note if you have not been to the Henry Ford Museum in Dearborn, MI, I would highly recommend that you make a trip out to see it. It is a very fun place to see just how far automobiles have come over the years and how much of an impact Ford really had.

Sources:

http://www.hfmgv.org/exhibits/hf/#childhood

http://www.youtube.com

http://www.history.com/this-day-in-history/moving-assembly-line-at-ford

http://www.pbs.org/wgbh/aso/databank/entries/dt13as.html

http://www.time.com/time/magazine/article/0,9171,989769,00.html

http://www.ideafinder.com/history/inventors/ford.htm

John D. Rockefeller

Tyler Schafer

Jim Luke

U.S. Economoic History

John D. Rockefeller

                        Very few people have laws made specifically for what they have done, after how Rockefeller got rich, it was later made illegal so that nobody could abuse and create monopolies again..  It is said that if Rockefeller’s fortune were still intact and we applied inflation to the amount of money that he had, he would be the one of the richest men in the world, he would even have more money than Bill Gates.

Short Bio
Rockefeller was born in 1839 and lived 97 years when he died in 1937. He and his wife Laura Celestia Spelman had four children. John also heavily favored the Republican party. He was a religious man and belonged to a Baptist church. In his later years he also spend a great deal of money and time in philanthropy. He also helped made some medical discoveries such as cures to hookworm and yellow fever. He was the main share holder in Standard Oil inc, a company he founded and made most of his wealth from.
Oil has been a major commodity for the last 200 years, one of the most desired commodities in the world. The main difference between the oil business back then and the oil business now is that it was just getting started, and one of the first to get aboard the oil train was John D. Rockefeller.
How did he get so rich?
In order to explain how Rockefeller made so much money we must go over what a monopoly is.
A monopoly is when a person or business controls an entire commodity or service and has no competition. Once a monopoly is in place they can charge whatever price they want for the good or service because no one else is offering that good or service, so in order to get it, you have to pay what they set the price at. And as you know, oil is a absolute necessity for many Americans now, and it also was back in the early 1900’s. After he had a certain amount of welath in the oil industry it was fairly easy for him to push everyone else out of the market by lowering prices to the point where others couldnt make a profit. While rockefeller was also making less of a profit, he could take the damage to his company and his wallet while his competitor’s could not, forcing them out of business. Rockefeller is a big reason, if not the main one that monopolies are illegal today.

“Standard Oil gradually gained almost complete control of oil refining and marketing in the United States through horizontal integration. In the kerosene industry, Standard Oil replaced the old distribution system with its own vertical system. It supplied kerosene by tank cars that brought the fuel to local markets and tank wagons then delivered to retail customers, thus bypassing the existing network of wholesale jobbers. Despite improving the quality and availability of kerosene products while greatly reducing their cost to the public (the price of kerosene dropped by nearly 80% over the life of the company), Standard Oil’s business practices created intense controversy. Standard’s most potent weapons against competitors were underselling, differential pricing, and secret transportation rebates. The firm was attacked by journalists and politicians throughout its existence, in part for these monopolistic methods, giving momentum to the anti-trust movement. By 1880, according to the New York World, Standard Oil was “the most cruel, impudent, pitiless, and grasping monopoly that ever fastened upon a country.” To the critics Rockefeller replied, “In a business so large as ours … some things are likely to be done which we cannot approve. We correct them as soon as they come to our knowledge.(Wikipedia)”
Even though Rockefeller used under-the-belt tactics to get as rich as he was, he gave money to helpful charities in the end. According to a statistic on Wikipedia, Rockefeller had a net worth of 663.4 billion dollars in 2007 United States currency making him the second wealthiest person to have ever lived. Only under Cornelius Vanderbilt.
It all started when  John’s Brother, William brought him into the business. Within two years of John working there he was already in charge of controlling costs, reinvesting profits and using the waste that the refineries discharge. Soon after Standard Oil Inc was born.
Rockefeller is important because, he is one of the most successful people to have ever lived when you are speaking in terms of net worth and money. Lots of people will admire and learn from his example so they can try to be as successful as he was. The entire oil business was changed by Rockefeller and we are still very dependent on oil many years later. Without Rockefeller the oil industry most likely would have developed at a much slower rate  and much of the technology we have now would be delayed.
     In conclusion Rockefeller was a great man, he did amazing things. Toward the end of his life he started to give large amounts of money to charities to help people in need, much like Bill Gates has. He achieved great things and he worked hard, stepping over many people to get there. Ruthless and aggressive business tactics enabled him to rise to the top, many businesses and corporations learned from his example. Without him business and corporations quite possibly would interact in a entirely different way.
Works Cited
“John D Rockefeller.” Wikipedia. Web. 2 Dec 2012.
<http://en.wikipedia.org/wiki/John_D._Rockefeller>.
“People & Events: John D. Rockefeller Senior, 1839-1937.” PBS. Web. 2 Dec 2012.
<http://www.pbs.org/wgbh/amex/rockefellers/peopleevents/p_rock_jsr.html>.
“John D. Rockefeller Biography.” Biography. Web. 2 Dec 2012.
 <http://www.biography.com/people/john-d-rockefeller-20710159>.

THE LEHMAN BROTHERS: The Rise and Fall

LEHMAN BROTHERS: The Rise and Fall

A walkthrough Lehman Brothers history, business in a time of crisis and the lasting effects on the world economy.

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A Brief History

Family Business

Crisis

Aftermath

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Global Credit Crisis – A Timeline
  • 9/14: Lehman Brothers files for bankruptcy; Merrill Lynch is taken over by Bank of America
  • 9/16: Fed bails out AIG for $85billion in return for a 79.9% equity stake
  • 9/18: Lloyds TSB buys HBOS, Britain’s biggest home loan lender in an all share deal
  • 9/20: Barclays buys Lehman’s U.S. broker-dealer operation; Bush administration presents $700 billion bailout bill to Congress
  • 9/21: Morgan Stanley and Goldman Sachs are given approval to become bank holding companies regulated by the Fed; the investment banking era is over
  • 9/22: Nomura Holdings buys Lehman Asia; later it buys Lehman Europe too
  • 9/26: WaMu is closed by the U.S. Government; its assets are sold to J.P.Morgan chase for $1.9 billion
  • 9/29: European governments scramble to shore up banks; House of Representatives rejects $700 billion bailout bill; global financial markets plummet
  • 10/3: House of Representatives approves a revised bailout bill two days after the Senate approves it; Wells Fargo agrees to buy Wachovia for $16 billion
  • 10/6: Dow Jones sinks below 10,000 for the first time in four years fearing a global recession
  • 10/7: Iceland borrows 4 billion Euros from Russia to avoid national bankruptcy
  • 10/8: Britain to inject 50 billion pounds into top banks following dramatic falls in the share prices of HBOS and Royal Bank of Scotland; Central banks around the world cut interest rates
  • 10/10: Stocks fall 10% in Tokyo and 9% in London; Dow is 1.5% down after a day of record volatility
  • 10/13: European governments pledge $1.3 trillion to banks sending stocks soaring once again
  • 10/14: U.S. Treasury to inject $250 billion into banks in exchange for preferred shares.

 

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TED TALKS -The Global Power Shift

“The United States will remain the most powerful nation on Earth for the next 10, 15 years, but the context in which she holds her power has now radically altered.”

— Paddy Ashdown

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Works Cited

  • Davidson, Adam. “IT’S THE ECONOMY; Dead Bank Walking.” The New York Times. The New York Times,   16 Sept. 2012. Web. 02 Nov. 2012. <http://www.nytimes.com/2012/09/16/magazine/lehman-brothers-we-heard-you-were-dead.html?pagewanted=all>.
  • Ericm1000. “Economic Collapse of 2008 – Lehman Brothers CEO Richard Fuld Before Congress.” YouTube. YouTube, 15 Oct. 2011. Web. 02 Nov. 2012. <https://www.youtube.com/watch?v=ghLEbJz4UfI>.
  • “The Fall of Lehman Brothers – A CNBC Special Report – CNBC.” The Fall of Lehman Brothers – A CNBC Special Report – CNBC. N.p., n.d. Web. 02 Oct. 2012. <http://www.cnbc.com/id/26638883>.
  • Hudgins, Matt. “Lehman Is Biding Its Time to Market Its Real Estate.” The New York Times. The New York Times, 12 Sept. 2012. Web. 02 Oct. 2012. <http://www.nytimes.com/2012/09/12/realestate/commercial/lehman-brothers-with-much-real-estate-to-sell-is-biding-its-time.html?pagewanted=all>.
  • Tuesday, NEW YORK (CNNMoney) — Defunct Investment Bank Lehman Brothers Moved into Its Final Chapter. “Lehman Brothers Bankruptcy: The Final Chapter.” CNNMoney. Cable News Network, 06 Mar. 2012. Web. 02 Oct. 2012. <http://money.cnn.com/2012/03/06/markets/lehman_bankruptcy/index.htm>.
  • Tuesday, NEW YORK (CNNMoney) — Defunct Investment Bank Lehman Brothers Moved into Its Final Chapter. “Lehman Brothers Bankruptcy: The Final Chapter.” CNNMoney. Cable News Network, 06 Mar. 2012. Web. 02 Oct. 2012. <http://money.cnn.com/2012/03/06/markets/lehman_bankruptcy/index.htm>.

 

The Housing Industry through the Centuries

In 2008, the United States saw the worst housing crisis in its history.  In the years leading up to the crisis the US saw housing prices skyrocket to 30-40% growth in a year.  Mortgages were easy to acquire, predatory lending was abundant, and subprime loans were commonplace.   Homebuyers were refinancing their homes at record rates, homes were being bought and flipped at enormous profits, and banks were seeing higher than normal profits.  The events that were taking place were unbelievable and unsustainable.  The purpose of this article is to take a look at housing through the centuries from the 1600’s to present day with a focus on what houses looked like and the mortgage industry.  It will also cover how the housing industry changed significantly in the 1900’s to where it is today.

Housing in the 1600’s

Houses in the 1600’s were made by hand using materials that were brought over by the first setters or using the timber that was available in the woods.  Oak was the prevalent wood and was used most often.  A home was basic, one story with two rooms with a chimney running up the middle.  By the end of the century homes had evolved to a two story four room structure.  The homes took on a Colonial design as seen below:

Since materials were used from what was available on the land, there was no need for a mortgage and since banks weren’t in existence, they weren’t available. (http://www.takus.com/architecture/1colonial.html)

Housing in the 1700’s

Homes in the 1700’s were still made in the same fashion as they were in the 1600’s.  Settlers used available timber or mud.  There were two predominant home types: mud houses with thatched roofs and one room and wood houses with steep roofs.  Most were a single story although the wealthier settlers had two story homes.  Mortgages still weren’t in existence.   (http://www.ehow.com/info_8481569_kind-homes-did-puritans-live.html)

Housing in the 1800’s

The 1800’s brought many changes to the housing industry.  There was lots of land for sale although there were few buyers.  The price of land was dramatically lowered for people to purchase it…an acre of land averaged 12.5 cents and was sold by the government.  People settled near waterways in isolated farms or small hamlets. (http://www.watersheds.org/history/earlysettlers.htm).  Home materials began to change based on regions and ethnic backgrounds.  Wood was most often used in the New England area while the southern regions used brick.  In the West, log homes were more prevalent.  The exteriors were typically faded and unkept and dirt in the home was often ignored.  The wealthy did paint their homes. (http://www.historycentral.com/NN/America/Homes.html) Materials were gathered from local vendors or nature and paid using currency.  The central banking system was still in infancy and mortgages still did not exist.

Housing in the early 1900’s

The 20th Century brought great changes in the housing industry and began to set the standards for the industry today. As we entered the 20th century, foundations were placed on the ground, homes were modest (less than 1,000 square feet) with 2-3 bedrooms.  Indoor plumbing and electricity was still uncommon.  Builders began using the braced framing method for increased stability.  As time went on, materials began to change based on economic status.  Builders began using concrete footings or reinforced cement foundations.  The quality of the homes and materials were heavily dependent upon ability to pay.  Most homes were paid for in cash.  (http://www.ehow.com/info_8701082_way-houses-were-made-1900s.html)

Housing in the mid 1900’s

Houses in the mid 1900’s began being built with standardized building materials and methods.  They were becoming larger with the average square footage being close to 1,000.  Most had bathrooms, 2 bedrooms, and over 50% had garages.  The cost of homes began to rise with an average home costing around $11,000.  Due to the high cost of homes, most people had to borrow money and the mortgage was created.  Terms were short, 3-5 years at the maximum.  Large down payments were required and the interest rate was high.

In 1934, the National Housing Act was passed to help stimulate the release of credit to banks to allow for home repairs and construction.  The act created the Federal Housing Administration (FHA) and one of its purposes was to handle mortgage insurance.  Because the FHA assumed the risk, banks were able to extend the terms of mortgage loans making it easier for borrowers to repay the loan. Another result of the FHA was the creation of Fannie Mae, and it was a national mortgage association that allowed for a market in which mortgages could be sold.

There were many Acts and agencies created in the decades that followed.  They put in place standards of building codes, low income housing programs, neighborhood revitalization programs, elderly and disabled preferences for housing, and equal opportunity for all persons regardless of race.  In 1965, the Housing and Urban Development Act created HUD (Housing and Urban Development) to administer the low-income housing programs.  (http://www.huduser.org/Publications/PDF/review.pdf, http://www.ehow.com/info_8701082_way-houses-were-made-1900s.html, http://www.hud.gov/offices/adm/about/admguide/history.cfm)

Housing in the late 1900’s to present

In the late 1970’s, HUD created a program called Section 8.  The program was developed to help low income families afford housing.  It set housing quality standards and affordability standards for what people should pay for their housing each month.  The affordability standard was 30 % of monthly gross income should go toward housing and no more than that.  In turn, HUD would pay 70% of the monthly rent.  The Section 8 program is still in place and the 30% standard is still the industry norm. http://www.hud.gov/offices/adm/about/admguide/history.cfm

The late 1900’s to present watched homes continue to grow in size and cost.  The average cost of a home was now almost $200,000 and was over 2,000 square foot.  2 car garages became the norm and 2 or more bathrooms were standard.  Bedrooms went from 2 to more commonly 3 or more. We saw a shift in materials being used as well.  Granite and Quartz along with premium wood and bamboo. The green energy movement has transformed the material production and how we build.  Windows are super-efficient, garage doors are insulated, and geo-thermal heating and cooling systems are more commonplace.  Furnaces are purchased by their efficiency ratings and soon an 80% efficient furnace will no longer be available for purchase.

Mortgage rates during this period fluctuated wildly.  As you can see below, the 30 year rates have been fairly stable until the 80’s and have begun dropping drastically by 2010.

Currently, we are seeing the lowest mortgage rates in history.  At their highest, it was over 16% for a 30 year loan. Today, a 3% rate for a 30 year loan is the norm. (http://www.dailywealth.com/1615/The-Best-Time-in-History-to-Buy-a-House)

To see other interesting graphs showing home prices and affordability indexes, please go to http://www.dailywealth.com/1615/The-Best-Time-in-History-to-Buy-a-House.

The Housing Bubble

The housing bubble that hit the United States affected many parts of the country with some areas hit worse than others.  Home prices peaked in 2006, with a steady decline beginning in late 2006 until 2012.  Home prices are still declining in some areas however, most have begun stabilizing.  The collapse of the bubble impacts many areas including but not limited to home values, real estate, home builders, home supply companies and Wall Street.  Due to the collapse and the amount of homeowners that were unable to pay their mortgage debts, the government offered a limited bailout to those people.  Over 1 trillion dollars has been given by the government to rescue homeowners and lending intuitions, including Freddie Mac, Fannie Mae, and FHA.  (http://en.wikipedia.org/wiki/United_States_housing_bubble)

Housing bubbles are hard to predict and often times they are only seen in hindsight.  Land prices begin to increase and soon that leads to higher prices than the actual structure.  In the late stages of the bubble, home prices begin to see rapid increases at unsustainable levels relative to incomes, price to rent ratios, and other affordability indicators.  This period is then followed by decreasing home values with many home owners in a negative equity situation (the home is worth less than the mortgage note).  One of the casualties of the bubble is the mortgage and credit crisis that followed once homeowners could no longer pay the mortgage after the introductory rate mortgage interest rates went back to a regular interest rate.  Some of these mortgages were interest only rates, balloon rates, or short term mortgage terms with a refinance deadline (Adjustable Rate Mortgage loans).  Often times home buyers were above the 30% housing affordability factor set in place by HUD.  Some were borrowing 40-50% of their gross monthly income! (http://en.wikipedia.org/wiki/United_States_housing_bubble)

Although housing bubbles are hard to predict, some analysts began seeing economic and cultural factors as early as 2004.  Market data studies conducted in 2006 showed a market decline including lower sales, falling prices and an increase in foreclosures.  Economists believe the bubble burst beginning in 2006. In March 2007, home sales and prices saw its steepest plunge since the Savings and Loan Crisis in 1989. (http://en.wikipedia.org/wiki/United_States_housing_bubble)

There were side effects of the Housing Bubble.  The most prevalent effect was the increase of new home construction.  Refinancing grew increasingly popular with homeowners taking advantage of increasing home values to pay off credit card debit, remodel, or for personal use.  Another effect was the shift of people living in large metropolitan areas to the suburbs due to high prices. (http://en.wikipedia.org/wiki/United_States_housing_bubble)

Causes of the Housing Bubble

The housing tax policy has had many changes sine 1978.  The Taxpayer Relief Act of 1997 repealed the previous capital gain rules on homes and replaced it with a $500,000 (married) or $250,000 (single) exclusion on capital gains on the sale of a home once every two years.  The Act made housing the only investment no subject to capital gains.

Deregulation of the banking industry also contributed by allowing more risky mortgage products to exist such as Adjustable Rate Mortgages (ARMs) and interest only loans.

Low mortgage rates after the dot-com bubble made easy credit for new loans.  As interest rates began to rise, the ARM payments began to rise as did foreclosures, dropping home prices and values.

The desire for home ownership was also a contributing factor.  There are several beliefs regarding home ownership such as homes do not fall in value (unlike the stock market) and that homes will yield average to better than average returns as investments.  This theory is unfounded because historically the inflation adjusted house prices have increased less than 1% per year.

The media also promoted home ownership as an investment due to the large amount of shows depicting how to buy real estate low, remodel the home, and resell it high (also know as “flipping”).

Another factor that may have contributed was the crash of the dot-com bubble.  Investors began buying real estate as a perceived safer more lucrative investment. The historically low interest rates also contributed. However, interest rates began to increase and hence the inability to pay higher mortgages. The use of risky loan products exasperated this problem.

This reference is for all of the Causes of the bubble (http://en.wikipedia.org/wiki/Causes_of_the_United_States_housing_bubble)

How has the Housing Bubble effected the Economy?

The impacts to the economy due to the housing crisis is far reaching. People in construction lost their jobs,states and  local communities are struggling due to decreased property taxes and loss of jobs and thus impacting income tax collected.  Banks are struggling or going bankrupt because of the mortgage crisis. Homeowners have watched their assets shrink or disappear completely.  Experts predict it could take years to fully recover from the losses incurred.  One of the major impacts was the foreclosures and what it did to consumer credit and the mortgage industry.  In response to this crisis, the Housing and Economic Recovery Act (HERA) of 2008 was enacted.  “It authorized the Federal Housing Administration to guarantee up to $300 billion in new 30-year fixed rate mortgages for subprime borrowers if lenders write-down principal loan balances to 90 percent of current appraisal value. It was intended to restore confidence in Fannie Mae and Freddie Mac by strengthening regulations and injecting capital into the two large U.S. suppliers of mortgage funding.” (http://en.wikipedia.org/wiki/Housing_and_Economic_Recovery_Act_of_2008)  It also created a first time home buyer tax credit to encourage buying.  (http://www.hud.gov/news/recoveryactfaq.cfm)

In closing, while the housing crisis wasn’t as devastating as the Great Depression, it has been the most significant economic crisis in our lifetime.  It has reached everyone, homeowner or not. It will have lasting impacts but it has taught us lessons, hopefully ones that everyone learns from.

Jay Gould: American Capitalist

 

©Google Images

Many historians have regarded Jay Gould as the epitome of a robber baron, based upon a few observations of his actions, without consideration of his understanding of the effects his actions would have upon others.  Mr. Gould had an incredible understanding of the business environment that pervaded the American economy after the Civil War.  He conducted business by the standards of the time, and is the quintessential American capitalist.  As a person outside the business world, he was a devoted family man of exceptional character.

The discussion of Jay Gould will proceed through a logical course.  First, I will present a brief biography of Gould, to understand a little of where he came from and what he did.  I apologize if this section is slightly “dry” as things will become much interesting thereafter.  I do however; believe that it is an essential portion of this analysis.  I will then describe who Gould actually was, through his social life, familial and charitable affairs.  I will continue by applying what we know of Gould to his business actions that had previously been reported as nefariously self-interested, showing that he was simply conducting business by the standards of the day and often times to the benefit of those in suffering.  I will also show that his actions are by all moral standards much more palatable than even events that have recently occurred in American business.  Finally, I will make a brief analysis of how Gould’s actions affected the development of America and its economy and present you with some of my own thoughts on conducting the research involved in this production.  Citations as well as another author’s recount of Gould will also be provided.

The Life of Jay Gould

                Jason “Jay” Gould was born May 27, 1836 to a farming family of New England puritans.  As a child, he was small, weak and unimpressive in any area other than his brilliant intellect.  While having nothing exceptional in the way of formal schooling, Gould was the archetypal self-educated individual, devoting much of his leisure time to literature.  (Alef, 6)  He was most interested in mathematics and engineering, which allowed him to take his first position of significance as a surveyor of both his and neighboring counties, a task which included mapping railroad routes.

During the mid-1850’s, Gould entered into his first partnership, joining with Zadock Pratt to construct a tannery.  Their business was successful by all accounts until the relationship was terminated when Pratt was unable to decipher Gould’s complex accounting methods – accusing him of using partnership funds for his own gains.  No evidence of foul play every surfaced and Gould resolved the dispute by purchasing Pratt’s share.  Shortly thereafter, Gould would more to New York City; and, using his knowledge gained in the industry, began operations as a leather merchant and broker.  (Alef, 8)

This was to be Gould’s first experience of Wall Street, which would be the stage for many of his legendary performances.   The Civil War caused demand for leather goods to be high, as it had many applications to the war efforts.  This would enlarge Gould’s coffers to where he could take advantage of the multitude of other opportunities that would arise.  His first significant action was to acquire bonds of the Rutland & Washington Railroad at 10 cents on the dollar and consolidate it with the Rensselaer & Saratoga Railroad, which Gould had come to helm with the assistance of his father-in-law Daniel Miller.  It was here that Gould learned the intricacies of running a railroad.  He would rise to the position of president while also selling the bonds he had purchased at the price of a dime each for $120 each.  With these additional funds Gould became more engaged in the buying and selling of stocks and would meet perhaps his most infamous ally: James Fisk.

Gould, Fisk and a temporary partner, Daniel Drew would enter the center stage of the business world when in 1870 they engaged in a battle with Cornelius Vanderbilt (famously known as the Commodore) over the Erie Railroad.  As Erie’s treasurer, Drew understood that he could profit handsomely if he were able to retain control of his stock and position with the Erie Company.  He sought the assistance of Gould and Fisk, who as brokers, would peddle the shares of stock he had simply printed from the basement of the Erie headquarters.  Their buyer, Vanderbilt, was intent upon taking control of the Erie by purchasing an increasing number of shares.  Eventually, Vanderbilt realized that he had been purchasing inflated stock and utilized his Supreme Court connections he had Drew and  The Erie prohibited from issuing more stock.  Throughout this time, the price of Erie stock had skyrocketed.  Unwilling to bend to the Commodore, Drew, Fisk and Gould sought their own Judge to place an injunction on the previous order.  With these legal tangles in place, they continued printing shares of Erie stock.  This all came to an end in 1867 when warrants were issued for the arrest of Drew, Fisk and Gould, who fled to New Jersey.  Both sides continued enlisting the service of political figures until Drew decided to end the charade and strike a deal with Vanderbilt.  At the time, it appeared as though Fisk and Gould were in the possession of a mountain of debt and a deteriorating railroad.  Fortunately for the Erie, investors in Europe were still purchasing Erie shares and the loss was sustainable.  Moving forward, Gould anticipated that Drew would attempt to capitalize on the eventual fall of the Erie.  Gould knew that Drew had an affinity for the short sale of the stock of failing enterprises.  The trap Gould set was ingenious.  He utilized his banking connections and a series of certified checks based off of Erie bonds to remove $20 million from the New York money supply.  Once Drew had shorted the Erie stock, Gould flooded the street with his currency.  The increase in available money caused Erie stock to rise, bankrupting Drew and leaving Gould and Fisk at the helm of the Erie.  (Northrup, 58-76)

Now that Gould and Fisk had control of the Erie, they began on their largest endeavor.  In 1869, the two gentlemen attempted to corner the gold market.  The plan was to acquire large quantities of gold, effectively driving up the market price.  As gold was the only accepted medium for international transactions, this would make Midwest farm stores relatively inexpensive to the international markets.  To get these goods to the Atlantic, they would utilize the Erie and Gould and Fisk would reap profits.  In order to do so, they would need to ensure that the U.S. Treasury would not dump its own gold supply onto the market, which would immediately suppress the price of gold.  To achieve this, they enlisted the assistance of Abel Corbin, President Grant’s brother-in-law, by offering to make investments on his behalf.  As an added measure, Gould used his influence to have Daniel Butterfield placed as the Assistant Treasurer of the New York Reserve branch.  With everything in place, Gould, Fisk and their cadre began purchasing gold.  At one point, Gould had invested $25 million, Fisk $60 million.  Gold prices steadily rose until President Grant became aware of the situation.  Gould was tipped off by Mrs. Corbin and on the day which the Treasury was to release gold onto the market, Gould continued to purchase gold while actually selling more than he was acquiring.  Treasury gold hit the market and prices began to plummet, producing widespread panic.  Gould again purchased gold once the market had bottomed.  At the conclusion of the day known as Black Friday, it is believed that Gould had accrued a profit of $11 million.  The amount of profit or loss that he and Fisk would ultimately realize is not known as litigation required them to repudiate much of their contracts and the duo was engaged in legal battles with hundreds of investors for about a decade.

The remainder of Gould’s career was that of acquiring a railroad dynasty by acquiring several of the most important rail systems in the country as well as much of the nation’s telegraph capacity and the New York above ground rail system.  Gould first began by capitalizing on the fall of Credit Mobilier scandal, purchasing shares of Union Pacific stock at very low prices.  After the Union Pacific president passed away, Gould purchased his stake, gaining a controlling interest in the railroad.  By 1879, Gould had gained the Kansas Pacific, Missouri Pacific and Denver Pacific lines.  This would place Gould in control of over 10,000 miles of track or 15% of American rail.  (Alef, 27,28)  Having control of the rails, it made business sense to acquire the accompanying telegraph lines.  Using his newspaper, New York World Gould would drive down the stock prices of firms he wished to acquire by printing negative articles about the firm.  In this manner he was able to acquire Western Union as well as the Atlantic and Pacific Telegraph companies.  Gould had essentially achieved monopoly status in the telegraph industry.  It was in this same manner that Gould was able to gain control of the elevated rail system of New York City.

By 1890, Gould was in a deteriorating condition.  His works for the remainder of his life would be to place his son George Gould in control of as much of his holdings as possible.  Jay Gould would die on December 2, 1892, leaving his fortune of approximately $72 million to be appropriated amongst his family members.  (It should be noted that this extremely conservative amount was accepted by the government in an effort to receive the taxes associated with it as quickly as possible.)

© Google Images

Who Was Mr. Gould?

                By all accounts, Jay Gould kept to himself.  He was secretive and protective of his personal life.  He actually kept his personal life entirely separate from his business endeavors – a stark contrast to that of the typical tycoons who relished in the spotlight and were celebrities in their time.  In fact, when Gould was not in his office, he was spending his time with his family.  He did not belong to any social clubs, nor did he drink or use tobacco.  Neither he, nor his wife and children were flashy.  They owned the highest quality of everything available yet were not outlandish with their possessions.  Interestingly, in personal purchases, Gould would use the same dealers each time he needed to replace an item, never negotiating price or making requests the vendors could not satisfy.  Gould did not partake in adventures, finding his pleasures in being with his family and enjoying books and horticulture.  Gould actually owned and tended to what was arguably the largest private conservatory in the world, tending to thousands of species of plants, his favorite being orchids of which he owned over 8,000.

An observant stated of Gould: “In his family, he was the best of husbands and I never knew a man who loved his children with such intensity as he did.  He seemed to worship them all.”  (Northrup, 269)  It is perhaps for this reason that Gould held family meetings each morning in which his children would syphon through requests for assistance, choosing legitimate and deserving causes for which to assist through the Gould fortune.  Gould was never public with any charitable acts.  This is not; however, to state that he was not a charitable man.  In fact, his eldest daughter, Helen was to become a philanthropist, most notably furnishing New York University with a library.  Gould himself was a proponent of extending the Presbyterian Church.  He did this through direct money donations and by providing free passage on his lines to missionaries and pastors.  At the request of his sister, he constructed a schoolhouse in Camden.  Another educational benefactor was the University of the City of New York.  Gould was also known to have given freely to victims of the Chicago fire.  As a contribution to America itself, Gould added 80 acres to the grounds of Mount Vernon.

Lyndhurst Mansion, Gould’s Residence ©Google Images

Gould, the Tycoon

                In his approach and thoughts regarding business, I believe that Gould can best be summarized through two of his own quotations: “Corporations are going, we are told to destroy the country.  But what would this country be but for corporations?  Who have developed it?  Corporations.  Who transact the most marvelous businesses the world has ever seen?  Corporations.  My theory on investment is this: to go into everything that promises profit.  For me business possesses a great fascination.  I believe in this country, in its future.”  “No man can control Wall street.  Wall street is like the Ocean.  No man can govern it.  It is too vast.”  (Northrup, 234,235)

So having reviewed the biography of Mr. Gould, we see that his methods seem quite controlling, while exploiting corruption and the avarice of others.  For a reason which I cannot explain, there is an underlying notion amongst our population that business is or should be fair and noble.  Business in the days of Gould was ruthless and corrupt, similar to that of today, although its complexities have evolved; the underlying asymmetries are still present.  One must only look at the recent scandals of WorldCom and Enron.  In each case, setting aside the complex accounting measures that allowed their actions to be relatively concealed and for their actions to be perpetuated on a larger scale, the capability to influence parts of their respective market and thus extract massive amounts of profits for themselves was present.  (Stiglitz, 10)  These are essentially the same methods that Gould and other tycoons used from 1860-through 1890.  In Gould’s day, schemes that were concocted were actually wilder than those of today.  One scheme that was proposed against Gould, in 1884, was when a group of brokers conspired to hire a Gould look-a-like for $20,000 to fake Gould’s death to cause his stocks to fall, affording them to make a profit by shorting them.  (Northrup, 228)  Another example of clever business that occurred in his era is the story of a tussle between Gould and Vanderbilt.  After having been undercut by Gould and Fisk, Vanderbilt cut the rate of shipping cattle along his line from $125 to $100.  This caused a rate cutting war until Vanderbilt was pleased to see that no cattle were being transported down the Erie line, while his route was filled with cattle at $1 per cart.  The commodore was beside himself until he received word that Gould and Fisk had purchased every steer available and shipped them down his very own lines, profiting handsomely.  (Northrup, 247)

As it can be seen, the successful businessmen of Gould’s era had a way of thinking “outside the box.”  The most popular methods of increasing profits in Gould’s time were by utilizing vertical and horizontal integration in areas of production to maximize profits.  Gould recognized that profits could also be increased by increasing demand.  It was for this reason that he cornered the gold market.  Gould recognized that if the farmers in the Midwest could sell their grain on the global market it would create more volume for his Erie line.  He recognized that what is good for others could do him just as well.  By manipulating the price of gold, farmers in the Midwest would rejoice and Gould would profit as well.  The plan was not as self-interested and narrow sighted as has previously been reported.

Next, we should analyze how Gould expanded his rail empire.  Gould always purchased stock in firms that was low.  In many cases, he was purchasing lines that were simply dilapidated, having been wrung to the bone of their profits by their previous investors.  By making these purchases, consolidating with his existing operations and improving the lines, Gould would return these systems to their profit potentials.  Gould understood the operations of railroads to the minutest of engineering details.  He took care to personally examine his lines and operations.  This all stemmed from his days as a surveyor.  By using all of this information, he understood the value and potential of the systems.  He used this information to profit.  This goes starkly against the notion of a robber baron, or a person who extracts tolls with nothing to return in kind.

Investing in America’s Infrastructure

                Railroads were incredibly important in creating a national market.  By consolidating, integrating and improving the thousands of miles of rail under his control, Gould was indirectly providing a great service to our country.  Conservative estimates give the efficiencies of railroads in 1890 as providing a savings of 5% of GNP, meaning production would have been 5% less per annum in the absence of the rail system.  (Miller & Sexton, 161)  This may seem like a small amount.  When applying this to the rule of 70, we can see that the railroads account for a doubling of the economy in 14 years.  This is certainly quite significant, and would have a lasting effect on the economy as a whole as well as on the quality of life people would enjoy.

An area of development in which Gould was a forerunner was in that of the telegraph.  Having seen the promise of this invention, he donated liberally to Dr. Morse and his laboratories.  Gould created an extensive network of telegraph lines and stations, providing all of America with a means of communication that was incredibly more efficient than anything it previously had access to.  Prior to the telegraph, communications could only be received as fast as a horse could travel or over the time it takes to produce and receive a smoke signal.  This was an important advance in our society, of which, Gould was the leader.

A final area of consideration is not necessarily in Gould’s actions as a businessman but rather how he and others conspired.  They used political corruption and behind the scenes collaboration to form monopolies.  In retrospect, it became obvious that these trusts and corporations were in fact corrupt.  This eventually led to regulations.  The deviously clever minds of Gould and his cohorts presented cases where the government should be involved in business.  Prior to this era, there was little if any government involvement in the capitalist world.  To the present day, there are still struggles between government regulation and the corporate world.  Each time individuals develop a more intricate scheme for profits; oversight is developed to prevent corruption.  The start of this whole system began after the Gould era.

Afterthoughts and Commentary

                Jay Gould was the quintessential capitalist.  He invested his money where he saw opportunity for growth.  As we can see through his charitable actions and devotion to his family and faith, he was what would have been an upstanding gentleman.  He conducted business in an environment that was ripe with corruption, collusion and deception.  I believe that this scenario would be the most extreme example of laissez-faire.  Even the government involvement was controlled by the capitalists.  Men would go to extraordinary lengths in the name of profit.  Gould’s chief competition came in the form of the legendary Vanderbilt himself.  Gould’s results speak for themselves.  He rose from a modest farm boy to become one of the greatest tycoons our country would know.  He used his intellect and clever wit to find and provide himself with opportunities for profit.  He saw the world of business as a great marvel, providing him with thrills and great wealth.  While many have criticized Gould’s methods, they were no different from that of any other man at the time.  My personal opinion is that Gould was actually a victim of his own character.  I believe that because Gould was not large, boisterous and outgoing like the other tycoons, he was received much differently.  His being withdrawn caused him to be seen more as a scoundrel.  While the other tycoons were at social gatherings, garnering attention and basking in their fame, Gould was not.  He did not desire the celebrity status that would have accompanied his fortune, as was common for the time.  This would cause the perception of him to be different from that of his fellows.  It is also my opinion that had he not attempted to corner a market so large and important as the gold market, which is a commodity tracked by virtually everybody, the scandal may have not tarnished his name to the amount that it did.  Few people know of the railroad and telegraph empire that Gould had built.  When his name is spoken; however, Black Friday and the attempted corner of the gold market immediately come to mind.

Taken as a whole, Jay Gould was an incredibly diligent man who successfully ascended to the precipice of the business world.  He played by the rules of his day and was one of the greatest players.  He was a man who respected and believed in the American economy.  The results of his actions set the stage for our nation to experience prosperity unlike any global power would ever know.  I have no doubt that had he lived during the modern era, he would have used his intelligence and creativity to rise to success, playing by the more ethical standards of today.

Conducting research on the life of Mr. Gould was a rather enjoyable experience.  I was able to review literature spanning over a century and saw a pattern of change in how Mr. Gould was perceived.  The earliest dated text concerning Gould was that of Northrup, published in 1892 (the year of his death).  This text was a rather large collection of various stories as well as personal accounts and comments, combined with excerpts from other publications and congressional hearings.  It presented a stark contrast between Gould’s business and family lives.  A reader who only received the information regarding Gould’s business endeavors would lead a mob to have the man burned at the stake.  One who read only that of his personal affairs would place him among the ranks of Mother Theresa.  Although lengthy, this was actually the most engaging of the texts I studied, as it included hundreds of personal accounts and observations that were lacking in the other texts.

Through my studies, I noticed a trend in how the perception of Gould by the authors would change as time passed.  As time has progressed, Gould is portrayed less as a villain and even to the degree that he is acknowledged as a founder of the greatest economy the world has known.  My take on this is that with time, we have been able to analyze more information as well as see the full effects of his actions.  Did history change?  No; but, how we relate to it does.  This is perhaps one of the greatest takeaways one can have from this analysis.

Please follow the following link to watch Edward Renehan review his work on Jay Gould with CSPAN.

http://www.c-spanvideo.org/clip/4177025

Sources Used

Alef, Daniel.  Jay Gould: Ruthless Railroad Tycoon.  Santa Barbara: Titans of Fortune, 2010.  Print.

Josephson, Matthew.  The Robber Barons.  Orlando: Harvest Book, 1962.  Print.

Klein, Maury.  The Life and Legend of Jay Gould.  Baltimore: Johns Hopkins, 1986.  Print.

Miller, Roger L. and Sexton, Robert L.  Issues in American Economic History.  Mason: South-Western, 2005.  Print.

Morris, Charles R.  The Tycoons: How Andrew Carnegie, John D. Rockefeller, Jay Gould and J.P. Morgan             Invented the American Supereconomy.  New York: Owl Books, 2005.  Print.

Northrup, Henry D.  Life and Achievements of Jay Gould.  Philadelphia: Southard Publishing Co., 1892.  Digital Print Copy.

Renehan, Edward. “The Dark Genius of Wall Street: Jay Gould.” CSPAN Video.  Web Video.  29 Nov. 2012.  < http://www.c-spanvideo.org/program/187719-1>

Stiglitz, Joseph E.  The Roaring Nineties.  New York: W.W. Norton & Co., 2003.  Print.

“Jay Gould.”  Wikipedia.  Web.  29 Nov. 2012. < http://en.wikipedia.org/wiki/Jay_Gould>

“Jay Gould.” The Biography Channel.  Web.   29 Nov. 2012. <http://www.biography.com/people/jay-gould-9316806>

“Jay Gould.” Famous People. Web. 29 Nov. 2012. < http://www.thefamouspeople.com/profiles/jay-gould-240.php>

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Johnstown Flood

Through out history there are many events that are remembered, taught in classes and learned from by a country. One of those events was the catastrophic Johnstown Flood of 1889.

On May 31st 1889 the South Fork Dam collapsed killing over 2,000 people. While no one disagrees this was a horrific tragedy, there was much controversy over whether or not it was an avoidable tragedy. No matter how the surviving townspeople of Johnstown felt, a jury agreed it was an act of ‘province”.

Background

Just outside of Pittsburgh P.A., nestled into a the valley between the Little Conemaugh River and the Stony Creek River was the booming town of Johnstown, home to 10,000 residents with an additional 20,00 living in the outskirts. This was one of many towns in that era that was supported by the steel mill industry. Many of the residents felt as though life would always be good as long as the mills ran. Since Johnstown was built in a floodplain the residents felt they could handle any flood that plagued their town, after all minor floods happened all the time. It became common place for residents to move their furniture to higher levels of their homes to avoid water damage from these floods. In 1840 the largest earth dam, a dam constructed without man-made materials such as steel, was built 14 miles away from Johnstown as part of the vast canal system. This dam created the man-made lake of Conemaugh which was used  for recreational purposes by the affluent members of the South Fork Fishing and Hunting club. Some of the more well known members of the club were Andrew CarnegieHenry Clay Frick , Andrew W. Mellon and many more.

South Forks Fishing and Hunting Club

Once the canal systems were no longer used due to the introduction of railroads, the South Fork Dam became somewhat ignored and neglected. It was, and possibly still is, believed by many, that the South Forks Hunting and Fishing Club should have looked after the dam more carefully since they owned not only the dam but also the reservoir they later renamed as Lake Conemaugh. The Club did make some repairs throughout their ownership, but they also made modification that made the dam more dangerous. One dangerous modification was installing fish screens in order to keep the more expensive “game”  to stay within the lake and not escape down the river. These screen prevented debris from leaving the spillways. The other major harmful modification was lowering the dam in order for two carriages to cross it at the same time. This meant the dam was only 4 feet higher than the spillway. In these processes the drainage pipes were removed, but were never replaced.

The Flood

On May 31st 1889 Lake Conemaugh swelled over the South Forks Dam due to debris that was impossible to clear away. Luckily for some in village of South Fork the dam engineer saw the warning signs of the dam collapsing. He bravely jumped onto a horse and rode to the village of South Fork to warn anyone in the floods path possible, but the telegraph lines were down and there was no way to get a message to Johnstown. Even if there had been a way many of the residences of Johnstown had become callous to flooding and would not have evacuated.

At about 3:10 in the afternoon the dam gave way to the unrelentingly rushing waters of Lake Conemaugh. 20 million tons of water exploded down the river destroying and carrying with it everything in its way. It was reported the roar of the water could be heard by the Johnstown residence 14 miles away and that some knew right away what was to happen. 

At about 4:07 pm, just under one hour after the dam collapsed the 40 foot high tidal wave hit the prosperous town of Johnstown. It only took 10 minutes for the town to me demolished to nothing. It was not just the water that destroyed the town but also everything the water ‘picked up’ along the way. The tidal wave worked it way through four other towns before crashing into Johnstown. This meant that houses, barns, trees, animals, and even 3 steam engines were washed down the valley into Johnstown.

Johnstown Flood Water

Thousands of residence in Johnstown fled to the highest points in their homes in hopes of ‘escaping’ the flood waters. Unfortuanlty only 1 in every 10 people within the town itself survived. Most homes where washed away by water or the large debris within the water. Each person who survived the flood waters encountered a secondary horror of their own. Many, like Anna Fenn Maxwell, watched as their family members, in her case 7 of her children, died right in front of them and there was nothing they could do to stop it. Maxwell once described her tragedy as:

“The water rose and floated us until our heads nearly touched the ceiling. . .It was dark and the house was tossing every way. The air was stifling, and I could not tell just the moment the rest of the children had to give up and drown. . .what I suffered, with the bodies of my seven children floating around me in the gloom can never be told.”

For many of the others that survived the flood, an unlikely death of fire still fell upon them. Much of the larger debris was caught by the Stone Bridge at the junction of two rivers. This gave hope to those who found large pieces of debris to aid them as rafts. However, somehow, possibly by an overturned oil lamp, the pile of debris consisting of demolished houses, trees, train cars and bodies caught fire trapping 80 people and killing them.

Clean up started at the Stone Bridge

 

 

 

 

 

Up rooted house and tree after flood

 

 

 

 

One simple message was reported by telegraph to Pittsburgh that evening by the superintendent

“Johnstown is annihilated.”

 

The Aftermath

The next morning many of those who survived walked the town looking for friends and family, both dead and alive, familiar homes and town businesses. Others went to the hill sides and using anything they could find starting building shelters to give a little protection from the elements. Its reported that 99 whole families were wiped out, almost 400 children under the age of 10 were lost, over 750 unidentified people were killed, 1,600 homes were destroyed and almost 300 businesses were gone. The damages totaled to $17 million dollars. To this day it is one of the worst ‘natural’ catastrophes ever.

Shelter built from flood debris

Clean up efforts took years. Crews continued to find bodies for months, and in some areas years. The country itself really pulled together for Johnstown and its survivors. Money, food and other supplies were shipped in from all over the U.S. and other countries around the world. Somewhat luckily for Johnstown the Red Cross came into existence in 1881. Not only was the Red Cross able to be on scene in 5 days, Clara Barton, the founder spearheaded the the relief efforts. This was the first major disaster the Red Cross had ever responded too. The workers build hotel style living areas and warehouses to store supplies  With he help of the Red Cross businesses on Main St. reopened just a little more than a month after the flood disaster happened.

 

The Thomas Parfitt family. They started selling coffee and sandwiches even before they had a home.

Temporary buildings were constructed to house business as soon as possible.

Impact

Most horrific tragedies, such as the Johnstown flood, bring later impacts to an economy. While there was some immediate  impact felt, it was not what the survivors thought was needed. First, the residences of Jownstown thought the South Forks Hunting and Fishing Cub should have been held responsible. A half-dozen of the South Forks Hunting and Fishing Club were present that early in the summer. After witnessing the collapse of the dam they immediately left and never really spoke of the incident. Of course the Club never thought anything horrific would come because of the modification they made to the Dam yet, not a single club member ever expressed even the smallest amount of personal responsibility. However, many of them did contribute to the relief funds to aid the survivors.

Another impact felt  were the changes to dams. Dams were never made in the same way as the South Forks Dam again. Dams are now designed using man-made materials for support. Also, regulations about how often dams are inspected and by who, qualified engineers only, were also changed.

The Johnston flood was one of the most horrific tragedies to happen within our country. Not a single survivor did not lose someone close to them. Today there is a Johnstown National Memorial and Johnstown National Museum tourist can visit in Johnstown. The museum is housed in an old library built by Andrew Carnegie after the flood. There are many landmarks and interactive displays to help bring the flood to life for visitors. Lastly, a large plot at the Grandview Cemetery has had 777 headstones placed in dedication to those who were lost and unidentified.

 

 

 

Sources Used

http://www.history.com/this-day-in-history/johnstown-flood

http://www.pbs.org/wgbh/buildingbig/wonder/structure/south_fork.html

http://www.jaha.org/FloodMuseum/club.pdf

http://usparks.about.com/cs/parkhistory/a/johnstownflood.htm

http://www.history.com/topics/clara-barton

http://www.jaha.org/edu/flood/rebuild/img/rebuild/index.html