This week in trading history saw the establishment of the Federal Reserve System, which wasn’t the first of its kind, but hopefully will be the last. We also saw the first transistor tested in Bell Labs, Howard Hughes was born, and a fossil collector from Florida was sentenced...
The first crossword puzzle was created by Arthur Wynne, a Liverpool journalist. The puzzle appeared in the Sunday edition of the New York World newspaper.
Drexel Burnham Lambert Inc. pleaded guilty to charges of mail, wire and securities fraud. The sentencing meant they had to hand over a fine of $650m as well as give information on other Wall Street figures, including one of their own, Michael Milken. The case did immeasurable damage to the company and in February 1990 Drexel filed for bankruptcy.
Coca-Cola bought Orangina for $840m. The extravagant price of this sale shocked Wall Street, however Coca-Cola were trying to expand their inventory of non-cola drinks and at the time the French brand Orangina was second to Coke in overall market share in France.
The Italian parliament was dissolved on this day, as a result of Prime Minister Mario Monti resigning a day prior. The general election was then set for 4th March.
The third, and lasting, central banking system in the USA was established. Between 1836 and 1913 the U.S. used only state-run banks that created and issued their own currency. However, economy and currency struggles caused the panic of 1907, which was when J.P. Morgan and others scheduled a bailout for the financial system. When J.P. Morgan passed away in March 1913, the country realised they needed another powerful authority to keep track of the financial system and the Federal Reserve was born, again.
Bell Labs tested the first transistor, but it didn’t get released to the public until June 1948 when they gave their first public demonstration. Compared to its former iteration, the vacuum tube, the transistor was more efficient, gave off less heat and was cheaper to make. The three inventors behind the design received the Nobel Prize award.
Howard Hughes was born on this day. Not only was Hughes a Hollywood mogul but he also worked in manufacturing and broke records in the aviation industry. At 17 he took on his family’s Texas-based tool company, before moving to Hollywood in 1926 where he produced movies such as Hell’s Angels and Scarface. In 1954 he bought RKO pictures, but sold it only a year later to pursue his passion in aviation. The Hughes Aircraft Company created a custom-made plane that Hughes himself flew, that broke records in speed and flight-time. However, in a somewhat ironic end, Hughes died in 1976 whilst on a flight back to his hometown in Houston.
It’s Chirstmasssss - so the financial world took the day off! Right?
The Soviet Union was officially brought to an end after a long 69-year reign. A day prior to this, Gorbachev had resigned from his post as President of the Soviet Union and the remaining 12 constituent republic emerged as independent pro-Soviet states.
A fossil dealer from Florida, Eric Prokopi, admitted in court to smuggling dinosaur bones from Mongolia into the U.S. He was facing a seventeen-year sentence for taking bones which included the skeleton of a 70-million-year-old Tyrannosaurus bataar. He had sold the bones in an auction in May 2012 for over $1m, however they were seized by the government before the deal could go through. In the end Prokopi only served three months in prison.