AT&T Inc. (T), Union Pacific Corporation (UNP) – Connected Computing: From Modern Marvel to Stock-Crash Scapegoat

On this day in economic and business history…

The world’s first demonstration of remote computing took place on Sept. 11, 1940. That day, George Stibitz, a researcher at AT&T Inc. (NYSE:T)‘s Bell Labs, set up his complex number calculator, a bulky typewriter-like device in his laboratory, and began to communicate with a nearby university. EDN’s Suzanne Deffree explains what happened:

The demonstration occurred at a meeting of the American Mathematical Society at Dartmouth College in Hanover, New Hampshire, just a few hundred miles north of the Bell Labs building in New York, where the CNC sat.

The computer connected by telephone lines (28-wire teletype cable) to a teletype unit installed at the college. Attendees of the meeting entered equations into the teletype unit that were transmitted through the phone lines and calculated remotely. Answers were returned approximately a minute later to what was described as an astounded audience.

This first effort wouldn’t be repeated for a decade, as World War II interfered with further connected-computing developments. AT&T Inc. (NYSE:T) may have been at the forefront of postwar computing innovation had a Department of Justice antitrust suit not barred the telecom monopoly from entering the fast-growing computer industry in 1956. Ultimately, ARPANET‘s design would become the foundational model for connected computing after it was activated nearly three decades after Stibitz’s first demonstration. That foundation would have a part to play in another notable Sept. 11 event…

Look out below
The Dow Jones Industrial Average (INDEXDJX:.DJI) set new records for both the largest nominal decline and the largest trading volume in its history on Sept. 11, 1986. That day, $110 billion in value vanished when the Dow Jones Industrial Average (INDEXDJX:.DJI) plunged 86.61 points, finishing 4.6% lower on a day that experienced trading in nearly 238 million shares. Interest rates, which had already declined markedly from their 1980 heights, were feared to soon be on the upswing, particularly if European nations and Japan were to ratchet up their own interest rates. Oppenheimer analyst Michael Metz gave the classic excuse for an unexpected drop: “There is a lot of uncertainty about what the outlook for the economy is.” Isn’t there always?

The Los Angeles Times accused “program trading” of causing the drop:

Aggravating the decline was computer-generated “program trading.” These trades, which involve hundreds of stocks and millions of dollars, are triggered automatically by price disparities between the stock market and the market in futures contracts that are based on stock indexes.