On this day in economic and financial history…
The first known case of Spanish influenza was reported on March 8, 1918 in Camp Funston, a part of Fort Riley in Kansas. Within three days, more than 100 American soldiers were hospitalized, and hundreds more had reported ill. The virus mutated and became more dangerous in the fall as the war neared its end, and by the winter of 1918 deaths numbered into the millions. Up to 40% of the global population fell ill, and between 50 million and 100 million people are estimated to have lost their lives. Roughly 2.5% of the population in most primary combatant nations died, and up to 3% of the entire world’s population perished, making it one of the worst disasters in human history.
The flu affected many parts of human civilization. Dr. Andrew Price-Smith has argued that its impact on the Central Powers helped tip the war toward the Allies toward the end of 1918. Economies worldwide also suffered. The U.S. economy went into recession from August of 1918 through March of 1919, and both the amusement and life insurance industries were particularly hard-hit. Who wants to go to a carnival when the whole world is falling ill?
However, the Dow Jones Industrial Average actually rose throughout the pandemic period, gaining 81% from the end of 1917 to the end of 1919. A research brief published by Fidelity Investments during the bird flu panic of 2006 notes that markets have risen during more recent (but less deadly) pandemics as well: The 1957 Asian flu pandemic occurred during a strong postwar surge in the Dow, and the Hong Kong flu pandemic of 1968 also took place in the middle of a period of moderate market strength. We can go all the way back to the world’s first (and stupidest) bubble, Tulipmania, to see evidence of widespread death and disease pushing market prices higher. Death is the ultimate risk, after all; a diseased investor just might be more willing to go all-in.
What took you so long?
The New York Stock Exchange formalized its organization by drafting a constitution and renaming itself the “New York Stock and Exchange Board” on March 8, 1817. It had been 25 years since several stockbrokers gathered beneath a buttonwood tree on Wall Street to establish the city’s first stock exchange.
Over the years, the Exchange endured devastating fires, crippling financial panics, technological transformations, and the growth of the securities industry into its high-tech, high-frequency modern form. In the 21st century, the Exchange became part of NYSE Euronext (NYSE:NYX) after merging with Europe’s leading electronic exchange. NYSE Euronext (NYSE:NYX)’s $14.1 trillion total market capitalization (as of the end of 2012) makes it by far the world’s largest exchange; the Nasdaq, at $4.6 trillion, is less than a third the size.
No more eight-tracks for us!
Koninklijke Philips Electronics NV (ADR) (NYSE:PHG) first publicly demonstrated the compact disc on March 8, 1979. This was the endgame of an intense research battle between the Dutch electronics company and Sony Corporation (ADR) (NYSE:SNE) , which had developed and publicized similar prototypes as early as 1976. Philips’ successful demonstration convinced Sony Corporation (ADR) (NYSE:SNE) to combine forces, which resulted in the creation of a CD manufacturing and playback standard that was published the following year. It took three more years to move CDs into commercial production, which began in 1982 with the release of Billy Joel’s 52nd Street and the initial sales of Sony Corporation (ADR) (NYSE:SNE)’s first CD player in Japan.