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Investments

  • 1600's Early investment institutions such as acceptance houses and merchant banks helped finance foreign trade and accumulated funds for long-term investments overseas.
  • 1792 The New York Stock Exchange began operating. Because of its long operating history the NYSE is still home to the majority of the world's largest and best-known companies.
  • 1800's Many of the famous investment banking firms that still operate today (in one form or another) began in the 1800's. These firms include J.P. Morgan, Goldman Sachs, Lehman Brothers, and others.
  • 1850 Lehman Brothers was founded, though they did not enter investment banking until the 1880's.
  • 1850's Merchant bankers in London and Paris began financing industrial expansions, which led to financing for U.S. projects, including the Transcontinental Railroad.
  • 1860 Henry Varnum Poor published History of the Railroads and Canals of the United States, a financial history of the companies laying track or digging canals in the United States. This publication was the root of the Standard & Poor's stock index.
  • 1860's During the Civil War, syndicate banking houses sold millions of dollars worth of bonds to help the federal government finance the war efforts. This was the first mass-market securities sales operation, a practice that was also used a few years later to finance the expansion of the transcontinental railroads.
  • 1869 Goldman Sachs was founded by German Jewish immigrants Marcus Goldman and Samuel Sachs. Goldman Sachs remains a major player in the investment banking and securities market.
  • 1873 The Panic of 1873 triggered a severe international economic depression in both Europe and the United States. The panic was caused by the fall in demand for silver following decisions by Germany and the United States to abandon the silver standard. The depression lasted until 1879 (longer in some countries) and was known as the Great Depression until the 1930s, but is now known as the Long Depression.
  • 1879 Bache & Company, a securities firm that provided stock brokerage and investment banking services, was founded in New York. The firm was later acquired by Prudential Financial and then Jefferies Group and is now called Jefferies Bache.
  • 1884 Charles H. Dow, a finance journalist, started the Railroad Average (now called the Dow Jones Transportation Average).
  • 1890-1925 The investment banking industry was highly concentrated and dominated by an JP Morgan & Co.; Kuhn, Loeb & Co.; Brown Brothers; and Kidder, Peabody & Co. These banks used commercial bank deposits to fund their investment banking because there was no legal requirement to separate the two operations.
  • May 26, 1896 Charles H. Dow, a finance journalist, unveiled the Dow Jones Industrial Average, the first stock index. He averaged the top 12 stocks in the market (mostly steel mills, railroads, mining, etc.) as a measure of the market's tide. The first index was at 40.94 points. The Dow Jones Industrial Average is still used today, but the 30 companies that comprise it come from a wider variety of industries.
  • October 1907 The Panic of 1907 began when the New York Stock Exchange fell almost 50% due to a failed attempted to corner the market on stock of the United Copper Company. This was during a time of economic recession and many consumers reacted by making runs on banks and trust companies, causing many state and local banks to enter bankruptcy. J.P. Morgan is credited for saving Wall Street during this crisis by allegedly locking top executives from major banks in his office until they hammered out a solution.
  • 1910 Salomon Brothers was founded as a Wall Street investment Eventually Salomon became part of Citigroup and in October 2003, the name was abandoned.
  • February 3, 1913 The Sixteenth Amendment to the United States Constitution was ratified, allowing Congress to levy an income tax.
  • December 23, 1913 The Federal Reserve Act was passed. It created and set up the Federal Reserve System, the central banking system of the United States, and granted it the legal authority to issue money and Federal Reserve Bank Notes as legal tender.
  • October 24, 1929 The New York Stock Exchange crashed, causing thousands of people to lose nearly the entire value of their investments. This day was known as Black Thursday.
  • October 29, 1929 The Dow Jones Industrial Average dropped 12% in one day, continuing the trend of decreasing stocks started on Black Thursday. This day was named Black Tuesday and is considered the start of the Great Depression, which lasted nearly a decade and caused severe levels of poverty, hunger, unemployment, and political unrest.
  • June 16, 1933 The Glass-Steagall Act of 1933 was passed in reaction to the collapse of a large portion of the American commercial banking system. This act required banks to separate their operations into commercial and investment divisions. The Glass-Steagall Act remained in force until it was repealed during the Clinton administration in 1999.
  • 1933 Congress enacted the Securities Act of 1933 in the aftermath of the stock market crash of 1929 to regulate the sale of securities.
  • 1934 The Securities Exchange Act of 1934 was passed to further regulate the secondary trading of securities (stocks, bonds, and debentures). It also established the Securities and Exchange Commission (SEC), the agency primarily responsible for enforcement of United States federal securities law.
  • 1946 Standard & Poor bought a punch card computer from IBM and expanded their index to 500 companies, which could be updated hourly. This formed the basis of the S&P 500 that is still used today.
  • 1946 The first venture capital firms were founded: American Research and Development Corporation (ARDC) and J.H. Whitney & Company.
  • 1958 The Small Business Investment Act of 1958 allowed small business investment companies to help finance small entrepreneurial businesses, under the regulation of the U.S. Small Business Administration (SBA)
  • 1971 Nasdaq was created as the world's first electronic stock market. The system facilitates trading and provides price quotes on more than 5,000 over the counter stocks. It is also home to many high-tech stocks, such as Microsoft, Intel, Dell, and Cisco.
  • 1974 The Employee Retirement Income Security Act (ERISA) prohibited corporate pension funds from holding certain risky investments. Some portions of the act were relaxed in 1978.
  • 1980's Financier Michael Milken popularized the use of high yield debt (also known as junk bonds) in corporate finance, mergers, and acquisitions. This fueled an increase in leveraged buyouts and hostile takeovers. The high yield market collapsed in 1989 and 1990.
  • August 15, 1981 Ronald Reagan signed the Kemp-Roth bill, officially known as the Economic Recovery Tax Act (ERTA), lowering the top capital gains tax rate from 28% to 20% and making high risk investments more attractive.
  • 1985 The Nasdaq 100 was introduced to compete with the S&P 500.
  • November 2, 1999 The Gramm-Leach-Bliley Act repealed certain provisions from the Glass-Steagall Act of 1933. This removed the separation between investment banks and depository banks and likely contributed to the severity of the financial crisis of 2007-2010.
  • 2005 The New York Stock Exchange became a public entity.
  • July 2007 The turmoil that had been affecting the mortgage markets spilled over into the leveraged finance and high-yield debt markets.
  • September 2007 The expected market rebound did not happen and major lenders announced major writedowns due to credit loss. Consumers lost confidence and buyers began to withdraw from the market.
  • 2007-2008 A credit crisis was created when several investment banks collapsed, were acquired, or left the investment banking industry due to internal financial trouble.
  • October 3, 2008 The Troubled Asset Relief Program (TARP) was signed into law. This program authorized the federal government to use up to $700 billion to purchase assets and equity from troubled financial institutions. The goal of the act was to strengthen the financial sector and avoid or mitigate the effects of a recession.

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