60. The California asbestos lawsuits: October 1978.
Workers at Todd Shipyard and Long Beach Naval Shipyard in Southern California file a class-action suit seeking all profits -- estimated at $1 billion -- made since 1938 by 15 of the nation's major asbestos manufacturers. The largest asbestos manufacturer, onetime Dow component Johns Manville, would declare bankruptcy in 1982. By 1995, despite thousands of settlements, the total number of suits would be about half a million, and claims wouldn't be over.
But most of the money would go to the lawyers, not the victims. Soon, class actions would become a staple of American law, giving victims of dangerous products legal recourse (or giving greedy trial lawyers a way to get rich at the expense of blameless companies, depending on which side you're on).
59. Wall Street's fixed commissions end: May 1, 1975.
Pushed by the Justice Department, the Securities and Exchange Commission ends the price-fixing practice by brokers of charging 1% on all transactions. Wall Streeters argue that the Four Horsemen will gallop up Wall Street at any moment. And it briefly seems like they might be right. By the end of 1975, 35 brokerage firms disappear, though most of them are pretty dinky. But guess what: Volume soars. (Price down equals demand up. Economics is funny that way.) In 1975, in the middle of a sucking bear market, average daily volume on the New York Stock Exchange is about 20 million shares. In 1999, that figure would be 823 million.
The end of fixed commissions brings about Charles Schwab (SCH:NYSE), the giant of discounting, which by 1998 would record $2.74 billion in revenue and $348 million in net income and a market cap in 1999 of about $46 billion, more than Merrill Lynch (MER:NYSE). And don't forget the online brokers, which will make everyone who touches a computer rich beyond his or her wildest dreams.
58. Morgan consolidates U.S. Steel: 1901.
How do you become a zillionaire? Practice, practice, practice. Photo credit: Corbis/Bettman J. Pierpont Morgan's creation of U.S. Steel takes robber barony to a whole new level. Morgan adds several small steel companies to his own steel holdings and persuades Andrew Carnegie to sell his massive company to the new trust, which at a capitalization of $1.4 billion is the world's first billion-dollar company. U.S. Steel (today known as USX-U.S. Steel Group (USX:NYSE)) controls 65% of U.S. steel output and further focuses the kind of negative attention on giant trusts that leads to the trustbusting of the early 20th century.
57. Calpers promotes shareholder activism: 1984.
The California Public Employees Retirement System, the nation's largest public pension system, in 1984 officially turns its sights on the boardroom. It fights back against cushy poison pill antitakeover plans and directors' willingness to dole out greenmail -- buying corporate raiders out at a premium to the market price.
Calpers begins pressuring underperforming companies, including Gillette (G:NYSE), Avon (AVP:NYSE) and Texaco (TX:NYSE). In the early 1990s, it begins publishing an annual list of "focus companies," the biggest losers in its portfolio, pushing board members to produce better results or risk a "no" vote at re-election time. In doing so, Calpers becomes a symbol of shareholder activism: If you're mad as hell (and own enough stock), you don't have to take it anymore.
56. Eisenhower signs the act creating NASA: July 29, 1958.
Pass the Tang and the freeze-dried ice cream.
Those dang Russkies put that gosh-darn Sputnik into orbit and we have to do something. So President Dwight Eisenhower inks the National Aeronautics and Space Act, creating the National Aeronautics and Space Administration. Over the next 40 years the U.S. space program would put a man on the moon and contribute to advances in computer science, weather research, communications technology and lots of other good stuff. Total cost: a mere $14 billion annually (and far too many photo ops for John Glenn).
55. ADM becomes the world's largest linseed oil maker: 1923.
The newly formed Archer Daniels Midland (ADM:NYSE) has nine mills and 334 linseed oil presses, on its way to becoming a price-fixing agribusiness giant and home to David Brinkley in his sunset years. The same year, Cargill purchases Taylor & Bournique Co., a major Eastern grain-merchandising firm with a private wire system, establishing Cargill's first communications link with markets in the East. Cargill would become one of the largest private companies in the U.S. The rise of Cargill and ADM mirrors the fall of the family farm and the long, slow death of rural America. In 1900, almost 38% of the country's workers are farmers. There are 5.7 million farms averaging 147 acres. In 1990, only 2.6% of the labor force tills the land. There are only 2.1 million farms, but the average acreage has risen to 461.
54. Watts explodes in a race riots: August 1965.
Touched off by a DWI traffic stop, race riots erupt in Los Angeles' Watts neighborhood as African-Americans vent long-simmering anger about dire conditions in the inner city. Thirty-four people are killed and more than 1,000 injured. Scores of businesses and jobs destroyed in the violence would never return, while white support for civil rights would drop off sharply, exacerbating the decline of Watts and other inner-city neighborhoods, which even today remain isolated from the economic and business success going on around them.
53. The New Yorker serializes Silent Spring: June 1962.
Rachel Carson's landmark treatise Silent Spring, on the dangers of toxic chemicals and pollutants, gives rise to a second wave of muckraking. Ralph Nader's Unsafe at Any Speed, a denunciation of the Chevrolet Corsair's nasty habit of flipping over -- "stylistic pornography over engineering integrity," he says -- would be published in 1965. A decade of consumer protection and federal regulation would follow, including the creation of the Environmental Protection Agency and the Occupational Safety and Health Administration in 1970. The Clean Air and Clean Water acts would come later, as well as the Freedom of Information Act in 1974.
52. Charles Merrill re-creates Merrill Lynch: 1940.
"Good Time Charlie" Merrill, high-living financier and playboy, is the driving force behind one of the most transformative trends ever to hit Wall Street: the democratization of investing. In 1940, Merrill merges Merrill Lynch (MER:NYSE) with E.A. Pierce & Cassatt, the firm to which he'd sold Merrill Lynch's retail brokerage and branches in 1930. He then adopts a focus on the customer that builds the new Merrill into the largest U.S. brokerage and gets thousands, then millions, of Americans a share of the stock market's riches.
51. The baby boom begins: 1946.
Randy GIs return from WWII, and nine months later the navel-gazing generation begins. The boomers would impose their (questionable) taste upon all walks of life, from Schwinn bikes in the '50s, to love beads in the '60s, all the way to Internet stocks and SUVs today.
50. The Agricultural Adjustment Act is signed: May 12, 1933.
President Franklin Roosevelt signs the Agricultural Adjustment Act in an effort to end the terrible poverty that has visited farms in the wake of the Great Depression. The act, which creates price supports and controls on crop production, succeeds, at the cost of turning those hardy Jeffersonian farmers into dependents of the federal government long after the Depression has passed.
49. Levittown opens: October 1947.
William Levitt builds suburbia, and they come. The houses are small and uniform, but for GIs just back from the war and families used to grimy tenements, they're heaven. And they're cheap, running $8,000 to $10,000 each. Levitt sells 300 homes in his Long Island, N.Y., development in the first weekend and 17,000 in four years, marking Levittown as an enormous financial success and speeding a suburban explosion that extends from New York to Los Angeles.
Sadly, Levitt doesn't let equal rights get in the way of his quest to build the perfect tract house. His early contracts explicitly bar homeowners from allowing their properties "to be used or occupied by any person other than members of the Caucasian race."
48. Hospital Corp. of America is founded: 1968.
Doctors don't make enough money. Dr. Thomas F. Frist Sr., his Air Force surgeon son and Jack Massey (former head of Kentucky Fried Chicken) start HCA in 1968 to rectify that sorry state. Eventually HCA, the first investor-owned hospital chain, would merge with Columbia to form Columbia/HCA Healthcare (COL:NYSE). It would become the largest operator of hospital chains in the country, until it is brought low in a major Medicare bilking scandal.
The door to for-profit health care businesses is opened, not to close again. The health maintenance organization comes a few years later, when President Richard Nixon, worried about health-care inflation, persuades Congress to provide grants encouraging the establishment of HMOs. The law also opens the corporate door for HMOs by requiring any company offering health-care insurance to its workers to offer an HMO option.
47. The savings-and-loan crisis peaks: 1988.
S&Ls were never such a good idea. Using short-term liabilities (depositors' savings accounts) to finance long-term assets (mortgages) is a roadmap for disaster, and the inflation of the 1970s provides the necessary gas for the ride to receivership. By the early 1980s, 73 S&Ls go under, costing the federal fund that insures S&Ls close to $2 billion.
Unfortunately, rather than dealing with the crunch, your friendly representatives in Washington choose to look the other way and loosen regulations. With little to lose, the S&Ls pile on bad loan after bad loan, hoping to lend their way to profitability. Losses increase further because S&Ls, which for two generations had been run by the dumbest guys in the banking business, are suddenly given the chance to make all manner of commercial loans. A Texas office park here and a Florida hotel there, and we're suddenly talking real money.
By 1988, it's clear that the deregulation of the early '80s was a huge mistake, and hundreds of S&Ls (and commercial banks, which are facing their own problems) will have to be shut down. In 1988, 190 S&Ls fail, at a total cost of more than $46 billion, far outstripping the reserves in the federal insurance fund. U.S. taxpayers make up the difference. In all, taxpayers pay $132 billion to fix the S&L crisis -- instead of the $20 billion or so resolving it in the early '80s would have cost.
Still, things could have been worse. While the crisis would be expensive, it would be largely resolved by the early '90s, and the U.S. financial industry would be healthy going forward. The Japanese can only look on enviously.
46. AT&T is dismantled: Jan. 1, 1984.
Forced by the Justice Department and Judge Harold Green to give up its monopoly status, American Telephone & Telegraph splits up into a long-distance company (today's AT&T (T:NYSE)) and the regional Bells. The move opens up competition in the long-distance market, thereby introducing the term "slamming" into the English lexicon and giving new endorsement opportunities to washed-up celebrities everywhere.
45. Reagan fires federal air traffic controllers: August 1981.
President Ronald Reagan fires 11,000 members of the air traffic controllers' union, demonstrating that the power once wielded by labor unions in America has waned. Of course, years of deindustrialization and repeated scandals involving organized crime had already greatly weakened the nation's once-mighty union movement.
For most of the next two decades, unions would remain on the defensive. But by the late 1990s, a new wave of union leaders would step up spending on recruitment in an effort to avoid marginalization. In 1998, union membership would grow by 101,000 workers, the largest increase in five years.
44. U.S. immigration peaks: 1907.
Call 'em strivers searching for a better life. Or, if you prefer, just call 'em cheap labor. Either way, immigrants have provided a vital spark to the U.S. economy throughout this century. Their influence peaks before World War I, when a flood of immigrants from Eastern and Southern Europe powers the growth of New York and the other new metropolises of the Northeast and Midwest, helping turn the U.S. into the world's foremost industrial nation. Immigration tops out in 1907, when more than 1 million European immigrants pass through New York's Ellis Island.
43. FDR signs the GI Bill of Rights: June 22, 1944.
The GI Bill makes college and advanced training possible for millions of vets, dramatically increasing the education level and skills of the U.S. labor force. The DeVry Institute would pick up the slack 40 years later.
42. The Jungle is published: 1906.
Though it's a maudlin novel and a Zola rip-off, Upton Sinclair's muckraking contribution has an almost immediate impact. The government would pass that year the Meat Inspection Act and the Pure Food and Drug Act, which would pave the way for the Food and Drug Administration but strangely have no effect on the advent of Velveeta.
The Jungle marks the peak of the first wave of muckraking journalism, which galvanizes public outrage over the excesses and lawlessness that mar American business at the turn of the century. By World War I, pressure from the muckrakers, and their political counterparts, the Progressives, would have led to government protection of natural resources, the creation of public utility commissions and the enactment of labor laws.
41. Coca-Cola becomes a global brand: World War II.
Coca-Cola (KO:NYSE) President Robert Woodruff decides he'd like to sell the world a Coke and starts with the U.S. armed services for a plug nickel a bottle. World conquest and a succession of schmaltzy commercial jingles swiftly follow. Coming Thursday: In Part 4, entries 40 through 21, the Arabs deprive us of our God-given right to cheap oil, Xerox blows it and Bill Gates picks IBM's pocket.