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Article Archive: History

The unexpected origins of discounting
06/22/24   History
"in 1626, Durham officials found a formula for fees that tenants would accept. If tenant farmers paid a fee equal to one year's net value of the land, it earned them a seven-year lease. A fee equal to 7.75 years of net value earned a 21-year lease. This was a form of discounting, the now-common technique for evaluating the present and future value of money by assuming a certain rate of return on that money."

Cumulative vs. cyclical knowledge
11/06/22   History
"President James Garfield died because the best doctors in the country didn't believe in germs, probing Garfield's bullet wound after an assassination attempt with ungloved, unwashed fingers that almost certainly contributed to his fatal infection."

How the potato chip took over America
01/22/22   History
"The earliest known recipe for chips dates to 1817, when an English doctor named William Kitchiner published The Cook's Oracle, a cookbook that included a recipe for 'potatoes fried in slices or shavings.' And in July 1849, four years before Crum supposedly dissed Vanderbilt, a New York Herald reporter noted the work of 'Eliza,' also, curiously, a cook in Saratoga Springs, whose 'potato frying reputation' had become 'one of the prominent matters of remark at Saratoga.'"

Operation Neptune's Spear
05/02/21   History
"The full story of how, and why, America's top security officials decided to pull the trigger that night in May has never been told. This oral history - the story inside the West Wing and U.S. intelligence agencies as Neptune's Spear coalesced over the fall of 2010 and spring of 2011 - is based on extensive original interviews with nearly 30 key intelligence and national security leaders, White House staff, and presidential aides - including some who have never spoken publicly before, and roughly half of those pictured in Souza's famous photograph."

Simple and effective
03/06/20   History
"A recent MIT study estimates only 70% of people wash their hands after going to the bathroom. And 50% of those people aren't doing it right. They further estimate that just 1 in 5 airport travelers has clean hands. If we were able to simply bump that number up from 20% of travelers to 60%, that could potentially slow the spread of disease by nearly 70%. Even 30% of travelers with cleaner hands could reduce the impact of a disease by nearly one-quarter."

Forces shaping the world
10/04/19   History
"When people talk about what nation will own the next century they point to leadership in AI and Machine Learning, where China looks so competitive. But it's staggeringly hard to grow an economy when you lose a fifth of your working-age population in a single generation. China could invent something as big as the next internet, but when mixed with its demographics have an economy that muddles along. Europe, Japan, and South Korea are the same or worse."

Tulip mania: the classic story is mostly wrong
02/26/18   History
"Prices could be high, but mostly they weren't. Although it's true that the most expensive tulips of all cost around 5,000 guilders (the price of a well-appointed house), I was able to identify only 37 people who spent more than 300 guilders on bulbs, around the yearly wage of a master craftsman. Many tulips were far cheaper. With one or two exceptions, these top buyers came from the wealthy merchant class and were well able to afford the bulbs."

Mastery or ignorance
03/19/16   History
"Who among stock brokers and investment analysts in 1900 could have foreseen the eclipse of railroads? However, just like de Tocqueville said about the Roman aqueducts and roads, the miles of unused railroad tracks today are monuments (albeit not as conspicuous) not just to a young nation's will to master a continent, but also to the 19th century's ignorance of internal combustion and air travel."

How Singer won
08/23/15   History
"The Singer Sewing Machine changed the way America manufactured textiles, but the invention itself was less important than the company's innovative business"

Was tulipmania irrational?
10/05/13   History
"there has been little attempt to understand how speculation actually works. The example of tulipmania shows the importance of doing that - rather than relying on lazy quips about 'animal spirits' or irrationality."

How to kill a currency
06/12/12   History
"As the world considers the possible death of the euro, it's worth considering a famous historical example. Ok, it's not that famous. But it's still worth looking at: The break-up of the Austro-Hungarian currency union in 1918."

Origins of the indebted homeowner
04/22/12   History
"Not long after the economic crisis began, the president's landmark Conference on Homeownership reported that 'down payments of 10 percent, 5 percent, and even nothing down' had become common practice in the home-mortgage market. Reliance on second mortgages and novel financing terms, the report noted, were also widespread. Although these developments sound all too familiar, this Conference on Homeownership was held in 1931 and the president sponsoring it was Herbert Hoover, not George W. Bush or Barack Obama. We often think of the expansion of easy mortgage financing as a relatively recent development, but the growth of indebted homeownership has older and more complicated origins."

'Fortune 500' of 1812
04/11/12   History
"Fortune magazine began publishing annual rankings of U.S. corporations by revenue in 1955. Ever since, scholars and forecasters have analyzed changes in the Fortune 500 to help inform their judgments about industry concentration and the relative importance of different sectors of the economy. Historians would love to have snapshots of the nation's largest corporations at earlier dates. Unfortunately data are scarce, especially before the Civil War. Based on our research, however, it is now possible to create a sort of historical 'Fortune 500' ranked by corporate capitalization -- the total sum stockholders were supposed to pay for their shares."

No normal recovery
04/03/12   History
"With the U.S. economy yielding firmer data, some researchers are beginning to argue that recoveries from financial crises might not be as different from the aftermath of conventional recessions as our analysis suggests. Their case is unconvincing."

The Long Shadow of German Hyperinflation
12/07/11   History
"The Germans' strict opposition to the monetary financing of governments isn't just petty legalism -- it's a bedrock principle, based in history, which was purposefully built into EU treaties and Bundesbank policies. It's worth revisiting why the memory of hyperinflation has seared itself into the minds of many Germans, and how it's shaping their thinking and the future of the euro itself."

Control rights and wrongs
10/26/11   History
"Banks are special. That has long been recognised in the design of their ownership, governance and regulation. This special status can have strange consequences. The historical distribution of risks and returns in banking is one. For a century, both risks and returns have been high. But while the risks have typically been borne by wider society, the returns have been harvested by bank shareholders and managers. The experience of the past two decades illustrates well this imbalance. In 1989, the CEOs of the seven largest banks in the United States earned on average $2.8 million. That was almost 100 times the median US household income. By 2007, at the height of the boom, CEO compensation among the largest US banks had risen almost tenfold to $26 million. That was over 500 times the median US household income. Those are high returns by any measure. But so, subsequently, have been the risks. The fall in the share prices of global banks means they are scarcely different in real terms today than in the early 1990s. And it is not just investors licking their wounds. So too is the global economy."

Trust issues
09/20/11   History
"Hartwick College didn't really mean to annihilate the U.S. economy. A small liberal-arts school in the Catskills, Hartwick is the kind of sleepy institution that local worthies were in the habit of founding back in the 1790s it counts a former ambassador to Belize among its more prominent alumni, and placidly reclines in its berth as the number-174-ranked liberal-arts college in the country. But along with charming buildings and a spring-fed lake, the college once possessed a rather more unusual feature: a slumbering giant of compound interest."

A second great depression, or worse?
08/18/11   History
"According to the National Bureau of Economic Research, falling from peak to trough in each cycle took 11 months between 1945 and 2009 but twice that length of time between 1854 and 1919. The longest decline on record, according to this methodology, was not during the 1930s but rather from October 1873 to March 1879, more than five years of economic decline."

The Nixon shock
08/13/11   History
"Burns was replaced by Jimmy Carter in 1978. The following year, with inflation rocketing toward 15 percent, Burns delivered a keynote speech, "The Anguish of Central Banking," in which he argued that central bankers around the world were failing because elected leaders were unwilling to risk displeasing constituents. The new Fed chief, Volcker, did tame inflation unlike Burns, he had the fortitude to subject the country to a brutal recession. But the dilemma faced by Burns - how to withstand the demands of the public for limitless monetary expansion - did not go away. We see it now in the troubles of nations from Greece to Ireland to the U.S. And the anguish that Burns felt is Ben Bernanke's unfortunate inheritance."

How debt has defined human history
08/08/11   History
"Since 1971, when the U.S. abandoned the gold standard, and the world has been moving to a system of virtual credit money, we have been entering a new period of history. But it's not entirely unprecedented. In fact, contrary to popular belief, credit has been the predominant form of money in world history."

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