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Learn to Earn: A Beginner's Guide to the Basics of Investing and Business. Home · Learn to Earn: A Author: Peter Lynch | John Rothchild DOWNLOAD PDF. Mutual-fund superstar Peter Lynch and author John Rothchild explain the basic principles of the stock market and business in an investing guide that will enlighten and entertain anyone who is high-school age or older. Many investors, including some with substantial portfolios. Download Learn to Earn Peter Lynch PDF. The “Learn to Earn: A Beginner's Guide to the Basics of Investing and Business” explains how to.
Tania Crasnianski. One Up On Wall Street. Robert R. Today, there are over ten thousand banking institutions in the United States, if you add in all the savings and loans and the credit unions, while Great Britain has less than fifteen. In , there were twenty-nine stocks, and in , thirty-one.
Soon, every John and Jane Doe with nothing better to do decided to start a bank. Thousands of banks appeared on main streets and side streets in big towns and little towns, the way chicken restaurants are cropping up today.
And since every one of these state banks could issue its own paper money, it was very confusing to do business, because from state to state it was hard to tell whose cash was worth what, and a lot of merchants wouldn't accept any of it. Traveling within the country then was very similar to traveling abroad today: You had to worry about changing money from place to place.
This is an area in which the United States and Europe have gone in different directions. Europe has always had a few banks with many branches, while we've always had a slew of different banks. By , there were three hundred separate banks in the United States, as compared to a handful of banks in England.
Today, there are over ten thousand banking institutions in the United States, if you add in all the savings and loans and the credit unions, while Great Britain has less than fifteen. Many of our local banks were shoestring operations that lacked the necessary capital to tide them over in an economic crisis, and there was always a crisis waiting to happen. Half the banks that opened their doors between and had failed by , and half the banks that opened between and had failed by When you put money into a bank, it wasn't insured the way it is today, so when a bank failed, people with savings accounts or checking accounts had no protection and lost all their money.
There was no such thing as a safe deposit. Banks were dangerous places to park cash, but that didn't stop Americans from putting their life savings into them. The banks would take these savings and lend the money to the bridge builders and the canal builders, the turnpike projects and the railroad projects that got America moving.
When a bank loaned money to a railroad, or a bridge company, or a steel company, the money came from the savings accounts of the people who put money into the bank. In other words, all this high energy, this excitement, this hustle and bustle that led to economic progress was financed out of the pockets of the man and woman on the street.
Whenever the government needed money for a project, it had four choices of where to get it: More about bonds on page Whenever a company needed money, it could borrow from a bank, sell bonds, or sell shares of stock.
But in the first half of the nineteenth century, stocks were a company's last resort.
The idea of selling shares to the public caught on very slowly. The Father of Modern Economics Markets were opening all over the place, and people were buying and selling at a furious pace, and to many people the whole situation was out of control. Never in history had masses of individuals been allowed to go their own way and work for their own benefit.
There didn't seem to be any rhyme or reason to it. This is where the economists came in. They were a new breed of thinker. For thousands of years, religious philosophers had tried to figure out how mankind could live according to God's wishes.
They debated politics and the best form of government, and who the leaders should be. But it took economists to describe what happens when individuals have the freedom to seek their fortunes. The first and the smartest early economist was a Scotsman named Adam Smith, a nerd of his day who lived at the time of the American Revolution.
Smith avoided parties and picnics to stay at home thinking and writing, and he was so absorbed in his ideas that he got the reputation of being absent-minded. The Wealth of Nations was published in , the year America declared its independence, and it's a shame that Adam Smith didn't get more credit for writing it.
He deserves a prime spot in history along with John Locke, Benjamin Franklin, Thomas Paine, and other revolutionary thinkers who argued that political freedom is the key to a just society where people can live in peace and harmony. The others didn't say much about how to pay the bills -- but Smith did.
He made the case for economic freedom. Smith argued that when each person pursues his own line of work, the general population is far better off than it is when a king or a central planner runs the show and dictates who gets what. His point seems obvious today, but in , it was a novel idea that millions of individuals making and selling whatever they pleased, and going off in all directions at once, could create an orderly society in which everybody had clothes, food, and a roof over their heads.
What if ninety-nine out of one hundred people decided to make hats, and only one out of one hundred decided to grow vegetables? The country would be flooded with hats, and there would be nothing to eat.
But this is where the Invisible Hand comes to the rescue. There wasn't really an Invisible Hand, of course, but Smith imagined one working behind the scenes to insure that the right number of people grew vegetables, and the right number of people made hats. He was really talking about the way in which supply and demand kept goods and services in balance.
For instance, if too many hat makers made too many hats, hats would pile up in the market, forcing the hat sellers to lower the price.
Lower prices for hats would drive some hat makers out of the hat business and into a more profitable line of work, such as vegetable farming.
Eventually, there would be just enough vegetable farmers and just enough hat makers to make the right amount of vegetables and hats. In the real world, things don't work out quite as perfectly as that, but Smith understood the basics of how a free market works, and they still hold true today. Whenever there's a demand for a new product, such as computers, more and more companies get into the business, until there are so many computers for sale that the stores have to drop their prices.
This competition is very good for you, me, and all the other consumers, because it forces the computer makers to improve their product and cut prices. That's why every few months, they come out with fantastic new models that cost less than the clunky old models. Without competition, they could keep selling the clunky old models and consumers could do nothing about it. The Invisible Hand keeps the supply and demand of everything from bubblegum to bowling balls in balance.
We don't need a king, a Congress, or a Department of Things to decide what the country should make, and how many of each item, and who should be allowed to do the manufacturing. The market sorts: Smith also realized that wanting to get ahead is a positive impulse, and not the negative that religious leaders and public opinion makers had tried to stamp out for centuries.
Self-interest, he noticed, isn't entirely selfish. It motivates people to get off their fannies and do the best they can at whatever job they undertake. It causes them to invent things, work overtime, put extra effort into the project at hand. Imagine what lousy carpenters, plumbers, doctors, lawyers, accountants, bankers, secretaries, professors, center fielders, and quarterbacks we'd have if people weren't allowed to profit from their talents, and success was never rewarded!
Smith said there was a "law of accumulation" that turned serf-interest into a better life for everyone. When the owner of a business got richer, he or she would expand the business and hire more people, which would make everybody else richer, and some of them would start their own businesses, and so on.
This is where capitalism created opportunities, unlike feudal agriculture, where a small number of big shots owned the land and kept it in the family, and if you were born a peasant, you would live penniless and die penniless, and your children and their children would be stuck in the same rut forever.
At the time Smith wrote his book, and throughout the century that followed, great thinkers were trying to find laws for everything. Scientists already had discovered physical laws, such as the law of gravity, the laws of planetary motion, and the laws for certain chemical reactions.
People believed in an orderly universe, in which, if therE; were laws for how the planets move and how apples fall from the tree, there had to be laws for business, and laws for politics, and laws for how people react in different situations. Once you figured out the formula for how money gets passed around, for instance, you could predict exactly who would end up with how much. It was one thing to say there was a law of supply and demand, or a law for how money travels, and quite another to find a formula that could nail it down.
But economists kept trying, coming up with new theories to reduce the hustle and bustle of the marketplace to a single equation.
Our First Millionaires According to the records, not a single millionaire existed in America in colonial times. Elias Hasket Derby of Salem, Massachusetts, a seafaring merchant who refused to get involved in the slave trade, was reputed to be the wealthiest person in the country. Today, his house belongs to the National Park Service and is open to the public. It's only a few hundred yards from the House of Seven Gables, the setting for Nathaniel Hawthorne's famous book. The fact that everybody knows Hawthorne and not Elias Hasket Derby tells you something about the relative importance of literature and finance in the schools.
Several hundred miles to the south, a Baltimore merchant, Robert Oliver, had also collected a sizeable fortune, but during and after the Revolution, the richest person in America was thought to be Robert Morris.
Morris formed a business syndicate that bought and sold ships.
His ships sailed from the West Indies to Europe and back again, sending tobacco and foodstuffs in the European direction and bringing cloth and manufactured goods from them to us. He was chairman of a secret committee that supplied the revolutionary armies with coats, pants, shirts, and gunpowder, and his companies got the contracts to supply the army. Morris became superintendent of finance under the Articles of Confederation, and he was an avid supporter of Alexander Hamilton and of Hamilton's pet project, the first national bank.
Morris believed that only the better class of people should run the country. He argued for the superiority of gentlemen such as himself, for there was no doubt in his mind he was one. He was entirely opposed to Jefferson's idea that the small independent farmer was the backbone of the nation and should be given the right to vote.
Like many of the great wheeler-dealers who followed in his footsteps, Morris built his empire on money borrowed from the banks. He had many friends in high places, and since his biggest customer was the army, we could call him the original big defense contractor.
Also like some of our modern wheeler-dealers, including Donald Trump, Morris overextended himself and borrowed more money than he could pay back. There was a lull in the shipping business, his financial empire collapsed, and Morris declared bankruptcy. In those days, declaring bankruptcy was a very serious thing to do, because owing money to people and not paying them back was a crime.
Morris spent three years in a debtor's prison in Philadelphia, where one of his visitors was George Washington. From his jail cell, Morris organized a campaign to abolish this sort of penalty, and thanks to his efforts, we no longer lock people up when they can't pay their debts. If we still had debtor's prisons in the s, they would be very crowded, because more than eight hundred thousand Americans file for personal bankruptcy every year.
Most have gotten in too deep with their credit cards. By , there were a half-dozen millionaires in the country, and most made their profits on ships and trading. Number one among them was Stephen Girard of Philadelphia, who died in at the age of eighty-two, the richest person in America at that time.
Girard was born in France, the son of a ship captain. He went to sea as a teenager and later became an international trader and merchant. He came to America, invested in land, bank stocks, and government bonds, and managed to prosper in all these areas. Girard eventually started his own bank and joined a syndicate to do business with a younger wheeler-dealer named John Jacob Astor.
More on him shortly. The bulk of the money was donated to a college for male orphan children. Girard was a confirmed atheist who despised religion so much that under the terms of his will, no minister of any faith could set foot on the college property. Girard's net worth was eclipsed by that of John Jacob Astor. Astor was a German immigrant who started out as a fur trader, then bought part interest in a ship that sailed back and forth to China -- that's where the big fortunes were still being made, in ships and trading.
From one ship, Astor expanded to two, three, four, and eventually he had a fleet of speedy vessels known as clippers. For an American to build a fleet of this kind was a major achievement, because it had to be done with borrowed money, and the American banks had a limited supply of money to lend, as compared, say, to the British banks.
During this period in history, money was backed by precious metals, so the amount of cash a bank could print depended on how much gold and silver it had in its vaults. In London, there was an ample supply, so the banks could roll the presses and create plenty of cash for their business tycoons to borrow. But the U. When he realized he couldn't beat the competition, Astor turned away from international trade and concentrated on the U.
This started a hot national debate: If you can't take it with you, who should get it? The public thought Astor should have left more to his fellowman in general, and less to his relatives, because capitalists were supposedly working for the benefit of society.
This debate still rages today. Everyone seems to agree that working hard and getting ahead is a good thing, but people are divided on the issue of what to do with the proceeds. These days, Astor couldn't possibly have given 95 percent of his wealth to his children, because the estate taxes would have taken 55 percent off the top as soon as he was laid to rest.
The contemporary rich have a different sort of choice: They can leave their money to private charities and foundations, including colleges, hospitals, homeless shelters, AIDS research, and food banks, or they can do nothing and let the government take the biggest chunk of it.
A Slow Start for Stocks By , there were corporations formed in the United States, but most of these remained in private hands so the general public couldn't own them. Corporations were very controversial. Their fans and supporters saw them as an important ally of democracy that could benefit the community at large. Their critics saw them as undemocratic, sneaky, and subversive organizations that only cared about themselves.
It was a frustrating period for any investor in stocks. The states already had passed laws to limit the liability of shareholders if a company got sued, so people could invest without fear of losing more than the value of their shares. But not many people did invest. It was hard to find friends or neighbors to share in the enthusiasm and chat about their favorite public companies, the way investors do today whenever we get the chance.
There wasn't a business section of the newspaper, or a Money magazine, or books on how to pick stocks. In fact, there weren't many stocks to pick from: In March the complete list was printed in the New York Commercial Advertiser, a popular paper of the day. There were twenty-four stocks, mostly banks. In , there were twenty-nine stocks, and in , thirty-one. The earliest buying and selling was done under a large button-wood tree on Wall Street, and after that, stocks were traded in small rented rooms or in coffeehouses.
At one point, there was a fire in one of the rooms, and the traders moved into a hayloft and continued trading there. You could stand around and twiddle your thumbs waiting for a stock to be traded. Business was so slow that the traders started buying and selling at It got so dull that on March 16, , a prime candidate for the slowest trading day on record, only thirty-one shares changed hands.
This was a far cry from the million shares that changed hands on an average day in The stock-trading business livened up a bit by , when companies were listed on the NYSE. The country was on the move with canals, turnpikes, and bridges. These fantastic improvements required money, and the money came from the sale of stocks and bonds. Bank stocks were no longer the hot items they had been a couple of decades before.
The new hot item was railroad stocks and bonds. At one point, people were buying anything with the name "rail" in it, and not caring what prices they paid. They were also paying higher and higher prices for any piece of land near a railroad. If they didn't have the cash to buy the land, they could borrow it from the banks.
Banks were lending huge sums on these real-estate deals, and large numbers of farmers were ignoring their crops and becoming real-estate tycoons.
This was a home-grown bubble, similar to London's South Sea bubble from long before, and in it burst. Stock prices and land prices came down as fast as they had gone up, as investors tried to cash out.
The would-be tycoons who had borrowed money to buy the stocks and the land were stuck with debts they couldn't repay to the banks. The banks ran out of money, and people with savings accounts lost their savings when the banks closed their doors and went out of business. Soon, cash was in such short supply that nobody could afford to buy anything. The financial system was on the verge of collapse. This was the Panic of The American economy and the economies of most countries lurched from euphoria to panic and back again.
In the euphoric periods, when prices were rising and jobs were plentiful, speculators would spend their last paycheck, hock their jewelry, go into debt, do anything to buy stocks, or bonds, or land, and get in on the action. Then, in the panics, collapses, and depressions, the speculators got their comeuppance and people sobered up.
The stock market crashed in and again in , when shares in the popular Erie Railroad fell from sixty-two dollars to eleven dollars. Still only a tiny percentage of the population owned stock -- given the ups and downs in the market, perhaps this was for the best.
The brunt of the losses was borne once again by the Europeans, who, not having learned an earlier lesson, were pumping money into U. By the s, nearly half of all U. American Inventiveness The American people were regarded as an uncouth rabble by the more refined Europeans, and they saw us as poorly educated, roughshod Yankee doodles, but what a surprise they got when all the great inventions began to pour out of American heads.
American ingenuity was a response to our lack of manpower. In a huge country with a small population we needed to invent machines to do some of the work. Though clever inventors were dreaming up machines, this didn't mean the machines would be brought to life. It was capitalism -- people willing to invest their money to manufacture the machines -- that led to the golden age of American invention.
There was Fulton and his steamboat; George Cabot's mill; Francis Cabot Lowell's complete industrial factory; McCormick's giant harvesting machine, the reaper, that spared the farmers from back-breaking work. While serving as a tutor on a southern plantation, a Connecticut tinkerer named Eli Whitney invented the "gin" to remove seeds from cotton and single-handedly turned the South into a mecca for cotton production.
McCormick's reaper, Samuel Colt's repeating pistol, and a new kind of padlock were the three American inventions that vowed the crowds at a famous exhibition of industrial machinery at the Crystal Palace in London in Europeans were amazed by American products, and just as amazed by our system of manufacturing that standardized the quality so each item that rolled out of the stop was exactly the same as the last. Again, it took money to get these inventions off the drawing boards and into production.
Some of it was borrowed from banks, but more and more was raised in the stock market, as shareholding grew in popularity at home and especially abroad. Foreigners bankrolled our fantastic progress by investing in our emerging market, and years later, we are returning the favor by investing huge sums in the emerging markets of Asia, Africa, and Latin America.
On the farm, machines improved the life of the farmer, who up until the s was still using the same primitive methods that had been used five thousand years earlier in Egypt. Farmers tilled the soil with plows pulled by animals, or with hand plows pulled by humans, and much of the stoop labor was done by slaves, who were victims of the system, the same as the slave in ancient Mesopotamia. Among the causes of slavery, primitive agriculture was a major culprit.
Slavery was abolished when the bystanders came to their senses and raised enough of a ruckus to put a stop to this evil practice, but capitalism deserves some of the credit. It took investors and their money to build the factories that made the farm equipment threshers, reapers, disk harrows, steel plows, grain elevators, and so forth that changed agriculture forever.
With new machines to do the backbreaking labor once reserved for slaves and serfs, there was no longer an economic benefit in forcing people into a life of servitude.
Several of the companies that made farm equipment one hundred years ago are still with us today: Deere, International Harvester now called Navistar , and Caterpillar.
While they were inventing and selling the machines that could hoe, plant, and harvest, other companies were inventing herbicides and fertilizers to kill the bugs and the weeds and enrich the soil. The combination of new equipment and new chemicals turned the American farm into the most efficient food bank on earth, capable of producing more wheat, corn, and so forth, per acre than any other country's farms in the history of agriculture. True, ours was a fertile land, with hundreds of millions of acres of rich soil lying beneath the fruited plains, unlike the tired, leeched-out, pawed-over soil the farmers of Europe and Asia had worked mercilessly for centuries until it lost its fertility.
Yet there's no denying that innovations and inventions kept our plains fruited, and made the American farm the envy of the world. While a million Irish people lost their lives in potato famines, Chinese people starved because of rice shortages, and starvation was a fact of life for much of humanity, the United States produced and continues to produce more food than its citizens could eat.
Farm machinery changed the way farmers raised crops, but it didn't change the American diet, which was dreary and monotonous. Most families grew their own food. The basic menu was bread, potatoes, root vegetables, and dried fruits, livened up with the occasional slice of salted or smoked meat. People ate kidneys for breakfast. Kitchens lacked refrigerators, so fruits and vegetables could be eaten fresh only in the short stretches when the produce was "in season.
If you didn't live near the water, you couldn't get fresh fish. Lemons were a luxury, and an orange was something you found once a year in your Christmas stocking, if you had a Christmas stocking.
The tomato was an exotic Mexican export, widely distrusted because it was thought to be poisonous. Grapefruits were generally confined to Florida. There were no refrigerated trucks or railcars to move vegetables from one place to. People did their own canning at home, in glass jars, whenever they could get the extra produce.
Cattle, sheep, and pigs were walking rib steaks, lamb chops, and pork roasts, transported live from the farms to the cities so their meat could be preserved "on the hoof.
Keeping a family fed, clothed, dry, and warm was a full-time job. Without our modern conveniences and products to help them along, women's work was never done, and neither was men's. Most of the houses were handmade, and so were the clothes, the drapes, the furniture, and the soap. The average person might spend weeks without buying a product made by a company, public or private. It took hours to make the food, and hours to tend the gardens, and more hours to cut the firewood for the stoves.
The smoke from stoves and fireplaces was a major pollutant, both in and around the houses where people spent most of their time. So much for the fresh air that everybody supposedly enjoyed in those days. There was no TV, which might have been a blessing, because a lot of people had no time for TV. Today, we talk about "home entertainment," but in the old days, it really did come from inside the home: If this sort of entertainment was so wonderful, then why did so many people turn to the radio and later to the television?
Railroads and Commerce The stock market continued to gain in popularity throughout the nineteenth century, thanks in part to Thomas Edison's first commercially successful invention, the tickertape machine. This was a printing device covered by a glass bowl that made it look like a bubblegum dispenser.
Every time a stock was bought or sold, a record of the trade was sent via telegraph to tickertapes around the country and the world. It came out on the tape, an endless roll of paper that showed the stock symbol, the price, the number of shares that changed hands. Anybody with access to a ticker could watch the tape and keep tabs on stock prices, up to the minute. Before Edison invented this machine there was no way of telling what stocks were doing, unless you were standing on the floor of a stock exchange.
But as soon as tickertapes were, installed, investors could follow theft favorite stocks right along with the insiders on Wall Street. The American economy grew eightfold between the s and the Civil War.
This meant that the population was making eight times as many products, and buying and selling them at eight times the rate of the colonial inhabitants. We were well on our way to becoming the world's greatest industrial power. With the Civil War behind us and slavery abolished although racial discrimination clearly was not abolished , the population expanded westward, and the skylines of the cities expanded upward, as everywhere in the country people were on the move.
By , textile mills were popping up along the rivers in New England, and no fewer than forty-six cotton textile companies sold shares on the Boston stock exchange. When soldiers returned from the Civil War, where they'd gotten accustomed to wearing uniforms, they went out and bought a new kind of uniform, the ready-made suit.
Soap and candies, leather and maple sugar, all traditional homemade products, could now be bought in stores. Trade barriers between one state and another were broken down so mass-produced goods could cross state lines.
Two railroad companies, the Union Pacific and the Central Pacific, were chosen to extend the lines across the country to the Pacific. Occasionally, a fight would break out among the Irish, German, or Chinese workers along the line, but together they put theft muscle into laying, the track and hammering the spikes.
Congress granted million acres to various railroads in different parts of the country -- this was the biggest gift; of property in U. The railroads sold some of this land to farmers and used some of it as collateral for the huge loans they took out to pay the workers and buy the track, railroad cars, and other expensive equipment. Several of today's railroad companies still own vast tracts of valuable acreage from the original government land grants.
It's an incredible asset for them. The railroads carried the freight, plus the passengers, and they brought crowds of new buyers into the stock market. The federal government provided most of the land. It wasn't the cowboy and the six shooter that won the West as much as it was the railroads.
Without this money and these breaks, who knows when the territory would have opened up? Railroad stocks, how could they miss! People saw the rail lines fanning out to the far corners of the nation, and the locomotives puffing along, and they were convinced that railroads were a can't-lose proposition.
A sizeable number of farmers were speculating in railroad stocks, in railroad land, and in the land companies created by the Homestead Act of Some of these railroad projects and land projects turned out to be fly-by-night schemes, as did many of the gold and silver mining ventures that came along behind the railroads.
Mark Twain is said to have once described a gold mine as a "hole in the ground owned by a liar," and more often than not, that liar was selling shares. Far more money was made by the people who sold shares in unproven mines than was made by all the prospectors who brought their pans and their picks to California. The victims of fly-by-night schemes had no federal or state regulators to protect them, and the laws that prohibit companies from putting out false or misleading information were yet to be written.
During the great era of the cowboy, which lasted only about twenty-five years, a slew of cattle-ranching stocks appeared on the stock exchanges. In the late s, there were 38 million cows and 39 million people in the United States, or roughly one cow for every inhabitant.
Cowboys made a big impression on the easterners who bought into this bull market. By , there were different stocks sold on the New York Stock Exchange. Insurance companies had made their debut on Wall Street, along with the steel companies and the ironworks that grew into giants and dragged farmers off the land and lured immigrants from across?
The railroads had extended their track to all corners of the country, and there was heavy traffic on the canals of the Great Lakes where barges delivered iron and coal to be remade in the bellies of the steel mills, which poisoned the air with their toxic belch, but still the immigrants arrived by the boatload, looking for factory jobs.
They poured into New York harbor from Ireland, from continental Europe, from as far away as China, escaping potato famines, wars, secret police, injustice, intolerance, insecurity, upheavals of all kinds. They took low-paying jobs as garment workers, meat packers, welders, riveters, and grease monkeys,?
They sought out these poor working and living conditions because however bad the situation was over here, it was better than the situation back home, where people were starving or were caught up in endless warfare. If life wasn't better over here, then why did so many make the trip? They also realized that if they stayed home in Poland or Greece or wherever else, they had little hope of advancement, because in every country a small group of aristocratic families owned the farms, hoarded the money, and controlled the government.
In America, they had hope, and more than hope, they had expectations. Wasn't this the land of opportunity? Workers saw the growing prosperity in the neighborhoods around them, and they expected to share in it -- or if they couldn't, their children would and did. The offspring of immigrant factory workers had a chance to go to college and become doctors, lawyers, executives, and even owners of the very companies where their parents and grandparents worked long hours for low pay.
By and large, the American worker of the late nineteenth century didn't blow the money on expensive vacations or champagne parties -- at least most of them didn't. They put the money in banks, where the situation had become somewhat less chaotic than it had been when banking was run by the states.
The endless varieties of currency that made shopping so confusing disappeared in the mids when a new federal banking system was established. From then on, we had one national currency, the U. Americans stashed so much cash in the banks that from the Civil War to World War I they saved an amazing 18 percent of the country's total industrial output. Because the cash was used to build better factories and better roads to transport the goods from the factories, workers became more efficient.
They could produce more goods for the same amount of work. The supply of money increased forty times over, but there was hardly any inflation. These days, when a would-be emerging nation such as Russia prints more money, we see an immediate collapse in the value of the money, and prices go through the roof. But in the second half of the nineteenth century, when the United States was an emerging nation, prices held steady, even though the banks had begun printing money like crazy.
The reason this printing of money didn't cause inflation was that our industrial output was growing right along with the money supply. Another factor that may have contributed to the national prosperity is that our borders were effectively closed to many foreign-made goods by prohibitive tariffs.
These days, we hear a lot about free trade and what a good thing it is, but during the heyday of the U. The inventions kept coming out of the American mind: People were inventing better mousetraps, better everythings, a machine for every job that once had been done by human hands. In the s, a bill was introduced in Congress to close the U.
Patent Office, on the theory that every important invention had already been invented. How wrong that turned out to be! There was a machine to roll cigarettes, made by a company called Bonsack and first used by a Carolina tobacco farmer named James Duke -- the Duke of Duke University.
There was a machine to make matches, a machine to make flour Pillsbury got hold of that one , a machine to condense milk the Borden milk company had the exclusive rights , a new method for making steel the Bessemer process , and a machine for canning soup first used at Campbell's.
Once new machines were invented, somebody had to invent more machines to make the new machines, plus parts and tools to repair them. Instead of machines putting people out of work, as many critics of the machine age had predicted, they actually created work. For every job lost to a hunk of metal, a couple of jobs were opened up.
And with each advance in the sophistication of machines, the work got easier. Factory-made goods were cheaper to produce than handmade goods, and in many cases they were superior to handmade goods, or at least the quality was more consistent. Cheaper goods could be sold more cheaply to the customers, who got more and more for their money whenever an industry was mechanized.
The Growth of National Brands When the twentieth century rolled around, there was a thriving snack-food industry, with all sorts of jellies, jams, biscuits, candies, and chewing gum being produced and distributed nationwide by companies that sold stock on the stock exchange. You could eat these things and invest in these things.
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The Big Secret for the Small Investor. Joseph Taglieri. The New Market Wizards. Jack D. The Warren Buffett Way. Robert G. The Buffettology Workbook. Mary Buffett. The Intelligent Investor, Rev.
Benjamin Graham. The New Buffettology. Nassim Nicholas Taleb. This Time Is Different. Carmen M. The Snowball. Alice Schroeder. The Richest Man in Babylon. George S. Unlimited Power. Tony Robbins. Robert B Cialdini PhD. The Power of Habit. Charles Duhigg. Laura Vanderkam. The Wealthy Barber Returns: David Chilton. Carol S. Thinking, Fast and Slow. Daniel Kahneman. Think and Grow Rich Rediscovered Books.
Napoleon Hill. How to Stop Worrying and Start Living. Dale Carnegie. The 4-Hour Workweek, Expanded and Updated. Timothy Ferriss. Philip A. The Black Swan: Second Edition. Ray Dalio. Investing QuickStart Guide. Ted D. Steve Jobs. Walter Isaacson. Millionaire Teacher. Andrew Hallam.
The Money Game. Adam Smith. The Wealthy Renter. Alex Avery. Living Trusts for Everyone. Ronald Farrington Sharp. The Bogleheads' Guide to Investing. Taylor Larimore. Dan Brown. The List. Yuval Abramovitz.
The Manual of Ideas. John Mihaljevic.