The Day the Great Depression Ended
On this day in economic and business history ...
In most respects, April 28, 1942, was much like any other day of the Great Depression era for American markets. "The stock market lacked buying confidence today and leading issues retreated fractions of a point or more," wrote Associated Press journalist Bernard S. O'Hara. President Franklin D. Roosevelt's plan to limit personal incomes to an upper ceiling of $25,000 was greeted with a ho-hum response. When asked for his opinion, one stockbroker told The New York Times that "the President's message had just about the same effect as another sinking off the Atlantic Coast. Bad news has been discounted. Investment demand continues where it was, poor but reasonably steady."
No one knew it then, but that day was the last day of the longest, deepest slide in American market history. The Dow Jones Industrial Average finished April 28, 1942, at a closing value of 92.92 points. It was still 75% below an all-time high reached in the fall of 1929. At no time in those 13 years had the Dow reclaimed more than half the value it had lost from its 1929 peak of 381.17. But the very next day, the Dow began its recovery, and within weeks it had left single-digit territory behind for good.
The road back to a new peak would take years longer, as investors were forced to wait out the successful resolution of World War II, and the post-war spending recession besides. The Dow climbed on, through the remainder of the 1940s -- interrupted by a shallow bear market after the war's end -- and into the 1950s, when it finally broke through to a new high in 1954. From the first peak to the final deep valley, the Great Depression had ruined investors for more than a decade, and from that valley to a new peak it took more than a decade more. Markets eventually recover, but no one knows when.
We didn't really like you guys, anyway
Comcast walked away from an industry-shaking hostile bid to buy Disney on April 28, 2004. Originally valued at $66 billion when announced in February, the all-stock deal had dwindled to $48 billion by the time Comcast backed away. It was a long shot to begin with, as Disney's market cap, despite falling through the period from offer to withdrawal, was rarely below the value of Comcast's bid. Even on April 28, Disney was worth a hair more than $48 billion. Comcast blamed its retraction on Disney management. Could you blame them? Who in his right mind would sell the world's most famous entertainment company at less than market value?
The failed deal was a death knell to the tenure of Disney CEO Michael Eisner, already under fire from the Disney board over his bungling of a critical relationship with animation studio Pixar. Eisner had already lost his post as chairman of Disney's board, and he would leave the executive office in 2005. The deal would have created the world's largest entertainment company by a long shot, worth nearly $120 billion together by the time it was called off. However, neither party suffered much from the deal's failure -- in the nine years that followed, Disney's market cap more than doubled, and Comcast's rose by 60%. The two companies continue to battle for the title of "world's largest media company," with Disney in a very narrow lead at the nine-year mark. Both companies are worth roughly $110 billion, nearly as much as their proposed combined value in 2004. In some cases, failure can produce better results than success.
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