The Dow's Greatest Day, and the First Mobile Carrier
On this day in economic and business history ...
The Dow Jones Industrial Average came the closest it ever has (so far) to a 1,000-point daily change on Oct. 13, 2008, when euphoric investors swarmed into the markets after a rare bit of good financial news. The index closed up 11.1% with 936 points gained, marking both the largest percentage gain since 1932 and the largest point gain of all time, a nominal record outdistancing one last set in the spring of 2000 by more than 400 points.
The day's gain, worth $1.2 trillion in new market value -- also a record -- was perhaps driven by selling exhaustion as much as by general optimism. Volume on the New York Stock Exchange was only 60% as large as it had been during the prior trading day, but that day had set its own all-time record for volume, so quite a few shares still managed to exchange hands.
It was news out of Europe that the continent's banks would be backstopped -- as American banks had been by the recently passed Emergency Economic Stabilization Act -- that planted seeds of a rally. Details on the American act's TARP bailout mechanism gave it plenty of fertilizer to grow. Indexes around the world soared along with the Dow, with Japan's Nikkei outdistancing its American counterpart by the middle of its trading day. Markets certainly needed the relief, as the Dow had fallen both for eight consecutive weeks and for eight wretched days in a row, losing 22% of its value in the process as credit markets locked up around the world.
Nothing was ultimately solved on Oct. 13, and the markets certainly didn't start a sustained recovery after the day's huge pop. The Dow finished October -- a shockingly volatile month in which the average trading day moved the index by 3.8% in one direction or the other -- slightly lower than its Oct. 13 close, and by the end of November the index was 6% lower than its Oct. 13 close. The Dow continued to spasm wildly for several months before finally collapsing to its ultimate low point the following March.
The start of a legendary career
Thomas Alva Edison is frequently considered one of the greatest inventors in American history, and with more than 1,000 patents to his name, he is at least one of the most prolific. But all those inventions had to follow Edison's first: the electrographic vote recorder, for which the 21-year-old Edison first filed a patent on Oct. 13, 1868. That day is thus the unofficial "day one" of Edison's inventing career.
In his lifetime, Edison not only obtained 1,093 patents, but he also filed as many as 600 more patents that were never approved. True to his reputation, the vast majority of Edison's patents involve electric devices or electric transmissions, but his wide-ranging intellect also focused on construction and mineral extraction -- the Rutgers University Edison Project records about 50 patents apiece in the fields of cement and mining.
Edison used his patents to create several notable companies, including the antecedents to and and the first motion-picture trust, all of which had outsized influence on the later development of their industries. For all his seemingly boundless capacity for innovation, Edison never became an uber-wealthy captain of industry like those who had instead focused relentlessly on gaining market share within a particular industry. At the time of his death in 1931, Edison's estate was valued at approximately $12 million, equal to about $185 million today. However, the economic fruit of Edison's inventions had been estimated by the United States Congress to be worth nearly $16 billion just three years before his death, implying that the Wizard of Menlo Park captured less than one-tenth of 1% of the value he created during his lifetime.
Mobile revolution's ground zero
The first mobile phone ever sold hit the market in March 1983, but it took another seven months for the first mobile-phone service to begin, which finally occurred on Oct. 13, 1983. That day, Ameritech Mobile president Bob Barnett inaugurated his company's new service at a promotional event in Chicago's Soldier Field, where he used the original Motorola "Brick" cell phone, the DynaTAC, to call Alexander Graham Bell's nephew.
The service, at $50 a month with no minutes (they cost about a quarter per minute during off-peak hours), was not for the average consumer, nor was the Brick, an ungainly thing that cost more than most computers sold for during that period. However, demand for a constant connection among America's elite was high enough that, according to The New York Times' coverage of the event:
By the end of next year, a number of companies are expected to offer cellular telephone service in the nation's 30 largest metropolitan areas, including New York City. It will mean that in those cities, there will be no practical limit on the number of people who will be able to make calls simultaneously from their cars. Under present systems, in New York and Chicago, for example, only a dozen calls can now be made by mobile phones at the same time.
Ameritech Mobile has estimated that it will have 5,000 customers on line in a 2,500-square-mile area of Chicago by the end of this year, and as many as 12,000 customers by the end of 1984.
Robert L. Barnett, the concern's chairman, predicted that within three to five years, there will be 100,000 potential customers in the Chicago area.
By the end of 1984, the world had 320,000 cellular subscribers, and the United States led the way with 92,000. Five years later, shortly after Motorola launched the world's first flip phone, there were 7.3 million global cellular subscribers, with 3.5 million in the United States. Ameritech continued for another decade as an independent mobile carrier. By the time it finally merged with current-day AT&T progenitor SBC Communications in 1999, the domestic cellular industry Ameritech created had grown by almost 60% per year for 15 straight years, reaching a total of 86 million subscribers. You can't sign up for Ameritech service anymore, but at least one person still has it: David Contorno holds a Guinness world record for the oldest mobile number in the world, having first signed up for Ameritech's service (which he purportedly still uses) in the summer of 1985.
The cellular industry can now credibly claim to be the fastest-growing and most pervasive new service industry in the world. The total number of cellular subscribers worldwide is set to match or exceed the total number of people on earth in 2014, just three decades after Bob Barnett's first call.
The real winner of the mobile explosion
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The article The Dow's Greatest Day, and the First Mobile Carrier originally appeared on Fool.com.
Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter, @TMFBiggles, for more insight into markets, history, and technology.The Motley Fool owns shares of General Electric. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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