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Quote of the Day

 

“It’s a rare business that doesn’t have a way worse future than it has a past.”

-Charlie Munger

 

 

February 20th – This Day in Stock Market History

February 20th, 1795 – Robert Morris, financier of the American Revolution, creates the North American Land Company.

Morris was very wealthy, and personally paid more than 10 million pounds of his own money to George Washington’s army during the Revolutionary War. After the war, Morris became heavily invested in real estate, and pooled his land with James Greenleaf and John Nicholson on this day in 1795 to form the North American Land company. The company would be one of the largest land trusts in history, holding a total of 6 million acres of land in the District of Columbia, Georgia, Kentucky, North Carolina, Pennsylvania, South Carolina, and Virginia.

north american land company stock certificate. Image from Seth Kaller
North American Land Company stock certificate. Image from Seth Kaller

Morris would offer 30,000 shares of stock to the public for $100 each. The company was similar to today’s Real Estate Investment Trusts (REITs), investors were promised a 6% yield, and a complete return of their capital when the property was sold.

By 1797 the North American Land Company owned more land in America than any other individual or company. But the Panic of 1797 led to credit markets drying up. Morris was unable to get new loans to finance his business, and despite his vast property holdings, had no cash to repay his creditors.

Morris would end up in debtors prison until the US Bankruptcy act of 1800 was passed that would get him out of prison.

 

February 20th, 1959 – The Dow Jones Industrial Average closes above 600 for the first time.

Chart from Macrotrends
Chart from Macrotrends

The milestone came in a time of relative calm between two cold war era crises. 1957 saw the launch of Sputnik, and America’s slow entry into the space race that led sharp declines that the market would not recover from until 1958. Then the early 60s saw the Cuban missile crisis, which would lead to another 20+% decline in stocks.



Best February 20th in Dow Jones Industrial Average History

1899 – Up 3.09%, 1.47 points.

 

Worst February 20th in Dow Jones Industrial Average History

1933 – Down 3.18%, 1.78 points.

 

 

Read of the Day

There is another famous Real Estate company from the revolutionary war era, the Dismal Swamp Company. The company was started by William Byrd and whose story is told in the book The Fabulous History of the Dismal Swamp Company: A Story of George Washington’s Times

 From historian Charles Royster–winner of the Francis Parkman, Bancroft, and Lincoln prizes–comes the history of one of eighteenth-century America’s most fantastic land speculation deals: William Byrd’s scheme to develop 900 square miles of swamp on the Virginia-North Carolina border and create fabulous wealth for himself and other shareholders, including George Washington.

Royster scrupulously follows the paper trail through the byways of transatlantic deal-cutting, providing a rare view of early American economic culture.  Elegantly written and impressively researched, The Fabulous History of the Dismal Swamp Company is an eye-opening account of greed, folly, and venture capitalism in the revolutionary era.

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