Investment trusts reached peak popularity and systemic danger by selling at premiums higher than underlying stock values while creating complex pyramids of cross-ownership and hidden leverage. These 1929 equivalents of closed-end mutual funds bought stock on margin with funds loaned not by banks but …
A new brokerage industry enabling margin stock purchases allowed ordinary investors to buy corporate equities with only 10 percent down, borrowing the rest with stocks serving as collateral for loans. By August 1929, brokers routinely lent small investors more than two-thirds of the face value of …
President Abraham Lincoln signs the Pacific Railway Act, authorizing extensive land grants in the Western United States and the issuance of 30-year government bonds to the Union Pacific Railroad and Central Pacific Railroad companies to construct a transcontinental railroad. While the act becomes …
Congress passes the Legal Tender Act on February 25, 1862, authorizing the issuance of $150 million in United States Notes (popularly called “greenbacks” for their distinctive color) to finance the Union war effort after spiraling costs rapidly deplete gold and silver reserves. The …
The United States experiences its first major peacetime financial crisis as the speculative bubble in western land collapses, triggering the Panic of 1819 and a prolonged economic depression. The crisis directly results from the Second Bank of the United States’ reckless lending practices, …
Congress charters the Second Bank of the United States as a privately owned institution with a 20-year federal charter, five years after the expiration of the First Bank of the United States. President James Madison, who had opposed the First Bank as unconstitutional in 1791, now supports the Second …