The Business Of America

By Bernard Baumohl and Valerie Merchant

1900s Financial institutions can't keep pace with the economy. The Panic of 1907 was one of many credit crunches that plagued the U.S. before it established the Federal Reserve.

1910s As powerful corporations emerge, the government becomes active in regulating them. The Standard Oil Trust is broken up. A War Industries Board manages production.

1920s Painful depression in 1920 and 1921. The downturn is immediately followed by unprecedented growth. By 1929, nearly every household in America has a car.

1930s The Great Depression decade. The Dow falls from a high of 381.17 in 1929 to 41.22 in 1932. National output drops 29%. Unemployment surges to 25%.

1940s The decade begins with economic and military mobilization. Jobs are available as factories churn 24 hours. The war's end gives rise to the IMF and the World Bank.

1950s The U.S. and the dollar reign supreme. The boomer economy fuels construction of homes, schools and highways. e bad news. mutual assured destruction (MAD).

1960s The cold war and the Vietnam War feed the military-industrial complex. This decade witnesses the longest period of sustained economic growth in U.S. history.

1970s The price is paid for excessive government spending in the '60s. Inflation hits double-digit figures. Interest rates take off, sending Wall Street into an ugly bear market.

1980s A crackdown on inflation brings the most painful recession (1981-82) since the Great Depression. Wall Street then goes wild until the Crash of '87.

1990s The cold war's end shifts resources from the military to civilian economy. Technological innovation spurs investment, job growth and productivity.

1900

COMPLEMENTS OF THE ECONOMY Manufacturing 37.9% Services 32.9% Agriculture 20.6% Government 8.6%

BEST-SELLING AUTO Oldsmobile (14 manufactured) PRICE $1,500 WORK REQUIRED TO BUY IT 47 MONTHS

Inflation Rate 0 U.S. Jobless 5% Home Ownership 46.7 Top Income Tax 0

1925

COMPLEMENTS OF THE ECONOMY Services 39 % Manufacturing 36.5% Agriculture 13.4% Government 11.1%

BEST-SELLING AUTO Model T Ford (1,643,295 manufactured) PRICE $660 WORK REQUIRED TO BUY IT 7 MONTHS

Inflation Rate 2.5% U.S. Jobless 3.2% Home Ownership 46.7% Top Income Tax 46%

1950

COMPLEMENTS OF THE ECONOMY Services 53.7% Manufacturing 28.5% Government 10.8% Agriculture 7 %

BEST-SELLING AUTO Chevrolet (1,420,399 manufactured) PRICE $1,450 WORK REQUIRED TO BUY IT 6 MONTHS

Inflation Rate 1% U.S. Jobless 5.3% Home Ownership 55% Top Income Tax 84%

1975

COMPLEMENTS OF THE ECONOMY Services 59.5% Manufacturing 21.8% Government 15.3% Agriculture 3.4%

BEST-SELLING AUTO Chevrolet Impala Caprice (421,684 manufactured) PRICE $4,631 WORK REQUIRED TO BUY IT 5 MONTHS

Inflation Rate 9.1% U.S. Jobless 8.5% Home Ownership 64% Top Income Tax 70%

TODAY

COMPLEMENTS OF THE ECONOMY Services 67.9% Manufacturing 17.4% Government 13 % Agriculture 1.7%

BEST-SELLING AUTO Toyota Camry (421,684 manufactured) PRICE $20,218 WORK REQUIRED TO BUY IT 6 MONTHS

Inflation Rate 1.5% U.S. Jobless 4.6% Home Ownership 66% Top Income Tax 39.6% ONE COMPANY'S JOURNEY

General Electric has been the world's most valuable company. In fact, it can serve as a proxy for the transformation of American business. A few highlights:

1900 The General Electric Co. is eight years old, the product of the merger of the Edison General Electric Co.-Thomas Edison's firm and the Thomson-Houston Co. It is a forced marriage: Edison was an inventing genius but no match for J.P. Morgan in finance. Edison would quit soon after.

1905 To increase the demand for electricity, GE begins to produce electric appliances, including the toaster and a lightweight iron.

1913 Introduces gas-filled incandescent lamp. Produces first practical X-ray tube, laying foundation for medical-technology division.

1919 GE creates Radio Corp. of America (RCA) to develop radio technology. Buys the British holdings in the Marconi Wireless Telegraph Co. of America.

1922 GE's radio station WGY in Schenectady, N.Y, begins regularly scheduled broadcasts, including that of the first U.S. radio drama, The Wolf.

1932 Divests RCA because of antitrust considerations. Creates the GE Credit Corp. to help sell appliances during the Depression.

1939-45 Broadcasts TV programs from New York's World Fair. War output quadruples revenues. Announces first line of TVs.

1950-59 Innovations include Lexan polycarbonate resin, a radar system for commercial airports, man-made diamonds. Enters the computer business.

1961 The government indicts GE and 28 other companies for price fixing and fines and penalizes the company heavily. Three GE executives sentenced to jail.

1971 Exits computer business by selling to Honeywell.

1976 Buys Utah International, a natural-resource company, for $2.2 billion (largest corporate purchase to date). Sells it eight years later.

1981 John E Welch Jr. becomes CEO and begins to decentralize management. GE will buy nearly 350 businesses and sell more than 230.

1984-86 Sells housewares operation to Black & Decker for $300 million. Buys RCA, including NBC, for $6.4 billion. Acquires an 80% interest in Kidder, Peabody for $600 million.

1987-89 Swaps GE/RCA Consumer Electronics (TVs and VCRs) with Thomson of France for CGR, a medical diagnostic imaging company. NBC launches cable-TV network CNBC.

1990-94 Buys Tungsram, a lighting maker, from Hungarian government. Sells aerospace business (except jet engines). Sells Kidder, Peabody.

1998 GE is expected to have revenues of $101.4 billion, and net income of $9.3 billion. Its divisions: aircraft engines, appliances, industrial, information services, lighting, medical, power, plastics, transportation, capital services and NBC.

Text by Bernard Baumohl and Valerie Merchant