Virginia, Pennsylvania, Delaware, Massachusetts about— wait a second, their bonds are selling for 30 cents. Our bonds are selling for 80. How is this all going to work? But we made it through that.
Then we had several depressions. They call them panics. We do that in the stock market. When the stock market goes down 10 %, we call it a correction. Like, oh, I thought I lost a lot of my money, but that’ s just a correction. So, this is called a panic. We had several of those panics and then we had the Great Depression, and I never understood that adjective“ great” in front of depression. It could have been miserable, terrible, chronic; I mean“ great” just doesn’ t seem to apply. But we had the Great Depression. And we have had 13 recessions since the Great Depression, and we got through them relatively fast. We’ ve never had another depression. What’ s happened? What’ s happened in this country? And that’ s what finance is about. And a lot of it has been achieved by our Congress.
In 1913, we started the Federal Reserve. We have a bank looking over all the banks and they sort of dropped the ball in the depression. They raised rates, but everybody’ s entitled to a bad start. But really important things happened in the 1930s. Imagine the FDIC in 1934. Imagine if your bank goes under and you don’ t have your money. That’ s kind of scary. The FDIC has been an incredibly successful program. No one has ever lost a dime in a bank since 1934. Maybe in bank stocks, but not in the bank itself. So, I love banks. Not all the bankers, but I love banks.
The SEC went into business in 1934. The Securities & Exchange Commission looks at securities; this is a thing preventing fraud. There were so many bad things going on in the 1920s. People say the stock market caused the depression. In 1929 the market went down, but less than 1 % of Americans owned stocks. The economy was out of control. It was just a bag of gas and it all exploited; it had nothing to do with the stock market. So, in 1934, we started the SEC. They got Joseph P. Kennedy— a stock market guy who knew all the nasty and good parts of it and was President Kennedy’ s father— to run the SEC.
But even more important than that, the next year we started Social Security. What a great deal. People used to retire older and then move in with their kids, and the kids had to stop spending. It just didn’ t work. 71 million Americans are going to get a check this week from Social Security. Spectacular program. We also the same year set up an even better one; it’ s called unemployment compensation. It’ s paid for by companies. If you get laid off, you get a check for 6, 9, 12 months. I mean, these are all great buffers. That’ s why we’ ve had all these recessions and they go away. And this is a great tribute to our Congress; great progress from our business world.
And then we started Fannie Mae, Freddie Mac, Sallie Mae. People can buy houses with 5 % down. We’ re talking buying a house in the 1950s for $ 6,000 or $ 7,000, and 30 years later, it’ s worth $ 80,000 or $ 90,000 and you pay off the mortgage. Whereas a person three blocks to the right is paying rent that’ s gone up over 33 years. I mean, these are brilliant programs. Consuelo [ Mack ] and Bob [ Pisani ] talked about financial literacy. It’ s incredible how little people know about all these wonderful things that exist to help all of us— whether you’ re Warren Buffett, Charlie Munger or a 12-year-old living in Newark.
And then there’ s a lot of fear now about AI— how AI is going to ruin the world. There’ ll be no jobs. In fact, it was funny, I was on a call the other day with the CEO of a company. It was so embarrassing; he was calling it“ A1” several times. I’ m like,“ That’ s a steak sauce!” One of my 11-year-old grandchildren was standing right there, and she knows what artificial intelligence is. She’ s all over it! Anyway, don’ t be afraid of artificial intelligence. In 1984, we split up AT & T. There were 100 million employees in America, and AT & T had one million of them. Since then, the amount of business with cell phones and data and texting and videos has gone up 50-fold. T-Mobile, Verizon and AT & T today have 3.25 million employees. They’ ve gone from one million to 3.25 million. We’ ve gone from 100 million jobs to 158 million jobs. People said it’ s going to be all over when this company breaks up. People have such fear, but it’ s such a great country. Dick [ Gephardt ] mentioned the reasons why people want to come here. It’ s a spectacular place to be.
And then I want to talk about small business. There are 35 million small businesses in America with less than 500 employees. They employ 61 million Americans. That’ s up 15 million in the last 15 years. That’ s where the real growth in the country is. Some of these grow larger; some stay the same. And where do they get their money? From a local bank. [ Nike founder ] Phil Knight went to a local small bank in Oregon to finance his inventories and his receivables. Nike’ s done pretty well. There was a bank involved there. Mortgages come from banks. Loans come from banks. They take deposits and turn them into loans. And it’ s so important that all this occurs. And then once companies get larger and when they go public, then institutions like Fidelity and pension funds and college endowments can invest in them. But they have to get going.
Look at all the successful companies we know today. They all started very small, with their own money and they borrowed some money. When they get large enough, they can go to venture capital firms or buyout firms. But they need to start. And that has made our country fantastic. And this Museum is so important. I mean, they literally had a poll one time. They asked 100 people in their 30s what the Federal Reserve was. And the vast majority thought it was a very expensive bourbon.
We’ ve got to get the word out. Finance is so important. It makes such a difference for everyone. Whether you’ re starting to get a job or whether you’ re retired, finance is important and it’ s not appreciated. It’ s not understood, [ and that’ s ] what this Museum is doing. I’ m so excited to learn about it and talk about it and just think about what public companies have achieved. Companies like Home Depot, TJ Max and Costco. They’ ve lowered costs to people, with better products, and they’ ve made money for shareholders. Everybody’ s won.
And it’ s important now to know about stocks, know about investing because two generations ago you worked at a Xerox, IBM or US Steel, and you got a pension fund. You got X amount of your salary for the rest of your life. Those don’ t exist anymore. If you don’ t save, and you don’ t know where you’ re putting your money, you’ re going to have a problem down the road. So, it’ s kind of interesting that we finished with public companies because exactly next year it’ ll be 400 years since Peter Minuit with the Dutch West Indies Company— a public company that you could have bought shares in 400 years ago— bought this island for 60 guilders, or $ 24, from the Native Americans. That was a very successful public company.
I’ m so honored to be here tonight and the Museum is a great thing we have here. Let’ s get it a lot bigger. Thank you.
www. MoAF. org | Spring 2025 | FINANCIAL HISTORY 9