There are a lot of new gravestones in the Memorial Garden with some intriguing stories to them. It makes me wonder: are we living “Economic History 2, the Sequel”? Check out these stories.
South Sea Company
The South Sea Company was best known for spinning stories about future deals to inflate the value of its stock. They succeeded: shares rose 1,000% in one year. When the bubble burst, many people who bought on credit went bankrupt while others began selling short. The government stepped in to restore confidence but the crisis had severely damaged the credibility of the country’s leadership. Year: 1720
Dent & Company
Dent & Co. financed major economic and business development projects in Asia. When a major lender that financed Dent went broke, there was a run on the banks. Dent & Co. got trampled. Year: 1867
Lexington Motor Company
This mid-west auto manufacturer went broke as the result of a major recession. Year: 1923
Tucker Corporation designed and sold cars. The SEC took the company to trial over questionable business practices. Although Tucker was found innocent, lawsuits from dealers and customers piled up and the company was forced to close. Year: 1948
Peruzzi was once the second largest bank in Europe. It was destroyed by making too many risky loans. This was before TARP and bank bailouts became fashionable. Year: 1345
Fortunately there is a happy ending. Many years later, Peruzzi was reincarnated as a successful consumer products company when ancestors of Peruzzi came to America in the late 1800s and founded Planters Nut Company. Planters was subsequently acquired by Standard Brands, who was acquired by Nabisco Brands, who was acquired by Kraft Foods.
Moral of the story: Let’s add The History of Failed Corporations as a required class in business school. And while we’re at it, perhaps we should let banks fail, just like Peruzzi. They might just reappear as sellers or manufacturers of tangible goods. But we must be patient. If history repeats itself, as with Peruzzi, it might take 500 years.