Rise And Rise Of Dhirubhai

Rise And Rise Of Dhirubhai Dhirubhai once said: Our dreams have to be bigger, our ambitions higher, our commitment deeper and our efforts greater. This is my dream for Reliance. In fact, this is my dream for India. Indeed Dhirubhai has been successful in bringing his dream to reality. From a humble beginning, Dhirubhai Ambani was successfully able to build up the largest Business conglomerate in India in a span of just 25 years. Today, the turnover of Reliance Industries forms 3% of the entire GDP. This tremendous growth in such a small time is the result of the large amount of hard work, dedication and excellence that Dhirubhai Ambani brought in to the culture of Reliance Industries. As they say, there are two sides of the coin. While there is no doubt that Dhirubhai Ambani was a highly intelligent and dedicated manager, he was not perfect, in the right sense. For a long time Dhirubhais ethics have been a matter of debate. While some consider him as a shrewd businessman, the others dont approve of certain things he did. History Dhirajlal Hirachand Ambani was born on 28th December 1932, in Chorwad Gujarat into a Modh family of moderate means. He was the second son of a school teacher. Right from childhood Dhirubhai was precocious and highly intelligent. He was highly impatient of the oppressive grinding mill of the school classroom. Chose work that used his physical ability to the maximum rather than cramming school lessons. At the age of 16, Dhirubhai moved to Aden, Yemen. He worked there as a clerk for A. Besse Co. For two years. Later he was promoted to manage the companys oil filling station at the port of Aden, when A. Besse became the distributors for Shell. Ten years later, Dhirubhai returned to India and started a business Reliance Commercial Corporation with a capital of Rs. 15000.00. The primary business of Reliance Commercial Corporation was import polyester yarn and export spices. The business was setup in partnership with Chambaklal Damani, his second cousin who was also there with him in Aden. The first office of Reliance Commercial Corporation was set up in Narsinathan Street at Masjid Bunder. It was a 350 sq. Ft room with a telephone, one table and three chairs. Initially they had two assistants to help them in their business. In 1965, Chambaklal Damani and Dhirubhai Ambani ended their partnership and Dhirubhai started on his own. It is believed that both had different temperament and a different take on business. While Mr. Damani was a conscious trader and did not believe in building yarn inventories, Dhirubhai was a known risk taker and he considered that building inventories with anticipating a price rise and making some profit is good for growth. During this period, Dhirubhai and his family used to stay in a one bedroom apartment in Bhuleshwar. In 1968, he moved from the chawl to an upmarket apartment at Altamount Road, in South Mumbai. His first car was a premier Padmini. In 1970s he bought a white Cadillac car. Dhirubhai started his first textile mill in Naroda in the year 1966. Textiles were manufactured using polyester fibre yarn. Dhirubhai started the brand Vimal, named after his nephew. Extensive marketing of the brand in the interiors of India made Vimal a household name. Franchised retail outlets were started to sell only Vimal brand of textiles. In the year 1975, a technical team from the World Bank, visit this unit and certified it as excellent even by developed country standards. Banks and financial institutions repeatedly turned him down when he needed money the most. He was just not in the same league as other businessmen of his time. This made him an out of the box thinker. Dhirubhais first public offering of 28.2 lakh equity shares in the then Reliance Textiles in November 1977 was oversubscribed nearly seven times. The issue fetched him Rs 3 crore, a big sum by the standards of those days. Between 1979 and 1982, Reliance made four debenture issues. In 1979 it was for a worsted mill; in 1980, for modernising its textile mill; in 1981, to manufacture polyester filament yarn at Patalganga. In 1982, he topped it all with a record Rs 50-crore issue for expansion and diversification. Dhirubhai treated his shareholders like family members. Such royal treatment endeared him to his investors, says Kisan Ratilal Choksey, Chairman of KR Choksey Shares and Securities, a leading Mumbai brokerage firm. Dhirubhai understood the power of equity funding for his mega projects, says Devesh Kumar, Managing Director of Centrum Broking. In that sense, he was a visionary, way ahead of his times, and an out-of-the-box thinker, he adds. He always made sure that the investors got returns commensurate their investments. Marriages, businesses, studies abroad of the investors have been said to be financed by Reliance. He coined the term Mega Issue. His faith in retail investor also gave a leg up to BSE and its 30-share sensitive index, Sensex. Lured by Reliances power to deliver dividends and higher stock prices, thousands flocked to the market. Dhirubhai was a visionary, because he looked at the future a future he knew he may not even be around to enjoy. But that what propelled him and his stakeholder benefited from his search for a better future. In 1982 Ambani began the process of backward integration, setting up a plant to manufacture Polyester filament yarn. He subsequently diversified into chemicals, gas, petrochemicals, plastics, and power and telecom services. RIL bought IPCL from the government of India to become Indias largest petrochemical player.   After the launch of the refining arm of reliance, Reliance achieved a huge cashflow position and has never looked back. Mukesh Ambanis statement that RIL will be like a makoda where even if a few legs are hurt, the organism will be hale and hearty and not stop its march forward. Behind the Scenes Despite his affability, some of his old colleagues describe Dhirubhai as a dark character-not just because of the darkish skin he inherited from his father-but for the ambition and risk taking he hardly concealed. He exported spices, often at a loss, and used replenishment licenses to import rayon. Later, when rayon started to be manufactured in India, he exported rayon, again at a loss, and imported nylon. Ambani was always a step ahead of the competitors. With the imported items being heavily in demand, his profit margins were rarely under 300 percent In the 1950s the Yemini administration realized that their main unit of currency Rial was in disappearing. After investigating the matter it was realized that all Rials were routed to the Port City of Aden. There a young man in twenties was placing unlimited buy orders of Yemini Rials. During those days the Yemini Rial was a pure silver coin and was much in demand at the London Bullion Exchange. Young Dhirubhai would buy Rial, melt it in pure silver and sell it to bullion traders in London. Reliance expanded its equity base through frequent rights and bonus issues to shareholders, while financial institutions converted 20 per cent of their loans into equity in September 1979. But the use of convertible debentures catapulted Dhirubhai Ambani into the big league in the capital markets. Dhirubhai had anticipated the governments policy with regards to the convertible debentures and the Series I issue of partially convertible debentures by Reliance in October 1979 raised Rs 70 million. Although Reliance was not alone in trying the long disused instrument but from late 1980 the issues of partially convertible debentures coming from Reliance in quick succession, raising Rs 108 million in September from its Series 11 and Rs 240 million from its Series 111 the next year, and Rs 500 trillion from Series IV in April 1982. Dhirubhai capped that by obtaining from Sen Gupta clearance to do what should normally be legally impossible: converting the non-convertible portions of the four debenture issues into equity. This proved to be a master stroke. By this method, dubbed a brilliant and unconventional move by many, Dhirubhai-Reliance was able to chop Rs 735 million off its debt book in 1983, and turn it into comparatively modest equity of Rs 103 million, while reserves were raised by Rs 632 million. Instead of an annual interest bill of Rs 96.5 million on debentures, the dividend burden from the extra equity was only around Rs 36 million. This transmutation allowed Reliance to continue raising more quasi-debt, with its E Series of partially convertible debentures in October 1984 which raised another Rs 800 million. This reduced the debt equity ratio and further increased the attractiveness of the Reliance stock which was becoming an outperformer on the Indian Stock exchanges. Reliance always used to persuade the regulators with respect to its debenture issues. This did not mean that all its issues were approved without any hurdles. All questions being raised were not disposed of by Reliances policy of SALAM. On one occasion, the regulator rejected the premium that Reliance was seeking to put on an issue, on the ground that projected profitability had not been indicated. Without a pro-forma balance sheet for the current year-an extension of results to date-it could not be accepted. In 1982, Dhirubhai created waves in the stock markets when he took on a Kolkata-based cartel of bear operators that had sought to hammer down the share price of Reliance Industries. The cartel badly underestimated the Ambani ability to fight back. Not only did Dhirubhai manage to ensure the purchase of close to a million shares that the bear cartel offloaded, he demand physical delivery of shares. The bear cartel was rattled. In the process, the bourses were thrown into a state of turmoil and the Bombay Stock Exchange had to shut down for a couple of days before the crisis was resolved. After this incident many questions were raised by the press. People could not understand that how; a yarn trader till a few years ago was able to raise such a huge cash flow in the time of crisis. The answer stood in a story detailed how companies registered in the tax haven, Isle of Man, with ridiculous names like Crocodile Investments, Iota Investments and Fiasco Investments had purchased Reliance shares at one-fifth their market prices. Curiously, most of these firms were controlled by a clutch of non-resident Indians who had the same surname, Shah. Yet another article detailed how the group had been the beneficiary of a loan mela a number of banks had loaned funds to more than 50 firms that had all purchased debentures issued by Reliance Industries In 1993, Reliance was in the bidding for several oilfields in the Arabian Sea. The government oil search corporation had discovered the fields but did not have the funds to build the huge production rigs, gas compressors and pipelines that were needed. Several contacts among rival bidders were alleging that the tender was being rigged in favour of Reliance. Indian politicians and bureaucrats are masters at tilting an open and transparent tender into a one-horse race, by techniques such as keeping the weighting of bidding factors uncertain or secretly promising later concessions to compensate for underbidding. In the event, Reliance swept the field, and a director with one of the losers told me: We were shafted, and for the wrong reasons. Corporate Rivalry Reliance frequently, routinely, put any criticism or opposition to its actions down to motives of envy or a desire to pull down anyone achieving success. Throughout every crisis caused by exposure of alleged manipulations, its publicity took on a self-pitying Why is everyone always picking on us? tone. But the record tends to show that it was Dhirubhai and Reliance who often made the first move to put a spoke in a rivals wheels, whether it was Kapal Mehra of Orkay Silk Mills, Nusli Wadia of the Bombay Dyeing Group or, latterly, the Ruias of the Essar group. Coincidentally with disputes with Reliance, various rivals were hit with government inspections, tax problems, unfavourable press reports and physical attacks. The mid-eighties were a period during which the Reliance group got locked in a bitter turf battle with Bombay Dyeing headed by Nusli Wadia. The two corporate groups were producing competing products Reliance was manufacturing purified terephthalic acid (PTA) and Bombay Dye ing, di-methyl terephthalate (DMT). Wadia lost the battle and reportedly became the source of information for many of the articles against the Ambanis that subsequently appeared in  The Indian Express. In 1985, the Mumbai police accused a general manager in a Reliance group company of conspiring to kill Wadia, a charge that was never established in a court of law. Many years later, a newspaper owned by the Ambanis would accuse Wadia of illegally holding two passports and played up the fact that he was Mohammed Ali Jinnahs grandson. Year 1986 was a crucial one for Dhirubhai. He suffered a stroke in February that year. A few months later, the  Express  began publishing a series of articles attacking the Reliance group as well as the Indira Gandhi regime for favouring the Ambanis. These articles were co-authored by Arun Shourie who, ironically, later as Union Minister for Disinvestment in the Atal Behari Vajpayee government, presided over the sale of 26 per cent of the equity capital of the former public sector company, Indian Petrochemicals Corporation Limited (IPCL), to the Reliance group. By gaining managerial control over IPCL, the Reliance group would now be able to dominate the Indian market for a wide variety of petrochemical products. Ramnath Goenka, once a friend of Dhirubhai, and owner of The Indian Express was also considered to be close with Nusli Wadia. On many occasions, Ramnath Goenka tried to intervene between the two warring factions and bring an end to the enmity. As the days passed by The Indian Express carried a series of articles against Reliance Industries and Dhirubhai in which they claimed that Dhirubhai was using unfair trade practices to maximise the profits. As Reliance had a close relationship with The Indian Express, Ramnath Goenka did not use his staff at the Indian Express to investigate the case but assigned his close confidant, advisor and chartered accountant S. Gurumurthy for this task. Apart from S. Gurumurthy, another journalist Maneck Davar who was not on the rolls of Indian Express started contributing stories. The end to the tussle came only after Dhirubhai Ambani met with a stroke. While Dhirubhai Ambani was recovering in San Diego, his sons Mukesh Ambani and Anil Ambani managed the affairs. The Indian Express had turned the guns against Reliance and was directly blaming the government for not doing enough to penalise Reliance Industries. The battle between Wadia Goenka and Ambanis had become so big that it became a national crisis. It was not as if Indian politicians had not helped other industrialists in the past. However, the difference in the business-politics nexus at that time lay in the fact that by the time the Reliance groups fortunes were on the rise, the Indian economy had become more competitive. Thus, it was not enough for those in power to promote the interests of a particular business group. It became necessary to simultaneously put down the competition. Managing the Environment Dhirubhai, more than many of his fellow industrialists, understood and appreciated the importance of managing the environment, a euphemism for keeping politicians and bureaucrats happy. Ideas are no ones monopoly. Those who criticise me and Reliances growth are slaves to tradition, if not to outright conservatism and complacency; the criticisms were put down to jealousy. But the same Man also felt you have to sell your ideas to the government. Selling the idea is the most important thing, and for that Id meet anybody in the government. I am willing to salaam anyone. His willingness to salaam anyone and his cultivation of junior staff and newcomers had by the early 1980s created a huge network of friends in politics, government ministries and financial circles. Earlier, goodwill had been cemented by gifts of the famous suit-lengths of material. After the float of Reliance in 1977, Dhirubhai was able to allocate parcels of shares or debentures from the promoters quota of any issue, wit h a profit virtually guaranteed by the gap between issue and market prices or by the prospect of conversion. He made no secret of the fact that he did not have an ego when it came to paying obeisance before government officials be they of the rank of secretary to the Government of India or a lowly peon. It is hardly a secret that Dhirubhais support base would easily cut across political lines. Very few politicians have had the gumption to oppose the Ambanis, just as the overwhelming majority of journalists in the country preferred not to be critical of the Reliance group. The Indian media, most of the time, has chosen to lap up whatever has been doled out by the groups public relations executives. The bureaucracy too has, by and large, favoured the Ambanis, not merely on account of the fact that many  babus have got accustomed to receiving expensive hampers on the occasion of  diwali. Indira Gandhis return to power opened a golden period for Dhirubhai Ambani. In 1979, his company barely made it to the list of Indias 50 biggest companies, measured by annual sales, profits or assets. By 1984, Reliance was in the largest five. Dhirubhai himself had become one of the most talked and written about persons in India, gaining a personal following more like that of a sports or entertainment star than a businessman. It was also the period when Dhirubhai made the most rapid part of his transition, in the bitter words of a senior non-Congress politician in 1996, from supplicant-the most abject kind of supplicant-to influencer and then to controller of Indian politics. Dhirubhai A legend People close to Dhirubhai said that there were three Dhirubhai Ambanis. One was unique, larger than life, a brand name. He was one of the most talked about industrialists, and for Gujarati people he has tremendous emotional and sentimental appeal. He is their ultimate man, and has inspired many emulators. The second Dhirubhai Ambani is a schemer, a first-class liar, who regrets nothing and has no values in life. Then there is the third Dhirubhai Ambani, who has a more sophisticated political brain, a dreamer and a visionary, almost Napoleonic. People always getting the three personalities mistaken. Dhirubhai was one man who tried to look beyond the obvious, who dared to dream and dared to achieve his dream. He did not let anything stop him. No restriction was strong enough to stop Dhirubhai Ambani. Whether what Dhirubhai has been claimed to do, he actually did or not, there is certainly no denying the fact that there is no businessman in India who attracted as much adulations as he did. He was more than a legend in his lifetime. He successfully convinced 4 million middle class households to invest their hard earned savings in Reliance Industry Groups. He fondly referred to his shareholders as family members and conducted annual shareholder meetings in the atmosphere of large melas attended by hordes. Dhirubhai Ambani was different man to different people. To his millions of investors, who had seen their share prices multiply, he was a business messiah. To one writer, he was a Frankensteins Monster created by Indias experiments with close government control of the economy. The strictly controlled import licences given to registered exporters of textiles, allowing import of raw materials worth a certain percentage of their export earnings. Like many others, Dhirubhai realised that these import or replenishment licences (known as REPS) were as good as money, even though some of them were officially not transferrable and imports had to be made by the actual user of the materials. By paying higher margins than any other traders, Dhirubhai soon became the main player in the market for REP licences. The margins were tiny in the trade itself but his dominance also put him in the position of being able to turn on and off much of the supply of yarn into the Indian market. Conclusion Dhirubhai Ambani built his company through outstanding abilities and drive on many fronts: as an innovative financier, an inspiring manager of talent, an astute marketer of his products, and as a forward-looking industrialist. The energy and daring that showed itself in his early pranks, practical jokes and trading experiments developed into a boldness and willingness to live with risk that few if any other Indian corporate chiefs would dare to emulate. His extraordinary talent for sustaining relationships, and sometimes impressing men of standing, won him vital support from both governments and institutions. The dark side of his abilities was an eye for human weakness and a willingness to exploit it. This gained him preferential treatment or at least a blind eye from the whole gamut of Indian institutions at various times.

Free Trade and the Economy of Canada Essay example -- Economics Global

Free Trade and the Economy of Canada Free trade is the act of exchanging goods or services between countries for minimal tariffs or fees. Between countries, this is a method of exchange that is gaining more and more popularity. By importing and exporting for low fees, free trade is an efficient way to cover up weaknesses in the country and gain on strengths. Free trade is a very controversial topic that is viewed upon differently by many people in many different countries. Some oppose free trade; they feel it will cause production losses or low employment in their country. Many countries also embrace it and believe it helps create a strong and healthy nation. They join in free trade organizations or draft free trade agreements with other countries to try and capitalize on the potential benefits. In Canada, free trade with other countries is embraced and as a direct result, both business and consumers experience great economic and social prosperity. Ask any economist and they will tell you one of their main principles, which they rely on as if it were a verse from the bible, is: â€Å"free trade makes everyone better off (Mankiw, Kneebone, McKenzie & Rowe 9). To explain this, the terms opportunity cost and comparative advantage must first be defined. The opportunity cost of an item is whatever that must be given up to attain that item (Mankiw, Kneebone, McKenzie & Rowe 53). For instance, if you are a farmer and decide to harvest corn all today, you are deciding not to feed the chickens or milk cows. Thus, the opportunity cost to attain corn would be the milk or eggs that you cannot gather. When producing goods, each country has an opportunity cost for an item. They cannot produce every single item they want; some good must be given up in order to attain other goods. For example, Canada may have the decision on whether they should allocate resources to manufacture 500 computers or 1 car. The opportunity cost for one computer wou ld be the number of cars that can be produced divided by the number of computers that can be produced, which is 0.002 cars. Alternatively, the opportunity cost for one car would be the number of computers divided by the number of cars, which are 500 computers. Consider also, for instance, that another country, Japan, could produce 1000 computers for every 1 car. Then, Japan’s opportunity cost for computers would be 0.001 cars. When com... ...her developed countries. Free trade must be continually embraced in Canada for businesses and consumers to continue enjoying the high economic and social prosperity that is currently occurring. Works Cited: Bhagwati, Jagdish, â€Å"The Pure Theory of International Trade: A Survey†, The Economic Journal, Vol   Ã‚  Ã‚  Ã‚  Ã‚  74, No. 293, Mar 1994. pp. 1-84 BBC News, The Argument for Free Trade, http://news.bbc.co.uk/1/hi/special_report/1999/11/99/battle_for_free_trade/533208.stm, Feb 12, 2003 Bureau, Jean-Christophe, Salvatici, Luca, â€Å"WTO Negotiations on Market Access in Agriculture: a Comparison of Alternative Tariff Cut Proposals for the EU and the US†, Topics in Economic Analysis & Policy, Vol 4, Issue 1, March 26, 2004, pp 1152 International Trade Canada, Canada’s Trade Negotiations and Agreements, http://www.dfait-maeci.gc.ca/tna-nac/menu-en.asp, Nov 18, 2004 Mayer, Frederick, Interpreting NAFTA, Colombia University Press, Oct 15 1998 Mankiw, Kneebone, McKenzie & Rowe, Principles of Microeconomics 2nd Edition, Prentice Hall, 5th Edition, Jul 27, 2000 Murphy, Robert P., Who Benefits From Free Trade, and How, http://www.mises.org/fullstory.aspx?control=1429, Jan 23, 2004

Government Policy Essay

The Wall Street Crash, which occurred in October 1929, was the mass selling of shares, which led to a massive drop in prices, which prompted further selling of shares. In one day, $14 billion was wiped off the value of the stock market. This panic selling was triggered by rumours and fears that the stock market was about to collapse (these rumours were brought about by large share holders, like Baruch and Kennedy dumping shares, and news of the collapse of the British financial empire which was financed by debt and credit, just like America’s). But why did a sudden loss of confidence have such massive repercussions? The answer lies in the long term problems in the economy which had created instability and weaknesses in the economy. Until October 1929 these weaknesses had been masked by the confidence of American people and businesses; the high prices of stocks and shares were the result of speculation – the belief or confidence that they were worth more. But as confidence crumbled, there was nothing left to sustain the economy. The key reason why the economy could not sustain itself was because the policies of the government had created major faults in the American economy, and in every area of the economy, which meant that what started as mass selling of shares resulted in a major Wall Street Crash. Firstly, government policies were responsible for the Bull market of the 1920s. Firstly, the government of the 1920s had essentially promoted speculation by allowing the Federal Reserve to keep interest rates low. This encouraged lending / borrowing, which meant that millions of Americans were able to buy now, pay later for their consumer goods – such as fridges, radios and cars. Similarly, by keeping interest rates low, the Federal Reserve essentially encouraged lending to those wanting the play the stock market, as low interest rates made ‘buying on the margin’ attractive. With as many as 60,000 people involved in buying on the margin (or 10% of American families), and millions more buying now, paying later, the cycle of prosperity and stock market investment was actually based on debt and credit. Secondly, the government encouraged the Bull market by publically rejecting critics who warned of danger signs in the economy. For example, In Sept 1929 Roger Babson warned that the existing prosperity was based on a ‘state of mind’, not on economic facts. He predicted a crash and massive unemployment†¦ but he was criticised as being pessimistic and trying to undermine the country’s wealth. Experts seemed confident that the market was strong and so ignored the warnings of economists. If the government had been more careful about lending and listened to the warnings, people would have only purchased things within their means – rather than buying or investing in what they couldn’t afford. Therefore, there would not have been such over confidence (people believed that high levels of demand, and high volumes of stock market trading proved that the economy was excellent), which means that the stock market would not have been over valued in order to suffer from a loss of confidence and then a crash in the first place. As well as allowing the Fed to keep interest rates low, government policies also led to a Crash by reducing the ability of American businesses to sell their goods abroad. For example, the Fordney McCumber tariff of 1921, which was designed to protect the prices of American farmers’ goods, actually resulted in retaliatory tariffs from foreign countries. For example, Spain, Germany and France put tariffs on American cars and wheat. As a result, when the American economy did begin to slow down in the latter 1920s, businesses and farmers could not sell their surpluses abroad, which led to a drop in profits, and a reduction in production – with an impact on employment. Therefore, had the government not pursued a protectionist policy in the early 1920s, there would have been no loss of employment in the late 1920s, which means production rates would have been maintained, which would have ensured that money was kept in circulation and shares kept their value. To make matters worse, by making it harder for European countries to sell their goods in America, the government’s protectionist policy made it harder for European countries to repay the war debts they owed to the USA. To try and rectify this, the government chose to set up the Dawes Plan, whereby it lent Germany $250 million to pay its reparations to Britain and France. In 1929, the government agreed for Germany to restructure its loan repayments to the USA (the Young Plan), giving them a longer period of time to repay. Whilst in principle these actions were supportive, in practice they artificially propped up the German economy, which led to massive investment in Germany ($3,900million was invested after the Dawes Plan) as investors hoped to make a quick buck, just like they were in the American ‘get rich quick’ / speculative economy. This meant that government policy had in fact encouraged investment at home and abroad based on speculation. When investors realised that the returns (values) of stocks at home and abroad were artificially high, it would trigger a loss of confidence and massive sales – i.e. the Wall Street Crash. Another reason why government policies caused the Wall Street Crash is because the government pursued a laissez faire policy towards businesses and regulation. As a result, the 1920s were characterised by the creation of trusts and corporations – such as US Steel. The government actively ignored anti-trust laws, rather than using their federal powers to police and regulate industry. In a case heard at the Supreme Court the government argued that big businesses were not illegal, so long as some competition remained. However, in reality, the trusts wiped out competition – fixing prices and swallowing up smaller businesses (for every 4 businesses that succeeded in the 1920s, 3 failed). As a result, 1000s of smaller businesses failed, whilst the trusts became ‘captains of industry’, with the knowledge and the money to produce things very quickly and efficiently. This meant the stability of the American economy depended on the actions and profits of a few large companies, such as Insull and Ford, creating a dangerous situation. What is more, the government’s lack of regulation of corporations meant firms like Bethlehem Steel Corporation and Electric Bond & Share were not prevented from using their profits to speculate on the stock market, adding further insecurity (gambling!) to Wall Street. Unfortunately, by the end of the 1920s, many trusts – such as car giants like Ford – were producing more than was needed (and couldn’t sell their surpluses abroad thanks to the government’s tariff policy). As their sales dropped, so did wages and employment, leading to less money in circulation, less demand and a significantly weaker economy. As the trusts’ sales dropped, it also led to fewer stock market investments, which furthered the loss of confidence in Wall Street. Government policy concerning the regulation of banks and banking was also a key factor in the crash. There were no controls concerning mergers and competition so, by 1929, 1% of America’s banks controlled 46% of the nation’s assets. This meant that the stability of the country’s banking system depended on the stability of just 1% of the banks – which was a precarious situation (a Crash could see almost half of the nation’s assets disappearing!). What is more, the lack of regulation in banking meant that the government did not have complete control over the actions of the Federal Reserve Board. For example, in March 1929, one member of the Fed (Charles A. Mitchell) acted without the agreement of the Fed to publically announce that if money became tight because of higher interest rates, his bank (New York’s National City Bank) would personally pump $25million into the broker’s loan market. This was called the single most irresponsible decision of 1929 as it encouraged lending and gambling on stock market to soar at a time when the economy had slowed significantly. The government also did not regulate individuals working on the stock market – for example, greedy individuals like William Durant and his ‘bull pool’ were able to artificially inflate the market for their own gain, only to sell quickly and leave others with significant losses. Furthermore, government policies exacerbated the country’s massive unequal distribution of wealth, which itself contributed to the long-term weaknesses in the economy and hence the crash. In 1929, tax returns of 27million families showed that 12 million families were earning $1,500 a year, or less, and another 6 million families were earning less than $1,000 a year. This put at least 50% of the population in a position of serious economic hardship. In particular, agriculture faced significant problems: the mid-war Federal Farm Loan Act had offered farmers loans at lower interest rates in order to buy machinery to help meet war demand, but these loans became difficult to repay when the demand reduced as the war ended. After World War One, prices for wheat dropped from $2.50 a bushel to less than $1; wool from 90 cents to 19 cents. Although the government passed tariffs to relieve these problems, in the long term tariffs made the situation worse because foreign economies put ret aliatory tariffs in place. The post-war Agricultural Credits Act funded 12 banks to offer loans to any farmers working co-operatively. However, the Act ultimately meant more smaller farmers became in debt. The larger farmers who could afford the loans squeezed the small farmers out of the market. Prohibition made farmer’s problems even worse by cutting the need for grain previously used in alcohol. Ultimately, America’s unequal distribution of wealth should have signalled to the government that its capitalist system was not working – and steps should have been taken to alleviate the imbalanced spending power. Because the government did not alleviate the situation, the divide grew bigger (making these people dependent on credit / loans, which they couldn’t repay because of their lack of employment) – making the economy more fragile and unstable. Therefore, in October 1929, when a massive amount of selling began in the New York Stock Exchange, a mad panic set in. The confidence bubble had burst – triggered by a few rumours and fears that the market was going to crash. Had the government not pursued such a laissez faire approach to the management and regulation of banking and business, and had it responded earlier to the rich / poor divide in American society, the Wall Street Crash would never have happened because there would not have been such over-inflated / false confidence; there would have been foreign markets to trade with; and banks, businesses and individuals would have been regulated and acting in the interest of long-term not short-term gains.

Synopsis Of The Book Beric - 1597 Words

1. Where Beric finds himself in this chapter is the wide waters of the Rhenus which caught the first shrill gleam of the early northern sunlight, flashing solver as it flowed out from the mist haunted darkness of the forest, and lapped along the river ramparts and the jetties of Colonia Agrippina. On the West Bank-Roman bank of the river the little colonial town, Capitol of the lower Rhenus providence, sat compactly within its walls, with the usual native fringe huddled about it, and the big that was the winter station of the twenty second legion; its cleared cornland, and the vineyard where the vines where in young leaf. It had been almost two years since he came north with many others sentenced to the galleys, to fill the gaps in the†¦show more content†¦They had been straining there lungs rowing will all there might everything they had in them to get the reward they had been promised. Chapter 13 1. Jason had a dream about that he was back among his own people, in the days before he ever thought of Rome..... What happened in his dream is There was a little boat that his brother and he had of there own. They painted her like a mallard, with green and purple on her wing coverts, and the eyes at her bows little and bright like a mallards. He was dreaming of her ..... It was just after the winter rains, and the whole island scarlet with anemones most all where the olive trees fell back behind the house. They always grew thickly there. And Briseis, his mothers old slave had been baking bread. 2. What happened to Jason in this chapter is he had died at the oar. What happened to Beric is he had been very angry because the overseer had not listened to him before when he had said to replace him because his friend was sick and now he was dead and his body thrown overboard and with a raging fury of anger he fought to kill when the overseer was about to reach out to grab the shackle for the replacement of