Financial History Issue 133 (Spring 2020) | Page 26

influences those expectations. Volatility will be highest when political decisions influence earning expectations most, as they have during the present pandemic.  Dr. Richard Sylla is a Professor Emeri- tus of Economics and the former Henry Kaufman Professor of the History of Financial Institutions and Markets at the NYU Stern School of Business. He is also the Chairman of the Museum of American Finance. Dr. Janice Traflet is the Howard I. Scott Research Professor of Management in Bucknell’s Freeman College of Management and a member of the Financial History editorial board. Dr. Robert E. Wright is a Julian Simon Fellow at the Property and Environment Research Center in Bozeman, Montana this summer and the author or co-author of 18 books. He is also a member of the Financial History editorial board. Chart showing mortality from the 1918 influenza pandemic in the United States and Europe. swing in the United States. The first wave that fall affected mostly school children, and some schools were closed. But few children died. A second wave in early 1958 was more deadly, affecting in particu- lar pregnant women and elderly people with pre-existing conditions. Estimated US deaths ranged from 70,000 to 116,000. In 1957, the Dow Industrials peaked on July 12 and then dropped 19.4% to a low on October 22. Curiously, the flu outbreak typically was not cited by the media as a factor in the market downturn. It soon became apparent that the US economy entered what would prove to be a mild recession in August 1957, one that would last through April 1958. When the reces- sion began, the pending flu problem was known to health experts and officials, and they were on top of the flu epidemic before it hit the United States. Indeed they already had developed a vaccine, which was well reported in the press. Even though supplies of the vaccine were ini- tially limited, undoubtedly it was encour- aging to investors and others to know that a vaccine existed. The sharp stock market decline began before the recession and before the pub- lic, if not scientists and officials, became aware of the flu problem. It thus proved its worth as a leading indicator. Better reasons for the late October lows were a confrontation that fall between federal officials and Arkansas’s governor over the integration of public schools, and especially rising Cold War tensions. On October 4, the Soviet Union successfully launched its Sputnik, the first man-made satellite to orbit the Earth, prompting considerable American angst and investor consternation. Later that fall, President Dwight Eisenhower suffered a mild stroke, and the failure of an American test rocket put a damper on the market’s recovery from its October low. Lessons No two crises are alike. Some contagions infect fewer people than others. Some are deadlier than others, and some spread more easily. Some engulf a city but leave other areas unscathed and able to help. Others hit large swathes of continents, hemispheres, even the entire globe, if not simultaneously then, in our increasingly integrated world, in rapid succession. Securities markets have always tended to be good leading indicators of future earnings expectations and will move rap- idly up and down as new information 24    FINANCIAL HISTORY  |  Spring 2020  | www.MoAF.org Sources Barro, Robert J., Jose F. Ursua and Joanna Weng, “The Corona Virus and the Great Influenza Pandemic: Lessons from the ‘Span- ish Flue’ for the Corona Virus’s Potential Effects on Mortality and Economic Activ- ity.” National Bureau of Economic Research Working Paper 26866. March 2020. Burrows, Edwin G. and Mike Wallace. Gotham: A History of New York City to 1898. Oxford: Oxford University Press. 1998. Centers for Disease Control and Preven- tion (CDC). “1957–1958 Pandemic H2N2 Virus.” https://www.cdc.gov/flu/pandemic- resources/1957-1958-pandemic.html. Swedlund, Alan C. and Alison K. Donta. “Scar- let Fever Epidemics of the Nineteenth Cen- tury: A Case of Evolved Pathogenic Viru- lence?” in Human Biologists in the Archives: Demography, Health, Nutrition and Genetics in Historical Populations, ed. D. Ann Her- ring and Alan C. Swedlund. New York: Cambridge University Press. 2002. Sylla, Richard E., Jack Wilson and Robert E. Wright. “Early US Securities Prices.” EH.NET. http://eh.net/database/early-u-s- securities-prices/ Wilford, John Noble. “How Epidemics Helped Shape the Modern Metropolis.” The New York Times. April 15, 2008. Wright, Robert E. and David J. Cowen. Finan- cial Founding Fathers. Chicago: University of Chicago Press. 2006.