Year 1933:
u This year, Franklin D. Roosevelt was inaugurated 32nd president of the United States and initiated a series of programs known as the New Deal.
u The Securities Act of 1933 (also known as the “Truth in Securities Act") was part of the New Deal. It was the first act designed to regulate securities trading and protect the rights of financial consumers. Before the Great Crash of 1929, there was little Federal-level regulation of securities in the United States.
u The Glass-Steagall Act, which required strict separation of investment banking business from commercial banking business, was passed in 1933. After its passage, the First National Bank of Boston divested its investment banking arm and created First Boston Corporation, later joined by the securities affiliate of Chase National Bank.
u In June, the U.S. Congress abrogated the use of the gold standard monetary system.
Year 1934:
u The Securities Exchange Act of 1934, which regulates sales of securities in the secondary market, created the U.S. Securities and Exchange Commission (SEC). The first Chairman of the SEC was Joseph Kennedy, the father of U.S. President John F. Kennedy.
u Security Analysis, written by professors Benjamin Graham and David Dodd, was published.
Year 1935:
u J.P. Morgan & Co. decided to spin off its own investment banking business and founded Morgan Stanley on September 16, 1935.
Year 1938:
u Richard Whitney, president of the New York Stock Exchange (NYSE) from 1930 to 1935, was put into prison for fraud and embezzlement. This scandal forced the NYSE to further strengthen self-supervision and self-regulation.
u The Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, was founded and started to issue mortgage-backed securities (MBS).
Year 1939:
u World War II broke out in September and at the same time Wall Street entered a three-year-long fall. However, total profits of American companies increased sharply during this period.
u The National Association of Securities Dealers (NASD), the predecessor of the Financial Industry Regulatory Authority (FINRA), was established under the 1938 Maloney Act.
u IBM lost its seat to AT&T in the Dow Jones Industrial Average (DJIA).
Year 1940:
u J.P. Morgan & Co. went public.
Year 1942:
u The Dow Jones Industrial Average ended below 100 for the last time.
u Morgan Stanley joined the New York Stock Exchange (NYSE).
Year 1946:
u Mellon Securities Corporation was merged with the First Boston Corporation.
u The very first two venture capital companies - American Research and Development Corporation and J.H. Whitney & Company were founded. Private equity stepped into its modern age.
Year 1948:
u Merrill Lynch & Co. started a campaign to promote its credibility, professionalism and security, in an effort to change people’s view of a jumbled and chaotic Wall Street. By the end of the 1940s, Merrill and Lynch became the largest brokerage firm on Wall Street and Charles Merrill was seen as the father of the modern brokerage business.
Year 1949:
u Alfred W. Jones, a financial journalist, came up with the term “hedge fund”.
The 1930s-1940s:
u The pension fund, first introduced as a supplement to social security, later became an important financial instrument on Wall Street.