General Motors Company (GM), The Boeing Company (BA): The Creation of the Debt Ceiling and the First Man on the Moon

This wildness had a secondary effect of creating confusion over potential regulatory implementations, which was then still very much in the air following the passage of the Securities Act two months earlier. Some investors thought daily price movements would be limited, which is a common practice now thanks to circuit breakers, but which would have been difficult to control in an analog trading era. Others thought margin trading would be eliminated. One visionary suggestion, spelled out in the pages of The New York Times, posited that “specialists” would be replaced by machines like those allowing automated betting at racetracks. “This fantastic idea,” wrote the Times, would do away with the human element in the execution of orders by mechanically matching buying with selling orders.” This, of course, is currently accomplished thousands of times per second on any given stock of the thousands on the market, since trading is entirely computer-based now. None of these ideas came to fruition in 1933, but it didn’t stop skittish Wall Streeters from stampeding away from the Dow Jones Industrial Average (Dow Jones Indices:.DJI)’s first 100-point close since 1931.

The origin of the debt ceiling
The Public Debt Act was enacted on July 20, 1939. It was the first implementation of an aggregate debt limit for the U.S. federal government, which had previously split its restrictions by individual bond issues. The Public Debt Act set the debt ceiling at $45 billion, which was at the time about half of national GDP. Within two years, stimulus spending had brought the United States near that limit, which necessitated a further increase, and a consolidation of federal borrowing power in the hands of the Treasury.

The article The Creation of the Debt Ceiling and the First Man on the Moon originally appeared on Fool.com and is written by Alex Planes.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter, @TMFBiggles, for more insight into markets, history, and technology.The Motley Fool recommends General Motors.

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