On this day in economic and business history …
If you are or once were a college student, you’re probably quite familiar with two low-cost nutritional options: canned food and ramen noodles. Both claim Aug. 25 as their date of origin.
Tin cans were first patented in England on Aug. 25, 1810, by Peter Durand. This development came about one year after French dictator Napoleon awarded 12,000 francs to French brewer Nicholas Appert for his method of sealing food in airtight glass containers. That was the culmination of a hotly contested innovation contest meant to preserve enough food to reliably feed the French military. The problem with glass, of course, is that it tends to break — Durand adapted Appert’s methods to tin cans, and a durable method for preserving food was born.
Durand soon sold the rights to his British patent to others with interests in manufacturing, but he repatented the same process in the United States in 1818. Over the years, cans (of tin or other metals) have proved extraordinarily versatile, but they haven’t been without drawbacks. Early cans were sealed with soldered lead, which could result in lead poisoning for anyone relying on canned food for too long. Today, bisphenol-A, or BPA, is the latest chemical danger thought to lurk in canned food, as most metal cans use this chemical as a component in their internal resin liners. However, the dangers are nowhere near as great as those posed by 19th-century lead-rimmed cans, and the greater variety of available preserved food makes it easier to avoid overexposure.
The American Can Company, once a part of the Tin Can Trust of the early 20th century, was so important to American food production that it became one of the longest-tenured components of the Dow Jones Industrial Average (INDEXDJX:^DJI). The metal-can maker held a place on the index from 1916 until 1991, when it was removed following an unusual attempt to diversify into financial services. Today, most of American Can’s manufacturing operations are part of London-based packaging leader Rexam, which helps produce some of the estimated 131 billion metal cans made in the United States every year.
Unfortunately, not every broke college student can afford luxuries like canned food. Thanks to Momofuku Ando, they don’t have to scrimp and save for canned “delicacies” — the Japanese businessman produced the first prepackaged ramen noodles on Aug. 25, 1958. Ando had taken it upon himself to solve a lingering food shortage in postwar Japan, which resorted to promoting American-style breads when its decimated noodle makers proved unable to supply the needs of a hungry population. After months of testing, Ando produced a package of precooked instant noodles called Chikin Ramen, named after the package of chicken flavoring that’s now so familiar to millions of cheap (or noodle-craving) eaters.
The price of these noodles was originally in luxury territory — one package cost six times as much as other, more traditional noodle varieties. In 1971, Ando produced the first foam Cup Noodles package, and this was the killer edge that brought ramen to the masses. Four decades later, the world was consuming 98 billion servings of the quick, cheap, and easy noodle meal every year. Ando earned multiple honors from the Japanese government for his creation before dying at age 96 in 2007. He ate Chikin Ramen nearly every day, right up until the last day of his life.
There’s no rolling back this upgrade
Two years after it went public on over-the-counter exchanges, future king of discount retail Wal-Mart Stores, Inc. (NYSE:WMT) joined the New York Stock Exchange on Aug. 25, 1972. The fast-growing company had already split its shares once and had 51 stores generating $78 million in sales by the end of the year. Two years later, Wal-Mart Stores, Inc. (NYSE:WMT) began paying dividends, and quarterly payouts have continued ever since.
If you’d purchased $1,000 worth of Wal-Mart Stores, Inc. (NYSE:WMT)’s shares on Aug. 25, 1972, your investment would be worth $1.1 million 41 years later — a return of roughly 114,000%, not counting any reinvested dividends, according to the company’s historic investment calculator.
Competition arrives for American carmakers
Toyota Motor Corporation (ADR) (NYSE:TM) arrived in the United States on Aug. 25, 1957. It was the first time Japanese cars had been imported into the U.S., heralding the start of a new era of competition for Detroit’s Big Three. That day, two Toyopet (as Toyota Motor Corporation (ADR) (NYSE:TM) cars were initially called) Crowns rolled off their ship and into America’s hearts … well, not really. The American public didn’t care much for these “Toyopets,” whose name reminded English-speakers of toys and pets, or possibly pet toys, or pets treated like toys, like Paris Hilton’s Chihuahua. The company soon adopted Toyota Motor Corporation (ADR) (NYSE:TM) branding for its cars, but progress was slow at first. The Big Three held 93% of the American market in 1957. Two years later, that grip had loosened to 83%, but that was largely due to the rise of AMC and the invasion of European imports, rather than Toyota Motor Corporation (ADR) (NYSE:TM)’s success.
Toyota Motor Corporation (ADR) (NYSE:TM) was undeterred by its stiff competition and persevered in spite of some damaging import tariffs that restricted some of its models from effective competition. The 1973 oil embargo and resultant price shock was a major turning point in Toyota’s efforts, and by the end of 1982 — the year Toyota Motor Corporation (ADR) (NYSE:TM) merged its manufacturing and sales organizations into one company — imported cars accounted for 27% of the American market, and Japan was by far the largest source of imports, with an 80% share. In 1986, Toyota began manufacturing cars in the United States, but it would be another 13 years before the company listed its shares on the New York Stock Exchange. By this point Toyota held 9% of the American auto market.
Toyota became the world’s largest automaker in 2008, and it held that title for each of the following four years, with the exception of earthquake-ravaged 2011. In 2012, after rebuilding its production capacity and rebounding from an embarrassing spate of recalls, Toyota sold 9.75 million vehicles around the world, with 2.1 million of those cars sold in the United States, good for third place in the U.S. with a market share of about 14%.
Trust the gecko
Then, in 1975, as the company wobbled on the edge of bankruptcy, a certain investor named Warren Buffett stepped in with a $4.1 million lifeline, for which he received 1.3 million shares at an average price of $3.18. By the time Berkshire Hathaway Inc. (NYSE:BRK-B) announced its plans to buy the rest of GEICO for $70 a share, that investment had grown to a nominal value of $90.6 million — a 2,100% gain for ordinary investors, but just another good deal for Buffett.
The article Today in History: Food Pioneers, Toyota in America, and Buffett Buys the Gecko originally appeared on Fool.com 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 and owns shares of Berkshire Hathaway.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
