The Meaning of Market Milestones

This week, Apple became the first company to close the trading day with a market cap beyond $3 trillion. Calculated by multiplying its $193.97 stock price by its 15,787,154,000 shares outstanding, we get close to $3.05 trillion.

Beyond the numbers, though, market milestones can mean much more.

Market Milestones

By looking back at our economy’s largest companies, we can see what propelled its growth.

Stock Markets

With two banks, in 1781 and 1791, we had our first $1 million and $10 million companies. As the first IPO (Initial Public Offering of stock to the public), the Bank of North America was chartered during the American Revolution and helped to fund it. But even more crucially, Alexander Hamilton made sure that the Congress created the First Bank of the United States in 1791 to jumpstart his economic plans.

Next, fast forwarding to 1878, we have the New York Central Railroad’s market cap at $100 million. A part of an expanding national transport network, the New York Central connected New York with Chicago, Boston, and St. Louis. At the same time, we could have named the Erie, the Great Northern, the Southern Pacific, and a slew of local and national railroads that crisscrossed the country.

Below, you can see a late 19th century NY Central express train:

From here, we should note that when U.S. Steel was created in 1901, its market cap was $1 billion while it took until 1924 for AT&T to surpass the billion dollar market cap threshold. Then, after the 1920s, we can jump to 1955 with General Motors’ $10 billion market cap milestone and after. in 1995, we got General Electric setting the $100 billion record. Combining manufacturing, electricity, and finance, GE became a conglomerate with multiple businesses that catapulted it to the top (until its more recent plunge).

Now, surpassing the next major milestones in 2018 and 2023, Apple’s market cap moved past $1 trillion and $3 trillion.

Assets

We should keep in mind that stock market cap is not the same as assets. Indeed, although AT&T did not have the highest market cap by 1920, it still was a gargantuan company worth well over $1 billion. In the following graphic, you can see how during the 100 years from 1917 to 2017, the largest company top spots changed:

Our Bottom Line: Financial Eras

Moving from the bottom up, we can say that the firm reflects and affects the economy.  With banking our first milestone, it signified the necessity for financial intermediaries. As institutions that connect savers and borrowers, the Bank of North America and the Bank of the United States became the heartbeat of economic progress. Only with a viable banking system could companies raise the money they needed to start and grow.

Next, we have the railroads. Representing the need for a transportation infrastructure, railroads like the NY Central facilitated a national market. Only then could we have the regional specialization that optimized efficiency and David Ricardo’s comparative advantage.

Next, further fortifying economic growth, US steel marked the leadership of a capital goods sector that could equip manufacturing and transport. It could also underpin the growing affluence that provided consumers’ spending power. Through cars from GM and Ford, and food from Armour and Swift, we see consumers in our economic growth recipe.

Summarizing, we can start with finance and move to transport. Then, we have capital and consumer goods. And now, we can say, we’ve become an economy dominated by services.

My sources and more: With Apple’s $3 trillion market cap milestone, it made sense to look for others. Always handy, the Visual Capitalist presented a picture of the past that combined ideally with this Global Financial history. Then, other possibilities include a closer look at the 1920s,