Wall Street History
By 1957, it seemed clear that the iron curtain that separated East
and West was impenetrable. The Cold War was on. Americans
were very uncertain of the future, at least those who followed
foreign affairs. Khruschev had succeeded Stalin (after a brief
struggle within the Kremlin) and he vowed to bury the United
States. In fact, there was legitimate cause for concern as Soviet
industrial production increased from 30 to 55 percent of
American output between 1950 and 1960.
1957 was also a time that the Cold War advanced from the
political stage to outer space. Since World War II it was clear
that the U.S. was the scientific and technological leader of the
free world. However, the U.S. scientific community was heavily
laced with Europeans who had fled the war and post-war
devastation and there was concern that U.S. successes were not
homegrown accomplishments but rather, were based on borrowed
In preparation for the International Geophysical Year (1957-58),
both the U.S. and the Soviet Union announced plans to launch
artificial satellites. The U.S. space program was conducted in full
view of the world and was obviously struggling. The Soviet
space program was centered in a remote region of Kazhakhstan
and conducted with the utmost secrecy. Rumors of a new launch
vehicle, significantly larger than anything the U.S. had built,
circulated at scientific meetings. However, even these vague
claims were dismissed as mere Soviet propaganda.
The Soviet announcement in the summer of 1957 of the
frequencies on which their satellite would broadcast was largely
ignored. Suddenly on October 4, the Soviets stunned the world
when "Sputnik," meaning literally "fellow traveler of earth," rode
into orbit on a ballistic missile. It was 184 pounds, twenty times
larger than the satellite the U.S. was attempting to launch.
Sputnik circled the earth every 92 minutes at a speed of 18,000
miles per hour.
It''s hard to imagine what this must have been like for Americans
back then, especially when you think of all of the changes that
have taken place, technologically, in just the past ten years. Since
I, myself, was born in 1958, I have to rely on other sources to
Millions of Americans were dismayed by the sound coming from
their radios and televisions; beep, beep, beep.in A-flat. The
power of the signal itself was only 1 watt, emitted by a battery
that died in a few weeks, but the shock it gave America was
staggering. Communism was mastering the universe. President
Eisenhower tried to downplay the event. Sputnik was "one small
ball in the air," he said, "(and) it''s something which does not raise
my apprehensions, not one iota." He was more concerned that
public hysteria would feed the appetite of the military industrial
complex for more spending on ballistic missile technology.
Democratic Senate Majority Leader, Lyndon Johnson had a
different reaction. "The Roman empire controlled the world
because it could build roads. Later, when men moved to sea, the
British Empire was dominant because it had ships. Now the
communists have established a foothold in outer space. It is not
very reassuring to be told that next year we will put a ''better''
satellite into the air. Perhaps it will even have chrome trim and
automatic windshield wipers."
Meanwhile, for a typical Soviet reaction to Sputnik we can turn
to an account from Semyon Reznik, a college student at the time.
"The day our satellite Sputnik was launched, a special voice came
over the radio to announce it to us. Traditionally, in the Soviet
Union a few of the radio announcers were hired to read only the
most urgent news on the radio. We always knew when
something extra special was coming over the airwaves, as we
would hear a special signal, "ta ta toe, ta toe, ta toe" and then one
of these readers with a deep voice would begin speaking. And if
your radio wasn''t on at home, a neighbor would let you know
immediately. It was pure genius on the part of Soviet leaders to
create this kind of show. You''d forget about everything at this
moment - about your problems, about your spouse and your
family. This was like a kind of religious performance. [And so it
went on 10/4]. ''Attention. All radio stations of the Soviet Union
are broadcasting.Our satellite Sputnik is in space.'' Everyone
felt so proud and wondered who did it? No names were named
And how did the U.S. stock market react? Well, the Dow Jones
had closed at 465.82 on 10/3/57. As word spread on 10/4 of the
Soviet''s success, the Dow fell to 461.70 on 10/4. But by 10/22,
the Dow had slipped to 419.79 (a decline of 9.9%) in less than 3
weeks. The idea that the nation was technologically inferior was
not a good one.
While 419 was the low level for the period, the general
attitude among the American people did not improve with time.
In November the Soviets launched Sputnik II. This time the
satellite was 1,120 pounds and it had some "live" cargo, a dog
named Laika as a passenger. The feeling spread that a Soviet
rocket capable of flinging radios and dogs into space was capable
of flinging an atomic or hydrogen bomb into American soil.
The U.S. finally attempted its first launch of a satellite in
December and it flopped miserably. Much like the headlines of
today, the newspapers then blared "Kaputnik," "Flopnik!" and
Werner Von Braun, the German who had launched the first
successful ballistic missile, the V-2, at London had brought 127 of
his team to America after the war. After the Navy''s version of a
missile had failed in December, Von Braun was allowed to launch
his rocket which on January 31, 1958, put Explorer I in space.
The success of Explorer I helped to alleviate the apprehension.
What the average American didn''t know, however, is that their
President, Ike, was never as concerned about Soviet capabilities.
But, unfortunately, he was unable to convey those feelings to the
people. The matter of our U-2 spy plane flights over the Soviet
Union stood in the way of full disclosure.
In April 1958, Eisenhower made the crucial decision to put space
exploration under civilian control in the National Aeronautics and
Space Agency (later Administration). After this move, we blew
the Soviets away.
Next week, the Jetsons impact on Wall Street.
Sources: "We Interrupt This Broadcast," Joe Garner
"The American Century," Harold Evans
"The Century," Peter Jennings and Todd Brewster
"Russia: A History," Gregory Freeze