The first financial capital of the United States was Philadelphia. A walk down Chestnut street and you will see all the old banks which have been turned into mostly restaurants. That was the home of the Bank of the United States which Andrew Jackson was intent on destroying. But Philadelphia continued to be the financial center. Even the Philadelphia Stock Exchange predated New York which was founded in 1792. The Philadelphia Stock Exchange was founded in 1790 but was originally named the Board of Brokers of Philadelphia. On May 17, 1792, twenty-four brokers signed the Buttonwood Agreement, which eventually became the New York Stock Exchange.
Jay Cooke was the financier of the Civil War and the first primary dealer located in Philadelphia. His firm was the largest and it failed during the Panic of 1878. The House of Morgan was actually born out of the partnership of Drexel, Morgan & Co., which formed by Anthony J. Drexel of Philadelphia with his protégé and partner, J. Pierpont Morgan in 1871 which became a New York firm. Following Drexel’s death, the company reorganized in 1895 and became J.P. Morgan & Co. which became an investment banker that financed the formation of the United States Steel Corporation. It became the world’s first billion-dollar corporation. Also in 1895, J.P. Morgan & Co. supplied the United States government with $62 million in gold to float a bond issue and restore the treasury surplus of $100 million.
J. Pierpont Morgan became the target of much criticism and it was this image of bailing out the US Treasury from the silver Democrats that painted him as a profiteer because the bonds he floated rallied and many claimed he intentionally underpriced then to make money on the bonks.
I have often explained that the Economic Confidence Model is fractal. Thus, 2 x 8.6 equals 17.2. Hence, 17.2 x 8.6 = 147.92. What is emerging is the gradual decline in New York and the shift in the financial capital of the United States once again. The shift from Philadelphia to New York began gradually from the opening of the company in New York in 1871. However, it was the Panic of 1878 which undermined Jay Cooke & Co and shifted the power to Drexel. The New York office began to rise and with Drexel’s death, Morgan became most famous by bailing out the US Treasury in 1895.
What is most interesting is that the shift from Wall Street in New York to Miami is underway. Goldman Sachs was moving its most profitable operation to Florida and so many others are now starting to follow. The lockdowns have wiped out jobs and small businesses in New York which is looking more like a ghost town after the gold rush was over. But it has also wiped out the need for offices with only 8% of the people returning. Bill Gates won. He has ended commuting to reduce CO2 and the politicians were so eager to get rid of Trump, they never considered they were undermining New York itself. Our model is projecting the by the sheer volume of assets, the shift from New York to Florida is underway and Florida may exceed that of New York altogether by 2025/2026 (1878 + 147.92).
