3JM Company Inc.



Published Articles by David Balovich

Title: Seven Amazing Generations
Published in: Creditworthy News
Date: 9/14/12


As the days get longer one has the opportunity to reflect not only on what has occurred in the past but also the present.

During some of these reflective moments it has occurred to me that for most of the time man has roamed this big Blue Marble, the world that people were born into did not really change at all by the time they passed on. The last seven generations, however, has been different - far more exceptional for all of us – in fact, this time period, 1850 – 2012, has been downright astonishing. It can be argued one of the reasons for this is that we live longer today, almost twice as long as our ancestors prior to 1900.

Still, think about this. People prior to the Civil War, 1861,  were mostly involved in some type of farming enterprise but they also lived during a time of railroads, electricity and the large economic change, when industrial manufacturing became a larger part of the nation's GDP than agricultural goods.

Their children, born into an era of horses, wagons, and railroads also lived during the era of automobiles, airplanes, movies, radio, widespread use of the telephone, and an expanding modern middle class. And for the most part this was all accomplished with both their earnings and savings and in some instances secured credit. But there were no credit cards, ATM’s, or unsecured credit for the masses.

Their grandchildren born during the same era also lived during the time of TV, the jet age, corporate computerization, credit cards, unsecured credit for the masses along with truly competent medicine. Their great grandchildren, my children, became adults during the space age, along with personal computers and numerous electronic gadgets and software that defy description.

The fact is , for the last seven generations, all of us were born into one world and then came of age in a completely different one.

Certainly there are some who try desperately to hold onto the past, particularly if it accounts for their livelihoods, during a period of great transformation. Think of the farmers in the early 1890s who had become so proficient at growing crops that the resulting surplus of their harvests led to a significant collapse in all produce prices. Many farmers lost their farms, unable to pay their debts secured by their farms, due to the decrease in prices for their products. Yet, for every farmer who lost his farm, a neighboring farmer in better financial condition, would buy it and, with the implementation of modern mechanical farming that lowered production costs, increased the crop yield from previous years allowing the farmer to make a better living on the same land where his neighbor had failed.

I think of my wife’s grandfather, a country blacksmith, who probably battled the advancement of the automobile and yet for every blacksmith who faded from memory, thousands found new careers because of the automobile. Whether it was manufacturing them; or as mechanics; or building and maintaining the new highways that automobiles required. Not surprisingly, in spite of the good fortune to be alive during this time of incredible change, people complained about the cost of cars, the cost of fuel, the prices mechanics charged to repair them and how much our highway systems cost and to this day those complaints continue.

The price of a 1901 Oldsmobile, $700.00, looks extremely cheap today. But consider the average worker in America made only $0.22 cents an hour in 1900 and worked 53 hours per week, taking home just over $600 a year. Today, the average worker in America earns $23 an hour, the work week has shrunk to 37 hours, and the average annual take home is just over $33,000 a year. We work 832 fewer hours then our grandparents and great grandparents and our average annual take home pay is 5000 percent greater than theirs.  And yet, we still complain about our work hours and low pay.

1952 – 1977 is often considered the most significant generation of innovation that propelled us into today’s world. It was during the 1960’s sixties that the financial world and our medium of exchange began to experience changes that would affect both consumer and business credit. Bank of America in San Francisco and Preston State Bank in Dallas introduced a plastic purchasing card for its customers that eventually evolved into the Visa and MasterCard which would lead to the largest expansion of consumer debt. It would also pave the way for the end of currency made of paper and coin and lead to the recognition of credit and collections as a professional occupation rather than clerical.

Prior to the introduction of the consumer credit card (excluding Diners Club and oil and gas travel cards) the consumer paid for their everyday needs with cash. Generally, personal credit was limited to home mortgages, auto loans, and the occasional personal loan available through a finance company who charged high interest and made loans, generally, to people who did not need the money.

In 1968 the banks ceased paying out gold or silver for bank notes ( U.S. currency) and in 1972 the currency of the United States was no longer backed by either gold or silver. The end of the Vietnam war in 1975 brought about a demand for innovative and inexpensive products  that created new manufacturing and distribution channels. It also changed what companies we purchased products from and how and where American companies manufactured their products. In 1975, a Harvard University drop out, named Bill Gates and his boyhood friend Paul Allen, founded Microsoft,  a software company, in New Mexico and incorporated it in 1976. It became and still is the largest personal software company in the world. A year later, two high school students in Palo Alto, California working out of their garage created a personal computer. Today, Apple Inc, the company Steve Jobs and Steve Wozniak started is the largest public company in history, by capitalization, surpassing Microsoft.

The next generation beginning in 1978 through 2003 brought continued innovation and prosperity along with two recessions and a major downturn in the stock market. And yet, when the dotcom bubble burst in the late 1990s, it had no real effect on the progress made in expanding the Internet, or in the improvement in high-speed connections, video streaming, or the expansion of online commerce. All these and more dramatically improved with new products being created and introduced during and after the 1990 collapse.

Therein may be the secret to where our future is headed. For one only has to look at the industries that either prosper or sometimes just survive during the worst economic upheavals. For example the Sony Corporation really didn’t come of age with personal entertainment devices, like the Walkman, until the great recession of 1980. The rapid expansion of sales for DVRs, DVDs, microwave ovens and personal computers also didn’t occur until the same three-year downturn.

It may come as a surprise, to many, that the one industry that's remained constant, through both good and lean years, is the American automobile industry. Although the Duryea Brothers, who built the first gas-powered automobiles, quickly went out of business at the beginning of the Panic of 1893, there were many others in that same period working on perfecting the automobile. And although the most innovative and efficient products are often created during difficult times, we still continue to complain. We complain about air quality, gasoline prices, transportation systems, food prices, celebrity, athlete, and Wall Street salaries, our job or lack of a job, and taxes to name just a few.

Four years ago gasoline, in the United States, cost over $4 a gallon for the first time even though in other countries the prices were two and three times that amount. Today, we have several automobile manufactures who produce cars that exceed 35 mpg and there are electric cars actually being sold and driven on our highways. One manufacturer has recently announced a hybrid to be introduced in 2013 that will achieve100 mpg. Contrary to popular belief , these products are no more expensive than the Oldsmobile sold in 1901 and they are a heck of a lot safer. 

In September 1900 the city of Galveston, Texas was hit by a category four hurricane. Often referred to as The Great Storm, in part because hurricanes were not given names back then, it claimed the lives of 12,000 people of which 4,000 were never found. The city was totally destroyed with just a few structures left standing after the storm. In 2005, a category five hurricane, named Katrina, did severe damage to the city of New Orleans and surrounding areas along with many cities in Mississippi. A total of 1,863 people perished in a much larger hurricane then the one that hit Galveston in 1900.  Why? Innovation and technology that allowed the residents to prepare before Katrina made landfall. In the 1900s hurricanes were reported by ships at sea after they made it to port. There were no weather satellites, or airplanes equipped to fly into the “eye” of the storm to measure wind speed and velocity, nor was there a weather channel.  The citizens of Galveston had no warnings of what was going to occur and were unprepared when the hurricane made landfall unlike the citizens who resided in the coastal towns of Louisiana and Mississippi.

We are, all complaints notwithstanding, living in another golden era of new products and innovation that have replaced the products that were, just a generation ago, also “new” and “innovative”. Just as the television replaced the radio as the home entertainment system for my parents, the Internet is the new medium of entertainment for my children and one can only imagine what it will be for my grandchildren and their children.

In addition to entertainment, the Internet has also revolutionized our education system, the manner in which we socialize, our shopping habits, the way we conduct our business, and the source and delivery of our news. If one stops to think about it, the Internet is responsible for more business failures, in all categories, then Wal-Mart or any other big box store. In fact, there are many big box stores today that have fallen on difficult times due to the Internet.

Then there is the smart phone, a device that already has made the landline telephone, fax machine, and scanner obsolete. It has eliminated any need for cassettes and compact disc’s to play music or store data. There are presently over a million applications that can be processed on a smart phone. We can store all of our information, music, pictures, and movies on a Cloud or in a Drop Box for immediate access anywhere in the world. Programs like Skype enable us to video chat, an invention of Bell Labs in 1947 but not fully developed for the masses until the 1990s, with friends and business associates and programs such as You Tube allows everyone to have their 15 minutes, or greater, of fame whether they asked for it or not. We can also make every-day purchases using smart phone applications  replacing the need to carry cash and/or credit/debit cards.

Just as our great-grandparents, grand-parents, and parents, we are living in a world far different from the one we were born into. And although we seem to be overwhelmed about this at times, often because to us the change is spread over decades, history will record it as incredibly rapid. In all, like the six previous generations, this is an exciting time to live in.

And yet one would not realize it from the continuing common whining and complaints we share with each other. In that one respect, as long as we retain our human qualities, it is the one thing that has been a constant through all of the generations and innovative changes we have encountered.

Right Spock?

I Wish You Well,

David Balovich is an author, credit consultant, educator, and public speaker.
He can be reached at 3jmcompany@gmail.com or through the Creditworthy website.

The information provided above is for educational purposes only and not provided as legal advice. Legal advice should be obtained from a licensed attorney in good standing with the Bar Association and preferably Board Certified in either Creditor Rights or Bankruptcy.  

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