1985 Business News in Review
JANUARY/FEBRUARY A bullish, merger-happy financial year kicks off with the Dow average right around 1,200.Skip to next paragraph
Subscribe Today to the Monitor
Energy prices are falling. Natural gas is decontrolled as of Jan. 1. and a supply ``bubble'' persists. The spot market price of oil is sliding; in some US locales, gasoline drops below 90 cents a gallon. OPEC cuts its official price to $28 a barrel Jan 30.
Internationally, the dollar remains strong. In late January, British interest rates rise to their highest level in three years, and British unemployment is at its highest since World War II. In a prelude to the '86 ``big bang,'' Citicorp buys Seccombe, Marshall & Champion PLC, becoming the first bank to own a British discount house.
Bank of Boston Feb. 7 says it failed to report $1.2 billion in cash transactions. Dozens of banks around the US subsequently admit similar faults as the US Treasury cracks down on money laundering. MARCH/APRIL
Privately insured US thrifts are in trouble. ESM, a government securities firm, collapses March 4. That prompts a run on Home State Savings in Ohio and a bank holiday March 15 for 72 savings and loans. Bevill, Bresler & Schulman, another government securities firm, collapses April 8 due to problems with ``repurchase agreements.''
Media takeovers ensue. Capital Cities Communications buys ABC on March 18 for $3.5 billion. Rupert Murdoch buys 50 percent of 20th Century Fox, and then on May 6 Fox buys six TV stations from Metromedia Inc. In mid-April, Ted Turner begins attempt to control CBS; it is unsuccessful, but it costs CBS millions to defend itself.
Internationally, the US on March 1 says it will not ask Japan to extend voluntary auto export quotas. In late March, Japan sets a new, 25 percent higher car export ceiling. But Japan denationalizes telecommunications and plans to liberalize markets.
Yearlong British coal strike ends March 3, after most workers had drifted back. The US and Israel announce elimination of all tariffs within 10 years.
Marketing twists. IBM scraps the PCjr March 19. Coke announces a change in its 99-year-old formula. Procter & Gamble drops its maligned moon-and-stars logo. Pan Am sells its Pacific routes. MAY/JUNE
Salvos in the merger wars. A Delaware court May 17 says raider T. Boone Pickens can be excluded from a Unocal stock buyback. Allied Corporation and the Signal Companies unveil a $5 billion merger on May 15. Uniroyal embarks on a leveraged-buyout. R.J. Reynolds June 2 pays $4.9 billion for Nabisco. And in a $5 billion deal, GM buys Hughes Aircraft.
E.F. Hutton May 2 pleads guilty to federal charges stemming from a systematic check overdrafting scheme affecting some 400 banks and institutions.
With economy sluggish, the Fed on May 17 cuts the discount rate to 7.5 percent. The Dow responds, breaking 1,300 for the first time on May 20.
More problems with privately insured thrifts. Depositors May 9 stage a run on Maryland savings and loans. Eventually, it appears, all thrifts in the US will be federally insured to bolster confidence.
An insurance crisis becomes evident. Doctors, day-care centers, municipalities, and businesses experience soaring rates and policy cancellations. Lloyds of London investors learn May 13 they have lost $165 million due both to misappropriation of funds and underwriting losses in asbestos and medical malpractice in the US.
The US Equal Employment Opportunity Commission June 17 rejects ``comparable worth.'' JULY/AUGUST
Toyota announces July 23 it will produce cars at a wholly owned plant in US (Georgetown, Ky., is the site later chosen). On July 29, General Motors selects Spring Hill, Tenn., for its $3.5 billion ``Saturn'' venture.