250 Years of Building. The American Market Is What We Made of It.

TWO HUNDRED AND FIFTY

Tomorrow is the Fourth of July. The 250th. Markets are closed in observance.

We wanted to mark the moment with something worth reading. So this is not a recap of the week. It is a look at the full arc of American financial markets.

One pattern holds across the whole thing. Americans finance transformational infrastructure at scale. We sometimes over-finance it. The financial system breaks. We reform it. Then we build the next thing. The system we have today is the latest layer of that cycle, not the final one.

Markets reopen Monday. Tomorrow's edition takes us to right now. Today we go back to the start.

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In 1790, Alexander Hamilton assumed the war debt of the states into a single federal obligation. That act created the U.S. bond market. The country established federal credit before it established a permanent capital.

Two years later, on May 17, 1792, twenty-four brokers signed an agreement under a buttonwood tree outside 68 Wall Street. They set a commission and agreed to trade with each other first. That document is the founding charter of the New York Stock Exchange.

The Civil War forced a national banking system into being. The National Banking Acts of 1863 and 1864 built the first uniform U.S. banking framework. Capital had a country to flow through.

Rail mileage went from 35,000 miles in 1865 to more than 250,000 by 1900. The financing was mostly debt. Bonds funded the tracks. American and European investors bought them. The pace was staggering, and the pace was the problem.

In 1873, Jay Cooke and Company collapsed under its bet on the Northern Pacific Railway. More than 100 banks failed. About a quarter of American railroad companies went into receivership. The economy contracted for more than five years. It is still called the Long Depression.

Twenty years later it happened again. The Philadelphia and Reading Railroad failed in February 1893. The Panic of 1893 took 500 banks and roughly 25 percent of American rail capacity with it. Unemployment hit 18 percent.

In 1907, J.P. Morgan personally backstopped the banking system from his own office because no public institution could. That was the last straw. The Federal Reserve Act passed in 1913. The country finally had a central bank that could stand behind a panic.

The rails got built. The financing failed. The country built a better financial system.

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Retail investors entered the stock market at scale for the first time. Margin debt exploded. The Dow quintupled in the decade. Then on October 29, 1929, it collapsed.

The crash was not the worst part. The four years that followed were. The Dow lost 89 percent of its value by 1932. Roughly 9,000 banks failed. The Great Depression set in.

What got built in response was the modern financial state. The Securities Act of 1933. Glass-Steagall in 1933 separated commercial and investment banking. The Securities Exchange Act of 1934 created the SEC. The FDIC insured bank deposits. Disclosure became law.

A second collapse confirmed the pattern. Samuel Insull's utility holding companies, which had built much of the American electrical grid through the 1920s, fell apart in 1932. About 600,000 shareholders lost their money. The Public Utility Holding Company Act of 1935 broke up the pyramid.

The grid got built. The holding companies failed. The country rewrote utility regulation.

World War II financed itself with war bonds. Bretton Woods in 1944 made the dollar the world's reserve currency. The interstate highway system, authorized in 1956, was financed differently. Federal backing. Trust fund mechanism. No private capital structure that could fail. The roads got built without a panic attached. The exception that proves the pattern.

By 1980, the scaffolding for the modern American economy was in place.

Fixed commissions on stock trades ended in 1975. The cost of trading collapsed. Discount brokers were born. The 401(k) was created in 1978 and quietly became the dominant retirement vehicle in America, pulling tens of millions of workers into the stock market for the first time.

Electronic trading replaced the floor. The Bloomberg terminal arrived in 1982. Index funds went mainstream. Mortgage-backed securities transformed real estate finance. Globalization wired American markets into the rest of the world in ways that had no historical precedent.

The infrastructure of today’s financial markets was built in this era. The financial state built in the 1930s now sat under a market vastly larger, faster, and more connected than anyone in 1934 could have imagined.

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Companies like WorldCom and Global Crossing raised hundreds of billions of dollars to lay fiber optic cable across the country and across oceans. They built more capacity than the world had demand for at the time. The dot-com crash that began in March 2000 took the telecom buildout with it. WorldCom filed for bankruptcy in 2002, the largest in American history at the time. Global Crossing failed. So did most of their peers.

The fiber sat dark for years.

Then the internet economy of the 2000s caught up to it. Streaming video. Cloud computing. Mobile data. All of it ran on cable that had been laid by companies that did not survive long enough to use it. The fiber itself became the backbone of the modern digital economy.

The fiber got built. The telecom companies failed. The internet still ran on the fiber.

Then 2008 happened. Mortgage-backed securities had become the plumbing for global credit, and the plumbing broke. Lehman Brothers failed. AIG nearly did. The system the New Deal had built turned out to have new cracks that the new infrastructure had created. Dodd-Frank in 2010 rewrote the rules. Capital requirements went up. Central clearing for derivatives became standard. Quantitative easing was infrastructure no one had seen before, and it became permanent.

Two things happened in the post-2008 window that mattered more than most observers realized at the time.

The smartphone made retail trading a pocket activity. Zero commission trading went from novelty to standard by 2019. The retail investor reentered the market in numbers not seen since the 1920s.

And Bitcoin was published in October 2008 and went live in January 2009. It was the first serious attempt to build a market system outside the existing one. Crypto has since matured into an institutional asset class.

Then AI arrived as a capital expenditure line item.

The current cycle is the latest infrastructure buildout, and it is enormous. Hyperscalers and their partners have committed hundreds of billions to AI data centers, power generation, networking, and compute. The Q1 2026 earnings season confirmed that this is no longer projected demand. It is contracted demand, with named counterparties on signed multi-year agreements.

History suggests the infrastructure itself is rarely the mistake. Railroads transformed America. Electricity transformed America. Fiber transformed the internet. The companies that financed those revolutions often failed long before the infrastructure proved indispensable.

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American markets have never been a straight line upward. They have been a series of construction projects financed by optimism, interrupted by excess, strengthened by reform, and carried forward by the next generation of builders. Two hundred and fifty years later, the pattern is still running.

The system today is the latest layer. The Federal Reserve, the SEC, the modern brokerage, the retirement account, the index fund, the smartphone trading app, the institutional crypto market, the AI capex cycle. All of it sits on top of everything that came before. None of it is finished.

Tomorrow morning, our Friday edition looks at where 2026 stands at the midpoint and what the second half may bring. The historical lens is the right one to carry into that read. The first half has already been a construction year of its own.

Thank you for reading. Have a wonderful Fourth of July.