WWII and Finance

Finance is the study of managing funds, whether it is acquiring or investing.  This area of study is developed off of calculating and managing risk.  There are certain areas of acquiring money and comparing it with associated risk that can be calculated.  People these days are becoming more and more worried about the risks that they are taking with their money and financial investments due to the status of our economy.   In general, individuals seek to “analyze, understand and control the various hazards they face,” (Chance 447) in various areas of their life.  We analyze our risk of failing an exam due to an inappropriate amount of study time, the risk we take when asking someone out on a date, and even the risk we take when not wearing our seatbelts.  It is no wonder that people would worry about the risks that they take with their money.  This natural anxiety that all humans possess is one aspect that pertains to the emergence of the study of finance. 

After WWII, finance became a booming area of study.  It is safe to assume that after people lose a lot of their wealth and money, as seen in the Great Depression before and during the beginning of WWII, they would be concerned about losing it again.  Also, before WWII, it was difficult for companies to invest outside of their own country, a cause of increased calculated risk.  When you have a lot of money, you want to spread your money around so that you can be more protected so that you don’t experience complete loss of everything you have.  This can be seen in the example of equity swaps provided by Chance and Peterson.  Essentially, people “use these swaps to rid themselves of the risk of being heavily invested in their own companies,” (Chance 452). 

Consumer demand also increased after WWII.  More people were able to indulge themselves in the products of society.  Technology was booming with the production of cars, TV, radio, and even airplanes. Having these goods that were of such high demands increased the number of workers in the United States, thus spreading the wealth even further.  As people began to feel more accomplished and interested in how risk and profits could be calculated, the popularity of the subject of finance increased.  Today there are plenty of students in college that carry around a textbook about finance.  It is amazing to believe that the study did not even exist until WWII.