The Physics of Wall Street: a brief History of Predicting the Unpredictable

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mission for it that would justify its existence. the solution he finally 
came upon and implemented in 1927 was the creation of an elite, fun-
damental research team within the central research unit. the idea was 
that many of du Pont’s industrial departments relied on a core of basic 
science. But the research teams in these departments were too focused 
on the immediate needs of their businesses to engage in fundamental 
research. Stine’s team would work on these orphaned scientific chal-
lenges over the long term, laying the foundation for future applied, 
industrial work. Stine landed a chemist from Harvard, named Wallace 
carothers, to head this new initiative.
carothers and a team of young Phds spent the next three years 
exploring and exhaustively documenting the properties of various 
polymers — chemical compounds composed of many small, identical 
building blocks (called monomers) strung together like a chain. dur-
ing these early years, the work proceeded unfettered by commercial 
considerations. the central research unit at du Pont functioned as 
a pure, academic research laboratory. But then, in 1930, carothers’s 
team had two major breakthroughs. first, they discovered neoprene, 
a synthetic rubber. Later that same month, they discovered the world’s 
first fully synthetic fiber. Suddenly Stine’s fundamental research team 
had the potential to make real money for the company, fast. du Pont’s 
leadership took notice. Stine was promoted to the executive commit-
tee and a new man, elmer Bolton, was put in charge of the unit. Bolton 
had previously headed research in the organic chemistry department 
and, in contrast to Stine, he had much less patience for research with-
out clear applications. He quickly moved research on neoprene to his 
old department, which had considerable experience in rubber, and 
encouraged carothers’s team to focus on synthetic fibers. the initial 
fiber turned out to have some poor properties: it melted at low tem-
peratures and dissolved in water. But by 1934, under pressure from his 
new boss, carothers came up with a new idea for a polymer that he 
thought would be stable when spun into a fiber. five weeks later, one 
of his lab assistants produced the first nylon.
over the next five years, du Pont embarked on a crash program to 
scale up production and commercialize the new fiber. nylon began life 
as an invention in a pure research lab (even though, under Bolton’s di-

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rection, carothers was looking for such fibers). As such, it represented 
cutting-edge technology, based on the most advanced chemistry of the 
time. But it was not long before it was transformed into a commercially 
viable, industrially produced product. this process was essentially 
new: as much as nylon represented a major breakthrough in polymer 
chemistry, du Pont’s commercialization program was an equally im-
portant innovation in the industrialization of basic research. A few 
important features distinguished the process. first, it required close 
collaboration among the academic scientists in the central research 
unit, the industrial scientists in the various departments’ research di-
visions, and the chemical engineers responsible for building a new 
plant and actually producing the nylon. As the different teams came 
together to solve one problem after another, the traditional boundaries 
between basic and applied research, and between research and engi-
neering, broke down.
Second, du Pont developed all of the stages of manufacturing of 
the polymer in parallel. that is, instead of waiting until the team fully 
understood the first stage of the process (say, the chemical reaction by 
which the polymer was actually produced) and only then moving on 
to the next step (say, developing a method for spinning the polymer 
into a fiber), teams worked on all of these problems at once, each team 
taking the others’ work as a “black box” that would produce a fixed 
output by some not-yet-known method. Working in this way further 
encouraged collaboration between different kinds of scientists and 
engineers because there was no way to distinguish an initial basic re-
search stage from later implementation and application stages. All of 
these occurred at once. finally, du Pont began by focusing on a single 
product: women’s hosiery. other uses of the new fiber, including linge-
rie and carpets, to name a few, were put off until later. this deepened 
everyone’s focus, at every level of the organization. By 1939, du Pont 
was ready to reveal the product; by 1940, the company could produce 
enough of it to sell.
the story of nylon shows how the scientific atmosphere at du Pont 
changed, first gradually and then rapidly as the 1930s came to a close, 
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t h e p h y s i c s o f wa l l s t r e e t

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to one in which pure and applied work were closely aligned and both 
were valued. But how did this affect osborne, who didn’t work at du 
Pont? By the time nylon reached shelves in the United States, europe 
was already engaged in a growing war effort — and the U.S. govern-
ment was beginning to realize that it might not be able to remain 
neutral. In 1939, einstein wrote a letter to roosevelt warning that the 
Germans were likely to develop a nuclear weapon, prompting roos-
evelt to launch a research initiative, in collaboration with the United 
Kingdom, on the military uses of uranium.
After the Japanese attack on Pearl Harbor, on december 7, 1941, 
and Germany’s declaration of war on the United States four days later, 
work on nuclear weapons research accelerated rapidly. Work on ura-
nium continued, but in the meantime, a group of physicists working 
at Berkeley had isolated a new element — plutonium — that could also 
be used in nuclear weapons and that could, at least in principle, be 
mass produced more easily than uranium. early in 1942, nobel lau-
reate Arthur compton secretly convened a group of physicists at the 
University of chicago, working under the cover of the “Metallurgical 
Laboratory” (Met Lab), to study this new element and to determine 
how to incorporate it into a nuclear bomb.
By August 1942, the Met Lab had produced a few milligrams of 
plutonium. the next month, the Manhattan Project began in earnest: 
General Leslie Groves of the Army corps of engineers was assigned 
command of the nuclear weapons project; Groves promptly made 
Berkeley physicist J. robert oppenheimer, who had been a central