History of the New York Stock Exchange
The New York Stock Exchange (NYSE) is the largest in the world. Located at 18 Broad Street in Manhattan, in many ways its history is the history of business and economic growth in America. This article traces the origins, major events and evolution of the New York Stock Exchange over the two centuries of its existence.
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Time Frame
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The NYSE got its start in 1792 when two dozen businessmen sighed the "Buttonwood Agreement" to trade securities on commission. Two years earlier the new federal government assumed the Revolutionary War debts and issued $100 million in government bonds. These bonds were the first public securities traded on a large scale in the United States. At first there were just five securities traded. The market was called "curb trading" because transactions were conducted outdoors. In 1817 brokers created a formal organization, the New York Stock & Exchange Board, passing a constitution and establishing rules for securities trading. Soon thereafter, the first railroad stocks began trading and dominated the market throughout the 1800s.
Function
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The advent of formal rules and of trading in railroad stocks illustrates the role the exchange played in the economic development of the United States. The early set of rules evolved into standards that prohibited issuing shares in secret, required companies disclose critical information for investors and in 1869 required that shares be registered. The result was a market that could be trusted to a degree previously unknown. The rail companies and other fledgling American corporations found the market a place where they could raise the capital needed by a rapidly industrializing nation. Economic downturns in 1837, 1857 and 1873 slowed but did not halt growth. The most serious disruption of trading was during the Civil War when trading was suspended in Southern stocks. In 1863 the name was changed to the New York Stock Exchange
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History
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In 1901 the NYSE moved into its present location on Broad Street. In 1906 the new Dow Jones Index reached 100 for the first time, anticipating the remarkable growth of the 20th century. Though the Panic of 1907 temporarily depressed the market, the NYSE soon became the financial center of the United States. In 1923 a bull market began that was to end abruptly on October 29, 1929 in the infamous Black Thursday stock market crash. The ensuing Depression brought equally depressed trading volume. However, the post-war era soon showed the best years were still ahead for the NYSE. In 1949the longest bull market in US history began, and by 1952 6 million Americans owned shares of stock. Volume rose to unprecedented levels. October 10, 1953 is notable as the last day less than 1 million shares were traded on a single day---and by the 1990s volume averaged over 100 million shares daily. By 1990, the number of Americans who owned stock rose to over 50 million.
Features
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The key to the NYSE's growth was a combination of stringent standards that began to evolve in the 19th century and reliance on technology. In 1844 the telegraph boosted volume by allowing investors to communicate and place orders quickly even from hundreds of miles away. In 1867 the first stock ticker was introduced. The handling of data on the trading floor was automated in 1966, ushering in the computer age for the NYSE. The advent of the Internet in the 1990s now makes it possible for investors to buy, sell and monitor stocks from anywhere in the world in real time.
Significance
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Today the NYSE continues to evolve. In 2007 a merger was completed with Euronext, a company that operates the Paris Burse stock exchange along with exchanges in London, Portugal, and other European countries, adding to the already nearly 4000 stocks listed on the NYSE. As NYSE/Euronext, the exchange is now an intercontinental market for securities trading, keeping it on the leading edge of today's increasingly globalized economy.
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