The History of the Wall Street Stock Market
New York City is among the major financial centers of the world, and nowhere in New York typifies the image of finance as much as Wall Street in the borough of Manhattan. Wall Street serves as home to several stock exchanges, including the New York Stock Exchange and the NASDAQ, as well as other financial exchanges and business headquarters.
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Early History
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Wall Street takes its name from the 17th century when early New York settlers from Europe constructed barricade walls to protect the city from attacks. One such wall, which ran between two thriving neighborhoods, was adjacent to a path that became known as Wall Street. In 1785 New York became the capital of the United States and Wall Street was already a major center of power. It became home to the federal building that served as the setting for George Washington's inauguration as the nation's first president.
Stocks in New York
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In 1792 a group of New York merchants met and signed a document known as the Buttonwood Agreement. This treaty required the merchants to only trade with one another as a means of consolidating their power. After a group of merchants founded a successful stock market in Philadelphia in 1792, the New York merchants organized themselves as the New York Stock and Exchange Board in 1817. They rented a space at 40 Wall Street and began operating New York's first stock market.
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Growth
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The New York Stock and Exchange Board changed its name to the New York Stock Exchange in 1863 and set itself up for rapid growth by allowing new members to join. Existing members needed to vote on all new members and newcomers were required to pay for their seats on the exchange. As the 19th century gave way to the 20th, Wall Street became a center for major financial transactions. J. P. Morgan engineered the first billion-dollar merger for his company, U.S. Steel, on Wall Street. Other industrialists followed and smaller stock exchanges sprang up to house stocks that didn't meet the listing requirements for the NYSE.
Crash and Modern History
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One of the biggest events in the history of Wall Street, other than its founding, was the market crash of 1929. Rapid growth and loose regulation allowed businesses and private individuals to take increasingly risky gambles on stock purchases. From 1924 to 1929 stocks more than quadrupled in value, finally crashing to more realistic levels on October 29th, 1929. Stock prices remained low as millions of Americans lost their investment dollars and the Great Depression kept unemployment high and interest in investing low. Wall Street gradually recovered, fueled by government spending on World War II, which began in 1941. Since then Wall Street has remained relatively stable. The NASDAQ opened in 1971, and in 1987 Wall Street was home to another major crash, though one with a much quicker recovery than the 1929 episode.
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- Photo Credit wall street with flag image by Tomasz Cebo from Fotolia.com
