Stock Market History

What is the Stock Market? When and where did it come from? Why did it come to be?

The first formal stock exchange was organized in Philadelphia in 1790. At the time, Philadelphia was the USA's capital. This first exchange flourished because of the great amount of government and business activity taking place at the capital city. Stock market history was made.

In 1792, another exchange was beginning to form in New York. At the time, Wall Street was just a dirt road that ran from Trinity Church down towards the dockyards of the East River.

It was named Wall Street because the road was flanked by a high wooden wall that was put up in 1653 to protect the Dutch settlers from the attacks of both Indians and the British. That's Wall Street History in a nut shell.

In that year, a group of 24 brokers gathered under a buttonwood tree on Wall Street and drew up an agreement with one another to trade securities amongst themselves. Public trading of commodities like tobacco, sugar and wheat had been going on for more than 40 years before the men reached their agreement.

Investors Business Daily's book entitled: Guide To The Markets, provides an excellent breakdown and detailed history of the stock market, plus a lot more!

At this time in history, organized trading of securities was still in its infancy. They decided to charge a uniform commission rate to their customers for buying and selling those securities, another important phase in stock market history.

By 1800, the principal stocks traded were those of banks. As Wall Street grew and more buildings were being erected, the brokers and traders involved, started moving into offices and conducting business indoors.

By 1817, the members of the Buttonwood Group had adopted the name the "New York Stock and Exchange Board (NYS&EB)", and Wall Street had become the center of America's securities markets.

At this time, shares of businesses were rarely bought and sold because few companies had promising outlooks.

But that would soon change with the dawn of the railroad age.

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Meanwhile, outside on Wall Street, another group of brokers were mobilizing. While the NYS&EB developed stringent rules about memberships and rules for listing stocks for trading, the Industrial Revolution was raging that fired up the American economy and created new companies and new industries never before imagined.

Most of theses companies needed funding to get their operations up and running, so they began to offer stock. Another stage in stock market history was born.

But because many of theses companies were considered to speculative by the more conservative NYS&EB, they were traded outdoors by brokers who were not members.

They became known as "The Curb" or "The New York Curb Exchange" because its trading activities took place outside, at the curb of the street.

This market existed outdoors until 1921 when the Curb Exchange moved indoors to its present location. In 1952, the name was changed to The American Exchange. Another phase in stock market history.

Over time, the New York Exchange earned the respect and confidence of the investing public, and came to be the world's dominant and most respected market for securities trading.

After World War II, the New York Stock Exchange (NYSE) and the American Stock Exchange (AMEX) dominated securities trading. In 1945, the bigger, more established companies traded on the NYSE; the smaller more speculative companies were listed on the AMEX.

Next: The Stock Market Crash & The Great Depression

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