Wall Street Begins Trading
(Submitted by Dr. Dale D. Dixon, a member of the Poland Investment Club for 45 years.)
As the U.S. manufacturing economy developed late in the 18th century, there was a need for a market to trade shares of the new companies. This need was initially met by a cluster of brokers in New York City who held informal meetings at coffeehouses and street corners, often congregating around lampposts. When brokers wanted to place trades, children who were hanging out of nearby windows would write down the buy and sell orders and pass them to clerks inside to start the necessary paperwork.
It wasn’t until May 17, 1792, that the seed for a more formal organization was planted. Under a buttonwood tree 24 of the more successful brokers signed the Buttonwood Agreement, which set forth trading hours and fixed commissions. On February 25 1817, this private club evolved into the New Your Stock Exchange (NYSE), occupying the second floor of 40 Wall Street for an annual rent of $200.
But those who could not afford the NYSE’s $20 membership fee still traded on the street. As trading activity increased, the shouting became so loud that special hand signals were introduced. In 1920, these traders formed the New York Curb Market and moved indoors to the building where it still resides. The Curb Market was renamed the American Stock Exchange (AMEX) in 1953.
Over the years, technological advances changed trading at the NYSE and AMEX. Innovations in trading floor technology – from the telephone in the late 1800s to the first electronic ticker boards in 1966 to wireless data systems in 1996 – helped both exchanges grow into global marketplaces. This growth in technology even helped with the creation in 1971 of another market for securities – the NASDAQ (National Association of Securities Dealers Automated Quotations). Two centuries of trading later, the trades at the NYSE and AMEX still take place on a centralized trading floor around “posts,” a reference to the lampposts brokers used to gather around.