The History of the New York Stock Exchange
The New York Stock Exchange name New York Stock & Exchange Board due to the signing of the Buttonwood Agreement.
The only securities to be traded, at the time, were government bonds and bank stocks. The first stock traded and listed on the New York Stock & Exchange Board, was the Bank of New York, New York City’s first chartered bank.
The NYSE is easily the most famous stock exchange in the world.
The Century Before - Wall Street
Wall Street, which is an integral part of the NYSE history, first appears as a portion of a sheep pasture which was used in common by the inhabitants of New Amsterdam. Its natural condition was partly rolling upland and partly meadow of a swampy character.
About the middle of the seventeenth century, the English in the New England colonies began to press heavily upon the Dutch in New Netherlands, and kept the burghers of New Amsterdam in a constant dread of an invasion, not only from the English but also Native Americans, pirates and other dangers. Influenced by this feeling, the city authorities resolved to fortify the place, and in 1653 constructed a wall or stockade across the island, from river to river just beyond the line of the village. This wall passed directly across the old sheep pasture.
Citizens were forbidden to build within 100 feet of the stockade, this open space being reserved for the movements of troops.
It soon became a prominent highway bustling with commercial activity because it joined the banks of the East River with those of the Hudson River on the west, and the eastern portion has since remained so. The anticipated attack on the city was not made, but the wall was kept in good condition.
Picture: The wall, which became Wall Street, divided the tip of the island from the rest.
Houses crept up close to the wall on the city side, and began to appear on the opposite side just under the wall. In this way a new street was formed, through which ran the old stockade. Early merchants built their warehouses and shops on this path, along with a city hall and a church. The open space along the wall was originally called The Cingel, signifying “the ramparts.” Soon after the town reached the limit of the military reservation, persons residing here were spoken of as living “long de Wal,” and from this the street came to be called “the Wall street,” which name it has ever since borne.
The wall, having fallen into decay, was demolished about the year 1699, and its stones were used in the construction of the old City Hall, which stood at the intersection of Wall and Nassau streets, the site now occupied by the Sub-Treasury of the United States.
New York was the U.S. national capitol from 1785 until 1790 and Federal Hall was built on Wall Street. George Washington was inaugurated on the steps of this building.
1793 - The Tontine Coffee House, in Wall Street, was dedicated as the New Yorkers exchange. Before the construction of the Tontine Coffee House the brokers of the Buttonwood Agreement and others did trade at the Merchant's Coffee House just across the road. The Tontine Coffee House was built by a group of brokers to serve as a meeting place for trade and correspondence.
In its prime, the Tontine was among New York City's busiest centers for the buying and selling of stocks and other wares, for business dealings and discussion, and for political transaction. Having had a dual function as a combination club and a meeting room, the coffee house played host to auctions, banquets, and balls, among others. After hours, gambling and securities dealings were practiced that were then deemed less than honest. The coffee house also provided a place for the registration of ship cargo and the trading of slaves. The Tontine was noted as classless; individuals from all social strata met there and collectively engaged in the many civil and economic affairs.
Political demonstrations and violence were not uncommon at the Tontine Coffee House. In the wake of the French Revolution, fistfights between those respectively sympathetic to the British and the French broke out on a daily basis.
Trading at the Tontine Coffee House continued until 1817. The growth of the Tontine's trade proceedings had effected the creation of the New York Stock and Exchange Board (NYSEB), a very important step in NYSE history, and necessitated a larger venue. The NYSEB is recognized as the precursor to the present-day New York Stock Exchange, the largest stock exchange in the world. The Tontine itself was transformed into a tavern by a John Morse in 1826, and a hotel by Lovejoy & Belcher in 1832.
Early 1817 - The New York merchant group, realizing that their stock exchange was now in decline after the early tumult of revolutionary war bonds and stock in the Bank of the United States, sent an observer to Philadelphia Stock Exchange. March 8th, 1817 – Upon the observer’s return, bearing news of the thriving Philadelphia exchange, the New York Stock and Exchange Board was formally organized.
The organization drafted its constitution and by-laws on March 8th, 1817, and named itself the "New York Stock & Exchange Board".
Anthony Stockholm was elected the Exchange's first president. NYSE history states that at this time there were 30 stocks traded on the exchange. The president of the exchange would call out the names of the stocks individually, and the brokers would yell their bids from their assigned chairs. That is why we say people have a "Seat on the exchange". This practice continued until about 1871. The exchange was an exclusive organization, new members were required to be voted in, and a candidate could be black-balled by three negative votes. Seats on the New York Stock Exchange are leased or sold by the current owners and not by the exchange itself. In 1817 a seat would cost about 25 USD, in 1827 it increased to $100, and in 1848 the price was $400. In Dec 2005, one seat went for 4 million Dollars. NYSE history has shown that the number of seats on the Exchange has increased steadily throughout the years. In 1868 there were only 533 seats.
Members wore top hats and swallowtail coats.
The first central location of the NYSE was a room rented for $200 a month located at 40 Wall Street.
1835 - The NYSE was destroyed in the Great Fire of New York. It moved to temporary headquarters.
Picture: NYSE History - 1850’s
1860 - Historic Price Quotation Sheet from the New York Stock Exchange issued in 1860. This historic document shows the "First Board" prices of Stocks listed on the New York Stock Exchange. The First Board represented trading from 10:30am to Noon. (The Second Board represented trading from 2:30pm to 3:00pm) This closing price summary was printed on a daily basis and sent to brokers and Wall Street firms.
1863 - The name was shortened to its modern form, "New York Stock Exchange” (NYSE).
1865 – The NYSE moved to 10-12 Broad Street.
1868 - NYSE history states that membership on the exchange has been held as a valuable property since 1868. Until recently, members could only join by purchasing existing seats, which were limited to a total of 1,366.
1867 - The First Stock Ticker was used.
Picture: The First Stock Ticker which was invented by Edward A. Calahan, revolutionizes the stock market.
1878 - A landmark event in NYSE history - the first telephones were installed.
1883 - The NYSE got its first electric lights.
1896 - The Dow Jones Industrial Average (DJIA) was created by Dow Jones & Company, a financial news publisher.
Between 1896 and 1901 - Volume of stocks traded had increased six-fold and a larger space was required to conduct business in the expanding marketplace.
10 May, 1901 – The NYSE history shows that demolition of the existing building at 10 Broad Street and the adjacent lots started after having a design competition which was won by architect George B. Post.
April 22, 1903 - The New York Stock Exchange building opened at 18 Broad Street at a cost of $4 million. The trading floor was one of the largest volumes of space in the city at the time at 109 x 140 feet (33 x 42.5 m) with a skylight set into a 72-foot (22 m) high ceiling. The main façade of the building features marble sculpture by John Quincy Adams Ward in the pediment, above six tall Corinthian capitals, called “Integrity Protecting the Works of Man”. Because of the importance of the NYSE history the building was listed as a National Historic Landmark and added to the National Register of Historic Places on June 2, 1978.
1903 - Originally trading times were signaled by a Chinese gong, but brass bells were introduced when the NYSE moved to its current location in 1903. There is one large bell, measuring 18 inches (460 mm) in diameter, in each of the four trading areas of the NYSE. They are operated synchronously from a single control.
1915- The market price was given in dollars.
1922 - A building designed by Trowbridge & Livingston was added at 11 Wall Street for offices, and a new trading floor called "the garage". Additional trading floor space was added in 1969 and 1988 (the "blue room") with the latest technology for information display and communication.
Picture: The 11 Wall Street building was designated a National Historic Landmark in 1978.
1943 – One important part of NYSE history, and for the U.S. as a whole, was that the trading floor was opened to women.
Mid-1960s - The NYSE Composite Index was created, with a base value of 50 points equal to the 1965 yearly close. This index reflects the value of all stocks trading at the exchange instead of just the 30 stocks included in the Dow Jones Industrial Average.
1966 - The NYSE created the Common Stock Index and floor data were fully automated.
The electronic displays boards were first put up.
February 18, 1971 - The NYSE, INC was first incorporated as a not-for-profit Corporation.
1977 – More NYSE history was created when foreign brokers were admitted to the exchange.
1979 - The New York Futures Exchange began.
1996 - A real-time ticker was introduced at the Market.
2000 - Another trading floor was opened at 30 Broad Street.
2001 - Trading in fractions (n/16) and was replaced by decimals (increments of $.01).
2003 - The NYSE Composite Index was re-launched using revised methodology and a new base value of 5,000 points equal to the 2002 yearly close.
2005 - NYSE Hybrid Market was launched, creating a blend of auction and electronic trading.
December 30, 2005 - In anticipation of the NYSE’s transformation into a publicly held company, member seat sales officially ended, replaced by the sale of annual trading licenses. NYSE decided to acquire its rival Archipelago. There were now over 2700 stocks on the NYSE, including 453 from 47 different countries.
April, 2006 - Monumental developments in the NYSE history; NYSE went both electronic and public, by merging with the already publicly traded Archipelago electronic stock exchange. The new merged company is called the NYSE Group, Inc., and the seats of the NYSE translated into shares of stock which are now traded under the ticker symbol NYX. 30 Broad Street trading room was closed.
2007 - The exchange closed the rooms created by the 1969 and 1988 expansions due to the declining number of traders and employees on the floor, a result of increased electronic trading.
April 4, 2007 - NYSE Euronext is formed out of the merger of NYSE Group, Inc. and Euronext N.V. The merger marks a milestone for global financial markets, bringing together major marketplaces across Europe and the United States whose histories stretch back more than four centuries.
December 11, 2007 - The New York Stock Exchange opened an office in Beijing. On September 4, the NYSE had become the first foreign exchange to receive approval to open a representative office in China.
June 24, 2008 – More NYSE history in-the-making as Realtime Stock Prices are launched. The new data product enables Internet and media organizations to buy real-time, last-trade market data from the NYSE and provide it broadly and free of charge to the public.
October 01, 2008 - NYSE Euronext acquires the American Stock Exchange, becoming the third-largest U.S. options marketplace and enhancing the company’s leadership in ETFs, cash equities, closed-end funds and structured products. More than 500 Amex-listed companies join NYSE Euronext, adding to it a U.S. platform for small-cap companies and building on the company’s leadership position in global listings.
In conclusion the NYSE history has followed a winding path, keeping up with political and social changes, and will surely continue to do so well into the future.