Saturday, June 17, 2000

Personal finance

How the market was built

        Some things are so ingrained in our culture they hardly raise an eyebrow.

        Why is “Wall Street” synonymous with the stock market? Ever seen a wall on Wall Street?

        It's all part of our vernacular. American culture just wouldn't seem the same without the stock market and its imagery. And the American stock market wouldn't be the same without its history.

Building the wall
        The Dutch built in 1653 a 12-foot high wooden stockade from river to river to protect from British and Indian attacks.

        In 1685, 32 years later, surveyors laid a street along the wall. The wall eventually was taken down as the city expanded north, but the street remained Wall Street.

        With the center of New York financial life there, it was on those street corners and in those yards that brokers and traders began exchanges. Their first major market: $80 million in bonds issued in 1780 by the federal government to refinance federal and state Revolutionary War debt.

Building the Trade
        May 17, 1792, 24 brokers signed the Buttonwood Agreement, agreeing to trade with one another and charge a uniform commission rate to their customers. The Bank of New York is the first corporate stock traded under the agreement.

        Legend has the agreement taking place under a buttonwood tree — at 68 Wall St.

Building the Exchange
        More organized now, trading still took place wherever brokers could meet for another 25 years. A boom in investing came after the War of 1812, with more banks and insurance companies joining the government bonds.

        The growth drove traders to a more formal organization and a place to meet. In 1817, they adopted a constitution with rules and regulations, calling themselves the New York Stock & Exchange Board (NYS&EB). They rented rooms — at 40 Wall St.

Building the building
        It took another 19 years to get everyone indoors. The NYS&EB prohibited its members from trading in the streets in 1836. (Groups of traders still trading the street went on to form “The Curb Market,” what has become the American Stock Exchange.)

        In 1863, the name was changed to the New York Stock Exchange. And by 1865, it'd grown large enough to move into a five-story building at 10 Broad St. The building was enlarged during the 1870s and 1880s, then demolished in 1901.

        The new exchange building opened in 1903 at 18 Broad St. — at the corner of Wall Street.

        But less than a century later, despite additions and renovations, the exchange had outgrown it again. NYSE officials looked at moving to Brooklyn or New Jersey before making a deal to build a new facility across the street, on a block bordered by Exchange Place, Broad and William streets.

        And Wall Street.

        Amy Higgins writes about personal finance for the Enquirer. You can reach her at 768-8373;; or Your Money, The Cincinnati Enquirer, 312 Elm St., Cincinnati 45202.


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