In its nearly 200 year history the New York Stock Exchange (NYSE) has grown from a handful of stockbrokers, and a mere five securities traded, to over 8,000 issues listed in 2010. In 2007 the NYSE merged with Euronext, bringing together European and American interests in a global marketplace. In 2008 the company acquired the American Stock Exchange and is now known as NYSE Amex Equities.
According to the Gilder Lehrman Institute of American History, in 1790 the U.S. national debt was an estimated $54 million. Following the Revolutionary War, the new country did not have the authority to levy taxes against the population to repay war debt. The only source of revenue was borrowing. Although the ratification of the United States Constitution in 1788 corrected this, there was not an economic program in place to collect taxes. In 1790 the U.S. government issued $80 million in bonds to repay the war debt, thereby creating the U.S. investments market. Initially, trading was unorganized and most often took place in the streets, a practice that would be forbidden to New York Stock Exchange Members beginning in 1836.
In 1792, twenty-four stockbrokers stood under a buttonwood tree on Wall Street in New York City and signed the historic Buttonwood Agreement. The purpose of this agreement was to bring order to the notoriously unorganized and chaotic trading market. These 24 individuals are credited with creating what would become officially known as the New York Stock Exchange, and the beginning of trading stocks on a commission basis. Trading initially took place at the famed Tontine Coffee House in New York City.
Constitution and Rules
Following the War of 1812, the securities market was growing considerably. By 1815 bank and insurance stocks were traded in addition to government bonds. In 1817 a constitution with rules of business conduct was adopted and the New York Stock and Exchange Board was officially established as a self-regulated organization. Securities were traded in rented rooms at 40 Wall Street in New York.
Call Market and Trading Sessions
With the adoption of its constitution, the call market procedure for trading was established. This procedure entailed the president of the Exchange Board calling out the list of stocks. The brokers would trade each security in turn. Trading took place during two separate sessions each day, one in the morning and another in the afternoon.
Wall Street has become synonymous with the New York Stock Exchange. From its humble beginnings in rented rooms on Wall Street, the New York Stock Exchange has moved a number of times. In 1835, the year of the Great Fire in Manhattan, the Exchange was forced to temporarily move operations. In 1863 the New York Stock and Exchange Board shortened its name to the New York Stock Exchange and moved to its present location at 10-12 Broad Street, at the corner of Wall Street and Broad, which is now known as the trading capital of the world.
- stock exchange image by Christopher Walker from Fotolia.com