Today, when someone says, “Wall Street,” they are usually referring to the U.S. financial markets. But “Wall Street” was an actual street first. So how did the street name become synonymous with the financial markets?
The Tree
In response to the country’s first financial panic, 24 of New York’s top merchants and brokers met in 1792 under a Buttonwood (aka sycamore) tree on Wall Street. They created a private group—the first version of the New York Stock Exchange (NYSE)—signing an agreement to trade with each other under common rules and regulations. Their “Buttonwood Agreement” restored faith, confidence, and trust in financial trading.
Did You Know…
- Under the Buttonwood Agreement, the first stock traded was Bank of New York.
- Initially, in 1792, only five securities were traded.
- The original Buttonwood tree grew near what is now 68 Wall Street. Today, a tree representing the agreement stands in front of the NYSE.
Growth
Governed by the new Buttonwood Agreement’s regulations, members set up offices at the Tortine Coffee House on the corner of Wall and Water Streets. Ten years later, they moved to the Merchants’ Exchange building on Wall Street.
The group continued to grow, and on March 8, 1817, after visiting the Philadelphia Merchants’ Exchange, they created the New York Stock & Exchange Board. With a constitution and an elected president, stock trading on the NYSE became more formal.
Having a “seat” in the exchange signified membership. To be assigned a seat, you had to be voted in by current members then pay a fee. Members gathered twice a day to trade. From their chairs, they shouted bids and offers as the NYSE’s president called out each security’s name.
As the U.S. grew, so too did the number and variety of securities traded on the NYSE. By the end of the Civil War, the list of 30 had grown to 300. This growth necessitated a change from the twice-a-day-trading-of-one-stock-at-a-time to the simultaneous trading of all stocks all day long. This new system assigned stocks to specific locations called trading posts. Seats were abandoned as brokers roamed the trading floor and traded directly with one another.
Did You Know…
- The initial exchange membership cost of $25 jumped to $100 by 1837 and doubled to $400 by 1848.
- NYSE members had a dress code. They wore top hats and dress coats.
- The Bank of New York was the first company listed on the NYSE.
- The NYSE, the Bank of New York, and the Bank of the United States secured Wall Street’s early financial dominance.
New York Stock Exchange and Technology
As the NYSE expanded during the nineteenth century, it moved to different buildings on Wall Street. And, as the number of shares traded grew, so too did the need for technology.
Samuel Morse demonstrated the telegraph on Wall Street in 1837. Brokers jumped on this new way to communicate remotely, and the area soon filled with telegraph wires. Then in 1867, the stock ticker revolutionized market communications, allowing market information to be spread quickly across the U.S. But it was after the 1878 installation of telephones that the trading volume really took off.
Finally, in 1903, after two years of construction, the NYSE moved into its own building at Wall Street and Broad. Technology abounded in this new building—where the NYSE still resides. It had hundreds of underground vaults to hold stock certificates, a marble trading floor, and a seventy-foot high ceiling. Wanting to keep everyone cool, Engineer Alfred Wolff designed machines that made it the first air-conditioned building in North America.
Did You Know…
- Each of Wolff’s three ammonia-absorption machines cooled with the equivalent of one hundred and fifty tons of ice.
- Beginning in the 1870s, a loud bell signaled each NYSE’s trading day’s opening and closing. A Chinese gong was the original bell of choice. The gong was replaced with an electrically operated brass bell in the 1903 building. (Today, the four trading areas each have a bell operated synchronously from one control panel.)
- In 1882, the first electricity plant in the world powered 7,200 Wall Street lamps.
- Trading volume topped one million shares for the first time on December 15, 1886.
- In 1960, over one billion shares were traded, and by 1970, with the help of the first computers, that number jumped to over three billion.
Battles, Fires, Financial Panics, and Bombs
Wall Street has seen its share of difficulties. Beginning with the Dutch and English, then the American Revolution, wars and battles have touched the street. Fires have also raged on and around it. (For more about this, read Did You Know This Wall Cost More Than The Entire Island On Which It Was Built?)
In 1920, a bomb exploded on Wall Street, killing 38 people and seriously injuring 143 others. Because most of the bombing victims worked at J.P. Morgan’s bank, investigators believed it to be the target. However, the bombers were never caught. (This was the deadliest attack on American soil until the 1995 Oklahoma City bombing.)
In 1792, financial panic led to the creation of what would become the NYSE. Panic returned on Black Tuesday, October 29, 1929. The market crashed, losing $30 billion and bringing the roaring twenties to a screeching halt. Almost sixty years later, on Black Monday, October 19, 1987, Wall Street suffered one of the largest single-day crashes, losing $500 billion.
Both crashes led to important reforms. In 1934, Congress created the U.S. Securities and Exchange Commission to regulate the operation of the nation’s securities markets. In the late 1980s, special rules were implemented to permit the overriding of automated protocols and avoid, hopefully, future disasters.
Did You Know…
- The 1920 explosion was so strong, it propelled a car up to the 34th floor of a nearby building before it crashed back to the ground.
- Wall Street—the street—had seen massive growth, but the great stock market crash of 1929 halted construction on the street for decades—except for the Irving Trust Company’s skyscraper being built on One Wall Street.
Summary
Yes, Wall Street is more than just a street. Thanks to history, politics, technology, and some luck, “Wall Street” became synonymous with U.S. financial markets, and played a fundamental role in shaping both the U.S. and worldwide economies.
However, in the twenty-first century, as online stock trading increases and many of the major financial institutions move away, Wall Street is in decline. But regardless of what happens in the future, Wall Street will always be a reminder of the U.S.’s golden age of economics.