There are some things that have become so part and parcel of the world we live in that
they almost seem boundless and eternal. It's difficult to imagine them ever having
been created in the first place. They always just kind of were.
Now one of these things are the financial markets which we obviously talk about every
day on this channel and most of you watching this I'm sure interact with on a daily basis as well.
So although it's not always necessary to know the history of the things you're involved in,
it's definitely very interesting and it can be eye opening.
So in this series of videos, we're going to start to give you the history
of the very same financial markets, institutions and events
that we all take for granted these days. And we're going to kick things off in this
video with something that's become such an icon and such a complex entity that it's really
difficult to imagine how it could have ever come into being in the first place.
We will of course be talking about Wall Street. The early history of this famous location
and how it all started.
Whether you know it from the movies, the financial services industry, the US stock market or
even just the location itself, the name Wall Street is definitely something
that's very familiar to all of us. But have you ever wondered how it actually
got its name and why this location in particular was chosen to be a centre of business and finance?
Well although there are speculations about how the street got its name, it's widely believed
to date back to the Dutch settlers in the 17th century back when New York was
actually called New Amsterdam and it was a Dutch Colony.
It was at this time that Governor Petrus Stuyvesant, whose name I am clearly pronouncing incorrectly,
ordered a wall to be built on the Northern boundary to predominantly keep out the Native Americans
but also to keep out other threats including
the British. You could almost say it was like a reverse
Brexit, let's keep the British out this time.
Now this wall was about 10 feet high and it was made of big wooden planks.
It was so big in fact that it even featured in the 17th century maps.
They built a huge wall! But unlike more recent conversations about
constructing walls, I don't think the Mexicans were being asked
to pay for it on this occasion.
Now surprisingly, the wall only protected the Northern border and not the Southern border,
which was a big mistake to make as you can imagine and the British actually capitalised
on this in 1664. They sailed right into the harbour from the
South and they seized the colony. So it was at this point that it was renamed
from New Amsterdam to New York.
Later that century in 1699 the British Colonial Government removed the wall,
however, there was a path that ran alongside the wall before its removal
and despite the wall no longer being there, the path kept its name,
which, you guessed it, was called Wall Street.
Wall Street became a bustling commercial area and one of the busiest trading
areas in the city thanks to it’s ideal location. It ran the width of Manhattan between the
East River and the Hudson. The New York City hall was built in the area
between 1699 and 1703 and it was the seat of government for the
British Colony of New York which was later then the location of the current Federal Hall
on Wall Street. This was where George Washington was inaugurated
as the first president, on the balcony of the building in April 1789.
Unfortunately the early history of Wall Street as a commercial hot-spot has its dark moments
as well. Enslaved African people were first brought
over when it was a Dutch colony in the 1600s. The enslaved people were used for labour under
the Dutch West India Company, and it was actually these people that constructed
the wall which Wall Street is named after, as well as doing much of the other work to
help build the area to what it was at that time.
So when the British came and took over the colony and turned it into New York, they continued
the slavery system although this time it was through The Royal African Company.
In fact, in 1665 a law was passed that legalised
slavery and in 1682 slave masters were given the power of life and death over their slaves.
A brutish and disgraceful law.
This then led to New York adopting its first full slave code and ultimately the establishment
of a slave market for the sale and rental of enslaved
African people in New York City. This was a huge trade at the time and the
forming of a market helped to organise it all a lot better.
In 1711 the law was passed by the New York City Common Council that made Wall Street
the city's official slave market. The law stated
that slaves must be hired at the Market House at Wall Street.
This would mean that everyone knew where to go to hire slaves.
It was located at the end of Wall Street by the East River and was also where grains were sold,
which led to it being known as the meal market.
This continued until 1762 when the market finally came to an end.
The earliest organisation of securities trading in New York was recorded in 1792, 30 years
after the meal market was taken down. This was under the Buttonwood agreement which
allowed the trading of securities between brokers only dealing with each other.
The name in fact came from the Buttonwood tree that was at the end of Wall Street, which
is where the traders and the speculators would trade amongst each other.
So at that point in time 24 of the top merchants in the city, they met to discuss ways to organise
the securities business and to gain more control, this would effectively get rid of the power
of the auctioneers and allow them to control their trading fees.
Essentially, they would be controlling what goes on by only allowing the securities to
be traded amongst themselves. They also introduced a commission structure
which stated that the 24 of them would be charged a fixed fee,
while anyone else that wanted to trade would be charged more.
However, although this started in 1792 in New York. The first Stock Exchange in the
US actually started in Philadelphia in 1790. Now the New York based brokers who were working
under the Buttonwood agreement, they started being like nosy neighbours, doing a bit of
curtain twitching and looking over at Philadelphia and what they realised is that while their
stock exchange was not doing so well, due to the war of 1812, the one in Philadelphia
was flourishing. So the New York brokers sent an observer to
the Philadelphia exchange to investigate and this resulted in the creation of the
New York Stock and Exchange Board.
What they did then, they rented a room on Wall Street specifically for securities trading
and they set up the organisation. This exchange was an exclusive members only
group, which needed members to be voted in under strict conditions.
3 negative votes and it's a no go. And the president of the exchange, Anthony Stockholm,
had the duty each morning to read the stocks that would be traded on that day.
Things were a lot more limited back then,
as there were obviously not the same huge numbers of securities that we can trade now.
However, this trading volume did start to pick up in 1869,
after the New York Stock Exchange merged with the Open Board of Stock Brokers,
which was set up in 1864 as a competitor. So this merger of the stock exchanges increased
the trading volume and the number of members as part of the exchange.
Although this was nothing near the numbers that you get these days when there's a merger
between the exchanges, you can obviously see how the organisations
had slowly moved from their primitive beginnings, to a much more structured market for securities trading,
with a common approach for rules and a common approach for access.
So this now leads us nicely onto the next stages of the history of trading in the US.
And we'll be covering these stages throughout this series, as well as taking a look at what
took place in other countries, because as you can probably tell from the
history of Wall Street a lot of the origins came from Europe because obviously we're talking
about the colonisation of New York. However, these topics are all going to come
in future videos.
For now, if you liked this video please do leave a thumbs up.
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Thanks a lot for your time, and I'll see you in the next video very soon! Bye-bye!