Stock Market History Facts
These days, everyone focuses on Wall Street but according to stock market history facts, the New York exchanges were not the first money markets. In fact, the very first stock exchange of any kind was the precursor to the London Stock Exchange, which was founded more than 300 years ago.
The origins of stock markets began when shipping investors needed money to finance two voyages on two old sailing ships. The first was one of the Muscovy Company’s efforts to find a short cut to China and the other was a trade trip in 1688 by the East India Company to India. The funds for both ship ventures were raised by the companies selling shares to investors with the promise of receiving a share of the profits if the trips proved profitable.
Stocks Catch On
Within just a few years, the newfangled idea of selling a stake in an enterprise with the goal of profit sharing caught on quickly. In one area of London, most of the trading was conducted in two coffee shops — Garraway’s and Jonathan’s.
The alley upon which the coffee shops fronted was known as Change Alley, a long time area for people to meet and exchange goods and services as far back as the 17th century. John Castaing, the owner of Jonathan’s Coffee House, began posting the prices of stocks on boards in the coffee house. This was the very beginning of stock trading among the locals in London.
Stock market history facts show that there was a royal stock exchange, begun by Sir Thomas Gresham, begun in 1565. But this royal exchange was not for the great unwashed types likely to stop at Change Alley or one of the nearby coffee houses. The stock trading begun in that alleyway and at those coffee shops was the actual begin of a robust and lively free market stock trading system in which everyone, no matter how lowly they were born, could participate.
Stock Market History Facts
Over time, the new market structures experienced booms and busts. One of these was the collapse of the South Sea Company in the 1700s. The failure of the institution was mocked heavily by the wealthy and poor alike, but the recovery from that debacle soon proved the trading of commodities and stocks in London, the precursor to the London market, was indeed there to stay.
Stock market history facts show that by the end of the 17th century, laws were passed in Britain requiring brokers and jobbers of stocks to be licensed by the government. That put a stop to insider trading and stock rigging, the type of events that had previously either caused or expanded market crashes and the collapse of companies whose stocks were heavily traded at the London markets.
By 1723, it was clear the basic underpinnings of the stock market as it is known today were solid and not going anywhere. Traders enjoyed an active exchange for financial products, including the purchase of government bonds to finance wars and other activities overseas.
American Stock Markets
The American market was a close follower of the British exchanges in their historic settings. The New York Stock Exchange was founded in 1792 when a few dozen brokers decided to eliminate the confusion and disorientation that accompanied the then-current mode of stock trading. The brokers got together to form their own exchange. The agreement among the brokers was called the Buttonwood Agreement, so named for the buttonwood tree on Wall Street in lower Manhattan under which the brokers inked their names to the document.
This exchange first met in a small building at 40 Wall Street, but that building was destroyed by fire in 1835, about 18 years after the brokers renamed their enterprise as the New York Stock and Exchange Board. By the turn of the 20th century, the exchange had moved to its present site on Broad Street and, within a few decades, the volume of stocks traded had expanded six fold.