The New York Stock Exchange, or as it is commonly referred to in stock market jargon, NYSE, is the most powerful stock market in the world. It is not the first, but we can safely say that much of the world economy depends on its behavior. The financial eyes of the world settle daily on the New York Stock Exchange. Hopes, despair and financial dramas are woven there. Many of the events that have shaken the world in the last 200 years have had some kind of link with the New York Stock Exchange and its behavior. In this article, and in the one that follows, we are going to immerse ourselves in the birth of this giant of stock market business.
So first were the moneylenders
When capitalism began to give birth to its first behaviors of accumulation, and feudalism as a form of production of material life was in decline, men appeared on the European stage which, with their wallets full of coins, would start a series of businesses consisting of financing others in exchange for a tasty interest. They were the moneylenders. It was the dawn of the 14th century, still far from the birth of the New York Stock Exchange.
The leaders in the field of jumbo loans were the Venetians. They are wonderfully portrayed in William Shakespeare’s masterpiece, “The Merchant of Venice.” The game was simple, the moneylenders offered money in exchange for a high-interest rate, which produced a rapid and abundant multiplication of currencies. However, when they saw that they could negotiate the loans themselves and get a dividend from it.
The business soon moved to the financing of monarchies that consumed resources without control. Thus, the Venetian lenders, with their slate board in hand, negotiated their loans. The foundations of the New York Stock Exchange began to be laid.
Belgium, in the genetics of the New York Stock Exchange
Antwerp was the place chosen for the birth of the first stock market that will lay the foundation for the birth of many others, including the New York Stock Exchange. There, back in 1531, brokers and moneylenders established a place to conduct business. To this place, men of state in need of fresh funds also came.
Of course, the stock market that was set up in Antwerp in those years was far from what we can see today at 11 Wall Street. Only bonds and promissory notes were negotiated there. The actual stocks were far from being known.
A New Business on the Horizon
By the beginning of the 17th century, a new business appeared before the visionary eyes of the men who transited the places where loans were negotiated: we are talking about trips to the Indies, in search of goods. That’s right, ship owners knew that these trips entailed many risks, and in the face of the possibility of losing everything, to pirates or because of bad weather conditions, they began to get financiers, in exchange for significant dividends as a result of the risky travels.
Initially, companies formed to finance a trip only lasted for the existence of that trip. But with the commercial success of these companies, other companies that sold shares -or an interest in the business- began to form in exchange for the dividends that could be obtained.
The basis for the birth of future stock exchanges was laid and the New York Stock Exchange would be born a few hundred years later. However, that is a story we will tell in our next issue.