In our previous article, we told the interesting history of the economic and financial movements that were to give rise to the embryos of the stock exchanges, including the New York Stock Exchange. Moneylenders, brokers, and businesspeople discovered a whole new world of opportunities. The trips to the East Indies and America gave way to the first shipping companies, with share participation.
The rapid growth of these companies and the intervention of the monarchy, granting them the benefit of the monopoly, pushed to the commercialization of the shares. British companies began to grow, and the entire stock exchange process laid the foundations for the birth of the London Stock Exchange and later, the New York Stock Exchange.
When everything was turned into shares
The success of companies such as the British East India Company and the South Sea Company prompted many other companies to offer shares in their businesses, no matter how implausible. Records at the time show that shares were offered in a company that promised to extract the sun from vegetables. Although the limit of absurdity was experienced when a company offered its shares promising a company of such magnitude and scope that its purpose could not be revealed.
Thus was born the first “financial bubble” and a massive crisis with it. The South Sea Company issued uncontrolled shares and then could not pay the dividends from these, with its profits and everything began to collapse and from there arose the need to establish some regulations.
From the London Stock Exchange to the New York Stock Exchange
In 1773, the first stock exchange located in London was born. The London Stock Exchange had substantial restrictions on stock trading. Already in 1794, 24 New York merchants, gathered under a mangrove tree located in the Wall Street funds, a dead-end street, signed an agreement establishing the rules of stock trading. It was known as the “Buttonwood Agreement” and thus laid the foundations of the New York Stock Exchange, which was finally created in 1817, under the name of New York Stocks and Exchange Board.
However, to be fair with history, the New York Stock Exchange was not the first one in the United States of America. Before it, the Philadelphia Stock Exchange had been created.
Quickly, the New York Stocks Exchange became a reference for all financial businesses. Banks, industrial and agricultural companies, as well as a wide variety of other activities, made their way through Wall Street. The New York Stock Exchange received commissions and dividends for its activities, and this led it to become a very wealthy institution.
Against all odds
NYSE became the global center of financial business, and with unprecedented speed, it surpassed all those stock exchanges that preceded it. It bore all kinds of setbacks: in 1865, it was left closed and without operations after the assassination of Abraham Lincoln. The panic of 1907, which ended with the creation of the Federal Reserve, also affected its work.
In 1914, with the onset of World War II, NYSE suspended operations for four and a half months. In 1920, it was hit by a bomb of radicalized groups, which caused dozens of injuries. On an emblematic date, October 29th, 1928, “Black Thursday,” in which the Great Depression started, assets collapsed and one of the longest nights on Wall Street began.
The New York Stock Exchange was born in the convulsed times of incipient capitalism in America and after a whole period of independence struggles and, until today, it remains the world center of financial operations. The New York Stock Exchange is where the world’s most ambitious dreams are born and die.