Closing Down The NYSE: What Does It Take?

By Andrew Beattie | October 19, 2010 AAA
Closing Down The NYSE: What Does It Take?

Like a church on Sunday, you don't expect the world's most famous exchange to close when there are stocks to be traded. However, the New York Stock Exchange has shut its doors multiple times in its long and storied history. We'll look at when and why the NYSE in this article. (For related reading, also see The Birth Of Stock Exchanges.)

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Fire and Ice
When the NYSE was still known as the New York Stock & Exchange Board, the NYS&EB, it started out at 40 Wall Street. From 1817 to 1835, things went smoothly. As a testament to the brokers and members' reluctance to stop business, the Great Fire of 1835 that ripped through lower Manhattan did not actually result in a closure, but rather a move to temporary quarters where trading continued on. (What is the NYSE? Find out in The NYSE And Nasdaq: How They Work.)

Since then, the NYSE has been prey to some inevitable shutdowns due to weather. The blizzard of 1888 caused a shut down, as did the moves to larger quarters. Excessive heat, lack of heat and paperwork backlogs - particularly during times of short staffing during wars - also caused the exchange to pause for a day here and there. So perhaps the fairest way to judge is by the events that led to successive days of closure.

Deaths
The first long closure of the NYSE followed the assassination of President Abraham Lincoln by John Wilkes Booth in 1865. The exchange closed for over a week and has observed Lincoln's birthday every year from 1896 to 1953. Since then, the NYSE has closed for days of mourning following the deaths of notable figures, occasionally making their birthdays a holiday at the exchange. More often, the exchange will close early or for several hours during the funeral of important figures. (Important people also get to ring the bell. Learn more in The Tradition Of The NYSE Bell.)

Panics and Crashes
The first financial event to close down the NYSE was the failure of Jay Cooke & Company during the panic of 1873. Jay Cooke & Company was a major player in the U.S. banking system, but it was overleveraged in railroad speculations. The bank failed, and the NYSE closed for ten days. Businesses and railroads failed en masse and the economy spiraled into a six-year depression.

The Great Depression marked another pause in trading as FDR closed the NYSE during the banking holiday, lasting five days in 1933. During the actual crash, the NYSE did close early for several days to process the flood of trades. (Learn more about the Great Depression in What Caused The Great Depression?)

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War
The declaration of WWI marks the longest shutdown on record with the NYSE closing for more than four months in 1914. The exchange eventually did get back to business and its operations helped cement the United States' position as the preeminent financial hub after the war.

WWII caused no such shut down. However, the NYSE appropriately shut down for two days to celebrate the victorious return of the troops in 1945 with - what else - a ticker tape parade.

The other long closure related to war, was the September 11th terrorist attacks on the WTC. The four-day closure marked the longest since the banking holiday in 1933. (For more info on the start of this exchange, check out Wall Street History: The NYSE Is Born, Bubbles Form.)

Notable Non-Closures
Although many events have shut the NYSE down for a day, and a rarer few have closed it for several days, the days where the NYSE has carried on in the face of adversity are also worth mentioning. During some of the worst market moments, including crashes and panics in 1907, 1929, 1987, 2000, 2007 and 2010, trading has continued.

But a favorite example of Wall Street's admirable stubbornness is the bombing of Wall Street in 1920. When a wagon loaded with dynamite and shrapnel killed 38 people outside the J.P. Morgan bank, not only did the NYSE open, but the bank itself opened for business as well. It marked one of the first times in modern history when public opinion swung firmly behind Wall Street, supporting their defiance of terrorism.

The Bottom Line
Brokers are not invincible. If the heat is out or the roads snowed over, the NYSE will shut down. To keep it closed, however, requires war, terrorism, depression, panic or assassinations, and fortunately those events are still much rarer than the odd blizzard.

For the latest financial news, see Water Cooler Finance: The Beginning Of A Foreclosure Crisis?

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