Wall Street, located in lower Manhattan, has become synonymous with the U.S. financial markets. Yet the history of the street goes back much further than the New York Stock Exchange (NYSE).
Wall Street is a direct reference to a wall that was erected by Dutch settlers on the southern tip of Manhattan Island in the 17th century. The Dutch, located at the southernmost part of the island, erected a defensive wall to help keep out the British and pirates. Although this wall was never used for its intended purpose, years after its removal it left a legacy behind with the street being named after it.
- The physical location of Wall Street is in lower Manhattan, where the New York Stock Exchange is housed.
- The street's name refers to a long-gone wall that was erected in the 17th Century by Dutch settlers intent on keeping out the British and pirates.
- Beyond the street itself, the name Wall Street has become synonymous with the financial world and America's financial center in New York City.
The Buttonwood Agreement
This area didn't become famous for being America's financial center until 1792 when 24 of the United States' first and most prominent brokers signed the Buttonwood Agreement that outlined the common commission-based form of trading securities. Some of the first securities trades were war bonds, as well as some banking stocks such as First Bank of the United States, Bank of New York, and Bank of North America.
The NYSE came later. In 1817 the Buttonwood agreement—named so because the agreement occurred under a Buttonwood tree—was revised. The organization of brokers renamed itself The New York Stock and Exchange Board. The organization rented out space for trading securities in several locations until 1865 when it found its current location at 11 Wall Street.
The American Civil War that took place between 1861 and 1865 ended up helping the financial district expand.
Merger Leads To Expansion
In 1869, the New York Stock and Exchange Board merged with a competing firm that sprang up called The Open Board of Stock Brokers. With financial trading still getting its footing, the merger helped solidify the NYSE as one of the major places to go and trade. Membership was capped to a certain number of members and remains capped, although increases in members have occurred over the years.
The 1929 stock market crash and the ensuing depression brought more government regulation and oversight to the US stock exchanges. Prior to this, it was far less regulated, and after the crash politicians and the exchange realized more protocols had to be put in place to protect investors.
The NYSE is the largest stock exchange in the world by market capitalization. The NASDAQ Stock Exchange, at 165 Broadway, is the second-largest exchange. While many still think of Wall Street as the financial center of the world, that is starting to change. While many financial firms were formerly headquartered on Wall Street, many have chosen to locate elsewhere. Many high-frequency trading firms have taken up residence in New Jersey, for example. With electronic trading and technological advances in communication, it is no longer a requirement for traders to be at or near the financial district.
While the physical span of the financial world continues to expand around the world, the street that houses the physical building of the NYSE remains a powerful and historic symbol and location.