The New York Stock Exchange is huge. In fact, at over $16trn, it’s the biggest stock exchange in the world by market capitalisation. Every day, around six or seven million trades take place. But its beginnings are a far more humble affair. And it all started under a Buttonwood tree outside 68 Wall Street in May 1792.
That spring day, 24 New York City brokers met to agree on a new system to buy and sell securities, such as bonds and shares. Until then, trading meant going down to the auction, particularly when it came to soft commodities such as wheat and tobacco. But the Buttonwood Agreement changed all that. Of course, in these early days, investing was fairly straightforward. Just five securities – mostly bonds – were listed from the headquarters at the Tontine Coffee House.
Over the next quarter of a century, American trade grew, and New York overtook Philadelphia has the financial centre of the United States. Twice a day, the president of the exchange would read out a list of securities, at which point the brokers would buy and sell. It was all a far cry from today’s world of computer-driven high-frequency trading.
As the number of securities increased, it was time to move out of the coffee shop. On 8 March 1817, the Buttonwood Agreement formally became the New York Stock & Exchange Board, with rented rooms at 40 Wall Street, a new set of rules and a constitution.
The opening of the Erie Canal and the arrival of the railways in America from the 1830s onwards brought a surge in business to the exchange. By 1835, an average of 8,500 shares were being traded daily – a 50-fold increase in the space of just seven years. Since then, the New York Stock Exchange has moved home several times, and witnessed numerous boom-and-bust cycles – all on its way to becoming the world’s biggest and, arguably, most important stock exchange.