Incredible Stories from the Birthplace of Modern Capitalism
Wall Street has changed from a gathering of twenty-four brokers into the machinery of global finance. The remarkable thing is how little the people have changed.
In May 1792, Lower Manhattan was still a place of ships, horses, merchants and mud.
Wall Street ran east towards the water. New York was a small city by modern standards, and the United States itself was scarcely sixteen years old. Yet something was beginning here that would eventually reach into almost every developed economy on Earth.
On 17 May, twenty-four brokers and merchants signed a short agreement establishing rules for dealing in securities and setting commissions. Tradition places them beneath a buttonwood tree at 68 Wall Street, although the tree itself belongs partly to Wall Street legend. The document does not. The Buttonwood Agreement survives, and the New York Stock Exchange traces its origins to it.
There were no terminals. No financial television. No Bloomberg screens glowing in darkened rooms.
There were men who needed to know whom they could trust.
That may be the more important beginning.
The Market Becomes a Machine
The market outgrew the street.
In 1817, brokers created the New York Stock & Exchange Board and rented rooms at 40 Wall Street. Trading took place twice a day. Securities were called from a podium while brokers shouted their bids and offers from assigned chairs. The chairs eventually gave Wall Street one of its most enduring expressions: owning a “seat” on the exchange.
Then came technology.
The stock ticker arrived at the NYSE in 1867, carrying prices beyond the trading room continuously and changing who could know what was happening in the market.
Ticker tape became telephones. Telephones gave way to computers. Computers were connected to networks. Networks became fast enough for machines to trade with machines.
The distance between decision and execution collapsed.
Human nature did not.
There were men who needed to know whom they could trust
by Wanderlust
Fear Arrives Faster
On 19 October 1987, the Dow Jones Industrial Average fell 22.6 per cent in a single session, still its largest one-day percentage decline. Selling fed selling as markets around the world became entangled in a crisis unfolding within hours.
Twenty-three years later, the clock accelerated again.
During the Flash Crash of 6 May 2010, nearly $1 trillion in US market value disappeared within minutes before prices partially recovered. Investigators eventually traced the cascade across futures and equity markets, demonstrating how extraordinary speed could transmit instability almost instantaneously.
The technology was new.
The rush for the exit was ancient.
When One Man Became the Central Bank
Some of Wall Street’s greatest stories happened before the institutions now taken for granted existed.
In 1907, a failed attempt to corner United Copper helped ignite a financial panic. Depositors ran on trust companies. Credit tightened. The rate for overnight loans against stock collateral briefly reached 100 per cent. The New York Stock Exchange itself was threatened by the disappearance of money available to brokers.
There was no Federal Reserve.
So J. Pierpont Morgan assembled bankers and money instead.
Read More: New York: Six Days on Foot
…The crowd had moved from Wall Street to the internet. It was still a crowd.
Cash was delivered to the Exchange’s loan post and private financial power was deployed against a spreading panic. The episode became one of the forces behind America’s subsequent monetary reforms and, ultimately, the Federal Reserve System.
Wall Street had discovered something uncomfortable: markets built upon private confidence could sometimes require an institution powerful enough to restore it.
The technology was new. The rush for the exit was ancient.
by Wanderlust
The Club Changes
For generations, the Exchange was overwhelmingly a male institution.
Then, on 28 December 1967, Muriel Siebert became the first woman to buy a seat on the NYSE. She had struggled even to find someone willing to sponsor her application. For the following decade, she remained the only woman among 1,365 men on the Exchange.
Half a century later, another boundary was breached from an entirely different direction.
In January 2021, individual investors congregating online drove extraordinary trading in GameStop and other so-called meme stocks. Prices, volumes and attention surged until several retail brokers restricted certain transactions, provoking questions about clearing, market structure, and the relationship between individual traders and financial institutions.
The crowd had moved from Wall Street to the internet.
It was still a crowd.
Beneath the Numbers
Over ten parts, we will return to the moments when Wall Street ceased to be an abstraction.
The Buttonwood brokers. The great crashes. Attempts to corner markets. Morgan and the Panic of 1907. The ticker tape and the machines that eventually replaced it. Muriel Siebert entering a club built by men. The Flash Crash. GameStop. And the extraordinary fortunes created and destroyed between them.
This is not simply the history of an exchange.
It is the history of what happens when ambition, information, technology, money and human psychology are connected to one another.
Two centuries ago, twenty-four men needed a sheet of paper and enough confidence in one another to make a market.
Today, orders can cross the world in fractions of a second.
But when prices begin to rise, somebody still fears missing out.
And when they begin to collapse, somebody still wants to be first through the door.
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