The stock market has been a popular topic of conversation throughout the ages, but especially now, nearly a decade after the Great Recession wrecked the system and devastated millions of people.
However, even those who participate in trading and tracking stocks may be unaware of the stock market’s origins or how it came to the United States in the height of the American Revolution.
Let us delve into the deep history of the stock exchange:
The stock market got its start in 16th century Antwerp, Belgium. However, this original model did not boast the stocks and stockbrokers we have come to know today. Instead, the stock market was dominated by bankers and moneylenders who would work to resolve everything from individual to governmental debt issues, meaning the stock market was backed by promissory notes and bonds.
In 1566, approximately 30 years after the Belgian stock market was established, Sir Thomas Gresham established the Royal Exchange as London’s first stock exchange. The Exchange was then officially opened by Queen Elizabeth I, who awarded it a royal title, as well as a license to sell liquor. Similar to the Antwerp Stock Exchange, the Royal Exchange consisted of offices and shops where merchants and traders could meet and conduct their daily business.
The 17th century saw an influx in trade-oriented companies with East India in their names. This is because the English often exploited trade with Eastern and Southeastern Asia, as well as India. This led to the monopolization of the area, where these companies proliferated British Imperialism.
Dutch companies of the same caliber began to rise shortly after. Given their quick and far-reaching expansion, these East India companies were considered to be one of the first modern joint stock companies.
In spite of the tensions of the American Revolution, the New York Stock Exchange was established in 1773. Unlike the exchanges of its time, the NYSE dealt exclusively in stocks. While it was not the first stock exchange to be established in the United States – that title belongs to the Philadelphia Stock Exchange – the NYSE was the quickest to grow, especially with its location and backing from the tough curbstone brokers.
From the NYSE’s success grew three indices, which now dominate the majority of the market: the Dow, NASDAQ, and the S&P 500. Each of these indices represent the nation’s largest corporations and have branches of their own, which often cover smaller industries and fields.
In spite of its ups and downs – namely, the Great Depression and Great Recession – the NYSE remains the world’s financial superpower, with a market capitalization larger than Tokyo, London, and the NASDAQ combined. Therefore, it is safe to say that the NYSE is here to stay, regardless of the changes the financial industry may encounter in the near and distant future.