A Finance MBA’s Guide: A History of Wall Street and New York’s Financial District
Wall Street is the heart and soul of global commerce. Nestled in at the southern end of New York City, these eight blocks of concrete, glass, and high-tech infrastructure play a huge role in the world’s economy and trade. The securities, stocks, and commodities that are traded by bankers and MBAs shape the infrastructure of the world we live in. However, Wall Street wasn’t always a bustling financial hub in the center of a global metropolis. The area was first the home of the Native American Lenape tribe, until European settlers arrived in the 17th century. The Dutch were the first Europeans to start to develop the area that would become known as Wall Street in Manhattan, part of what they named the city of New Amsterdam. Soon after, the British took over, and New York City as we know it began to form.
1652: Dutch settlers, at war with the English, build a 2,340-foot wood and earthen wall for defense in lower Manhattan, where they establish the first permanent settlement on the island.
1664: The wall prevents a land invasion, but the English are able to conquer Manhattan by sea. They rename it New York.
Dec. 13, 1711: Wall Street starts its history as a commercial hub by hosting a government-sponsored slave market. The tax revenue generated from auctioning off slaves helps to fund the city government.
1789: The City Hall on Wall Street is renamed Federal Hall as it becomes the meeting place of the first Congress. At the time, New York is the nation’s capital. The Bill of Rights is first proposed here, and President George Washington is sworn in on the building’s balcony.
1790: The Compromise of 1790 relocates the federal capital to Washington, D.C.
May 17, 1792: The Buttonwood Agreement is made, named after the buttonwood tree that securities traders used as a meeting point. After witnessing traders in Philadelphia trade through a centralized exchange, New York traders decide to create one for themselves to limit competition and protect themselves from government intrusion into their business dealings. Only approved brokers would be allowed to trade securities. The traders believed that this organization would give them more credibility than the independent auctioneers who dominated the day.
April 1817: The New York Stock & Exchange Board is opened, a continuation of the original Buttonwood Agreement. In order to get a seat on the exchange, one must be voted in, pay a fee of $25, and abide by a dress code of top hats and tails. This dress code would become the source of the popular caricature of the top-hat-wearing billionaire.
1825: The Erie Canal is completed. This waterway significantly reduces the travel time for goods to move from Albany to Buffalo, making it easier to ship goods from New York City to the Great Lakes. The state of New York starts to become a center of global commerce as a result, and Wall Street benefits immensely.
Dec. 16, 1835: A massive fire destroys parts of Manhattan, radically changing the physical landscape of Wall Street.
Oct. 29, 1929: The glamour and excess of the Roaring 20’s comes crashing down as a mass sell-off of stock results in the market tanking. Known as Black Tuesday, this market crash precipitates the Great Depression.
Dec. 11, 1987: Oliver Stone’s film Wall Street is released, starring Charlie Sheen and Michael Douglas.
Wall Street History Facts
While many MBA students aspire to work on Wall Street today, centuries ago, it was part of a Dutch settlement. Legend says that the street got its name from the Dutch “de Waal Straat.” This area was a center of New York commerce starting in the late 1700s, but the booming economy after the Civil War truly cemented the street’s fate as the heart of New York’s Financial District. Some of the biggest names in finance worked here, including J.P. Morgan and John D. Rockefeller. While the Great Depression caused a downturn in Wall Street’s fortunes that would take decades to undo, it would eventually bounce back. In 1975, electronic trading was first allowed on the New York Stock Exchange, expanding access to trading beyond the stock exchange floor.
History of the New York Stock Exchange
The Buttonwood Agreement, written in 1792, allowed for a group of securities traders to set up their own exchange free from auctioneers that typically oversaw such trading. These traders originally operated under a Sycamore tree on Wall Street and eventually took over the Tontine Coffee House. Their tightly knit group had strict rules for admittance and trading. In 1817, these stock traders took their agreement one step further and formed the New York Stock & Exchange Board, modeled after the successful Philadelphia Stock Exchange. In 1863, the name was changed to its current moniker, the New York Stock Exchange, or NYSE. Currently, trading on the floor of the NYSE is open from 9:30 a.m. to 4 p.m. Eastern time on weekdays. Although the trading floor is not as bustling thanks to electronic trading, there are still traders packing the NYSE every day, hoping to make a fortune in the world’s financial center.