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02 April
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HistoryPodcast 55 – Wall Street

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Wall Street is the name of a narrow street in lower Manhattan running east from Broadway downhill to the East River. Considered to be the historical heart of the Financial District, it was the first permanent home of the New York Stock Exchange. The phrase “Wall Street” is also used to refer to American financial markets and financial institutions as a whole. Interestingly, most New York financial firms are no longer headquartered on Wall Street, but elsewhere in lower or midtown Manhattan, Greenwich, Connecticut, or New Jersey. JPMorgan Chase, the last major holdout, sold its headquarters tower at 60 Wall Street to Deutsche Bank in November 2001.

HP55 – Wall Street.mp3 16:42 – 15.4MB

Question: What is the first year Michelle mentions as a stock market crash?

Answer: 1929

Links/Sources:

Stock Market Crash of 1987
Stock Market Crash of 1929
Wikipedia article on Stock Market Crash of 1929
Wikiipedia Article
A to Z Investments: 1929 Crash

Source: Encyclopedia Britannica

Books

Left To Tell : Discovering God Amidst the Rwandan Holocaust

Confessions of a Wall Street Analyst : A True Story of Inside Information and Corruption in the Stock Market

The First Wall Street : Chestnut Street, Philadelphia, and the Birth of American Finance

Wall Street : A History

Wall Street: A History : From Its Beginnings to the Fall of Enron

This show will focus on a single street and the business conducted on it. The narrow street’s location is lower Manhattan, NY and runs east from Broadway downhill to the East River. Stumped…well, this street happens to have formed a boundry for different groups of early settlers and Native Americans, during the 17th century. Still boggled…here’s another clue, trading and speculating informally took place in the late 18th century near a buttonwood tree, which thrived on the street. Looking for a more current use of the street…lets see, the street was the first permanent home of the New York Stock Exchange and is used to refer to American financial markets and financial instituations as a whole. If your thinking Wall Street, you are accurate. Wall Street, aguably the most well-known financial street worldwide, has a facinating history from the street’s inception hundreds of years ago to modern day events taking place on it daily.

Please listen as the history of Wall Street is revealed. A trip through time will uncover Wall Street’s legacy and important historical events. Also, stay tuned to find out how to win a copy of the book Left to Tell, a heroing tale of a woman’s survival of the 1994 Rwandan Holocaust.

Cha-Ching – the sounds of bells ringing and money instantanously electronically changing hands is an everyday occurance on Wall Street, but how did this street become the main headquarters of financial institutions?

Going back hundreds of years before New York City was a city, a wall actually existed. The wall was built in 1653, on the lower end of Manhattan “Island” by the Dutch, who had established the New Amsterdam settlement, to protect against potential attacks from the Lepane Indians, New England colonists, and the British. Matterials used to build the wall included, timber and earthwork. Fortunately, the wall was never tested in battle and was dismantled by the British in 1699. The road alongside the once errect wall still remained though. The street’s name was naturally, Wall Street.

In the late 18th century, there was a buttonwood tree at the foot of Wall Street under which traders and speculators would gather to trade informally. This was the origin of the New York Stock Exchange. With many established cities worldwide having formed a headquarters for trade and commerce, the United States followed suit and established a place for formal stock and bond trading. The year was 1792, and Wall Street was the street destined to become New York’s center of commerce. Here’s insight to the area at this time: the population of New York City was about 34,000, excluding Brooklyn and Queens which were still separate towns. Also, a majority of Manhattan had just been rebuilt with brick buildings after the devastating Great Fire of 1776. Wall Street was not even yet paved or even lined with cobblestones. Wealthy businessmen, in addition to their ordinary trade, would sell the following: lottery tickets, bonds, and shares of stocks in new banks that were forming. The hottest trading and speculating was in treasury bonds, which were issued by the new Bank of the United States. In 1791, 100 shares actually did formally change hands.

Until 1792, a person wanting to buy or sell an investment would accomplish the objective by either advertising or word of mouth among associates and friends. Some of the first merchants to keep a supply of stock shares on hand were Leonard Bleeker at 16 Wall Street and Sutton & Harry at 20 Wall Street.

The first organized stock exchange was created in 1792, when John Sutton, Benjamin Jay, and 22 other financial leaders signed an agreement of rules, regulations and fees. After the agreement was finalized, in a building at 22 Wall Street, securities were auctioned every day beginning at noon and sold to the highest bidder. The seller paid the exchange a commission on each stock or bond sold. The founders originally called this organization, The Stock Exchange Office. This organization was quite exclusive, by granting membership to only the elite of New York’s financial community. At the time, women were not allowed membership, but now women do have such an opportunity extended. In fact, Muriel Siebert was the first female member of the New York Stock Exchange.

In 1882, the Dow Jones, the then name was Dow, Jones & Company, was founded by Charles Henry Dow, Edward Davis Jones and Charles Milford Bergstresser in a small basement office at 15 Wall Street. The Company starts producing daily hand-written news bulletins called “flimsies” delivered by messenger to subscribers in the Wall Street area, resulting in the inception of the Dow Jones Newswires. In 1884, the Dow Jones Indexes is founded with the Dow Jones Averages, the creation of Charles Dow, appearing for the first time in the “Customers’ Afternoon Letter.” Information was provided for 11 stocks: nine railroads and two industrials. This was the precursor to the Dow Jones Industrial Average, which was launched in 1896, and consisted soley of industrial stocks. On July 8, 1889, the Dow Jones & Company’s “Customers’ Afternoon Letter” becomes the Wall Street Journal; its quite apparent that the paper’s title is referencing New York City’s Wall Street. Amazingly to think of now, but the Journal contained only four pages and sold for two cents; advertising was 20 cents a line. The Wall Street Journal still remains an influential international daily business newspaper published in New York City. For many years, it had the widest circulation of any newspaper in the United States, although it is currently second to USA Today.

The year 1929 is an infamous year on Wall Street, as the events that occurred on October 28th and 29th,1929, are linked to the Great Depression. On these days, the Dow dropped 69 points to 230. By the stockmarket’s close on October 29, the Dow had lost 39.6% since its high on September 3rd. The market bounce that followed was shortlived, and by early November the Dow had broken down to new lows. People’s fortunes and entire investments were wiped out, due to investors commonly using the liberal 10:1 margin (big loans to buy stock) available to them. Stories do exist about the stock market “crash” of 1929 causing dozens of people to commit suicide by jumping out of windows, shooting themselves, and reportedly the news causing heart attacks. The great worldwide depression of the 1930’s is often attributed to the stockmarket crash. The decrease in the stockmarket’s valuation did get worse though, when the market hit bottom on August 12, 1932. On that day, the Dow hit a low of 63, which is the same value the Dow had when it began in 1896, where the market had lost almost 89% of what it was once valued at. However, in addition to the stockmarket’s extreme devaluation, other circumstances did contribute greatly to the rapid decline in the standard of living for many Americans. At the time, most Americans didn’t play the stock market, but rather kept their savings in banks. The failure of so many banks, along with rising unemployment, triggered so much suffering during the early 1930’s.

The stock market loss momentum again on Monday, October 19, 1987, the Dow Jones Industrial Average fell 508.32 and closed at a record-breaking low of 1,738.40 points. This date is referred to as Black Monday and is documented as the single day worst stock market crash in history. The 22.9% loss in 1987 almost doubles the percentage lost in the Crash of 1929, which was 12.82%. Several stockmarket analysts concur that the crash was attributed to a number of events, including the poor choices of portfolio insurance professionals and program trading. One of the results of the crash was the creation of circuit breakers, techniques to restrict trading times in the market when market value is very high and volatile. Also, communication between stockmarket regulators and investors has increased, along with the access of the market to its investors.

Overall, the stockmarket has risen in value drastically. People confidently flock to the stockmarket as a source of investment for both long-term and short-term stocks. Currently, the stockmarket is so diversified with many various industries selling stocks. Many brokerage firms have formed, and with the advent of the Internet so widely used, its commonplace for individuals to just buy and sell stocks using Internet trading accounts. Internet trading accounts typically have a much lower commission fee than utilizing the traditional ways of trading stocks, which would be with a stock broker. A modern day fact that may be of interest is that most NY financial firms are no longer headquartered on Wall Street, but elsewhere in lower or midtown Manhattan, Greenwich, Connecticut, or New Jersey. In fact, JPMorgan Chase, the last major holdout, sold its headquarters tower at 60 Wall Street to Deutsche Bank in November 2001.

Prior to Wall Street being the focal point of the American financial markets, Boston was the financial center of America. Bonds for projects such as roads, canals and bridges, and contracts for commodities such as hides and molasses, were bought and sold mostly by Boston dealers. However, an official place to conduct such business did not exist, until the initiation of Wall Street. Also, Belgium established the world’s first exchange in 1531, with Amsterdam soon following suit. In 1602, under the Amstel bridge, transactions of the East India Company’s shares took place. The monies raised here financed the Pilgrim’s trip to America. At this time, Paris conducted their financial business on Rue de Quincampoix. Also, during the early 1600’s, Berlin’s traders and merchants conducted their business at the Grotte in Schlossgarten. London’s stock exchange also began, as an outdoor market centered on Exchange Alley. By 1725, many London brokers began conducting business at Jonathon’s Coffee House, which was renamed “The Stock Exchange” in 1773. Then, an advertisement by a broker named John Taylor proclaimed “Buyeth and selleth new lottery tickets, Navy victualling bills, East India bonds, and other publick securities”.

The business of buying and selling stocks, bonds, and securities does indeed have a robust and facinating history. Hope you found this HistoryPodcast to shed some light on the events and circumstances that led to Wall Street becoming such a prominent and well-known street for financial transactions.

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