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Overview of American Stock Exchange History

23 December 2008 - Features - Editor

Stock exchanges all over the world continue to undergo changes in an effort to keep up with rapidly advancing technology. The stock markets of today bear little resemblance to the first stock market in recorded history – the Amsterdam Stock Exchange. The Dutch East India Company established the Amsterdam Stock Exchange, then known as the Amsterdam Bourse, in 1602 and became the first company to issue stocks and bonds through the exchange.

Having merged with the Paris Stock Exchange and the Brussels Stock Exchange in September 2000 to form Euronext, which in turn merged with NYSE Group to form NYSE Euronext, the Amsterdam Stock Exchange is now known as Euronext Amsterdam. While the historic stock exchange may have undergone many changes, a number of financial principles developed by the Dutch in the early history of the exchange remain in use today. These include debt-equity swaps, option trading, unit trusts, short-selling and merchant banking. Today there are stock exchanges operating in virtually every developed economy and the majority of developing, or emerging, economies. The world’s biggest markets are in the United States, Canada, India, the United Kingdom, France, Germany, Japan and Hong Kong (China).

Much of the early trade in stocks and securities revolved around the lucrative spice trade and shipping. Maritime pioneers of the time, such as the Netherlands and Portugal, took the lead in these markets, with Spain, France and England later emerging to claim their stake. With the rise of the British Royal Navy as a force to be reckoned with during and following the Napoleonic Wars at the end of the 18th century and continuing into the early 19th century, the seat of trade and commerce shifted to England.

English colonists took the principles of trading stocks to America and with the birth of the United States, leaders with insight saw the need to develop, not only military might, but economic power. One of these visionary leaders was Alexander Hamilton, the first U.S. Secretary of the Treasury. Having studied the stock exchanges in Britain, he was convinced that they were essential to establishing and maintaining a thriving economy. He served as U.S. Secretary of the Treasury from 1789 to 1795, and during this time he initiated the development of the American stock exchanges.

The trading of government debt securities began on the street corner of Wall Street and Broad Street in New York, the capital of the nation at the time. Trading soon expanded to include stocks and in 1817 New York traders established the New York Stock & Exchange Board, moving from the street corner into number 40 Wall Street. The stock market continued to go from strength to strength, with the rival New York Curb Exchange being founded in 1842. The New York Stock & Exchange Board later became the New York Stock Exchange (NYSE) and its rival later changed its name to the American Stock Exchange (AMEX). Number 40 Wall Street is now the 71-floor Trump Building. Congress instituted government regulation of stock markets following the Great Stock Market Crash of 1934.

Visitors to Wall Street in New York, the hub of America’s financial sector, will come across a statue of Alexander Hamilton honoring his role in the establishment of U.S. stock exchanges.

 


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