Under a leafy buttonwood tree,
The town officers rose to their feet;
The runners, a powerful group you see,
I would change everything I could;
They soon developed commissions
Which for the runners was so good.
This might not be what Henry Wadsworth Longfellow would have had in mind as part of his poem, “The Village Blacksmith”; but the story of how the New York Stock Exchange started reminded me of his famous verse. The formation of the New York Stock Exchange (NYSE) supposedly occurred when 24 of the most prominent brokers and speculators in the United States got together and reached an agreement.
It was said that they put under a “Buttonwood” tree to conceptualize the vision that marked the beginnings of the Wall Street investment community. Some cynics would say that this story sounds far-fetched; but by all accounts, this is the way it happened.
Where exactly was this buttonwood tree? It was near a 12-foot-high wooden stockade along the Hudson and East Rivers, built in 1653, under the direction of Governor Peter Stuyvesant, to protect Dutch settlers from the Lenape Indians, settlers of New England. and the British. At the same time, a street was also beginning to develop along the wall on the city side. This street was called Wall Street.
Over the years, the feared attacks never materialized and the thick plank wall began to deteriorate. Eventually, citizens and farmers began tearing down the wall to use the planks for building materials or firewood. The wall disappeared completely in 1699, but the street retained the name “Wall Street”. However, it would be more than a hundred years before the financial markets could call Wall Street its birthplace.
So what prompted these 24 prominent brokers, speculators, and merchants to gather under that “buttonwood” tree in 1792? The catalyst seemed to have come at the end of the Revolutionary War when the first stock certificates were traded in the United States. It was in 1790 that the soldiers and merchants who participated in the war began to redeem the script that the Federal Government had issued to them during the war.
The birth of the investment market was marked by these first issues of publicly traded securities. Those visionary entrepreneurs wanted to get involved in this new and possibly lucrative venture. It was then, at that famous 1792 meeting under the buttonwood tree, that they agreed to sell securities as private transactions in their private organization and collect commissions on the transactions. This came to be known as the “Buttonwood Agreement”.
At first, brokers conducted their business from the Tontine Coffee House on Wall Street because they had no headquarters; and they didn’t even have a name for their organization. However, this group would come to be known as the New York Stock Exchange (NYSE).
It was at the same time that the government created the first bank, the Bank of New York. In fact, the first corporate stock traded by the “Brokers of the Buttonwood Tree” was the Bank of New York. It was also the first company to list on the New York Stock Exchange.
The formal organization was established in 1817 and was called the New York Stock & Exchange Board. At 68 Wall Street they soon developed a set of rules and a constitution, drawn up on March 8, 1817, for conducting business. It wasn’t until 1863 that the name was finally shortened to the New York Stock Exchange.
Since 1868, having a listing on the NYSE has been considered valuable property. Currently, prospective members must purchase existing seats which number 1,366.
Today, Wall Street has become a “pedestrian only” street. It is at the end of that street at Federal Hall that President George Washington’s inauguration took place on April 30, 1789. There is a statue of Washington at the exact site of the inauguration, and the current building there, erected in 1842, it was the first US Custom House. From the Washington statue there is a good view of the New York Stock Exchange, which is actually on Broad Street, not Wall Street. What stands out in the NYSE building, however, are the sculpted figures and Corinthian columns, which have become universal symbols of American commerce and finance.
The New York Stock Exchange has come a long way since the “24 Prominent” signed the “Buttonwood Agreement” in 1792. Billions of dollars change hands here every day. The New York Stock Exchange, from its humble beginnings, has become the world’s center for financial transactions and the largest stock market. Yes, indeed, under the leafy button…
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