Under a spreading button tree,
The village runners rose to their feet;
The runners, a powerful group that 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 a starting point for his poem, “The Village Blacksmith”; but the story of how the New York Stock Exchange started reminded me of its familiar verse. The formation of the New York Stock Exchange (NYSE) allegedly occurred when 24 of America’s most prominent brokers and speculators got together and struck a deal.
They were said to have gathered 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 implausible; but this is clearly how it happened.
Where exactly was this button tree? It was near a 12-foot-high wooden palisade along the Hudson and East rivers, built in 1653, under the direction of Governor Peter Stuyvesant, to protect the Dutch settlers from the Lenape Indians, the New England settlers. and the British. At the same time, a street was also beginning to develop along the city side wall. 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 to tear down the wall to use the boards as building materials or firewood. The wall disappeared completely in 1699, but the street retained the name “Wall Street”. However, it would still be over a hundred years before the financial markets could call Wall Street their birthplace.
So what prompted these 24 prominent brokers, speculators, and merchants to rally under that “button” tree in 1792? The catalyst seemed to have reached the end of the Revolutionary War when the first stock certificates were traded in the United States. It was in 1790 when the soldiers and merchants involved in the war began to rescue 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 listed securities. Those visionary entrepreneurs wanted to get involved in this new and possibly lucrative venture. It was then, at that famous meeting in 1792 under the “buttonwood” tree, that they agreed to sell securities as private transactions in their private organization and charge commissions on the transactions. This became 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 become known as the New York Stock Exchange (NYSE).
It was around this time that the government created the first bank, the Bank of New York. In fact, the first corporate stocks traded by the “Brokers of the Buttonwood Tree” were 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 Securities and Exchange Board. At 68 Wall Street they soon developed a set of rules and a constitution, drawn up on March 8, 1817, for doing business. It wasn’t until 1863 that the name was finally shortened to the New York Stock Exchange.
Since 1868, having a membership in the NYSE has been considered a valuable property. Currently, potential members must purchase existing seats totaling 1,366.
Today, Wall Street has become a “pedestrian only” street. It is on that street in 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 United States Customs. From the Washington statue there is a good view of the New York Stock Exchange, which is actually on Broad Street, not Wall Street. However, what stands out in the NYSE building are the sculpted figures and Corinthian columns, which have become universal symbols for American commerce and finance.
The New York Stock Exchange has come a long way since the “prominent 24” signed the “Buttonwood Agreement” in 1792. Here billions of dollars change hands 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 spreading button tree …
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