Investments & Trading
The Buttonwood Agreement – The forerunner to the NYSE By J. Foley
When we think of the current New York Stock Exchange, images come to mind of the Big Board, ticker tape and incredible amounts of stress. But it didn’t always use to be that way. There was a time when a group of men met under a shady tree in the spring to found what would become one of the most powerful and well known exchanges in the world.
The story of the Buttonwood Agreement actually goes back even further than 1792. Two years earlier, then Secretary of the Treasury Alexander Hamilton (pre-duel) issued a then staggering amount of $80 million in war bonds to help pay for the rising costs of the Revolutionary War. It would be these bonds that would play a key role in the founding of the Buttonwood Agreement.
A major reason for the founding of the Buttonwood Agreement was that securities trading in New York City at that time was a bit disorganized. Auctioneers would deal in commodity trading, land speculation and foreign currency exchange, but the Buttonwood Agreement sought to organize and streamline the trading so that it could be done in one place.
Two years later, on May 17, 1792, a group of 24 prominent New York City business men met outside of 68 Wall Street in lower Manhattan and put together the Buttonwood Agreement. With a simple two-sentence contract, they formed the New York Stock & Exchange Board and the first securities to be traded were those very war bonds that Alexander Hamilton had issued two years prior. The first company to be listed on the new exchange was the bank of New York. The original home for the new stock & exchange board would be the Tontine Coffee House, which was owned by Hugh Smith, one of the 24 founding members. Other founding members included well known New York business men such as Charles McEvers Jr, John Bush, Alexander Zuntz and Ephraim Hart.
In 1817, the adopted name of the New York Stock & Exchange Board was formally adopted, as well as a comprehensive constitution and bylaws, and later in 1863, this name was shortened to the name we know today, the New York Stock Exchange.
It’s amazing to consider that the billions of dollars that trade hands every day on the floor of the New York Stock Exchange started as a group of business men looking to organize colonial American commodity trading under a tree. But it’s true, and their legacy is felt every single day and it will continue to be felt for as long as the NYSE stands.
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Article Written By J. Foley