Topic Page: Wall Street (New York, N.Y.)
In the seventeenth and eighteenth centuries, Wall Street was the major commercial thoroughfare in lower Manhattan. The original Dutch settlers in New York built the wall after which the street was named to protect the area from local Indians and the English. By the time of independence, the street was a well-established commercial thoroughfare and also was the site of a local stock market.
Traders met at appointed hours outdoors and in coffeehouses to trade the shares of local banks, insurance companies, and the bonds of the new federal government and New York State. Trading developed quickly but was beset by scandal. The outdoor traders formed a new, more formal marketplace that moved indoors in 1817. That market became the New York Stock Exchange (NYSE). Brokers who did not join remained out-of-doors and became the New York Curb Exchange, later to become the American Stock Exchange.
The NYSE grew quickly with the economy but remained free of government regulation for the first 140 years of its existence. During the nineteenth century it developed a reputation for predatory trading practices by its floor traders. The favorite investment for many was bonds rather than stocks as a result. After World War I, stocks began to attract more investors until the stock market crash of 1929. The results of the crash and the ensuing Depression were profound. Most investors avoided stocks throughout the 1930s and 1940s and only began to return to the market in the latter 1950s. Investor protections found in the Securities Act (1933), the Banking Act (1933), and the Securities Exchange Act (1934), all of which were enacted as a result of the crash and the Depression, provided the underpinnings of Wall Street's growth for the remainder of the century.
Beginning in the 1960s the markets attracted more investors and the era of modern investment began. In the 1980s and early 1990s, changes in regulations allowed individuals to open private retirement accounts and manage their own pensions more freely. As a result the markets began to rise and an increasing number of individuals became exposed to the stock market. The number of mutual funds increased dramatically as well. In the later 1990s trading via the Internet became popular, attracting even more investors to the market who traded for themselves rather than using a traditional stockbroker.
Many financial markets are located outside New York, including the options markets and the futures markets, but are still considered part of Wall Street. The name has come to embrace all of the markets, not just those located in New York, and is a synonym for the financial world in general.
Despite the growth and importance of the NYSE and the bond markets that also developed on Wall Street, the marketplace remained private, even following government regulation after 1933. The investment banks, securities dealers, and brokers that bring securities to market and trade them are among the nation's most regulated industries but are still private institutions; that is, they are owned by individuals rather than by government agencies. The same is true of the stock markets. Many of those institutions have gone public, selling shares to the public to raise additional capital, necessary for the ever increasing demands for financing. But Wall Street still reflects the basis of American capitalism—private institutions serving the national economy by raising investment funds for industry and government.
Trading Floor of the New York Stock Exchange. 1955. Gottscho-Schleisner, Inc., photographer. Gottscho-Schleisner Collection, Library of Congress.
The crowd at the New York Stock Exchange. 1939. Gottscho-Schleisner, Inc., photographer. Gottscho-Schleisner Collection, Library of Congress.
New York Stock Exchange. 2006. Checco, photographer. Flickr.
View of New York Stock Exchange. 2005. Duo de Hale, photographer. Flickr.
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