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The Birth Of Wall Street

May 19, 2010 by  

What would become the New York Stock Exchange was born 218 years ago this week. On May 17, 1792, 21 stock brokers and representatives of three firms met under a buttonwood tree at 68 Wall Street and signed what became known as “the Buttonwood Agreement” to regularize the buying and selling of public shares.

Members of the New York Stock and Exchange Board, as it was called, pledged to honor two commitments. First, to buy and sell shares only among themselves—no outsiders permitted at this table. Or as the Agreement put it, “We will give preference to each other in our Negotiations.”

Second, that their commissions on all exchanges would never be less than .25 percent (one quarter of one percent) of the transaction. Over time, both the number of members and the percent for commissions grew exponentially.

And here’s an interesting tidbit: For more than 200 years stock prices were quoted in fractions, not decimal points. The reason has more to do with Spanish pirates than English banks. In order to share some of the captured booty with their crew members, pirates would slice doubloons into eight pieces—sort of like dividing a pizza today. So 1/8th of a dollar became a common unit of measurement. Two of them were “two bits,” or 25 cents—an expression we still use today.

That is, of course, the only association between pirates and Wall Street that’s ever existed.

—Chip Wood

Chip Wood

is the geopolitical editor of PersonalLiberty.com. He is the founder of Soundview Publications, in Atlanta, where he was also the host of an award-winning radio talk show for many years. He was the publisher of several bestselling books, including Crisis Investing by Doug Casey, None Dare Call It Conspiracy by Gary Allen and Larry Abraham and The War on Gold by Anthony Sutton. Chip is well known on the investment conference circuit where he has served as Master of Ceremonies for FreedomFest, The New Orleans Investment Conference, Sovereign Society, and The Atlanta Investment Conference.

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  • s c

    Your last sentence says it all, Chip. Today’s pirates are now in Washington (and most of them are elected). They’ve done a remarkable job of destroying free market capitalism and what used to be the strongest economy (and currency) in the world.
    Lenin, Marx and Stalin would be so proud.

  • Al

    Chip, Wall street is another example of what america has become. It was started with good intentions and has worked to accomplish many good things for a lot of our people. When it was started it was an american organization run by americans. Today it is run by the world’s rich. Not just Americans. Think about the morallity of our people when this was started and the morallity of the people that are there today. I don’t meat that everyone is the same. There are a lot of good people who work on wall street but they are not in control. Did or didn’t the melt down in our financial and economic mess start on wall street? What really started the housing demize?

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