Today when we think of the stock market, it is a vast exchange of every type of company. Currently, there are 60 major stock exchanges throughout the world and the United States holds the place as the largest taking over 40% of the global exchange. These numbers are not surprising to say the least, but what may surprise some people is that the US has not always been a part of the stock market. The first recorded stock market was in Belgium in 1530. The 1600s saw the evolution of stock markets in Britain, The Netherlands, and France, but it was not until 1789 when Alexander Hamilton took office that the United States became a player in the game.
Early Days of the Stock Market
The first stock exchange was not nearly as crowded as it is today. In the 1800s, it was known as the Curb Exchange and was just a little market at the corner of Broad Street. It was not until 1921 that the it moved to a more permanent location at Trinity. Still, there was a lot of growth to be had during this industrious time and it was not until 1953 that Curb Exchange officially changed to the official title of the American Stock Exchange.
The Great Crash
No history about the United States Stock Market would be complete without talking about some of its darkest times. The Great Stock Market Crash of 1929 remains as the largest crash in United States. The first notion of a problem was on October 29, 1929 when a 10% dip in stocks was noted early in the day. Throughout that day, stock prices continued to fall and over the next few weeks, prices seem to drop off the face of the earth. However, it was actually not the cause of the Great Depression.
What people do not realize is that stocks bounced back remarkably quick during that time, but frightened people withdrew their money from banks fearing an economic meltdown. With no insurance to back banked funds back then, it was understandable that people quickly withdrew their money, but this rush to the bank system essentially closed many banks for good. (Just a little bit of information for when people claim that the crash caused the Great Depression.)
Radio Helped Build Interest
In the early 1950s, the Curb Exchange moved indoors and changed its name to the American Stock Exchange, but that was not the only change to come to the United States Stock Market. More interest was essential to grow the exchange to new heights, so in accordance with the times, Radio AMEX was introduced. This change to marketing tactics attracted younger companies and entrepreneurs. Between 1950 and 1960 AMEX grew from $12 Billion to a staggering $23 Billion overall. A large part of the thanks can be given to the inclusion of radio stock broadcasts.
Options Market
Education is key and during such an industrial time as the 1970s where more companies were moving into publicly traded stocks, the need for education was paramount. AMEX decided to educate new investors with its options market. This program included a series of films, printed materials, seminars, slides, and research material to explain the risks as well as the potential rewards of investing in the stock market. The options market opened even more doors for those who had previously been on the fence about investing in the stock market thereby growing the market even more.
Expansion is Necessary
The United States Stock Market has been a steadily growing market and therefore, growth often necessitates the need for more floor space. The New York Stock Exchange received a substantial increase in floor space with the purchase of 22 Thames St. The expansion into the adjoining building allowed for two balconies and a mezzanine trade level. This expansion took place from 1979 to 1988.
First ETF
Exchange Traded Funds are highly attractive to many investors for their low costs, stock like features, and tax efficiency. In 1993, the American Stock Market received the very first ETF, known as the Standard & Poor’s Depository Receipts. Since its inclusion into the American Stock Market the SPDRs or Spiders as it is most commonly referred to has become the largest ETF in the world.
Deregulation of the Financial Industry
The American Stock Exchange and the Global Stock Exchange as a whole were once again hit hard in 2008 when deregulation of financial institutions caused another meltdown to occur. Again, it was the banks that caused much of the fuss as they were giving out home loans that they knew the recipients would be unable to pay back.
Today’s Stock Market
Although we have seen many ups and downs throughout the history of the American Stock Market, todays stocks are remarkably strong. Although the United States currently houses the largest stock market, it only maintains 17% of the world’s stock. United States companies tend to be much larger than those of other countries. This is a long way from the humble beginnings of the Curb Market of the 1920s and we are still growing.