NEW YORK STOCK EXCHANGE: A Brief Early History

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(I wish to thank Ted Gormick, Canadian, student of history and gifted mundane astrologer, for first investigating and identifying February 21, 1820 as the likely birth date of the New York Stock Exchange, contrary to the commonly recognized date: May 17, 1792)

 

FROM CURBSTONE BROKING TO THE FOUR MASONIC STONES OF THE NYSE:

 

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THE EARLY YEARS OF THE NEW YORK STOCK EXCHANGE. ______________________

(#.1.) CAP STONE: THE NEW YORK STOCK EXCHANGE BOARD: FEBRUARY 21st 1820 (a Leap Year). On this Monday in the early afternoon, about 1:00 PM, an extensive set of final revisions of the incomplete Constitution of 1817, three years in the making, were adopted and so completed the formal establishment of New York’s first securities exchange. Just 28 years after its inception in 1792 as THE STOCK EXCHANGE OFFICE of #22 Wall Street, the constitutional revisions started in 1817 were at long last brought to completion with the duly signed adoption of a comprehensive operating constitution for The New York Stock Exchange Board, comprising 15 articles and 13 by-laws. (There wouldn’t be any further changes to the constitution until the fourth Friday of the month, March 28th 1902 or to the corporate stile until Thursday, January 29, 1863, when the current stile: NEW YORK STOCK EXCHANGE was then adopted).

Seven years later, In 1827, the Board vacated the Tontine Coffee House after 34 years’ occupancy starting long before the establishment of any exchange, and moved into the newly opened Merchants Exchange, where the Board agreed to pay $500.00 per year to rent a specially requested numbered Room, the number being “43” (Feb 21, 1820 = 2+21+1820=16=7; Tontine Coffee House, 34yrs =3+4=7; room # 43= 7; the corporate name changed to NYSE in 1863, the 43rd year of the constitution; after all, the Masons have their own reasons and keep their own counsel). By

Mundane astrological reckoning, the first corporate Stile when adopted in 1820 (and in use for 43 years) must necessarily mark in signification the date and moment of birth of New York’s first stock exchange, as it represented the advent of what became, over the subsequent 184 tears, America’s premier financial institution. Although equity securities trading had been added to debt trading activities since the long ago early years, and in the process making this stock exchange the world’s largest of its kind, this stock exchange had become in character just what it was meant to be from its March 1792 start-up, at the time of the founding of THE STOCK EXCHANGE OFFICE at #22 Wall Street, and its later sponsorship of the BUTTONWOOD AGREEMENT. Throughout its 184 years the Stock Exchange was meant to be an exclusively managed financial casino, however seemingly dignified by the elitist trappings of American finance capitalism’s institutional culture. And so it has continued to be until

the day of this writing.

(#.2.a) FOUNDATION STONE: FEBRUARY 29th 1792. (Leap Year)

New York City after the Peace of Paris of 1783 was still just a regional port city of 30,000 persons: while on Wall Street there were just 54 merchants and 3 auctioneers who kept places of business there. But the post-Independence economy in New York got a boost when the

Congress of the Confederation announced on September 13, 1788 the scheduled establishment of the Federal Government under the Constitution, to be opened in New York City in March 1789. The Federal Government later re-located to Philadelphia in 1790. By February 1792 Wall Street suffered its first over-trading crash. These events set the right context for comprehending what was then in the works inside the securities broking

business. Among those Wall Street 57 was what was to become in MAY 1792 the “Cartel of 24”, a group of brokers and merchants in pursuit of the practical monopolization of select issues in the public securities auctions market, when they weren’t otherwise engaged in the trading and investing of private monies for commodities, debt instruments and casino betting; Yes, betting too: for instance, one surviving document records the placement of a bet on whether or not a certain French politician would be guillotined by a certain date during the French Revolution. Along with casino betting, the business of dealing in first issuances and re-offerings of corporate securities to the public had traditionally been a job organized by these same casino auction houses.

(#.2.b) THE STOCK EXCHANGE OFFICE: FEBRUARY 29th 1792

On the fourth Saturday of the month, this business, located at No. #22, Wall Street, was established and opened for business on the following month’s second Wednesday, March 8th. This new auction house was a joint venture of five established partnerships controlled by nine leading ‘players’ in the trading markets; this pooled effort of its partners was the hallmark

of the CLUB. The advertised organizational purpose marked the advent of the first systematic effort of New York City‘s oligarchic-minded elites to monopolize the public auctions market, in anticipation of controlling the public sales of the more lucrative larger corporate share issuances. As already mention, the CLUB was one of the select few auction houses fast at work from 1792 to “cartelize”, because it found itself incapable to outright “monopolize” the New York auctions market, and so to control for anti-competitive advantage the manipulation of daily securities trading. The CLUB owners were then, namely: (1) John Sutton of (a) SUTTON & HARDY; and (2) Benjamin Jay of JAY & SUTTON; (3) Leonard Bleecker and (4) G.N. Bleecker of (b) A.L.

BLEECKER & SONS; (5) Andrew D. Barclay, and (6) Charles McEvers Jr, and (7) Gulian McEvers of © MCEVERS & BARCLAY; and (8) John Ferrers of (d) CORTLANDT & FERRERS; and (9e) J. PINTARD. During the year after the signing of the Buttonwood Agreement, the CLUB members funded the building of their very own “informal” dual-purpose premises at Wall and William Streets, chartered in 1793 and Stiled: THE NEW YORK TONTINE COFFEE HOUSE COMPANY, formally dedicated as a Merchants Exchange, which it continued to be until 1827 and the establishment of the independent Merchants Exchange at Wall and Hanover Streets. Suitably named “Tontine”, since tontines were the chosen instruments to finance the construction. And in keeping with the deservedly tawdry image of the industry of the CLUB, the source of the financing instrument was the Tontine Insurance Policy, promoted by two of the partners in the CLUB: (1) AMSTRONG & BARNEWALL and Mr. David Reedy: This insurance policy was a

hybrid form of investment, part insurance, part “dead pool” gamble, which was eventually outlawed because it was deemed to be patently immoral. The end result of these recounted events is the inside story of the founding of just one very ambitious private auction house dealing public securities. The CLUB was then still a generation away from the completion of the tasks that one could later characterize as a properly conducted public Stock Exchange; Just as conception necessarily must precede birth, one may suppose.

(#.3.a) CORNER STONE: MAY 17th 1792.

In March 1792 the CLUB soon established a daily “rotational” auctions house, representing their joint and several interests. In just 72 days of existence CLUB negotiations turned what had soon become a failed attempt at monopolization into a highly successful, accomplished cartel; an occasion marked, at the moment the CLUB progressed from its “Founding” Stone months to the start of its “Corner” Stone years, with the execution of the “celebrated” BUTTONWOOD AGREEMENT. This occasioned the expansion of the CLUB’s membership by the inclusion of 15 outsider merchants and

brokers. The fifteen outsiders were, in profile: 10 brokers, 4 merchants and 1, the Warden of the Port of New York, who joined with seven insiders of the CLUB: the seven were 2 brokers and 5 merchants. One broker, David Reedy and a merchant partnership, Robinson & Hartshorne, joined the cartel on November 13, 1794. The date of this documentary agreement has occasioned the widely recognized celebration of the so-called

“founding” on May 17th, promoted by the public relations staff of the NYSE at its website. Agreed to by its original 22 signatories, this was essentially a cartel agreement to fix commission charges. The CLUB was the primus inter pares sponsor of this new cartel pricing code of conduct. In essential effect, the CLUB managed successfully to persuade 15 other Wall Street’s brokers and houses to enter negotiations among themselves, then to sign an agreement on the matter of price rigging the city’s securities market in order to stifle competition in the market-at-large on select high value public issues, using the instrument known as “Fixed Commissions”.

(#.3.b) Within the first nine days of the BUTTONWOOD AGREEMENT there were already listed quotations of the recently established BANK OF THE UNITED STATES, and the first commercial bank established in the City, the BANK OF NEW YORK. Thanks to the aggressively successful efforts of the CLUB, a group of 24 owners of Wall Street

brokerage houses hatched what in that era was the nation’s second most lucrative price fixing scheme, after the gold bullion trading manipulations of the silver bullion market. History may have never recorded whether or not the deal was truly consummated under that Buttonwood Tree, (actually, a Sycamore tree, standing just in front of the property line between #s 68 & 70 on the north side of Wall Street, and later uprooted in 1863). More likely the agreement was consummated while slurping coffees at the MERCHANTS’ COFFEE HOUSE during the lunch hour after the morning trading had concluded, at the corner of Wall and Water Streets. History may never divulge the actual details of the signing, most likely because the Agreement was a matter of concern only on a need-to-know basis inside the CLUB. The documented result (See FOOTNOTES) was a single sheet of unofficial paper, carrying 24 signatures pledging to abide by the Cartel’s restrictive pricing regime, those fixed commission

prices of the CLUB’s financial product services. In political economic effect this represented the start of the ascendancy of the Money Power’s license to contain the People’s market freedom. So from that day was marked America's first financial, privately sponsored, "cartel agreement", a traditional oligarchic device borrowed by the New World from the Old; a device archly anti-competitive in outcome. To be sure, a dignifying of what amounted to be, in the imperceptible long-run, the “screwing” of the unorganized public as investor.

(#.4.) KEY STONE: MARCH 08th 1817 ,

This second Saturday of the month marked the adoption date of the first By-Laws of the Exchange, in accordance with the Tuesday, FEBRUARY 25th, 1817 constitutional resolutions of the newly stiled: “THE NEW YORK STOCK AND EXCHANGE BOARD. Self-conscious steps on the path to formal organizational establishment of a Stock Exchange were first taken with the first of a

series of meetings committed to proposing what became an adopted “preliminary” Constitution. By 1817, the stock broker’s CLUB within the merchants community had grown to comprise 8 firms and 19 persons in business individually, and may be compared in size to the 6 firms and 18 individual businesses at the signing of the 1792 BUTTONWOOD AGREEMENT. The Board remained jealous of outsiders, admitting only one new member in 1817, for instance. However, by 1820 Board Members were 39 in all, with 10 of these signatories either party to or a family member of a party to the 1792 Agreement. These events didn’t complete the documentary work, however; in part because of the disruptions attendant upon financial depression, disruptions resulting from the deflationary pricing and capital investment chaos during the period immediately following the Treaty of Ghent, which treaty ended the War of 1812; and partly because of the raging epidemic of Yellow Fever in lower

Manhattan. Of such epidemic proportions was the Fever, that the trading houses of Wall Street were forced to remove themselves to Greenwich Village, on and near to Bank Street, while at the same time the lords of the House of Bleecker moved to the nearby neighborhood and named that street, selflessly enough, Bleecker

Street.

FOOTNOTES: Most of the modern histories of Wall Street and the Stock Exchange skate by the small-bone historical facts of time-moment detail, relevant to the interests of astrologers; So treat as INDISPENSIBLE these classic two historical reference works: (A) Francis L. Eames, THE NEW YORK STOCK EXCHANGE, (1894), pp. 13-16, in

which one finds a facsimile of the BUTTONWOOD AGREEMENT of 1792. (B) Edmund C.Stedman, THE NEW YORK STOCK EXCHANGE, (1905), pp. 35-37; 57-70, in which a facsimile of Page One of the preliminary Constitution of 1817, thought lost irretrievably for 118 years, until recovered from a Newark, NJ attic in 1900.

P.S.: (This writer worked 20 years at two Wall Street financial institutions: first, for 12 years in international banking management, and then, 8 years in international credit risk management and bond issuance and origination.).

 

 

 

 

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[Guest guest]

Hi Iver

 

RE: LSE (not the school)

 

I'll refer to my files and comment shortly.

 

RE: CORRIGENDUM on NYSE: Time moment on Feb 21, 1820 should have read "at about 12:00/1:00 pm" ....(Sorry, must be Mercury at work) .......John

 

del iver <deliver1900 wrote:

 

hi John

thanx

 

Q: any thoughts on London Stock Exchanges ?

 

thanx in advanze

IverJohn TWB <jtwbjakarta wrote:

 

 

(I wish to thank Ted Gormick, Canadian, student of

 

 

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