Wall Street is an infamous street rooted in Manhattan, New York. It is a powerful symbol of US capitalism. The history of Wall Street signifies all banks, security traders, and hedge funds that operate the financial system of the United States of America. It is spawned across east to west from Broadway to South Street.
The Beginning of the History of Wall Street
The history of Wall Street began like this. During the critical Anglo-Dutch War in 1652, the antagonisms between England and the Netherlands spread to North America. Dutch residents who used to live in Manhattan Island, known as New Amsterdam, dreaded England’s plan to attack them. This fear initiated the construction of a wooden wall of defence. The Wall was demolished then reconstructed in 1692. It was demolished for good in 1699. While the Wall was never used for its primary purpose, it left behind a strong legacy and a street was named after it: ‘Wall Street’.
If we consider the history of Wall Street, then it did not become popular as the Financial centre of America until 1792. During that year, 24 prominent brokers in the US signed the Buttonwood agreement, which highlighted the standard commission based on specific trading securities. The Buttonwood agreement got its name because the brokers signed the agreement under the Buttonwood tree. The Organisation of Brokers renamed itself the New York Stock and Exchange Board. The company rented a space for trading financial securities in various locations. In 1865, the company finally found its present centre at 11 Wall Street.
The New York Stock Exchange is the world’s biggest stock exchange, followed by the NASDAQ Stock Exchange located at 165 Broadway. Presently Wall Street has become diverse with more than financial institutions doing their business on it.
How Does the Stock Exchange Market Operate?
The securities market was developed with the objective of raising capital for enterprises to grow, become profitable, and eventually create more jobs. However, within no time, security trading became highly lucrative, with traders participating in it more. The big change on Wall Street came after the Glass-Steagall Act was abolished. It allowed banks to use the savings of depositors to invest in securities known as derivatives. The banks based their funds on various loans, which included corporate bonds, credit card debts, and mortgages.
The History of Wall Street Crashes
The history of Wall Street is incomplete without discussing the significant crashes that it has witnessed since its inception. These crashes play a significant role in defining the present structure of the modern Wall Street. This is because these incidences contributed to the new structures, rules, and guidelines to trade in the financial market. In the following, we have highlighted some major crashes from the history of Wall Street.
- 24th October 1929
The stock market witnessed an influx as high as 50%, which started in 1928, despite clear indications of the economy being on the wane and the forecast of stock market collapse by Roger Babson, a famous economist. It did eventually crash on what is presently denoted as Black Thursday; on this day, the market dropped by 11%.
By Black Tuesday (28th October 1929), the market was panicking with 16 million shares being traded away; the very next day, the market lost USD 30 Billion. While there was a fast recovery, there were significant damages, and the market continued to fall until 1932. In fact, it took the whole of 1932 for the market to recover; this period was denoted as the Great Depression, which resulted in unemployment and poverty.
- 19th October 1987
On this very day, the Wall Street witnessed the biggest single-day drop with a massive loss of USD 500 Billion as markets across the world plunged. The computers used in Wall Street were programmed to sell stocks at a particular price threshold. Due to a domino effect, computers began liquidating a large number of stocks, and clerks failed to stop these transactions. It also affected buying, which destroyed any bids. After this, new rules were introduced in which automated protocol could be overridden, hence preventing the same disaster in the future.
- 11th September 2001
This was the year that Wall Street witnessed a terror attack that caused the death of 2,996 people, left 6000 people seriously injured, and destroyed the World Trade Center. This limited destruction traders’ access to financial institutions that were standing, resulting in market shut down for seven days. Then came a period of rebuilding the destroyed area.
- September 2008
In 2008, Wall Street was the highlight of the worst financial drop since the Great Depression. It was primarily the result of poor administration of subprime mortgages. During this period, the reckoned companies Freddie Mac and Fannie Mae were taken over by the government, and the Lehmann Brothers filed for bankruptcy. Expecting the same suit for other banks, a federal bailout was announced. The housing prices crashed across the country and there were huge foreclosures and home seizures.
- 17th September 2011
Due to the aftermath of the financial and housing market crash, massive protests labeled Occupy Wall Street took place on the Zuccotti Park. The protestors established a camp to pique attention towards enormous economic inequality. They held the bank for prosecution regarding the financial crisis. It highlighted that 1% of the global population owns 40% of wealth. The protestors blamed the street for the financial crisis, recession, and massive unemployment. Their objective was to extend a democratic process to the financial industry of the United States of America as Wall Street is monopolised by connection, power, and money. The introduced Principles of Solidarity include:
- Personal, as well as collective, responsibility
- Identify and regarding individual rights
- Transparent and democratic participation
- Resistance towards oppression
- More value to the Labor
- Better security and privacy
- Education of human rights
- Providing access to technologies, culture, and knowledge alike
On 15th November 2011, the movement was forced out of the Zuccotti Park, explaining it was leaderless and based on anarchy principles. The protestors shifted their locations and were seen again during the Presidential Election of 2016.
The Infamous Wall Street Bull
The Wall Street Bull is an enormous statue that represents Wall Street. This symbolism gave birth to the terms bull market and bear market. A bull market is represented when the stock prices experience an influx, whereas the bear market is considered when the market is witnessing a drop.
The Black Wall Street
The Greenwood neighbourhood in Tulsa was earlier reckoned as the Black Wall Street. In the early 20th century, the African-Americans formed their own business district and named it Black Wall Street. The name was used until the Tulsa race riot, which occurred in 1921. African-Americans historically worked as servants in Tulsa, where they created their own insular society with its own economy.
The land on which black businesses were operating became Greenwood in 1905 when the African-Americans purchased the land. These businesses primarily included barber shops and grocery shops. Black Wall Street experienced growth until the race riot. After the riot, Black Wall Street witnessed a great financial drop during which many homes and businesses were destroyed and the residents were not allowed to rebuild. However, businessmen slowing began to reconstruct by obtaining the required legal assistance.