Thứ Sáu, 11 tháng 5, 2012
The History of Wall Street
“Wall Street: No other place on earth is so singularly identified with money and the power of money” (Fraser 1). Wall Street is a street in Manhattan where several major brokerage firms and stock exchanges are located. It is also referred to as the financial community in general, including investors, traders, analysts, bankers, etc. “The street has had an enormous material impact on the American economy and its unique position in the world; on our political institutions and their democratic protocols, on the tone of our social order and the way it vibrates between equality and hierarchy” (Fraser 1). Wall Street has shaped our economy into what it is today, and symbolizes the goals of free enterprise.
Wall Street originated from a physical wall built by the Dutch in lower Manhattan as a means of protection from Indian tribes. The area was purchased by the Dutch from the Indians and was separated by plank fences and a twelve foot wall. The east and west sides of lower Manhattan, separated by the wall, were joined for trade and commerce by a passageway named and now known as Wall Street. After the wall was torn down by the British, the street remained, and was home to many large shops and warehouses, City Hall, and Federal Hall where George Washington was inaugurated as first president (Marotta 1).
In 1792, two dozen New York City’s leading merchants met to establish the Buttonwood Agreement, named after a buttonwood tree on the street itself. To gain control over trading fees, the members restricted trading securities only amongst themselves. This agreement eventually led to the group’s creation of the New York Stock Exchange which was initially headquartered in a rented room on Wall Street (Marotta 1). The establishment further symbolizes the foundation of a free market system, and its importance.
The New York Stock Exchange has completely transformed since its original 24 group members. A seat on the exchange that once cost twenty five dollars in 1817 now recently sells for about four million. The volume of shares traded daily has also exploded. Throughout history the country has seen a share volume of one million in 1886, ten million in 1929, one billion in 1927, and four billion in recent years (Marotta 1).
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The street as a whole is now so much more than just a physical location. It symbolizes America’s free market system which involves a public acting in self-interest to create market equilibrium. The stock market has transformed today to incorporate most of America’s large corporations to be traded amongst any investor. As Steve Fraser points, “Until nearly the turn of the twentieth century, very few industrial corporations were publically owned and traded on the stock exchange… Wall Street nonetheless deserves credit for helping to mobilize the capital resources” (5). The transformation is further explained as David John Marotta states, “With today’s exchange-traded funds, a few hundred dollars can buy fractional shares in most publically traded companies in America” (Marotta 1). Such a market provides easier access to capital investment funds for corporations which opens opportunities, increases productivity, and leads to overall economic growth. It also provides incentives to investors by incorporating a large diversification of investment options, as well as a share in profit. Effective investment by both the corporations and investors leads to wealth gains. However, many instances of fraud and decreased confidence in the market have caused great money losses in the past.
“When people have significant assets invested in the success of corporate America, it changes their political views” (Marotta 1). Political issues involving taxes, corporate regulation, financial reporting and interest rates affect the outcome of the stock market which shaped Wall Street into what it is today, and what it will become in the future. Because investors are risking their hard earned assets, values differ and conflicting views arise. In the article, “A Short History of Wall Street,” author David John Marotta compares Arturo Di Modica’s sculpture of the “Charging Bull,” to the value of an investor’s stock. The “Charging Bull” is one of the best known symbols of the exchange. After the stock market crashed in 1987, Modica “dropped the 7,000-pound statue in front of the New York Stock Exchange in December of 1989” (Marotta 1). It was then reinstalled in Bowling Green where is it “the most photographed piece of art in the city” (Marotta 1). Later Modica sued Wal-Mart and other companies for violating copyright laws by replicating the statue and selling it for their own gains. Here, Marotta points that Modica wanted to “protect the value of what he owns” (1). In a sense, the sculpture is like a stock. Investments reflect an investor’s hard earned money, and investors expect that to be protected and secure through a stable system.
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Investors as well as the public have high expectations of the market, as it affects the economy as a whole, causing different attitudes throughout time. The American public’s overall outlook on Wall Street has seemed to be a rollercoaster of positive and negative views since the beginning. American’s lost faith throughout the American Revolution and the Great Depression, but gained it back after the Second World War, beginning with the Reagan revolution (Fraser 3). “Nowadays, Wall Street strikes most people as a darkly ignominious place, a virtual school for kleptomaniacs” (Fraser 3). The Martha Stewart fall, many instances of corporate fraud, and the most recent financial crisis, has now driven Wall Street’s reputation down. The inconsistent views represent the “transfiguration of the nation’s sense of itself” (Fraser 4). Ultimately, flaws in the market represent flaws in American system and society as a whole.
Wall Street is far more than a street. It represents the spirit of free markets as the basic principal of our country’s foundation. All in all it has shaped our economy and country into what it is today. “Admired or reviled, Wall Street is the towering symbol of a cool, impregnable power” (Fraser 1).