Wall Street, a short, but interesting History

The Stock Market, welcome to the worlds biggest auction.  Over 400 years ago, Wall Street was nothing more than a dirt path.  So what is Wall Street anyways, besides an address in New York City? The dirt path, which became know as Wall Street, took its name from a wall made out of sticks and mud, which was built alongside that very path shortly after New York was founded as a Dutch trading post in 1609. The wall was later turned into a wooden fence to keep cows in, and Indians out, no, really. The area became a center of commercial activity. It was here that things like furs, molasses and tobacco were traded for the first time. Wall Street was not where the USA had its first stock exchange though. In fact, the United States first stock exchange was established in Philadelphia, in 1790.  And oh ya, by 1626, the Indians were allowed in as well, but the cows may have gotten away.  Before the Indians left however, they sold Manhattan to the settlers for the whopping sum of 25 Dollars, and a few beads. The word Stock Market actually came from stock, as in "livestock", you know, cows and horses, things that were traded way back then.  Instead of trading cows though, we now trade pieces of paper that represent ownership in someone else's company.

The Happy Times

By the early 1890's there were enough companies, and enough stocks to buy and sell that telephone clerks were needed at brokerage houses, (places where the big two way auctions were held). These clerks took orders from people wanting to buy or sell shares in companies, then relayed that information to brokers who were all in the same area, known as the pit. It's even been rumored that in the early days, in the pit, some traders got so mad and frustrated that fist fights broke out! Sometimes the phone clerks would have to lean out of windows from overhead offices to communicate with brokers below, a few of them fell, "splat"!

Welcome to the Dark Side

By the 1920's, things were rocking on Wall Street, many businesses were making money hand over fist. During this boom period billions of dollars were invested in the markets. People, blinded by greed, began buying shares in companies they knew nothing about. Some people put their life savings into the market, others mortgaged their homes, some emptied bank accounts.  As most stock prices rose, those in the know began to warn that the market frenzy would not last. They were ignored by most people.  Banks, eager to cash in and make more money started to guess, with their customers money, on what stocks would go up.  Many banks became involved in what they knew was massive fraud and  illegal activity. Finally, in October 1929, the buying craze began to dwindle, and was followed by an even wilder selling craze. When the truth began to come out on the true worth of hundreds of companies it was already too late.

On Thursday, October 24, 1929, the bottom fell out.  Prices dropped drastically as more and more investors tried to sell their holdings. By the end of the day, the New York Stock Exchange had lost four billion dollars, it was known as Black Thursday. By the following Monday, the realization of what had happened began to sink in, and a full-blown panic ensued. Thousands of investors, most of them ordinary working people, were financially ruined.  Some people committed suicide rather than face family, friends, or legal action. There were death threats, brawls and a few murders.  By the end of the year, stock values had dropped by fifteen billion dollars. Many banks were wiped out by the falling prices.  Each failed business contributed to the downward spiral that would drag the world into the Great Depression.

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