On January 4, 1865, the New York Stock Exchange moved into its current address on Broad Street, just a stone’s throw from where it had all began on Wall Street. By this time New York, and specifically Wall Street, had become the financial focal point for the growing nation, a fact cemented by the preeminent exchange choosing the location for its headquarters. But the bigger question is why did New York, and specifically Wall Street, end up as it did? How was it that this street and not another grew up to become the center of finance for our nation?
It all began with a tavern. In 1641, while the city was still under Dutch control and hardly big enough to warrant the title of “city,” the Dutch West India Company built a tavern at the corner of Wall and Broad streets called the Stadt Herbergh. As the city grew and it elected its first municipal government, the Stadt Herbergh was transformed in 1653 to be the official home of New Amsterdam’s government. The English kept it as their city hall after taking over in 1664, and while the building was torn down and rebuilt anew in 1697, this site remained the seat of power for hundreds of years. The address grew in importance as the federal government under the newly adopted Constitution selected New York as its temporary home, and Federal Hall was constructed to house Congress on the site of the old city hall. George Washington was sworn in here, and the corner of Wall and Broad became the de facto political center of the country.
Even before Wall Street grew in stature by housing government, finance had taken its place on the increasingly important street. Alexander Hamilton, the man who would come to define the American financial system while serving as the first Secretary of the Treasury, had chosen Wall Street as his personal home in 1783. When he had the idea to found a new bank, the Bank of New York, he established its headquarters just down the street from his home. The Bank of New York became the preeminent financial institution of its day, and helped give Wall Street the image as not just the center of government, but of money too.
The final piece to our puzzle is much more democratic and market-driven. As early New Yorkers sought ways to buy and sell stocks, as well as bonds, insurance, and other financial instruments, they turned to a group of general purpose brokers. These brokers would meet wherever it was convenient to engage in open auctions and negotiations, essentially the same open-pit stock trading that occurs on the floor of stock exchanges the world to this day. Drawn by the Bank of New York, and the street being the de facto center of the city due to the government offices, these brokers would meet in coffee houses and even just standing out on Wall Street itself to trade securities. Their first compact, but which they agreed to negotiate preferentially with each other and set a basic commission structure for fairness’ sake, was dubbed the Buttonwood Agreement, named so for the buttonwood tree (known as “sycamore” today) under which they would usually gather. With this agreement, the group also moved officially into the second floor of the Tontine Coffee House on the corner of Wall and Water streets, which would serve as the headquarters of their New York Stock and Exchange Board for years to come. Government soon moved away to Washington D.C. while the financial institutions remained and grew on this short stretch of cobblestone, establishing it was the literal and cultural financial center of the world.