What has the Buttonwood tree got to do with the New York Stock Exchange?

Under the widespread tree of buttons,

The village brokers stood;

Brokers, the powerful group you see,

They would trade whatever they could;

They soon developed commissions

Which was so good for brokers.

This may not be what Henry Wadsworth Longfellow would have in mind as the beginning of his poem, “The Village Blacksmith”; but the story of how the New York Stock Exchange began reminded me of his well-known verse. The formation of the New York Stock Exchange (NYSE) reportedly happened when the 24 most prominent brokers and speculators in the United States met and reached an agreement.

They were said to have met under the “Buttonwood” tree to conceptualize a vision that marked the beginnings of the investment community on Wall Street. Some cynics would say that this depiction sounds far away; but apparently that’s how it happened.

Where exactly was this button tree? It was located near a 12-foot-high wooden wall along the Hudson and East Rivers rivers built in 1653, under Governor Peter Stuyvesant, to protect Dutch settlers from the Lenape Indians, New England colonists and British. At the same time, a street along the wall on the city side began to develop. This street was named Wall Street.

Over the years, the attacks they feared never materialized, and the thick wall of planks began to crumble. Eventually, citizens and farmers began tearing down the wall to use planks for building materials or firewood. The wall completely disappeared in 1699, but the street retained the name “Wall Street”. However, it will be more than a hundred years before financial markets can call Wall Street their hometown.

So what led these 24 prominent brokers, speculators and traders to meet under that “buttonwood” tree in 1792? The catalyst seemed to come at the end of the Revolutionary War when the first stock certificates were traded in the United States. In 1790, soldiers and merchants who took part in the war began to buy a letter issued to them by the Federal Government during the war.

The birth of the investment market was marked by these first issues of publicly traded securities. These visionary businessmen wanted to get involved in this new and possibly lucrative venture. Then, at that famous meeting in 1792 under the “buttonwood” tree, they agreed to sell securities as private transactions in their private organization and charge commissions for those transactions. This became known as the “Buttonwood Agreement”.

Initially, brokers operated from Tontina Coffee House on Wall Street because they had no headquarters; and they did not even have a name for their organization. Still, this group would become known as the New York Stock Exchange (NYSE).

At the same time, the government created the first bank, the Bank of New York. In fact, the first corporate stock traded by “Brokers of the Buttonwood Tree” was the Bank of New York. It was also the first company to be listed on the New York Stock Exchange.

The formal organization was founded in 1817 and was named the New York Stock & Exchange Board. At 68 Wall Street, they soon developed a set of rules and a constitution, drawn up on March 8, 1817, to do business. It was not until 1863 that the name was finally shortened to the New York Stock Exchange.

Since 1868, NYSE membership has been considered a valuable asset. Currently, prospective members have to buy outlets numbering 1,366.

Today, Wall Street has become a “pedestrian-only” street. The inauguration of President George Washington took place on that street in Federal Hall on April 30, 1789. At the exact site of the inauguration is the Statue of Washington, and the present building, erected in 1842, is the first American customs office. The statue in Washington offers a good view of the NYSE, Broad Street, not Wall Street. However, what stands out on the NYSE building are sculpted figures and Corinthian pillars, which have become universal symbols for American trade and finance.

The NYSE has come a long way since the “Prominent 24” signed that “Buttonwood Agreement” in 1792. Here, billions of dollars change owners every day. From its humble beginnings, the New York Stock Exchange has become a world center for financial transactions and the largest securities market. Yes, indeed, under the widespread tree of buttons …

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