A Brief History of the Stock Market

The Early Days of the Stock Market:

During the earliest days of Stock Market History, the exchange was not the complex marketplace that is present today. Stock markets were first established during the early 1530s in Belgium. During this time, stocks were not transacted in a simultaneous global fashion, but instead, set-up as a meeting place between brokers and lenders.

The first market was established sans stock; the marketplace was simply a physical location where buyers and sellers or lenders and borrowers would congregate to transact business deals. The transactions in such a marketplace dealt primarily with government purchases, individual debt issues, and routine business transactions.

Stock Market in the 1600’s:

The stock market in the 1600’s evolved when France, Britain and the Netherlands chartered voyages to the East Indies. As a result of the transportation costs and the fact that few explorer could conduct an overseas voyage, numerous limited liability companies were created to raise funds from investors, who in turn, received a share of profits proportionately aligned with their investment.

The majority of business transactions revolved around exploration, shipping, and the spice trade. The maritime empires of Portugal, Spain, France, England, and the Netherlands dominated this market and established the practice of investments from the general population. Investments were used to fund the voyages and were then redistributed based off the profits made from trade. The establishment of such an exchange gave way to the creation of a more complex exchange, which was later established in the United States.

Stock Market History of the United States:

When the United States was established, the need to develop an economic power was viewed as a primary concern. Alexander Hamilton, the first Secretary of the Treasury, evaluated and studied the stock exchange in Europe with the hopes of establishing a similar marketplace in the United States. During Hamilton’s term (from 1789 to 1795) the U.S. Secretary of the Treasury promoted the development of the marketplace through the creation of American stock exchanges.

Stock market history in the United States was first established by Hamilton who encouraged the trading of government securities on the corner of Broad Street and Wall Street in New York City. Overtime, the trading evolved and expanded to include stocks of issuing corporations.

Once public corporations decided to issue stocks to help raise money for their business efforts, the stock market began to grow.

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