Wall Street (4)

Wall Street is an eight-block-long street in the Financial District of Lower Manhattan in New York City. It runs between Broadway in the west to South Street and the East River in the east. The term "Wall Street" has become a metonym for the financial markets of the United States as a whole, the American financial services industry, New York–based financial interests, or the Financial District itself. Anchored by Wall Street, New York has been described as the world's principal financial center.

Wall Street was originally known in Dutch as "de Waalstraat" when it was part of New Amsterdam in the 17th century, though the origins of the name vary. An actual wall existed on the street from 1685 to 1699. During the 17th century, Wall Street was a slave trading marketplace and a securities trading site, and from the early eighteenth century (1703) the location of Federal Hall, New York's first city hall. In the early 19th century, both residences and businesses occupied the area, but increasingly business predominated, and New York City's financial industry became centered on Wall Street. In the 20th century, several early skyscrapers were built on Wall Street, including 40 Wall Street, once the world's tallest building.

The Wall Street area is home to the New York Stock Exchange, the world's largest stock exchange by total market capitalization, as well as the Federal Reserve Bank of New York, and many commercial banks and insurance companies. Several other stock and commodity exchanges have also been located in downtown Manhattan near Wall Street, including the New York Mercantile Exchange and other commodity futures exchanges, and the American Stock Exchange. To support the business they did on the exchanges, many brokerage firms had offices nearby. However the direct economic impacts of Wall Street activities extend worldwide.

Wall Street itself is a narrow and winding street running from the East River to Broadway and lined with skyscrapers, as well as the New York Stock Exchange Building and Federal Hall National Memorial and One Wall Street at its western end. The street is nearby multiple New York City Subway lines and ferry terminals and both the World Trade Center (1973–2001) site and the New World Trade Center.

History

Early years

There are varying accounts about how the Dutch-named "de Waalstraat" (literally: Walloon Street) got its name. Three conflicting explanations can be considered.

One explanation maintains that Wall Street was named after ''Walloons'', the Dutch name for a ''Walloon'' being ''Waal''. Among the first settlers that embarked on the ship ''Nieu Nederlandt'' in 1624 were 30 Walloon families. In 1626, Peter Minuit, the governor of the colony, who became famous by the purchase of Manhattan Island for the Dutch West India Company, was a Walloon.

Another name used for the same street was Cingel, which is a Dutch word (''singel'') for either an outer barrier with trees and brush growing along a wall to protect a town, or the more common use of being a canal or moat dug for defense purposes. In Dutch, the Waal is the most important river in the Netherlands (an arm of the Rhine river that is the widest fork of the Rhine shortly after crossing the Dutch border). As such, the word could have indicated a water course. The map does not show any protective canal at this location, though it would have been a common design feature for Dutch towns. If there had been plans to build such defense and it had not taken place, then the name ''Waal Straat'' could have been used tongue in cheek for that governing promise – and this name then replacing the name ''Cingel''.

Another explanation is that the name of the street was indeed derived from a wall or rampart (actually a wooden palisade) on the northern boundary of the New Amsterdam settlement, built to protect against potential incursions from Native Americans, pirates, and the English. The wall was built of dirt and wooden planks, measuring long and tall.

While the Dutch word "wal" can be translated as "rampart", it only appeared as "De Wal Straat" on some English maps of New Amsterdam, whereas other English maps show the name as "De Waal Straat". The distinction of this one letter is similar to the distinction in English between ''ben'' and ''been'' or between ''star'' and ''stare'' – the distinct meanings are fully understood both by speaker and listener.

According to one version of the story:

In the 1640s, basic picket and plank fences denoted plots and residences in the colony.''The History of New York State'', Book II, Chapter II, Part IV. Editor, Dr. James Sullivan, Online Edition by Holice, Deb & Pam. Retrieved August 20, 2006. Later, on behalf of the Dutch West India Company, Peter Stuyvesant, using both enslaved Africans and white colonists, collaborated with the city government in the construction of a more substantial fortification, a strengthened wall.White New Yorkers in Slave Times
New-York Historical Society. Retrieved August 20, 2006. (PDF)Timeline: A selected Wall Street chronology
PBS Online. Retrieved August 8, 2011. In 1685, surveyors laid out Wall Street along the lines of the original stockade.
2006 NYSE Group, Inc. Retrieved August 1, 2006. The wall started at Pearl Street, which was the shoreline at that time, crossing the Indian path Broadway and ending at the other shoreline (today's Trinity Place), where it took a turn south and ran along the shore until it ended at the old fort. In these early days, local merchants and traders would gather at disparate spots to buy and sell shares and bonds, and over time divided themselves into two classes—auctioneers and dealers. Wall Street was also the marketplace where owners could hire out their slaves by the day or week. The rampart was removed in 1699 and a new City Hall built at Wall and Nassau in 1700.

Slavery was introduced to Manhattan in 1626, but it was not until December 13, 1711, that the New York City Common Council made Wall Street the city's first official slave market for the sale and rental of enslaved Africans and Indians. The slave market operated from 1711 to 1762 at the corner of Wall and Pearl Streets. It was a wooden structure with a roof and open sides, although walls may have been added over the years and could hold approximately 50 men. The city directly benefited from the sale of slaves by implementing taxes on every person who was bought and sold there.

In the late 18th century, there was a buttonwood tree at the foot of Wall Street under which traders and speculators would gather to trade securities. The benefit was being in proximity to each other. In 1792, traders formalized their association with the Buttonwood Agreement which was the origin of the New York Stock Exchange. The idea of the agreement was to make the market more "structured" and "without the manipulative auctions", with a commission structure. Persons signing the agreement agreed to charge each other a standard commission rate; persons not signing could still participate but would be charged a higher commission for dealing.

In 1789, Wall Street was the scene of the United States' first presidential inauguration when George Washington took the oath of office on the balcony of Federal Hall on April 30, 1789. This was also the location of the passing of the Bill of Rights. Alexander Hamilton, who was the first Treasury secretary and "architect of the early United States financial system", is buried in the cemetery of Trinity Church, as is Robert Fulton famed for his steamboats.

19th century

In the first few decades, both residences and businesses occupied the area, but increasingly business predominated. "There are old stories of people's houses being surrounded by the clamor of business and trade and the owners complaining that they can't get anything done," according to a historian named Burrows. The opening of the Erie Canal in the early 19th century meant a huge boom in business for New York City, since it was the only major eastern seaport which had direct access by inland waterways to ports on the Great Lakes. Wall Street became the "money capital of America".

Historian Charles R. Geisst suggested that there has constantly been a "tug-of-war" between business interests on Wall Street and authorities in Washington, D.C., the capital of the United States by then. Generally during the 19th century Wall Street developed its own "unique personality and institutions" with little outside interference.

In the 1840s and 1850s, most residents moved further uptown to Midtown Manhattan because of the increased business use at the lower tip of the island. The Civil War had the effect of causing the northern economy to boom, bringing greater prosperity to cities like New York which "came into its own as the nation's banking center" connecting "Old World capital and New World ambition", according to one account. J. P. Morgan created giant trusts and John D. Rockefeller's Standard Oil moved to New York City. Between 1860 and 1920, the economy changed from "agricultural to industrial to financial" and New York maintained its leadership position despite these changes, according to historian Thomas Kessner. New York was second only to London as the world's financial capital.

In 1884, Charles Dow began tracking stocks, initially beginning with 11 stocks, mostly railroads, and looked at average prices for these eleven. Some of the companies included in Dow's original calculations were American Tobacco Company, General Electric, Laclede Gas Company, National Lead Company, Tennessee Coal & Iron, and United States Leather Company. When the average "peaks and troughs" went up consistently, he deemed it a bull market condition; if averages dropped, it was a bear market. He added up prices, and divided by the number of stocks to get his Dow Jones average. Dow's numbers were a "convenient benchmark" for analyzing the market and became an accepted way to look at the entire stock market. In 1889 the original stock report, ''Customers' Afternoon Letter'', became ''The Wall Street Journal''. Named in reference to the actual street, it became an influential international daily business newspaper published in New York City. After October 7, 1896, it began publishing Dow's expanded list of stocks. A century later, there were 30 stocks in the average.

20th century

Early 20th century

Business writer John Brooks in his book ''Once in Golconda'' considered the start of the 20th century period to have been Wall Street's heyday. The address of 23 Wall Street, the headquarters of J. P. Morgan & Company, known as ''The Corner'', was "the precise center, geographical as well as metaphorical, of financial America and even of the financial world".

Wall Street has had changing relationships with government authorities. In 1913, for example, when authorities proposed a $4 stock transfer tax, stock clerks protested. At other times, city and state officials have taken steps through tax incentives to encourage financial firms to continue to do business in the city.

A post office was built at 60 Wall Street in 1905. During the World War I years, occasionally there were fund-raising efforts for projects such as the National Guard.

On September 16, 1920, close to the corner of Wall and Broad Street, the busiest corner of the Financial District and across the offices of the Morgan Bank, a powerful bomb exploded. It killed 38 and seriously injured 143 people. The perpetrators were never identified or apprehended. The explosion did, however, help fuel the Red Scare that was underway at the time. A report from ''The New York Times'':

The area was subjected to numerous threats; one bomb threat in 1921 led to detectives sealing off the area to "prevent a repetition of the Wall Street bomb explosion".

Regulation

September 1929 was the peak of the stock market.The world in depression 1929–1939 October 3, 1929 was when the market started to slip, and it continued throughout the week of October 14.
In October 1929, renowned Yale economist Irving Fisher reassured worried investors that their "money was safe" on Wall Street. A few days later, on October 24, stock values plummeted. The stock market crash of 1929 ushered in the Great Depression, in which a quarter of working people were unemployed, with soup kitchens, mass foreclosures of farms, and falling prices. During this era, development of the Financial District stagnated, and Wall Street "paid a heavy price" and "became something of a backwater in American life".

During the New Deal years, as well as the 1940s, there was much less focus on Wall Street and finance. The government clamped down on the practice of buying equities based only on credit, but these policies began to ease. From 1946 to 1947, stocks could not be purchased "on margin", meaning that an investor had to pay 100% of a stock's cost without taking on any loans. However, this margin requirement was reduced four times before 1960, each time stimulating a mini-rally and boosting volume, and when the Federal Reserve reduced the margin requirements from 90% to 70%. These changes made it somewhat easier for investors to buy stocks on credit. The growing national economy and prosperity led to a recovery during the 1960s, with some down years during the early 1970s in the aftermath of the Vietnam War. Trading volumes climbed; in 1967, according to ''Time Magazine'', volume hit 7.5 million shares a day which caused a "traffic jam" of paper with "batteries of clerks" working overtime to "clear transactions and update customer accounts".

In 1973, the financial community posted a collective loss of $245 million, which spurred temporary help from the government. Reforms were instituted; the Securities & Exchange Commission eliminated fixed commissions, which forced "brokers to compete freely with one another for investors' business". In 1975, the SEC threw out the NYSE's "Rule 394" which had required that "most stock transactions take place on the Big Board's floor", in effect freeing up trading for electronic methods. In 1976, banks were allowed to buy and sell stocks, which provided more competition for stockbrokers. Reforms had the effect of lowering prices overall, making it easier for more people to participate in the stock market. Broker commissions for each stock sale lessened, but volume increased.

The Reagan years were marked by a renewed push for capitalism and business, with national efforts to de-regulate industries such as telecommunications and aviation. The economy resumed upward growth after a period in the early 1980s of languishing. A report in ''The New York Times'' described that the flushness of money and growth during these years had spawned a drug culture of sorts, with a rampant acceptance of cocaine use although the overall percent of actual users was most likely small. A reporter wrote:

In 1987, the stock market plunged, and, in the relatively brief recession following, the surrounding area lost 100,000 jobs according to one estimate. Since telecommunications costs were coming down, banks and brokerage firms could move away from the Financial District to more affordable locations. One of the firms looking to move away was the NYSE. In 1998, the NYSE and the city struck a $900 million deal which kept the NYSE from moving across the river to Jersey City

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