The New York Stock Exchange, commonly referred to as the NYSE, is the world’s largest stock exchange by market capitalisation of its listed companies. The NYSE trading floor is located at 11 Wall Street and is composed of four rooms used for the facilitation of trading. The main building, at 18 Broad Street, was designated a National Historic Landmark in 1978, as was the 11 Wall Street building.
The NYSE is operated by NYSE Euronext (NYSE: NYX), which was formed by the NYSE’s 2007 merger with the fully electronic stock exchange Euronext.
Presently, Marsh Carter is Chairman of the New York Stock Exchange, having succeeded John S. Reed and the CEO is Duncan Niederauer, having succeeded John Thain.
Unfortunately, entrance to the inside is restricted and currently available only for employees of the NYSE.
The beginnings of the Exchange go back to the end of the 18th century. Having migrated from one location to another, it finally settled at its present location at the turn of the 19th to 20th century. The NYSE has expanded since then, both in terms of the buildings it occupies and the power it has been able to accumulate by swallowing up its rivals and adapting new technologies.
The origin of the NYSE can be traced to May 17, 1792, when the Buttonwood Agreement was signed by 24 stockbrokers outside of 68 Wall Street in New York under a buttonwood tree on Wall Street. On March 8, 1817, the organisation drafted a constitution and renamed itself the “New York Stock & Exchange Board”. Anthony Stockholm was elected the Exchange’s first president.
The first central location of the Exchange was a room, rented in 1792 for $200 a month, located at 40 Wall Street. After that location was destroyed in the Great Fire of New York in 1835, the Exchange moved to a temporary headquarters. In 1863, the New York Stock & Exchange Board renamed itself the New York Stock Exchange. Two years later, the Exchange moved to 10–12 Broad Street.
The volume of stocks traded increased sixfold in the years between 1896 and 1901, and a larger space was required to conduct business in the expanding marketplace. Demolition of the Exchange building at 10 Broad Street and adjacent buildings started on May 10, 1901.The new building, located at 18 Broad Street, cost $4 million and opened on April 22, 1903.
In 1922, a building for offices, designed by Trowbridge & Livingston, was added at 11 Wall Street, as well as a new trading floor called the Garage. Additional trading floor space was added in 1969 under the nickname the Blue Room, and in 1988 the EBR, or Extended Blue Room, with the latest technology for information display and communication, was inaugurated. Yet another trading floor called the Bond Room was opened at 30 Broad Street in 2000.
As the NYSE introduced its hybrid market, a greater proportion of trading came to be executed electronically, and due to the resulting reduction in demand for trading floor space, the NYSE decided to close the 30 Broad Street trading room in early 2006. As the adoption of electronic trading continued to reduce the number of traders and employees on the floor, in late 2007 the NYSE closed the rooms created by the 1969 and 1988 expansions.
The NYSE announced its plans to merge with rival Archipelago on April 21, 2005, in a deal intended to reorganise the NYSE as a publicly traded company. The NYSE’s governing board voted to merge with Archipelago eight months later, and become a for-profit, public company. In April 2007, the NYSE Group completed its merger with Euronext, the European combined stock market, thus forming the NYSE Euronext, the first transatlantic stock exchange.
As of January 24, 2007, all NYSE stocks, except for a small group of very high-priced ones, can be traded via its electronic Hybrid Market. Customers can now send orders for immediate electronic execution or route orders to the floor for trade in the auction market. In the first three months of 2007, in excess of 82% of all order volume was delivered to the floor electronically.
Eight New York City architects were invited to participate in a design competition for the current NYSE building. The Exchange selected the neoclassical design submitted by architect George B. Post. The trading floor, at 33 × 42.5 m, was one of the largest volumes of space in the city at the time, and had a skylight set into a 22-metre-high ceiling.
The main façade of the building features six tall columns with Corinthian capitals, topped by a marble pediment containing high-relief sculptures by John Quincy Adams Ward with the collaboration of Paul Wayland Bartlett, carved by the Piccirilli Brothers, representing Integrity Protecting the Works of Man.
The building was listed as a National Historic Landmark and added to the National Register of Historic Places in 1978.
The Great Crash began in late October 1929 and was the most devastating stock market crash in the history of the United States when taking into consideration the full extent and duration of its fallout. The crash signalled the beginning of the 10-year Great Depression that affected all Western industrialised countries.
The Roaring Twenties, the decade that led up to the Crash, was a time of wealth and excess. Despite the dangers of speculation, many believed that the stock market would continue to rise indefinitely. The market had been on a nine-year run that saw the Dow Jones Industrial Average increase in value tenfold, peaking at 381.17 on September 3, 1929. The optimism and financial gains of the great bull market were shaken on September 18, 1929, when share prices on the NYSE abruptly fell.
In the days leading up to the crash, the market was severely unstable. Periods of selling and high volumes of trading were interspersed with brief periods of rising prices and recovery. These swings were later correlated with the prospects for passage of the Smoot-Hawley Tariff Act, which was then being debated in Congress. This act, sponsored by Senator Reed Smoot and Representative Willis C. Hawley, and later signed into law in 1930, raised US tariffs on over 20,000 imported goods to record levels.
On October 24 (Black Thursday), the market lost 11% of its value at the opening bell on very heavy trading. Several leading Wall Street bankers met to find a solution to the panic and chaos on the trading floor. The meeting included Thomas W. Lamont, acting head of Morgan Bank; Albert Wiggin, head of the Chase National Bank; and Charles E. Mitchell, president of the National City Bank of New York. They chose Richard Whitney, vice-president of the Exchange, to act on their behalf.
With the bankers’ financial resources behind him, Whitney placed a bid to purchase a large block of shares in US Steel at a price well above the current market. As traders watched, Whitney then placed similar bids on other “blue chip” stocks. A blue chip is stock in a corporation with a national reputation for quality, reliability and the ability to operate profitably in good times and bad.
The Dow Jones Industrial Average recovered, closing with it down only 6.38 points for the day; however, the respite was only temporary.
Over the weekend, the events were covered by the newspapers across the United States. On October 28, “Black Monday”, more investors decided to get out of the market, and the slide continued with a record loss in the Dow for the day of 38.33 points, or 13%.
The next day, “Black Tuesday”, October 29, 1929, about 16 million shares were traded, and the Dow lost an additional 30 points, or 12%, amid rumours that US President Herbert Hoover would not veto the pending Smoot-Hawley Tariff Act. The volume of stocks traded on October 29, 1929 was a record that was not broken for nearly 40 years.
On the same day, William C. Durant (the founder of General Motors) joined with members of the Rockefeller family and other financial giants to buy large quantities of stocks in order to demonstrate to the public their confidence in the market, but their efforts failed to stop the large decline in prices.
Due to the massive volume of stocks traded that day, the ticker did not stop running until about 7:45 p.m. that evening. The market had lost over $30 billion in the space of two days, which included $14 billion on October 29 alone.
After a one-day recovery on October 30, where the Dow regained an additional 28.40 points, or 12%, to close at 258.47, the market continued to fall, arriving at an interim bottom on November 13, 1929, with the Dow closing at 198.60. The market then recovered for several months, starting on the next day, with the Dow gaining 18.59 points to close at 217.28, and reaching a secondary closing peak (i.e., bear market rally) of 294.07 on April 17, 1930.
After the Smoot-Hawley Tariff Act was enacted in mid-June, the Dow dropped again, stabilising above 200.
The following year, the Dow embarked on another, much longer, steady slide from April 1931 to July 8, 1932 when it closed at 41.22 – its lowest level of the 20th century, concluding an 89% loss rate for all of the market’s stocks.
For most of the 1930s, the Dow began slowly to regain the ground it lost during the 1929 crash and the three years following it, beginning on March 15, 1933, with the largest percentage increase of 15.34% and the Dow Jones closing at 62.10.
The largest percentage increases of the Dow Jones occurred during the early and mid 1930s, but it would not return to the peak closing of September 3, 1929 until November 23, 1954.