Wall Street

The street was originally known in Dutch as Het Cingel ("the Belt") when it was part of New Amsterdam during the 17th century. An actual city wall existed on the street from 1653 to 1699. During the 18th century, the location served as a slave market and securities trading site, and from 1703 onward, as the location of New York's city hall, which became Federal Hall. In the early 19th century, both residences and businesses occupied the area, but increasingly the latter predominated, and New York's financial industry became centered on Wall Street. During the 20th century, several early skyscrapers were built on Wall Street, including 40 Wall Street, once the world's tallest building. The street is near multiple subway stations and ferry terminals.

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 commercial banks and insurance companies. Several other stock and commodity exchanges have also been located in Lower Manhattan near Wall Street, including the New York Mercantile Exchange and other commodity futures exchanges, along with the NYSE American. Many brokerage firms owned offices nearby to support the business they did on the exchanges. The economic impacts of Wall Street activities extend worldwide.

History

Early years

In the original records of New Amsterdam, the Dutch always called the street Het Cingel ("the Belt"), which was also the name of the original outer barrier street, wall, and canal of Amsterdam. After the English conquest of New Netherland in 1664, they renamed the settlement "New York" and in tax records from April 1665 (still in Dutch) they refer to the street as Het Cingel ofte Stadt Wall ("the Belt or the City Wall"). This use of both names for the street also appears as late as 1691 on the Miller Plan of New York. New York Governor Thomas Dongan may have issued the first official designation of Wall Street in 1686, the same year he issued a new charter for New York. Confusion over the origins of the name Wall Street appeared in modern times because in the 19th and early 20th century some historians mistakenly thought the Dutch had called it "de Waal Straat", which to Dutch ears sounds like Walloon Street. However, in 17th century New Amsterdam, de Waal Straat (Wharf or Dock Street) was a section of what is today's Pearl Street.

The original wall was constructed under orders from Director General of the Dutch West India Company Peter Stuyvesant at the start of the first Anglo-Dutch war soon after New Amsterdam was incorporated in 1653. Fearing an over land invasion of English troops from the colonies in New England (at the time Manhattan was easily accessible by land because the Harlem Ship Canal had not been dug), he ordered a ditch and wooden palisade to be constructed on the northern boundary of the New Amsterdam settlement. The wall was built of dirt and 15-foot (4.6 m) long wooden planks, measuring 2,340 feet (710 m) long and 9 feet (2.7 m) tall and was built using the labor of both enslaved Africans and white colonists. In fact, Stuyvesant had ordered that "the citizens, without exception, shall work on the constructions… by immediately digging a ditch from the East River to the North River, 4 to 5 feet deep and 11 to 12 feet wide..." And that "the soldiers and other servants of the Company, together with the free Negroes, no one excepted, shall complete the work on the fort by constructing a breastwork, and the farmers are to be summoned to haul the sod."

The first Anglo-Dutch War ended in 1654 without hostilities in New Amsterdam, but over time the "werken" (meaning the works or city fortifications) were reinforced and expanded to protect against potential incursions from Native Americans, pirates, and the English. The English also expanded and improved the wall after their 1664 takeover (a cause of the Second Anglo-Dutch War), as did the Dutch from 1673 to 1674 when they briefly retook the city during the Third Anglo-Dutch War, and by the late 1600s the wall encircled most of the city and had two large stone bastions on the northern side. The Dutch named these bastions "Hollandia" and "Zeelandia" after the ships that carried their invasion force. The wall started at Hanover Square on Pearl Street, which was the shoreline at that time, crossed the Indian path that the Dutch called Heeren Wegh, now called Broadway, and ended 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. There was a gate at Broadway (the "Land Gate") and another at Pearl Street, the "Water Gate". The wall and its fortifications were eventually removed in 1699—it had outlived its usefulness because the city had grown well beyond the wall. A new City Hall was built at Wall and Nassau in 1700 using the stones from the bastions as materials for the foundation.

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

In the early period, local merchants and traders assembled at various locations to purchase and sell shares and bonds. Over time, they became divided into two distinct groups: auctioneers and dealers. 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 greatly expanded the northern economy, 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. He 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 part

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 tomb-like silence that settles over Wall Street and lower Broadway with the coming of night and the suspension of business was entirely changed last night as hundreds of men worked under the glare of searchlights to repair the damage to skyscrapers that were lighted up from top to bottom. ... The Assay Office, nearest the point of explosion, naturally suffered the most. The front was pierced in fifty places where the cast iron slugs, which were of the material used for window weights, were thrown against it. Each slug penetrated the stone an inch or two [3–5 cm] and chipped off pieces ranging from three inches to a foot [8–30 cm] in diameter. The ornamental iron grill work protecting each window was broken or shattered. ... the Assay Office was a wreck. ... It was as though some gigantic force had overturned the building and then placed it upright again, leaving the framework uninjured but scrambling everything inside.

— 1920

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. 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:

The Wall Street drug dealer looked like many other successful young female executives. Stylishly dressed and wearing designer sunglasses, she sat in her 1983 Chevrolet Camaro in a no-parking zone across the street from the Marine Midland Bank branch on lower Broadway. The customer in the passenger seat looked like a successful young businessman. But as the dealer slipped him a heat-sealed plastic envelope of cocaine and he passed her cash, the transaction was being watched through the sunroof of her car by Federal drug agents in a nearby building. And the customer — an undercover agent himself -was learning the ways, the wiles and the conventions of Wall Street's drug subculture.

— Peter Kerr in The New York Times, 1987.

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; the deal was described as the "largest in city history to prevent a corporation from leaving town".

21st century

In 2001, the Big Board, as some termed the NYSE, was described as the world's "largest and most prestigious stock market". When the World Trade Center was destroyed on September 11, 2001, the attacks "crippled" the communications network and destroyed many buildings in the Financial District, although the buildings on Wall Street itself saw only little physical damage. One estimate was that 45% of Wall Street's "best office space" had been lost. The NYSE was determined to re-open on September 17, almost a week after the attack. During this time Rockefeller Group Business Center opened additional offices at 48 Wall Street. Still, after September 11, the financial services industry went through a downturn with a sizable drop in year-end bonuses of $6.5 billion, according to one estimate from a state comptroller's office.

To guard against terrorist attacks in the area, Wall Street from Broadway to William Street, and Broad Street from Beaver to Nassau was permanently closed to vehicular traffic and pedestrianized. The intersection of Broad and Wall in front of the NYSE, is a now public square. Vehicle traffic is only allowed for local residents and those with permission from local businesses and the city and only after being subject to a security search. Authorities built concrete barriers, and found ways over time to make them more aesthetically appealing by spending $5000 to $8000 apiece on bollards. Parts of Wall Street, as well as several other streets in the neighborhood, were blocked off by specially designed bollards:

... Rogers Marvel designed a new kind of bollard, a faceted piece of sculpture whose broad, slanting surfaces offer people a place to sit in contrast to the typical bollard, which is supremely unsittable. The bollard, which is called the Nogo, looks a bit like one of Frank Gehry's unorthodox culture palaces, but it is hardly insensitive to its surroundings. Its bronze surfaces actually echo the grand doorways of Wall Street's temples of commerce. Pedestrians easily slip through groups of them as they make their way onto Wall Street from the area around historic Trinity Church. Cars, however, cannot pass.

— Blair Kamin in the Chicago Tribune, 2006

The Guardian reporter Andrew Clark described the years of 2006 to 2010 as "tumultuous", in which the heartland of America was "mired in gloom" with high unemployment around 9.6%, with average house prices falling from $230,000 in 2006 to $183,000, and foreboding increases in the national debt to $13.4 trillion, but that despite the setbacks, the American economy was once more "bouncing back". What had happened during these heady years? Clark wrote:

But the picture is too nuanced simply to dump all the responsibility on financiers. Most Wall Street banks didn't actually go around the US hawking dodgy mortgages; they bought and packaged loans from on-the-ground firms such as Countrywide Financial and New Century Financial, both of which hit a financial wall in the crisis. Foolishly and recklessly, the banks didn't look at these loans adequately, relying on flawed credit-rating agencies such as Standard & Poor's and Moody's, which blithely certified toxic mortgage-backed securities as solid ... A few of those on Wall Street, including maverick hedge fund manager John Paulson and the top brass at Goldman Sachs, spotted what was going on and ruthlessly gambled on a crash. They made a fortune but turned into the crisis's pantomime villains. Most, though, got burned – the banks are still gradually running down portfolios of non-core loans worth $800bn.

— The Guardian reporter Andrew Clark, 2010.

The first months of 2008 was a particularly troublesome period which caused Federal Reserve chairman Ben Bernanke to "work holidays and weekends" and which did an "extraordinary series of moves". It bolstered U.S. banks and allowed Wall Street firms to borrow "directly from the Fed" through a vehicle called the Fed's Discount Window, a sort of lender of last resort. These efforts were highly controversial at the time, but from the perspective of 2010, it appeared the Federal exertions had been the right decisions.

By 2010, Wall Street firms, in Clark's view, were "getting back to their old selves as engine rooms of wealth, prosperity and excess". A report by Michael Stoler in The New York Sun described a "phoenix-like resurrection" of the area, with residential, commercial, retail and hotels booming in the "third largest business district in the country".

At the same time, the investment community was worried about proposed legal reforms, including the Wall Street Reform and Consumer Protection Act which dealt with matters such as credit card rates and lending requirements. The NYSE closed two of its trading floors in a move towards transforming itself into an electronic exchange. Beginning in September 2011, the Occupy Wall Street movement, disenchanted with the financial system, protested in parks and plazas around Wall Street.

On October 29, 2012, Wall Street was disrupted when New York and New Jersey were inundated by Hurricane Sandy. Its 14-foot-high (4.3 m) storm surge, a local record, caused massive street flooding nearby. The NYSE was closed for weather-related reasons, the first time since Hurricane Gloria in September 1985 and the first two-day weather-related shutdown since the Blizzard of 1888.