A Short Historical Overview of the Stock Market

The Short Historical Overview of the Stock Market


This is a real short historical overview of the stock market. Stock markets are some of the most important parts of today’s global economy. Countries around the world depend on stock markets for economic growth.

However, stock markets are a relatively new phenomenon. They haven’t always played an important role in the global economy. We are going to share the history of the stock market and explain why stock markets have become the driving economic force they are today.

The first genuine stock markets didn’t arrive until the 1500s. However, there were plenty of early examples of markets that were similar to stock markets.

In the 1100s, for example, France had a system where ‘Courretiers de change’ managed agricultural debts throughout the country on behalf of banks. This can be seen as the first major example of brokerage because people effectively traded debts.

History trades
image from the Museum of American Finance

This group of men traded the debts and became known as the first brokers. In the thirteenth century, a common misconception arose in Bruges.

Commodity traders started to meet in a house that was owned by a gentleman named Van der Beurze, and so later, in 1409, this group became known as ‘Bruges Beurze’. This was the formalized, and even institutionalized a meeting. In fact, those meetings took place in a building in the city of Antwerp that was owned by Van der Beurze.

Most merchants of that time undertook their trading in the city of Antwerp. This idea spread across the region of Flanders very quickly, and also in neighboring countries, and soon in the cities of Ghent and Rotterdam ‘Beurzen’ soon opened.

The very first joint-stock company

In this short historical overview, we came to a joint-stock company. The first joint-stock company was the Dutch East India country which was formed in 1602.

A joint-stock company is an organization in which stakes can be purchased and sold by shareholders. A shareholder may own a proportion of the business and has a certificate of ownership.

The Dutch East India Company was the first to get fixed capital stock, and so company stock was continuously traded on the Amsterdam Stock Exchange. It was not long after this happened that other trade followed, in different derivatives, came into being on the Amsterdam market. Something as short selling also occurred. This, however, was soon seen as illegal and was banned in 1610 by the authorities.

WallStreet

The short historical overview cannot be true without this story.

The London Stock Exchange was officially formed in 1801. Since companies were not allowed to issue shares until 1825, this was an extremely limited exchange. This prevented the London Stock Exchange from becoming a true global superpower.

That’s why the creation of the New York Stock Exchange (NYSE) in 1817 was such an important moment in history.

The NYSE has traded stocks since its very first day. Contrary to what some may think, the NYSE wasn’t the first stock exchange in the United States. The Philadelphia Stock Exchange holds that title. However, the NYSE soon became the most powerful stock exchange in the country due to the lack of any type of domestic competition and its positioning at the center of U.S. trade and economics in New York.

Today, there are stock markets all over the world. The most well-known stock markets and the world’s largest area in the United States of America, United Kingdom, China, Canada, India, Japan, Germany, France, Netherlands, and South Korea.

Stock markets can be found around the world and there’s no denying the global importance of stock markets.

Every day, trillions of dollars are traded on stock markets around the world and they’re truly the engine of the modern capitalist world.

 

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