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Under the Buttonwood Tree Just as the newspaper doesnt own the goods or provide the services it advertises a stock exchange doesnt own the stocks and bonds it lists Public corporations choose to list their stocks and bonds with an exchange for the same reason you might choose to take out a classified ad the listings draw a steady pool of interested buyers and sellers or investors Investors shop for stocks and bonds at a stock exchange for the same reason you might read the classified section they can pick and choose from a long list of competitively priced products A brief history of the New York Stock Exchange the worlds largest equities market reveals how the modern stock market first emerged to help a new government-the United States of America-pay off its debts It then grew and developed to meet the needs of both public corporations seeking capital and investors seeking profits Under the Buttonwood Tree In 1790 there were only two types of securities to trade Revolutionary War bonds that the newly formed American government sold to pay off an 80 million war debt and shares of stock in the first national bank called the Bank of the United States Stock brokers merchants and auctioneers bought and sold these stocks and bonds in offices coffee houses marketplaces and other locations on and around Wall Street Without a set location and time for trading sellers and buyers had to search for each other all over town In technical terms this stock market was not very liquid meaning sales and purchases of stocks were not quick and easy On May 17 1792 24 Wall Street brokers solved the problem of liquidity at the stroke of a pen They agreed in writing to trade only with each other Thus the worlds largest stock exchange began humbly with a simple two-sentence document called the Buttonwood Agreement The agreement was named after the brokers
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