Page 4 - Module 1 History of wall street

The The
th
19 Century 20 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 1847 map showing the street layout and ferry routes
for lower Manhattan
as the nation’s banking center” connecting “Old World capital and New World
ambition”, according to one account. J. P. Morgan created giant trusts; John D.
Rockefeller’s Standard Oil moved to New York.
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 H. Dow began tracking stocks, initially beginning with 11 stocks,
mostly railroads, and looked at average prices for these eleven. 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 View of Wall Street from corner of Broad Street,
“convenient benchmark” for analyzing the market and became an accepted way 1867. On the left is the sub-Treasury building, now the
Federal Hall National Memorial.
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.[27] After October 7, 1896, it began publishing Dow’s
expanded list of stocks.[26] A century later, there were 30 stocks in the average.
th
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 where 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 tax on stock transfers, 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.
In the late 19th and early 20th centuries the corporate culture of New York was a primary center for the
construction of skyscrapers, and was rivaled only by Chicago on the American continent. There were
also residential sections, such as the Bowling Green section between Broadway and the Hudson River,
and between Vesey Street and the Battery. The Bowling Green area was described as “Wall Street’s
back yard” with poor people, high infant mortality rates, and the “worst housing conditions in the city”.
As a result of the construction, looking at New York City from the east, one can see two distinct
clumps of tall buildings—the financial district on the left, and the taller midtown district on
the right. The geology of Manhattan is well-suited for tall buildings, with a solid mass of bedrock
underneath Manhattan providing a firm foundation for tall buildings. Skyscrapers are expensive to
build, but when there is a “short supply of land” in a “desirable location”, then building upwards
makes sound financial sense. 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 and chipped off pieces ranging from three
inches to a foot 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”.
3