Stock Market History
Ever since companies have needed to raise funds there has been a market to trade
stocks. In the 11th century people who managed the debts of agricultural
communities were considered the first brokers. In 13th century Belgium and Italy
bankers began to formally trade commodities and government securities. In 1602 The
East India Company became the first company to issue stocks and bonds, issuing
shares on the Amsterdam Stock Exchange.
In the United States the first formal stock exchange was created in 1792. In New
York, 24 large merchants required a market to sell their stocks and bonds and
created the New York Stock Exchange. The industrial revolution created increased
need for corporate funding. By 1900 millions of dollars of stock were traded in
the market.
The AMEX started in 1842 primarily dealing in government securities. Its primary
business has changed from stocks to options and exchange traded funds (ETFs).
The NASDAQ the second-largest exchange in the
U.S. was founded in 1971. Most stocks on the exchange are technology related and
trades of these securities are done electronically. For people wanting to learn
option trading it is important to understand the differences between the physical
and electronic exchanges.
Stocks traded on the exchanges are equities of public companies. Companies that
require access to large amounts of capital become public. By being public its
shares can be owned by anyone. This increases the base of shareholders and the
ease in which companies can attract capital. Stockholders of public companies are
individuals that wish to share in the company's prosperity. Public equity allows
even small investors to share in the growth and wealth created by a large
corporation.
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