Stock Market History

The history of the stock market begins from 11th century in Cairo where Muslim and Jewish traders had set up trade associations. They used their knowledge about all the methods involved in trading. In the 12th century it started in France and in the later half of the 13th century Bruges community traders institutionalized their private trade meetings. This idea spread to other countries and it soon opened in Amsterdam. In the mid 13th century the bankers in Venice started trading in government securities. This trading system was later adopted by other countries in the 14th century. Later, Joint Stock Company was started by the Dutch. In the early part of the 17th century the first Stock Exchange Company started in Amsterdam which was the first outlet for the sale of shares issued by the Dutch East India Company.

In the U.S, the stock market came into existence only 200 years back. It started when the state government made a decision to obtain finance for the war by putting up bonds for sale and government notes by making a promise that the payment will be made at a later date when they would earn profit. The private banks also started to increase money at that time by issuing their own shares and stocks and selling them in the market to increase their own funds. This also lured the rich people as they saw that it was a good method of getting richer. During 1792, twenty four reputed and established merchants held a meeting and created a marker, called New York Stock Exchange (NYSE). In the conference, the businessmen gave consent to meet everyday on Wall Street and trade in bonds and stocks.

After the Industrial Revolution there was a change in the system of exchanging in the market. People started buying stocks at low price and sold it off when the price rose and this method is followed till date. NYSE dealt with the stocks of reputed and large companies so the small companies got together and formed the American Stock Exchange known as AMEX.

There are other exchange markets like NASDAQ etc. After the great crash in 1934 American government formed the Securities and Exchange Act which gave birth to the Securities and Exchange Commission (SEC).