The New York Stock Exchange: From a Buttonwood Tree to $44 Trillion

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Until late 2000, the New York Stock Exchange priced shares in eighths of a dollar, a habit inherited from merchants who chopped Spanish silver dollars into eight pieces to make change. That detail says a lot about the institution. Behind the screens and the algorithms sits more than two centuries of tradition, panic, and improvisation, beginning in May 1792 when 24 brokers signed the Buttonwood Agreement under a tree on Wall Street.

This episode follows the exchange from the Tontine Coffee House, where stocks were auctioned beside tobacco, wheat, and molasses, to a market capitalization of over $44.7 trillion. It explains how the telegraph helped New York overtake Philadelphia, why a seat on the exchange was once a literal chair, and how a wireless handheld trade of IBM shares in 1995 began the end of the trading floor's monopoly. It also covers the bombing of 1920, the crashes of 1929 and 1987, and the circuit breakers built to stop the next stampede.

• The Buttonwood Agreement set a floor for commission rates and bound its 24 signers to trade only with each other, creating a network of trust for moving Revolutionary War bonds and bank shares.
• Seats were capped at 1,366 in 1953. One sold for $625,000 just before the 1929 crash, and the Barnes family held a membership across five generations from 1894 to 2003.
• After merging with the electronic platform Archipelago in 2005, the exchange abolished seats, paying owners roughly half a million dollars in cash and 77,000 shares each.
• Modern circuit breakers are tied to the S&P 500: a 7 percent drop halts trading for 15 minutes, a 13 percent drop does so again, and a 20 percent drop closes the market for the day.
• In 1967 Abbie Hoffman and the Yippies threw dollar bills from the public gallery onto the trading floor. Three months later the exchange sealed the gallery behind bulletproof glass.