Establishment of the stock market​

Published on 1st December 2020
The first genuine stock markets didn’t arrive until the 1500s. However, there were plenty of early examples of markets which were a lot like stock markets. In the 1100s, for example, France had a system where ‘courtiers de change’ managed agricultural debts throughout the country on behalf of banks. Later, the merchants of Venice were credited with trading government securities as early as the 13th century. Soon after, bankers in the nearby Italian cities of Pisa, Verona, Genoa, and Florence also began trading government securities.

The world’s first stock markets are generally linked back to Belgium. Whereas Bruges, Flanders, Ghent, and Rotterdam in the Netherlands all hosted their own “stock” market systems in the 1400s and 1500s. However, it’s generally accepted that Antwerp had the world’s first stock market system. These early stock markets had one thing missing: stocks. Although the infrastructure and institutions resembled today’s stock markets, nobody was trading shares of a company. Instead, the markets dealt with the affairs of government, businesses, and individual debt.

In 1602, the Dutch East India Company officially became the world’s first publicly traded company when it released shares of the company on the Amsterdam Stock Exchange. Stocks and bonds were issued to investors and each investor was entitled to a fixed percentage of East India Company’s profits.

Before investors yelled across trade floors and threw order forms into the air, they conducted business in coffee shops. Early stocks were handwritten on sheets of paper, and investors traded these stocks with other investors in coffee shops. The London Stock Exchange was officially formed in 1801. Since companies were not allowed to issue shares until 1825, this was an extremely limited exchange. This prevented the London Stock Exchange from becoming a true global superpower. That’s why the creation of the New York Stock Exchange (NYSE) in 1817 was such an important moment in history. The NYSE has traded stocks since its very first day. The NYSE soon became the most powerful stock exchange in the country due to the lack of any type of domestic competition and its positioning at the center of U.S. trade and economics in New York. The London Stock Exchange was the main stock market for Europe, while the New York Stock Exchange was the main exchange for America and the world.

Today, virtually every country in the world has its own stock market. In the developed countries, major stock markets typically emerged in the 19th and 20th centuries soon after the London Stock Exchange and New York Stock Exchange were created. Stock markets can be found around the world and there is no denying the global importance of stock markets. Every day, trillions of dollars are traded on stock markets around the world and they are truly the engine of the capitalist world.

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