Stock Market History

When most people think of the term stock market history, they tend to focus on the events leading up to the stock market crash of 1929.  Admittedly that event had a huge impact on the stock market itself, but the history of the stock market goes back much further to the formation of the modern stock market exchanges.

History of the Stock Market Exchanges

Below we've outlined what we think is a fairly accurate account of the timeline for perhaps the most important of all of the modern stock exchanges.  Admittedly, the early history of these exchanges is quite blurry in that their "history" often dates back to an informal gathering of local businessmen.

London Stock Exchange - 1698

The London Stock Exchange is arguably the oldest of the world's major stock exchanges.  The London Exchange can trace its history back to 1698 when its founder - John Castaing - began to organize the market in Jonathan's Coffee-house via a simple list of stock and commodity prices.  Today, this exchange lists 3,500 companies representing 84 countries.

New York Stock Exchange - 1792

The New York Stock Exchange or NYSE is arguably the oldest and most well known of all the American stock markets.  The NYSE was formed in 1792 when two dozen stockbrokers from New York City had the idea to organize what was then a disorganized and chaotic method of stock trading.  From those humble beginnings, the NYSE has continued to grow and today lists 2,800 companies with a total capitalization of nearly $20 trillion.  In 2007 a historic merger of equals created the NYSE Euronext.

Bombay Stock Exchange - 1875

The Bombay Exchange, also known as Mumbai, claims to be the oldest stock exchange in Asia, tracing its history back to 1875.  In 2008, nearly 2,000,000 shares of stock traded daily on the Bombay Exchange.

American Stock Exchange - 1849

The American Stock Exchange or Amex is a relatively recent addition to the world's stock markets.  The history of this stock market begins with the Curb Exchange and the California Gold Rush of 1849.  The Amex played an important part in the financial and business transactions associated with the mining industry in the 19th century.

In 1921, the Amex expanded it niche role to include companies that did not meet the strict standards of the NYSE.  In 1998, the NASDAQ purchased Amex and it continues its history of being a niche market player and today specializes in derivatives and stock options.  In late 2003, the American Stock Exchange regained its independence.  After only six years under the control of NASD, The Amex Membership Corporation completed an agreement to transfer control of the exchange back to its membership.

NASDAQ - 1971

Yes, we've even included a relatively recent addition in this article on stock market history.  And that's because we recognize the importance of this particular exchange.  At one time most companies aspired to be traded on the NYSE. That changed about 10 years ago and many large companies now trade on the NASDAQ.  Founded in 1971, the National Association of Securities Dealers Automated Quotation or NASDAQ was the first stock exchange to recognize the role of electronics in stock trading.

Today, the networks of computers running the NASDAQ allow it to be the most efficient stock exchange in the world.  In October 2004, the NASDAQ surpassed the average trading volume of the NYSE for the first time.

Stock Price History

The Dow Jones Industrial Average is perhaps the most prestigious of all the modern day stock indexes.  With a history dating back to May 26, 1896, one of the most interesting aspects of the Dow, which is also very indicative of stock prices, is the time it took to reach each of the 1,000 point milestones.  For example, when the index was first introduced it stood at 40.94 and it took roughly 76 years to reach the 1,000 mark.

The complete milestone history of the average appears in the table below:

DJIA Milestones

History of the Securities and Exchange Commission

Finally, an overview of our stock market history would not be complete without a mention of the Securities and Exchange Commission.  The beginnings of the Securities and Exchange Commission or SEC dates back to the Great Crash of 1929, and the reforms that followed.  Before that time there was little need or support for regulation of the securities markets.

During the crash, not only did individual investors lose countless fortunes, but also the banking system.  Banks were invested heavily in the market and the ensuing panic after the crash caused many people to pull money from their savings accounts causing many banks to close.

In an attempt to restore faith in capital markets, Congress passed the Securities Act of 1933 and the Securities and Exchange Act of 1934.  And in 1934, the Securities and Exchange Commission was established to enforce those same securities laws passed by Congress.

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