- The Economy Tracker
- Posts
- Happy 233rd Birthday to the NYSE
Happy 233rd Birthday to the NYSE
The story of the Buttonwood Agreement.
Nick Tomas
May 17, 2025 • Estimated Reading Time: 6 minutes
Happy 233rd Birthday to the New York Stock Exchange!
Before there were ticker symbols, trading floors, or Reddit-fueled meme stocks, there was something much simpler: a tree. A buttonwood tree to be precise. In the early days of American finance, this tree served as a familiar meeting point for brokers doing business in a time before trading floors or exchanges existed.
According to both legend and historical records, some of the very first securities trades in the United States happened beneath the shade of this tree. So when the country faced its first financial crisis, it made perfect sense for brokers to return to that same spot under the buttonwood tree to formalize an agreement that would help bring order to the chaos. A foundational moment in the creation of what would later become the New York Stock Exchange.
From Panic to Progress
The Buttonwood Agreement was born out of necessity. Specifically, the Panic of 1792. That financial crisis, triggered by excessive speculation, threatened to unravel the young U.S. economy. Things got so bad that Treasury Secretary Alexander Hamilton had to step in and bail out banks and financial institutions just to keep the system from collapsing.
In the aftermath, public trust was badly shaken. With little oversight, rumors and market manipulation spread easily, making investors hesitant to put their money at risk. The brokers and traders of the day realized they needed a solution. Some kind of structure that could restore confidence.
In March of 1792, 24 of New York’s leading merchants and brokers met at Corre’s Hotel to bring some order to the wild, anything-goes world of post-Revolutionary War securities trading.
That solution became known as the Buttonwood Agreement.
Where Wall Street Took Root
On May 17, 1792, those same 24 stockbrokers and merchants gathered beneath the shade of the buttonwood tree (a.k.a. American sycamore) at 68 Wall Street with quill pens in hand to sign the agreement.
At the time, this humble sidewalk was the place to trade securities. There was no trading floor, no computers, no CNBC. Just a group of men making deals out in the open.
The Buttonwood Agreement itself is remarkably straightforward as it basically states:
We only trade with each other: No outside auctioneers or random freelancers. Creating a high trust environment on the heels of the fallout of outsiders reneging on deals and agreements.
We all charge the same commission: A flat 0.25%, to ensure fairness and avoid cutthroat underbidding.
The agreement emphasized trust, structure, and mutual accountability:
"We the Subscribers, Brokers for the Purchase and Sale of Public Stock, do hereby solemnly promise and pledge ourselves to each other, that we will not buy or sell from this day for any person whatsoever, any kind of Public Stock, at a less rate than one quarter per cent Commission on the Specie value and that we will give a preference to each other in our Negotiations. In Testimony whereof we have set our hands this 17th day of May at New York, 1792."
And just like that, the groundwork for the New York Stock Exchange was in place.
The first stock ever traded under this new agreement? The Bank of New York. Founded by none other than Alexander Hamilton.
NYSE: Born Under a Tree, Raised in a Coffee House
What began under the branches of a buttonwood tree didn’t stay outdoors for long. As trading activity grew, the brokers moved their operations into the Tontine Coffee House, one of the busiest spots in New York at the time.
Painting by Francis Guy with the Tontine Coffee House. (Building with the American flag.)
By 1817, the group had formalized their operations, rebranding themselves as the New York Stock and Exchange Board. A name that would later be shortened to the New York Stock Exchange (NYSE).
Fast forward to today, and the NYSE is a global financial powerhouse. But its roots trace all the way back to 24 men, a simple agreement, and a shared vision.
Legacy of the Buttonwood Agreement
The Buttonwood Agreement may have only had two simple rules, but its impact was anything but small. In fact, those two principles, self-regulation and standardized commissions, laid the groundwork for the entire U.S. capital market system.
Even though the actual buttonwood tree fell during a storm in 1865, the protection it once offered continues to live on symbolically.
Click the Leave a comment button if you have any questions or comments, or need something clarified. Don’t be shy. The main point here is to improve constantly. Questions and comments help us both and tells me what you are interested in learning/hearing more about.
If you enjoyed this post or found it useful, do me a favor and hit the like (heart button all the way back to the top of the post and to the left) and share it with others.
Reply