History of Stock Markets
Introduction
Everyone listens to the daily news in which there is a separate section devoted to the stock market. The jargon used in the news like the index, Dow Jones, FTSE index, the falling or rising dollar price and most importantly the sensitivity of the stock market all these things present a different language altogether for the layman. Investors and stock market experts can easily make out what the presenter is talking about. Although one may not be directly dealing in stock market but the ups and downs in the market affect the life of the common folks in a big way. A slight change in one economy affects the stock markets of the world.
The important stock exchanges of the world include the NYSE in the United States, Dow Jones, the German, French, Japanese stock exchanges, the Hong Kong Stock Exchange, the Bombay stock exchange and other stock markets. The major economies of the world influence the stock markets of the world as well as the rise and fall in oil prices.
The Origin of the Stock Markets
There are different opinions regarding the origin of the stock markets. Some historians believe that the Italians were the originator of the stock markets while others maintain that the stock markets existed in a rough form in Cairo, Egypt. According to historian Fernand Braudel, the Jewish and the Muslim traders had a system of trade association and even were aware about the many ways of payment and credit and all this way back in the 11th century. The courratiers de change in the twelfth century France was charged with managing and controlling the borrowings by the agricultural community for the banks there. Since these professionals dealt with debt, they could be the first brokers in the history of stock markets in the world.
There is also a reference of the 13th century Bruges commodity dealers, which transformed from an informal meeting to an institutionalization. The idea then swept regions like Flanders, Ghent and Amsterdam. In Italy in the 13th century, the bankers of Venice started dealing with government securities. Later in the 14th century bankers from Italian cities like Florence, Verona, Pisa and Genoa started dealing with government securities.
These independent cities without the rule of the Duke and the council of citizens facilitated this type of trading. The Dutch are credited with the idea of having the joint stock companies where the shareholders were able to put in money in the business enterprises and also shared the profit and loss of the businesses. The first company that gave out bonds and stocks was the Dutch East India Company and it gave the shares on the Amsterdam Stock Exchange. The Amsterdam Stock Exchange is given the credit for being the only stock exchange in the 17th century that initiated the continuous trade.
The United States had a stock market history of two hundred years. The Colonial Government created the finances for the war through selling bonds and the government notes that promised the investor to pay the profit in the future. Simultaneously the non-government banks raised finances by giving out shares and stocks. The New York Stock Exchange was brought forth in the year 1792 when 24 big traders met and decided to deal in bonds and stocks on the famous Wall Street on a daily basis.
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