How Wall Street Became Known as 'Wall Street'

BOSTON ( TheStreet) -- For the better part of two weeks, protestors have been camping out on Wall Street to protest, among other issues, big banks, wealth inequity and the political influence of corporations through lobbyists and donations.

The base camp for their discontent is no surprise. It is the seat of global financial power and a geography-based symbol of wealth.
A Harper's Weekly illustration of Wall Street during the Panic of 1884, a crisis in which U.S. banks, reacting to European woes, halted investments and called in loans. The crisis was quelled by a series of bailouts. Sound familiar?

We may take Wall Street's importance for granted. But how did Wall Street become "Wall Street?" Why New York? Why not Boston, Baltimore, Philadelphia (actually home to the nation's first stock exchange) or Chicago? And why this particular neighborhood of the Big Apple?

How the area got its name -- even before all those bankers, investors and stock exchanges moved in -- remains debated among historians.

In many accounts, the name derives from de Waal Straat, what early Dutch settlers called the edge of their settlement (the northern edge ran from Pearl Street to Trinity Place), which was fortified by a 12-foot wood fence intended to deter attacks by Native Americans and British colonists. Other accounts see a connection as more likely coming from Walloons or Waal, a Dutch expression for its French-speaking population, many of whom were early settlers in the area.

That academic debate aside, the Dutch community developed a tradition of arranging and executing financial deals outdoors, with traders and auctioneers setting up shop on street corners.

In a growing country (and a neighborhood that expanded beyond its Dutch roots), many of these "curbside brokers" would eventually specialize in the stocks of turnpikes, canals, railroads and oil companies. The California Gold Rush of the 1840s made mining stocks especially attractive investments. By the time the Civil War ended and an industrial boom bolstered the post-battle economy, iron, textiles and chemicals drove hot enterprises.

Success led the outdoor marketplace to formalize its efforts and regulate business practices. The New York Curb Market was created and, after operating an indoor trading floor on Greenwich Street, renamed itself the New York Stock Curb Exchange in 1929. Within a year, the exchange was back on Wall Street, expanding into a headquarters that helped anchor the growing financial district straight through to the present day. It became the American Stock Exchange in 1953.

Another group of curbside brokers would morph into what later became the New York Stock Exchange.

In 1792, 24 stockbrokers -- in a power play against the freewheeling auctioneers they competed against -- signed the two-sentence "Buttonwood Agreement," named for a local Buttonwood tree at 68 Wall St. where they set up shop in good weather (in bad weather, they used a local coffee shop, then a rented space), to trade only with each other and for a 0.25% commission. The men conducted the business of the day in tails and top hats; new members had to be voted in by existing ones, and a fee was charged for the right to sit at the table.

According to historian Charles Geisst, author of Wall Street: A History (Oxford University Press, 1997), "The new market would be more structured, conducted without manipulative actions," and would also draw business away from a formalized exchange already profitable in Philadelphia.

But Wall Street was rocked almost immediately by a scandal that compares with more modern troubles. William Duer, an early investor in the Bank of New York -- founded in 1791 by Alexander Hamilton -- and a well-known figure in society circles, found himself sentenced to debtor's prison after many of his curbside stock trades, funded on borrowed money, failed. Untangling his assets from the bank proved problematic.

"The new marketplace took some time to recover from the unwinding of his positions, and the banks recoiled at having lost money at a time when the new federal government was pressing them for funds," Geisst writes. "Duer had the distinction of being the first individual to use knowledge gained from his official position to become entangled in speculative trading; in effect, he was the first inside trader."

As trading exchanges formalized beyond their street vendor roots, New York, like the nation itself, was seeing a financial evolution through the ensuing decades.

The opening of the Erie Canal established the city as a nationally important seaport. Post-Civil War industrialists such as J.P. Morgan and John D. Rockefeller set up shop on Wall Street and transformed the nation's vision of how large, profitable and powerful a corporation could become and the vast personal wealth that was obtainable.

Behind closed doors, innovation was a constant. In 1884, Charles H. Dow began tracking stocks by their pricing, an early index that introduced the world to the lingo of "Bull" and "Bear" markets. Dow and Edward Jones went on to form Dow Jones & Co.

As commerce grew, so did the neighborhood (as well as the rest of Manhattan). The bedrock base below its streets proved perfect for supporting the mammoth skyscrapers. By 1918, following World War I, Wall Street was considered the global center of finance, usurping that distinction from the financial centers of London. In 1966, perhaps the best known symbol of Wall Street's role was under construction -- the World Trade Center.

Over the years, Wall Street's prominence has remained -- but not without challenges.

In 1998, it took a $900 million deal with the City of New York, made up of cash and tax breaks, to keep the New York Stock Exchange from making good on a threat to move across the Hudson River to New Jersey.

There was also, of course, the 9/11 terrorist attacks on the World Trade Center and the physical and spiritual impacts from which Wall Street, like the nation at large, is still recovering a decade later.

-- Written by Joe Mont in Boston.

>To contact the writer of this article, click here: Joe Mont.


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