The stock market was originally founded by the government with the issuance of war bonds. In an attempt to further fund the war, these bonds were sold to the general population with a guarantee of repayment. It was at this same time all over the industrialized world that the major banks too were getting the same exact idea in their heads that they can sell a portion of their ownership to investors in exchange for profits.
It was back in 1792 that a group of 24 merchants met for the first time on Wall Street. Each of these merchants had their own portfolio of stocks, securities and bonds that they wanted to trade with each other. The agreed to meet there on Wall Street every day from that day forward to trade their investments and within time the number of merchants who came to this meeting grew and grew. Today there are billions of investors meeting on Wall Street on a daily basis through internet trading and through various brokerage firms. The whole thing stared with only 24 merchants.
By the 1800's the stock exchange had grown into a powerful industry as the industrial revolution started kicking in and many new business were opening up at an accelerated rate. These businesses in order to fund themselves split their companies into shares and took part of those shares to Wall Street so that investors could buy them. This continued on well into the 1900's where there was literally millions of dollars being traded on the exchange. Prior to1921, the entire stock exchange was still held outside on Wall Street until it was moved indoors for the first time in 1921. Since then it has been in the same spot.
Then people started to realize that some company's stocks had higher demands then others and that these speculators wanted the shares so bad they were willing to bid on them just to buy them. It was at this time that the stock exchanges secondary market was born and this would continue on until 1929.
It was on Black Tuesday that there was an unprecedented 16.4 million shares sold. So much in fact that the ticker tape was not able to keep up and fell more than 2 hours behind before it finally broke. With all that trading, there was more than $100 billion dollars wrapped up in the stock market. This was a lot of money in those times and when the stock market crashed, most of that money vanished along with it, leading to the Great Depression.
Since those times the secondary market has made a full recovery and there have been many new changes which have been made to prevent another stock market crash.
Visit the authors website Stock Market For Dummies Guide for articles, tips and advice about how to read the stock market, and how to learn the stock market fundamentals.View all articles by Ray Baker
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