Buttonwood Agreement

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Depiction of traders under the buttonwood tree Buttonwood.png
Depiction of traders under the buttonwood tree
A 1797 painting by Francis Guy. The building with the American flag is the Tontine Coffee House. Diagonally opposite (southeast corner, extreme right) is the Merchant's Coffee House, where the brokers of the Buttonwood Agreement and others traded before the construction of the Tontine. On the right is Wall Street, leading down to the East River. Tontine coffee house.jpg
A 1797 painting by Francis Guy. The building with the American flag is the Tontine Coffee House. Diagonally opposite (southeast corner, extreme right) is the Merchant's Coffee House, where the brokers of the Buttonwood Agreement and others traded before the construction of the Tontine. On the right is Wall Street, leading down to the East River.

The Buttonwood Agreement is the founding document of what is now New York Stock Exchange and is one of the most important financial documents in U.S. history. [2] The agreement organized securities trading in New York City and was signed on May 17, 1792 between 24 stockbrokers outside of 68 Wall Street. According to legend the signing took place under a buttonwood tree where their earliest transactions had occurred. [3] The New York Stock Exchange celebrates the signing of this agreement on May 17, 1792 as its founding. [2]

Contents

History

In March 1792, twenty-four of New York's leading merchants met secretly at Corre's Hotel to discuss ways to bring order to the securities business. Two months later, on May 17, 1792, these men signed a document called the Buttonwood Agreement, named after their traditional meeting place under a buttonwood tree – not because it was signed there. [3]

There were too many brokers involved to meet under a tree. Business was conducted in various offices and coffee houses. In 1793, they coordinated their business inside the Tontine Coffee House on the corner of Wall and Water streets. [4]

The document is now part of the archival collection of the New York Stock Exchange. [5]

Document agreement

In brief, the agreement had two provisions: 1) the brokers were to deal only with each other, thereby eliminating the auctioneers, and 2) the commissions were to be 0.25%. It reads as follows:

We the Subscribers, Brokers for the Purchase and Sale of the 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 percent Commission on the Specie value and that we will give preference to each other in our Negotiations. In Testimony whereof we have set our hands this 17th day of May at New York, 1792. [4]

Signers

The twenty-four brokers, known as Founding and Subsequent Fathers, who signed the Buttonwood Agreement were (including business location): [6]

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References

  1. ↑ Hewitt, p. 31
  2. 1 2 Pisani, Bob (17 May 2017). "This single-paged document started the New York Stock Exchange 225 years ago". CNBC. Retrieved 7 April 2020.
  3. 1 2 Banner, Stuart (January 1998). "The Origin of the New York Stock Exchange, 1791–1860". The Journal of Legal Studies . The University of Chicago Press. 27 (1): 113–140. doi:10.1086/468015. JSTOR   10.1086/468015.
  4. 1 2 Teweles, Richard Jack; Bradley, Edward S.; Teweles, Ted M. (25 September 1992). The Stock Market (6th ed.). Wiley. p. 97. ISBN   9780471540199.
  5. ↑ Durante, Dianne L. (22 June 2016). "New York Stock Exchange: 224 Years and Counting". Dianne Durante Writer. Retrieved 16 August 2014.
  6. ↑ Wyckoff, Peter (1972). Wall Street and the stock markets: A chronology (1644–1971). Chilton Book Co. p. 145. ISBN   0-8019-5708-7.
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