Wall Street in southern Manhattan is home to major banks and financial institutions that have a huge impact on the global economy. This New York City neighborhood is a symbol of economic power, and its history is filled with both ups and downs.
Here, brokers and traders make decisions that can affect the fates of billions of people. Startups and ambitious students are eager to enter this world of big money and high competition.
Wall-Street: The Heart of Finance[]
Wall Street is more than just a street located in southern Manhattan. It is a symbol of the financial power of the United States, a place where enormous power and influence are concentrated. Here are the headquarters of the largest banks and financial organizations. In addition, Wall Street is home to the New York Stock Exchange and the Federal Reserve Bank.
It is the place where decisions are made that affect the economy of the entire world. Wall Street employs people who make decisions every day that can affect the well-being of millions of people. It is also a place where many young people who dream of a career in finance aspire to go.
The Origins of Wall Street[]
The Dutch settlers who founded New Amsterdam in Manhattan built a wall to protect them from attacks by Native Americans and sea robbers. This fortification was 3 meters high and stretched over 700 meters. The construction was accelerated by the conflict between England and Holland, which began in 1652 and affected the colonies in the Americas.
New York's now famous financial artery, Wall Street, was formerly the site of New Amsterdam's defenses. Built of timbers and earth, it supported the city's defenses and was reinforced with cannons. The entrances were located at the intersection of present-day Pearl Street and Broadway.
There is an assumption that the street is named in honor of this wall. However, according to another hypothesis, the name is related to the Walloons, the founders of the settlement, who named the neighborhood Vaal and its main street Vaal Straat.
In the distant past, when the Dutch built a wall to protect their colony and trade in the new Amsterdam, the center that would later become Wall Street was born. The change of power and renaming to New York City did not affect the city's commercial ambitions.
By 1711, a slave market was operating on this street, contributing to the economic rise of the colonies and enriching local merchants. Thus, Wall Street became the cradle of a future financial giant.
In the 1700s, the center of the US economy was Philadelphia, but New York wanted to take over the initiative. At the origins of Wall-Street was the slave trade, but a milestone in its development was the event at the white sycamore tree in 1792.
At that time, traders entered into the Buttonwood Agreement, which implemented rules for the stock trade, limiting it to licensed brokers. This act became the basis for the New York Stock Exchange, taking the Philadelphia model as an example.
The Financial Heart of the Megacity The emergence of New York City as an economic giant is inextricably linked to Wall Street. As the importance of Philadelphia faded, the biggest money flows to this famous street. Today, Wall Street is not just a street, but a powerful symbol of financial clout, whose decisions have a significant impact on economic dynamics around the world.
Interesting facts about Wall-Street
The streets of New York are home to a motley crowd: office workers and travelers among them. The obvious attractions of the place, such as the famous bronze bull, attract attention.
Superstitious citizens and visitors believe in magic: they say that if you rub the bull's privates, make a wish and it will come true. There are many stories about Wall Street, a symbol of the city's financial greatness. In 1837, for example, Samuel Morse introduced his telegraph here, and stockbrokers were among the pioneers in its use.
In 1867, prototype stock exchange technology was introduced, and in 1882, the city became home to a new commodities exchange. Thomas Edison began outfitting the financial district with his electrical inventions that same year. By 1903, the modern stock exchange building appeared at the intersection of Broad Street and Wall Street. From 1918, New York City surged ahead, becoming the world's premier financial hub, overtaking London.
In 1929, the stock market collapsed, triggering the crisis and subsequent Great Depression. In response, a piece of legislation known as the Glass-Steagall Act was passed in 1933.
It separated deposit and investment banks, which prevented financial turmoil for decades. By 1949, Richard Donchian created the Futures, Inc. fund, introducing a trading strategy based on clear rules, which became the basis for modern risk management techniques through limit and stop-loss orders.
In the early 1970s, NASDAQ ushered in an era of high technology in the stock market by introducing its own index. Wall Street mastered computerization for trades during the same period. In 1999, with the repeal of the 1933 law, banks merged investment and banking services again.
The financial crisis of 2008
In 2008, the world economy faced a deep recession called the Great Recession. The main cause was the collapse of major banks and investment companies due to the mortgage lending crisis. Some experts claim that the problems started after the US authorities lifted legal restrictions that prohibited banks with deposit accounts from conducting risky operations on the stock market.
Wall-Street Financial Dynamics
In 2018, Sen. E. Warren noted stagnant wages in the U.S. despite a surging stock market. Despite the general economic instability, stock exchanges are showing records. This was possible thanks to the US Federal Reserve, which flooded the market with liquidity, allowing stocks to quickly recover losses after the crash. The main beneficiaries were investment banks.
The U.S. Federal Reserve allocated a massive $1.5 trillion to help the financial sector cope with the crisis triggered by the pandemic. While most banks experienced losses due to credit problems, Goldman Sachs, on the contrary, increased its revenues to $2.94 billion in Q2 2020 due to successful stock market operations, showing record results in a decade.
Market growth on Wall Street is causing increased optimism among consumers, encouraging them to purchase expensive goods after a marked increase in their investment assets. Meanwhile, positive market sentiment often correlates with favorable economic conditions and confidence in the future among businesses and households. However, it is worth remembering that sometimes market upturns can be caused not by natural demand, but by certain stimulus measures.
During an economic upturn, corporations may attract investment by issuing securities at high prices. The funds raised are used to buy property or take over other firms. This stimulates the overall growth of production and promotes the creation of new jobs.