As the saying goes, those that don’t know their history are doomed to repeat it.
So, how well do you know your Wall Street lore?
We’ve put together 10 questions to test your knowledge of Wall Street history so that you can learn from its triumphs and avoid its mistakes.
As the Dutch were settling New Amsterdam, a major economic event was occurring back in Holland, where the national passion for tulips had created an insanely inflated market now referred to as 'Tulipomania.'
In 1637, Dutch tulip traders were able to make profits of what today would equal roughly $60,000 a month and certain, rarer varieties of individual tulips were known to cost as much as a modest house in Amsterdam, but the system was rather fragile and historians say that an inability of one trader in Harlem (Holland not NYC) to pay his debt, shattered the entire system.
The Dutch built a wall along the northern edge of their territory to protect it from potential Native American invasion. Stretching across the entire width of Manhattan, the wall was made of wood and rope and the way in which the materials and topography affected the contour of the wall are still reflected in the way that Wall Street runs today.
Isaac Le Maire was a Dutch trader and a shareholder in The Dutch East India Company who sought to broke the company's monopoly on Dutch trading by creating a secret company to sell shares (more than he actually had) in the Company while it was being challenged by English warships and facing other issues.
Le Maire flooded the market with shares in The Dutch East India Company and forced the prices lower, prompting a livid Dutch government to censure Le Maire and attempt to change Dutch law to prevent further shorting.
In the end Le Maire broke The Dutch East India Company's monopoly but didn't make a profit of the short trading. He ended up in exile from Amsterdam.
Source: NRC Handelsblad
A buttonwood tree on Wall and Pearl streets played host to the first agreement between 24 stockbrokers in 1792 where they founded an early version of the exchange by signing the famous 'Buttonwood Agreement,'
'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 least than one quarter of one per cent 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.'
Source: USA Today
Richard Cantillon coined the phrase 'Entrepreneur' in his economic essay, Essai, after he worked with an original entrepreneur, John Law, to profit off of an investment bubble in the French colonization of North America.
Law had essentially been granted the right to a monopoly in developing French territories in North America, named the Mississippi Company. Cantillon amassed a fortune buying Mississippi Company shares and selling them at an inflated price. His profits made Law jealous and he tried to banish Cantillon from France. Cantillon did one better. He teamed up with wealthy speculator Joseph Gage to form a company that financed further speculation in North American real estate.
He died after cashing out and moving to London, in a fire allegedly set by his discharged cook. His work is quoted by Adam Smith in Wealth of Nations.
George Washington took his oath at Federal Hall on Wall and Broad Streets, making the first presidential visit his own inauguration.
So, it can be argued that without Wall Street, there would be no presidency. Something Barack Obama might not want to think about.
Source: National Archives
The Bank of New York was founded by Alexander Hamilton in 1784 and was the very first financial institution to hold assets physically on Wall Street.
The bank was also the first stock listed on the New York Exchange when it debuted in 1792.
Source: New York Historical Society
The Dow Jones Industrial Average was born on July 3rd, 1884 as the Customer's Afternoon Letter when Charles Dow and Edward Davis Jones began what would become their media empire, growing the average and the newsletter into Dow Jones and The Wall Street Journal.
When Malcolm McLean purchased enough shares to become the majority stakeholder in Pan Atlantic Steamship and buying out the other shareholders to make the company private. He did it to give take his McLean Trucking Company a step forward in the evolution of container shipping but ended up making the incidental discovery of a whole new form of private equity and venture capital finance.
Within a decade, young Turks like Warren Buffett, Victor Posner and Saul Steinberg would start to make millions in taking public companies private.
In an interesting bit of historical coincidence, McLean, after consolidating his companies into SeaLand Industries, sold it at large profit to the Reynolds Tobacco Company, a corporation that would later merge into RJR Nabisco and be party to a rather famous LBO in its own right.
Source: North Carolina History
The bull's sculptor, Sicilian-born Arturo Di Modica, installed the bull as a piece of guerrilla art in 1989, when he installed the three-and-a-half ton piece during the wee hours of the morning directly outside the NYSE. When daylight came, the bull created quite a stir with traders and tourists alike embracing the new piece of art. City officials however, were unamused and confiscated the bull a few days later.
However, the public outcry at the bull's removal prompted the city to officially lease the bull form Di Modica and install it on permanent display a few blocks away at Bowling Green, a few blocks south of Di Modica's initial placement.
Since then Di Modica has become a go-to guy for bulls in financial capitals, having most recently been commissioned to create a bull for Shanghai's financial centre. But the Chinese requested their bull be 'younger and stronger' than the Bowling Green Bull.
It also has larger testicles.
When the Kent State University shootings caused anti-war protestors to rally at City Hall, AFL-CIO workers loyal to Nixon and supportive of his policies in Vietnam descended on the rally and broke a police line to attack the mostly student-filled crowd.
The riot raged on all morning with teamsters streaming across downtown to invade nearby Pace University and chase fleeing protestors down into the Financial District where bankers and traders watched in horror as more than 70 people were pummelled and injured by enraged union workers.
What came to be known as 'The Hard Hat Riot' was a major symbol of the anti-war era and is one of the most bizarre days in Wall Street history.
Source: The New York Times
Charles Ponzi was an Italian immigrant who arrived in America around the turn of the century and worked his way through the lower rungs of the American Dream before conceive ing of a financial fraud that still plagues Wall Street today.
Exploiting the unsophistication of the early Twentieth Century postal system, Ponzi made money by recruiting clients to pay in for postage vouchers that allowed foreign respondents to pay for US postage at a reduced rate. When postal rates inevitably fluctuated, Ponzi would realise the difference on the vouchers, pocket the profit, and pay back the earliest investor before moving down the line, but always staying ahead of the curve to keep himself wealthy and his investors wanting.
The scheme grew more elaborate and Ponzi was eventually brought to justice. He died in Rio de Janeiro, penniless, in 1949.
Duer was a Continental Congressman and businessman of questionable skill who used his carefully cultivated relationship with Alexander Hamilton to gain access to governmental financial information that he used to trade speculatively, a practice that was previously undiscovered but became very, very popular by the 1980's.
Unlike the Boeskys, Milkens, Gekkos and Stewarts that later made millions on the use of information to trade illegally, Duer lost his shirt in 1792's Panic and died in a debtor's prison.
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