Today the stock market is an integral part of our economy, and it is hard to imagine a time when it didn’t exist. That time was over 300 years ago. But, towards the end of the 17th century, when trading started in Jonathan’s Coffee House, situated near the Exchange Alley in the city of London, things began to change. In 1698 businessman and coffee drinker John Castaing issued a document called The Course of the Exchange and other things which was essentially a list of goods that could be bought or sold. Of course, people have always traded goods for thousands of years but this is the first official record we have of any sort of organized and premeditated buying and selling.
The word spread fast and soon people were flocking to Jonathan’s Coffee House to do business. This carried on for a few years until men were regularly being thrown out for fighting and so the trading filtered down into many other coffee shops in the city. By the end of the 17th century, over one hundred companies were buying and selling stocks in the city of London with more popping up at an alarming rate. John Castaing, who was a Huguenot broker, was now publishing his document on a Tuesday and Friday and this was used for pricing and exchange rates. Coffee shops and traders relied on this for years and he became the industry leader, possibly due to his connections with the shipping trade.
In 1748 Jonathans was burnt down by a huge fire that swept through Change Alley, burning down many of the coffee shops which hosted stock trading. The stockbrokers, now with nowhere to go to trade, funded the rebuild of numerous coffee houses including Jonathans which was aptly renamed The Stock Exchange.
Meanwhile in America, which was, surprisingly, slightly slower than us to catch on, was waking up and smelling the coffee literally. The first stock exchange was the Philadelphia Stock Exchange but when the New York Stock exchange opened it quickly superseded Philadelphia and soon became the most powerful in the world. By this point, trading was spreading like wildfire and in 1801 what was formally Jonathan’s Coffee Shop, where it all began, started a membership scheme and, unless you were a member you couldn’t officially trade.
By 1836 the stock market was already an integral part of the world’s economy with several exchanges in American and England. At this time a rule book was also written up and more and more stockbrokers were trading officially within an exchange. After WW1, the economy was becoming stronger and stronger and business with foreign countries was becoming more and more frequent. Measures were put in place so that dealing with overseas clients was easier and countries such as Brazil and Chile were trading with the UK daily.
However, with this new emerging foreign market comes the possibility of fraud and over the last fifty years, foreign exchange fraud has become rife. It works by scammers convincing traders that they can make a fortune by trading in the foreign exchange market. There are many many schemes but they all work similarly; traders are promised a huge return for an initial investment of normally between $5,000 – $10,000. They happily stump up the cash but never see the returns. By this point, the scammers are away with their money.
With trading becoming more and more sophisticated as the years go by, and organizations attempting to whittle out fraud, the stock market is stronger than ever and will continue to be one of the most important aspects of the modern world.
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