Gotham_ A History of New York City to 1898 - Edwin G. Burrows [248]
UNDER THE BUTTONWOOD TREE
Like Hamilton, New York’s “moneyed men” came out of the Panic of 1792 eager to draw the line between honest investment and knavish speculation. When trading in public stocks began two or three years earlier, the market was dominated by auctioneers who knocked down consignments of government paper to the highest bidder like any other commodity (and often, indeed, side by side with other commodities). Two of the most active, Leonard Bleecker and John Pintard, formed a partnership in July 1791 and held auctions in the Long Room of the Merchants’ Coffee House, three times a week at one P.M. and three times a week at seven P.M. Although these events were open to the general public, the great majority of stock purchases appear to have been made either by wealthy “dealers,” also known as “jobbers,” who bought and sold on their own accounts (often, like Duer, using borrowed money), or by “brokers,” who acted on behalf of specific customers. Between auctions, dealers and brokers would meet outside to trade stock among themselves. During the summer of 1791 they gathered under a buttonwood (sycamore) tree on Wall Street.
That September, as the volume of sales increased and bank stocks joined public stocks on the market, the city’s auctioneers, dealers, and brokers drew up the first set of rules governing the sale of securities. Five months later, in February 1792, the auctioneers opened a Stock Exchange Office in “a large convenient room for the accommodation of the dealers in stock” at 22 Wall Street. Then, in March, Duer failed and the market collapsed.
In the ensuing panic, the auction system came under heavy criticism for having been too easily manipulated by unscrupulous auctioneers and dealers who rigged prices and circulated false rumors. At the end of March, hoping to restore confidence in the market, a number of dealers and brokers met at Corre’s Hotel and signed a promise to boycott future auctions and find “a proper room” in which to do business; several weeks later, the legislature flatly outlawed the auctioning of federal or state securities.
On May 17, 1792, twenty-four brokers and dealers drew up the so-called Buttonwood Agreement, which laid the foundations for a structured securities market without the now discredited auctions. The signers agreed to a fixed minimum commission rate, and they promised “that we will give a preference to each other in our Negotiations.” Early in 1793 the brokers and dealers moved into an upstairs room of the elegant new Tontine Coffee House, situated on the northwest corner of Wall and Water streets. Wags dubbed it “Scrip Castle.” (The Wall Street “curb market” didn’t disappear, however: in warm weather, stock traders continued for many years to assemble on the pavement outside.)
The Tontine Coffee House, by Francis Guy, c. 1820. The Coffee House was the large building on the left, occupying the northwest corner of Wall and Water streets. Note the merchants and traders gathered on its balcony, as well as the presence of women in the street below—a reminder that private residences were still common in this part of town. (© Collection of The New-York Historical Society)
Construction of the Tontine Coffee House symbolized the fear of disorderly capital markets that became a recurring feature of the city’s economic life. It was also an early indication that the Panic of 1792 wouldn’t, as some had feared, cause prolonged harm to the city’s economy. By the following June a local paper could declare that rumors of New York’s problems “have been very exaggerated and falsified. . . . Credit is again revived—and prosperity once more approaches in sight. . . . Trade of every kind begins to be carried on with spirit and success.” Events unfolding