Where would the global economy be without the stock market? The system allows shares from countries worldwide to be quickly bought and sold, keeping everything running smoothly and preventing financial stresses.
The market value of firms trading on the London Stock Exchange alone was £3.81 trillion. However, this huge international trade didn’t exist until the 12th century — read on to find out all about how it developed and discover stock market history.
Early Origins of Stock Market History
Although you might think that it is a modern-day institution, stock market history actually began back in 12th century France when ‘Courretiers de Change’ began to manage the debt of agricultural communities on behalf of French banks. And so, the first brokers came to be.
Other countries began to follow suit. Traders in commodities would meet in houses or communal places and start to trade their stocks. Although it was initially informal, it soon became a formal system, and a flourishing stock market was developing across Europe. This was particularly the case in Antwerp, Bruges, Ghent, and what is now Rotterdam.
As time went on, trading became more complex and structured. During the 13th century in Italy, bankers began to trade in government securities, although it was outlawed in Venice. By the fourteenth century, this was standard practice across the country, including in the large cities of Pisa, Verona, Genoa, and Florence. Organizations in Italy were also some of the first to sell shares on the stock market.
Businesses in the United Kingdom were not able to sell shares until the 16th century — after this several other countries followed suit. This led to more international trading and the beginning of the market as we know it today.
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As time passed, the business of stock market trading became more formal and regulated. The first proper joint-stock company was the East India Company, which was Dutch and formed in 1602. This gave shareholders the ability to buy and sell stakes in businesses, leading to them owning the company if they held enough shares.
The East India Company was also the first organization to get fixed capital stock. This was a key moment in stock market history. What this means is that the company stock could be continuously traded on the Amsterdam Stock Exchange. Seeing how successful this was, many other types of organizations began to do the same thing.
However, this method was not without pitfalls. Some companies attempted to ‘short sell,’ which is where securities without an owner are sold. However, this practice was quickly banned in 1610.
The East India Company was ultimately dissolved in 1874 after decades of exploitation and poor management. This led to a bail-out from the British government worth £1 million in 1772.
Top Stock Markets Today Across The Globe
Fast forward to modern day, and there are stock markets across the world employing millions of people and affecting economies globally. The most well-known and important markets are in the USA, UK, Canada, India, China, France, South Korea, Germany, Japan, and the Netherlands.
Stock markets are notoriously unpredictable, as we know from the 1929 Wall Street Crash, with a huge range of factors affecting them — everything from a major company collapsing to the impact of a natural disaster. However, it’s hard to imagine a modern economy without them. After all, they’re nearly 800 years old.
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