The New York Stock Exchange got its start in March of 1792 when 24 of New York’s leading merchants met secretly regarding wresting control of the securities business from the auctioneers and bringing order to the business. Only two months later, these merchants signed the Buttonwood Agreement, which was named for the buttonwood tree that became their meeting place. According to the agreement, the businessmen agreed to trade securities among themselves only, abide by set trading fees and not to participate in trades or auctions of securities outside of their circle.
A hundred years prior to the creation of this first stock exchange, Dutch settlers built a wall to protect them from danger. The path along the wall became a popular commercial thoroughfare because it connected the banks of the East and Hudson rivers. This path was eventually named Wall Street and was home to a wide range of shops and businesses. The Exchange formed by these 24 businessmen would eventually reside at 11 Wall Street and coining the phrase most commonly associated with stock trading in the U.S.
The New York Stock and Exchange Board was officially formed on March 8, 1817 and rented space at 40 Wall Street. Each morning, Anthony Stockholm, the Exchange president, would read the list of stocks available for trading that day. The Exchange was open to members only. New members had to be voted in and had to pay an annual fee for their seat.
The first of Wall Street’s biggest panics took place in 1929. Stock prices rose 400 percent in five years and were grossly inflated from the actual worth of the companies being traded. When the Wall Street insiders could no longer keep the con going, the stock market fell 31 points in just one day, dropping another 49 points just a few days later. On October 29, 1929 the stock market collapsed completely leading to a nationwide economic crisis and depression.
On March 15, 1817, the New York Stock Exchange announced a ban on wash sales, which are technically fictitious sales of stocks by people who don’t even own the stocks. Even though the ban is announced in 1817, the practice of wash sales continues for several decades. There are typically two reasons wash sales occur: either to manipulate the price of stocks or to claim a tax deduction on the loss and repurchase the stock at a lower price. Since the 1800s, many laws have been passed to crack down on traders engaging in wash sales.
In the U.S., a wash sale is detected by the selling or buying of a stock or security at a loss within 30 days of buying identical stocks or securities or acquiring identical stocks in a trade. This policy includes the 30 days prior to the sale as well as the 30 days following the sale. If you conduct a wash sale, there are two consequences: you cannot claim any loss you sustain on the sale and your holding period for replacement stock includes the holding period of any stock you sold.