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MARKET MAKERS

A big stock market rally also greeted the new American president 200 years ago

New York Public Library
"The New York Stock Board In Session."
  • Jason Karaian
By Jason Karaian

Global finance and economics editor

Published This article is more than 2 years old.

Fresh from a famous victory, the new president delivered his inaugural address to a crowd outside the Capitol in Washington, DC. The stock market had been rising steadily since the vote. In his speech, the new commander-in-chief marveled at the country’s “gigantic” growth.

Most of the parallels between James Monroe in 1817 and Donald Trump in 2017 stop there. Monroe was the first to give a public speech outdoors at his inauguration, which took place in March back then. And he didn’t spend the first night of his term in the White House—the British had burned it down.

New York Public Library
The Tontine coffee house on Wall Street, 1812.

Later in the week of Monroe’s inauguration, an equally momentous event took place: The group of New York brokers who had met to trade stocks in a coffee house on Wall Street for years decided to get more professional. So, 200 years ago, on March 8, the brokers drew up a constitution to replace the agreement they originally made under a famous Buttonwood tree—and the “New York Stock & Exchange Board” was born. (It moved out of the coffee house to a dedicated office a month later.)

Today, companies on the NYSE boast a combined market cap of $21 trillion, making it by far the largest market in the world.

Researchers at Yale’s International Center for Finance have pieced together trading data from the early years of Wall Street, including a representative index for the nascent New York exchange (which was heavy on banks and insurance companies). Here, another parallel emerges between now and the year of the NYSE’s founding:

Shareholders did well in 1817, reflecting the positive mood of the day. In fact, Monroe’s presidency marked what became known as “Era of Good Feelings,” with political partisanship receding and citizens of the still-young nation looking to the federal government for stability.

“Discord does not belong to our system,” Monroe said as he took office, expressing gratitude for “the increased harmony of opinion which pervades our union.” Although Trump will hope that New York-listed stocks continue to follow the same trajectory as they did under Monroe, a president who decried “this American carnage” during his inauguration speech could hardly be operating in a more different political environment.

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