The First Stock Exchanges

This article was written by Samuel Phineas Upham

The New York Stock Exchange is like the major leagues of stocks, but it’s neither the only nor the original stock exchange. In fact, people have been trading shares in companies since the dawn of banking. From Venice to New York, here is a brief picture of the world’s stock exchanges.

Venetian Merchants

The merchants of Venice helped to fill a gap that the big banks of the time couldn’t. Certain debts were considered high risk, either because of the amount borrowed or the interest associated with the loan. These merchants would trade the debts with one another, which eventually gave way to the ability to sell that debt to customers in the form of “securities.”

Belgium Stock Exchange

The exchange at Antwerp was one of the earliest examples of a stock exchange in existence. Merchants would gather in Antwerp to discuss business, and trade debt notes with one another. The exchange was almost exclusively confined to paper notes and bonds. Though it was common to partner up for business ventures, there were no official shares that could change hands at the time.

East India Companies

The Dutch, British and French governments all lent money generously to companies who agreed to carry the “East India” brand. The formation of these companies changed how business was done. Each company had stocks that paid out dividends depending on how well it performed. In the past, earnings were calculated voyage by voyage, but the East Indian companies considered all voyages for the year when looking at earnings. This is similar to the modern concepts of quarterly and annual financial statements.

About the Author: Samuel Phineas Upham is an investor at a family office/hedgefund, where he focuses on special situation illiquid investing. Before this position, Samuel Phineas Upham was working at Morgan Stanley in the Media & Technology group. You may contact Samuel Phineas Upham on his Twitter page.