By Robert Hornak

 

America’s deep connection to capitalism isn’t an accident. Without the creation of public companies and the ability to raise capital by issuing stock it’s very possible America never would have happened. Crazy assertion? Well let’s look at the history. 

In the 1500’s savvy businessmen hired captains and crew to sail around the world engaging in trade for fabric, spices, and other commodities they could sell back home. But these adventures were very risky. Owners could lose everything from either pirates or bad weather. An early form of LLC was created to finance each of the voyages, with investors sharing in the profit or loss of each trip. 

In 1585, businessman Sir Walter Raleigh set out to establish the first permanent colony in the new world. He set up the colonists and went back to Europe. returning five years later to find the colony had been abandoned and the colonists missing. The venture was a total loss, with a mystery that continues to this day.

A better way was needed. These risk-taking businessmen realized that instead of financing each voyage they could create a company where the investors would share in the success of the company as long as they owned their share. The first of these companies were the East India companies established in the early 1600’s by the Dutch, French and British.

This created the need for a way to buy and sell these stocks, and the Amsterdam Stock Exchange (the oldest in the world, now the Euronext Amsterdam) was founded in 1602 to support these new jointly-owned companies. They sold shares and paid dividends, just as modern corporations do today. The success of this system allowed the trade industry to grow, with the founders building more ships and hiring more crews.

This enabled another attempt to create a permanent colony in the new world. In 1620, the Mayflower, with families of Pilgrims recruited for this voyage, set sail from England after bad weather blocked earlier attempts. Originally heading for an area in the Hudson river, then part of a region known as Virginia, persistent bad weather caused them to land on Cape Cod in Massachusetts that November instead. This, of course, is not an ideal time to be in New England under any circumstances. 

We all know the rest of that story. How the Pilgrims struggled to establish their colony, finally realizing success after making each family responsible for their own plot of farmland. And then celebrating their success in a fall harvest feast that was held with members of the local Indian tribe that helped them survive.

The New York Stock Exchange was founded much later in 1792 – when local businessmen signed the Buttonwood Agreement – established almost simultaneously with the United States. The NYSE, which made its home on Wall Street, sat at the gateway to the new country, supported all U.S. trade and business activity.

The new exchange grew rapidly by having a fairly open system that set listing requirements and charged fees for traded securities. It quickly outgrew the London exchange, founded almost 20 years earlier in 1773, due to that exchange’s more restrictive approach to securities trading, and quickly became the most powerful and successful stock exchange in the world.

In many ways this was the wild west before there was a wild west. The success of the exchange led to an explosion of business activity.  The ability to mitigate risk through joint-stock ownership and the capacity for great reward through investment, allowed the United States to grow into a business giant that fostered almost all the great companies and innovations in modern history. 

And this brings the legacy of Thanksgiving full circle and ties it directly to the success of the NYSE and the destiny of NYC to become the most powerful city in the world. So, when you give thanks on Thursday, be sure to say a thank you for the capitalist spirit of Wall Street that allowed all the rest to follow. 

 

 

Robert Hornak is a professional political consultant who has previously served as the Deputy Director of the Republican Assembly Leader’s NYC office and as Executive Director of the Queens Republican Party. He can be reached at rahornak@gmail.com and @RobertHornak on X.