The history of the stock market is rich with lessons about the risks and benefits of investing. Investments allow infrastructure to be constructed, businesses to boom, job creation efforts to flourish and retirement accounts to swell, but investments can also go sour. It’s important to learn about the stock market and how it works before you begin investing.

Many European countries had already established the practice of trading stocks (linked to the shipping and spice trade) before America was settled. As Congress established a US Treasury and realized the need to build up a strong economy, Alexander Hamilton (the US Secretary of the Treasury) came up with the idea of an American-based stock exchange. This began with trading of government debt securities in the 1790s.

Private stock exchanges had been taking place up before this, often between wealthier businessmen, sometimes including investments where businessmen would invest money needed for infrastructure or business prospects with the agreement that the money would be paid back at a gain of interest due. These investments were done person to person, in private, and were often the result of word-of-mouth advertising.

In 1792, the first organized exchange of stocks took place. This was actually performed in a park where 24 New England businessmen signed a contract designating specific stock exchange rules. They established regulations, fee limits and a set of general rules about how the stock market would operate, and then the official stock trading began. They began meeting at 22 Wall Street each day at noon, where the bidding and sale of stocks and bonds were sold to the highest bidder. Commissions were paid on each exchange. They called themselves The Stock Exchange Office.

The location of these exchanges and the name of the organization overseeing the exchanges changed several times before 1863, when the name the New York Stock Exchange was established and the location of the corner of Wall Street and Broad Street was finalized. Smaller exchanges such as the Curbside Brokers oversaw trading of as little as one share at a time between smaller businesses. In 1953, the Curbside Brokers became the American Stock Exchange.

Government did not actively regulate stock exchanges until 1934, after the market crash of 1929 that led to the Great Depression. The stock market has seen many cycles of rising and falling investment values, and much of the US economy is tied to this market. Because so many individuals invest in the stock market these days, the ups and downs of the stock market affect more than just big businesses and government. Everyone is tied to the stock market in one way or another, making this an important part of our economic health as a nation.