The Buttonwood Agreement is the founding document of what is now the New York Stock Exchange and is one of the most important financial documents in U.S. history.[2] The agreement organized securities tradinginNew York City and was signed on May 17, 1792 between 24 stockbrokers outside of 68 Wall Street. According to legend the signing took place under a buttonwood tree where their earliest transactions had occurred.[3] The New York Stock Exchange celebrates the signing of this agreement on May 17, 1792 as its founding.[2]
In March 1792, twenty-four of New York's leading merchants met secretly at Corre's Hotel to discuss ways to bring order to the securities business. Two months later, on May 17, 1792, these men signed a document called the Buttonwood Agreement, named after their traditional meeting place under a buttonwood tree – not because it was signed there.[3]
There were too many brokers involved to meet under a tree. Business was conducted in various offices and coffee houses. In 1793, they coordinated their business inside the Tontine Coffee House on the corner of Wall and Water streets.[4]
The document is now part of the archival collection of the New York Stock Exchange.[5]
In brief, the agreement had two provisions: 1) the brokers were to deal only with each other, thereby eliminating the auctioneers, and 2) the commissions were to be 0.25%. It reads as follows:
We the Subscribers, Brokers for the Purchase and Sale of the Public Stock, do hereby solemnly promise and pledge ourselves to each other, that we will not buy or sell from this day for any person whatsoever, any kind of Public Stock, at a less rate than one quarter percent Commission on the Specie value and that we will give preference to each other in our Negotiations. In Testimony whereof we have set our hands this 17th day of May at New York, 1792.[4]
The twenty-four brokers, known as Founding and Subsequent Fathers, who signed the Buttonwood Agreement were (including business location):[6]