History of stock exchange
It is important to remember that market relations are based on exchange. Exchange means to get or to relinquish something by means of an other side. The barter is said to be the most primitive form of it. A service or a good is straight furnished in exchange for another. It goes without saying that the market relations have their own rules: every exchange must be of the same equality, the good provided must have a market utility salary to the good received. The law of quality measures this value by the labor time which has been spent to reduce the good exchanged.
The use of a special commodity as an overall equivalent, money (in some ancient societies livestock or just metallic pieces, notes, bank money, etc. L thus makes it possible to exchange goods quickly and with high level of flexibility, and proposes the possibility of accumulating value. However, we would like to mention one of the most popular elements of market relations – stock exchange (stock market). As we can see from the book “The Stock Exchanges” by Chuckling, stock exchange is an organization, which provides services for traders ND stock brokers to trade stocks, bonds, and other securities.
It also gives facilities for different financial Instruments, but first of all, stock markets work with shares and bonds. It Is necessary to underline that stock market does not sell or buy any securities In Itself. It Just supplies the necessary faceless and Infrastructure for exchange In securities to brokers and members who trade them. It regulates the trade activities in order to assure fair and free trade. All the bargains in securities at other investors have no permit to enter in the trading circles of the stock market.
On the whole, it is vital to note the main functions of the stock market. First of all, it redistributes money resources on the purpose of the investment. Moreover, stock exchange redistributes financial risks. The method of distribution of financial risk is based on its partial transfer to partners in various operations. Therefore, partners, who are able to neutralize negative consequences of financial risks as much as it is possible and who also have more effective variants of internal insurance protection, are eventually given that part.
What is more, stock market discloses and directs the information about profitability and the liquidity which influences investment decisions. Finally, as it has been already mentioned, stock exchange shows the state of the economy in general and its financial sector. It reflects the level of the economic stability of a nation. More and more people acknowledge the utility and importance of stock market for the reason that it is very beneficial to invest in developing enterprises, corporations and economy on the whole.
Thus, it gives an opportunity to an investor to take part in the industrial development of the country. Stock exchange sakes it possible to recognize the true market value of investment owing to price list and reports published by the experts of exchange. Specialists thoroughly observe the rise and drop of the market, so that people can predict when it is the best moment to purchase or to sell shares. But in our opinion we can hardly talk about stock market and its significance without knowing its history. The history of stock market’s foundation is utterly interesting.
First of all, dealers gathered at certain places and tried to sell some goods. Of course, we should not forget that in that time approximately end of the II century) goods were presented at the auctions. Later the Marseilles merchants asked for a special place because sometimes the auctions were postponed due to the bad weather. Since then the public sales have been allocated. Meantime, besides the goods, bills were also offered as well, and some of the well- provided merchants could give loans. But after a while the auctions have become a place only for s price contracts.
The word “stock exchange” has appeared in Bridge, Flanders. All trading concourses were organized in this city near the famous square e Burse (FRR. – purse). As the name of the house’s owner on that square was Bursa, places for business and financial transactions were named after him. Since then it has gradually changed into a stock exchange. Then we can see the developing of the stock market approximately in the XIII-XIV centuries. At first, it was as a bills trade – during that period a lot of regular bill markets and fairs came into being and then some of them disappeared.
In other words, bills trade aroused the necessity of the professionals who engaged in transactions with securities, and also it was significant o have a place, where all the operations with securities were made. However, as it seems in the modern world, the stock market was formed due to the influence of the emissions, which were pursued by the government, and foundations of the first Joint- stock companies. These companies had been founded in England and Holland at the period of time between the end of the XVI and the beginning of the XVII centuries.
There were the Dutch Incorporated Cost-landing company, and also the English Baltic, Moscow and Elevating companies whose shares became the object of a trade at stock exchanges in Holland and England. Let us allude some of the greatest stock economy. In the XVII century trading activity became really successful in Amsterdam as Holland had made huge steps in developing its economy. It is essential to add that the Amsterdam stock market made bases of the technical and the organization of the exchange turn.
Along with transactions in cash, new transactions appeared, such as operations where transfer of securities and its payment occurred after certain time. For this reason, it is not a great surprise that the first stock market in contemporary understanding of this word appeared in that city. All bargains with securities of the world were operated in Amsterdam. As a result all money resources began to be flown down to the Netherlands. However, in the XVIII century Great Britain started to dominate on that field.
It occupied the Dutch place and became a new trade centre of the Europe. Especially rapid development happened when the Bank of England was founded because after that there appeared an enormous amount of various Joint- stock companies and many state bonds were released. In addition, in 1773 brokers received a separate building and for the first time there was an inscription “Stock Exchange”. By the middle of the XIX century London had become a peculiar storage not only for money resources of Great Britain, but also of other countries in Europe and even America.
Nevertheless, we would like to focus on one more well-known stock exchange. In the end of the XVIII century, more specifically in 1792, a meeting of twenty four traders led to a creation of a market, which was named the New York Stock Exchange (NYSE). Later, in the mid-sass, United States was growing rapidly. Companies were in need of funds to be supported in expansion to correspond to the new demand. Besides, companies acknowledged that investors would be interested in buying shares to possess a part of the company. Therefore, stocks have assisted the expansion of the companies.
The great potential and utility of the newly founded stock exchange were becoming evident to both the investors and the companies. Perhaps, any other establishment did not draw scientists’, Journalists’ and writers’ attention as the New York stock exchange. It was connected with that huge role which she had played in second half XIX -? beginning of XX century in development of the American capitalism. Meantime, management of the NYSE and its brokers began to cooperate with a majority of European companies, stock markets and banks.
Also, NYSE and the stock exchange of the Saint-Petersburg had established business relations by 1880. But Frankly speaking, it was the beginning of the XX century when the first agreements with Russian companies were mentioned. In our country a lot of stock exchanges were formed in XVIII-XIX centuries. Initially, there were presented goods such as furs, bread, sugar and salt, but then bonds and shares became also extremely popular due to the development of the economy of the country. After the October Revolution, exchanges stopped their activity and resume to operate with securities only in 1990.
By the way, Peter I was a founder of the stock market in the Russian Empire. It was founded in 1703 after Pewter’s visit to Holland and at that time it looked like a meeting of merchants on the Traitors square near to the port. In 1721 the first building of the exchange which was settled down opposite to Costing dove, was constructed, but unfortunately, it has not remained until nowadays. The stock exchange was formed by an example of the largest European trading corporations, ND in the beginning of its history it was a place of transactions of foreign merchants started to taking part in trades.
However, their operations basically concluded export and import wholesale transactions. In the end of the XVIII century Catherine II decided to improve Vacillates Island, and in 1783 building of the stock exchange began. Although it was suspended for the financial reasons, later Alexander I finished project of the building, so in 1816 there was a new building of the exchange to which it moved to, but nowadays there is located the exposition of he Central naval museum.
The stock market in Saint-Petersburg is considered to be one of the oldest and powerful in Europe, although at first, it did not make a valuable contribution to the Russian economy because it was artificially established without straight necessity. Summing it up, we would like to emphasize the great importance of the stock market in the world’s economy. As we can see from the history, the stock exchange gave an opportunity for a number of countries to develop in various ways. First of all, it facilitated market relations to pass to the new level.
Finally, nowadays it is rather simple for everyone to participate in the industrial growth of the economy, in other words, stock exchange provides transfer of the savings in the investment, passing an intermediary of the commercial banks. However, banks and stock exchanges are not antagonists; they cooperate with each other in order to work for the national economy. Thus, stock market provides a large variety for the investment to the different people due to making the investment attractive to the investors. Cockcrow m;adaptable: 1) Lance David, Neal Larry.