Among the institutions which, while having no direct claim to be considered as part of the banking system, are none the less of great importance in the money market, and next to the Federal Government, the most important customers of the banks of New York, are the exchanges, which, by affording an instant market for securities of all kinds, not only aid in standardizing values, but render this form of wealth easily convertible to terms of cash.

Of the many exchanges in New York---there are many dealing in commodities, the only ones which need be discussed here are the Stock Exchange and the Curb Exchange. Both are the outgrowth of the gatherings of merchants and financiers at the coffee houses, of which the most famous in New York's early financial history was the Tontine, on Wall Street. While drinking their coffee or something stronger, habitués of such coffee houses as the Tontine, and similar ones in London, would buy and sell public or corporate stocks and securities, and transact other business of a financial character in which the banks were not interested.

Exchanges began to be formed about 1825 in all the principal financial centers, as the business of trading in shares became specialized, and those engaged in it felt that coffee house transactions were beneath their dignity. The first Stock Exchange was content with rented offices in the financial district, and it was not until 1865 that the members thought it worth while to erect their own building. But, in the reconstruction period following the close of the Civil War came the expansion in rails, and with it the necessity of floating large issues of securities. It is hardly unfair to say that the craze for speculation, to which early stock brokers were ready to lend themselves, was still another factor which not only increased the volume of business, but rendered it essential to safeguard transactions in stocks and bonds as thoroughly as possible.

Financial unrest was quickly reflected in the business of the Stock Exchange, on which the most noted of the early operators were Jay Gould, Jim Fisk, Daniel Drew and Cornelius Vanderbilt. These men did not appear themselves on the floor of the exchange, but operated through brokerage firms having seats there. Sometimes the Stock Exchange was blamed for occurrences in which it had no part. Thus in the events leading up to the famous Black Friday in September, 1869, it was wholly blameless, the disaster having been caused by the attempt of Jay Gould and James Fisk, Jr., to corner the gold market, and the Stock Exchange did not and does not trade in gold. The episode reveals that even two generations ago the relationship of the several markets was so close that where one was affected, all must feel the reaction.

With the increase of business and the efforts to safeguard and govern it, membership in the exchange, which was always a membership association, and not a corporation, became increasingly valuable. Thus in 1898, 122,160,166 shares of stocks and bonds to the value of $922,514,410 changed hands on the floor of the Stock Exchange. That year the high price for a seat was $29,750, and the low, $19,000. In 1925 the shares of stock traded in were 452,211,399 and the bonds represented a par value of $3,398,346,045. That year seats on the Stock Exchange were $150,000 high and $102,000 low. The Stock Exchange disciplines its own membership, and itself decides what securities they may be permitted to deal in through the exchange, although it cannot dictate in such matters to its members in their private business capacities.

Certain highly important classes of industrial stocks, including the Standard Oil Company stocks, were not listed, and in 1882, dealers in these stocks formed what was called the Curb Market. The operators collected in the middle of Broad Street, which was closed to traffic, roped off by the police, and practically given over to them, rent free and would give buying and selling orders to the brokers' clerks who watched them from the windows, in sign language. While still exposed to the inclemency of the weather, but rent free, so-called "seats" on the Curb Market were valued at $1,500. In 1921 the members took possession of a building erected for them as the "New York Curb Market," and toward the close of the year seats were valued at $3,500, were sold at $8,500 to $35,000 in 1925.