I currently live a block away from a Starbucks. There’s another one about 6 blocks away from that one, and when I get to work, yes, there’s one there too. Not long ago, people would have questioned how the star actually got into the bucks before they entered one of the cozy coffee shops that are a part of our daily lives.
Today we go into a Starbucks, or any other similarly chill copy-cat, to order a cup of some over priced liquid, or study, or eat. But we most definitely do not go into a Starbucks to yell at the top of our lungs for several hours straight in order to buy some securities.
Let me back up. New York City was one of the places in the “New World” that showed how the low life of swindlers and speculators could mix together with the high class of European settlers that remained. During and after the American Revolution, New York became the center of commerce in the colonies and because of this attracted many of these two varied types of people. The mix of these two societies was a perfect breeding ground for what was to come.
Trading securities had been around for many years, but on Wall Street was where New Yorkers and many other immigrants and Americans experienced the excitement of auctions and trading. Auctioneers of physical products such as corn or potatoes would yell at the street corner of Wall and Pearl. And the speculation of these actual products led to the trading of non-physical products such as stocks and bonds.
During this time, it was very uncommon for the average civilian to invest in stocks as we do today. Corporations had not yet been legally stripped of their liability, so if you bought a stock you could be held personally responsible for the debts of a company you did not run. Thus many people thought of these “investments” as scams and schemes to steal your money.
Nevertheless, just as Las Vegas survives today amidst its reputation, Wall Street persisted despite the infamy that it beheld. Most auctions and bidding at this time happened out doors though, so that the public could be involved. Because of this the auctioneers were gaining power over the brokers of the time.
Brokers were people who would buy securities for other, usually much richer, individuals and take a portion of the proceeds for themselves. It was, and is, a way for many more people to be involved in the stock market than just who is there on the street corner. They competed with each other on who would charge less of a commission to their clients.
But these brokers were losing their power to the auctioneers and decided to take a stand against them by setting up an agreement to not charge more than a certain commission and to “give preference to each other in our negotiations”.
The first meeting of this group was held at the Old Merchant’s Coffee-House, but these brokers soon realized that they needed their own location to do business. So they did what they knew how to do best and set up a corporation and sold shares to build their own coffee-house.
And thus The Tontine Coffee-House was built; the coffee-house that would be the first step toward the institution today known as the New York Stock Exchange. It was a mixture of a club and a meeting room, where pleasure and business commingled. In one room you could hold an auction for a new stock, and in the other you could have a drink and gossip about what was going on around town.
This coffee-house was a far cry from the coffee shops we sit in today. Besides the apparent physical contrasts, including a hefty bar to hold up the notoriously “large” brokers that would lean into it, there were many other differences between the old and new places of coffee.
In the Tontine Coffee-House one could hear auctioneers in the meeting room yelling out prices and numbers of securities while a bet was being placed on how much the security was going to be sold for in the club room. At nights the rooms were turned into banquet halls or ballrooms for parties and gatherings. It was where people came to meet each other, it was where bets were settled, it was where businesses started.
The Tontine Coffee-House saw many stocks and bonds exchange hands during its tenure as the premier place to trade securities in America. But it was merely a stepping stool along the route toward the securities markets of today and a footnote in the history of a very historically significant city and time.
Despite all these differences, these two establishments separated by time and culture, serve a very similar purpose. The primary focus of fueling patrons with coffee or other beverages is similar. But the underlying purpose is also comparable.
I have had many meetings at Starbucks, or a local coffee shop, to talk about business, relationships, and even just to gossip. These types of meetings happen best over a mug of coffee for some reason. And the colonists and early Americans knew this as well.
The look and feel of a Starbucks would seem very foreign to a broker at the Tontine Coffee-House. But to us, the Tontine would not look like a good place to make investment decisions. It would be shocking to witness an auction taking place because there are so many rules and regulations that are in place now to protect investors. The rawness of the Tontine would seem out of place compared to the tranquility of the coffee shops that we regular now.
The differences of the coffee shops of today and the Tontine Coffee-House fade away as you look at what is actually going on there. We have brought back stock trading in these establishments, because now you can use your computer to buy or sell stocks online while sipping a latte. People are checking their Etrade accounts, or looking at their 401Ks on tablets while drinking a coffee.
Looking back at where our country has come from, it sometimes seems like a different world. So much has changed in the past fifty years, and going back even further than that just seems incomprehensible. But whether its the mermaid logo, or a local variety, we can be reminded that our worlds aren’t that much different. Yes, the Tontine looked different than Starbucks does today, and our attire has slightly changed. But we still drink coffee, we still meet with friends, and we can now even trade stocks in these places.
The Tontine Coffee-House is no longer there. It is a whisper in the memories and shadows of the New York Stock Exchange and investment banks that currently sit on Wall Street. There is a Starbucks inside one of those towers though. And as long as coffee is served, people are gathered and stocks are traded, the Tontine and its raucous past will not be forgotten.