In 1792 under a Buttonwood tree at 68 Wall Street, 24 securities brokers signed an agreement that formalized their trading rules. As you might have expected, they soon decided to relocate indoors.
Where are we going? To the role of coffee in our economic history.
The Tontine Coffee House
What ultimately became the New York Stock Exchange really began in a coffee house. Established by the brokers who had signed the Buttonwood Agreement, in 1793 they started trading securities (and drinking coffee) at the Tontine Coffee House. During midmorning the group’s leader called out an alphabetized list of stocks and bonds and the brokers responded with their bids and offers. The result was a market, the process through which they determined the price and volume for all that they traded.
Below, in this 1797 painting, the Tontine Coffeehouse has the flag atop its roof and Wall Street is the street at the far right:
Coffee History and the Industrial Revolution
Originating in Yemen, traveling to Turkey and then moving to Europe by the mid-seventeenth century, coffee was about a lifestyle change. Because of a polluted water supply, beer had been a typical European’s beverage-of-choice. Starting with a breakfast of a bowl of beer soup (actually an eggs and beer and butter mixture), you could have sipped beer throughout the day.
The arrival of coffee resulted in less beer and more caffeine in the European diet. Or, as New Yorker Magazine writer Malcolm Gladwell explained, they chose “being jittery to being drunk.” Meanwhile, we could say that London’s coffee houses became idea incubators while factory workers became more alert. Coffee has even received some of the credit for the increase in productivity and innovation that characterized the industrial revolution.
Our Bottom Line: Human Capital
Whether we believe that coffee played a large or small role in the history of stock markets and innovation, we can conclude that it has affected the development of human capital. Defined as the learning that makes people more productive, human capital’s potential has been boosted by caffeine and the coffee houses where people gathered to share ideas and trade stocks and bonds.