A small number of early nineteenth-century New York stockbrokers built, from scratch, an organization that by the end of the century would be one of the most powerful nongovernmental bodies in the world. The origin and the early growth of the New York Stock and Exchange Board can be attributed in large part to the brokers’ success in regulating themselves, a success that enabled them to create wealth and to capture wealth from nonmembers. The value of the stock and exchange board’s regulatory function was enhanced by the unenforceability in the New York courts of an important class of transactions. In its earliest decades, the board was the only institution capable of regulating, and resolving disputes arising from, a wide range of market activity.
