Friday, May 25
Coffee Under the Buttonwood Tree
By Art Cashin
This particular May 17th of which I speak is a lovely day indeed in Manhattan. And this being 1792 and New York being the new capital of the new U.S., there are many citizens out and about to catch the spring airs. And more than a few of them are milling about a very popular joint, just off Wall Street, called the Merchants Coffee
Personally, I believe this establishment owes its popularity less to its famous cheesecake (which is rather okay for New York City) and more to the beverage in its name. For, while they actually do much of their beverage traffic in liquids other than coffee, it is quite helpful, upon arriving home, to be able to declaim to "she who suspects everything" that you have had a tough day at the Coffee House. (Somehow, even in 1792, "Honey, I had a tough day at the Ale House" smacks of underperformance.) Another feature of this bistro is one that I particularly like. They have a table and bench on the lawn, under a large Buttonwood Tree. So, I am headed there on this particular morning for a flagon or two of "coffee".
However, before I can eyeball Priscilla to bring me the usual, I find 24 citizens around this outdoor bench which I fancy somewhat. These two dozen gents are folks of some substance (both physically and financially) so I hold back a bit before claiming my usual spot. It is then that I see that one of the 24 gents is a merchant and fellow "coffee" drinker whom I know as "Verily, Verily". He gets this tag because this is
what he says whenever a client doubts his word. (This happens so frequently that he repeats the phrase so often that whenever a citizen sees him, said citizen immediately says - "Verily, Verily".)
Anyway, "Verily, Verily" says to me - "Art, do you have perhaps a spare $200 with which to join this venture?" He then explains that each of these merchants puts up $200 apiece to join something they will call "The New York Stock and Exchange Board". "Verily, Verily" says the boys think this is a very good investment for several reasons: 1) A guy named Napoleon Bonaparte was at this time making all European Bonds as unpredictable as a turf race in a rainstorm; 2) Certain gents were making plans for various ventures like canal companies and private turnpikes.
Well, these are nice thoughts indeed but personally even if I have $200 (a very unlikely event), I do not see much vig in this Stock Exchange idea. "But" says "Verily, Verily", "do not scoff, for a story goes with it" (over the years I learn this can often be a very expensive sentence). It seems these guys are onto a deal that a certain Alexander Hamilton has cooked up. He wishes to change the large revolutionary debt into Publick Stock.
The aforementioned debt is such a palooka that many citizens shun these "Continentals" as having very little value. In fact in graffiti school, kids are writing "Not worth a Continental" on walls and such. In further fact, this colonial money is so bad that almost all business is done using a Viennese coin that looked like a Spanish "pieces of eight" (called "the Thaler" at this time but with a New York City accent it is pronounced "dollar" and this is where this word comes from.) P.S. - said coin is cut like a pizza so you can break off an eighth or 12 1/2 cents. If you broke off 2 such "bits", you have a quarter - get it?)
Anyway, Hamilton is having difficulty getting the votes he needs to convert to Publick Stock. So he strikes a deal with a certain Thomas Jefferson who wishes to move the U.S. capital to Virginia (to be closer to home). And to prove they were honest, these two citizens decide to build said capital on some swampland owned by a gent named George Washington.
Anyway, the deal is struck and suddenly there is lots of Publick Stock to be traded on the New York Stock Exchange. Naturally, shy the $200, I miss out on the Buttonwood Agreement but I sign up shortly thereafter and am here since then. Another day, I'll explain why they call it "a seat" when everybody stands up at the Stock Exchange.
Many thanks to Mr. Cashin and UBS Financial Services who graciously allow his historical musings to be republished on this site. To enjoy more of Art's posts simply click on "Cashin's Comments" in the label section on the sidebar.