The Industrial Revolution created many new companies and everyone wanted to get in on the action. Many stocks that were deemed not important enough for the NYSE were traded outside on the side of the street, the curb. A Changing World Technology has advanced rapidly through the 20th century. By the 1970s, computers started to play important roles in industry. A share s cost should reflect its fractional portion of a company s future earnings.
Most companies raise money one of two ways.
Money they borrow and pay back with interest is debt. Money from buyers who want part ownership in the company at an agreed-upon price is equity. When someone buys stock, she gets to share in the company s future earnings and the company gets her cash to spend on projects. By auctions or licensed dealer sales, stock exchanges centralize sales around the world and keep equities circulating as prices and conditions change. Buyers and sellers don't yell out their requests or wave little pieces of paper.