”He bet that the market would go down, while everyone else is betting it was going to go up,” as economic historian Robert E. Wright says, until he runs out of money. ”He stops paying, so everyone has his money and starts to wonder who borrowed Duer and whether these people would make their payments.” The situation was similar, Wright adds, to what happened more recently when Lehman Brothers went bankrupt and people began to wonder who the company owed money to. So people panicked and started selling. The more they sold, the more prices fell, which made people even more panicked – until Alexander Hamilton worked with first Bank of the United States to stop the panic. 33. Palmer, William Pitt, ”Monody on the Lone Tree,” Journal of Commerce (06 21, 1865) Google Scholar. In addition to the ”monody,” Palmer was also the author of the ”Lines to the Loan Tree Near `Change,” also a pedestrianist, in the same issue of the Journal of Commerce. The tree is identified as sycamore, and ”button wood” does not appear anywhere.
In March 1792, 24 major New York traders met secretly at the Corre`s Hotel to discuss ways to get the securities business in order. Two months later, on May 17, 1792, these men signed a document called the Buttonwood Agreement, named after their traditional meeting point under a button tree. The agreement stated that they would only trade securities between themselves, that they were merely collecting commissions and that they would not participate in the auction. A Buttonwood Tree Grew Up Theren, and Under It They Drew Up This Agreement, drawing in Zeisloff, , New Metropolis, 444-46Google Scholar. Another important image of the Legend of Buttonwood was on a medallion beaten in 1922 by the Medallic Art Company for the NYSE, which represented a trio of brokers arranged in a Three Grace-like pose in front of the button tree above a large ”1792”. This was a common image in the official literature of the NYSE for several decades and is reproduced on the cover of Buck, New York Stock Exchange. The agreement itself was an attempt to bring order after the financial panic of 1792, when prices had fallen, business had been noticed and bank hits were running. The idea was to create a club where all those who acted were governed by the same rules. The agreement established that brokers could only behave among themselves and moderated the amount they could calculate in commissions.