A Trading Technology that Transformed Wall Street: Echoesby
On Nov. 15, 1867, Wall Street experienced an important -- arguably its most important -- technological breakthrough, as the first stock ticker went “online.”
Stock symbols, volume and price were typed into a machine and then relayed over telegraph wires to tickers, which printed the information onto thin strips of paper, called ticker tape.
For the first time, continuous nationwide transmission of stock prices was possible, even if there was a few minutes’ delay between data entry and ticker printing. This was a vast improvement over the earlier methods of transmitting financial information by mail, messenger, flag signal and carrier pigeon.
But the ticker didn’t just make communications within the financial industry faster -- it completely transformed the way Wall Street worked.
Prior to its invention, individual stock quotes were not sent long distances, as the prices would have changed before the information was received. Instead, summaries of the day’s quotes were disseminated. That changed when the ticker came onto the scene. For the first time, quotes could be continuously communicated anywhere in the country, and trades could be made with current information in almost real time.
Invented by Edward A. Calahan of the American Telegraph Company, the ticker earned its name from the machine's distinct sound. Calahan’s ticker, however, proved to be too delicate and slow for the bustling exchanges, so Thomas Edison improved upon it in 1871 with one of his first successful inventions, the Universal Stock Ticker. Edison’s model, which printed at a speed of roughly one character per second, quickly became the industry standard.
By the late 19th century, thousands of tickers filled brokerages, exchanges, newsrooms and the homes of wealthy investors, and the volume of ticker tape they produced spurred the birth of a New York tradition. In October 1886, tons of ticker tape rained down on the streets of Lower Manhattan from the offices above during the city’s first ticker-tape parade, celebrating the dedication of the Statue of Liberty.
Edison’s ticker is perhaps most famous -- and infamous -- for its use during the crash of 1929. On Black Tuesday, Oct. 29, stock tickers couldn't keep up with the increased trading volume as Wall Street panicked, and they lagged behind the market by several hours. This probably led to an exaggerated sense of panic, as brokers and investors realized they weren't receiving accurate price information. The crash prompted another major redesign of the ticker in the 1930s, and several new models appeared between then and the 1960s, when the Electronic Age rendered mechanical tickers obsolete.
Although stock tickers no longer occupy the offices and exchanges of the Street, their legacy lives on in the expressions of Wall Street -- “Don’t fight the tape” -- and their digital descendants can be found on virtually any electronic device today.
(Kristin Aguilera is the deputy director of the Museum of American Finance and the editor of Financial History magazine. The opinions expressed are her own.)
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
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