Within the living memory of some financial market professionals today is a technology that was crucial to stock trading from not long after the Civil War until shortly before the Apollo missions touched down on the moon. That technology is ticker tape, and it was a key factor in making the stock market large, fast and efficient.
The stock tickers that spewed out the thin strips of paper are now collectors' items, rendered obsolete by electronic networks. The ticker-tape parades that welcomed various heroes and celebrities are now uncommon — and when they do occur, fill the air with shredded office documents and rolls of toilet paper rather than actual ticker tape.
But it was ticker tape and the machines that ran it that paved the way for the market of today. Before the advent of this technology, transmission of stock prices was a cumbersome process. Messengers, sometimes barely of shaving age, would race from an exchange floor to deliver quotations to brokers' offices. Prices were sent from one city to another by mail in daily digests. Much of the information delivered was as stale as day-old bread.
The mid-19th century rise of telegraphy promised to change all that. "What hath God wrought," Samuel Morse tapped out over an experimental line in 1844, and in the next couple of decades first trains and then Civil War units were coordinated by wire. Soon it would be Wall Street's turn.
In 1867, Edward A. Calahan, a telegraph operator living in Brooklyn, reconfigured a telegraph machine to print out financial data. The need for such a tool had been made clear to Calahan one rainy day when he was swept out of a lobby by a rush of financial runners. His invention was an immediate word-of-mouth success; by the time he had assembled his fourth machine, Calahan had orders for 100 more. Such devices would become known as stock tickers, for the clocklike sound made by their printing wheels.
One early demonstration of the ticker's power came at the brokerage office of David Groesbeck & Company. One young runner there, known for his swiftness as "the American deer," raced in from the exchange floor to deliver quotations, only to find that a crowd gathered around one of Calahan's machines already had all the numbers.
Before the decade was out, Calahan would find a rival in another telegrapher-turned-inventor. This was Thomas Edison, who recently had applied for his first patent, which was for a commercially unsuccessful electric vote counter. The Ohio-born Edison, living in a Manhattan basement in 1869, grumbled that from now on, he would only invent things people actually wanted.
Edison found a career opportunity when a mechanical price display used at the Gold Exchange broke down amid frenzied trading from an effort by financier Jay Gould and his collaborators to corner the gold market (which would lead to September 29, 1869 being known as Black Friday). Edison, on the scene to get some telegraphy work, adeptly fixed and revamped the device, soon afterward getting a commission from its owner, the Western Union Telegraph Company, to develop a better stock ticker as well.
Over the next couple of years, Edison cranked out several improved tickers, and by 1871 had developed his Universal Stock Printer, which incorporated a range of innovations. With a shifting, low-friction type wheel, it could print faster than earlier printers, running the tape at about 60 characters per minute. Plus, a screw-thread unison device kept multiple printers synched to a central transmitter, eliminating the need for people to run around resetting the machines.
Some 5,000 of the Universal Stock Printers were sold in the early 1870s. This and related inventions brought Edison the hefty sum of $40,000 (he had expected around $5,000) and his first dose of fame, enabling the inventor to set up his own lab in New Jersey and eventually work on everything from the phonograph to the electric light bulb to the movie camera to a new way of making cement.
Companies vied for position in the expanding stock ticker business. The Gold & Stock Telegraph Company and the Commercial Telegram Company had a bidding war for ticker subscribers, driving monthly charges down from about $25 to $10. Intellectual property rights to ticker technology were another area of contention, with Gold & Stock holding many of the early patents and complaining that others were ignoring them. "Ticker Companies at War," announced an 1887 New York Times headline.
The New York Stock Exchange had been a big beneficiary of tickers from the start. For one thing, the machines enabled a higher volume of trading. For another, there now was less need for smaller exchanges elsewhere, since people around the country could get speedy price quotes from New York. In 1890, the Stock Exchange got directly into the ticker industry, buying Commercial Telegram and reorganizing it as the New York Quotation Company, a firm with preferred access to Exchange members.
As trading volumes grew, faster tickers were developed. More and more data had to flow on the 3/4 inch strips of paper. Around the turn of the century, a ticker came out that offered efficient automatic spooling. At first named after its creators as the Scott-Phelps-Barclay-Page ticker, it became known as the "self-winding" ticker and soon was an industry standard. Some old timers, though, preferred a tried-and-true Universal.
The day would come, however, when the tickers would fail. That day was October 24, 1929. Even the fastest tickers of the Jazz Age were not quick enough for Black Thursday, in which an unprecedented 12.9 million shares changed hands (a day with a third that number of shares traded would have been considered busy). The overwhelmed tickers were backed up for hours, throwing trading into confusion and intensifying the panic on this first day of the Great Crash.
A 1929 song called "A Tale of a Ticker" captured the darkening mood on Wall Street. Its lyrics included this: "Oh! The market's not so good today. Your stocks look kind of sick. In fact they all dropped down a point each time the tickers tick."
Over the next few years, Wall Street began to shift to the "black box," a sleek machine that could print 500 characters a minute. The glass-domed tickers of yore were fading in the financial industry but finding new uses elsewhere, particularly as news feeds. Tickers became staples of radio stations, and even now some stations play a ticking sound on the air to give the impression that news is flowing in. Tickers also were used in sports stadiums to transmit scores, and of course were popular in illegal gambling circles.
During World War II, many old Universals and self-winders made their way to scrap metal piles. It was a harbinger of things to come. Advances in electronics technology in the decades after the war ensured that the time of mechanical tickers and tape soon would draw to a close. The last new model, able to print 900 characters per minute, was introduced in the early 1960s. But Wall Street in that decade was adopting an array of electronic boards and computer displays. The movement of print heads and tape reels could only be a bottleneck amid the growing digital networks. By the 1970s, mechanical stock tickers had mostly disappeared from financial circles, migrating in some cases to antique stores. The century-long run of ticker tape had come to an end.
