Stock Ticker Machine
The stock-ticker machine was a device very much like the present-day digital stock ticker. It was a ticker-tape machine that would continuously send updates on stock prices to traders not physically on the Stock Exchange floor. This version/use of the ticker-tape machine helped to close the gap between time and space in the business world, helping to improve the economy. The introduction of this device completely revolutionized the way the stock market would operate because information now became more easily and readily accessible. What would the stock market be like today if the stock ticker had not been implemented? Would it still have been multiple local markets or would we have consolidated it into a larger one eventually? How did this machine influence current inventions today?
INVENTION AND INCEPTION
The Stock Exchange floor was a hectic place to be. Gold was traded against paper money, or "greenbacks" as they were called. "Messengers would rush to and from the exchange to bring news of prices to customers, and the tidings would be sent by telegraph throughout the country." The original stock-ticker claims to be invented by different people, as inventions tend to be. One was Frank Pope, then the general manager of the Gold & Stock Reporting Telegraph Co. Samuel Laws's ticker, put into use in 1866 in order to reduce floor traffic, was a battery powered clock-like device that printed out ticker tape with updated gold prices. He would have it placed in the exchange's window for all traders to see. Eventually, his ticker updated prices on commodities as well. The other was Edward A. Calahan, whose version fronted the Gold Stock Telegraph Co. Calahan's in 1867. The two rival companies sued each other over copyright infringements, but to no avail (Sobel). Thomas Edison made major adjustments to the ticker. One day on Wall Street in the New York Stock Exchange, one of the stock tickers broke down and know one knew how to fix it. Edison came in, fiddled with it for a few minutes, and had it working again. He then took the design and made some alterations, creating a new and improved version of the machine in the early 1870s (Reville). His version didn't require a local battery and was capable of being used over longer lines. He then sold his patent to obtain funds (Sobel).
THE STOCK TICKER MACHINE AND THE NYSE
The stock ticker machine, beginning with Laws's gold-price indicator, had major effects on securities trade and the New York Stock Exchange.
EFFECTS ON TRADING STOCKS
As explained above, before the new technology, messengers were sent back and forth to execute trades and having someone on the Exchange floor was a necessity to stay informed of prices. What the stock ticker machines were able to do was allow traders on Wall Street to stay up-to-date from their offices. "Now they could remain in their offices, watching the ticker, and send messengers to the floor to relay orders to their trading partners." Even those not located near New York could still obtain price information and telegraph in trades (Sobel). The stock ticker machine, as well as other ticker-tape technologies, was yet another communication invention that helped close the gap between space and time, allowing more instantaneous business transactions from greater distances, especially with Edison's version which could carry over greater distances. Ticker machines also could provide a nearly continuous update on stock prices with nearly no time delay, with new prices updating about every twenty minutes (as it still tends to in today's Stock Exchange) (Garbade & Silber). Because brokers outside of New York were able to trade on Wall Street with the advent of the new technology, localized markets became more and more obsolete. The country lost at least 40 different markets once all brokers had access to the New York Stock Exchange (Sobel).
TICKER MACHINE'S FLAWS
The stock ticker's different inceptions had their own flaws, however. Laws's original gold price-indicator was not able to travel very long distances and required a local battery to operate. Calahan and Edison improved on these issues, but still faced the same problem of two-way communication. The mass mediated message of stock prices were only one way and the machine was not capable of sending trades back to the Exchange floor. Therefore, brokers had to receive the new prices on the ticker and then either send a messenger back down to the floor with their trades or telegraph them in. The delay between the two actions sometimes caused brokers to miss out on the prices that they may have received on their ticker tape (Garbade & Silber). There was still a need for a two-way printing telegraph type of communication technology.
THE STOCK TICKER TODAY AND ITS INFLUENCE
The two-way printing telegraphy soon turned into what we consider today the facsimile machine, or more commonly known as a "fax machine". Edison's work with telegraphy, and the stock ticker machine, soon led to his work on a printing telegraph, where two-way instantaneous communication was now possible (Usselman). This was the ultimate precursor to today's fax machine. A technology such as this could make sending stock prices and stock trades back and forth much easier for someone without an office on Wall Street.
DIGITAL STOCK TICKER
Today, the stock ticker machine has been replaced by a digital ticker with a lot less limitations than the ticker tape counterpart. Nearly every stock quote flies across the screen, updating about every twenty minutes with the latest price. Any online brokering site such as ETrade (www.etrade.com) have a live ticker that you can open up on your computer so you can stay continuously updated so as to make more accurate online stock trades. There are large public live quotes that can be seen from tickers in public places such as Times Square. The digital stock ticker is faster, reaches all around the world, and is at no extra expense, whereas with the ticker machine a broker needed to invest in buying one and having the lines set up.
Du Boff, Richard B. "The Telegraph in Nineteenth-Century America: Technology and Monopoly." Comparative Studies in Society and History 26 (1984): 571-86.
Edison, Thomas A. Improvement In Printing-Telegraph Apparatus. Samuel S. Laws, assignee. Patent 96,567. 1869.
Garbade, Kenneth D., and William L. Silber. "Structural Organization of Secondary Markets: Clearing Frequency, Dealer Activity and Liquidity Risk." The Journal of Finance 34 (1979): 577-93.
Reville, Willaim. "Edison Saw the Light with Just a Little Genius." Irish Times 15 July 2004: 13.
Robert Sobel (1997, December). Inventing the NYSE. Barron's, 77(50), 56. Retrieved November 5, 2008, from ABI/INFORM Global database. (Document ID: 23860092).
Usselman, Steven W. "From Novelty to Utility: George Westinghouse and the Business of Innovation During the Age of Edison." The Business History Review 66 (1992): 251-304.