From the February 2008 issue of Research Magazine • Subscribe!

The Ticker's Rise and Fall

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.

The cultural impact of the paper-based system has endured in various ways, however. Ticker symbols remain the standard for transmitting stock prices, of course, and are routinely displayed in an electronic crawl that mimics the horizontal motion of ticker tape. The Times Square-style running of headlines around skyscrapers and along the bottom of television screens similarly harkens back to the ticker-tape era.

Both the rise and the fall of ticker tape reflected the financial industry's determination to stay on technology's cutting edge. From the 1860s to the 1960s, the stock market was a key source of financing for countless technologies and the industries that were built around them, ranging from railroads to airplanes to televisions to computers. But what made such financing possible, by enabling stock trading to occur with a speed, accuracy and scale never before seen in history, was the humble ticker tape.

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Ticker ComedyA sure sign that the stock ticker made a lasting mark on American culture was its appearance on an episode of the animated series "The Simpsons." In the 1997 episode, titled "The Old Man and the Lisa," the elderly and often sinister tycoon Mr. Burns, after a conversation with young Lisa Simpson, suspects that his financial situation may not be as solid as he thought it was. He looks at his stock ticker -- for the first time since 1929 -- and finds that most of his investments were wiped out in the Great Crash.

"Why didn't you tell me about this market crash?" Burns demands of his sycophantic aide, Smithers, who mumbles "Sir, it happened 25 years before I was born."

"That's your excuse for everything," Burns snaps.

The electronic feeds that replaced ticker tape sometimes show up in pop culture as well. The 1988 movie "Working Girl" has a fanciful scene in which Tess McGill, a young office worker played by Melanie Griffith, expresses her anger at a duplicitous colleague by typing an obscene message about him onto the overhead moving ticker.

Liam F. Dalton, an investment banker who served as technical advisor on the film, was aware that such interception of a stream of stock prices was implausible at best. However, he explained to the New York Times, "it's a cute idea, and America will buy it."

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New York City has a long history of ticker-tape parades, generally occurring in the "Canyon of Heroes," a stretch of Broadway in the financial district. The paper-tossing practice originated on October 29, 1886, when brokerage workers spontaneously tossed ticker tape down onto a parade honoring the dedication of the Statue of Liberty.

Ticker-tape parades were quite common from the 1920s to the 1960s, sometimes occurring more than half a dozen times per year. In more recent times, such progressions have been far less frequent, taking place typically because a New York sports team has snagged a national championship. A few years ago, a civic group called the Alliance for Downtown New York laid down granite markers along lower Broadway memorializing various parades that have passed through the Canyon of Heroes.

In the heyday of ticker-tape parades, the State Department often requested them for visiting foreign dignitaries. "This resulted," writes historian John Steele Gordon on American Heritage magazine's blog, "in parades for some people of not the slightest importance to history, such as Prince Ludovico Spado Potenziani, governor of Rome, and some whom the world wishes it could forget, such as Pierre Laval, who was premier of France when he was honored in 1931 and was shot as a traitor to France in 1945."

Here is a list of a few of the confetti celebrations that have taken place in New York over the decades:Sept. 30, 1899 Admiral George Dewey, after his victory in the Battle of Manila Bay in the Spanish-American War.June 18, 1910 Former president Theodore Roosevelt, upon returning from safari in Africa.Sept. 8, 1919 General John "Black Jack" Pershing, for leading the American Expeditionary Force in World War I.June 13, 1927 Charles Lindbergh, who the previous month had performed his solo, nonstop flight across the Atlantic.July 15, 1938 Howard Hughes, following a three-day flight around the world.Aug. 5, 1938 Douglas "Wrong Way" Corrigan, who had flown from New York to Ireland when he was supposed to go to California.June 10, 1945 General Dwight Eisenhower, a month after Germany surrendered in World War II.March 14, 1946 Winston Churchill, now former prime minister of Britain.April 20, 1951 General Douglas MacArthur, recently returned from Korea.May 9, 1951 David Ben-Gurion, first prime minister of Israel.July 11, 1957 Althea Gibson, African-American tennis pioneer, after winning the Wimbledon women's championship.March 1, 1962 John Glenn, recently returned from orbit on the Mercury 6 mission.Aug. 13, 1969 Neil Armstrong, Buzz Aldrin and Michael Collins, after the Apollo 11 moon mission.Oct. 20, 1969 The New York Mets, winners of the World Series.Oct. 3, 1979 Pope John Paul II.Jan. 30, 1981 Americans who had been released by Iran after 444 days of captivity.May 7, 1985 Vietnam War veterans, years after the war was over.June 10, 1991 Persian Gulf War veterans.June 25, 1991 Korean War vets, decades after they had fought.October 30, 2000 The New York Yankees, winners of the World Series.

Only a handful of people have ever been honored twice with a New York ticker-tape parade. These include Charles de Gaulle, who followed up his post-World War II parade with a 1960 visit as president of France's Fifth Republic. Eisenhower also returned to Broadway in 1960, this time with Richard Nixon, then Ike's vice president and a candidate for president. John Glenn got his second parade in 1998, after the former senator had taken a ride in the space shuttle. The only person who ever got three of the parades was Richard E. Byrd, aviator, naval officer and polar explorer.

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Kenneth Silber, a New Jersey-based editor and writer, has published on various subjects, and his articles have appeared in the New York Post, Wall Street Journal, Reason and other publications.

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