Reading the Ticker Tape in the Late Nineteenth-Century American Market

Reading the Ticker Tape in the Late Nineteenth-Century American Market

Peter Knight

We have become used to hearing the oracular pronouncementsofthe market’s insistent desires and commands, most often ventriloquized on the nightly news by a mid-level economist at one of the big banks. It comes at times to seem as if the projected and personified authority of the financial marketsis dictating events, demanding, for example, a hasty sacrifice from the Greek people in order to appease the inscrutable gods of finance(Jones 2011).But how did the market come to be thought of as a coherent, unified entity, having a life and mind of its own? What difference does thinking of the market in that way make?What role does vernacular financial information play in teaching non-experts to read the market?

The idea that the market knows best has become one of the dominant tenets of neoliberalism since the 1980s, underpinned by the Efficient Market Hypothesis that views the market as an omniscient and omnipotent being that cannot be predicted or contradicted (Frank 2000; MacKenzie 2006; Fox 2009). Yet we can trace a longer history of the simultaneous abstraction and personification of the market, and this article makes a contribution to that account. It focuses on the crucial moment of transition in the late nineteenth and early twentieth century in the United States,from a literal marketplace that could be observed in its entirety from the Visitors’ Gallery of the New York Stock Exchange (NYSE), to the abstract space of continuous financial activity represented by thenewly invented stock ticker.This period saw heated political debates about the morality of stock market speculation, with reformers arguing it was merely a gambling game rigged by elitist insiders who made unwarranted wealthwithout labour, while defenders insisted that speculation by professional traders performed the socially valuable service of efficiently allocating capital and spreading risk to those more able to shoulder it (Cowing1965; Fabian 1990; de Goede 2005). Although the actual numbers of Americans holding any type of security was very small (the best estimate is roughly 0.5% of the population by 1910, almost entirely confined to those with substantial means [Ott 2011, p. 17]), nevertheless the stock market was an object of both fear and fascination in popular culture in the last quarter of the nineteenth century (Fraser 2005), not least because of the rapid proliferation of bucket shops across the nation that allowed Americans toparticipate by proxy in the drama of the stock market (Hochfelder 2005).

This article will argue that vernacular versions of economic knowledge were as important as more orthodox forms of financial literacy in making the stock market seem normal to ‘small investors’(Ott 2011, pp. 9-35). It focuses onemerging ‘genres of the credit economy’ (Poovey 2008) such as investment advice manuals, biographies of Wall Street operators and popular financial journalism and stories. At the same time that these home-spun guides to Wall Street made investing in the market seem legitimate by personalising its abstractions and making it seem homely, they also made financial speculation seem uncanny, more akin to the occult than the rationalisations of economic theory.

Reading the Tape

The middle class magazines and novels of the late nineteenth and early twentieth centuryrepeatedly turned to the spectacle of financial panics to illustrate the operations of the market, in part because scenes of ‘frenzied finance’ (Lawson 1905) offer moments of dramatic intensity and sudden reversals of fortune that drive the plot of the story. The image of hysterical speculators on the floor of the Exchange became a familiar visual and narrative shorthand in this period for the transformative nature of financial capitalism as a whole:

Figure 1. ‘The Recent Panic Scene in the New York Stock Exchange on the Morning of Friday, May 5th’.Frank Leslie’s Illustrated Newspaper, May 18, 1893, p. 322. Library of Congress.

Finding representational analogues for financial capitalism became increasingly difficult in the last decades of the nineteenth century, however, as the market shifted from the physical location, personalities and embodied dramas of the floor of the New York Stock Exchange or the Chicago Board of Trade to the vast globally interconnected circuits of supply and demand figured in fluctuating stock prices printed on the stock ticker. Although melodramatic scenes from the floor of the stock and commodity exchanges continued to feature regularly in popular representations of the market (Zimmerman 2006), it is striking how often the dramas of Wall Street are illustrated (both visually and verbally) not with noisy scenes of crowds and mass hysteria but with small scale scenes of concentrated reading. Again and again these tales of fortunes won and lost are depicted in their most dramatic moments by scenes of men (and it is nearly always men) poring over the ticker tape that pours into the waste paper basket.[1] The ticker is often the graphic at the heart of the action (fig. 2).

Figure 2. W. R. Leigh, illustration for Edwin Lefèvre, ‘The Man Who Won’,McClure’s Magazine, August 1901, p. 363. Harvard College Library.

In some cases the picture of tape reading captures the moment that an archspeculator realises that his villainous scheme to corner the market has been foiled; in others, we are meant to see the calm concentration of a heroic Napoleon of finance who is able to apprehend the entire direction of the market from a trance-like study of the tape itself. In both cases, however, the depiction of someone reading the tape acts as a representational proxy for all those readers who would like to be able to see the disembodied market as a whole.The ticker made this possible, after a fashion: each entry on the tape represented a significant trade on the floor of the Exchange, and included the ticker symbol (the abbreviation of the company name), the price and the volume of the transaction.It thus enabled readers to follow all the action in the market from a privileged bird’s-eye viewpoint, and thus to begin to see ‘the market’ in a different wayas an abstract geography of a global financescape. The view from the Visitors’ Gallery of the anthropomorphized bulls and the bears battling it out on the floor of the Exchange is thus replaced by the vantage point of a lone individualabsorbed in reading the abstract procession of numbers coming over the ticker. The ideal market reader is thus far removed from the scene of action, yet still intimately bound up in its drama through the decoding of the symbols on the tape.

We can see many examples of this transformation in economic epistemology towards an abstract and disembodied engagement with the marketin Reminiscences of a Stock Operator. It is the semi-fictionalized autobiography of the legendary Wall Street trader Jesse Livermore, ghost-written by Edwin Lefèvre.[2]First published as a series of articles in the Saturday Evening Post, the book is still in print, and continues to be regarded as an inspirational and even a practical guide by the army of amateur online day-traders.Livermore’s is a classic American story of rags-to-riches success. The son of a New England farmer, he left home at fourteen to make his way in the world, with his first job in 1890 chalking up the prices on the quotations board as they came over the wire in a broker’s office in Boston. He began to speculate in bucket shops and then regular brokerages, earning his reputation as the ‘Boy Plunger’. He went on to make and lose several fortunes over the course of his career (see Smitten 2001).Reminiscences of a Stock Operator is a grimly fascinating mixture of self-serving accounts of Livermore’s success (attributed not to luck but skill), liberally sprinkled with advice, axioms and lessons learned. His basic philosophy is that ‘the market never lies’, and in some respects Reminiscences is the classic instruction manual for the ordinary American on how to train the self to the discipline required for learning to decode the endless noise of anonymous and abstract stream of price fluctuations that make up ‘the market’.

As a young boy chalking up the quotations on the board he does not think of stock prices as reflecting the underlying value of an individual company or even referring to any actual productive industry, instead seeing them merely as numbers that move up and down in repeatable patterns. The numbers Livermore chalks up are for him entirely abstract, the prices in his mind representing not so much traditional measures of fundamentalcorporate value asentirely free floating and self-referential signifiers in the endless chain of difference that the ticker churns out: ‘Those quotations did not represent prices of stocks to me, so many dollars per share. They were numbers. Of course, they meant something. They were always changing. It was all I had to be interested in—the changes. Why did they change? I didn’t know. I didn’t care’ (Livermore 1994, p. 9). Unlike the emerging cadre of technical analysts producing charts in the back office of some of the brokers that Livermore knows, his knowledge of price patterns is not achieved by plotting meticulous diagrams. Instead he carries in his head a rough-and-ready sense of the typical movements of individual stocks that allows him to ‘read the tape’ as if it were a novel, or rather, a character in a book. Even when faced with potential ruin later in his career Livermore continues to insist that his campaigns against rival factions in the market are abstracted from the level of petty human concerns:

Fiction writers, clergymen and women are fond of alluding to the floor of the Stock Exchange as a boodlers’ battlefield and to Wall Street’s daily business as a fight. It is quite dramatic but utterly misleading. I do not think that my business is strife and contest. I never fight either individuals or speculative cliques. I merely differ in opinion—that is, my reading of basic conditions. What playwrights call battles of business are not fights between human beings. They are merely tests of business vision. (Livermore 1994: 189)

For Livermore market activity is not the human-scale drama someother writers in the period perceive, but a contest between rival interpretations of the tape, the objective numbers seemingly far removed from individual passions.

In Reminiscences and other ‘modern’ financial advice literature from the turn of the twentieth centurysuch as Ticker magazine (established in 1907 by the financial journalist Richard Wyckoff, writing under the pen name ‘Rollo Tape’), the stated aim is not to gain insider information through personal connections to the powerful cliques supposedly pulling the strings of the market, but to turn one’s self into a recording machine much like the ticker itself, to eliminate emotion and become totally in tune with the mechanical rhythm of the market itself:

The Tape Reader evolves himself into an automaton which takes note of a situation, weighs it, decides upon a course and gives an order. There is no quickening of the pulse, no nerves, no hopes or fears. The result produces neither elation nor depression. There is equanimity before, during and after the trade. The Scalper is a bob-tailed car with rattling windows, a jouncing motion and a strong tendency to jump the track. The Tape Reader is like a Pullman coach, which travels smoothly and steadily along the roadbed of the tape, acquiring direction and speed from the market engine, and being influenced by nothing whatever. (Wyckoff 1910, p.16)

In these how-to-speculate guides for the common man, predicting market movements is presented as a mixture of practical know-how and hard science, rhetorically reclaiming it as a respectable and democratic form of business activity, free from the taint of immoral and irrational gambling. Speculative financeisthus legitimized because it no longer seems to involve succumbing to animal spirits or a sinful desire to get something for nothing (Lears 2003); instead the speculator is figured as the epitome of cool, detached manliness, influenced by no one, embodying a rationalsubjectivity whose mastery of the marketenables one to attain a sense of individual sovereigntyin the age of corporate capitalism. According to these accounts individuals can regain their own economic destiny by predicting the future, not through providential divination or even deep-seated understanding of market fundamentals, but familiarisation with the endogenous fluctuations of prices. According to these guides, speculation is not gambling but informed prediction. Tape reading, one manual asserts, is ‘the science of determining from the tape the immediate trend of prices. It is a method of forecasting, from what appears on the tape now, what is likely to appear in the future’ (Wyckoff 1910, p.10).Far removed from the turmoil of the Exchange, the dispassionate tape reader hasa supposedly objectiveview point that is ironically seen as even more privileged than the insider’s view of a member of the NYSE because it is safely removed from the distracting noise and personalities of the actual traders on the floor of the Exchange. Tape reading, according to these guides for the lay investor, permits a bird’s eye perspective on the sublime vastness of the financial market and the whole economy, with Wyckoffcomparing the tape reader to the general manager of a department store overseeing all the information produced by each part of the business, a fantasy of total surveillance, combined with an internal division of labour within the brain of the trader that equates to the reorganisation of the company in the age of managerial capitalism:

A Tape Reader is like the manager of a department store; into his office are poured hundreds of reports of sales made the various departments. He notes the general trend of business—whether demand is heavy or light throughout the store, but lends special attention to the lines in which demand is abnormally strong or weak. . . A floor trader who stands in one crowd all day is like the buyer for one department—he sees more quickly than anyone else the demand for that class of goods, but has no way of comparing it to that prevailing in other parts of the store. He may be trading on the long side of Union Pacific, which has a strong upward trend, when suddenly a break in another stock will demoralize the market in Union Pacific, and he will be forced to compete with others who have stocks to sell. The Tape Reader, on the other hand, from his perch at the ticker, enjoys a bird’s eye view of the whole field. When serious weakness develops in any quarter, he is quick to note, weigh and act. (Wyckoff, pp.10-11)

The fantasy sketched out in these manuals of tape reading for the lay investor is not just of seeing the financescape as a whole by attuning and disciplining one’s channels of perception to the rhythms of the market, but of becoming the master manipulator of the entire information-processing machine.

The Stock Ticker

As Preda (2009) has argued, the stock ticker thus contributed to significant shifts in the epistemology and ontology of market society. The ticker was pioneered by Edward Calahan of the American Telegraph Company in 1867, and Thomas Edison produced a more reliable version the in 1869. It was a development of the telegraph, with two wheels that could be controlled automatically; one printed the letter abbreviation of the company whose stock was being traded, and the other the price and volume. Apart from its increased speed and range of transmission, with its automatic printing the ticker was also more economical than the existing electric telegraph, that needed a skilled operator at either end.Prior to the invention of the stock ticker, messenger boys would run from the stock exchange to the neighbouring brokerages in the Wall Street district. With data supplied from the floor of the stock exchange in New York, Boston and the commodity exchanges in Chicago and elsewhere, beginning in the late 1860s tickers were installed in stock brokers offices and even in some private individuals’ offices (see Hochfelder 2006; Preda 2007, pp.113-43). After the turn of the century ticker use mushroomed, with tickers supplying a steady stream of financial and general news not just in legitimate brokers offices but also in bucket shops.[3]

The ticker transformed financial information. Prior to the ticker, price quotations were slow, inaccurate, not standardised, and sometimes even forged. Summaries of price quotations that were printed in market circulars were always immediately out of date, and often meaningless because they were given without reference to price variation. Brokers were connected to their customers either in person or by letter. Thecorrespondence often combined personal and business matters, itsaim to establish a relationship of trust rather than convey rapidly fluctuating prices. The advent of the ticker, therefore, created a shift in the nature of trust: whereas the status, character and personal connection of the broker had previously conferred authority on market information, people began to place their trust in the impersonal technical accuracy of the ticker machine, and in the professional authority of the emerging networks of brokers, market analysts and exchanges that sought to maintain their monopoly over price data. With the invention of the ticker, the site of speculationwasincreasingly removed from the face-to-face action on the stock exchange floor, with traders instead adopting a more impersonal engagement with the market as an idealised entity rather than an actual, embodied, physical space in Wall Street.[4]