V. The Ticker as a Sociolinguistic Machine

In the absence of the ticker, it was understandable that even big brokerage houses like Richard Irvine’s did not bother much sending telegrams: the telegraph did not solve a basic problem of the marketplace, that of directly tying prices to floor transactions (see Figure 2). In-between there was a myriad of paper slips littering the floor, a crowd of courier boys running in all directions, ears at the keyhole, as well as some forgers (not very rare). This whole system of social interactions obscured any direct relationship between the published price and the interactional nature of financial transactions. The said transactions were, then as in the 18^th century (Preda 2001b) and as today (Knorr Cetina and Bruegger 2002) conversational exchanges. Securities prices were set by conversational turns; a “market turn” meant in early 19^th century London a conversational transaction, a price variation, and the broker’s fee on £100 worth of transacted securities. Contracts were written down by back office clerks at the end of the working day.

Figure 2 about here

This meant that the interactional price-setting mechanism of the marketplace was the speech act. This had to fulfill specific felicity conditions in order to be valid, of course: participants knew each other, had legitimate access to the floor, and had a transactional record, among others. But this does not obscure the fact that it was the perlocutionary force of a speech act which set the price (Austin 1970 [1961]). Paper slips fixed and visualized this conversational outcome post hoc and only for momentary needs. They were an ephemeral trace left by conversations, which could otherwise be observed only from the visitors’ gallery, as a conglomerate of shoutings and wild gestures. Conversations could not be directly and individually witnessed; the only proof of them having taken place lived less than a fruit fly. This is why all commentators of the financial marketplace, from the 18^th century on, emphasized the key role of honor as an unspoken condition for the felicity of transactions.

In the same way in which the speech act’s felicity conditions required that the broker was honorable and known to the other participants on the floor, the paper slip had to be handwritten, signed, certified thus as original and tied to its author. This, of course, made the price dependent on the individual, context-bound features of conversational exchanges.

The ticker radically changed this situation. It visualized the results of conversational turns as these went on and untied these results from the authority of participants to conversations. At the same time, it tied these results to each other, made these ties visible as the tape unfolded, and made the market visible as an abstract, faceless, yet very lively whole. All the felicity conditions which made the speech act valid (intonation, attitude, look, wording, pitch of voice, etc.) were darkened out. It should be noticed here that in the US and in Britain, at the time of the ticker’s invention, several efforts were under way to develop machines for making speech visible. On the one hand, there were attempts at developing technical devices for the deaf, connected to the method of lip reading. The people involved in these attempts were also involved in the development of better telegraphic devices and tried their hand (though unsuccessfully) at a telegraphic machine fitted for financial transactions. Alexander Graham Bell’s father was among those making such efforts (Siegert 1998: 81). On the other hand, there were attempts at developing machines which should automate speech and writing, turning these into standardized activities (Gitelman 1999: 94, 188). More generally, in late 19^th century phonology was devising transcription systems and machines which should make speech sounds visible (Robins 1990: 223). These experiments were at the forefront of the revolution in linguistics, which took place around 1900, when historical-etymologic approaches were replaced by descriptive-structuralist ones.

The new technology also meant that printed stock lists lost some of their importance as decision instruments—a fact already noticed by observers of the period. At the same time, lists became more sophisticated and began to show not only opening and closing prices, but also prices at different times of the day—a fact mirrored by more detailed market reports in the New York and provincial newspapers. In 1884, with the ticker being a solid market fixture, Dow Jones began publishing average closing prices of active representative stocks (Wyckoff 1972: 31), thus initiating the first stock market index.

The ticker, combined with the telegraph and the telephone (Stehman 1967 [1925]: 14-15), made time shrink: the investors couldn't let time pass before placing an order anymore, since this could mean losing money. Not only that more rapid decisions were required from them, but also more rapidity in the way they worded their decisions. This made brokerage houses adopt and distribute telegraphic codes to their clients, standardizing the language of financial transactions and adapting it to the new technological requirements. For example, a client of the house of Haight & Freese in Boston could telegraph them, "army event bandit calmly" instead of "Cannot buy Canada Southern at your limit. Please reduce limit to 23."⁹ An effect of this standardization was that investors were bound to their brokers even more than before: as an investor, one had to learn a special telegraphic code from the broker's manual, spend as much time as possible in his office, and read his chart analyses. Brokerage houses advertised their telegraphic codes as a sign of seriousness and reliability. Some distributed them to their clients for free, while others charged a fee.

The changes effected by the ticker with respect to representational and discursive modes were profound. Not only that the new language was standardized and adapted to the rapidity of transactions; it was now a credential by itself. First and foremost, the ticker wiped out the social entanglement which stood between conversational speech acts and the visualization of prices. The observer of financial markets wasn’t anymore to be equated with the confused tourist standing on NYSE’s visitors’ gallery. The observer of the market was the observer of the tape. In this sense, it can be argued that the ticker contributed to a radical abstraction and reconfiguration of the visual experience of the market. It was part of the broader efforts of the 19^th century to rationalize visual perception and render it manageable, predictable, and productive (Crary 1990: 147).

The ticker did not merely replace the skills of a myriad of courier boys. In this sense, the ticker definitely did not act as a door opener (Latour / Johnson 1988). Rather, it promoted sociolinguistic principles superimposed on (and equivalent to) economic ones. The contingent features of conversational exchanges were obscured; their result was visualized in a spatial arrangement replacing the temporal structure of conversations, but equivalent with it at the same time. It made the meaning of securities prices depend on differences between earlier and later prices. Prices were related to each other, and not to an external reality. It unveiled patterns of repeatability in both conversations and prices. I do not mean by this that the ticker was built according to abstract linguistic and economic principles. Quite the contrary: its way of working generated discursive and representational modes directing investors and brokers along specific paths of action, orienting them toward price differences, disentangling authority from concrete persons, shrinking time, standardizing language.

Perhaps not entirely by accident, the ticker was invented at a time when US psychologists (but not only) were engaged in hot debates about permanent attention as a fundamental condition of knowledge (Crary 1999: 21-23). The ticker durably bound investors and brokers to its ticks. Permanent presence, attention, and observation were explicitly required by manuals of the time. This corroborates the argument formulated by Karin Knorr Cetina and Urs Bruegger (2002), that a central feature of financial markets is its observational epistemology.

The duty of the stockbroker was simply to be always by his "instrument," which "is never dumb" and ensures that the US is "a nation of speculators."¹⁰ The term "instrument" was equally used by the press of the time and by brokers in their account books: for example, in the 1870s the New York firm of Ward & Co. paid a monthly rent of $25 for their "instrument." Other firms rented their tickers at a rate of $1 per day. The ticker became simply “the instrument,” the paragon of the marketplace. Investors too felt motivated to spend more time in their brokers' offices, watch the quotations and socialize. Edward Neufville Tailer minutely recorded in his diary not only the actual dates he went to his brokers' offices—during the years 1880-1882, at least once a week—but also the times when he should have gone, expressing regret for not doing so:

Feb 24 1882: Stocks are better today. I sold Louisville and Nashville @ 72 1/2, Erie @ 36 1/4, and they have since advanced 1 1/2 to 2%. I bought Union Pacific @ 111 1/2 in the margin and sold it @ peak @ 114. It was a lovely afternoon for riding . . . I missed it by not being at Louis T. Hoyt's office this afternoon, as stocks fell off 1 @ 2 points. Feb 27 1882: Stocks are all better this morning, I missed it by not being at the opening of the market, as I later in the day paid an advance of 1 @ 2 % on the closing prices of Saturday, upon which I visited Mr. Hoyt in the morning.

Not only that presence in the stockbroker's office was a must, if one was to be au courant with the latest prices and price variations; it was also a must for the investor eager to hear "scientific" interpretations and analyses of price variations. A major cognitive effect of the ticker was that it gave a decisive impetus to cognitive instruments and procedures like the chart analysis. While financial charts were in use in England and France since the 1830s (see Preda 2001a), traditional procedures of data collection allowed only large time series: it was thus possible to visualize the price variations of a certain stock over a couple of years or months, but not over a couple of days or over a single day. Price data were not collected day by day, much less hour by hour, a difficulty mentioned by many chart compilers.

It was now possible to visualize (and analyze) minute price fluctuations over hours, days, or months. By the turn of the twentieth century, detailed, by-the-hour financial charts began to be published in investor magazines. Since the data had to be recorded much more rapidly now, new cognitive skills were required: those of the "tape reader," a trained clerk or a stockbroker who stood by the ticker, picked out and recorded the price variations of a single security in a diagram, so that at the end of the trading day a chart was already available. This required a great deal of attention, as well as agility and a well trained memory. With that, the chart analyst became an established presence in brokerage offices, as well as in investor magazines:

There was a chart-fiend in our office—a wise-looking party, who traveled about with a chart book under his arm, jotting down fluctuations, and disposing in an authoritative way, of all questions relating to "new tops," "double bottoms," etc. Now, whatever may be claimed for or brought against stock market charts, I'll say this in their favor, they do unquestionably show when accumulation and distribution of stocks is in progress. So I asked my expert friend to let me see his "fluctuation pictures," my thought being that no bull market could take place till the big insiders had taken on their lines of stock. Sure enough, the charts showed, unmistakably, that accumulation had been going on at the very bottom. [...] But it is one thing to know what a road is earning, and another to consider this earning power in relation to the market price of its stock. Viewed solely from the standpoint of earnings, a stock earning 3% and selling at 50 is not so cheap as one earning 7% and selling at par. Therefore, I rearranged my list, setting down the then market price of each stock and figuring what rate was beign earned on this price. [...] This, by the way, is the simplest and most accurate method I know, of forecasting a rise in any particular stock, provided the advance is not manipulative or due to special causes. I have tested it out in many ways and the results at times have been almost magical.¹¹

In his reminiscences written under the pseudonym of Edwin Lefevre (1998:18-19, 22), an investor who started around 1900, at the age of 14 as a quotation-board boy, stressed the importance of judgment by the chart, of having a proper system of assessing the meaning of fluctuations on the basis of charts alone, together with the strong desire for constant action. The chart was the market, as well as the means of understanding the market.

At the same time, the establishment of the stock analyst as a distinct profession—which should ensure the impartial distribution of meaningful information to investors and help them make their decisions—was loudly required in journal articles. A stock analyst would be on the same plane with a physician who recommends a medicine solely on its curative merits, he "would have to stand on a plane with George Washington and Caesar's wife. He must have no connection with any bond house or brokerage establishment, and must permit nothing whatever to, in any way, warp his judgment. He must know all securities and keep actual records of earnings and statistics which show not only whether a security is safe, but whether it is advancing or declining in point of safety."¹²

In 1890 “Poor’s Handbook of Investment Securities,” the first systematic coverage of industrial stocks was published. Around 1900, John Moody began rating the investment quality and character of bonds. While the practice of gathering information about stock companies was initiated by the Bank of England in the 1830s and the gathering of long-term statistical data on securities had begun in the 1840s, the ticker tape acted as a centrifugal force around which other kinds of data could be ordered and interpreted.

The new financial charts—different from the older ones—came with their own metaphorical luggage and discursive modes: there were now “double bottoms,” “tops,” and “shoulders” to enrich the analyst’s arsenal. What’s more, the chart continued the visualization process initiated by the tape: it was the visualization of concatenated visual representations of conversational outcomes. Correspondingly, the analytical language is full of visual metaphors: we do not need any references to the bricks, furnaces, tracks, and machinery of stock companies any more. Price differences suffice. Discursive modes supported the chart as a cognitive instrument, which in its turn conferred authority upon the stock analyst as the only one skilled enough to discover the truth of the market in the dotted lines. The analyst promoted the charts, which required a special language. Since these cognitive instruments required permanent presence and attention, the public depended on the agile eyes and skilled hands of brokers and analysts.
VII. Why Do Investors Have Sentiments?

Fancy metaphors, new-fangled charts: how did they influence the investors’ attitudes? With that, I come to discussing the teleo-affective structures generated by cognitive rules and representation modes.

A relevant notion, discussed extensively in behavioral finance (e.g., Shleifer 2000: 12, 112; Odean 1998; Shiller 1984; Kahneman and Riepe 1998), is that of “investor sentiment.” It designates the fact that investors form and hold beliefs about financial securities, according to which they make their investment decisions. This has a considerable influence on how financial markets work. The investors' beliefs do not seem to be based entirely and exclusively on a detailed, “cold” analysis of securities prices, which shall take into account all the available relevant information. Rather than that, other factors, generally termed as "irrational" (but not known in detail) seem to play an important role. What's more, such beliefs do not seem to emerge randomly, but according to certain social patterns and processes, which are not yet understood in detail either.

This is paradoxical, since standardized communication technologies should allow a rapid and equal distribution of information and, at the same time, provide all investors with the epistemic means for rationalizing their decisions.

The ticker was a popular, not an elitist instrument. It required permanent presence and bound investors to market events. It made them come to their broker again and again, and spend hours there. The case of Edward Tailer, the investor discussed above, is relevant in this respect, since he kept a detailed diary. First of all, his participation to financial transactions increased after the introduction of the ticker; second, this participation became a reflexive one. We know that he regularly went to watch the ticker. Up to 1870, Tailer (who traded in woolen goods) bought stock only occasionally, and gold only for the purpose of covering his import-export activities. Whenever he bought gold on margin and gold futures between 1866 and 1870, he admonished himself for risking too much. In mid-1867, he began recording stock prices regularly. He thus began monitoring his actions with respect to the evolution of stock prices and commented upon his past decisions. Here is a short excerpt from his diary, showing the frequency with which he monitored his investments and his own decisions:

Dec 2 1880: I telegraphed today to L.T. Hoyt from Nashville to buy me one hundred shares of Western Union at ninety. It was quoted in Nashville @ 90 1/2 at noon. Dec 4 1880: The special to the Cincinnati Commercial reports money tight in NY, plus a commission of 1/32 @ 1/4 of 1% per day. Mr. L.T. Hoyt bought me 100 Western Union @ 90, a good purchase. (On a letter from J.A. Hamilton from NY, dated Nov 27 1880, he scribbled: J.C. 82, L.S. 123%, NYC 146 1/2, Del&H 92, DL&H 105, Chat 74 1/2.) Dec 21 1880: I bought today through L.T. Hoyt 100 Louisville and Mississippi preferred @ 91, Louisville and Nashville watered @ 87 1/2, through Broke and Smith Western Union @ 80 3/8. Dec 24 1880: Preparations are made to complete the Northern Pacific RR and I bought today through L.T. Hoyt 100 shares of the preferred stock @ 64 3/4. I sold at last summer @ 45-53. Dec 30 1880: I purchased today 200 Delaware and Hudson @ 92 1/4, 100 Western Union @ 81 1/4, 100 Chesapeake and Ohio preferred @ 35 1/2.

As mentioned above, he admonished himself whenever he felt he should have been at his broker's office instead of riding in Central Park. He pasted newspaper clippings in his diary and commented upon his own transactions as corresponding or not to what newspapers said was the right thing to do. When on trips to Europe or in the US, he took care to go to stockbrokers’ offices and record prices. What is more, beginning with 1879, the frequency of his transactions increased dramatically and remained very high in the coming years. For example, between October 3, 1879 and November 21, 1880, he recorded 36 financial transactions in his diary, which means about one every ten days. During the next year, he took a six-month trip to Europe—taking care to monitor stock prices from London and Geneva (among other places)—but his diary records 18 trades for the remaining six months. It is hard to believe that he was an isolated phenomenon: Ms. Mary Bowman, a client of Ward & Co., another prominent NY brokerage house, traded eleven times in the stock of the Bank of Commerce, the Bank of the State of New York, and the Bank of America between April and December 1876; she bought these stocks mostly on margin, being thus a more active investor than some of Ward & Co.'s male clients. In both cases, increased frequency of investment activities overlaps with the introduction of the ticker.

Permanent attention to market events also meant permanent attention to one’s own doings, systematic reflection upon the satisfactions derived from the own behavior. Is riding in Central Park giving me a greater satisfaction than a visit to my broker? What is the right thing to do? At the same time, when studying such diaries we can notice the fact that popular investors were still very reluctant to sell certain stocks, even when they were losing money; some of them at least tended to monitor the price variations of certain stocks more actively than other stocks, even if they did not hold a significantly greater amount of money invested in the stocks they followed more actively. Edward Tailer, for example, held Lake Shore and Michigan Railroad Co. stock for years, although its price continuously decreased. He expressed joy over a small dividend, although the gain was written off by the price decline:

Sept 28 1874. Stocks have been excited in Wall Street today and Lake Shore has advanced to 82 3/4 at this price I could get out without a loss having purchased in the panic at 91 & last April @ 74 1/2 for an average. [...] Jan 7 1876. I am pleased to see that the Lake Shore and Michigan Southern railway, in which I am interested, has earned a dividend of 2%, payable on the 1^st of February next out of the earnings, for the six months ending with Dec 31 1875. [...] May 5 1876. I bought today 200 shares of Lake Shore, through Broke & Smith @ 52 1/2.

We have to do here with what behavioral finance theorists call "stickiness" or "frame dependence" (e.g., Shefrin 1999: 23; Andreassen 1990; Scharfstein and Stein 1990)—that is, with the apparently irrational unwillingness to sell bad stocks. "Stickiness" does not corroborate key assumptions of the efficient market theory, namely that (1) investors act on the grounds of information having the same meaning for everyone and (2) they clearly distinguish between relevant and irrelevant information. While noticed and discussed in behavioral finance, this phenomenon still lacks a sociological explanation. It is not to be confounded with apathy or indifference—quite the contrary. Someone like Tailer was anything but indifferent with respect to his portfolio, but he still couldn't bring himself to sell a stock the value of which had decreased by more than a third. My argument here is that permanent observation of market processes and of stock prices (induced, at least in part, by the ticker) has emotional effects. In other words, stocks become not only an object of permanent monitoring, but—and exactly because of permenanent monitoring—they become an object of emotional attachment too.

This phenomenon has been noticed and described at least in two cases until now: as the emotional attachment of scientists to the object of their research activities (Knorr Cetina 1997), and as the emotional attachment of professional traders to market processes (Knorr Cetina and Bruegger 2000). However, we should not think that this is a very recent phenomenon: the increased frequency with which in the late 19^th century at least some American investors monitored the performance of their stocks (due to the ticker), as well as the increased frequency of their transactions made them (or at least some of them) associate their stock transactions with private events (the birth of a child, birthdays, anniversaries, the death of a relative, etc.). At the same time, particular performances of stock prices (an unexpected high price, a desastruous low), which were now monitored much more frequently, could also be associated with public events.

Moreover, a continuous monitoring could lead investors to "give stocks another chance" and "wait a little longer," since under the new conditions they could in principle be sold any time. We can observe this in Tailer's case, who recorded stocks bought on his eldest daughter's birthday, or stocks sold on the brink of great political events, like the 1876 war between Russia and Turkey. Other investors, like George Dow (a New York shoe vendor), attached to stocks because they came from their native towns—like the Portland Gas Company—in spite of the financial irregularities accompanying them. The overall argument is that an increased cognitive preoccupation with financial securities necessarily leads to the development of emotional ties; as a consequence, stocks will not be valued solely according to the information held by investors, or to their price dynamics, but also according to the investors' emotional attachment to stocks. Accordingly, the "stickiness" of stocks is not a consequence of judgment deficiencies or lack of information on the part of investors, but a built-in feature of their cognitive preoccupation with financial securities.

The ticker—by requiring permanent presence and attention to the marketplace—encouraged (if not generated) a continuous monitoring of one’s own behavior, together with emotional ties to securities one could associate with private and public events. Permanent monitoring, reflexivity, and attentiveness may seem unexceptionable today, indeed, even intrinsic components of a “natural rational behavior” which serves as the normative foundation of many economic models. The above arguments show how little “natural” or “given” and how much the result of a cognitive nexus such behavior can be. Self-monitoring and emotional ties are elements of the teleo-affective structures binding investors to the marketplace. They tie human actors to the language and cognitive rules of the ticker, being justified and reinforced by these rules and language. In the nexus of discursive modes, rules, and teleo-affective structures, human actors and artifacts (of various kinds) are fused together in durable ties.