VIII. The Ticker as an Organizational Device

How did this nexus, then, affect the organization of the marketplace? How did it put its imprint on the broker’s office? In order to understand this better, we have to examine first how the production of financial knowledge worked as an organizational device in the pre-ticker era.

During most of the 19^th century, many stockbrokers were not specialized, but maintained heterogeneous lines of trade. They acted as centers of competence, gathering and distributing various kinds of information to their clients. They made use of their various business lines in order to get access to this information, and to distribute it further. In this sense, their lack of specialization was an advantage. They also actively used their networks and businesses in order to attract new investors and promote the sale of financial securities. For example, the firm of Richard Irvine & Co. traded in pig iron (they had a pig iron yard in Brooklyn) and iron futures (among others). In their letters to clients, they offered not only this particular commodity, but stocks too. When selling a used engine to a Southern railroad company, they also got information about their state of affairs. Or when writing to clients about a successful shipment of fruit, they offered some attractive stocks too, together with the latest New York quotations:

We have shipped to you care of Messrs Lampart and Holt, by this steamer, the apples you ordered in your favor of the 20^th September last. We are assured the peaches and oysters are of the best quality, and trust they will prove so. Below we give you memo of their cost to your debit. We think it well to mention that 1^st Mortgage 6% gold Chesapeake and Ohio Railroad bonds can now be bought here to a limited amount at 86% and accrued interest. They are well thought of by investors, and were originally marketed by the company's agents as high as 14% and interest. We enclose today's stock quotations.¹³

This, among others, makes clear why stockbrokers cherished good old letters. They were a more efficient means of distributing information, networking, and deal-making—in short, of producing knowledge and relationships at the same time. In this perspective, brokers were knots in a network where knowledge, deals, private services overlapped. Clients did not have to visit their brokers very often, since for all practical purposes letters worked very well. The empirical data also speak against the telegraph as merely speeding up everything and making everybody just more efficient. In the above example, relevant information cannot be separated from a complex narrative structure evocative of deep social ties, of an economy of favors, and full of allusions impossible to render by means of a telegram.

One of the main social changes effected by the ticker was that it transformed the stockbroker's office into a kind of community-cum-communications center, where investors could spend the whole day watching quotations, talking to each other, and placing orders. The technology of real time price quotations was quickly combined with that of the telegraph and later the telephone. The telegraph and telephone capabilities of brokerage offices, their linkages to the world, as well as their facilities for customers were advertised in the street, in front of the office, on poles and on the facade. In the customers' room, rows of tickers (attended by clerks) worked uninterruptedly, while clients seated on several rows of seats watched other clerks updating the quotations board. The modern brokerage office had a separate telegraph room, an order desk, a ticker room, and a back office. At the center of this spatial arrangement was the ticker room. Advertising brochures praised the stockbroker's office as a model of efficient communication, accuracy, and machine-inspired modernity:

A passenger standing on the observation platform in the engine-room of a modern ocean-liner will observe great masses of steel, some stationary, some whirling at terrific speed; he may go down into the boiler-room where is generated the power with which the great ship is driven, but all this will give him only a crude idea of the actual workings of the machinery of propulsion. He must know and be able to grasp all the component parts of that machinery, and their relation to each other, in order to appreciate what a tremendous undertaking it is to move this gigantic mass of men and materials over the watery miles separating two continents. So it is with the machinery of a large banking and brokerage house. A client may spend many days in the customers' room, from which vantage point he will observe much, but his knowledge of the inner workings of the machine, built to handle orders in the various markets, must still be superficial. . . . Everything is run with clock-like precision. No matter how large a business is being done, there is no confusion, the plant being designed to handle the maximum volume of orders.¹⁴

One consequence was that the nexus of discursive modes, cognitive rules, and teleo-affective structures reinforced broker-investors networks and made them more stable: cognitive organization was one of their central features. The ticker centralized and bundled knowledge-producing activities in the broker’s office. Customers had to show up to an office regularly in order to access this knowledge. As mentioned above, some took care to keep in touch regularly even when they went on longer trips. This corroborates arguments formulated in economic sociology, as well as in the sociology of knowledge, according to which economic transactions are embedded in processes of knowledge production (Knorr Cetina and Bruegger 2001; Preda 2002). Another consequence was cognitive standardization: the ticker brought the same prices (and the same price variations) to everyone at the same time. It also brought standardized analytical instruments (charts) together with a standardized analytical (double bottom, head-and-shoulders, etc.) and trading language. In this sense, it is an example of what Bruno Latour (1999: 28-29, 306) calls an "immutable mobile"—that is, a networking technology which allows the transfer and the standardization of knowledge at the same time. By allowing this transfer, it binds investors to networks and to financial exchanges. This nexus, with its stress on the scientific side of financial investments, reinforced their social legitimacy and thus coped well with the overall discourse about the "science of financial markets," so popular in late 19^th century. It required from investors exactly the qualities preached by manuals: attention, vigilance, a constant observation of financial transactions and of price variations. For the investor, it becomes reasonable to follow the market movements and to try being efficient. Fourthly, it shrank time and thus contributed to increasing the velocity of transactions, at the same time attracting more and more investors to the market: with that, the markets' liquidity was deepened.

The ticker threatened the monopoly of the older, larger brokerage houses. Access to prices wasn’t bound exclusively to honor and personal connections any more. Having the right machine and a few copper wires was enough. Power struggles were fought over who should be entitled to get access to prices; in 1889, in a short-lived attempt to drive bucket shops out, the NYSE banned all stock tickers (Wyckoff 1972: 33).

The floor of the exchange was reshaped too. The stock exchange floor was organized in specialized "crowds"—brokers and market makers trading a single security around a ticker, under a streetlamp-like signpost.¹⁵ The ticker was clearly perceived as giving the New York Stock Exchange a decisive advantage over European stock exchanges, and especially over the London Stock Exchange, making it more abstract and less dependent on the honor system:

Not only is the "ticker" service better here than in London, but the American plan is far superior to the English in furnishing first over these instruments, and later in the printed stock lists, the actual number of shares and bonds dealt in, with their prices. A stock ticker in London gives such bidding and asking prices as may be obtained by the representatives of the Exchange Telegraph Company on the floor, but since the custom does not prevail there to make open bids and offers, a large part of the quiet business between brokers and dealers escapes the observation of the persons engaged in collecting quotations.¹⁶

Themes like “organization” and “efficiency” became very actual. How to monitor and collect quotations in an efficient way, how to transmit them further without missing anything were topics regularly repeated by brokerage houses in their advertising brochures and manuals. In this sense, at the institutional level the ticker triggered a process of self-monitoring similar to that it had triggered at the individual level. Both the organization and the individual had to pay more attention to what they did, to weigh courses of action, to monitor permanently their activities. The decentralization of the trading floor was accompanied by the centralization of activities in the broker’s office. In this sense, again, the ticker generated principles of efficient organization superimposed on the sociolinguistic theory it disseminated.

Hence: the ticker acted as a complex organizational device, (1) introducing a new profession (the stock analyst), (2) de-centralizing certain activities, while centralizing others, (3) standardizing evaluation procedures, (4) reinforcing investor networks, and (5) encouraging, if not triggering reflexive processes at the individual and organizational level.
IX. Conclusion

I open up the conclusion by reiterating one of the initial questions: in view of the above, was the ticker really that useless and redundant? Certainly not. Was it just a speedy, transparent medium? Far from it. This shows that our sociological understanding of how communication technologies work on financial markets has to be revised.

In a historical perspective, we should not overvalue the telegraph’s and the telephone’s role in financial exchanges. The empirical evidence about their real use in the transmission of securities prices (and not the mere promotional hype) suggests that, before the ticker was introduced, they were not used much by investors and brokers. Letters were powerful networking devices.

With that, I come to my second argument, namely that communication technologies should not be seen just as transparent media, speeding up the transmission of financial information and making it only more efficient. This interpretation rather obscures the sociological examination of “information.” What information is, depends, among other things, on the nexus in which it is generated: before the ticker, minute price variations could not constitute any real information for investors who were not permanently present in the marketplace, did not have the memory of a whole herd of elephants and the computation capabilities of an army of accountants.

My argument here has been that financially-relevant communication technologies have to be understood as nexuses of discursive modes, cognitive rules, and teleo-affective structures inducing important changes both at the individual and at the organizational level (see Figure 3). They broaden the reach of the market not only by their speed (which, however important, is not enough), but by focusing the permanent attention of a public of investors and brokers, by binding them to the unfolding of market events. The ticker made market turns visible as they happened: the market is thus disentangled from its local, context-bound, contingent features and made into something which is both abstract and visible in several forms to everybody at once. It is visible in the flow of names and prices on the paper strip, but also in the financial charts, which are nowadays produced in real time too.

Figure 3 about here

In this sense, we should ask ourselves whether the computer screen—the ultimate form in which financial markets are visible to us—does not continue and develop the ticker principle. I do not mean by this the mere fact that pixel tapes are running on, say, E*Trade monitors. What I mean is that the computer screens used in financial markets work on the same principle of visually processing the results of conversational exchanges, which now take place as on-screen conversations. At the same time, computer screens re-process their output in real time, providing financial workers and investors with prices, real-time price charts and real-time chart analyses, coupled with real-time representations and analyses of political and economic events. The principle of uninterrupted attention and presence is as valid today as it was in late 19^th century, if not even more valid. Seen in this perspective, the difference between networked computer screens and the ticker (with the adjacent telegraph and telephone) is one of degree, not of substance.

Hence, the instrument whose story I have told here is still present—not only on pixel stripes, but deeply burrowing beneath the monitors’ shining surface.

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Figure 1: The ticker as a medium and as a machine