The Stock Ticker - 2

The Stock Ticker - 2

During the Civil War, with its enormous increase in the national debt and the volume of

paper money, gold had gone to a high premium; and, as ever, by its fluctuations in price

the value of all other commodities was determined. This led to the creation of a "Gold

Room" in Wall Street, where the precious metal could be dealt in; while for dealings in

stocks there also existed the "Regular Board," the "Open Board," and the "Long Room."

Devoted to one, but the leading object of speculation, the "Gold Room" was the very

focus of all the financial and gambling activity of the time, and its quotations governed

trade and commerce. At first notations in chalk on a blackboard sufficed, but seeing their

inadequacy, Dr. S. S. Laws, vice-president and actual presiding officer of the Gold

Exchange, devised and introduced what was popularly known as the "gold indicator."

This exhibited merely the prevailing price of gold; but as its quotations changed from

instant to instant, it was in a most literal sense "the cynosure of neighboring eyes." One

indicator looked upon the Gold Room; the other opened toward the street. Within the

exchange the face could easily be seen high up on the west wall of the room, and the

machine was operated by Mr. Mersereau, the official registrar of the Gold Board.

Doctor Laws, who afterward became President of the State University of Missouri, was

an inventor of unusual ability and attainments. In his early youth he had earned his

livelihood in a tool factory; and, apparently with his savings, he went to Princeton, where

he studied electricity under no less a teacher than the famous Joseph Henry. At the

outbreak of the war in 1861 he was president of one of the Presbyterian synodical

colleges in the South, whose buildings passed into the hands of the Government. Going to

Europe, he returned to New York in 1863, and, becoming interested with a relative in

financial matters, his connection with the Gold Exchange soon followed, when it was

organized. The indicating mechanism he now devised was electrical, controlled at central

by two circuit-closing keys, and was a prototype of all the later and modern step-by-step

printing telegraphs, upon which the distribution of financial news depends. The "fraction"

drum of the indicator could be driven in either direction, known as the advance and

retrograde movements, and was divided and marked in eighths. It geared into a "unit"

drum, just as do speed-indicators and cyclometers. Four electrical pulsations were

required to move the drum the distance between the fractions. The general operation was

simple, and in normally active times the mechanism and the registrar were equal to all

emergencies. But it is obvious that the record had to be carried away to the brokers'

offices and other places by messengers; and the delay, confusion, and mistakes soon

suggested to Doctor Laws the desirability of having a number of indicators at such

scattered points, operated by a master transmitter, and dispensing with the regiments of

noisy boys. He secured this privilege of distribution, and, resigning from the exchange,

devoted his exclusive attention to the "Gold Reporting Telegraph," which he patented,

and for which, at the end of 1866, he had secured fifty subscribers. His indicators were

small oblong boxes, in the front of which was a long slot, allowing the dials as they

travelled past, inside, to show the numerals constituting the quotation; the dials or wheels

being arranged in a row horizontally, overlapping each other, as in modern fare registers

which are now seen on most trolley cars. It was not long before there were three hundred

subscribers; but the very success of this device brought competition and improvement.

Mr. E. A. Callahan, an ingenious printing-telegraph operator, saw that there were

unexhausted possibilities in the idea, and his foresight and inventiveness made him the

father of the "ticker," in connection with which he was thus, like Laws, one of the first to

grasp and exploit the underlying principle of the "central station" as a universal source of

supply. The genesis of his invention Mr. Callahan has told in an interesting way: "In

1867, on the site of the present Mills Building on Broad Street, opposite the Stock

Exchange of today, was an old building which had been cut up to subserve the necessities

of its occupants, all engaged in dealing in gold and stocks. It had one main entrance from

the street to a hallway, from which entrance to the offices of two prominent broker firms

was obtained. Each firm had its own army of boys, numbering from twelve to fifteen,

whose duties were to ascertain the latest quotations from the different exchanges. Each

boy devoted his attention to some particularly active stock. Pushing each other to get into

these narrow quarters, yelling out the prices at the door, and pushing back for later ones,

the hustle made this doorway to me a most undesirable refuge from an April shower. I

was simply whirled into the street. I naturally thought that much of this noise and

confusion might be dispensed with, and that the prices might be furnished through some

system of telegraphy which would not require the employment of skilled operators. The

conception of the stock ticker dates from this incident."

Mr. Callahan's first idea was to distribute gold quotations, and to this end he devised an

"indicator." It consisted of two dials mounted separately, each revolved by an

electromagnet, so that the desired figures were brought to an aperture in the case

enclosing the apparatus, as in the Laws system. Each shaft with its dial was provided with

two ratchet wheels, one the reverse of the other. One was used in connection with the

propelling lever, which was provided with a pawl to fit into the teeth of the reversed

ratchet wheel on its forward movement. It was thus made impossible for either dial to go

by momentum beyond its limit. Learning that Doctor Laws, with the skilful aid of F. L.

Pope, was already active in the same direction, Mr. Callahan, with ready wit, transformed

his indicator into a "ticker" that would make a printed record. The name of the "ticker"

came through the casual remark of an observer to whom the noise was the most striking

feature of the mechanism. Mr. Callahan removed the two dials, and, substituting type

wheels, turned the movements face to face, so that each type wheel could imprint its

characters upon a paper tape in two lines. Three wires stranded together ran from the

central office to each instrument. Of these one furnished the current for the alphabet

wheel, one for the figure wheel, and one for the mechanism that took care of the inking

and printing on the tape. Callahan made the further innovation of insulating his circuit

wires, although the cost was then forty times as great as that of bare wire. It will be

understood that electromagnets were the ticker's actuating agency. The ticker apparatus

was placed under a neat glass shade and mounted on a shelf. Twenty-five instruments

were energized from one circuit, and the quotations were supplied from a "central" at 18

New Street. The Gold & Stock Telegraph Company was promptly organized to supply to

brokers the system, which was very rapidly adopted throughout the financial district of

New York, at the southern tip of Manhattan Island. Quotations were transmitted by the

Morse telegraph from the floor of the Stock Exchange to the "central," and thence

distributed to the subscribers. Success with the "stock" news system was instantaneous.