"Where the common people could speculate": The ticker, bucket shops, and the origins of popular participation in financial markets, 1880-1920

Journal of American History

Volumn 93, Issue 2, 2006, Pages 335-358

  Hochfelder, David ^a  

^a RUTGERS UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

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EID: 33751276561     PISSN: 00218723     EISSN: None     Source Type: Journal    
DOI: 10.2307/4486233     Document Type: Review

References (192)

1. Charles H. Taylor, ed., History of the Board of Trade of the City of Chicago (3 vols., Chicago, 1917), 744-47;
2. New York Times, Aug. 30, 1887, p. 2;
3. New York Times ibid., Dec. 17, 1887, p. 1.
4. Cedric B. Cowing, Populists, Plungers, and Progressives: A Social History of Stock and Commodity Speculation, 1890-1936 (Princeton, 1965), 28-29.
5. On bucket shops, see Cowing, Populists, Plungers, and Progressives. For accounts of the Chicago Board of Trade's fight against bucket shops,
6. see Jonathan Lurie, The Chicago Board of Trade, 1859-1905: The Dynamics of Self-Regulation (Urbana, 1979), 75-105, 138-67;
7. and Ann Fabian, Card Sharps and Bucket Shops: Gambling in Nineteenth- Century America (New York, 1999), 153-202.
8. On the business and social history of the development of finance capitalism, see Alfred D. Chandler Jr., The Visible Hand: The Managerial Revolution in American Business (Cambridge, Mass., 1977);
9. James Livingston, Origins of the Federal Reserve System: Money, Class, and Corporate Capitalism, 1890-1913 (Ithaca, 1986);
10. Gretchen Ritter, Goldbugs and Greenbacks: The Antimonopoly Tradition and the Politics of Finance in America, 1865-1896 (New York, 1997);
11. Sven Beckert, The Monied Metropolis: New York City and the Consolidation of the American Bourgeoisie, 18501896 (New York, 1993);
12. Robert H. Wiebe, Businessmen and Reform: A Study of the Progressive Movement (Cambridge, Mass., 1962);
13. Irwin Unger, The Greenback Era: A Social and Political History of American Finance, 1865-1879 (Princeton, 1964);
14. Elizabeth Sanders, Roots of Reform: Farmers, Workers, and the American State, 1877-1917 (Chicago, 1999);
15. Richard Franklin Bensel, The Political Economy of American Industrialization, 1877-1900 (New York, 2000);
16. and Richard White, "Information, Markets, and Corruption: Transcontinental Railroads in the Gilded Age," Journal of American History, 90 (June 2003), 19-43. For works that argue that chance, luck, and risk taking have long occupied central places in the American economic landscape,
17. see Jackson Lears, Something for Nothing: Luck in America (New York, 2003);
18. and Fabian, Card Sharps and Bucket Shops, On how Wall Street became the focal point for a culture of risk taking,
19. see Steve Fraser, Every Man a Speculator: A History of Wall Street in American Life (New York, 2005);
20. Cowing, Populists, Plungers, and Progressives; and
21. Walter Benn Michaels, The Gold Standard and the Logic of Naturalism: American Literature at the Turn of the Century (Berkeley, 1987).
22. These figures are conservative; there was a sixfold increase in the number of shareholders in a group of 66 companies surveyed between 1900 and 1923. Cedric Cowing claims there were only 500,000 total shareholders on the eve of World War I. According to Steve Fraser, roughly "half of the American population own securities today," thanks to mutual funds and the Internet. H. T. Warshow, "The Distribution of Corporate Ownership in the United States," Quarterly Journal of Economics, 39 (Nov. 1924), 15-38;
23. Cowing, Populists, Plungers, and Progressives, 95;
24. Fraser, Every Man a Speculator, 577.
25. Reform efforts by exchange leaders were similar to the efforts of the financial community to educate the public about the necessity of banking reform, which began in the 1890s and culminated in the Federal Reserve Act of 1913 and thereby in a national banking and currency system favorable to business interests. See Livingston, Origins of the Federal Reserve System, esp. 33-34, 71;
26. Ritter, Goldbugs and Greenbacks;
27. and Beckert, Monied Metropolis.
28. Chandler, Visible Hand;
29. James R. Beniger, The Control Revolution: Technological and Economic Origins of the Information Society (Cambridge, Mass., 1986);
30. Richard DuBoff, "Business Demand and the Development of the Telegraph in the United States, 1844-1860," Business History Review, 54 (Winter 1980), 459-79;
31. William Cronon, Nature's Metropolis: Chicago and the Great West (New York, 1991);
32. JoAnne Yates, Control through Communication: The Rise of System in American Management (Baltimore, 1989).
33. "The Telegraph," DeBow's Review, 16 (Feb. 1854), 168.
34. Norvin Greens testimony is in U.S. Congress, House of Representatives, House Committee on Post Offices and Post Roads, Postal Telegraph Facilities, 51 Cong., 1 sess., Feb. 11, 1890, p. 41.
35. Green also noted that New York City offtrack betting parlors annually paid Western Union $750,000 to transmit horse racing odds and results.
36. Richard Franklin Bensel, Yankee Leviathan: The Origins of Central State Authority in America, 1859-1877 (New York, 1990), 238-302.
37. In 1866, Western Union bought out its leading rivals and handled at least 80% of telegraph traffic thereafter. In 1870, Western Union president William Orton concluded that the "great future of telegraphy" lay in ticker service. He anticipated that its profits would eventually exceed those of public message traffic. William Orton to Anson Stager, Nov. 12, 1870, President's Letterbooks, Western Union Telegraph Company Collection (National Museum of American History Archives Center, Smithsonian Institution, Washington, D.C.); Orton to James Simonton, Dec. 24, 1874, Dec. 3, 1875,
38. ibid.; Norvin Green to E. K. Willard, July 10, 1879,
39. ibid.; Green to William H. Forbes, Dec. 19, 1879,
40. ibid.; Green to Edward Sweet and Co., Jan. 28, 1880,
41. ibid. 10 By 1894 brokers at the Boston Stock Exchange knew of trades on the New York Stock Exchange within thirty seconds. Examples like this support economic historian Alexander Field's claim that the private wire and ticker networks allowed commodity and securities trading to attain "performance standards we associate with the twentieth century."
42. Henry Crosby Emery, Speculation on the Stock and Produce Exchanges of the United States (New York, 1896), 139;
43. Alexander Field, "The Telegraphic Transmission of Financial Asset Prices and Orders to Trade: Implications for Economic Growth, Trading Volume, and Securities Market Regulation," Research in Economic History, 18 (1998), 167.
44. For the ticker's effects on regional exchanges, see Bradford Scharlott, "The Telegraph and the Integration of the U.S. Economy: The Impact of Electrical Communications on Interregional Prices and the Commercial Life of Cincinnati" (Ph.D. diss., University of Wisconsin, 1986).
45. Horace L. Hotchkiss, "The Stock Ticker," in The New York Stock Exchange: Its History, Its Contributions to National Prosperity, and Its Relation to American Finance at the Outset of the Twentieth Century, ed. Edmund Clarence Stedman (New York, 1905), 434;
46. George Rutledge Gibson, Stock Exchanges of London, Paris, and New York: A Comparison, (New York, 1889), 82-84;
47. Thomas Gibson, The Pitfalls of Speculation (New York, 1906), 47;
48. New York Times, Aug. 19, 1894, p. 24;
49. New York Times ibid., Feb. 7, 1904, p. 30;
50. The Scalper, "Ticker Talk," Ticker, 2 (May 1908), 29.
51. For the argument that the ticker was the key transformative technology that caused "a radical abstraction and reconfiguration of the visual experience of the market," see Alex Preda, "Of Ticks and Tapes: Financial Knowledge and Price-Recording Technologies in Nineteenth Century Financial Markets" (in David Hochfelder's possession).
52. Ticker figures are from Orton to Frank Scudamore, Aug. 11, 1873, President's Letterbooks, Western Union Telegraph Company Collection; James D. Reid, The Telegraph in America (New York, 1879), 613-14;
53. James D. Reid, The Telegraph in America (New York, 1886), 731;
54. Scharlott, "Telegraph and the Integration of the U.S. Economy," 120-22;
55. Ranald Mitchie, London and New York Stock Exchanges: 1850-1914 (London, 1987), 174;
56. Committee on Arrangements, minutes, Feb. 8, 1886, General Files, 1872-1915 (New York Stock Exchange Archives, New York, New York). John Denney's quote is from New York Evening Post, June 1, 1889,
57. Mitchell Scrapbooks, New York Evening Post ibid.
58. Sereno Pratt, The Work of Wall Street (New York, 1903), 139;
59. "Speculitis. A Name for the Wall Street Disease. The Cause, the Symptoms, and the Cure," Ticker, 2 (July 1908), 159-61.
60. Taylor, History of the Board of Trade of the City of Chicago, 565, 585, 1218-22.
61. For a reproduction of the Chicago Tribune article, see History of the Board of Trade of the City of Chicago ibid., 586-88.
62. "Glimpses of Gotham," National Police Gazette, June 14, 1879, p. 14;
63. "The Spirit of Speculation: How the Passion for Gambling Is Being Fostered by Wall Street," National Police Gazette ibid., Feb. 12, 1881, p. 11;
64. New York Times, Sept. 4, 1884, p. 8.
65. On defalcating clerks, see New York Times ibid., Oct. 29, 1880, p. 5;
66. New York Times ibid., June 19, 1883, p. 1;
67. and New York Times ibid., Nov. 18, 1883, p. 1. On Jesse Livermore,
68. see Edwin Lefevre, Reminiscences of a Stock Operator (New York, 1923);
69. Cowing, Populists, Plungers, and Progressives, 101-3;
70. and Richard Smitten, Jesse Livermore: World's Greatest Stock Trader (New York, 2001), 22-30.
71. New York Times, Sept. 11, 1882, p. 8;
72. New York Times ibid., Sept. 4, 1884, p. 8.
73. New York Times Ibid., Aug. 14, 1887, p. 9.
74. On the so-called Big Four, see New York Times ibid., Nov. 3, 1887, p. 3;
75. and New York Times ibid., May 12, 1889, p. 9.
76. For details of bucket shop operations, including those of the Haight and Freese Company, Coe Commission Company, and M. J. Sage Company, see John Hill Jr., Gold Bricks of Speculation: A Study of Speculation and Its Counterfeits, and an Expose of the Methods of Bucketshop and "Get-Rich-Quick" Swindles (Chicago, 1904);
77. Merrill A. Teague, "Bucket-Shop Sharks," Everybody's Magazine, 14 (June 1906), 723-35;
78. Merrill A. Teague, "Bucket-Shop Sharks," Everybody's Magazine ibid., 15 (July 1906), 33-43;
79. Merrill A. Teague, "Bucket-Shop Sharks," Everybody's Magazine ibid. (Aug. 1906), 245-54;
80. Merrill A. Teague, "BucketShop Sharks," Everybody's Magazine ibid. (Sept. 1906), 398-408;
81. McCarthy v. Meaney, 183 N.Y. 190 (1905);
82. and New York Times, Nov. 19, 1905, p. 15.
83. Teague, "Bucket-Shop Sharks," 728;
84. Weiss v. Haight & Freese & Co., 148 Fed. 399 (1906).
85. For similar cases involving other bucket shops, see Joslyn v. Downing, Hopkins & Co., 150 Fed. 317 (1906);
86. Williamson v. Majors, 169 Fed. 754 (1909).
87. Lefevre, Reminiscences of a Stock Operator, 15-16;
88. New York World, Dec. 16, 1886, Mitchell Scrapbooks.
89. On bucket shop operations, see "Bucket Shops: An Inside View, and Some Lessons to Be Drawn Therefrom," Ticker, 2 (May 1908), 19-23;
90. Haight v. Haight & Freese, 92 N.Y.S. 934 (1905);
91. and Teague, "Bucket-Shop Sharks," 732.
92. Livermore is quoted in Lefevre, Reminiscences of a Stock Operator, 19-20.
93. Smitten, Jesse Livermore, 31-38.
94. Carl Parker, "Governmental Regulation of Speculation," Annals of the American Academy of Political and Social Science, 38 (Sept. 1911), 126-54.
95. New York Times, Sept. 4, 1884, p. 8;
96. New York Times ibid., March 6, 1885, p. 8;
97. New York Times ibid., April 16, 1885, p. 1;
98. Taylor, History of the Board of Trade of the City of Chicago, 787;
99. New York World, Dec. 16, 1886,
100. Mitchell Scrapbooks; W. G. Nicholas, Cold Facts about Bucket-Shops: Their Development Co-incident with the Enormous Shrinkage in the Value of Farm Products and the General Business Depression; A Gigantic Evil and Its Cure (Chicago, 1887), 2-6;
101. New York Times, Dec. 5, 1886, p. 1;
102. New York Times ibid., June 1, 1889, p. 1;
103. New York Evening Post, June 1, 1889,
104. Mitchell Scrapbooks; New York Times, May 10, 1905, p. 1;
105. "The Index Man of the Under World of Finance," New York Times Sunday Magazine, Oct. 18, 1908, p. SM6;
106. New York Times, Jan. 7, 1901,p. 15;
107. and ibid., May 8, 1913, p. 8.
108. On the New York Stock Exchanges trading volumes from the 1880s to 1913, see http://www.nyse.com/marketinfo/datalib/1022221393023.html.
109. New York Times, Oct. 18, 1883, p. 1;
110. Gold and Stock Telegraph Company attorney to George W. Ely, March 25, 1884, Committee on Arrangements, General Files (New York Stock Exchange Archives);
111. James H. Milne to Ely, Aug. 4, 1884, ibid.;
112. William E Grovesteen to Governing Committee, Feb. 28, 1887, in Stock Quotations. The New York Stock Exchange Should Control Its Own Quotations, undated pamphlet in Mitchell Scrapbooks;
113. Memorandum giving list of bucket shops in New York City [1886 or 1887], Officers' Files, Vice President R. H. Thomas, ibid.;
114. "Tottering Bucket Shops," New York Tribune, April 27, 1890;
115. New York Times, May 20, 1890, p. 8.
116. For figures on Western Union's bucket shop business, see Western Electrician, June 7, 1890, p. 325;
117. New York Times, Nov. 29, 1884, p. 1;
118. and New York Times ibid., May 30, 1900, p. 2.
119. On Western Union's service to poolrooms, see Record Book of Louisville Office, 1877-1940, Western Union Telegraph Company Collection; C. S. H. Small to Frank B. Rae, June 21, 1888, Miscellaneous Correspondence from Superintendent's Office, 1877-1910, Western Union Telegraph Company Collection;
120. Vidkunn Ulriksson, The Telegraphers: Their Craft and Their Unions (Washington, 1953), 200-201;
121. U.S. Congress, Senate, Judiciary Committee, Interstate Race Gambling by Telegraph, 60 Cong., 2 sess., Jan. 21, 1909, p. 8;
122. and Western Union Telegraph Company Annual Report, 1905, p. 7, Western Union Telegraph Company Collection.
123. Record Book of Louisville Office, 1877-1940, Western Union Telegraph Company Collection; New York Times, July 8, 1910, p. 1;
124. "Digest of the Preliminary Work of the Special Committee of June 25, 1913," Special Committee on Bucket Shop Operations (New York Stock Exchange Archives).
125. For both the quotation from the Western Rural, Feb. 7, 1883, and Benjamin Hutchinson's remarks,
126. see Lurie, Chicago Board of Trade, 87, 91.
127. New York Times, Aug. 30, 1887,
128. Mitchell Scrapbooks. For details of David W. James's transactions, see Springs v. James, 121 N.Y.S. 1054 (1910).
129. Emery, Speculation on the Stock and Produce Exchanges of the United States, 98; Report of Governor's Committee on Speculation in Securities and Commodities (Albany, 1909), 4, 7.
130. Haight & Freese's Guide to Investors (Philadelphia, 1899), 25, 58;
131. C. C. Christie, "Bucket Shop vs. Board of Trade," Everybody's Magazine, 15 (Sept. 1906), 708-9, 713.
132. "The Chicago Board of Trade, How It Helps the Farmer, Grain Dealer and Shipper," Ticker, 2 (Oct. 1908), 255-60.
133. Jackson Lears, Ann Fabian, and Jonathan Lurie all point out the rhetorical and moral confusion that marked contemporary efforts to distinguish legitimate business and gambling. Lears, Something for Nothing, 194;
134. Fabian, Card Sharps and Bucket Shops, 4, 5, 157, 188, 198;
135. Lurie, Chicago Board of Trade, 78-79.
136. Public Grain and Stock Exchange v. Western Union Telegraph Co., Ill. Cir. Ct. 548 (1883).
137. Judge Murray Tuley's decision is quoted in Bryant and another v. Western Union Tel. Co., 17 Fed. 825, 830 (1883);
138. and New York and Chicago Grain and Stock Exchange v. Chicago Board of Trade, 127 Ill. 157 (1889).
139. For the board's reaction to the case, see Lurie, Chicago Board of Trade, 99-102, 138-51.
140. Board of Trade of City of Chicago v. Donovan Commission Co.; Same v. Cella Commission Co., 121 Fed. 1012, 1014 (1903);
141. Board of Trade of City of Chicago v. L. A. Kinsey Co., 125 Fed. 72, 78 (1903);
142. Christie Grain and Stock Co. v. Board of Trade of City of Chicago, 125 Fed. 161, 169 (1903);
143. Taylor, History of the Board of Trade of the City of Chicago, 1218-22.
144. Board of Trade of the City of Chicago v. Christie Grain and Stock Company, 198 U.S. 236, 249, 247 (1905).
145. Justices John Marshall Harlan, William R. Day, and David J. Brewer dissented.
146. Norvin Green to Robert C. Clowry, Dec. 29, 1883, Board of Directors Meeting Documents, Jan. 2, 1884, Chicago Board of Trade Records (Special Collections, University of Illinois at Chicago Library, Chicago); Clowry to J. M. Ball, Dec. 29, 1883, ibid.
147. New York Times, Dec. 5, 1886, p. 1;
148. Taylor, History of the Board of Trade of the City of Chicago, 787. Official Notification from George Stone to Western Union, March 1, 1890, Board of Directors Meeting Documents, Chicago Board of Trade Records;
149. contract between the Chicago Board of Trade, Western Union Telegraph Company, and the Postal Telegraph-Cable Company, May 31, 1892, Taylor, History of the Board of Trade of the City of Chicago ibid.
150. New York Times, March 20, 1897, p. 12;
151. New York Times ibid., June 19, 1897, p. 12;
152. Committee on Arrangements, minutes, Jan. 15, 1897, New York Stock Exchange Archives.
153. Board of Directors, minutes, July 27, Nov. 6, 1883, April 9, April 29, 1890, Sept. 11, 1900, and March 23, 1901, Board of Directors Meeting Documents, Chicago Board of Trade Records. For sample applications for ticker service, see Market Report Committee, meeting of Jan. 27, 1903, Miscellaneous Documents, ibid.
154. William Griffith, ed., The Roosevelt Policy: Speeches, Letters, and State Papers, Relating to Corporate Wealth and Closely Allied Topics (3 vols., New York, 1919), II, 438.
155. Hiram Sager's article, reprinted as a circular, in Market Report Committee, Miscellaneous Documents, Chicago Board of Trade Records; "Report of the Seventh and Eighth Annual Meetings of the Council of Grain Exchanges," Jan. 20-21, 1916, Jan. 18, 1917, The Roosevelt Policy: Speeches, Letters, and State Papers, Relating to Corporate Wealth and Closely Allied Topics ibid.
156. Taylor, History of the Board of Trade of the City of Chicago, 916, 903;
157. Hill, Gold Bricks of Speculation, 355.
158. Lurie, Chicago Board of Trade, 161-63;
159. Taylor, History of the Board of Trade of the City of Chicago, 976;
160. New York Times, May 5, 1909, p. 1;
161. New York Times ibid., May 16, 1913, p. 20.
162. On the board of trade's investigative activities, see Market Report Committee, Miscellaneous Documents, Chicago Board of Trade Records.
163. New York Times, April 3, 1910, p. 2;
164. Annual Report of the Attorney-General of the United States for the Year Ended June 30, 1910 (Washington, 1910), 23-24;
165. Annual Report of the Attorney-General of the United States for the Year Ended June 30, 1913 (Washington, 1913), 46;
166. New York Times, Oct. 19, 1915, p. 14;
167. New York Times ibid., May 7, 1916, p. E4.
168. Law Committee Reports and Resolutions, Feb. 13, 1883, New York Stock Exchange Archives; New York Times, July 26, 1893, p. 2.
169. John Phillip Quinn, Fools of Fortune; or, Gambling and Gamblers (Chicago, 1890), 577-78;
170. Board of Trade of City of Chicago v. O'Dell Commission Co., 115 Fed. 574 (1902).
171. Report of Governor's Committee on Speculation in Securities and Commodities, 3-5;
172. Parker, "Governmental Regulation of Speculation," 152;
173. William C. Van Antwerp, The Stock Exchange from Within (Garden City, 1913), 50;
174. "Proceedings of the Sixth Annual Meeting of the Council of Grain Exchanges at Chicago, Illinois," Jan. 21 and 22, 1915, p. 2, Market Report Committee, Miscellaneous Documents, Chicago Board of Trade Records.
175. Sereno Stansbury Pratt, The Work of Wall Street: An Account of the Functions, Methods, and History of the New York Money and Stock Markets (New York, 1912), 71.
176. Cedric Cowing found that the number of Americans who held securities increased to 17 million because of Liberty Bond drives. Steve Fraser claimed that only 3.4 million new investors entered the stock market through their Liberty Bond purchases. Lizabeth Cohen cited a 1918 survey that found that 84% of unskilled workers at the Chicago Stockyards owned Liberty Bonds. She also detailed the emergence of employee stock ownership plans in the 1920s as an integral part of corporate welfare. Such plans depended upon "the enthusiasm that workers demonstrated during the war for buying Liberty Bonds." By the late 1920s, stock ownership among eligible employees was as high as 70 to 80% in Chicago's large manufacturing corporations. Cowing, Populists, Plungers, and Progressives, 95;
177. Fraser, Every Man a Speculator, 389;
178. Lizabeth Cohen, Making a New Deal: Industrial Workers in Chicago, 1919-1939 (New York, 1990), 164, 175, 183-84.
179. New York Times, April 30, 1916, p. 21.
180. On stock frauds after World War I, see Louis Guenther, "Pirates of Promotion," World's Work, 37 (Nov. 1918), 29-33;
181. Louis Guenther, "Pirates of Promotion," World's Work ibid. (Dec. 1918), 149-53;
182. Louis Guenther, "Pirates of Promotion," World's Work ibid. (Jan. 1919), 314-20;
183. Louis Guenther, "Pirates of Promotion," World's Work ibid. (Feb. 1919), 393-98;
184. Louis Guenther, "Pirates of Promotion," World's Work ibid. (March 1919), 509-18;
185. and "Methods of the Modern Bucket Shops," World's Work ibid., 46 (Aug. 1923), 361-62.
186. On the reaction of the New York Stock Exchange and Consolidated Stock Exchange to the new frauds, see New York Times, Feb. 4, 1922, p. 1;
187. New York Times ibid., Feb. 5, 1922, p. 24.
188. For Seymour Cromwell's public pronouncements, see New York Times ibid., March 15, 1922, p. 19;
189. and Cowing, Populists, Plungers, and Progressives, 164. On the New York Stock Exchange's embrace of the investor of small means after World War I,
190. see Julia Ott, "The 'Free and Open 'People's Market': Public Relations at the New York Stock Exchange, 1913-1929," Business and Economic History On-Line, 2 (2004), http://www.h-net.org/-business/bhcweb/publications/ BEHonline/2004/Ott.pdf;
191. and Janice Traflet, "'Own Your Share of American Business': Public Relations at the NYSE during the Cold War," ibid., 1 (2003), http://www.thebhc.org/publications/BEHonline/2003/Traflet.pdf.
192. New York Times, Nov. 1, 1929, p. 23.