Not even the lifting of marginal deposits from ten points to thirty points per par value share has diminished the public’s activity. The professionals are bearish. The public never.

“The higher the market goes, the deeper the public is in it.” He reached for his customers’ book. Just after the last debacle, the number of customers fell off to barely 140. Now, in the midst of August’s great surge, the total had grown to nearly 500.

The extent of the public’s participation has placed a terrific load on the over-worked ticker, which was never designed to shoulder such a burden. The ticker is fast. Not long ago it was the fastest news courier in the world. But marvelous mechanism that it is, it is not quite fast enough for its job.

The function of the Stock Exchange is two-fold: (1) to provide a trading place for stocks and bonds and (2) to announce the factors of these sales— quickly, at once. The one is as important as the other, for they are internally dependent. In its first function, the Exchange is more than holding its own. In the second, however, it is increasingly hard pressed.

Every minute, between the 3 o’clock, some forty or fifty trading hours of 10 o’clock and trades are made. In the bowels of the Exchange, a mass of machinery—cogs, belts, wheels and levers—as intricate as that of a Leviathan, is geared to drive the thousands of tickers below Fulton Street. And to drive the tickers beyond this frontier, a still greater assemblage of machinery is operated by the Western Union.

The ticker must be on time. Vancouver must get word of the trade as soon as Miami, Tulsa as soon as Boston. But the ticker is in a traffic jam. The most heroic entrenchments have failed to keep it abreast of trade. Characters have been shorn to cabalistic symbols. The sale of 100 shares of Steel, which used to read on the tape 100 US 112, now reads X 112; Anaconda has dwindled from Anc. to C., General Motors from GMO to GM, and others have been equally slaughtered. And during the great surges, volume was dropped from the tape altogether, until it caught up with trade.

Fractions of seconds were penuriously scrimped. Electrical impulses to relay points were accelerated; one one-thousandth of a second was saved there in the transmission of a character; 400 new characters were added to the ticker’s daily capacity. By such devices was the ticker’s output boosted from 235 characters a minute to 296. Still trade moves faster. It is a rare day, now, that the ticker is not four minutes behind the market; and on one grievous day it lagged 100 minutes. A corrective, however, is promised. The Exchange is now experimenting with a new ticker—a marvelously fast machine capable of producing 900 characters a minute. This means tearing out all the old machinery, costly stuff. Nevertheless, the change seems to be economically worth-while. Time is at a premium in the stock market, nowhere more so.

Source: The Outlook, 18 September 1929

Related posts:

1. Wall Street 1929 Part 5
2. Wall Street 1929 Part 6
3. Wall Street 1929 Part 3
4. Wall Street 1929 Part 7
5. Wall Street 1929 Part 2

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