"Where the Common People Could Speculate": The Ticker, Bucket Shops, and the Origins of Popular Participation in Financial Markets, 1880-1920

Abstract

On the morning of August 29, 1887, Abner Wright, president of the Chicago Board of Trade, forcibly removed the instruments of the Postal Telegraph and the Baltimore and Ohio Telegraph companies from the floor of the exchange, literally throwing their equipment out of the building. A few months later, on the night of December 15, Wright discovered some mysterious electrical cables leading out of the basement of the exchange building. Thinking that they were telegraph lines, he ordered them cut with an axe. Instead, they were cables connecting the building to the police and fire departments.' His desire to sever the Board of Trade's telegraph connections might seem surprising, since the telegraph network was indispensable to the operations of the major stock and commodity exchanges. Wright's forceful actions were part of a long struggle over control of financial information and of a broader effort to remove the taint of gambling from the nation's financial markets. That struggle, which pitted the nation's stock and commodity exchanges against thousands of shops, began with the widespread adoption of the ticker, a low-cost and low-maintenance printing telegraph, in the late 1870s and lasted until about 1915. Bucket shops were places where customers wagered small sums on the price movements of stocks and commodities. The term bucket apparently originated in early nineteenth-century England. Poor youths drained beer kegs thrown out by pubs and sold the collected dregs in abandoned shops. In the late 1870s the term was applied to shops where customers could wager on the price movements of stocks and commodities.2 Bucket shops leased tickers from telegraph companies on the same terms as brokers did and used real-time quotations from exchange floors as the basis for customers' wagers. However, shops did not place customers' transactions on any of the stock and commodity exchanges, nor did shop transactions affect the actual prices of stock shares or agricultural products. Such transactions were fictitious and did not result in delivery of stock certificates or commodities to their patrons. Indeed, by the 1880s nearly every state had outlawed shops as gambling dens. Unlike brokers, who acted as customers' agents