Electricity was harnessed to expand finance’s reach throughout the country and seas. New networks of telegraphed information and news added layers of certainty and volatility to Wall Street and for investors worldwide. Edison’s inventions and patents helped solidify these technological innovations and financial practices. They provided the means for him to escape New York and set up his laboratories and facilities for creative innovation and manufacture.

A few weeks after Black Friday, Edison formed a partnership with Franklin L. Pope, a telegraph engineer. A few weeks after Black Friday, Edison partnered with Franklin L. Pope, a telegraph engineer who was also associated with Doctor Laws. Earlier in the year, Edison had conducted telegraph tests with Pope from Boston and Rochester, one reason he came to New York City. On October 1, 1869, Edison and Pope announced they were going to create both the Financial and Commercial Telegraph Company and the American Printing Telegraph Company.[2]

They partnered only a few months after completing the transcontinental railroad, and the US was expanding quickly westward. Immigration was on the rise, and the economy was growing rapidly. They jointly filed several patents in printing telegraphy during this period. Two printer designs were for stock tickers to provide gold and stock quotations in the New York area. Another printer called “The Pope and Edison Type-Printing Telegraph” was meant to be used on “private lines.” They transmitted messages other than commercial quotations from an easy-to-use terminal for individuals and business houses and, in a sense, were the first “emails.” While their partnership was successful, it ended when the Gold and Stock Telegraph Company absorbed their businesses.

Like much of the managerial talent of the time, General Marshall Lefferts had served during the Civil War. After several years heading Western Union, he became the President of the Gold & Stock Telegraph Company. Very quickly, they acquired the patents to Laws’ Gold Indicator and his Stock Printer, as well as the Calahan Stock Ticker.

In 1870, the Gold and Stock Company created the Exchange Telegraph Company with partners from London, England to expand internationally. Investment capital was streaming into the US, primarily for railroad development. Telegraph messages and ticker prices were streaming through the Atlantic Ocean as well. Lefferts became a friend and mentor to the young Edison, and both encouraged and funded his work.

Edison had gained extensive experience with the Laws Gold Indicator and the Calahan Stock Ticker and was in an ideal situation to develop a general stock ticker for mass production. By the end of the year, Edison made a number of innovations and obtained patents for the Electrical Printing Instrument. Anxious to go into mass production, General Lefferts, as head of the Gold and Stock Telegraph Company gave him $40,000 for the rights to use his telegraphic and ticker inventions.[2] The event was represented in this movie Edison the Man (1940) where Spencer Tracy played the famous inventor.

His first months in New York City was an extraordinary time for Edison, who had barely reached his mid-twenties. In early 1870, with the money from his stock ticker inventions, he opened his first factory in nearby Newark, New Jersey, for the manufacture of gold and stock tickers. Edison’s worked on telegraph instruments as well as duplex and quadruplex telegraph instruments that could send multiple electrical signals at the same time.

Another device he continued to work on allowed remote synchronization of tickers from the central station. If a ticker in a broker’s office went out of “unison” and began to print unstructured results, it needed to be quickly reset. In the first years of the stock ticker, a runner would have to go to each client’s location and reset the ticker by hand. Every mechanism needed to be synchronized to allow multiple machines to print the same information simultaneously. Also, the demand for the tickers was spreading beyond New York, and it was crucial that the machines operated simply and without the need for mechanical troubleshooters. A device had been invented by Henry Van Hoevenbergh, but it didn’t work very well. Edison tested a new design on the Laws Stock Printer during the spring of 1871 and he soon received a patent for his “screw-thread unison” innovation that could reset the printing machines with an electrical signal. Subsequently, all stock tickers developed after this innovation incorporated the unison device, resulting in the stock ticker’s rapid diffusion.[3]

As their tickers were beginning to be used in many remote cities in the US and around the world, it was important to fix the stock tickers without the use of local skilled workers. Edison continued to make improvements on the stock ticker to create a reliable machine that could be marketed on a mass basis. The concept of the interchangeability of parts was important for the production of clocks, guns, and sewing machines, and it was applied to the manufacture of tickers as well. Several variations of stock tickers were initially manufactured in small numbers, but then in 1871, Edison constructed the Universal Stock Printer for New York’s Gold and Stock Telegraph Company.

The “Universal” was very dependable and could be manufactured in high volume. The New York Stock Exchange was a major beneficiary of the new stock tickers. These machines enabled a higher volume of trading and spread the reach of the Wall Street exchange. This allowed the NYSE to unseat smaller exchanges in other cities as people around the country could get price quotes transmitted directly to their stock tickers from New York. Over 5,000 of these devices were produced and used by investors around the world.

The ticker also got the attention of Western Union, which was also envious of The Gold and Stock Telegraph Company’s monopoly on transmitting market information from the New York Stock Exchange. Another concern for the giant was that the Gold and Stock Telegraph Company was using Edison’s Universal Private Line Printers to send out financial information. Edison’s printer only had moderate success though while a faster printer from George M. Phelps gave Western Union technological considerable competition. Along with a new stock ticker in 1870, later called the “Financial Instrument” that was faster, more efficient, and more reliable, Western Union went on the offensive. When they threatened to enter the New York market with this new ticker, Gold and Stock arranged a merger in 1871 and took over the took over the manufacturing and distribution of the stock ticker equipment.

Edison worked closely with “Mr. P” after the merger. Over the next few years they would patent the Quadruplex, considered Edison’s major contribution to telegraphy. It would allow four simultaneous telegraph transmissions on a single conducting line and would save Western Union a considerable amount of money. He also helped with Phelps’ Electro-Motor Telegraph that was ten years in development and based on an electro-motor/governor that was able to achieve speeds of up to 60 wpm. By 1875, Phelps’ transmitting apparatus allowed an operator to simultaneously transmit stock information to hundreds of different offices. It could also operate between New York and that other emerging financial center, Chicago, without using a single repeater.

The Universal Stock Ticker was Edison’s first commercial success and, in many ways, the source of his future success. The first 40 of his 1,093 patents filed with the US Patents Office came from his work with stock tickers and printing telegraphs. The success of his stock tickers provided capital and connections with wealthy investors that helped fund his many inventions, including perhaps his most outstanding achievement, the electric light bulb. In 1875, he moved to Menlo Park, New Jersey, where he set up his laboratory and the Black Maria movie studio.[4]

Citation APA (7th Edition)

Pennings, A.J. (2021, Jul 21). Thomas Edison Builds the Universal Stock Ticker. apennings.com https://apennings.com/telegraphic-political-economy/thomas-edison-builds-the-universal-ticker-tape-machine/

Notes

[1] A very good account of Black Friday events appears on the New York Times website section “On This Day”. See http://www.nytimes.com/learning/general/onthisday/harp/1016.htm. Accessed on May /10/15.
[2] Anecdotal information on Edison’s timely circumstances on Wall Street from Edison: His Life and Inventions by Frank Lewis Dyer and Thomas Commerford Martin.
[3] The stocktickercompany website has very good information on the history of the stock indicators and ticker-tape machines.
[4] It has been difficult to trace the exact timing of Edison’s activities at the time. Ultimately, I decided to follow the patents. http://www.prc68.com/I/StkTckPat.shtml#List

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Anthony J. Pennings, PhD is a professor at the State University of New York, Korea. Previously, he taught at St. Edwards University in Austin, Texas and was on the faculty of New York University from 2002-2012. He also taught at Victoria University in Wellington, New Zealand and was a Fellow at the East-West Center in Honolulu, Hawaii during the 1990s.

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Category: financial technology, telegraphic political economy
Tags: Calahan Stock Ticker > Thomas Edison > Universal Stock Ticker

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