Edison, His Life and Inventions

F >> Frank Lewis Dyer and Thomas Commerford Martin >> Edison, His Life and Inventions




CHAPTER VII

THE STOCK TICKER


"THE letters and figures used in the language of the tape," said a
well-known Boston stock speculator, "are very few, but they spell ruin
in ninety-nine million ways." It is not to be inferred, however, that
the modern stock ticker has anything to do with the making or losing
of fortunes. There were regular daily stock-market reports in London
newspapers in 1825, and New York soon followed the example. As far back
as 1692, Houghton issued in London a weekly review of financial and
commercial transactions, upon which Macaulay based the lively narrative
of stock speculation in the seventeenth century, given in his famous
history. That which the ubiquitous stock ticker has done is to give
instantaneity to the news of what the stock market is doing, so that at
every minute, thousands of miles apart, brokers, investors, and gamblers
may learn the exact conditions. The existence of such facilities is to
be admired rather than deplored. News is vital to Wall Street, and there
is no living man on whom the doings in Wall Street are without effect.
The financial history of the United States and of the world, as shown
by the prices of government bonds and general securities, has been told
daily for forty years on these narrow strips of paper tape, of which
thousands of miles are run yearly through the "tickers" of New York
alone. It is true that the record of the chattering little machine, made
in cabalistic abbreviations on the tape, can drive a man suddenly to the
very verge of insanity with joy or despair; but if there be blame for
that, it attaches to the American spirit of speculation and not to
the ingenious mechanism which reads and registers the beating of the
financial pulse.

Edison came first to New York in 1868, with his early stock printer,
which he tried unsuccessfully to sell. He went back to Boston, and quite
undismayed got up a duplex telegraph. "Toward the end of my stay in
Boston," he says, "I obtained a loan of money, amounting to $800, to
build a peculiar kind of duplex telegraph for sending two messages over
a single wire simultaneously. The apparatus was built, and I left
the Western Union employ and went to Rochester, New York, to test the
apparatus on the lines of the Atlantic & Pacific Telegraph between that
city and New York. But the assistant at the other end could not be made
to understand anything, notwithstanding I had written out a very minute
description of just what to do. After trying for a week I gave it up and
returned to New York with but a few cents in my pocket." Thus he who
has never speculated in a stock in his life was destined to make the
beginnings of his own fortune by providing for others the apparatus
that should bring to the eye, all over a great city, the momentary
fluctuations of stocks and bonds. No one could have been in direr
poverty than he when the steamboat landed him in New York in 1869. He
was in debt, and his few belongings in books and instruments had to
be left behind. He was not far from starving. Mr. W. S. Mallory, an
associate of many years, quotes directly from him on this point: "Some
years ago we had a business negotiation in New York which made it
necessary for Mr. Edison and me to visit the city five or six times
within a comparatively short period. It was our custom to leave Orange
about 11 A.M., and on arrival in New York to get our lunch before
keeping the appointments, which were usually made for two o'clock.
Several of these lunches were had at Delmonico's, Sherry's, and other
places of similar character, but one day, while en route, Mr. Edison
said: 'I have been to lunch with you several times; now to-day I am
going to take you to lunch with me, and give you the finest lunch you
ever had.' When we arrived in Hoboken, we took the downtown ferry across
the Hudson, and when we arrived on the Manhattan side Mr. Edison led the
way to Smith & McNell's, opposite Washington Market, and well known to
old New Yorkers. We went inside and as soon as the waiter appeared
Mr. Edison ordered apple dumplings and a cup of coffee for himself. He
consumed his share of the lunch with the greatest possible pleasure.
Then, as soon as he had finished, he went to the cigar counter and
purchased cigars. As we walked to keep the appointment he gave me the
following reminiscence: When he left Boston and decided to come to New
York he had only money enough for the trip. After leaving the boat his
first thought was of breakfast; but he was without money to obtain it.
However, in passing a wholesale tea-house he saw a man tasting tea, so
he went in and asked the 'taster' if he might have some of the tea. This
the man gave him, and thus he obtained his first breakfast in New York.
He knew a telegraph operator here, and on him he depended for a loan to
tide him over until such time as he should secure a position. During the
day he succeeded in locating this operator, but found that he also was
out of a job, and that the best he could do was to loan him one dollar,
which he did. This small sum of money represented both food and lodging
until such time as work could be obtained. Edison said that as the
result of the time consumed and the exercise in walking while he found
his friend, he was extremely hungry, and that he gave most serious
consideration as to what he should buy in the way of food, and what
particular kind of food would be most satisfying and filling. The result
was that at Smith & McNell's he decided on apple dumplings and a cup
of coffee, than which he never ate anything more appetizing. It was not
long before he was at work and was able to live in a normal manner."

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.

It was at this juncture that Edison reached New York, and according to
his own statement found shelter at night in the battery-room of the Gold
Indicator Company, having meantime applied for a position as operator
with the Western Union. He had to wait a few days, and during this time
he seized the opportunity to study the indicators and the complicated
general transmitter in the office, controlled from the keyboard of the
operator on the floor of the Gold Exchange. What happened next has been
the basis of many inaccurate stories, but is dramatic enough as told
in Mr. Edison's own version: "On the third day of my arrival and while
sitting in the office, the complicated general instrument for sending
on all the lines, and which made a very great noise, suddenly came to
a stop with a crash. Within two minutes over three hundred boys--a boy
from every broker in the street--rushed up-stairs and crowded the long
aisle and office, that hardly had room for one hundred, all yelling that
such and such a broker's wire was out of order and to fix it at once.
It was pandemonium, and the man in charge became so excited that he lost
control of all the knowledge he ever had. I went to the indicator, and,
having studied it thoroughly, knew where the trouble ought to be, and
found it. One of the innumerable contact springs had broken off and had
fallen down between the two gear wheels and stopped the instrument; but
it was not very noticeable. As I went out to tell the man in charge
what the matter was, Doctor Laws appeared on the scene, the most excited
person I had seen. He demanded of the man the cause of the trouble, but
the man was speechless. I ventured to say that I knew what the trouble
was, and he said, 'Fix it! Fix it! Be quick!' I removed the spring and
set the contact wheels at zero; and the line, battery, and inspecting
men all scattered through the financial district to set the instruments.
In about two hours things were working again. Doctor Laws came in to ask
my name and what I was doing. I told him, and he asked me to come to his
private office the following day. His office was filled with stacks of
books all relating to metaphysics and kindred matters. He asked me a
great many questions about the instruments and his system, and I showed
him how he could simplify things generally. He then requested that I
should call next day. On arrival, he stated at once that he had decided
to put me in charge of the whole plant, and that my salary would be $300
per month! This was such a violent jump from anything I had ever seen
before, that it rather paralyzed me for a while, I thought it was too
much to be lasting, but I determined to try and live up to that salary
if twenty hours a day of hard work would do it. I kept this position,
made many improvements, devised several stock tickers, until the Gold &
Stock Telegraph Company consolidated with the Gold Indicator Company."
Certainly few changes in fortune have been more sudden and dramatic in
any notable career than this which thus placed an ill-clad, unkempt,
half-starved, eager lad in a position of such responsibility in days
when the fluctuations in the price of gold at every instant meant
fortune or ruin to thousands.

Edison, barely twenty-one years old, was a keen observer of the stirring
events around him. "Wall Street" is at any time an interesting study,
but it was never at a more agitated and sensational period of its
history than at this time. Edison's arrival in New York coincided
with an active speculation in gold which may, indeed, be said to have
provided him with occupation; and was soon followed by the attempt
of Mr. Jay Gould and his associates to corner the gold market,
precipitating the panic of Black Friday, September 24, 1869. Securing
its import duties in the precious metal and thus assisting to create an
artificial stringency in the gold market, the Government had made it
a practice to relieve the situation by selling a million of gold each
month. The metal was thus restored to circulation. In some manner,
President Grant was persuaded that general conditions and the movement
of the crops would be helped if the sale of gold were suspended for
a time; and, this put into effect, he went to visit an old friend in
Pennsylvania remote from railroads and telegraphs. The Gould pool had
acquired control of $10,000,000 in gold, and drove the price upward
rapidly from 144 toward their goal of 200. On Black Friday they
purchased another $28,000,000 at 160, and still the price went up. The
financial and commercial interests of the country were in panic; but
the pool persevered in its effort to corner gold, with a profit of many
millions contingent on success. Yielding to frantic requests, President
Grant, who returned to Washington, caused Secretary Boutwell, of the
Treasury, to throw $4,000,000 of gold into the market. Relief was
instantaneous, the corner was broken, but the harm had been done.
Edison's remarks shed a vivid side-light on this extraordinary episode:
"On Black Friday," he says, "we had a very exciting time with the
indicators. The Gould and Fisk crowd had cornered gold, and had run the
quotations up faster than the indicator could follow. The indicator was
composed of several wheels; on the circumference of each wheel were the
numerals; and one wheel had fractions. It worked in the same way as an
ordinary counter; one wheel made ten revolutions, and at the tenth
it advanced the adjacent wheel; and this in its turn having gone ten
revolutions, advanced the next wheel, and so on. On the morning of
Black Friday the indicator was quoting 150 premium, whereas the bids by
Gould's agents in the Gold Room were 165 for five millions or any part.
We had a paper-weight at the transmitter (to speed it up), and by one
o'clock reached the right quotation. The excitement was prodigious. New
Street, as well as Broad Street, was jammed with excited people. I sat
on the top of the Western Union telegraph booth to watch the surging,
crazy crowd. One man came to the booth, grabbed a pencil, and attempted
to write a message to Boston. The first stroke went clear off the blank;
he was so excited that he had the operator write the message for him.
Amid great excitement Speyer, the banker, went crazy and it took five
men to hold him; and everybody lost their head. The Western Union
operator came to me and said: 'Shake, Edison, we are O. K. We haven't
got a cent.' I felt very happy because we were poor. These occasions are
very enjoyable to a poor man; but they occur rarely."

There is a calm sense of detachment about this description that has
been possessed by the narrator even in the most anxious moments of his
career. He was determined to see all that could be seen, and, quitting
his perch on the telegraph booth, sought the more secluded headquarters
of the pool forces. "A friend of mine was an operator who worked in the
office of Belden & Company, 60 Broadway, which were headquarters for
Fisk. Mr. Gould was up-town in the Erie offices in the Grand Opera
House. The firm on Broad Street, Smith, Gould & Martin, was the other
branch. All were connected with wires. Gould seemed to be in charge,
Fisk being the executive down-town. Fisk wore a velvet corduroy coat
and a very peculiar vest. He was very chipper, and seemed to be
light-hearted and happy. Sitting around the room were about a dozen
fine-looking men. All had the complexion of cadavers. There was a basket
of champagne. Hundreds of boys were rushing in paying checks, all checks
being payable to Belden & Company. When James Brown, of Brown Brothers
& Company, broke the corner by selling five million gold, all payments
were repudiated by Smith, Gould & Martin; but they continued to receive
checks at Belden & Company's for some time, until the Street got wind of
the game. There was some kind of conspiracy with the Government people
which I could not make out, but I heard messages that opened my eyes as
to the ramifications of Wall Street. Gold fell to 132, and it took us
all night to get the indicator back to that quotation. All night long
the streets were full of people. Every broker's office was brilliantly
lighted all night, and all hands were at work. The clearing-house for
gold had been swamped, and all was mixed up. No one knew if he was
bankrupt or not."

Edison in those days rather liked the modest coffee-shops, and mentions
visiting one. "When on the New York No. 1 wire, that I worked in Boston,
there was an operator named Jerry Borst at the other end. He was a
first-class receiver and rapid sender. We made up a scheme to hold this
wire, so he changed one letter of the alphabet and I soon got used
to it; and finally we changed three letters. If any operator tried to
receive from Borst, he couldn't do it, so Borst and I always worked
together. Borst did less talking than any operator I ever knew. Never
having seen him, I went while in New York to call upon him. I did all
the talking. He would listen, stroke his beard, and say nothing. In the
evening I went over to an all-night lunch-house in Printing House Square
in a basement--Oliver's. Night editors, including Horace Greeley, and
Henry Raymond, of the New York Times, took their midnight lunch there.
When I went with Borst and another operator, they pointed out two or
three men who were then celebrated in the newspaper world. The night was
intensely hot and close. After getting our lunch and upon reaching the
sidewalk, Borst opened his mouth, and said: 'That's a great place; a
plate of cakes, a cup of coffee, and a Russian bath, for ten cents.'
This was about fifty per cent. of his conversation for two days."

The work of Edison on the gold-indicator had thrown him into close
relationship with Mr. Franklin L. Pope, the young telegraph engineer
then associated with Doctor Laws, and afterward a distinguished expert
and technical writer, who became President of the American Institute of
Electrical Engineers in 1886. Each recognized the special ability of
the other, and barely a week after the famous events of Black Friday the
announcement of their partnership appeared in the Telegrapher of
October 1, 1869. This was the first "professional card," if it may be so
described, ever issued in America by a firm of electrical engineers, and
is here reproduced. It is probable that the advertisement, one of the
largest in the Telegrapher, and appearing frequently, was not paid for
at full rates, as the publisher, Mr. J. N. Ashley, became a partner in
the firm, and not altogether a "sleeping one" when it came to a division
of profits, which at times were considerable. In order to be nearer his
new friend Edison boarded with Pope at Elizabeth, New Jersey, for some
time, living "the strenuous life" in the performance of his duties.
Associated with Pope and Ashley, he followed up his work on telegraph
printers with marked success. "While with them I devised a printer
to print gold quotations instead of indicating them. The lines were
started, and the whole was sold out to the Gold & Stock Telegraph
Company. My experimenting was all done in the small shop of a Doctor
Bradley, located near the station of the Pennsylvania Railroad in Jersey
City. Every night I left for Elizabeth on the 1 A.M. train, then walked
half a mile to Mr. Pope's house and up at 6 A.M. for breakfast to catch
the 7 A.M. train. This continued all winter, and many were the occasions
when I was nearly frozen in the Elizabeth walk." This Doctor Bradley
appears to have been the first in this country to make electrical
measurements of precision with the galvanometer, but was an old-school
experimenter who would work for years on an instrument without
commercial value. He was also extremely irascible, and when on one
occasion the connecting wire would not come out of one of the binding
posts of a new and costly galvanometer, he jerked the instrument to
the floor and then jumped on it. He must have been, however, a man of
originality, as evidenced by his attempt to age whiskey by electricity,
an attempt that has often since been made. "The hobby he had at the
time I was there," says Edison, "was the aging of raw whiskey by passing
strong electric currents through it. He had arranged twenty jars with
platinum electrodes held in place by hard rubber. When all was ready, he
filled the cells with whiskey, connected the battery, locked the door of
the small room in which they were placed, and gave positive orders that
no one should enter. He then disappeared for three days. On the second
day we noticed a terrible smell in the shop, as if from some dead
animal. The next day the doctor arrived and, noticing the smell, asked
what was dead. We all thought something had got into his whiskey-room
and died. He opened it and was nearly overcome. The hard rubber he used
was, of course, full of sulphur, and this being attacked by the nascent
hydrogen, had produced sulphuretted hydrogen gas in torrents, displacing
all of the air in the room. Sulphuretted hydrogen is, as is well known,
the gas given off by rotten eggs."