Nerds on
An Illustrated History
of Wired Markets
By David Leinweber
Not long ago, trading on a stock market
meant you would be in a crowd of people
energetically shouting, running around and
making a mess with great quantities of paper.
No more. Visiting a financial market now is
more like visiting the “cloud,” a big data
center. Computers and network gear hum in
racks. Fans blow. Rows of tiny lights flicker.
Occasionally someone shows up, but don’t
count on much water cooler conversation.
Technology did not suddenly transform
our markets. It has been a gradual process,
and understanding how we got here, and
the simpler machines we used along the
way, provides insight into today’s complex markets. It turns out that going back
to the basics, from the buttonwood tree
and hand signals, is a good way to explain
technology that can seem hopelessly complex and buried in jargon.
Looking into the workings of modern
securities markets is like looking under
the hood of a Prius hybrid car. There are so
many complex and obscure parts it’s hard
to discern what’s going on. If one looks
under the hood of an auto from a simpler
era, for example a ’64 Mustang, it is possible to see the parts and what they do,
and have a better chance at understanding
their complex modern replacements.
History repeats and informs in market
technologies. From the days when frontrunning involved actual running to the
“Victorian Internet era” brought on by
telegraphy, we can learn a great deal from
looking back at a simpler era.
We think that the overwhelming influence of computers remaking the landscape around Wall Street today is something new, but a pair of before-and-after
photographs show an even more dramatic
technological invasion. Before telegraphy,
in the 1850s, the sky over Wall Street was
open and clear. 1
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50 Financial History | Spring/Summer 2011 | www.MoAF.org