The Long Pursuit of Speed in Finance
How traders from the 18th century to today raced to get the edge
In 1790, barely a year after the United States Constitution took effect, Representative James Jackson of Georgia rose in Congress to denounce a new breed of speculators. These men, he claimed, had chartered swift vessels to outrun official couriers, buying up government debt at a fraction of its value in anticipation of Alexander Hamilton’s plan to assume Revolutionary War obligations. Jackson thundered that ordinary citizens were being “plundered by harpies.”
That colorful phrase, which gives Bob Pisani’s article its title (Financial History, Museum of American Finance, Fall 2014), captures a recurring anxiety in American finance: that some traders enjoy an unfair advantage by receiving information faster than others. Pisani traces how this suspicion has shadowed the markets from the nation’s founding through the telegraph, the ticker, and into today’s world of algorithmic trading.
From the start, speed was everything. In the early 1800s, speculators galloped ahead of the mail coach from New York to Philadelphia, exploiting price discrepancies between the two exchanges. Soon private horse relays and stagecoaches outpaced official post. By the 1830s, entrepreneurs were rigging “optical telegraphs” — wooden signal towers viewed through telescopes — to transmit stock quotes between cities in under half an hour.
The arrival of the electric telegraph in the 1840s and the transatlantic cable two decades later revolutionized trading even further. Brokers could suddenly communicate across oceans in minutes rather than weeks, erasing once-profitable arbitrage gaps. Each leap forward sparked familiar complaints: faster traders were said to hold “secret intelligence,” while slower rivals accused them of manipulation.
Pisani notes that newspapers fought to democratize this flow of information, deploying boats, ponies, pigeons, and eventually telegraph lines of their own to deliver market news to a wider audience. The invention of the stock ticker in 1867 again changed the rules, giving continuous price updates but also fueling bucket shops, betting parlors that spread speculation to the working classes.
By the late 19th century, Wall Street firms were running private telegraph networks to Boston, Philadelphia, and Chicago. Western Union admitted that most of its revenues came not from ordinary correspondence but from speculators and gamblers hungry for an informational edge. The cycle repeated with the telephone, pneumatic tubes, computers, and electronic trading systems.
The lesson, Pisani suggests, is that every communications breakthrough initially benefits the first movers. Yet as technologies spread, their advantages shrink, and transparency gradually expands. What once looked like unfair manipulation eventually becomes the market norm.
Two centuries after Jackson railed against “rapacious wolves,” the debate still rages, now over high-frequency traders and mathematical algorithms. Pisani’s history reminds us that the tension between speed and fairness is not a modern invention but a defining feature of financial markets themselves.
Source: Bob Pisani, “Plundered by Harpies,” Financial History, Museum of American Finance, Fall 2014.