Networked Markets and Mainframe Politics in Wall Street’s First Digital Age, 1968–75

In the wake of twin crises in the US securities industry in 1968 and 1969, the US Congress and the Securities and Exchange Commission (SEC) began to discuss a radical proposal: unify the the stock market in the US into a single, harmonized, and national “market system.” Markets for stocks had been historically fragmented; traded in private institutions which exerted quasi-governmental powers and responsibilities over their own self-regulation. By the early 1970s, concerns were raised that this fragmented market for securities trading had negative consequences for both the new domestic public investors on Wall Street—pensioners and owners of mutual fund shares—and foreign investors who were flocking to the US stock market. As a result, regulators, economists, and technical consultants began to consider what it would take to unify the nation into a single “central” or “national” “market system,” in which the price for the same stock would be the same on a national basis, and capital could move frictionlessly through the market without the physical movement of stock certificates.

Computers and electronic telecommunications played a central role in this discussion. The contests over this system reflected both differing technological approaches and opposing governing visions about the proper role of the US Government in the maintenance of the market. Should stock exchanges be subject to a laissez-faire model, competing in a “market for markets” materialized in an inter-market computer network? Or should the State’s role be to establish and oversee the stability of a single market, virtualized in a computer, whose parameters and rules it would have a hand in defining? This paper, drawing on research on the archives of the New York Stock Exchange and the Securities and Exchange Commission, follows this debate and its implications for regulation, economic governance, and financial technology in the decades to come.