Ohio History Journal
| Winter-Spring
2004 pp. 4-17 |
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Copyright
© 2004 by the Ohio Historical Society. All rights reserved.
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Communication Technology
Transforms |
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By Bradford W. Scharlott |
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On
the night of August 20, 1847, the tireless telegraph promoter Henry
O'Reilly installed a Morse telegraph instrument in a small room above
the meeting hall of the Cincinnati Merchants' Exchange. In less than
two months, O'Reilly had extended the first telegraph line in the
West from Pittsburgh to Cincinnati. Now the moment had come to see
if the wire would carry the electrical impulses of Morse code back
to the Pittsburgh telegraph office. The Cincinnati Gazette the following day described what happened:
Cincinnati and Pittsburgh shook hands yesterday by means of Mr. O'Reilly's telegraph. . . . The whole affair worked beautifully, and the first word Cincinnati uttered in the ear of Pittsburgh took the Iron City quite by surprise. She recovered her equinimity [sic] in a short time and very politely sent us an interesting communication . . . . The steamer Cambria, it will be seen, reached Boston on the afternoon of the 19th. . . . Breadstuffs were then dull . . . .1 Both the setting and the first
message reflected the strong ties between the telegraph and commerce.
The telegraph line terminated in a room above the Merchants' Exchange'—the
central meeting place for the city's merchants—because the members
of the Exchange needed telegraphic reports as soon as they came off
the wire. Indeed, the Exchange and its companion organization, the
Cincinnati Chamber of Commerce, helped bring the telegraph to Cincinnati
and undoubtedly influenced where the telegraph office would be located.
And that prosaic first message—revealing that a trading vessel
had arrived in Boston and that European bread prices were inactive—was
precisely the sort of timely commercial information that Cincinnati
businesses needed to help them trade in distant markets.2 Merchants welcomed the telegraph in Cincinnati and elsewhere because slow communication posed a serious obstacle to trade. Western merchants with farm commodities to sell had to wait a week or more to learn about prices in the East, and East Coast merchants had to wait just as long to learn about supplies in the West. The resulting uncertainty and risk meant most interregional trade had to rely on an expensive system of middlemen who traveled with goods and sold them in face-to-face negotiations. Institutions such as the Merchants' Exchange, aided by the telegraph, helped eliminate or diminish risk by allowing merchants to learn quickly about distant markets. And in time these institutions helped eliminate the need for the costly system of the middlemen.3 Not coincidentally, numerous institutions like the Cincinnati Merchants' Exchange arose around the time that the telegraph spread across the country.4 They generally received telegraphic news as soon as it came off the wire and therefore enjoyed a monopoly on current economic information. Hence, merchants and others who needed such information had to go to the exchanges to get it. Later in the century, the telephone and the ticker would further revolutionize markets, but in ways different from the telegraph. In the case of the Cincinnati Merchants' Exchange, the diffusion of telephones and tickers near the end of the century would allow businessmen to stop congregating at the exchange, since they could quickly get recent market news and make transactions without being there. These later innovations helped destroy the informational monopoly enjoyed by the Merchants' Exchange and thus doomed it. This essay investigates
the role of communication technology in market development by examining
the history of the Cincinnati Merchants' Exchange. Relying largely on
the records of the Merchants' Exchange and its companion institutions,
this research shows how the telegraph, telephone and ticker transformed
the Exchange, and by extension, how they revolutionized markets across
the United States.
The
Merchants' Exchange Before The Telegraph
The first chapter
in the story of the Cincinnati Merchants' Exchange occurred before the
telegraph reached Cincinnati in 1847. The Exchange was founded in 1843
by the Young Men's Mercantile Library Association, itself formed by
forty-nine Cincinnati businessmen in 1835. The Association's purpose
was mainly to operate a library for its members' benefit. The Association
started with modest means and was initially housed in the upstairs chambers
of one of its members. By 1840, however, the organization had grown
to more than 500 members and was prosperous enough to move into the
Cincinnati College Building, near the center of downtown.5 In
1846, the Cincinnati Chamber of Commerce took charge of the Exchange.
In a sense, the
Mercantile Library was the first effort by the businessmen of Cincinnati
to provide a central facility to meet their informational needs. Besides
acquiring books, the Library obtained periodicals and provided a reading
room for members. The Library subscribed to ten magazines and twelve
newspapers, "sufficient to furnish at all times early commercial
and miscellaneous intelligence from the most important commercial points
of our country," the Library's board reported in October of 1840.6
The Library started the Merchants' Exchange on May 1, 1843. One reason was that a need arose for a place where Library members could speak without disturbing others. The preceding month the board of directors had noted that conversations in the reading room disrupted readers, prompting the board to rent an additional room at the College Building to house the Exchange.7 Yet, a reason other
than noise abatement may be inferred from merchants' actions. Two months
after the Exchange opened, ninety merchants had subscribed to it at
the rate of $5 per year. The board reported that only ten more subscribers
would be needed to meet the estimated expenses, which included a $400
annual salary for the Exchange's record-keeper.8
The board gave a second reason in 1846, when it wrote that
it had founded the Exchange at "the urgent solicitation" of
the leading merchants of Cincinnati.9 Why would merchants feel any urgency about starting such an
institution? Thriving merchants' exchanges had been operating in cities
like Philadelphia and New Orleans since the 1830s, and the merchants
of Cincinnati probably saw the creation of their own exchange as a step
toward achieving the prominence of those cities.10
The Library's board intended for the Exchange to serve two purposes. First, records would be kept there of the city's commercial activities, such as imports and exports by canal, river and railroad, and arrivals and departures of steamboats. Second, the Exchange was supposed to become the central meeting place for the city's merchants who, the organizers hoped, would congregate to read the commercial information and engage in transactions. To facilitate such activity, the organizers appointed an hour of "'Change" when transactions were to be made.11 Where did they get the idea of "trading on 'Change"? Probably from the established exchanges. Ever since the mid-thirties, for example, the merchants of Philadelphia had met at noon to transact business during the hour of 'Change.12 The Exchange got off to a slow start. In its report of January 1844, the Library's board noted that "the merchants have failed to attend very regular during the hour of 'Change but this omission is with themselves, and not with the arrangements of the room." Still, the board found reason for optimism, since "the statistics, mercantile news, and other items of interest to merchants and leaders generally have been the means of increasing the number of visitors to the Exchange and Reading Room, at all hours of the day." So, despite the mixed success of the Exchange after its first eight months, the board recommended continuing it.13Yet three months later the board seemed hopeful of severing its ties to the Exchange. "It is contemplated to continue the Merchants Exchange [as] a distinct organization. . . . an Exchange is more properly an appendage to a Chamber of Commerce than to a library association." Moreover, the Exchange still apparently lacked sufficient community support, for the board found it necessary to write that the merchants of Cincinnati "should not regard its present usefullness [sic] so much as the very great benefits which will result from it in the course of a few years. If they will secure the money necessary to carry it on. . . . the Board will give it all due attention. . . ."14 On January 19,
1845, the College Building burned down. Members of the Mercantile Library
managed to save most of the Association's books. The Library along with
the Exchange moved to temporary quarters at the First Presbyterian Church,
further from the center of town. The Library and the Exchange would
remain there for a year and a half while the College Building was being
rebuilt.15
In April, the Library's board was urging the city's merchants to fund a Merchants' Exchange building to rival those "in the Eastern and Southern cities." By the following January, however, the board had dropped the idea. The reason was that the members of the Mercantile Library during the preceding year had collected $10,000 from the city's business community to rebuild the College Building. In return, the Library was to receive an extraordinary 10,000-year free lease (still in effect today) on greatly expanded quarters in the new building. The board decided that the Association should make some of its space available for the Exchange rather than exhort the business community to fund another building. The board recommended that the Library's largest room be reserved for the Exchange. The room should be suitably furnished, it wrote, to make it attractive to merchants and others "for the transaction of many kinds of business. For the sale of real estate and stocks at auction, or private sale." To aid in this, the board again urged that a time for 'Change be set: "Subscribers can establish an hour for meeting there, which once adopted would be found greatly to facilitate business . . . ."16
This drawing, which hangs in the Cincinnati Mercantile Library, depicts the New College Building, where the Merchants' Exchange was located from 1845, when the building was erected, till 1869, when it burned down. (Image courtesy of the Cincinnati Mercantile Library.)
As the Library's
board suggested, the Chamber of Commerce was the most logical custodian
of the Merchants' Exchange: the Chamber's chief purpose was to promote
Cincinnati's business interests, and the Exchange was organized to serve
the city's commercial needs. The reason the Chamber had not founded
the Exchange in the first place was that the Chamber itself had only
been formed in 1839 (largely due to the efforts of the Mercantile Library),
and it probably did not have the wherewithal to run the Exchange in
the early forties.19
But in 1846 the Chamber was keenly interested in the future of the Exchange. One reason is that by 1846 it was clear that telegraph lines would soon connect the major commercial centers, and that institutions like the Exchange were logical terminus points for telegraph lines. In January of that year, for example, a line from Newark, New Jersey, reached Philadelphia, terminating at that city's Merchant Exchange.20 At the very time that the Chamber's officers were arranging to take over the Cincinnati Exchange, they also were working hard to bring the telegraph to Cincinnati.21 The Chamber, like
the Mercantile Library, had been housed in the College Building before
it burned down. And it, too, moved back into the rebuilt College Building
in mid-1846.22
The Chamber then arranged for the takeover of the Merchants' Exchange,
and on August 11, it ratified bylaws for the Exchange.23 The bylaws give insight into the functions the Chamber expected
the Exchange to fulfill. Section Two of the bylaws read: "The period
from twelve to half past one o'clock daily, shall be specially set apart
for a General Meeting of Members for the transaction of business."24 In other words, that hour and a half would serve as the
period of 'Change, which the Mercantile Library had tried unsuccessfully
to establish.
Section Four of the bylaws provided that Bulletin Boards
shall be erected in the Hall, whereon the latest news of general interest,
recent reports of important mercantile transactions
in this and other markets, copies of Steam Boats' Manifests, with transcripts of their
logs, and other commercial intelligence, shall be placed by the Superintendent, at the earliest possible moment . . .25
So far as records
reveal, the Exchange, under the Library's governance had never posted
reports of transactions in other markets; the Chamber's members seemed
here to be anticipating the arrival of the telegraph.
The city's newspapers welcomed the takeover of the Merchants' Exchange by the Chamber of Commerce. On August 29 the Gazette wrote that "the establishment of a Merchants' Exchange, on an enlarged and permanent basis . . . is an important step, and every merchant in the city should promptly come forward to sustain it. . . . A common center of trade, such as the Exchange will furnish, will greatly facilitate commercial operations, and economise [sic] to an extent that would hardly be supposed possible. . . ." The Commercial echoed those sentiments by reprinting the article two days later.26 Despite the initial enthusiasm, the first days of the Exchange under the Chamber of Commerce were disappointing. The Gazette reported that on the first day of 'Change, only lard, mustard, buckets, flour, whiskey, and salt changed hands.27 The second day was worse, and the Gazette noted, "There were numerous sellers, but not many buyers."28 The Daily Enquirer was so unimpressed that it ventured that the Exchange would provide comprehensive statistics, stating "We do not anticipate, for the present . . . that it shall be the central and exclusive mart, where merchants must do congregate. . . ."29 The slow start of the Exchange must have been on the minds of the members of the Chamber the following week when they unanimously adopted this resolution: Whereas the project of connecting Cincinnati with the Eastern Cities, by means of the magnetic Telegraph, has already been commenced in Philadelphia and Pittsburgh and in a short period will probably be presented for the consideration of our citizens; and whereas its termination in the College Building is essential to the prosperity and success of the Merchants' Exchange; therefore Resolved that the members of the Chamber of Commerce pledge themselves individually to use all proper influence to effect this object. . . .30 The termination
of the telegraph line in the College Building was deemed "essential"
to the success of the Exchange because the members viewed the telegraph
as the magnet that would draw merchants and others to the Exchange to
read the telegraphic reports. They wanted the first line to the city
to come to the building that housed their exchange so telegraphic messages
could reach them there as soon as possible. And, as noted, the first
telegraph line to Cincinnati indeed terminated in the College Building
on August 20, 1847.
After the telegraph arrived, the Chamber immediately faced the question of how to obtain telegraphed market reports. The Chamber soon entered into an agreement with the city's daily newspapers to share telegraphic reports. On September 14, Henry O'Reilly's telegraph company issued a statement signed by "Richard Smith, Agent for Cincinnati Newspapers and Merchants' Exchange." In that leaflet, Smith rebutted charges that telegraph employees held back from a Columbus paper news that appeared first in Cincinnati papers. The Cincinnati papers got the news first, Smith explained, because it was sent from "our exclusive correspondent," and he went on to note that he (Smith) had been employed by "the newspapers, and by the Merchants' Exchange of Cincinnati, to send and receive telegraphic despatches [sic]. . . ."31 Smith's statement did not say whether the newspapers and the Exchange shared the commercial news he received, but they undoubtedly did. The overwhelming majority of the earliest telegraphic reports that appeared in Cincinnati newspapers consisted of commercial news, especially market reports.32 Given that both parties were disseminating the same kinds of information, it only made sense for the newspapers and the Exchange to share expenses and reports.
Jones wrote that
"after a year or two," three or four independent telegraph
reporters organized into an association, which "employed others
in various important localities to forward and receive news for the
press. . . . Their services were either paid for at stated weekly salaries,
or in steamers' [news] and other news forwarded in exchange." Jones
noted that Richard Smith was affiliated with this association.35 Smith presumably exchanged news with his counterparts in New
York and elsewhere and sold it in Cincinnati to the newspapers and that
city's Merchants' Exchange. Jones wrote that the association of independent
telegraph reporters dissolved after about a year (around 1850), to be
replaced in effect by the formal organization of the New York Associated
Press.36 Smith would remain a wire reporter until at least 1853.37
Although the Merchants' Exchange established 'Change nearly a year before the arrival of the telegraph, the coming of telegraphic reports greatly enhanced its usefulness. Less than three weeks after the arrival of the telegraph, the Gazette observed: A year ago, when
'Change was established in this city, the experiment was considered
one of doubtful issue. Now, the institution could not be gotten along
without. Our merchants would not know where else to go for "the
news," and would feel quite awkward were they to undertake to operate
elsewhere than on 'Change.38
The degree to which
the telegraphic reports became central to 'Change was highlighted the
following year. At their October 16 meeting, the membership voted to
institute an evening hour of 'Change from 7 to 8 o'clock, in addition
to the period from noon to 1:30. After that motion carried, the officers
of the Exchange were instructed to "make an arrangement for evening
Telegraph Dispatches. . . ."39 By 1848, it seems, the telegraph and transacting on 'Change
had become inseparable.
The Chamber reached a milestone on March 23, 1850, when the state legislature granted it a charter as the Cincinnati Chamber of Commerce and Merchants' Exchange, the full name now used by the organization.40 It reached another milestone on September 1, 1851, because that date marked the end of the five-year lease the Mercantile Library had granted the Chamber on its largest room for use as the Exchange Hall. The Library now wanted the room. Therefore, the Chamber arranged to rent another large room on the second floor of the College Building to serve as the home of the Merchants' Exchange. Now, however, the Chamber would have to pay $700 annual rent instead of the nominal $1 a year that the Library had charged.41 The annual statement
for the Chamber of Commerce that Richard Smith issued at the time of
the move reflects the extent of the development of the Exchange in those
first five years. Smith noted that the $5 annual subscription fee for
an individual membership would have to be increased to $10 to meet the
higher rent, and then he emphasized the value of belonging to Cincinnati's
Merchant's Exchange: "It is not likely that many of our members
would object to an increase in the price of subscription. In New York
the subscription to the Exchange alone, is $10 for each individual,
and the subscription to the Exchange Reading Room is also $10."
Moreover, the statistical information collected at the New York exchange
"is nothing compared with the information recorded and exhibited
on the books of our Exchange." Thus, Smith reasoned, "more
is furnished here for $5, than the New York Exchange supplies for $20."
Likewise, he continued, members of the St. Louis Merchant's Exchange
pay more ($15 annually) for an inferior exchange. Comparisons with still
other cities "would show most conclusively that the Exchange connected
with the Chamber of Commerce in this city, is more useful to members,
than any similar institution in the United States."42
Smith, of course, had reason to exaggerate, but Cincinnati's Exchange must have developed considerably in the previous half-decade for him to make such claims. He noted in his report that sixty firms and 219 individuals belonged to the Exchange. That year, the organization had total revenues of $3,288.75, including $693.24 from newspapers for market reports. Among the expenditures for the year was $260 for "Telegraph Markets," presumably the amount paid to a local telegraph company for transmitting and receiving market reports.43 As the Exchange matured, its membership had to adopt rules to ensure that everyone be given simultaneous access to information. In November 1851, the members of the Chamber passed a resolution that the superintendent "withhold all information of general interest . . . until he is ready to post it upon the Bulletin Board or announce it from the stand." The minutes of the meeting noted that the resolution was "to relieve the superintendent from embarrassment when questioned as to the contents of [telegraph] reports while transcribing them." Some of the members apparently had attempted to gain an advantage in trading by trying to pry information from Smith before all the members had access to it.44 By December 1855, telegraph companies were competing for the business of the Merchants' Exchange. In that month, Western Union and the National Lines System (of which O'Reilly's pioneer company was a part) submitted proposals to the Chamber for the organization's telegraphic business. The following month, the contract was awarded to Western Union.45 The contract allowed the company to place a telegraph in the Exchange itself, which had obvious benefits: news could reach the members of the Exchange faster, and orders to buy and sell in other markets could be placed from the Exchange.46 Richard Smith's
annual report for the Chamber of Commerce in September 1856 makes clear
why the telegraph companies were so anxious for the contract. In the
preceding year, the Exchange spent $937.95 for telegraphic reports,
nearly a fourfold increase over the amount spent five years before.
The increased expenditures on the telegraph were accompanied by increased
use of the Exchange by merchants, as shown by a highly detailed article
about of activity on 'Change, published in 1856 by the Cincinnati
Price Current. The article provides a rare glimpse of the Exchange's daily
bustle in the 1850s:
. . . on 'Change
each day . . . may be seen scores of hog-drovers from Ohio, Kentucky,
Tennessee, Indiana, and Illinois, anxious to ascertain the state of
the hog market, and witnessing the rise or fall of pork, with the most
absorbing interest. Here are the flour dealers, and grain dealers, and
all kinds of commission forwarding, and importing merchants, bankers,
steamboat and railway agents—millers, distillers, and manufacturers,
both from our own city and the surrounding towns. Here also may be seen
leading provision dealers from New Orleans, Baltimore, Philadelphia,
New York, and Boston; and from the British provinces and not only do
we find representatives from American cities, but here may be found
provision men and speculators from Liverpool, London, Paris, Glasgow,
Hamburg and Bremen. . . . The amount of merchandise which changes hands
here, each day, is enormous . . . .47
As noted, most
interregional trade in farm commodities before the telegraph relied
on a system of commission merchants who would take the commodities to
their final market, usually to an Eastern city or to Europe, before
making a sale. Only after the telegraph reduced the risk in such trade
did Western cities become the points at which final sales were typically
made.48 The above passage makes clear that Cincinnati, less than
a decade after the coming of the telegraph, was a major point for such
transactions. The article concluded:
The commercial
news by each steamer from Europe is made public on the bulletin boards
as soon as the steamers arrive at Halifax or New York, if in the day
time. Special reporters are employed in New York and other places to
furnish all interesting commercial news by telegraph. A full and accurate
telegraph report of the New York market for all leading articles, is
read during 'Change each day.
Since a permanent
transatlantic cable would not be laid until 1866, the fastest way to
get news about European markets was from the steamers that arrived at
Halifax or New York.49 The
daily reports from New York were read aloud during 'Change to get the
information to everyone assembled there as soon as possible.
By the mid-1850s,
the Merchants' Exchange, aided by the telegraph, had become a mature
market institution essential to the commercial life of the city.
The
Impact of the Telephone and Ticker on the Exchange
The Cincinnati
Merchants' Exchange would remain a robust institution during the Civil
War and after, and the telegraph would continue to play a vital role
in it, at least through the 1880s. The increasing importance of the
telegraph to the Merchants' Exchange is seen in the money the institution
paid for telegraph reports in various years: 1852, $260.00; 1856, $937.95;
1866, $5,441.93; 1875, $6,492.00; 1886, $8,212.88.50 By the early twentieth century, however, the institution was
clearly in decline, as other innovations in communication technology
helped eliminate the advantages to Cincinnati merchants of meeting face
to face on 'Change each day.
On October 20, 1869, the College Building burned down again, and the Chamber of Commerce and Merchants' Exchange moved less than a block away to Smith and Nixon's Hall on Fourth Street, where the organization would remain for twelve years.51 In its 1874-75 fiscal year, while at that location, the Chamber first installed in the Exchange a telegraphic device of the American District Telegraph Company, with which local messages could be sent to a downtown office; from there, messenger boys would quickly deliver them.52 This device probably lessened the need for some people to be present for 'Change, since others at the Exchange could send them telegrams when necessary. Also that year the Chamber placed in the Exchange a device of a business called the Fire Alarm Telegraph Company, "so that members can be immediately advised of the locality of any fire alarm during Exchange hours." And the Exchange installed more bulletin boards and halted the practice of reading telegraphic market reports during 'Change, probably because the volume of information made it impractical to read it all.53 Around the same
time, yet another telegraph company was growing in Cincinnati: the City
& Suburban Telegraph Association, which incorporated in 1874. This
company strung telegraph lines within the city, leasing them mainly
to merchants for intraurban communication between offices and plants
or residences. By the middle of 1877, the company had strung about fifty
such wires in the city.54
The City & Suburban's lines served as the basis for the introduction of the next truly revolutionary communications device in the city: the telephone. In 1877, the first telephone conversation held in Cincinnati was transmitted over one of the company's lines, and the following year, the City & Suburban entered into a contract with American Bell to supply telephone service to the city and surrounding area. By March 1879, there were over 300 subscribers to the telephone service in the area, and by 1884, over 2,500.55 In 1881, the Chamber of Commerce moved again, this time to Pike's Opera House, also on Fourth Street.56 It was in this building, where the organization would remain for eight years, that the Exchange apparently first made use of telephones, no later than 1882. The annual report for 1882-83 noted: "Increased telephonic facilities being found desirable, the service was extended on January 1 to five telephones, in the Merchants' Exchange, at an annual expense of $600, including three attendants. . . ."57 Obviously, the use of telephones in the Exchange helped free some merchants from the necessity of attending 'Change each day, as they could call the Exchange for the latest commercial information they needed, or could call other merchants located anywhere there was a phone rather than meet them at the Exchange. Still another innovation in communication technology appeared in the postbellum period that would affect exchanges everywhere: the ticker. In 1863, Edward A. Calahan obtained a patent for the device, which could rapidly register telegraphed price quotations on a strip of paper. The Gold and Stock Telegraph Company was incorporated in 1867 to use the apparatus. The company rented its tickers to subscribers and would transmit over all devices simultaneously the latest quotations from specific markets, the first being gold and stocks, accounting for its name. Until 1871, the company operated only in the New York City area, placing over 700 devices in the offices of brokers and others, thus allowing them to obtain the latest quotations from the gold and stock exchanges without being present at them.58 In 1871, Western Union acquired the Gold and Stock Telegraph Company and allowed it to take over its Commercial News Department, which for some time had supplied statistics for various commodities to subscribers. In its enlarged capacity under Western Union, the company began providing price quotations and additional statistics for other markets, eventually including produce, cotton, and various securities.59 The Cincinnati
Merchants' Exchange made use of the Gold and Stock Telegraph Company
no later than 1878, and probably before that; in his annual report for
1877-78, the chamber's secretary noted that the "constantly increasing
tariff charged by the Gold and Stock Telegraph Company" made it
necessary for the board to reduce the number of reports received. He
reported that a contract had been made with the company for its services
for $500 per month.60 In
1882, the Exchange placed three Gold and Stock tickers in the exchange,
one at each of the bulletin boards. The secretary noted that tickers
"greatly reduced the interval between the transmission and receipt
of our reports at the Exchange, and very materially increased the value
of this branch of the service."61
While the tickers may have added value to the information received
at the Exchange, the proliferation of them would ultimately diminish
the exclusive nature of the information, which members formerly could
find only at the Exchange. By 1904, at the latest, Cincinnati investment
brokers had begun using tickers in their own offices, thus offering
distant market information as soon as the Exchange could offer it.62
Even as technological forces were beginning to undermine the need for a Merchants' Exchange in Cincinnati, the Chamber began planning, around 1878, the construction of its own building with a grand Exchange Hall. More than a decade later, in 1889, the organization moved into its splendid new Cincinnati Chamber of Commerce and Merchants' Exchange Building, at the corner of Fourth and Vine streets.63 In 1911, this edifice, too, burned to the ground. In its place was built the thirty-four story Union Central Building, then the tallest structure west of New York. The Chamber of Commerce occupied the second and third floors of the building and again set up a room for the Exchange. A Chamber of Commerce publication tellingly described it in 1916: The exchange hall
is the meeting place for business men. . . . At present the principal
commodities handled are grain and hay. Formerly many other articles
were dealt in, but with the advent of the telephone and other modern
instruments of business, the barter on the exchange has been limited
practically to grain and hay. . . . The exchange is not a stock exchange.
. . .64
The once bustling
Exchange where numerous commodities changed hands had been reduced to
a place for the sale of a few items. Significantly, no mention is made
of 'Change, once the most prominent feature of the Exchange. No longer
did business people, drawn by the magnetism of telegraphic reports read
aloud each day, need to congregate at an appointed hour to get the latest
commercial news or to engage in transactions. Widespread telephones
and tickers now allowed them to obtain information and make deals practically
whenever and wherever they wanted. By 1916, the Exchange was well on
its way to becoming a relic.
The Exchange lingered on, at least till the Chamber of Commerce celebrated its centennial in 1939.65 But by the time the organization moved from the Union Central Building in 1965, the Exchange was dead and no provisions were made for a new exchange hall.66 At just about the same time, the organization changed its name to the Greater Cincinnati Chamber of Commerce, dropping the now superfluous "and Merchants' Exchange."67 Conclusions
The telegraph,
and later the telephone and ticker, profoundly affected the Merchants'
Exchange, but in different ways. The telegraph enabled the Exchange
to become a central meeting-place for the transaction of business, as
its founders hoped it would be. As noted, the Cincinnati Exchange apparently
was started in imitation of established merchants' exchanges elsewhere,
such as Philadelphia and New Orleans. But before the coming of the telegraph,
the Exchange failed to become a thriving center of trade. The telegraph
helped change that. Merchants gathered there for decades to hear or
read the latest telegraphic reports and then engage in business with
one another or to use the telegraph to buy and sell. In time, transacting
interregional business over the telegraph came to replace the use of
middlemen merchants who accompanied goods to distant markets and then
engaged in face-to-face negotiations. Thus, the telegraph allowed communications
to replace travel in transacting business over long distances.68
But if the telegraph helped eliminate the need for interurban travel in commerce, for a time at least it increased the need for intraurban travel. From the late 1840s through at least the 1870s, many Cincinnati merchants who needed the latest commercial information had to travel to the Exchange to get it. The telephone and the ticker then produced a second revolution in business practices. After the diffusion of these communication technologies, the Merchants' Exchange lost its monopoly on the most current commercial information. The second revolution decentralized intraurban business communications and transactions, and in the process undermined the Exchange. The Cincinnati Merchants' Exchange was perhaps doomed from the start because it served the needs of a wide variety of merchants, from hog-drovers to distillers. As markets matured nationwide in the postbellum years, particular institutions devoted to specific items or groups of items grew in importance. The Chicago Board of Trade became the leading grain exchange in the world. The New Orleans Cotton Exchange became the predominant commercial institution for that commodity.69 As such exchanges gained sway over national markets, the need for multi-commodity merchants' exchanges diminished. Brokers with tickers and telephones enabled merchants to buy and sell in specific markets without being present at the Exchanges devoted to them. Once it became possible to buy or sell almost instantly at any time, the level of risk involved in current transactions must have fallen to almost nothing. At that point, the risk in the commodities markets—and thus the opportunities for speculation and profit—lay in the future. After the Civil War, futures trading became a common feature of the leading exchanges.70 The Cincinnati Merchants' Exchange was not destined to become a leading specialized exchange with futures trading like the Chicago Board of Trade. the Exchange was a transitional market institution that for a time helped meet the commercial-information needs of the city. And its life, as well as its death, was largely dictated by communication technology.
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