In an op-ed on today’s New York Times, Sandy Lewis and William Cohan give voice to an argument that has been roaming through in specialized financial websites and blogs. Organized financial exchanges such as the New York Stock Exchange, the authors argue, are a fundamental part of any economic recovery.

Why isn’t the Obama administration working night and day to give the public a vastly increased amount of detailed information about what happens in financial markets? Ever since traders started disappearing from the floor of the New York Stock Exchange in the last decade of the 20th century, there has been less and less transparency about the price and volume of trades. The New York Stock Exchange really exists in name only, as computers execute a very large percentage of all trades, far away from any exchange.

As a result, there is little flow of information, and small investors are paying the price. The beneficiaries, no surprise, are the remains of the old Wall Street broker-dealers — now bank-holding companies like Goldman Sachs and Morgan Stanley — that can see in advance what their clients are interested in buying, and might trade the same stocks for their own accounts. Incredibly, despite the events of last fall, nearly every one of Wall Street’s proprietary trading desks can still take huge risks and then, if they get into trouble, head to the Federal Reserve for short-term rescue financing.

As it turns out, the Securities and Exchange Commission has been thinking long and hard about these issues. The paradox, however, is that we got to this situation thanks to a regulatory reform, “Reg-NMS,” promoted from the SEC itself. By requiring NYSE specialists to respond within a second to the orders of brokers, live trading on the floor of the NYSE was fundamentally challenged. Ironically, the objective at the time was to promote transparency.

Reacting to Daniel’s post from earlier this week. Yeah, these are valid points, especially about the mechanisms/market devices but there is something to add here, which is absent from the discussion (at least the bits I read/heard) and that is how crucially important is the overall sentiment (both public at large, policy makers and academics) for the success of the stimulus plan. Let us see, hypothetically, how such a sentiment can evolve. I agree completely with Daniel about the dominance of the archetypical ‘rational’ economic agent who will not use a tax for spending but, instead, save the additional funds. What we should be aware of is that, over the last few decades, successive generations of policy makers and economists collaborated in constructing that agent. The rise of supply-side economics along with the rolling back of the welfare state, are just two of the long-term trends that, coupled with intellectual support from leading economics departments, eroded the belief in the validity and usefulness of a Keynesian worldview. This may sound depressing as it implies that today’s public and policy makers are not just facing a dire economic situation but also have to deal with a dominant type of economic agent who is, in essence, antithetical to expansion plans. That said, there is hope here, I believe, because the same way the current ‘rational economic agent’ was put together, a different one could also come in its place – an Obama-style Homus Economicus, perhaps? 

Transparency, transparency, transparency: Obama wants it in government (he says), mortgage back securities didn’t seems to have enough of it, and many are yet to be convinced that the various bailouts will deliver it. As one recent sociological text on the subject puts it (in what, in light of the current context, now reads as something of an understatement), transparency is: ‘a concept that has gained increasing currency and favour as an organising principle and administrative goal’ [1] (you can also download a version of Fabian Muniesa, Emiliano Grossman and Emilio Luque’s excellent paper on the topic from the same book here).

In relation to my own research into consumer credit, the attempts to perform transparency (as with many other financial products) have to somehow manage and contain the inherent uncertainty and opacity of the unknowable future. In other words, consumer credit has to contain mechanisms that in some way render the future a little less opaque, even if achieving complete transparency is, by definition, impossible.

In the UK, part of this task has been recently undertaken by an ongoing review of the regulatory framework in relation to which consumer credit sits, principally oriented around an updating of the Consumer Credit Act (first drafted in 1974). This review has a stated aim of achieving a ‘fair, clear and competitive’  consumer credit industry; in other words, transparency (clarity) sits in relation to two perhaps conflicting requirements: ethical (fairness) and market openness (competition). Part of my research examines how these categories are performed in and through the operations of consumer credit in the UK. Just to give an idea of how achieving these aims are attempted, requirements on regularity of credit statements have recently been strengthened and, within those statements themselves, there are precise requirements for the ways in which the balance, interest payments, and default charges are displayed (this includes a requirement to provide a clear ‘Summary Box’ detailing the particular product’s key features, both pre- and post-contract – a similar scheme operates in the US, I understand).

I’m not going to focus here in detail on the role such ‘market devices’ play in relation to contemporary consumer credit. Instead, I want to sit these attempts to devise a contemporary regulatory framework in something of a long historical context. For, it was in a period when I was actively considering some of the issues that I have sketched above, that I visited Salisbury Cathedral in the UK and encountered one of their venerable ancestors: the Magna Carta, the document that is widely held to provide many of the founding principles for British jurisprudence, written in 1215. This is what (in translated form), it states in the ninth of sixty-three points:

‘9. Neither we [the King] nor our officials [in some versions ‘bailiffs’] will seize any land or rent in payment of a debt, so long as the debtor has movable goods sufficient to discharge the debt. A debtor’s sureties [guarantees] shall not be distrained upon [seized] so long as the debtor himself can discharge the debt. If, for lack of means, the debtor is unable to discharge his debt, his sureties shall be answerable for it. If they so desire, they may have the debtor’s lands and rents until they have received satisfaction for the debt that they have paid for him unless the debtor can show that he has settled his obligations to them.’

It then continues, in points ten and eleven, to lay out further attempts at establishing what are clearly intended to be the ‘reasonable’ responsibilities that should be held by others (in particular heirs and wives) towards the repayment of any debts owed to moneylenders should a debtor die. The Magna Carta is then, not only the first (well, to my knowledge – perhaps a legal scholar will correct me if not) attempt at a credit act, but also the first attempt at achieving ‘fairness’ and ‘clarity’ in relation to borrowed sums and to bring some measure of ‘transparency’ towards a financial instrument that depends on an inevitably opaque future. Unsurprisingly, the desire to couple these two aims with achieving market ‘competitiveness’ is absent – although, that being said, the document as a whole was produced in a context where a group of barons were attempting to circumscribe King John’s (seemingly unfettered) power, deemed to be a threat to the pursuit of their livelihood. So perhaps a proto-market imperative is there after all.

Apart from wanting to simply draw attention to this, to my eyes anyway, compelling historical artefact, one perhaps quite simple point here (and this relates to previous posts here and here), is the historical persistence of controversy around forms of borrowing, as well as the need for material devices that attempt to contain these controversies. Forms of lending, in their need to stretch an economic transaction across time, and in their ability for debts be transferred from one party to another, tie together actors often wholly disconnected from the original moment of exchange: in this example, there are not only borrowers and lenders, but also potentially bailiffs, wives, heirs, barons, Kings, and their various assets. The Magna Carta is an attempt to ‘frame’ or stabilise the potentially unpredictable and variable interactions that could occur between these parties. Performing transparency in relation to financial instruments is thus not solely a contemporary phenomenon, but as old the legal system itself.

But more than that, it is often too easy to forget the material labour that goes into establishing these ‘transparency enacting’ framing devices: in that respect, the Magna Carta serves as a good reminder. Painstakingly etched, in tiny script, into durable vellum, the Magna Carta is a device that was written so as to both endure and to be (to again recall a Latourian concept) an ‘immutable mobile’, to travel both across time and space, without losing its agential potential, its ability to ‘act’ and be mobilised when, and where needed. Achieving transparency through the regulation of contemporary financial instruments may well be dependent on a far greater range of material processes, however this greater complexity should only increase our attention to the way they combine with people and other material processes across a varied range of highly situated social settings.

[1] Garsten, C., de Montoya, L. (Eds.) (2008), Transparency In A New Global Order: Unveiling Organizational Visions, Cheltenham, UK: Edward Elgar, p. 1.

Trading Post No 12

July 22, 2008


Photo-reportage by guest blogger Emmanuel Didier (assisted by Martha Poon).


Trading Post No 12 at the University of Chicago Graduate School fo Business


This is what you see when you enter the University of Chicago’s Graduate School of Business: Trading post No 12.  It is a horse shoe shaped desk from which was traded, in its day, a specific set of shares including Gould, General Motors and Central Telephone and Electronics.



 As this brass panel explains, as the NYSE became electronic, the old exchange posts were sent to different schools and museums throughout the US.




The desk is designed for share quotes to appear on an convex panel running around the top. 




Traders presumably stood on the outside of desk where they could see these prices.  The desk provides pull-down seats, perhaps for them to rest while waiting for orders.  Note the impressive number of built-in drawers and cubby holes.




The agents receiving the transactions presumably stood inside of the horse shoe…




 ….where they had their own little drawers and organizational devices.




According to Greg Redenius, the facilities person responsible for taking care of No 12 and the only person able to provide any meager information about it, “the center ‘island’ with the holes in it worked similarly to the vacuum transport system at a typical bank drive through”. 





Here I am pressing the buttons.


If you have “visual question” please ask – I’d be happy to go and take further photographs. Coming soon, a report on my recent trip to the Chicago Board of Trade…


Emmanuel Didier is a researcher at CSDIP in Paris and was a visiting scholar at the Morris Fishbein Center for the History of Science and Medicine, University of Chicago this spring.



His forthcoming book, En quoi consiste l’Amérique? Les sondages et le New Deal, (What is the Composition of America? Statistical Surveys and the New Deal) is forthcoming from La Découverte.





When we use cash do we ever really stop to think about how it is made? 


After reading The Story of the American Bank Note Company by William H. Griffiths (1958), I inspected my paper money.  I happen to have several types of five unit currency in my wallet – euros, CND and US dollars.  There are two common anti-counterfeiting devices that are common to all three bills which become visible when they are held up to the light.  Embedded in each is a thin band running vertically and off center with the currency amount written on it.  Secondly, they have shadow images that repeat the picture featured on the face of the bill: in the Canadian and US bills these are people (Sir Wilfred Laurier and Abraham Lincoln); in the case of the Euro it is a repetition of the architectural form.[1]


A fascinating aspect of money is its material history – the ways in which it was physically confectioned and by whom, to resist counterfeiting and ‘raising’ (adding value through alteration).  The American Bank Note Company was once responsible for printing the paper currency in the United States.  It started as an association of private engraving firms in 1858.  In 1879, it became a single consolidated company following an act of Congress in the wake of the Civil War stating that “not more than one printing on a National Currency Note could be executed by a private organization, and that the final printing must be done by the Treasure Department” (p 48).  The company went public in 1916.


Methods of security printing have developed incrementally out of a kind of a technique called ‘intaglio’ where lines impressed into a surface are filled with ink and run through a steel-plate printing press.  Uniformity has been key since the comparison of a bill against one known to be genuine is a simple way of revealing forgery.  As Griffiths points out however, “while the general tendency of industry is to eliminate the personal characteristics of individual craftsmen, bank note engraving carefully continues them, even stresses them, because, despite all technological advances, the counterfeiter’s most baffling problem in the unique personality of the artist which the engraving process transmits directly to the document.” (p 11)  Thus the artistry and innovation of master engravers has mattered enormously to defeating unauthorized duplication.  One such technique is the ‘geometric lathe’ a machine that engraves a unique repetitive pattern according to particular settings use to make the distinctive figured borders on U.S. notes.  These early techniques have been supplemented by more ‘scientific’ ones, such as printing serial numbers in private formulas of contrasting inks.


The same techniques used for printing paper money (also used for postage stamps) were an important part of issuing stock and bond certificates.  In 1874, following numerous cases of fraud, Edwards Barndon, then Chairman of the New York Stock Exchange’s Committee on Securities, announced that it would require “all future applications to place Securities on the List, that they shall be carefully engraved by some responsible Bank Note Engraving Company”.  He further recommended “that Certificates of Stock of One-hundred Shares should have the denomination conspicuously engraved thereon, and that Certificates of lesser denominations should be of a different style and color” (p 46),  It follows that ‘bond paper’, invented and named by Zenas Crane, refers to paper impregnated with parallel silk threads for printing bonds and currency.  And it was engraver Asher Durand who popularized the convention of placing “Greek gods and goddesses in vignettes on documents of value” (p 29).

The techniques of security printing have a specific history.  Although notes, stocks and bonds are different ‘dispositifs of value’, it is interesting to consider how they were once literally, visually and physically assembled by the same producers.  Moreover, many of these production techniques – in and of themselves a distinct means of ‘making value’ – seem to have circulated out of this precise commercial location of invention, into government agencies and throughout the rest of the world.  It is indeed noteworthy that The American Bank Note Company printed bills for Greece and Columbia as early as 1862; in 1912, the newly formed Chinese Republic put in an order for notes; during WWI it was hired by the U.S. treasury to reorganize the Bureau of Engraving and Printing as well as to assist in the issuance of savings bonds and stamps; and in 1952 it began printing United Nations postage stamps – just to name a few of the company’s important customers.


That we no longer inspect each bill as we receive it may be a sign of our trust in money; but it is a trust that has been empirically established out of the widespread success of its material production as a ‘thing of value’.




Griffiths, William H. The Story of the American Bank Note Company: American Bank Note Company, 1958.


[1] There are other security features that are not shared by all the bills.  When held up to the light, a five appears in the middle of the Canadian bill, while the incomplete 5 in the top left hand corner of the Euro bill completes itself.  Moreover, the Canadian and Euro money has a shiny holograph bearing silver band running down each side.