Out of the Pits: Traders and Technology from Chicago to London

Caitlin Z a l o o m is a cultural anthropologist and assistant professor in the Department o f Social and Cultural Analysis at New York University. T h e University o f C h i c a g o Press, C h i c a g o 6 0 6 3 7 T h e 1 Iniversitv o f C h i c a g o Press, Ltd.. London 2t)l)6 In 'I"he I'urversit) o f C h i c a g o All rights reserved. Published 2 0 0 6 Printed in the United States o f America 1=5 1 4 1 ? 12 11 10 0 9 Oh 0 7 0 6

1 2 34=5

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I S B N - I 0 : 0 - 2 2 6 - 9 7 8 1 3 - 3 (cloth) 1SBN-13:978-0-226-97813-0 r inures 1.1. 1.3. and J .4 are reprinted from the C h i c a g o Boaid of'1 rade Records i C B O I ' n c g . 1 1 1 , 7=5-68 1-lj, 75-68 [ I - ) ] , Special Collections Department, U r u m sity Library. University of Illinois at Chicago. Photos ot the C h i c a g o Board of Trade taken by perniis.sion of the Board of'track- of the Citv o f C h i c a g o . I n c . T h i s publica­ tion has n o t b e e n reviewed b\ the Board of Trade, and the Board of frade n u k e s no representation regarding tlie accuracy o f this publication.

Preface

1

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Portions o f chapter 4 were previously published in " T h e Pioducti\e Lite o f Risk,'' Cultural Anthropology 19, n o . 3 (2004): 3 6 5 - 9 1 . C o p \ right V 2 0 0 4 b\ the Ameiiean Anthropological Association. Portions o f chapter 6 were pievioush published m "The Discipline o f Speculators" in Aihwa Ong and Stephen Collier, eds.. Global Assemblages: Technology. Politics, and Ethics as Anthropological Problems (Oxford. Blackwell, 200=5 /, 2=53-69. Portions o f chapter 7 were pun ioush published in "Am­ biguous N u m b e r s : Trading T e c h n o l o g i e s and Interpretation in Global Financial Markets," American Ethnologist 3 0 , n o . 2 ( 2 0 0 3 ) : 2=58-72. Copyright 2 0 0 3 b\ the American Anthropology Association.

Acknowledgments Introduction: F i n a n c e from the Floor Chapter 1

Materials o f the Market

Chapter 2

Trapped in the Pits

Chapter 3

Social Experiments in London Markets

Chapter 4

T h e Work of Risk

Chapter 5

Economic Men

Chapter 6

T h e Discipline o f the Speculator

Chapter 7

Ambiguous Numbers Conclusion: Practical Experiments

Library or Congress Cataloging-in-Publicatioii Data Zaloom, C a i t l i n . O u t o f the pits ; traders and technology from C h i c a g o to L o n d o n / Caitlin

Notes

Zaloom. p.

Bibliography

cm.

Includes bibliographical references and index.

Index

I S B N 0 - 2 2 6 - 9 7 8 1 3 - 3 (cloth : alk. paper) 1. Stockbrokers. 2. Stock exchanges, 3. E l e c t r o n i c trading o f securities. 4 . F i n a n c e — S o c i a l aspects. 5. Business anthropology. 1. Title. HG4621.Z35 2006 3?2.6'2-dc22

2006002490

@ T h e paper used in this publication meets the minimum requirements o f the A m e r i c a n National Standard for Information Sciences ~ Permanence o f Paper for Printed Library Materials, ANSI Z 3 9 . 4 8 - 1 9 9 2 .

T h e brassy shouts, ringing bells, and thrashing arms o f the floor traders are the most recognizable sounds and sights of Wall Street. O n the trading floor of the New York Stock Exchange ( N Y S E ) , the fevered pitch o f buying and selling stock certificates sets t h e tone for global finance at its most c l a m ­ orous. T h e business media offer a daily dose o f trading images—heads in hands amid the debris o f discarded tickets when the market is down, arms raised in frenzied activity when the market is rising—as they diagnose everchanging e c o n o m i c conditions. Despite its centrality to the image of American e c o n o m i c d o m i n a n c e , this iconic place is under threat. In April 2 0 0 5 , the N Y S E a n n o u n c e d that it would merge with Archipelago, an all-electronic stock exchange based in C h i c a g o . Archipelago's trading system would replace the tumult o f the trad­ ing floor with the h u m o f online circuits, ushering the recalcitrant N Y S E into the electronic era. Speculators enthusiastic about the union between the two exchanges propelled the price of a membership on the N Y S E to $ 2 . 6 million. Yet players on both sides o f the merger debate noted that the transition to electronic trading would c o m e at a high cost, o n e that could not be measured in dollar terms. Digital dealing on the Big Board would effectively end floor trading at the exchange, transforming the way traders had conducted business for more than two hundred years. M a n y N Y S E floor dealers lamented this change, resisting the new technologies. M a n y others considered electronic trading inevitable and worked to define the terms on which the N Y S E would go digital, seeking to secure the future o f their institution and, at the same time, a handsome profit for themselves. O n both sides o f the divide, generations o f traders have made the N Y S E a crucible of capitalism that electronic trading is poised to smash. For them, the exchange is a place where financial firms built on family connections, personal trading skills, and local control of a key global market c o m e together in one famous build-

will

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Preface

Preface

*

ix

ing. As broken, traffic in .blocks, slh ers of ownership in the world's most pres­

p u b l i c , so that floor traders at the N Y S E could buy and sell stock in the

tigious c o m p a n i e s , the}' enibodx American e c o n o m i c mastery. Foreign offi­

cutting-edge C h i c a g o market.

cials and A m e r i c a n celebrities acknowledge this as they accept prized invi­

At the C B O T , however, digital dealing was far more controversial, and

tations to r i n g the opening bell. T h e platform set above the floor provides a

the struggle over the future o f the exchange lasted a decade. T h e struggles

perfect vantage point tor viewing the imposing sight o f thousands o f indi­

at the C B O T over how to respond to the new possibilities o f electronic trad­

viduals united in the struggle for profit.

ing allow us to see what is at stake not only for the C h i c a g o floor traders, but

E l e c t r o n i c trading is designed to splinter this flesh and bone market into

also for markets more generally. Like their counterparts at the N Y S E , C B O T

separate parts. Traders in the new digital dealing rooms sit within the walls

m e m b e r s had money on the line. E l e c t r o n i c trading devalued access to the

of private trading spaces —whether banks, small firms, or their own homes.

trading floor and dragged down the value of their seats. Like the N Y S E floor

The)

traders, the C h i c a g o dealers had built a living around the skills o f buy­

surround themselves with the tools o f online exchange: computer

monitors displaying stock and commodity prices, news wires, and predictive

ing and selling hand-to-hand. Most ol C h i c a g o ' s floor traders lacked the

charts. T h e s e instruments objectify information, facilitate calculations, and

Ivy L e a g u e pedigrees and M B A s that had b e c o m e prerequisites for jobs in

enable a u t o n o m o u s actors to buy and sell instantly with the touch o f a fin­

finance,

ger. T h e y offer access to the full e n s e m b l e o f the market directly through

place that no longer valued their abilities to make deals face-to-face.

the screen. Digital dealers are exquisitely c o n n e c t e d , yet they act alone. T h e editorial page o f the Wall

Street

journal

and few could be confident that they would survive in a market­

As the world's exchanges went electronic, many o f the C B O T ' s estab­

(April 2 2 , 2 0 0 5 ) noted the

lished leaders fought to preserve the pits, the open outcry trading, tire m e m ­

demise o f t h e trading floor as it lauded the deal: " W h i l e humans may con­

bership structure, and the distinctive cultural environment o f trading that

tinue to play a role in large or complex orders for stocks that don't trade of­

had evolved in the city. T h e i r opponents ridiculed them for old-fashioned

ten, the majority o f trading will probably go electronic." T h e fate o f trading

sentimentalism, insisting that the transition was inevitable and warning that

floors in C h i c a g o , L o n d o n , Paris, M o n t r e a l , Tokyo, Sydney, and Singapore

the delay would not only cost m e m b e r s dearly, but also render the entire

has c o n f i r m e d this prediction. S c e n e s of traders sitting quietly behind c o m ­

C B O T expendable and obsolete.

puter s c r e e n s quickly replaced the action o f hangar-sized trading floors

T h e C h i c a g o traders b e c a m e more anxious when they looked across the

where m e n — and it was mostly men— competed for profitable deals, bring­

Atlantic. In London, electronic exchanges had already driven futures traders

ing the market to life with their bodies and voices. During the 1990s and

off the floor, marking the demise of open outcry'. T h e exchanges in C h i c a g o

early 2 0 0 0 s , financial exchanges across the globe underwent contentious

and London had close ties, since the C h i c a g o exchanges were the model

transitions similar to the o n e taking place in New York, putting an end to

for the London International Financial Futures E x c h a n g e ( L 1 F F E ) , the

forms o f trading and institutional arrangements that were often, as with the

British financial futures exchange. In London, some of the traders pushed

N Y S E , m o r e than one hundred years old.

off the floor had sought work as taxi drivers, others painted houses. T h e lucky ones got jobs in banks trading online. For some enterprising C h i c a g o traders, however, the o m e n was an opportunity. T h e y crossed the Atlantic

Nowhere were these battles fiercer than in C h i c a g o , where the futures ex­

with aspirations to remake the new market, opening boutique firms that

c h a n g e s , t h e C h i c a g o Board o f Trade ( C B O T ) and C h i c a g o M e r c a n t i l e

would export C h i c a g o trading styles—built on aggressive action, bravado,

Exchange (the M e r c ) , had helped the city b e c o m e a hub of global capitalism.

and bold risk-taking behavior—and distinctively American beliefs about

During the 1990s, these long-standing m e m b e r s h i p organizations wrestled

economy and culture to London's exchange.

with electronic trading and its proponents' promises that new technologywould h e l p t h e m a c h i e v e t h e dream o f truly global markets. T h e M e r c adopted electronic trading quickly after its leaders convinced m e m b e r s that

W h a t was so compelling about electronic markets? Proponents o f the new,

the new technologies would give them a competitive advantage over other

digital dealing systems argued that trading through an electronic network

e x c h a n g e s . T h e directors also dissolved its m e m b e r s h i p system in order

would be fast, efficient, and transparent, displacing the antiquated system

to b e c o m e m o r e flexible, reasoning that a conventional corporate structure

of person-to-person exchange. Separating individuals by fiber-optic cable

would allow the organization to maneuver at digital speed. It even went

and isolating them behind private terminals would allow a purer market to

x

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Pre face

e m e r g e , with anonymous, autonomous individuals replacing the trading "neighborhoods'* and tight in-groups that evolved on the trading floor, 'f lie new electronic .sv^tein-) would olfer pure individual competition; only the fittest would tlourish, and those unfit lor m a r k e t c o m p e t i t i o n would wither away. At their inception in the mid-1800s the trading pits themselves seemed a novel and efficient technology for cleaving insular trading cliques and mak­ ing the trading floor into a place where m e n could c o n d u c t business entirely on; their own. Electronic technologies have made them seem insufficient. T h e advent o f online markets created a new opening to use technological a n d h u m a n elements of the market —computer screens, techniques o f trad­ ing, and the composition o f trading rooms —to push even closer to eco­ n o m i c ideals o f autonomy for individuals and competition a m o n g them.

Tracing the transformations o f financial trading required many kinds o f

Yet there is no technologically determined script for changing the con­

travel. But wherever I went I benefited from the guidance and support o f a

stitution o f the marketplace. Shifting e c o n o m i c activity from the trading

broad constellation o f financial professionals, academic colleagues, friends,

floor to the dealing screen requires many projects that I call "practical ex­

and family. M y first debt is to the traders, managers, designers, a n d ex­

p e r i m e n t s " in market building. T h e s e experiments —in architecture and

change officials in C h i c a g o and L o n d o n who gave their time to this project.

t e c h n o l o g i c a l design, recruitment, self-discipline, and even the aesthetics

T h e i r generosity and cooperation are the foundation o f this research. I

of trading spaces—aim to bring e c o n o m i c ideals to life, and no ideal is more

would particularly like to thank the owners and managers o f Perkins Silver

important than the competitive individual. T h e modern individual is often

and the trader known here as David for the crucial help and access they pro­

described as endowed with the properties o f e c o n o m i c reason and compet­

vided m e .

itiveness. B u t these are not innate predispositions that need only to b e set loose. E v e n in the peak places o f the quest for pure profit, individuals and

As is conventional in ethnographic writing, 1 have created pseudonyms for people who offered their private reflections and experiences, m a n y o f

e n v i r o n m e n t s must be shaped, managed, honed, and reconstructed to cre­

whom shared with m e a trading desk, cups o f tea, and all the daily activity

ate the competitive situations that a n c h o r capitalist practice. How market

of traders' working lives that I write about here. Although I have r e n a m e d

managers, technology designers, and traders attempt to equip m e n with

the trading firm that appears here as Perkins Silver, I would not try' t o hide

market reason is the subject o f this book.

the identity o f the C h i c a g o Board o f Trade, one o f the biggest players in global futures markets, or the other financial exchanges. T h e executives who directed the C B O T during my research are the public representatives of the exchange, and so I use their real names. T h i s book took shape amidst the intellectual guidance 1 received as a graduate student in anthropology' at the University' o f California, Berkeley. Its trajectory began yvith the support o f my advisor, Paul Rabinow, w h o rec­ ognized an anthropological project in the e c o n o m i c rationality' o f futures market and then guided m e as I conceived, conducted, and c o m m i t t e d an analysis to paper. Aihwa O n g constantly reminded m e that a c o m b i n a t i o n of h u m a n practices and technological materials lay behind the transna­ tional p h e n o m e n a that I was witnessing, and then challenged m e t o find them. M a n u e l Castells focused my attention on the urban nodes that or­ ganized financial markets and dared m e to investigate the c o n n e c t i o n s be­ tween the institutions and actors that shape the space o f flows. Berkeley also

xii

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Acknowledgments

Acknowledgments

provided t h e foundation for absorbing intellectual exchanges and enduring

*

xiii

funds provided by the Alfred P. Sloan foundation!, the University' of C a l i ­

friendships with fellow graduate student*, even as we scattered around the

fornia Institute on G l o b a l Conflict and Cooperation, and the C e n t e r for

globe for r e s e a r c h and jobs. I was privileged to get both careful criticism and

G e r m a n and European Studies at the University o f California. In 2 0 0 4 -

stead} support from Ariaime C h e r n o c k , Stephen C o l l i e i , Jeff juris, Nalini

2 0 0 5 , 1 had the good fortune to spend the year at NYU's International C e n ­

K o t a m r a j u , Andrew Lakoff, Elizabeth b'.S. Roberts, Natasha S c h u l l , and

ter for Advanced Study, where I completed the manuscript.

R a c h e l S h e r m a n . It's hard to imagine writing this book without them.

The

support of close friends and family has been essential at every stage

Beyond the Bay Area, I benefited from the generosity of Saskia Sassen and

of crafting this book. Rona Talcott and Herb Davis welcomed m e into their

Richard S e n n e t t , who provided scholarly inspiration and warm friendship in

h o m e when I did fieldwork in C h i c a g o and helped to teach me about both

C h i c a g o , L o n d o n , and New York. Thanks to Stephen Barley, Greg Downey,

the city and the small world o f global traders. Over the course o f this re­

Karin K n u r r C e t i n a , Harris K i m , George Marcus, Bill Maurer, Ajay M e h r o -

search they b e c a m e great friends. T h e n they b e c a m e my in-laws. I wish that

tra, Yuval M i l l o , Alex Preda, Kris Olds, David Stark, Nigel Thrift, and M a r c

Herb and I could share this o n e final book.

Ventresca, e a c h of whom has read, listened, and provided valuable feedback.

During my stay in London I lived with Priscilla Roth and Nick Garland.

And to m y temporary/ hosts: the Kellogg S c h o o l of M a n a g e m e n t , where the

I didn't believe my friend G a b e when he told me that his mother would in­

languages o f both social theory' and futures trading are spoken

fluently;

vite m e to stay for the duration of my research. 1 was astonished when she

the A m e r i c a n Bar Foundation, where I wrote much of my dissertation; and the

did. S i n c e that time Priscilla and Nick have b e c o m e like family, and their

Cities P r o g r a m at the L o n d o n S c h o o l of E c o n o m i c s , which gave m e a place

kitchen table is my favorite seminar room. Many long-standing friendships

to think after the trading day closed.

have sustained m e through the peaks and valleys o f my writing process.

s o u l o f this book is in C h i c a g o . D o u g M i t c h e l l , at the University o f

T h a n k s to M i a Baricini, Matt Brown, D e b i Cornwall, Jacob Gersen, Sarah

C h i c a g o Press, lived up to his billing as the most effusively encouraging ed­

G o o d m a n , Adam Gross, Julia Gwynne, Heather Johnston, Valerie Reiss,

itor in the business, and T i m M c G o v e r n was equally helpful. I am grateful

and Megan Stephan. I am thankful to have them in my lite.

The

to t h e m , a n d to their colleagues at the press, for their confidence in the book.

Carolyn and Alan Grey, my mother and stepfather, gave m e a model for

O w e n G r e g o r y , the archivist o f the C h i c a g o Board o f T r a d e , guided m e

adventures, both intellectual and otherwise. F r o m my father, J . G o r d o n

through t h e more dusty stretches of C B O T history. T h e Special Collections

Z a l o o m , 1 inherited both a healthy skepticism and the strength and verve

D e p a r t m e n t o f the University Library, University o f Illinois at C h i c a g o ,

to pursue my own answers—the best legacy a parent could leave. Although

kindly provided images from the C h i c a g o Board o f Trade Records ( C B O T

he claims to not understand what I've been up to these past several years,

neg. I l l , 7 5 4 8 ( 1 - 1 ] , 75-68! 1-9]). T h e wonderful photographer B o b Davis

my uncle, Roy Z a l o o m , never wavered in his support o f my pursuits.

captured t h e action o f the trading floor in many o f the images that enliven

My deepest thanks are reserved for Eric Klinenberg. O u r relationship

these pages. T h e C h i c a g o Board of Trade gave permission to take these pho­

and this book began together and he has supported m e at every stage along

tos, but has not reviewed the book, and makes no representation regarding

the way with love, optimism, and an unflagging willingness to edit my prose.

the a c c u r a c y o f the content o f the publication. S u c h responsibility clearly

I a m lucky that completing this project is only the beginning o f our life ad­

lies with t h e author.

ventures. I dedicate this book to him.

It was fitting to finish writing this book in the financial capital of New York City. M y colleagues at New York University—Tom B e n d e r , Neil Bren­ ner, D o u g G u t h r i e , Phil Harper, Walter Johnson, T i m M i t c h e l l , Harvey M o l o t c h , K i m Philips-Fein, Mary Poovey, Mary Louise Pratt, Andrew Ross, and D a n i e l Walkowitz—welcomed m e with both insightful commentary and true support. I am looking forward to all the exchanges to c o m e . An\^ book on markets should acknowledge where the m o n e y c a m e from, f i n a n c i a l resources for research and writing c a m e from the Social S c i e n c e Research C o u n c i l Program on the Corporation as a Social Institution (with

A photograph o f the C h i c a g o Board o f Trade hangs in a crowded, central passageway o f London's Tate Modern gallery. Every inch o f its six-foot length vibrates with financial frenzy and spins with the disorder of t i m e and space. T h e picture induces the vertigo o f the contemporary world, a n d the frame spills over with traders, clerks, brokers, computer terminals, and tele­ phones. T h e acid colors o f trading coats swirl in and around the dealing pits. Hands and faces blur as they work to buy and sell financial commodities. T h e motion is not all in the present, though, Andreas Gursky, the artist, digitally layered the image to show traders who were o n c e there and have now gone. Trading cards, bits of newspaper, and financial statements shine through spectral bodies. T h e camera can record only their traces as they hurtle headlong into the future. Just as past, present, and future b l u r to­ gether, space is also unstable. T h e trading area collapses inward as the plane of the floor tilts forward into the frame. T h e composition lacks a distinct center. T h e viewer is off balance — neither directly in the m e l e e nor hang­ ing above it. T h i s picture o f a turbulent e c o n o m y contains a few orienting markers — the rings of the trading pits, the padded railings that contain them, t h e rows of telephone booths that angle stadium-style, and the stairs and hallways leading in and out of the marketplace. T h e instruments o f financial tech­ nology suggest that informational orderliness might be found on the trading floor, but instead they too are part of the din. A stack of price screens and monitors rises at the front of the frame. Electronic order books, telephones, paper trading cards, and time and sales sheets are scattered about the floor. T h e technologies of financial knowledge suggest quick access to c o n c r e t e data that link the outside world to the trading floor. But even these infor­ mational objects cannot cut through the swirl o f the market. T h e r e are simply too many o f them, an excessive proliferation of the technologies of reason. Instead of imposing order, they provide conduits for the frenzied 1

*

Introduction

Finance from the Floor sible for this disquiet. In financial markets like the C B O T , there are no goods to trade. N o grain or currency changes hands. T h e r e is only the ac­ counting o f gains and losses tabulated against traders' accounts at the end o f t h e day. Here, capitalism is a pure search for profit, without any clear con­ nection to commodities that people make or use. U n e n c u m b e r e d , the whirl­ ing o f capital is alluring, and Gursky is not alone in his fascination. O b ­ servers from anthropology and the social sciences, the humanities, and the popular press have focused on the growth and speed o f finance. Like Gursky, many of these cultural critics strive to understand global markets as a whole, both as a set of e c o n o m i c arrangements and as a reflection of the ways people live and work today. M u c h o f this writing examines the effects o f the mar­ ket's financial velocity and its mercurial nature. In m u c h contemporary cultural commentary, the e c o n o m i c order o f fac­ tories and nations is swept away by the digital symbols o f financial deals. T h e s e descriptions have a metaphorical flair. For instance, David Harvey famously claimed that new financial regimes produce "flux, instability, and

Intro. 1 Andreas Gursky, Chicago Board of Trade II (1999). Copyright © 2005, Andreas Gursky/ Artists Rights Society (ARS), New York/ VG Bild-Kunst, Bonn.

gyration." He infused the financial market with its own volition and m a n i c

currents o f m o n e y running through this trading floor. Both the equipment

market. T h e constant search for new territory and the proclivity for taking a

and the b o d i e s o f the traders are c h a n n e l s o f a massive force.

quick profit reproduce themselves in culture and individual affect. T h e tri­

2

logic, claiming that capital does not keep its shifting ways isolated in the

T h e photograph is not a portrait o f the particular character o f the C h i ­

3

u m p h o f capitalism and its market-based reason is matched by new kinds o f

cago Board o f Trade trading floor. As the curator and art critic Peter Galassi

enchantments. Jean and John C o m a r o f f direct us to the ironies o f the par­

has written, the piece is a portrait o f this financial market, "as a global insti­

allel rise o f hyper-rationalization in financial and legal regimes and the

1

tution and as a model o f contemporary behavior." Gursky's image has its

spread o f occult practices. T h e i r analysis o f the "conditions-of-being under

place at t h e l a t e M o d e m precisely because the C h i c a g o Board o f Trade

millennial capitalism" points to salvation and magic as m u c h as to market

( C B O T ) is a n exemplary site o f modernity, a place that offers a refined case

logic. Above all, the image o f flow runs through the writing o f both social

of financial speculation and the circulation o f money. In this location, every­

and cultural observers, capturing the movement between places, adding to

day relationships to the potential o f m o n e y and the necessity o f trade be­

the mystical image o f the market, and focusing our eyes on rivers o f trade

4

c o m e e x t r e m e . F i n a n c i a l professionals bring together flow, speed, and tech­

whose currents have the urgency o f a natural force. T h e metaphor appears

nology in t h e pursuit o f profits, and when thousands o f t h e m gather every

so often that it has lost its novelty. Flow is global c o m m o n sense. B u t the im­

day, they h e l p create something larger—the market.

age has an unfortunate side effect, encouraging analysts to position them­

Gursky's image sends a clear message about the velocity o f inonev and its

selves as observers, standing at the river's edge rather than jumping in to un­

disordering effects in the global economy. T h e market takes in vast waves o f

derstand the human actions and technological materials that make global

capital a n d spews t h e m out again in a logic all its own. Yet for the crowd

exchange happen. Even when it is carefully defined and contextualized, as

o f spectators around the photograph, the c o m m o t i o n and disarray are en­

in M a n u e l Castells's a c c o u n t o f the network architecture that structures in­

trancing. It is unsettling to examine the picture closely, especially because

formational e c o n o m i e s and the space o f flows, the powerful image o f rapid

a literal understanding o f the physical place, or o f the traders' labor, is im­

flow draws attention away from the social processes that bring flows to life.

possible. Instead, it is easier to step back from the photograph and absorb the overall impression o f the global financial beehive.

M a n y anthropologists, from Bronislaw Maltnowski and Marcel Mauss to Claude Levi-Strauss, Arjun Appadurai, and Karen Krtorr Cetina, have shown

Gursky captures the unease and a m a z e m e n t o f e c o n o m i c lite in an age

how exchange stitches together collectivities separated in time and space.

of global markets. T h e postindustrial logic o f speculation is partly respon-

The same is true for global financial markets —thev are engines of exchange

4

*

Finance from the Floor

Introduction

5

frequently conceived o f in metaphors o f Htm. T h c \ link individuals, cities,

fined by a relationship to the market and not simply by the individuals who

and collectivities through the proc ess of bade. C m sky, 1 lan cy. tin- i iurnarofts,

o c c u p y them. Individuals move in and out o f these positions, bringing their

and Castells are show ing something i m p o r t a n t Contemporary markets are

experiences on trading floors with them to m a n a g e m e n t offices and design

m e s m e r i z i n g and i m m e n s e . 1 he\ are both a symptom and a cause ot a

firms. However, e a c h position forces t h e m to confront a slightly different

c h a n g i n g world where trading links cities, organizations, and individuals.

set o f problems. For designers, the key problem is how to think about the

F i n a n c i a l e x c h a n g e brings together some o f the most powerful elements of

m a r k e t — W h a t is it? W h e r e is it? W h o acts in it? M o s t important, how

the contemporary economy: c a l c u l a t e e wizardn, information technologies,

can they bring the market more into line with a particular vision o f how it

and the sharp wit o f individuals drawing profit horn the endless circulation

should

ol'monev. Markets are intimidating and confusing, and, above all, they have

t h e market with the goal o f shaping an impersonal system that provides in­

important c o n s e q u e n c e s , enriching the fortunate or wiping out vast assets

formation to e a c h participant equally, so that the most successful traders are

in an instant. Yet tin re is another equally powerful and far more prevalent

the fastest and most agile individuals,

image o f markets, o n e that is difficult to r e c o n c i l e with the confusion that

cial characteristics.

work? T h e y analyze the technological and h u m a n c o m p o n e n t s o f

regardless o f their c o n n e c t i o n s or so­

global markets inspire. T h i s other image portrays markets as zones o f ra­

Managers have a different set o f problems. Like designers, they face the

tional a c t i o n , engines o f risk m a n a g e m e n t , places to profit and to protect

question o f what the best market might look like, but they are also con­

wealth. Markets organize and filter information, matching supply and de­

cerned with how to i m p l e m e n t these ideas, given the already existing mar­

mand. Markets are separate spheres, apart from the social and cultural world,

ketplace. T h e managers of the C B O T organization had to contend with the

ordered by principles o f self-interested action.

physical structure o f the market—the buildings o f the C B O T and the tech­

W e need to take a closer look at markets if we want to transcend the idea

nologies, like telephones and hand signals, that shape traders' actions in the

that they are rational e c o n o m i c tools or, alternatively, that they are engines

market. Managers o f trading rooms must work with the existing habits o f

of chaos. In recent years social scientists from different fields have reinvigo-

traders that they want to shape or to reform. T h e i r question is, W h a t is the

rated this field o f research, drawing out the architecture o f markets, as Har­

proper relationship of the individual to the market? O f course, their primary

rison W h i t e , Neil Fligstein, and Mark Granovetter have done, and investi­

job is to organize profit-making activity for their firms. B u t profit is con­

gating t h e h u m a n action and technical scaffolding that make e c o n o m i c

ceived as an end. Managers approach this problem by organizing the social

calculation possible, as Mitchell Abolofia, M i c h e l Gallon, and D o n a l d M a c -

composition o f a trading room and shaping the c o n d u c t o f others.

5

K e n z i e have done. At a still finer resolution, we begin to see that markets

Speculators face a similar problem that challenges them to think a b o u t

pose a particular set o f problems, especially for the people who work to

the means o f profit-making. Speculators ask themselves, How can I c o n d u c t

shape t h e m and seek to draw their livelihoods from t h e m . F i n a n c i a l mar­

myself in a market to draw profit? T h i s requires that they consider the trader's

kets are objects for inquiry into the culture and e c o n o m y o f contemporary

relationship to the market, to others inside the market, and to themselves as

capitalism. T h e y are particular spaces o f e c o n o m i c practice. In these mar­

confronted by the market. In other words, the problems I consider h e r e are

kets, traders, managers, and designers constantly define for themselves, and

problems o f ethics: W h a t is tire proper relationship between thinking and

for the markets as a whole, what constitutes principled e c o n o m i c action.

acting in the market? W h a t is the relationship between the norms o f eco­

T h e y also debate how to create conditions that will make principled action

n o m i c action and the material and human form o f the market?

possible. This means that market-makers work with the existing materials o f

W h i l e 1 was doing research, a particular event was underway, a realign­

the market—technologies, architecture, habits, and routines—to create

m e n t o f the technological and h u m a n materials o f the market. A transition

w h a t they would consider to b e a better market, o n e where individuals.can

from face-to-face dealing to online trading was changing the market i n two

draw profit from their own financial a c u m e n more than from their c o n n e c ­

key ways. First, it changed where the market was. It was no longer l o c a t e d

tions to others. T h e y also reflect on how to make themselves into ethical ac­

in the rings o f trading pits and in tire bodies and voices o f traders gathered

tors a n d apply disciplined techniques that allow t h e m to draw profit from

there. Now, the market was an entity beyond location that traders tapped

the market. M a n a g e r s , designers, and speculators labor with and in these markets every- dav. E a c h o f these positions —manager, designer, speculator —is de-

into through c o m p u t e r terminals. T h i s change also challenged the h u m a n foundation

of the market. T h e market was not made up o f individuals who

thought and felt the markets through their bodies and connections to others.

6

*

Introduction

Finance from the Floor

T h e designers o f the c o m p u t e r interfaces and dealing rooms were promot­

that financial markets brought and their effects on the cities o f the world,

ing a relationship to the market based on observation and more explicit anal­

but I did not see the interiors o f these markets, where finance defined a wav

ysis. T r a d e r s were now expected to watch the market and act on it, rather

of life and labor. People did not make appearances in most of these accounts.

than b e i n g the market and acting in it. T h e technological possibilities o f

I began to read business publications like Business

digital systems raised the interconnected problems of how the material form

which profiled practitioners o f finance and the issues they faced in the day-

of the m a r k e t and the h u m a n form o f market reason should be related.

to-day business dealings. From the pages o f these journals emerged a world

Week

and the

Economist,

beyond Internet madness and theoretical abstraction. Cities, organizations, and individuals were all hard at work securing their places in global finance As a graduate student in anthropology at the University of California, Berke­

networks, trading financial instruments, forging alliances, and adapting or­

ley, I e n c o u n t e r e d a wide and contradictory set o f views about financial mar­

ganizations to new technologies. Even though globalization was often dis­

kets. First t h e r e was the analysis o f the external effects o f the market versus

cussed as a fait accompli,

the t e c h n i c a l study of the market's interior workings. O n a more public stage,

and traders were bringing it into being as they tried to catch up with the

the pages o f the business media showed how firms

market c e l e b r a t i o n raised another contradiction. In the late 1990s the Bay

idea. In other words, these actors were identifying problems and defining

Area was t h e epicenter o f a stock market craze fueled by information tech­

solutions to create greater profit from a constantly changing geography.

nology a n d speculative logic. M y twenty-something friends monitored the

T h i s was not chaos, or the greater abstraction o f market efficiency. Reading

value o f t h e i r stock options from their desks at d o t c o m firms, watching their

the critiques and praise o f those in finance and business on their own prac­

paper gains grow and grow as the stock in their companies changed hands

tices led m e to ask questions about the theories 1 was reading. B u t the busi­

again and a g a i n . M a n y m o r e waited for W a l l Street to take their c o m p a ­

ness press and the e c o n o m i c s journals did not answer them either. I set out

nies p u b l i c , making their shares tradable on the N A S D A Q . E a c h time 1

to analyze global finance as a series o f practical problems that the executives

drove across the Bay Bridge to San Francisco, a billboard reminded me that

of financial exchanges, technology designers, and traders were working out

E * trade c o u l d help m e turn the bud of my graduate stipend into a blossom­

themselves in their everyday labor.

ing b a l a n c e if only 1 would sign up for o n e o f their active trader a c c o u n t s .

I left Berkeley and headed for C h i c a g o . C h i c a g o is not the first city that

A sign d e s i g n e d to look like an old motel advertisement displayed both the

c o m e s to mind for most people when they think o f finance. Wall Street tow­

wit and w e a l t h o f Yahoo! At the same t i m e , news media like C N N f n and

ers and the imposing c o l u m n s of the New York Stock E x c h a n g e are the mar­

M S N B C k e p t us all abreast o f the smallest shifts in stock-fueled fortunes.

ket's global symbols. C h i c a g o , however, has a special place in this universe.

T h e sheer e n e r g y of the market was palpable, but as a graduate student 1 was

It is the capital o f derivatives markets. Derivatives contracts are a special

looking in from the outside.

kind o f financial product whose value is linked to another financial c o m ­

The

vigor that markets were bringing to the streets and upscale restau­

modity, like bonds, or a "physical" commodity, like wheat. Futures and op­

rants o f S a n Francisco collided with the more skeptical depictions o f markets

tions are the two most c o m m o n derivatives, and these are the staples o f the

I gleaned from reading anthropologists, sociologists, and geographers. T h e r e

C h i c a g o marketplace. T h e city's derivatives exchanges run centralized mar­

celebration clashed with anxiety about the market's effects. First, I learned

kets for trading in these contracts. Derivatives have a dual life. T h e y are tools

that the m a r k e t in technology stocks was only a tiny fraction o f the world o f 6

of hedging, or risk management, and they are also tools o f speculation. T h e

professional financial m a n a g e m e n t and trading. T h e swift trading in bonds

C h i c a g o exchanges bring together thousands o f traders who work t h e de­

and specialized products known as derivatives contracts were changing the

rivatives markets for secondT>y-second profit. T h e work o f these speculators

landscape n o t only o f finance, but also o f politics and culture. In print, fi­

ensures the market's liquidity. T h e y are available in the market through­

nancial markets and the information technologies that supported them were

out their work days. T h e willingness to trade at all times allows banks out­

credited with the breakdown o f nation states, the rise o f global production,

side the exchange to complete their deals whatever the amount and when­

the a b a n d o n m e n t o f the welfare state, and the rise o f a global business class

ever their strategists choose. Traders are at the heart o f derivatives markets

whose wealth grew larger as the wages o f working-class people diminished.

and their culture o f circulation, and C h i c a g o is famous for its traders."

Yet m o s t o f the authors I read approached these markets from the abstract

G l o b a l players bring their business to the shores o f Lake Michigan for their

perspective o f political e c o n o m y . I learned about the e c o n o m i c changes

skill and for the experience o f the C h i c a g o exchanges in derivatives dealing.

8

*

t-inance from the Floor

Introduc t i on

*

9

N o longer "hog butcher to the world," C h i c a g o now labors to create a global

map in my pocket. M y sense of the trading floor fell into place. In the mean­

bazaar in these specialized financial goods.

time, I leaned on the phone clerks and other runners for help interpreting

I arrived in C h i c a g o in the s u m m e r o f 1998 and moved into a basement

what I saw. I learned that many of them were there to launch their trading ca­

apartment about two miles from the financial district. T h e family friends

reers, so they, too, were hard at work deciphering the financial m e l e e around

who owned the house provided m o r e than shelter. T h e i r son, David, was a

them. Working the phones and customer orders was c o m m o n l y the first step

futures trader at the C B O T and had agreed to help m e with my research. I

in getting to know how futures markets worked. From there I could begin to

called his house in the North S h o r e suburbs and began by asking if 1 could

learn about the labor o f financial exchange, as many traders do themselves.

talk to h i m about trading. H e cut m e short. "1 can't tell you anything. It is

Although I began in the agricultural futures room, my firm soon moved

just s o m e t h i n g that you have to see for yourself. W h a t did you say you're do­

m e to the much larger financial room, the engine of the exchange. T h i s shift

ing this s u m m e r ? " 1 said that I was planning on researching the exchanges

took very little adjustment. T h e work of the financial floor and the grain floor

and doing s o m e preparatory interviews. "Forget that," he instructed. " C a n

was essentially the same. T h e difference lay in the enormity of the

you b e at work on Monday?" W i t h o n e phone call to the firm's owner, h e

floor and the products in which the financial traders were dealing—futures

c o n v i n c e d the firm to hire m e as a runner at the C h i c a g o Board of Trade.

based on the debt o f the American Treasury and on the m o v e m e n t o f the

T h e C B O T looms over the city's main financial artery, LaSalle Street. But,

Dow

financial

Jones Industrial Average ( D J I A ) , as well as several more a r c a n e con­

like m o s t other workers at the e x c h a n g e , I approached from t h e rear. T h e

tracts. I worked at a "desk," a long table lined with phones dedicated to the

elevated trains of the C h i c a g o Transit Authority stop just behind the building,

swelling business o f the DJIA pit. Standing behind the phones, the clerks

and m y first morning the train was packed with traders and clerks on their

flashed urgent deals to brokers with hand signals and shouts. Legless seats

way to work. I followed the m o b down the stairs and underneath the enor­

swung out from the desks, but as I quickly learned, there was little time to sit.

m o u s structure that c o n n e c t e d the office building with the brand new trad­

E a c h morning I arrived at the C B O T at 6:45 a.m. and proceeded through

ing facility. T h e offices o f Perkins Silver looked down on an open courtyard

a network of corridors and elevators to the firm's office. In the coat room where

that brought light and air into the executive offices. T h e secretary behind the

the traders' garish clothes hung, I donned my own oversized trading j a c k e t

elegant m a p l e desk sent m e to find J i m Alba, who ran the floor operations

coordinated with the firm's colors. I placed my notebook in a pocket along­

for the firm. After a gruff introduction, he sat m e down with a stack o f doc­

side a stack of trading cards and took the elevator down to the fourth floor, the

u m e n t s that outlined the hand signals, products, and market terminology o f

level dedicated to the trading rooms and set apart from the governing struc­

futures trading. T h e y also gave instruction on how to conduct oneself, which

tures and back offices of the exchange. Security is tight around its perimeter.

I had to master for the exchange's own test. T o gain access to the floor, clerks

E a c h employee swipes an identity card and presses through a turnstile as a

were required to demonstrate a basic knowledge o f the rules of market con­

guard looks on. Traders and clerks open their pockets and purses for scrutiny.

d u c t — f r o m prohibitions on verbal abuse and throwing objects to the basics

E a c h morning, the clerks prepared for the opening bell, c o m p i l i n g or­

of pit trading. In the exam room deep in the basement of the E x c h a n g e , the

ders and making predictions about whether the market would be r i s i n g

new clerks grumbled over this scholastic exercise. T h e proctor handed us

or falling. B u t we were not the first to arrive. O n our way from s e c u r i t y to

our graded exams and our newly minted badges with the same hand.

the desks, we passed a buzzing room full o f clerks who had b e e n there s i n c e

My first job was on the grain trading floor, delivering orders from the

5:00

a.m. correcting errors from the previous day's work. O n the trading

clerks at t h e phone banks to the traders in the pits. T h e clerk would answer

floor, the pit slowly filled with traders examining their charts, l o o k i n g at

a customer's call, scribble down the order, and shove the sheet under a time

overnight reports from other markets, and gossiping. As 7:20 a p p r o a c h e d ,

stamp. At the thump of the stamp, I snatched the paper from the clerk's hand

everyone got quiet and waited impatiently for the buzzer. At its e l e c t r o n i c

and dove into the tumult. Runners elbowed e a c h other out o f the way. Dis­

screech, business c a m e flooding into the market, feeding the r a u c o u s en­

carded paper scraps slicked the floor. T h e noise was often deafening. O n e

ergy o f the trading floor. T h o u s a n d s o f excited traders and clerks p a c k e d

of the p h o n e clerks scribbled a c h e a t sheet for m e on a trading card, but

together is an irresistible thrill. E a c h day, however, the market w o u l d die

even with t h e guide in hand, I confused the wheat and soy pits and brokers,

down to a steady hum, and I used the opportunity to talk to the traders who

and found myself lost in the shouts o f traders as the market slid and peaked

trickled out o f the pits and set up interviews for after the trading day.

t h r o u g h o u t the day. After a couple o f weeks I could leave the h o m e m a d e

It did not take long to see that the traders were preoccupied with a s i n g l e

Introduction

10

i s s u e — e l e c t r o n i c trading. T h e y were right to be c o n c e r n e d . In the spring,

Finance from the Floor

•*•

11

explanation. T h e mysteries o f markets touch our lives, but few outside the

the Paris e x c h a n g e had opened electronic markets. Weeks later they closed

financial profession understand them. I realized that no field site would be

their trading floor. Later that year, the C B O T traders watched another coup.

more challenging, puzzling, and important than financial markets, espe­

The

G e r m a n exchange, then called the D e u t s c h e Terminborse ( D T B ) ,

cially the derivatives markets o f C h i c a g o and London. From these cities,

l a u n c h e d a n attack on L o n d o n markets; where futures on G e r m a n treasur­

where organized financial exchanges, banks, and traders arrange and propel

ies traded. Again, it did not take long for the L o n d o n pits to fold. T h e C B O T

capital flow, 1 could begin to answer questions that neither anthropologv

and its traders set their jaws for a fight. T h e y argued that the C B O T had de­

nor business texts were asking. W h a t were the places, people, and technol­

veloped p i t trading, that the liquidity o f the market was legendary, that the

ogies that generated the flow? How did m e n shape themselves into risk-

cold operators o f computers could never provide the kinds o f markets the

takers? W h a t were the codes o f conduct, strategies, and responsibilities o f

devoted p i t traders gave the world every day. T o fend off competitors,

actors inside these markets? And how did this personal labor draw on and,

the C B O T opened its own after-hours electronic market, called Project A.

simultaneously shape, the focus on rationality, profit, and competition that

But that d i d not deter a challenger with offices inside the building. T h a t

we think of as market values? How did these markets c o m e to have a cultural

s u m m e r , C a n t o r Fitzgerald, a bond-trading firm headed by the infamous

infrastructure that allowed them to operate as a single, global force? W h a t

Howard L u t n i c k , set up an electronic e x c h a n g e to deal in C B O T products,

binds markets in and across time and space? Ultimately, how is financial cir­

The

culation managed, imagined, and produced?

new e x c h a n g e soon folded, but the writing was on the wall. As r u m o r s about electronic trading deluged the financial floor, the firm

T h e change from face-to-face to online markets is not only a story of a dis­

I worked f o r was making its own plans. T h e y were setting up shops in Lon­

junctive; it is also the story of strong continuities in the forms of financial ex­

don and N e w York that specialized in o n l i n e futures trading. I asked the

change, as well as in the modes o f exchange and practical ethics of markets.

firm's o w n e r s to bring m e along. W i t h six months on the trading floor be­

Anthropology offers tools to trace both the changes and continuities. E t h n o ­

hind m e , I headed off for L o n d o n to work for Perkins Silver as a new recruit

graphic fieldwork and the blended approach o f cultural economy draw to­

a m o n g t e n new traders. E a c h morning before sunrise in the fall and winter

gether e c o n o m i c practices, forms o f knowledge, and disciplines that shape

of 2 0 0 0 , 1 arrived by tube in the heart of the City, London's financial district.

individuals into e c o n o m i c subjects in a way that can deepen our under­

Along with my fellow trainees, 1 studied formal trading techniques in a class­

standing of the contemporary complexity o f an e c o n o m i c ethos. Following

room a n d , on the trading floor, adjusted them to my own risk-taking ap­

a long history in anthropological approaches to the e c o n o m y , e c o n o m i c

petites. After the training, I traded G e r m a n Treasury bond futures on a Perkins

geographers Ash Amin and Nigel Thrift point out that "the pursuit o f pros­

Silver a c c o u n t . I interpreted the market according to my new skills and

perity must be seen as the pursuit o f many goals at o n c e , from the meeting

gained t h e direct experience o f risking m o n e y that is central to traders' ex­

of material needs and accumulating riches to seeking symbolic satisfaction

perience o f their own work. I spent nine hours a day with eyes fixed on my

and satisfying fleeting pleasure." T h i s is true even, as we will see, in places

screen a n d fingers lying lightly on the mouse, poised to click the second an

explicitly designed to purge any other values from the pursuit o f profit.

opportunity for profit appeared.

8

The

approach I take here traces back to the roots o f modern social sci­

In both cities, my base was the trading floor. But I wanted to gain a view o f

e n c e . M a x W e b e r developed an understanding o f the c o n n e c t i o n between

the market that went beyond the floor. After work and during subsequent vis­

e c o n o m i c systems and ethical orders, and G e o r g S i m m e l described the

its, 1 delved into archives, interviewed officials at the exchanges and technol­

power of money to c o n n e c t socially distant individuals, to mute passions,

ogy c o m p a n i e s , attended meetings on the reorganization of the industry, and

and to ignite e c o n o m i c lust. T h i s heritage informs the contemporary work

9

reviewed d o c u m e n t s and media reports that discussed the changing compo­

of anthropologists such as Stephen G u d e m a n , Bill Mauer, Daniel M i l l e r ,

sition o f futures markets from Singapore to London. From the C B O T trad­

Hiro Miyazaki, and Analise Riles, who are beginning to study the intersec­

ing floor a n d my seat at Perkins Silver, 1 worked to map how the changing

tion o f e c o n o m i c and legal domains as governing the economy and profit­

terrain of g l o b a l futures trading was rearranging the problems of circulation.

ing from e x c h a n g e increasingly b e c o m e the province of legal specialists."'

F r o m t h e field's earliest days, anthropologists have examined patterns o f

I also draw on themes from the anthropology of exchange, the anthropology

exchange i n places far from the e c o n o m i c centers o f North America and

of reason, and the social studies o f science and technology in order to make

Europe. Today, the world's powerful financial centers are the ones that need

sense of the creation and destruction of the technologies in the C h i c a g o

12

*

Introduction

Finance from the Floor

13

futures markets, to analyze traders' ways o f thinking, working, and living in

iious" dialogue with economic-! that would allow for a more subtle under­

•the market, and to chart the extension o f Chicago-style trading and forms o f

standing of the sociocuHuial nature o f e x c h a n g e . ' Marshall Sahlins's essays

c o n d u c t to the City o f L o n d o n . •

in Stoiw

2

Age F.cunoinicx

returned to Mauss's engagement with classical

Anthropologists have long contested accepted ideas about the e c o n o m y

economists, aiming to "definitively abandon this entrepreneurial and indi­

based in ideas about the nature o f " e c o n o m i c man," drawing lessons about

vidualist conception ol the e c o n o m i c object." He claimed that " [ e j e o n o m y '

the competition for information that makes up e c o n o m i c exchange, argu­

,is i a category ol culture rather than behavior, in a class with politics or re­

ing that e c o n o m y is a category of culture, and, most recently, pointing to the

ligion rather than rationality or prudence: not the need-serving activities o f

ways that contemporary e c o n o m i c systems are built on revision and adjust­

individuals, but the material life process o f society."" However, his argu­

m e n t . E a c h o f these arguments contests the idea that.a unified core o f eco­

ment does not take into a c c o u n t the active production o f rationality within

n o m i c impulses underlies human action. Fieldwork and the anthropology

a "reflexive modernity," where creating systems based on principles o f effi­

o f e x c h a n g e c a m e together in Bronislaw Malinowski's The Argonauts

c i e n c y and individual c o m p e t i t i o n is an end in itself." U l r i c h B e c k and

the Western Pacific.

of

T h e father o f ethnographic research devoted two years

to d o c u m e n t i n g the kula,

a type o f trade practiced in the Trobriand Islands

Vnthony Giddens, who have both considered the importance o f m o d e r n reflexivity, leave o p e n to investigation the specific processes that pattern

and arrived at his key conclusion that the hula was far from.a pure e c o n o m i c

reflexive modernization, particularly as it concerns the global circulation o f

system, arguing directly against explanations that r e d u c e d h u m a n e c o ­

capital. Part o f this patterning arises from the design o f modern systems that

n o m i c action to a search for utility. In fact, trading in objects like necklaces,

shape behavior and constitute new collectivities and from efforts to c o r r e c t

h e c o n t e n d e d , was more important than bartering in utilitarian goods like

and improve them. Attention to designers who act as "technicians o f gen­

food and tools. His argument flew in the face o f the "dismal fiction" o f a

eral ideas" can help to make the leap between the construction o f systems

"primitive e c o n o m i c m a n " driven b y the satisfaction o f basic need and the

and spaces where, in each, e c o n o m i c ideals o f designers work into the ma­

principle o f least effort.

terial forms they construct.

11

Following his lead, work on e x c h a n g e and e c o n o m y has had a long and productive history in anthropology. M a r c e l Mauss continued Malinowski's p r o j e c t to engage arguments about the e c o n o m y at h o m e in F r a n c e . In his classic work, The Gift,

Mauss used the transactions o f the kula

15

Studying the construction o f physical forms

and organizations, and the shaping o f individuals' c o n d u c t can clarify how these cultural processes contribute to market rationality. O t h e r anthropologists hover at the edges o f modern e c o n o m i c p r a c t i c e ,

ring to fight

seeking sites where "culture" contests "market logic." However, the o b j e c t s

the oversimplified utilitarianism that dominated F r e n c h universities. Mauss

of society and culture, those two spheres that might stand against the e c o ­

did n o t share the view that simple desire for useful goods was not the c o m ­

n o m i c juggernaut, are now materials for constructing markets. The m a k e r s

p l e t e p i c t u r e o f an e c o n o m y . H e set out to show that the obligations o f

of markets are themselves inspired by social theories. T h i s pattern b e c o m e s

social

credit and debt could not b e separated from the e x c h a n g e o f c o m ­

most clear when new technology inspires managers, designers, and traders

m o d i t i e s and that paths o f trade b o u n d together groups widely dispersed

to create new ways to realize the ideal of autonomous individuals and a p u r e

geographically and kept t h e m together over time. Mauss was explicitly chal­

e c o n o m i c sphere. T h e industry's shift from face-to-face interaction t o on­

l e n g i n g t h e widely h e l d view that m a r k e t e c o n o m i e s work by bringing

line technologies pushes the existing ethos to the edges o f its own practices,

together self-interested individuals aiming to satisfy narrowly defined needs.

creating opportunities for reflection and innovation. In the construction

His approach struck a b a l a n c e between the person w h o was always inter­

sites o f financial markets, social categories are manipulated in the designs

ested in calculating and manipulating her own social standing and the col­

of trading rooms and dealing screens. Society and culture do not exist out­

lective ideas about value, spirit, and status that hold tire kula

side the market. Instead, the profit-seeking opportunities thev offer are

together.

L a t e r both Clifford G e e r t z and Marshall Sahlins wrote against strictly

building blocks for new forms o f trading, and their challenges to rationali­

e c o n o m i c visions of exchange and wealth. Geertz's essay on the bazaar econ­

zation make techno-social systems seem incomplete even in their m o m e n t

omy o f M o r o c c o showed that the search for information, the manipulation

of implementation. T h e "edges" these anthropologists search for a r e al­

o f uncertainty, and client networks a m o n g vendors were integral parts of the

ready within.

e c o n o m i c picture. At the same time, Geertz sought a "reciprocally sedi-

Investigations o f the overlapping areas o f economics, ethics, and t e c h n i -

14

*

Introduction

cal specialization fit well with anthropology's cornerstone method, ethno­ graphic fieldwork. Today, anthropology is more associated with

fieldwork

1

than ever, before, *'The understanding of-what makes up a field, however, has! c h a n g e d . ' N e w objects for anthropological^-study'emerge* when-novel practices a n d ideas about our ways o f life, work, and politics arise." Finan­ cial m a r k e t s are just such'objects.

••

•

C h i c a g o has always thrived on the tension between the chaos o f capitalism and the order it requires. T h i s has never b e e n more apparent than it was during the city's tremendous expansion in the nineteenth century. In The Jungle,

Upton Sinclair's main characters approach the city by train and ex­

perience the sensory and perceptual confusion that c o m m e r c e creates. "A full hour before the party reached the city they had begun to note the per­ plexing changes in the atmosphere. It grew darker all the time, and upon the earth the grass seemed to grow less green . . . And along with the thick­ ening smoke they began to notice another circumstance, a strange, pungent odor. . . . It was an elemental odor, raw and crude; it was rich, almost ran­ cid, sensual and strong." Chicago's infamous stockyards belched out an oily smoke, which spread "in vast clouds overhead, writhing, curling; then unit­ ing in o n e giant river." T h e sounds from the yards trick the ears o f Jurgis, Sinclair's proletarian hero. "You scarcely noticed it at first—it sunk into your consciousness, a vague disturbance, a trouble. It was like the murmur­ ing o f bees in t h e spring, the whisperings o f the forest, it suggested endless 1

activity. the rumblings of a world in motion." Sinclair's analogies from Jurgis's rural past jar the reader as he shoots us headlong into the landscape, the necropolis o f cows and pigs. '1 'he yards were famous not only for bloody acts but also for the m o d e m techniques developed there. T h e y represented progress and made C h i c a g o the meatpacking capital of the world. Hogs and cattle from all over the west­ ern {hiited States converged on C h i c a g o to b e killed, dismembered, and ef­ ficiently distributed to eastern cities. C h i c a g o turned pigs and cows into m o n e \ , an a l c h e m y that involved thousands'of miles of grazing land, the in\ ention o f fecdlots. and the all-important technology o f the railroad. By the 2

1 SSOs C h i c a g o was butchering thirteen million animals a year. Efficiency and centralization were vital to the success o f the yards. In the yards, no animals m e t their end as efficiently as the hogs. Handlers 1

s

Materials of the Market

*

17

corralled ilicm ID the slaughterhouse ant! arranged theni in a neat row o n a

dered prices without spilling a drop of blood. T h e i r challenge was to create

jangplauk. Slaughterhouse workers chained the aniinaK* .inkles to an enor­

the smooth circulation of commodities demanded by their abstract vision.

mous horizontal disc and opened their veins. As the wheel turned, it yanked

Markets in these "products" had to be imagined and built. First, the m e m ­

the pigs into the air, bleeding and squealing, before chopping them into a

bers o f the C B O T began to construct a site o f trade that reconciled an ab­

vat o f boiling water that r e n u n e d the bristles from iheir skins. 1 heir bodies

stract notion of the market with the physical structure of the city and the ar­

were then stripped o f flesh part by part on the "disassembly line," each sec­

chitecture of the G B O T ' s marketplace.'

tion and shred destined to b e c o m e a commodity. T h i s method was an im­

Under the direction of the C B O T , the space of the city b e c a m e the space

portant inspiration for a later industrialist, Henry Ford, who mimicked this

of their trade." T h e city the C B O T merchants encountered presented both

orderly model of death and d i s m e m b e r m e n t in his automobile plants. His

material opportunities and barriers. T h e sandy harbor and marshy ground

admiration focused particularly on the meatpacking industry's refined divi­

of C h i c a g o clogged trade. An infrastructure that would ease the conditions

sion o f labor, the intricate order behind the foaming rivers o f blood that ran

of trade between C h i c a g o and its hinterland and between C h i c a g o and the

through the slaughterhouses.

5

powerful cities o f the eastern seaboard were primary concerns o f the newly

most famous products o f this hog's hell were meat, soap, and hair

formed organization. Beginning in the mid-1800s, influential merchants

brush bristles for the growing masses o f America, and enormous wealth for

lobbied for and funded the growth o f railways, bridges, harbors, and build­

The

captains o f c o m m e r c e like Philip Armour and Gustavus Swift, But the by­

ings in the city of C h i c a g o . Under their watch, C h i c a g o grew to support the

products o f the stockyards overtook the city. In C h i c a g o , capitalism reeked,

abstraction o f the market, and the market grew to encompass more and

and the less savory yields o f urban growth proved difficult to manage. T h e

more territory. Agricultural markets fused as Chicago's network of railroads,

odor of rotting animal waste wafted over rich and poor neighborhoods alike.

telegraph lines, and trading connections linked the western plains with the

1 'he coal fires that stoked the city's manufacturing painted a "lead-colored

East Coast.

sky," as Frank Norris famously described it in his novel 'The Pit. In 1871, city

Within the city' itself, architecture presented another way to shape the

engineers reversed the direction o f the river, sending the malodorous waste

space of trade, and merchants created new infrastructures for their markets

away from the city and from L a k e M i c h i g a n , the source o f its drinking

in the buildings the C B O T erected. T h e y built the tallest and most im­

water. Redirecting nature in the service o f the capitalist metropolis saved

pressive buildings o f their time to give shape to the ideals of centralized,

the noses and health of city dwellers, hut the less prosperous towns along the

competitive, markets in abstract instruments. T h e members of the C B O T

4

river and downstate paid the price. Nor was engineering able to achieve a

raised the city of C h i c a g o and their organization together as they created a

perfect fix: during storms, the underside o f Chicago's rapid e c o n o m i c ex­

materia] form for the market. As the market grew, the C B O T erected new

pansion surfaced. Sewers overflowed with a noxious effluvium o f urine, ma­

buildings. E a c h iteration o f the market was an opportunity' to renegotiate

nure, a n d blood; despite the best efforts of the city's planners, the by-products

how to make markets in stone, wood, and steel. T h e story of how the C B O T ' s

of the city's success could not always be eliminated.

members and leaders accomplished their projects demonstrates how polit­ ically and e c o n o m i c a l l y powerful actors work with the materials o f city-

Representing Abstraction The

space and t e c h n o l o g i c a l infrastructure to create the material form o f a market.

pigs o f Chicago's stockyards squealed and kicked on their way to becom­

ing commodities. A physical infrastructure and h u m a n hands were required to heave, can, and transport their meat. Across town, a different relationship

Order

to the materials of the market also emerged. In 1848, a group of businessmen

Futures made possible the circulation o f commodity prices without the

c a m e together at a flour store o n South Water St. Amidst the growing com­

physical commodity changing hands. T h e C B O T built the futures market

mercial disorder and ever-expanding profit, they founded the C h i c a g o Board

on the ever-changing value of wheat and corn, and there speculation thrived.

of T r a d e ( C B O T ) , an organization that would help develop both the urban

But at first, the founders of the C B O T were concerned not with creating a

potential o f C h i c a g o and the city's distinctive market in futures contracts. T h e i r "market" was an idea that harnessed time, collapsed space, and or-

market but with the transportation and banking challenges that faced busi­ nessmen in the growing metropolis. Development of the city, particularly

18

*

Chapter One

Materials of the Market

its transportation infrastructure, was essential to the circulation of com­ modities a n d the c o m m e r c i a l interests o f themselves and their peers.

7

T h e s e m e r c h a n t s first needed to govern and develop their own organi­ zation. T h e idea o f m e m b e r s h i p was central to the mission o f the C B O T .

*

19

the agricultural trade of the city. But their heft made them difficult to handle. 'Jo make a national market in grains and meat, Chicago's merchants forged new tools to trade these physical goods by creating abstractions that tran­ scended geography and time.

E a c h m e m b e r had a single vote. C o m m i t t e e s o f m e m b e r s investigated .the

A futures contract is a contract between individuals to provide an agreed

c o m m e r c i a l issues of the city and the internal issues of the organization and

a m o u n t o f commodity at the expiration o f a "deliver}" time set in three-

proposed solutions to the m e m b e r s . At the inaugural meeting, the first c o m ­

is louth cycles by the C B O T . T h e s e abstract tokens represent wheat and oats

mittee f o r m e d was given authority to draft a series of by-laws. T h e C B O T

from any location —Kansas or Wisconsin, the farms of the Millers or the

also c r e a t e d committees to monitor the activities of the organization's m e m ­

Taylors, it did not matter. T h e contracts were a way to trade large amounts

bers, guide the development of business in the city, and coordinate efforts

of grain even when these grains were still seeds in the ground. Futures con­

with the B o a r d s of Trade in other cities. T h e m e m b e r s extended t h e idea o f

tracts enabled traders to set the value o f grain months ahead of its reaping

g o v e r n a n c e by their peers as they drew on mercantile history to argue for

with only symbolic reference to the physical commodity. T h e paper token

self-regulation: rulings on disputes, merchant's law instructs, should b e made

of the futures contract allowed crops to pass through the hands of specula­

by other m e r c h a n t s familiar with the customs o f business. Separating them­

tors without their handling a single sheaf o f wheat.

selves from the authority o f civil law, the merchants and traders o f the or­

Like money, futures contracts created the ability to buy and sell with ease.

ganization would monitor and adjudicate the actions o f the C B O T and its

AM they circulate, they create a new source o f value apart from the material

individual m e m b e r s .

goods that lend their value to the c o n t r a c t . As information about the c o m ­

The

9

10

m e m b e r s soon adopted the regulations and elected their first presi­

ing harvest c h a n g e d , so did the price o f futures contracts. E a c h increase or

dent, T h o m a s Dyer. B o r n in the east, D y e r was a manufacturer in Atlanta

drop createdian opportunity for the m e m b e r s of the C B O T to make a small

before settling in C h i c a g o . His pork-packing business put h i m at the center

profit on the price change, selling their overpriced contracts or buying into

of the city's traffic in commodities. O t h e r founders had interests in real es­

a rising market. T h e C B O T allowed for trading that had less to do with phys­

tate, transportation, and banking. Six o f C h i c a g o ' s first twenty mayors were

ical commodities and more to do with the profits to be made from

C B O T m e m b e r s , reinforcing an already tight link between city government

tions in perceived value as the information about future harvests changed.

and the c o m m e r c i a l interests o f Chicago's entrepreneurs.*

fluctua­

T h e m e r c h a n t members of the C B O T b e c a m e speculators and disciples

W h i l e t h e m e m b e r s o f the C B O T were working to establish the c o m ­

of the market both in the m o v e m e n t o f physical commodities and in the

mercial h u b of C h i c a g o and develop c o n n e c t i o n s with the cities of the east,

techniques o f speculation that their changing prices allowed. B u t the spec­

they were also beginning to create a new kind o f market that would orga­

ulators of the C B O T did not simply deal for themselves. T h e y had an e c o ­

nize the agricultural markets o f the nation by establishing a market in the

n o m i c and civic mission. Through the work of the C B O T ' s members, the

price

of grain. In 1857, the C B O T began trading in "to-arrive" contracts that

organization steered the city's development to facilitate trade and create

established an agreed upon price for grain to be delivered o n demand. How­

business opportunities, making strategic c o n n e c t i o n s with other cities that

ever, these "warehouse receipts," as they were called at first, never had to be

made C h i c a g o the capital of the region and the coordinator of western c o m ­

exchanged for grain. Instead, the difference between buyers and sellers could

merce. T h e G B O T marshaled e c o n o m i c , political, and technological re­

be settled for cash as the price of grain moved. By 1855, the daily sessions o f

sources and led the drive to create a capital for American agricultural c o m ­

the C B O T were roiling with trade both a m o n g merchants and among spec­

m e r c e . T h e y dedicated themselves to the growth o f the city's markets and

ulators trading on the changing prices o f grain. Just a few year* later, g o \ -

fostered n e w t e c h n o l o g i e s , primarily t h e railroad and the telegraph, to

e r n m e n t provisioners began trading with C B O T speculators to coordinate

secure their city's c o m m e r c e and their own

fortunes.

die feeding of the U n i o n troops during the Cavil War. '1 heir business helped consolidate the already thriving national market in grain prices. T h e price of futures set in C h i c a g o unified the nation's commodity mar­

J lie C h i c a g o Nexus

kets by creating a single price for wheat for traders and merchants from New

1 'hat they would succeed in establishing C h i c a g o as a commercial nexus was

York to St. Louis. T h e grain yields o f Kansas and the hogs of Iowa dominated

not certain. As the members of the C B O T well knew, there were other seri-

20

*

Materials of the Market

Chapter One

o u s contenders to b e c o m e America's hub. For a while, Cairo, Illinois, seemed

*

21

ing local merchants founded the C B O T . O n January 1 5th, 1848, at the cor­

poised at the brink o f success as rail lines and federal influence converged

ner of Lake and Clark Streets, a telegraph in the office o f C o l o n e l J . J . Speed

on the city. According to the Charles Taylor, a contemporary historian,

tapped out a message from Milwaukee. Soon messages from the east and Chicago's urban kin ofthe northwest were flowing in. T h e first greeting sent

Great expectations o f the future or C a i r o were entertained by well-informed

between Detroit and C h i c a g o read, "To Milwaukee, R a c i n e , Southport,

p e o p l e throughout the country. . . . T h e American Railway

. . , antici­

and C h i c a g o . — W e hail you by lightning as fair sisters o f West. T i m e has

pating that C a i r o rather then C h i c a g o would reap t h e greatest benefit from

been annihilated. Let no element o f discord divide us. May your prosperity

the construction o f the railroad, published an article o f which the following

as heretofore be onward. W h a t Morse has devised and Speed joined let no

is an extract: ' T h e Illinois C e n t r a l Railroad will be t h e largest single railway

man put asunder." T h e telegraph led to a coordination of c o m m e r c e , prices,

enterprise in the United States. C a i r o , w h i c h is situated at the lower terminus

transportation, and politics among these regional centers that had b e e n im­

o f the proposed road at the junction o f the Ohio and Mississippi rivers, will

possible before.

Times,

15

in all probability b e o n e of t h e largest o f our western c i t i e s . "

The

m e m b e r s o f the C B O T grasped the importance o f the city's t e c h ­

nological infrastructure. At first a voluntary organization of leading C h i ­ A federal bill supplied more than two and a half million acres t o the State

cago merchants with no legal status, the board was nevertheless central to

o f Illinois t o construct a line o f the Illinois Central Railroad from Cairo to

promoting the city as a business center. It existed to promote "her c o m m e r ­

G a l e n a . C h i c a g o had t o fight for a "branch" o f the railroad. However, the

cial interests by more united action then heretofore" and was "the c e n t e r of

With William

deliberation on nearly every question in which C h i c a g o had an interest." Its

O g d e n , C h i c a g o ' s first mayor and the nation's first railroad baron, at the

influence was felt from city hall to the halls of Congress. " T h e board regu­

h e l m , the city's combination o f water and rail transport c i n c h e d the city's

lated c o m m e r c e through the region, passed tolls on canal freight to and from

success. At the outbreak o f the Civil War, C h i c a g o was the world's largest

the Mississippi, and debated how to manage the ever-increasing flow o f in­

railroad junction, with more lines meeting within its borders than any other

formation with telegraphic expansions. T h e m e n of the board lobbied W a s h ­

tributary soon overtook the m a i n trunk l i n e in traffic.

12

city on earth."

1

ington for land grants to complete the Illinois Railroad. T h e y were so s u c ­

C h i c a g o had another, more established, competitor for the position of

cessful that Senators Stephen A. Douglas and General James Shields, b o t h

western gateway city. S t . Louis waterways supported its claim t o be the great

from Illinois, sent special congratulations. In 1850, when sandbars b l o c k e d

western city and transportation hub. Situated at the junction of the Missouri

the Illinois River, hampering c o m m e r c e , the board again sent representa­

and Mississippi Rivers, the city's rivers s e e m e d to have natural advantages

tives to Washington to lobby for making the port more navigable.

for transporting grain to market. It had logged seventy-five years as the key

17

The

C B O T ' s influence was critical in building and maintaining the city

western port and principal trading partner for New Orleans. St. Louis mer­

of C h i c a g o and in coordinating northwestern c o m m e r c e . After a spring

chants cleared furs from the west and trafficked in other commodities on

flood that destroyed nearly every bridge in the city, the board reestablished

their way to and from the frontier. In addition, a narrow c h a n n e l north o f

communication between the north and west sides of the city to keep the m e ­

St. Louis meant that all upstream river traffic had to stop there to transfer to

tropolis running. City authorities worked with the board to issue b o n d s for

smaller boats. But it was St. Louis's c o n n e c t i o n s that eroded its dominance;

rebuilding the harbor, and the board shouldered the financial responsibility

Philadelphia was the city's major trading partner, and the eastern metropo­

for negotiating the securities and managing the funds.

lis was already losing markets to New York. St. Louis merchants began to

By the end o f the nineteenth century, C h i c a g o had b e c o m e the largest

switch their alliances to New York, but slowly and too late. New York capi­

grain distributor and the meat-packing capital of the United States. T h e

tal had established ties to C h i c a g o merchants, providing pricing advantages,

board's imprint was stamped on its bridges, harbor, and railroads, and l o c a l

and railroad money had already helped establish C h i c a g o as the west's rail

merchants developed new techniques for transporting the weight of g r a i n

T h e great spokes o f railroad lines were made far more powerful with

sacks, beef, and pork through its stockyards. Yet the movement of physical

the introduction o f telegraph lines. T h e merchants o f C h i c a g o could in­

goods was not the greatest achievement of the board. Its greatest innovation

hub.

1 4

tensify a n d multiply their relationships with traders in other cities through

was in pricing American provisions—not only for the city and the region but

the wires. T h e first telegram arrived in C h i c a g o in the same year that lead-

for the entire country and eventually for the world beyond its borders. T his

22

*

Chapter One

Materials of the Market

project established C h i c a g o as both a regional capital and a site for coordi­ nating t h e nation's agricultural markets.

The

*

23

reliability and accuracy of market information was of keen interest

to C h i c a g o traders. At its third annual meeting, in 1851, the C B O T adopted a rule forbidding members to give "untruthful or bogus reports of their trans­ actions, on pain o f expulsion."

T h e N a t i o n as M a r k e t

20

T h i s move toward truthfulness and trans­

parency in c o m m e r c e was not based simply on moral principles; it was also The

C B O T was instrumental in creating a market at the national scale for

necessary for making C h i c a g o a center o f nationwide c o m m e r c e . In a na­

grains a n d its other products. Two problems had hampered its visions o f

tional arena, where the reputations of individual traders were not known,

c o n n e c t i o n . First, the distances that separated the prairie from the plains

c o m m e r c i a l agents could only rely on the reputation of the organization. It

and the seaboard m e a n t that c o m m u n i c a t i o n was only as fast as the fastest

was imperative for the C B O T to police both the c o n d u c t of its members and

train. T h e invention o f the telegraph addressed this problem by separating

the information that flowed into and out of its pits, to develop and maintain

travel t i m e from c o m m u n i c a t i o n time, creating informational bridges be­

fair prices and accurate information, and to establish and enforce the regu­

tween c i t i e s and regions that overcame time and distance. It also created a

lations that would secure a sound reputation that would allow the extension

new scale for the politics and market of the nation. M o r e important, the

of c o m m e r c e beyond the borders of the C h i c a g o business community.

telegraph created a double vision of the market. T h e first originated in the

Cities maintained different standards for measuring weight and quality,

building o f the C B O T with its markets rooted in a particular place and his­

a technical problem that slowed trade, hampered distribution, and divided

tory, and t h e second s e e m e d ta defy location. Suddenly, information ema­

commercial regions. Accurate information and interconnection were not

nating from all corners o f the United States and all over the world could

enough to extend the boundaries of the market to m e e t those of the nation.

move grain markets in C h i c a g o . T h i s was a fundamental shift in the con­

A certain set of standard measures now had to be imposed on provisions in

cept o f c o m m e r c e . A market was no longer a place

a market where products could move easily across geographical boundaries.

to buy and sell com­

modities. T h e telegraph helped create the market, a new entity that existed

The

all the t i m e and everywhere. T h e free flow o f information across space made

housing, and shipping o f grain to make traffic between cities and regions

C B O T had created a series of exact standards for the inspection, ware­

the m a r k e t appear as a separate entity simultaneously composed o f each its

possible, but their adoption in C h i c a g o was not sufficient. T h e y had to be

individual participants, and created a single entity that transcended them

adopted throughout the country to create the fluidity necessary for national

18

a l l . W i t h technology that enables a flow o f information disconnected from

agricultural c o m m e r c e . C h i c a g o worked to standardize measure and coor­

place, the market appears to be a force outside o f and more encompassing

dinate c o m m e r c e with boards o f trade from Milwaukee to Buffalo.

than the actions o f the individuals that compose it, obscuring the daily acts

T h e first innovation was standard grading o f quality, a process that made

of coordination, planning, and exchange that shape the market and its cir­

o n e bushel of wheat classified as "winter wheat" fungible with any other.

culation. T h e political and e c o n o m i c work of rationalizing exchange united

T h i s allowed for centralization of the grain market in the elevators o f C h i ­

the c o m m e r c i a l space o f the nation and cut the market loose from its phys­

cago. Farmers and their representatives sold to the elevator owners and re­

ical and geographical anchors. T h e C B O T did not acquire its singular identity on its own. T h e country's

21

leased the products o f their fields into the vast rivers o f "winter wheat" that flowed through C h i c a g o . T h e s e standard grades did even more than create

boards o f trade developed standards o f reliable c o m m e r c i a l news and price

new centers for trade. T h e y also helped to make information about oats,

quotations that established trusted information soureesand consolidated the

com,

market's unity. T h i s was done with such effectiveness that in 1884, a promi­

ter wheat was winter wheat no matter where it c a m e from or who grew it. 1 he

nent historian o f C h i c a g o could claim that, "the system o f gathering all im­

boards of trade scrutinized standards that disconnected commodities from

and wheat consistent, which allowed for a buyer's easy judgment; win­

portant c o m m e r c i a l statistics has been carried to a point of comprehensive­

their place of production. With standards in place, information about grain

ness and a c c u r a c y far beyond that o f the G o v e r n m e n t bureau o f statistics."

could circulate without reference to individual farmers or particular fields.

The

rhetorical force o f the C B O T ' s efforts in Washington a n d the C h i c a g o

city government b e l i e the discursive opposition between market and gov­ e r n m e n t knowledge.

The

problem o f measuring grain matched the more intangible problem

of grading its quality. W h e n the C B O T was founded, farmers and buyers

19

measured grain by the bushel, an inconsistent measure of size that main-

24

*

Chapter One

Materials of the Market

tained the c o n n e c t i o n between the specific lot of grain and the tanner or

But p r e s s u r e from inland cities could n o t sway New York. W h e n it did break

owner who produced i t Despite shifting from carriage to boat to train on a

down in 1 8 7 0 , it was a crucial step in integrating the geography o f the grain

trip from Kansas to New York, Jones's bushel remained Jones's bushel until

market, but by then, the capital o f the grain market was not in dispute. It

it r e a c h e d its final buyer. Measuring grain by weight did something mirac­

was C h i c a g o .

ulous. N e w standards for m e a s u r e m e n t allowed shipments o f grain to be c o m b i n e d , shifting title from the farmer to the warehouse owner, who could resell a thousand bushels (by weight) o f wheat to New York merchants with­ 22

T h e Architecture o f F i n a n c e

out reference to the farmers who had grown it. T h i s system helped make

As the C B O T and its markets grew in size and significance, the m e m b e r s

grain a true commodity, disconnected from the place of its production and

committed themselves to carving out a place in the city-' that would m a t c h

its producer. As with grading quality, in order to have this new standard ful­

their growing stature. The directors built a succession of three buildings in

fill its potential for easing c o m m e r c e , other cities had to be convinced to

the heart o f C h i c a g o . T h e s e buildings were not simple containers tor the

adopt C h i c a g o ' s standards.

labor of traders; the buildings themselves shaped the market withm their

C h i c a g o ' s prominence in the grain markets lead other inland ports to fol­

walls. Just as the bridges and railroad tracks created a material infrastructure

low in this reform. T h e shared standards facilitated transactions and solidi­

for Chicago's commodity markets, the C B O T building's dealing floor, trad­

fied the c o n n e c t i o n s between market centers. N e w York's merchants, how­

ing pits, and corridors established a material form for the market. 1 'he flow of

ever, w h o bought much of the West's shipments, remained recalcitrant. T h e i r

information, the shape of competition, and alliances between firms w e r e all

business remained tied to the Atlantic c o m m e r c e of the British E m p i r e and

shaped by the interior geography of the C B O T buildings. T h e executives of

the system o f standards that bound them to these traders. Forsaking British

the C B O T and their architects were conscious that each building was a n ex­

standards in favor o f inland American ones would forcibly redefine their

periment in the social shape of the market, its symbolism, and its civic signif­

c o m m e r c i a l alliances, and American trade had not yet proved more prof­

icance. T h e struggle over the shape and meaning of the market created the

itable than Atlantic trade. N e w York was already an end-point for American

C B O T ' s most poignant symbol —the 1930 building that stands at the inter­

c o m m e r c e , and its merchants therefore felt less pressure to adopt measures

section o f L a S a l l e and Jackson in the heart of Chicago's Loop (see fig. 1.2).

2

that would ease trade in vast bulk. ' T h e y may also have b e e n reluctant to follow the lead of cities they did not feel were New York's c o m m e r c i a l equal. The

Buildings are unusual technological artifacts because they require e n o r ­ mous sums o f capital investment and can last for hundreds o f years.

25

The

C h i c a g o Board o f Trade and its allied associations in Milwaukee,

C B O T buildings provided an unusual opportunity for experimenting with

T o l e d o , a n d Buffalo bristied against this impediment to c o m m e r c e . T h e

the physical form of a market. B e c a u s e its business expanded so rapidly and

grain m e r c h a n t s o f the west chose Buffalo to lead the charge on New York.

continuously over the course o f a century, the organization built structures

Trapped between buying in the west by weight and selling in New York by

to keep up with the pace o f growth. E a c h structure bears the imprint o f its

bushel, these merchants fought to impose their standard. In J u n e 1854,

the

many constituencies and their ideas about the proper arrangement of t h e i r

Buffalo B O T adopted a resolution that put pressure on New York to capitulate:

marketplace. T h e building constructed by the C B O T in 1 9 3 0 and its addi­ tions bring these stories together.

Resolved, That this Board of Trade strongly disapprove[sj of the practice of

L a S a l l e Street is o n e o f C h i c a g o ' s most important avenues. It c u t s

measuring grain as now existing in the city of New York, and view it as detri­

through the heart o f the Loop, in the center of Chicago's business district.

mental to the interest of produce dealers generally, and particularly to those

Like Wall Street, its New York counterpart, Chicago's financial world t a k e s

making shipments direct to that market, occasioning thereby unnecessary

its n a m e from this thoroughfare. L a S a l l e Street may define C h i c a g o ' s

delays in unloading boats, and vexatious disputes and losses to shippers and

financial heart, but derivatives, like the C B O T ' s futures contracts, d e f i n e

owners of grain.

LaSalle Street. T h e C h i c a g o Board of Trade, the C h i c a g o Board O p t i o n s

Resolved, That this Board view the antiquated custom of measuring grain

E x c h a n g e , a spin-off o f the C B O T that has grown to rival its p r o g e n i t o r ,

as practiced in the city of New York, as an incorrect and illegal method of

and the C h i c a g o Mercantile E x c h a n g e , now the largest futures e x c h a n g e in

ascertaining the number of bushels and the practice ought to be abolished

the world, are LaSalle Street's global players and some of the world's b u s i e s t

2 1

and an uniform system of selling and delivering by weight, adopted. '

derivatives exchanges. Financial tales are etched on its architecture.

26

*

Materials of the Market

Chapter One

2?

Although C h i c a g o ' s working shoulders are most often c o n n e c t e d to hog butchery, t h e derivatives story is just as defining for the city. N o n e o f these stories is m o r e important than that of a building that does not carry a LaSalle Street address: the 1 9 3 0 building at 141 W . Jackson Boulevard, From the layout o f their trading floors to the decorative details o f the elevators and the facades, the designs o f the C h i c a g o Board o f Trade buildings reveal a fundamental transition from a market based in the abstractions of the midwestern grain trade to the markets for financial instruments based on ab­ stractions o f government debt. But t h e i m p o r t a n c e o f architecture goes beyond this modern story. T h e buildings, trading pits, and technologies o f the C B O T shape the ways that dealers c o n d u c t their business within the confines o f the B o a r d ,

26

The

C B O T buildings create markets by arranging bodies and communications in space a n d guide their movements through c h a n n e l s o f c o n c r e t e , metal and stone. T h e y assemble the information technologies, the speculators, and the organization in o n e space, define the actions that can happen there and the actions that must tures c o n t r a c t s .

happen there to produce successful deals in fu­

27

T h e 1 9 3 0 Board o f Trade Building shows how n e w configurations o f place, space, and time organize the m e c h a n i c s and symbolism o f trade. T h e build­ ings, tradingfloors, and dealing pits themselves were the o u t c o m e o f a c o m ­ plicated process o f growth, quarreling, and the exercise o f power. T h e fin­ ished building renders the designers' vision o f the market durable, fixed in stone a n d c a b l e ; it c e m e n t s the role of the G B O T in C h i c a g o ; and it im­ poses routines on the c o n d u c t o f traders as they make the trading pits churn, linking t h e physical form o f the building to the proper operation of the mar­ ket. T h e 1 9 3 0 building,held two significant promises: it would make the market m o r e efficient by allowing more business into its halls, arranging the trading floor according to market principles, and c h a n n e l i n g the arrival a n d dissemination o f information. It would also a n c h o r the board's place in the city o f C h i c a g o as a key financial institution inseparable from its host. T h e r e

I J Ctmipktid m 1 Hh? this CBOT buikhngWds the first to stand dl the c o m e i oi Jackson andLjSdllc Courtts) of Special Collections Department, U i m t t u l v Libiars Urmusih of Illi­ nois at Chicago.

were conflicting ideas about how to move forward with the ten-milliondollar project. T h e stakes were high.

:

T h e building c o m p l e t e d in 1930-was the third building dedicated to the

on this site. At ten stories, the Ihh? building cut an i m p r e s s e figuie on the C h i c a g o landscape. It was the tallest building m the cit\ and the first c o m ­

exchange. T h e first space specifically designed for the C B O T was the C h a m ­

mercial stincture to ha\ e electric lighting. A tower jutted from the building,

ber o f C o m m e r c e , which was destroyed in the Great C h i c a g o Fire of 1871.

an image ot Chicago's financial power that linked the national and inter­

T h e e x c h a n g e rebuilt the structure, but it soon outgrew t h e space, and in

national aspirations ol the cih with the c o i n m c i c i a l piowes^ ot the C B O T .

1885 the C B O T built its first structure at Jackson and LaSalle.

As the dcsigneis must have intended, the sttuclure's luminous bulk was a

Height was a key design e l e m e n t for e a c h o f the buildings that have stood

defining feature o f C h i c a g o , It awed Frank Norris, whose prose practically

Materials of the Market

*

29

trembles as he describes the structure in The Pit, " T h e lighted office build­ ings, the murk of rain, the haze o f light in the heavens, and raised against it the p i l e of T h e B o a r d ol Trade Building, b l a c k , grave, m o n o l i t h i c , c r o u c h ­ ing o n its foundations, like a moi tstrous sphii ix with b l i n d eve.*., silent, grave — c r o u c h i n g there without a sound, without sign ol lite under the night and drifting veil o f r a i n . "

2s

Norris notices the B o a r d oi 'trade Building not simply

tor its financial power (lie describes the building alter hours) but for its mon­ u m e n t a l physical presence in the "great gra\ city" o f C h i c a g o . - ' T h e build­ ing e m b o d i e d Chicago's project of urban greatness through private c o m ­ 5

mercial strength. " Its great mass was divided into three elaborately adorned parts, each crowned with a pyramidal tower. An enormous clock hung under the eaves of the most prominent gable, lending a modern touch, and reminding C h i c a g o a n s o f the c o n n e c t i o n b e t w e e n t i m e and m o n e y . S e v e n t e e n elegant stained-glass windows offset its unwieldy design. T h e most significant o f these c o n n e c t e d the business of the board with forces beyond the control o f even the most masterful traders: the morning sun shining into the trading room illuminated the allegorical figures of .Agriculture, C o m m e r c e , Fortune, and Order. T h e windows were designed by John L a Farge, a nineteenth artist, critic, and designer, and fabricated by Tiffany in New York. La Farge's works in glass and paint still hang in Harvard M e m o r i a l Hall, Trinity C h u r c h in B o s t o n , and the Metropolitan M u s e u m o f Art in New York. S u c h art a i m e d to express the C B O T ' s cultural p r o m i n e n c e through c o m m e r c e . The

S u n d a y (Chicago

'Tribune

(February 4 , 1 9 2 9 ) reported that the mayor

and a c o m m i t t e e of federal, state, and city officials who presided at the open­ ing o f the building in 1 8 8 5 were suitably captivated. Several objects and documents were deposited in the polished corner­ stone as t h e foundation was laid in 1 8 8 2 . T h e tokens fixed the time and

1.2

The CBOT'.s Art Deeo lower, completed in W O and crovvneu wmi a

M . I H I I - UI

v.eics, m c

Ronian goddess of grain, it-mains the exchange's signature building and a Chicago Luidmaik

Courtesy of the Board ol Trade of the Cih of Chicago.

p l a c e o f the building's creation and memorialized the citizen merchants o f t h e city w h o built it. T h e y included a list o f m e m b e r s o f the C B O T ' , a city directory for 1 8 8 2 , a copy o f the Chicago

for D e c e m b e r s i ,

of a Native American, adorned with stylized feathers, grips stalks o f c o r n . A

1 8 8 1 , c o n t a i n i n g a statement of the trade and c o m m e r c e o f C h i c a g o , and a

Inter

Ocean

pyramid crowns the top of the building, supporting a thirty-one-foot cast a l u ­

set o f U n i t e d States postage stamps. T h e building, however, ultimately fell

m i n u m statue o f C e r e s , the R o m a n goddess o f grain and the harvest, w h o

victim to expanding business. In the early 1920s the C B O T ' s leaders began

guards the business interests o f the m e n below. Every morning, traders a n d

m a k i n g plans to erect a skyscraper on the site.

the clerks, office staff, and managers who support them file through heavy-

The

Art D e e o tower that replaced the initial building rises forty-four

brass doors adorned with images o f agriculture. T h i s skyscraper, designed

stories above the street. T h e lines,of the building draw the eye straight up.

by Holabird and Root, the first of two buildings that now house the C h i c a g o

Several stories up, a stylized stone eagle guards an enormous clock that is

Board ofTrade, was finished in 1 9 3 0 and dominates LaSalle Street w i t h an

buttressed by two figures. O n the left, a stone image o f a hooded ancient

imposing grace. Its vertical limestone ribs and its stylized, machine-worked

c l u t c h i n g a sheaf o f wheat. T h r e e stories tall, the icon represents the farm­

details, evoke an era o f c o m m e r c i a l brilliance and individual flash.

ers o f the Fertile C r e s c e n t , who first cultivated grain. O n the right, a figure

But the finished building hides as m u c h as it reveals. T h e New B u i l d i n g

30

+

Chapter One

C o m m i t t e e had considered and rejected several other designs for the build­ ing that a l s o satisfied city setback regulations and provided ample office space lor the C B O T to rent.

11

The competition was fierce. .Architects from C h i ­

cago and N e w York lobbied for the contract. O n e eager architect wrote to the N e w B u i l d i n g C o m m i t t e e to support his plan with flattering arguments for its s y m b o l i s m and future 'profitability: 1 believe this proposition merits serious consideration because, first—a build­ ing o f this type will be a monument to the City of Chicago as well as the home of o n e of the basic industries of the country; second—the project can be eas­ ily financed because of the substantial value of your. . . holdings; third — because if properly handled the project will show a substantial return on the money invested.

;2

O f c o u r s e , every c o m p e t i n g architect might have made the same claims. T h e differences were in the drawings. T h e offices ot famed C h i c a g o architect Daniel B u r n h a m submitted draw­ ings of a building adorned with neoclassical ornaments. T h e i r design frames the building's main entrance with an arcade o f Corinthian c o l u m n s , each topped w i t h a classical figure in full round and elaborated with Latin com­ mentary. E n o r m o u s windows garlanded in stone swags face L a S a l l e Street, o v e r w h e l m i n g the doorways, which appearminisculc in comparison. In the drawings, t h e street bustles with sketchy figures of pedestrians, but the impos­ ing neoclassical details seem to shut them out o f the edifice. It is a clumsy de­ sign that confounds the civic meaning that Burnham had achieved in designs for the C h i c a g o World's Lair. T h e cornices and pediments on the C B O T building strike the wrong b a l a n c e between civic purpose and

finance.

Alfred A l s c h u l e r , on the other hand, favored a n e o - G o t h i c design c o m ­ plete with o r n a m e n t a l buttresses, reminiscent o f the recently constructed T r i b u n e T o w e r just a few blocks away. In his drawings, a flag tops the sky­ scraper's c e n t r a l spire. In a medieval city, the flag would be a signpost; it would m a k e urban space legible by marking a palace or center of c o m m e r c e . T h e giant flag, however, is superfluous. By its sheer size, the forty-story build­ ing, w h i c h would have b e e n easily visible for miles, would need no other a d o r n m e n t to-signal its.plaee in Chicago's landscape. .

More Modern Holabird a n d Root's modern skyscraper won out." T h e i r design brought to­ gether the high style o f capitalism with the board's modern project—profit through distilling and abstracting nature into circulating commodities. Rather

Materials of the Market

*

than harking back to the Middle Ages or classical times in its symbolism, the building's direct and forceful lines swept into the future. Like the financial work o f the C B O T , the building was dressed in the symbols of an ongoing project—making trade faster, more efficient, and more far-reaching, ulti­ mately supplanting nature with a man-made system o f trade. The

M

story is in the details. As the 1885 building c a m e down, the icons of

Agriculture, C o m m e r c e , Fortune, and Order gave way to machine-tooled nickel decorations that acknowledged the centrality o f technology in the contemporary practice o f agriculture. T h e Goddess o f Grain and the an­ cestors of cultivation may seem pure e m b l e m s o f an agrarian past and pres­ ent, but the new building's adornments suggested the relationship between the C B O T , modern technologies, and the future. Art D e c o made its official debut at the 1925 Paris exhibition. In 1 9 3 0 , such architecture was cutting-edge design for the "cathedrals of capitalism" like the C B O T building and the Chrysler Building in New York. Unlike the avant-garde architects of the time, who bared the structure of their buildings in the spare aesthetic of the International Style, Art D e c o designers

flaunted

the power o f m o n e y with the glamour of variegated marble and extravagant lighting systems that made the interior glow. T h e sumptuous materials and copious, lively decorations of Art D e c o invoke a modernism that explicitly links design to the worship o f capital. M o r e is more modern at the C B O T . T h e details o f the building highlight the board's particular t e c h n i q u e of capital a c c u m u l a t i o n . Abstract images o f plants and flowers swirl with a machine-precision finish. T h e s e decorations are geometric and angular, ac­ centuating their stylized, man-made quality. T h e images express a distance from the organic world even as nature is exploited, m u c h as do futures c o n ­ tracts themselves. T h e details bring this denaturalization to life, showing off the transportation technologies that brought grain to market and people across oceans to engage in c o m m e r c e . T h e building's lower floors are adorned with granite inlays o f stylized zeppelins and ocean liners. T h e paneled gates that guard the entrance to the 1930s trading floor show intricate scenes of the plant­ ing, harvesting,, threshing, and milling o f grain, and at the end of the c y c l e are depictions of the transportation technologies that bring the wheat, c o r n , and other grains to market. T h e s e images reveal the importance of m a c h i n e s to agriculture. In the planting panel, two m e n and a woman sow a field w h i l e smoke curls out o f two tall smoke stacks behind them. In the second p a n e l , a threshing m a c h i n e spews out wheat as the two human harvesters s e e m to be retreating from its presence. T h e ship's panel contains no representations of either grain or h u m a n presence; rather, a silo's contents are unloaded into 1.4 \lired Ykcliuler's -.kvbcrapcr design appealed to the CBOT's taste tor luston. adding medieval details to this cathedral ot capitalism, Courtew ot Special Collection Department, University Library, University of Illinois at Chicago.

the cargo hold of a ship via a chute without the intervention ofhuman hai ids. The

design o f the Board of Trade Building tells us that human abstrac-

34

+

Chapter One

Materials of the Market

tions, like futures contracts, and technology now dominate nature. No longer

grain business knows or C h i c a g o has ever had. You know the C o m m i t t e e

is the t r a d e in grains symbolically linked to the gods o f Agriculture, C o m ­

thanks you for this splendid work and personally I am more appreciative that

m e r c e , F o r t u n e , and Order. Expertise and technological equipment are the

[sic] I can tell you."'

essential conduits o f c o m m e r c e .

8

Grain traders and bankers outside C h i c a g o used their votes to link t h e m ­ selves and their businesses to the future o f the C B O T and its building.

G a t h e r i n g Constituencies Even t h o u g h the New Building C o m m i t t e e thought that the Holabird and

Rumsey and the board's leadership clearly wanted to make the building the symbol of the organization's national c o m m e r c i a l strength, worthy of sup­ port and investment.

Root d e s i g n clearly drew together the board's missions o f modern c o m m e r c e and u r b a n grandeur most effectively, they had to gain the C B O T m e m b e r ­ ship's approval before they could hire the architects. Henry A. Rumsey, chair of the c o m m i t t e e , set about assembling a constituency to support their deci­

W h a t Is in an Address? Planning the new building had helped Rumsey draw together the board's

sion. As w i t h every major plan at the C B O T , the m e m b e r s had the oppor­

constituencies o f traders outside C h i c a g o , as would at least two other m o ­

tunity to v o t e . W h e t h e r or not e a c h m e m b e r preferred the Art D e c o splen­

ments in the building's early life. T h e opening of the new building provided

dor of H o l a b i r d and Root's building was less important than the way the vote

an opportunity to establish and sustain ties with other businessmen and

brought t o g e t h e r the collective opinion o f the m e m b e r s . After the vote took

their organizations. T h e C B O T was clever about buttressing its trade and in­

place, t h e varied opinions o f the m e m b e r s h i p were solidified into a single

fluence through alliances. To a n n o u n c e its opening, the C B O T sent clay

c h o i c e t h a t sealed the shape o f the building and reinforced the network o f

models of the new building to officers at financial, transportation, and tech­

traders. T h e vote gave the m e m b e r s a collective investment in the design.

nology corporations, including the president of the C h a s e National B a n k in

In addition to representing the consolidated and ordered opinions o f

New York, the president o f American Steel Foundries in C h i c a g o , the su­

traders, t h e building was also a site for bringing together and arranging al­

perintendent o f the Little R o c k C o t t o n E x c h a n g e , the president o f the

liances b e t w e e n organizations, and individuals, and for making concrete

O m a h a Grain Exchange, and the President of the Erie Railroad in New York.

their c o m m i t m e n t s to futures markets. T h e destruction o f the 1885 build­

The

board also used the majesty o f the new building to claim its p l a c e

ing eradicated an older set o f alliancesand opened an opportunity to recon­

among the nation's most important institutions. Laying the cornerstone pro­

figure t h e network o f actors that made up the C B O T and reconstruct mar­

vided an opportunity to bring together representatives o f organizations that

kets. It was an opportunity to reinforce some c o n n e c t i o n s and sever others."

worked with the board and institutions whose financial stature the board

H e n r y R u m s e y s e l e c t e d the associations and interpretations to b e estab­

m a t c h e d or to which it aspired. T h e ceremony included the president o f the

lished a n d strengthened.

,6

New York Stock E x c h a n g e , the president o f the C h i c a g o Stock E x c h a n g e ,

R u m s e y began a c h a i n o f c o m m u n i c a t i o n s with m e m b e r s in C h i c a g o

the governor o f Illinois, the mayor o f C h i c a g o , the secretary o f the Depart­

and in o t h e r key cities. His far-flung supporters whipped up the vote, per­

m e n t o f .Agriculture, and the governor o f the Federal Reserve Bank. T h e

suading o t h e r off-site m e m b e r s to send in ballots. Rumsey, looking to enlist

ceremony allowed each o f these institutions to show its support.

the influential Dennis & C o . of Baltimore, wrote to emphasize the symbolic

S o m e connections were made more material by sharing space with the

lolc that t h e building could play in the Maryland company's business. "If we

C B O T . From the beginning, the C h i c a g o Stock Exchange was housed

have the wonderful building which is projected you will certainly he proud

within the C B O T ' s walls. In addition to creating a place for its own finan­

to \ isit us s o m e day and take youi friends into the new building or put its pic-

cial operations, the board's new building provided vast rentable space. T h e

5

iuse on y o u r letter-head." " Others didn't need convincing. E . P. Peck o f the

C B O T did its best to fill the offices with desirable tenants, emphasizing in

O m a h a G r a i n E x c h a n g e simply sent congratulations, as did H. F. Shep-

its advertisements its physical and symbolic location in the heart of C h i c a g o

herdson o f t h e M i n n e a p o l i s Grain E x c h a n g e , Rumse\ replied to Peck with

and the part it played in America's growing financial prowess. T h e promo­

gratitude: " H a n d s o m e is as handsome does. May I su\ o n c e more that we

tional booklet that the C B O T distributed to potential tenants juxtaposed a

have had a worthy represenfaihe, mentally, physicalh, finaucialh and spiri­

photograph o f L a S a l l e Street ending in the imposing, modern

tually in your good self in r e c o m m e n d i n g the erection of the finest structure

tower with a drawing of Wall Street, obliquely presented and ending in 'I rin-

CBOT

56

*

Haterials of the Market

Chapter One

*

3?

ity C h u r c h , T h e images are a c c o m p a n i e d by the caption, "At the head o f

vertised, their Otis elevators were "[tjhe finest vertical transportation in the

L a S a l l e Street. T h e Board o f Trade Building dominates the financial center

world." In addition to speeding workers to their desks at the literal heights of

o f the middle west." T h e juxtaposition makes clear its claim for inclusion in

c o m m e r c e , the elevators accelerated communications, helping clerks to

t h e c o m p a n y o f the great financial institutions of America, if not the world.

whisk messages between the board room and the offices of trading c o m p a ­

T h e C B O T building c o m m i t t e e banked on such a reputation to draw

nies. Elevators had an even more powerful counterpart in the t e l e p h o n e .

tenants, confident in the claim o f their architects that, "In spite of the rather

Skyscrapers are only possible because elevators allow rapid and effortless

large a m o u n t of office space on the market at this time, we consider that the

movement between the upper floors and the street and to the upper floors

e n o r m o u s prestige of the Board of Trade coupled with its unique advantages

of other b u i l d i n g s .

o f location in the heart of the financial district justify the erection of a build­

impediment to communication.

9

ing o f m a x i m u m capacity."' Renting space in the C B O T building, they

40

But with the telephone, distance and height were no

In addition to forging business connections, establishing c o m m u n i c a ­

thought, would create opportunities for companies to maintain close ties,

tion with the market, and distributing market information, the

both symbolic and real, with the e m i n e n t institution.

building was a place for traders to congregate as men. In between rounds o f

Apparently, many organizations agreed and set up offices in the building.

CBOT

dealing, they could visit the tailor to keep up with the latest fashions or stop

Listed o n the 1 9 3 1 roster o f tenants are newspaper c o m p a n i e s such as

in at the barber shop to get a haircut. A cigar stand and a soda fountain area

Barron's

were also included in the original building plans. S u c h amenities offered

Financial

Weekly

and the Wall

Street

Journal;

transportation c o m ­

panies, including the Canadian Pacific railway and the Duluth South Shore

additional opportunities for the board to exercise its connections with city-

and Atlantic Railway; and telecommunications companies, including West­

government. In typical C h i c a g o fashion, C h r i s t o p h e r P a s c h e n , C h i c a g o

ern U n i o n and R . C . A . C o m m u n i c a t i o n s Radiograms; and industrial and

Commissioner o f Buildings, wrote to Rumsey asking for assistance in secur­

a g r i c u l t u r a l powerhouses like A r m o u r and C o m p a n y , and Cargill Grain

ing the cigar stand and fountain space for a friend.

41

C o m p a n y . Offices in the Board o f Trade Building not only provided ready

T h e connections and sendees available to the new tenants were c r u c i a l .

access to the C B O T markets, but also allowed tenants to be part of the ex­

But symbols o f the building's p r o m i n e n c e were not yet set in stone. l i v e n

panding influence o f Chicago's financial world.

though the C B O T building was located in the heart of the financial district,

T h e city itself had an interest in c o n n e c t i n g to its workings. T h e C h i c a g o

its mailing address was not yet firm. S u c h a c o m m o n detail as a street ad­

Transit D e p a r t m e n t sought office space in the new building, and the Chair­

dress was a subject o f keen discussion between representatives o f the b o a r d

m a n o f t h e C B O T Transportation C o m m i t t e e worked to secure it. G o i n g

and the tenants, all of whom sought to stabilize the building's symbolic po­

over t h e head o f the New Building C o m m i t t e e , h e wrote directly to the

tential. Writing to another official at the C B O T in 1 9 3 0 , H. R u m s e y re­

board o f directors to ensure that Rumsey would provide substantial space

counted a conversation with a representative o f Quaker Oats over the

for the C h i c a g o Transit Department. T h e chairman argued that it had al­

proper address o f the building.

ways had headquarters in C B O T and that the Transit Department repre­ sented "all o f the C h i c a g o railroads in transit shipment matters. It maintains

Dear Mr. Glutton;

the records pertaining to the in- and outbound shipments o f grain, seeds

In talking with Mr. Murray o f Quaker Oats after 1, had suggested to him that

and t h e products of our mills and factories and certifies the freight rates. O u r

they use as their address Board of Trade Building, LaSalle at Jackson, he inti­

shippers are necessarily in constant c o n t a c t with the Transit Department

mated that he thought it would be a splendid feature on the letterhead of every­

and having it located in our building is a great c o n v e n i e n c e to them." He

one connected with the Board of Trade or in the Board of Trade B u i l d i n g .

reiterated the c o n n e c t i o n between the C B O T and the city's services and

This would tie the Board of Trade Building up with LaSalle Street, the

infrastructure, which the organization had worked so hard to build in the

world's greatest financial highway west ofWall and a street having s o m e t h i n g

n i n e t e e n t h century.

that Wall Street has not namely: The Board of Trade Building.

42

T h e C B O T also emphasized the advanced technologies incorporated in its n e w building in order to attract tenants. Elevators and telephones con­

All official C B O T communications were headed with a graphic of the

n e c t e d t h e trading floor with office workers both inside and outside the

building. Eventually, a phrase was added to the logo —"Serving the N a t i o n

building, short-circuiting the distances between them. As the C B O T ad-

since 1848." Rumsey and his counterpart at Quaker Oats were both c o n -

38

*

Materials of the Market

Chapter One

*

39

scious o f t h e c o m m e r c i a l and urban connections that an address crystal­

for Rumsey and the building's designers, the trading floor, or the board

lized and u s e d that to draw a specific c o n n e c t i o n between the organization

room, as it was called, was the central c o n c e r n . In the board room, traders

of the C B O T , its city, street, and building. T h e C B O T tenants piggybacked

produced futures markets, but producing the board room took some feats o f

on this c o n n e c t i o n and used the board building to claim a place o f com­

engineering. First, it required a vast open space at the building's core. Six

mercial a n d cultural significance that could rival New York's.

huge trusses, each weighing 2 2 7 tons, held up the skyscraper over the enor­ mous hall, eliminating the need for support c o l u m n s that would block the

The

movement and view o f the traders. T h e wide-open arena allowed traders to

Trading Floor: E l e m e n t of Design

circulate easily between pits, the telegraph and telephone operators, their

However lucrative rental i n c o m e was, the board's main mission was the pro­

offices, and the smoking room where traders met clients. T h i s space, at 1 6 5

duction o f markets. T h e skyscraper was constructed around the hangarlike

feet long by 130 feet wide, with a 60-foot ceiling, gave each trader equal a c ­

trading r o o m that defined the building. B u t the design o f the trading floor

cess to the markets and to the information he needed to trade. T h e design

was a s o u r c e of conflict.

applied the market principles o f order and equal access to information.

F r o m t h e design of the trading pits to the p l a c e m e n t o f the telephones

' 1 'he board room of the older building had strayed from the ideal and had

and the m a t e r i a l o f floorboards, the architects, board officials, and members

b e c o m e chaotic as the C B O T grew. In Holabird and Root's 1927 m e m o ­

debated t h e proper arrangements with intensity. T h e construction and lay­

randum on the older board room, the architects observe that "[ijt may b e o f

out o f the trading floor guide the daily paths of the traders and configure

some interest to note the changes that have c o m e about in the board room

w h o m t h e y can see and hear, their access to information, and what com­

in the last eight or ten years. First, the board room looks more dingy, m o r e

m u n i c a t i o n s technologies they c a n use instantly and which they must stretch

cluttered up and less orderly than it did some time ago. T h i s is due to the

to procure. T h e s e spatial arrangements mean money, and the C B O T ' s mem­

demand for increased facilities." A cotton pit, a trading post for oats, several

bers had fiery opinions about how it should work. T h e trading floor that was

telephone stations, and a coat room for telegraph operators crowded the

finally b u i l t was the product of competing interests and the powerful figures

floor. M o r e and more Western Union operators packed the desk surround­

that m e d i a t e d them. Rumsey, the board's negotiator and decision maker,

ing their office. C o m p a n i e s overcrowded their telegraph stations with illicit

swapped letters and conducted innumerable conversations with the archi­

operators. Swarms of clerks also congregated by the telephones, creating "a

tects, builders, and m e m b e r s of the board over the years during which the building was conceived, planned, and constructed.

45

His correspondence

\ cry unsightly condition" as the messengers elbowed their way to the p h o n e lines.

44

Quotation boards, where the changing prices of commodities were

shows h o w he mediated between traders, customers, architects, and con­

recorded, were raised off the ground to make more room and operated from

cerned m e m b e r s of the city bureaucracy, who all had an interest in the shape

a b a l c o i n . T h e News Bureau was shunted into the smoking room as the

of the building. T h e C B O T that now stands is an artifact o f Rumsey's skill­

markets they reported on ballooned.

ful h a n d l i n g o f these exchanges. O n c e it was erected, it consolidated a net­

'The architects, builders, and New Building C o m m i t t e e debated how to

work o f individuals, c o m m e r c i a l interests, and urban planning concerns in

turn this haphazard arrangement into an ordered whole. Creating a ration­

its stone form.

alized board room meant both providing good arrangements for the traders,

Rumsey's c o m m i t t e e r e c o m m e n d e d plans to the chair o f the board of di­

giving each equal access to the market and its sources of information, as well

rectors, w h o had the final say. B u t there was little disagreement between the

as providing efficient conduits for prices between the board room's markets

board o f directors and its c o m m i t t e e . Rumsey was the guiding hand behind

and the outside world. E a c h demanded close attention to the construction

the building, synthesizing interests and making the final decisions about

of physical space. Letters to and from Rumsey detailed disagreements over

what would be built and how. H e made sure not only that the design al­

the kinds of communications technologies to include, where to place them,

lowed for c o m p r o m i s e between interests, but that assembling physical plans

and how to set up the pits lo optimize their operation. Luckily for the New

was an opportunity for experiment. During the design process, he could

Building C o m m i t t e e , an experiment in marketplace design was already

bring the marketplace more closely in line with the ideals o f c o m m e r c e ,

under way. Before the builders began to wreck the 1885 building, the board

shaping t h e pits to reflect market principles o f individual competition and

reestablished itself in a temporary trading space not far from the new con­

smooth circulation, and making them literally durable.

struction site. New arrangements and materials could be tested there. 'The

40

*

Hater-ials of the Market

Chapter- One

*

41

experiment showed that traders' c o n c e r n s focused on their access to other traders' eyes and v o i c e s . In the board room, hand signals and shouts conveyed prices and dealing offers, placing the body at the center of traders' dealing strategies. Floor trad­ ing was taxing physical labor. T o take full advantage o f the markets, a trader stood for hours a day among throngs o f competitors jostling each other for advantage. For the interim trading floor to work, it had to provide a certain level o f physical comfort for the traders and allow them to hear and see the sounds and gestures of their trading partners and the market as a whole. T h e acoustics o f the hall were crucial to the operation o f the market and to prof­ its. R u m s e y conveyed this to Flolabird and Root in a request to use a flooring material for the permanent trading room that would absorb excess sound and be "easy o n the feet." T h e architects dismissed wood, rubber tile, cork, and l i n o l e u m as options. T h e softer materials would quickly give way under the floor traffic and would, "in a short time present a dilapidated appearance."

45

U n h a p p y with t h e architects' aesthetic intransigence, the board turned to a scientist for help. Runrsey hired Professor F. R. Watson, a physicist at University o f Illinois, to analyze the acoustics on the temporary trading floor. T h e r e was apparently m u c h room for improvement. A letter to J o h n Hola1.6 Traders at the C B O T pose for a group portrait on the crowded trading floor. Courtesy ot

the Board of Trade of the Cih' of Chicago.

bird from t h e N e w Building C o m m i t t e e conveyed,the.sentiments o f t h e traders and communications workers from the experimental trading floor. Traders .in the corn pit were especially piqued: Conditions are terrible, far worse than it was at the old Board; can't make yourself heard across the pit; in the old Board could stand on edge of pit with back turned and pick outand distinguish voices, impossible now; majority of traders are experiencing throat trouble since they began trading here; go home at night actually tired from the exhaustion of shouting in order to be heard and from the continual uproar and noise in the trading hall; in the old build­ ing were able to distinguish outstanding voices of men in the wheat pit or whever [sic] they might be, can't seem to now;. . . one could pick pit voices readily and locate their origin, but that is difficult now.

46

Clearly the experimental space had failed to improve the market. T h e ca­ I i Before the da\ \ a, tn it\ began, tin hadmg floor of the 1 SSr> building appears calm md or­ derly. T e l e p h o n e stations and piolik rating trading pits d o n o t , Infer the sp it t i t ! C o u r t e s y of the B o a r d of T r a d e of tin O h <>t C h u a z o

cophony even threatened t h e accuracy o f the price information c o m i n g o u t of t h e pits. A Mr. Chronister, who managed the C B O T ' s Quotations D e -

42

*

Chapter One

Materials of the Market

*

43

partment, reported that the new space was " 5 0 0 / ? worse than the old build­

Your Committee o n New Building has been advised of the wishes of your

ing. ' I h e reporters have difficult}' in getting quotations correctly and the

Honorable Board . . . relative to. . . the installation of equipment for fourteen

traders themselves are unable to hear proper!) across the pit."*"

private telephones adjacent to the Wheat pit to the South.

14 the quotations were incorrect, false price information would flow from

We must respectfullv, but nevertheless earnestly, protest against such a

the trading floor by way of the telephones, telegraphs, and pneumatic tubes

plan. Two years of study and thought were dedicated to the main floor arrange­

dial c o n n e c t e d locations as near as office- in the building and as far away as

ment, for handling the business of the entire active membership rather than

Faigland a n d Argentina. D e m a n d for information from the C B O T was grow­

the few. The best architectural and engineering talent have counseled us in

ing rapidh. For the new building, the architects expanded the electric wiring

determining the best possible arrangement for our floor facilities, including

capacity ot t h e floor and o p e n e d larger channels for telegraph cables to run

private telephones. Two Boards of Directors have reviewed and approved of

from the board room to the offices o f the Cleveland Telegraph Company,

the lay-out, sponsored by your Building Committee.*

1

the Western Union office, and the postal telegraph stations. Although these c o m p a n i e s provided the major public access to C B O T quotations, many firms m a i n t a i n e d their own dedicated lines to the trading floor.

S o m e raised aesthetic objections to the new telephones. "It is the unan­ imous opinion that it would be a serious mistake to mark the superb E x ­

Flow to arrange the informational conduits o f the trading floor was a hot

change Hall floor with this limited number of telephones," the building

button i s s u e . R u m s e y and the N e w Building C o m m i t t e e had to mediate

committee wrote. But mainly the committee objected on the grounds o f

arguments between traders, telegraph companies, and the architects over

equal access to information. S o m e firms had begun "flashing" their orders

where the telegraph and telephone stations were to be located on the floor,

to the pit from the telephone lines, relying on the rapid hand signals that

and how to allot them to Western Union and other telegraph companies.

would b e c o m e an integral and identifying part of financial pits. T h e N e w

Noting that "jajt present there is more demand for telegraph facilities than

Building C o m m i t t e e saw this as introducing informational disorder. Flash­

ever b e i o r e , " the Holabird and Root plan provided for sixteen telephone

ing blurred the boundary between the pit and the outside market. T h e hand

booths in sight o f the quotation board. Traders suggested configurations for

signals made customers' orders visible to attentive traders who could see

the telegraphs and telephones. Arthur Liudley o f C l e m e n t , Curtis & C o .

them before they reached the open market. Rather than acting only with in­

suggested t h a t the C B O T imitate the N e w York C u r b Market and install

formation available within the market borders of the pit, these traders could

stadium-style telephone banks to ensure that "every telephone man has a

act with information from outside the boundaries o f the physical market.

very clear v i e w of the whole floor." Rumsey filed his letter and photos with

Adding new telephones would therefore not only favor a select group o f

"all the o t h e r s of like nature."*

trading houses but also allow the market to spill over out o f the trading pit.

Flolabird and Root were also c o n c e r n e d to make market information

Rumsey's letter continued:

available to all participants. T h e y noted that the haphazard arrangements that had grown up on the older trading floor had obscured the quotation

It appears that the preference for these telephones is confined entirely to cer­

boards. A fair market where skill and speed would determine profit required

tain houses flashing their orders to the pit, and . . . this practice has been

equal a c c e s s to information. T h e firm set out to construct a board room that

frowned upon in construction plans due to its possibility for special prefer­

would give n o inherent advantage to place. However, not all participants

ence. Customer orders should have privacy, and it is a notorious fact that alert

were willing to give up their privileges. S o m e m e m b e r firms tried to ma­

pit traders soon become aware of the signals of different houses and can thus

nipulate a c c e s s to telephones, aiming to gain advantage in the market by in­

define the character ot orders before drey actually reach the pit.

fluencing

t h e arrangement of space and (cclmologv on the trading floor.

Therefore, . . . there is no justification for making any variation in the

T h e y pressured the board o f directors to secure extra telephone lines that

plans for confining the private telephone privileges to the East and West wall

would support their own business. T h e picsident piessured Rumsey to ac­

of the building, as this plan avoids highly discriminatory positions, while ben­

c o m m o d a t e their requests.

efits, if anv from change, accrue to comparatively few firms. "

5

Rumsey o b j e c t e d to this departure from the ideals o f an apolitical mar­ ket developed under the direction o f experts. H e replied to the president's

The

attempt to i n f l u e n c e his plans with ire:

kind o f information available. T h e y had assembled the expert opinions that

N e w Building C o m m i t t e e stood by its responsibility to define the

44

*

Materials of the Market

Chapter One

showed t h e m how to engineer information and shape the space of the trad­ ing floor. T h e design process they favored reflected the process o f the mar­ ket itself. T h e y worked with the idea that conflict produced the truest and

*

45

Vrchitechue o f C i r c u l a t i o n I he story o f the C B O T and architecture does not end in its Art D e c o h a l l s . I he differences between the 1 8 8 5 and 1 9 3 0 buildings arose from a r e n e g o ­

best design, just as it allowed the market to "discover" a price. T h e 1 9 3 0 building was the symbol of the board's place in the city and na­

tiation of the material form o f the market; the expansion o f the 1980s pro­

tion. T h e m o n u m e n t a l design of the board room and the care that went into

vided another opportunity for the C B O T to reconsider the form and sym­

its construction asserted its central importance to the organization and the

bolism o f its marketplace. S o m e fifty years after the construction o f t h e Art

city. R u m s e y and his c o m m i t t e e had worked to create a board room that

D e c o tower, the C B O T raised more questions about how best to express its

would draw traders, firms, and information into the pit. T h e design o f the

markets and mission through its architecture, m a k i n g plans to r e d e s i g n

floor a n c h o r e d the market inside the pit and created lines o f c o m m u n i c a ­

its market space.

tion that stretched away from it.

T h e room for expansion allowed for in the 1 9 3 0 design could not c o n ­

W h e n the new building opened, the c o n n e c t i o n between C h i c a g o and

tain the explosion o f trade that followed the invention and d e v e l o p m e n t of

futures markets was undeniable. T h e C h i c a g o newspapers crowed, declar­

Treasury futures markets in the 1970s and 19b0s. By the late 1970s t h e ex­

ing its central place in the city. T h e Chicago

ran a photograph

panding Board of Trade was stretching its machine-polished seams and b e ­

with the caption, "Impressive when viewed from any angle, the Board o f

gan planning an addition and an improved trading floor that would be c o n ­

Trade Building stands like a tall sentinel among the older structures that

structed behind the 1930s building. T h e y commissioned Helmut J a h n , of

Daily

News

flank it on the east and west. O n clear days it is visible to motorists starting

the C h i c a g o firm Murphv/Jahn. to design it. '1 he differences between the

northward from Hyde Park on the outer drive." T h e Chicago

Times

Art D e c o building and the new glass and steel addition reflected the e v o l u ­

for N o v e m b e r 1 3 , 1 9 3 1 , devoted a spread to the building with the following

tion of the C B O ' l from its origin in industrial technologies and agricultural

h e a d l i n e : " n e w BOARD O F TRADE BUILDING IN FRONT RANK OF CHICAGO'S

trade to an exchange built on the profitability of financial futures contracts —

POINTS O F INTEREST."

abstractions upon the abstraction o f the U.S. economy.

Daily

S m a l l e r headlines defined other sections.

T h e C B O T ' s place in the post-1970s global financial markets is r e p r e ­ sented by its material presence on the streets o f C h i c a g o . T h e new a r c h i ­

THE S E N T R Y — L a S a l l e St., financial center of the west, stretches before this

tecture embodied the emerging identity of the board, crystallized its al­

h a n d s o m e temple o f trade. The architectural marvel rises 44 stories into

liances, and created a futures market outfitted with the latest t e c h n o l o g i e s

the sky; it value—land and building—is $22,000,000. L i m e s t o n e is the

and guided bv new principles o f market action. T h e s e had changed radi­

p r e d o m i n a n t material used in its construction.

cally since the wheat market dominated the trading floor. T h e g l e a m i n g

BEAUTY GALORE — Inside and out, the B o a r d of T r a d e Building c h a l l e n g e s its

fellows the world over.

new building, with its airv offices and sunlit interior, was appropriate f o r an organization centrally engaged in global financial netwoiks. I l l u m i n a t e d

51

from the inside, the building seems to float. Even though trading takes p l a c e T h e B o a r d o f Trade C h a p t e r o f the American L e g i o n offered yet another

in the hangarlike dealing room, the building's transparency expresses its

suggestion for making the building a spatial signpost for C h i c a g o . John

connections to the markets beyond its halls." N o longer is the B o a r d o f

F i s h e r , the post's c o m m a n d e r , wrote to r e c o m m e n d a beacon light for the

Trade a financial space contained within Indiana stone, declaring its c o n ­

top of the building, which would serve as a guide-light for the U . S . Air Mail

nections to agriculture and proclaiming its seemingly immovable p l a c e in

pilots and would, "help to bring the n a m e of the C h i c a g o Board o f Trade

C h i c a g o . T h e new building's open environment replaces limestone s o l i d ­

into greater p r o m i n e n c e , not only a m o n g the people o f C h i c a g o , but of the

ity with an aesthetic appropriate to global network connections; its s p a c e s

United States as well." Finally, it would be the only b e a c o n light west of

bear little trace o f Chicago's specificity.

54

N e w York atop a major building. Although it is unclear whether a light was

Instead, the 1980s building establishes a space o f circulation that c r e a t e s

ever installed, it is certain that the American Legion officers had the right

an image of swift, unobstructed flows, the market ideal for digital d e a l i n g ,

idea. T h e C B O T building was a b e a c o n for the City o f C h i c a g o and its

the newest market technology. T h e neon lighting and the boxy spaces of the

financial nexus for years to c o m e .

1980s addition retain little of the careful craft and local detail that established

52

Materials o f the Market

+

4?

a sense of urban solidity and regional significance in the 1930 building. At­ t a c h m e n t to place can tie down the e c o n o m i c organization and individual; in financial dealing this threatens to draw attention from the space of trade and into the realm o f civic obligations such as family attachments and city life, all of which threaten to impinge on financial judgments. Instead of ded­ ication to place, the architecture of the j a h n building exudes abstraction and distilled c o m m i t m e n t only to the circulation of colorless capital. T h e Board of Trade o n c e reorganized the space o f the city in order to build a market. Jahn's abstract structure reveals how organizations like the C B O T now un­ derstand the market as detached from place, a "disembedding" aligned with market ideals o f unobstructed flow." Yet at the core of the building is a contradiction to the architecture o f cir­ culation. After fifteen years, the C B O T ' added still another trading floor, an amalgam o f digital information technologies and trading pits at the c e n t e r of the exchange. A heavily guarded turnstile gives access to the fourth floor— a space with two separate sections: the agricultural room, where traders still deal in contracts for wheat, corn, and soybeans, and the now more power­ ful financial dealing room. From the grain room, a narrow passage opens into the e n o r m o u s new space where financial contracts are traded. Pat Arbor, chairman of the Board ofTrade in 1997, when he built this state o f the art, $182-million trading facility, made it clear that the board's c o m m i t m e n t to pit trading was unshakable. But the new trading floor already s e e m e d trapped between its c o m m i t m e n t to place and its mission o f creating end­ less circulation. Blair Kamin, the architecture critic for the Chicago

Tribune,

empha­

sized the c o n n e c t i o n between the city's master modernist architect and the new trading space designed by his successors, Fujikawa, Johnson, and As­ sociates. "Anyone who ventures up to the trading arena itself cannot help but feel Mies's influence. T h e master almost surely would have been pleased by the straightforward power o f the room's big, column-free space, by its flexibility to a c c o m m o d a t e both expansion and future technologies, and by its lack o f visual clutter—no small achievement for a building with about 56

2 7 , 0 0 0 miles o f low voltage cable." Yet elements o f the new trading floor were more akin to the fortress architecture o f contemporary Los A n g e l e s . " It is an aggres&ively private space, a huge stone block just to the side o f the main building. T h e r e are no windows. T h e walls of the new trading floor J . / t h e m o d e m glass extension and am .ttrium mix inside and outside, suiiboli/nm the u n o b structed How o f abstract financial futures contracts '1 he Art Deeo portrait ot ( Vies lhat once graced the 19 trading tk.oi „.id it minded uacters that then commerce >w, based m gun, ,^ now framed t o r nostalgic e f f e c t P h o t o bv B o b Davis.

create a boundary for the market, severing it from the city streets beyond and ensuring that no information can be exchanged between inside and outside. T h e r e is no public entry to the building. T h e revolving doors are tucked under the overpass between the old and new buildings. T h e doorwav opens onto an atrium where members exchange their street jackets tor trading

48

*

Materials of the Market

Chapter- One

*

49

coats. T h e r e are no chairs or places to linger. It is a clearly defined pissage

inilmcnt to a particular market form: the trading pit as the nexus where

pointing to the trading floor. Traders pass through the guarded turnstile and

commodities and information converge. With this new and costly structure,

ride up t h e escalator to enter u V network ol hallways surrounding the trad­

the C B O T leadership-invested the organization in a particular vision o f the

ing floor. T h e walls are unadorned granite, shinv. cold, and imposing. Short

C h i c a g o market nexus. Arbor and his supporters argued that the millions of

and shallow passageways c u t through hanks o f phone desks to open onto a

dollars spent on space and technologies to support the floor traders was

trading room the size of G r a n d Central Station. Diffuse, bright, fluorescent

nothing compared to the advantages their unique skills brought to the work

light c o m e s from the fixtures four stories above. T h e walls o f the financial

of pricing and creating liquid markets. Digital technologies were excellent

room are covered in tall, gray panels covered with metallic-looking mate­

conduits o f information to and from the trading floor, Arbor argued, but the essentia! technology o f the C B O T was still the trading pits. All trading in

rial. T h e r e arc no internal walls to break up the space. C i r c u l a r structures raised above the floor level have steps inside and are

American Treasury- futures was channeled through these market arenas. E v e n

ringed with padded railings for the clerks and brokers to lean against. Within

when the board implemented an electronic trading system in the mid-1990s,

the pits there are no places to sit. L o n g phone desks abut the pits, where

it functioned as a supplement to the pits, operating when they were closed

clearing-firm clerks take orders and relay them to traders. W h e n there is no

for business. T h i s commitment to the pit, a specific place, and the local pop­

o n e in t h e room, the sense ofvacanev is absolute. T h e r e are no photos offam-

ulation o f traders contradicted the logic o f ubiquitous circulation.

ily or friends such as might b e found on c u b i c l e walls in offices anywhere

T h e trading pit remains the C B O T ' s e m b l e m and key tool for making

in the country. Nofliing suggests what kind o f c o m m e r c e occurs at the ex­

markets. An image of a trading pit is emblazoned on the stone facade o f the

c h a n g e . T h e only signs o f life outside this enclosed space are three flags on

new trading floor, declaring the board's dedication to its method of trade.

the east wall—the American flag, the Illinois flag, the City o f C h i c a g o flag,

T h e same symbol is imprinted on C B O T business cards and on every' pub­

and a b a n n e r that says, " W e l c o m e to the C B O T " on the north wall.

lication that leaves the C B O T ' s central offices. T h e trading pit as a p l a c e

Despite its fluid, abstract architecture, the trading floor reveals a c o m -

and a technology at the heart o f the exchange remains a defining ieature of Chicago's distinctive commercial life. In the late 1990s, as the global fu­ tures industry was implementing digital dealing, the C B O T had to defend its c o m m i t m e n t to the trading pit. T h e trading floor hidden within t h e ar­ chitecture o f circulation exposes the challenge that the C B O T faced. T h e meaning and function of the 1 9 3 0 building had gradually given way as de\elopments in technology' and changes in financial markets allowed the board to reshape the material form o f its marketplace. By the late 1990s the board was n o longer able to sustain the contradiction at its core. Electronictechnologies were replacing trading pits around the world. T h e price o f a membership plummeted, and the board began to plan how to integrateelectronic trading technologies, but the C B O T ' s historical a t t a c h m e n t to open-outcry trading was not easily broken. T h e m e m b e r s ' collective c o m ­ mitment to the cultural life and form of labor based in the trading pits was as fierce as the spirit o f C h i c a g o c o m m e r c e . Although many ot the argu­ ments in the 1990s placed the computer at the heart of the problems o f technology, we have seen how technological innovations, from bridges to telephones and architecture, have reshaped markets and raised c h a l l e n g e s to older forms o f exchange. Creating a material form for abstract e x c h a n g e has always been a fundamental problem of the C B O T , and the shift from

I.S' T h e Hags of the t 'nitett States, Illinois, and the C i t v of Chicago hang m the

financial

luhires trading lull, marking the exchange's commitment to local and national identity, despite its global orientation. Photo by Bob Davis.

pit trading to electronic trading at the end o f the twentieth century- was o n l y the latest phase in the modern project of creating the abstract space of m a r -

kets. F r o m standardizing contracts and c o m m e r c i a l measures to establish­ ing the c i t y as a c o m m e r c i a l space, creating circulation is a project based in the m a n i p u l a t i o n o f the physical world through technology and architec­ ture. R e v i s i n g the material form o f the market to conform to the shifting ideals o f abstraction can never be complete.

In July 1998, Pat Arbor, the chairman of the C B O T , called a members' meet­ ing to discuss rumors circulating in the pits, lunchrooms, and bars in and around the C B O T . Every day new tales surfaced about Arbor and his sup­ porters pursuing electronic trading and creating a global trading network with other exchanges. T h e C B O T had already instituted its own electronic trading system, Project A, which operated after the trading floor closed, and word was that the managers were considering leaving it on all the time. More worrisome were Arbor's reputed intentions to bring European-style electronic trading to C h i c a g o . He was pursuing an alliance with the allelectronic German-Swiss E x c h a n g e , which had recently wiped out the pits in London. T h e C h i c a g o traders knew their chairman was making plans, and the traders speculated constantly on exactly what they were and what kind o f changes they would bring. E a c h bit o f gossip stirred up their anxi­ eties. W h a t costs would this transition involve? How would they train them­ selves to work on screens when their work had been rooted in the h u m a n action o f the pits? Was Arbor going to give their G e r m a n rival power over the course o f the C B O T ? Was their way o f life and labor at risk? T h e out­ c o m e o f arguments over the implementation o f electronic technologies and cross-Atlantic alliances would shape the exchange's trading networks. T h e history of C h i c a g o , allegiances to the trading pit, and the close ties of C B O T m e m b e r s c a m e together to direct the actions of the largest futures market in the world. T h e thirty-year Treasury B o n d futures pit was the stage for the meeting. That July day, scraps of paper from the last hours o f trading littered the floor as the clerks and other employees filed out, leaving only members in the quiet pits. Traders from the grain room across the hall joined the

financial

dealers. Arbor was already waiting to preside over the meeting, literally, from his perch atop the market reporters' stand, which hung over the pit. From the outset, the members were tense and their chairman was defensive. Arbor 51

opened die meeting saving that he wanted to dispel the "rumors du jour"

catastrophe, since people working face-to-face could maintain stability in

and allow the m e m b e r s to ask questions in the open, bringing what was al­

turbulent times.

ready being talked about into the official discourse o f the exchange.

In its advertisements, the C B O T reminded the world's financial man­

First, h e said, the C B O T would use its reserves to update its technology."

agers that these markets were the only ones to stay open during the 1987

M e m b e r s would not be required to pay out of pocket for the electronic tech­

crash. T h e i r strength, they argued, c a m e from a potent source —the dedi­

nologies they feared would relieve them o f their livelihoods. T h e next ru­

cation o f the C h i c a g o floor trader. T h e i r perseverance in making markets,

m o r was wishful thinking. "Hasn't the Eurex agreement fallen apart," some­

even in the face of their personal financial peril, kept the exchange sailing

o n e asked. No, it had not foundered. Arbor told them. T h e members noted

through the storm. T h e relationship between Chicago's traders and their dis­

that the wider public lacked confidence in the C B O T ' s future course. Over

tinctive technology is reciprocal —just as the men make the pits work, work

the last year, the value o f C B O T "seats" had fallen almost half a million dol­

in the pits shapes these men, creating a process that solders self, technology,

lars off their peak. T h i s loss in value symbolized the declining significance

and organization together to forge a market.

1

of the exchange, but it also meant that each full m e m b e r o f the C B O T had

T h e y asserted that it was the relationships among the traders and the

lost $ 5 0 0 , 0 0 0 (in paper value, at least; in this collapse. Arbor had to dispel

roots o f the market in open outcry technology and in the city of C h i c a g o

the h o p e o f the next questioner, explaining that the C B O T was not buying

that created the deep, liquid markets that had always drawn business to the

up seats to boost prices.

C B O T . In other words, they believed that the p r e m o d e r n e l e m e n t s o f

O t h e r questions danced around the central issue, and then someone

2

the C B O T were still at the heart of this modern financial exchange. T h e im­

raised it directly: " W h a t good is a seat without open outcry?" Another asked

personal nature o f electronic trading posed the greatest danger to the mar­

rhetorically, " W h a t is the appeal of computer trading, besides some cost sav­

ket, they argued. New technologies that linked actors who were decentral­

ings? Traders can get into the pit and see a true bid/ask. T h e v can see exact

ized and dispersed would remove the energy and excitement that could

size. B i g g e r , deeper, better markets is what open outcry c a n give." But

only c o m e from face-to-face competition. Traders worried that with rivalries

Arbor refused to acknowledge what the speaker m e a n t to pass off as a self-

and friendships far removed, computer trading would not give the rush or

evident truth. He replied curtly that computers could provide deep and liq­

provide the intensity o f competition they experienced in the crowded pit.

uid markets and then pushed ahead. The members were committed to

T h e y insisted that the more abstract and analytic approach to the market

open outcry, but they had never before had to justify or defend their trading

would cause screen-based markets to be illiquid; that is, the online exchange

system. Traders' allegiances and profits were tied intractably to the trad­

would be unable to provide continuous circulation.

ing pit, but, until recently in the history of the C B O T , these attachments had

Defenders of the C B O T pit technology also argued that the open-outcry

r e m a i n e d in the background, part o f the invisible structure of assumptions.

tradition was better suited to handle the human irrationalities that cause

T h e t h r e a t o f e l e c t r o n i c trading, even in its vaguest forms, forced t h e m

panics in the market. Even the forward-thinking Arbor declared, "Nobody-

to consider where open outcry fit in the nascent technological future. T h e

does it better in times of market stress." Traders inhabit, identify with, and

m e m b e r s fought over the implementation of electronic technologies and

develop responsibilities to the market. T h e conservative traders argued thai

cross-Atlantic alliances to preserve the place of the pits, the future o f their

this unique combination of attachments kept the C B O T markets liquid.

craft, and, they hoped, the role o f C h i c a g o as a center of global trading. T h e

Sean Curley Jr. told a story from the bond pit that illustrated the responsi­

stakes c o u l d not have been higher.

bilities o f the trader and his professional identification with the market. It

W h e n they spoke a m o n g themselves, traders defended open outcry by

was M a r c h 1 9 9 5 and the government was about to release e m p l o y m e n t

saying it created efficiencies in the market that no electronic technology

statistics for February. Even though traders were expecting a stronger job

could ever replicate. T h e y believed that the "liquidity'" of the pits was deep:

market by about a hundred thousand jobs, the number that appeared o n the

any bank or strategist could do business at any time, no matter how large the

electronic ticker tape showed an additional five hundred thousand jobs.

order, ensuring the circulation o f capital through its markets. T h e pits pro­

Conventionally, bond prices drop a when e c o n o m i c signs, such as u n e m ­

vided speculators, and speculators would always trade. C h i c a g o traders also

ployment data, indicate a healthy economy. W h e n job growth is strong, in­

believed that the open-outcry system o f the pits protected markets from

vestors see more profit opportunities in the stock market. T h e y sell treasury

Trapped i -• the Pi ts

*

55

bonds, d r i v i n g down the price, and reinvest the money in the equity mar­

upset the delicate balance between the abstraction o f markets and the ma­

kets, a l o g i c that can be dangerous for bond-futures traders.

teriality o f the pit. Yet proponents o f the new information technologies

S e a n r e m e m b e r e d the day vividly; "And the bonds traded down, down,

asked what seemed to be a straightforward question about efficiency. W h y

all the way t o limit down. . . . T h e big bond locals didn't leave the bond pit.

should big banks pav fees to Chicago's brokers for carrying out their orders

T h e y couldn't.

You can't. That's what you're there for. C e r t a i n bond guys

when electronic networks could c o n n e c t traders directly? Electronic net­

won't l e a v e , even when they're losing a lot o f money, until their friends pull

works could obviate trading pits entirely and provide direct access to the

them out o f the pit. But, you know, they just were there to make markets,

market. T h e possibility o f electronic trading undermined the traders' work­

that's what their job is."

ing assumptions about the production o f markets by challenging their effi­

A d v o c a t e s o f open outcry even contested claims that electronic markets

ciency—the fundamental reason given in favor o f the C B O T pits. In re­

provide g r e a t e r transparency. T h e y argued that the social environment o f

sponse to this threat, the members and managers o f the C B O T defended

the pit, w h e r e traders know and watch each other, is a more effective forum

their form o f exchange.

for identifying illicit market activity. T h e responsibility shared by competi­

The

technologies o f digital trading "problematized" the reigning market

tors and friends alike creates a social transparency that no accounting pro­

form and forced market planners and managers to reimagine and recon­

cedure c a n match. "With the eyes o f competitors on you, vou are unlikely

struct what markets should be in light o f the new possibilities o f technology

to do s o m e t h i n g dishonest. . . . O n the screen, how do you know who the

and geography. T h e mere idea o f electronic trading made the constitution o f

criminals a r e ? "

5

T h e traders argued that the technological tools of market abstraction, the direct c o n n e c t i o n s between electronic trading screens, would hinder the mar­ ket's o p e r a t i o n . T h i s discussion positions technology as a force o f efficiency

the market—the trading pits and the personal interaction that brought them to life —"into an object of reflection" and made it "available for analysis o f its meanings, its conditions and its goals" when it had not been b e f o r e / The

screen would replace personal relations with abstract associations.

that d a m p e n s emotion and facilitates calculation based solely on prices and

Men

other financial abstractions. T h e argument belies how social ties and emo­

would b e replaced by numbers. T h e logic o f this process o f "disintermedia-

tions are always part o f t h e market. T h e market ideal o f technological ab­

tion" redefined the landscape o f the futures markets. Everyone knew, and

straction sets the terms o f the debate —one that the floor traders were sure

many feared, that digital technologies could circumvent the trading floor

to lose as t h e market made the transition from an earlier modern form to a

entirely, setting the market loose from the pits. Traders' on-screen interac­

contemporary one. O n regular work days, though, the s c e n e on the financial trading floor

laboring to create liquidity with their voices and bodies in the pit

tions would be recorded on servers they never saw or felt, allowing the mar­ ket to float freely among the electronic nodes o f a global network. S c r e e n -

gave no h i n t o f the threat the traders were facing. T h e C h i c a g o Board o f

based trading not only threatened the traders' links with the market but also

Trade markets had a b a n n e r year in 1998. T h e pits were packed. T h e thirty-

put the identity, economy, and business culture o f C h i c a g o at risk. E l e c ­

year U . S . Treasury B o n d futures pit, the largest in the industry, hit its daily

tronic t e c h n o l o g i e s could remove the market from the marketplace and

5

record on August 2 7 — 1 , 1 2 1 , 6 3 4 contracts. T h e hall vibrated with the

relocate it outside the C h i c a g o nexus. According to estimates at the time,

shouts o f active business. T h e traders did not fear that the C B O T ' would fail

Chicago's exchanges provided, either directly or indirectly, more than a hun­

but that t h e pits and their jobs would be swallowed up by the new logic o f

dred thousand local jobs —many o f them high-end service functions such

world markets they had helped to create. T h e members and the exchange

as banking, law, and insurance.

leadership faced a vexing problem. How could the C B O T update its tech­

The

traders themselves were wedded not only to open outcry but also to

nologies a n d remain a global player while maintaining its c o m m i t m e n t s to

the cultural practices and forms o f social organization associated with it,

C h i c a g o a n d its traders?

from the skills honed over generations to the institutions that brought it to

Traders a n d managers had a set o f fierce and contradictory commit­

life. Traders growing up in C h i c a g o and its suburbs learned specific ways o f

ments, first t o the market and then to their way o f making the market—the

engaging the market through networks of friends, family, and neighborhood

trading pit. I n their vision o f the trading nexus, the pit was the physical lo­

ties. M e m b e r s o f Chicago's "trading families" learned about open-outcry

cation for t h e market, putting flesh and bones on the abstract market, peo­

methods o f competition and strategies in their youth. Thousands o f others

pling it with bodies, voices, personalities, and colors. Digital technologies

are c o n n e c t e d to the market through looser ties with friends, colleagues, o r

S6

*

Chapter Two

Trapped in the Pits

*

clients w h o work at the exchange. People who work downtown saw the gar­

of the traders and brokers who work in the pits. T h e physical and social or­

ish, colorful coats that traders wore to make themselves visible in the crowded

ganization o f the pits supports the technology o f open outcry trading.

pits. T h e C B O T building was just o n e o f the ways that the marketplace m a d e a visible contribution to the city's atmosphere.

• For the C B O T ' s believers in open outcry trading, the market begins and ends on the trading floor. T h e space of the pit defines the market, and its oc­

D u r i n g its hundred-and-fifty-year history, the pit had garnered a singular

tagonal steps organize the arena of exchange. Temporally, the market is what

place a m o n g trading technologies, too. T h e C B O T defined the market in

is happening that m o m e n t in the pit, and is apparent in whatever deals are

futures every day. C h i c a g o traders were proud of their part in modern mar­

being made. O n c e trades have been written and verified and their prices in­

ket history. Losing open outcry threatened their role in global finance. T h e

scribed on the quotations board and sent out on the electronic ticker tape —

C h i c a g o B o a r d o f T r a d e resisted digital t e c h n o l o g y w h e n other central

all of which takes only seconds—the market has moved on. T h e traders'

financial institutions in global cities were willing to submit themselves to

work is to locate the market, a process that discovers the price of a c o m m o d ­

rapid c h a n g e . T h e C B O T ' s fight for the distinctive technology at the cen­

ity, and it can be found only within the boundaries o f the pit. B u t the work

ter o f its exchanges was a struggle to define the singularity o f C h i c a g o and

of the pit does not end here. As an e c o n o m i c device it is a site for identi­

establish its special importance in the systems of global finance and among

fying the contours o f the market, but that process is entwined with trading

global cities, as well as to establish its own terms for how the markets in

hierarchies, and the pit operates as symbol for the C B O T , not just as a mark

6

financial futures would be spun into a web of global markets.

7

How did the C B O T b e c o m e so entangled with open-outcry technology?

of the organization. It is a defining object that must be defended. The

abstracted image of three c o n c e n t r i c octagonal rings is the official

To understand this, we must first understand how traders' techniques are

symbol o f the C B O T . T h e pit wrapped the c o m m e r c i a l glory o f C h i c a g o

wedded to a single technology of exchange. But this is not a simple question

within its c o n c e n t r i c steps; it tamed the swirl of c o m m e r c e and sucked it in

of skill. T h e affective ties of the m e m b e r s to family and to C h i c a g o extended

to return market information as concrete prices. It is the commercial nexus

to their method o f trading. W h e n new technologies and exchange tech­

of Chicago's financial world. T h e pit is more than a place where prices were

niques presented a global challenge to open outcry trading, traders strug­

set; it is a symbol of a city and its global connections.

gled to find a viable way to navigate the terrain o f electronic efficiency that

S i n c e 1870, the stepped, ringed structures have been the distinctive fea­

digital technologies carved out. T h e c o m b i n a t i o n o f technological conflict

ture o f the Board R o o m . Just as redesigning the trading floor o f the 1 9 3 0

and local history played out in the 1998 contest for chairman of the C B O T ,

building offered an opportunity to rationalize the marketplace, the pit itself

the m a n who would plot the organization's course in the new technologi­

was originally an effort to rationalize the space o f the market. Its design

8

cal landscape. T o understand this decisive m o m e n t in C B O T history, it is

worked to solve a problem of the fragmentation of the marketplace. W i t h i n

helpful to examine the layers o f technology, social institutions, and cultural

twenty years of its founding, trading at the C B O T b e c a m e so popular that

practices that formed the market's foundations.

crowds inundated the C B O T space. Unable to see potential deals across the room, traders scaled heights to improve their sight lines. Market reporters

T e c h n o l o g y and Performance

began to complain in the pages of their daily papers that traders were c l i m b ­ 10

ing onto their desks and obstructing the reporters' vision. As auctions, fu­

O p e n outcry trading brings the market to life." T h e pit's steps arrange the

tures markets are effective for manufacturing prices and producing profits

market as it organizes traders' shouts and hand signals. E a c h trader brings

when all the participants can see and hear all bids on offer. T h e crowded

his bids to buy and offers to sell to the open pit. T h e auction that follows

trading room hindered speculators from getting to all the available trades.

does not have a central coordinator. E a c h deal is a c o m m u n i c a t i o n between

S i n c e traders could do business only with partners in their immediate r e a c h ,

the individual trader and the market as a whole. Brokers and local traders,

the market broke up into cliques, each producing its own price based on

or "market makers," form agreements that move contracts. If the trade is not

whatever information was available from its vantage point. T h i s was a weak­

a c c o m p l i s h e d inside the pit according to the specific set of performances

ness both for individual traders and for the C B O T , whose mission w a s to

that qualify as a trade, the exchange does not legallv occur. T h i s specific per­

create a central marketplace that set a single price for a commodity.

f o r m a n c e unites the physical location of the C B O T and the particular skill

T h e pit offered a solution to the problem by rearranging the space o f the

58

*

Chapter Two

Trapped in the Pits

*

59

market. R a t h e r than distributing participants over the flat surface of the floor,

a week, not a year. Ever}' year. N u m b e r one—this says something. This says

the pit r a i s e d them up in tiers, as in a stadium, an arrangement that produced

that the world, and this is a global market, c o m e s to the Board of Trade daily

c o n s i d e r a b l y better views. After trying out several shapes for the raised struc­

because they believe in us. T h e y believe in the m e m b e r s and they believe

ture, the C B O T introduced the octagonal pits in 1870, and these tiered steps

in the C h i c a g o Board of Trade."

have o r g a n i z e d the open outcn- market ever since.

He directs the listener to recognize that the success of the organization

W i t h i n t h i s trading arena, the choreography o f a trade links the pit tech­

and its markets is directly tied to the skills of the membership. In order to

nology to traders' techniques. T h e fixed steps of open outcry trading shape

understand how the success of these markets b e c a m e coupled with the spe­

shouted n u m b e r s into a legally enforceable contract between traders. Ma­

cific, fixed skills o f the locals, we must first understand the structure of trad­

terial d e v i c e s structure trading, but just as important are the systems of con­

ing and the rich social life o f the pits.

ventions regarding their use. Formal regulations require certain movements to offer a n d close a trade. Within the physical confines of the pit, these move­ ments seal a legal reality, a binding, enforceable contract. T h e action of the

How Trading Works

pit rests on t h e m as m u c h as on the rubber-clad steps. B u t the requirements

T h e succession of stages that make up a trade rely upon the tight orchestra­

are flexible, and traders use these limitations creatively. Practitioners ma­

tion o f individuals. E a c h person controls diverse types o f information and

nipulate t h e conventions and their bodies in ways that sometimes support

operates with a different communications system. T h e ordered interaction

and s o m e t i m e s subvert the choreography o f a trade. Norms o f use among

a m o n g the players is built on and generates relations o f dependence, famil­

traders g r e w up around the pit and b e c a m e fused with it and the C h i c a g o

iarity, and apprenticeship that shape traders' networks and create channels

trading floor. T h e s e norms o f use can change over time, but while thev last,

for career advancement. Learning to master the intricate interplay between

they seem necessary and intractable, the only methods that work.

traders, clerks, phone-bank managers, and outside clients is the secret o f pit

The

n o r m s and legal regulations c a m e together at the C B O T and fused

traders' success and a key to profit. The interactional order of the pit is as im­

into the open-outcry system, a complicated mix o f material objects —the

portant to the e c o n o m i c reasoning o f floor traders as the price information

trading pit, paper records —and the specific physical motions that create fu­

they acquire. To understand how traders b e c a m e so tightly entwined with

tures prices. T h e choreography o f a trade is a technology because this set o f

the pit, we must examine the performance o f trading.

m o v e m e n t s is a device for producing a binding trade. T h i s procedure, em­ bedded in particular motions (discussed in the following section) that ac­ complish a task, is a legally defined technique.

Into the Pit

C h o r e o g r a p h y brings legal and material technologies together with in­

\ trade originates outside the pits with managers and traders from banks and

dividual a n d collective techniques: the dance o f dealing uses not only the

hedge funds. F r o m their bases in major financial institutions, strategists

prescribed m o v e m e n t s but also the artistry necessary to bring that perfor­

monitor financial markets in search o f profit opportunities, either within a

m a n c e to life. T h e r e is room for creative play within the binding rules in the

single market or between financial markets. O n e c o m m o n tactic used by

tone o f the voice, the flair o f the hands, and the timing o f shouts. In the pit,

strategists is to exploit differences in the pricing of bonds for sale in the pres­

the legal rules that define the movements of a trade both circumscribe tech­

ent against the price of bonds offered in months ahead in the futures mar­

nique, by constraining traders' bodies to certain moves, and establish the

kets. For e x a m p l e , the strategist might consult a mathematically c o m p l e x

boundaries for inventive work. Not any m o v e m e n t can create a trade; only

bond-pricing model and see a discrepancy between past and future price.

a limited set o f actions can do this. Yet, there is still room for trading norms

The

and individual manipulations to develop.

in comparison to the price for the same bonds in the present. Perhaps the

price of a futures contract for thirty-year treasury bonds might be high

T h i s interpenetration of technology and m e m b e r s ' performances ties the

futures contract is trading at nine when it should be trading at three, ac­

fate o f the C B O T to the vitality o f open outcry. T o m Donovan, the presi­

cording to the model. Deciding quickly that the price of the futures contract

dent and C E O o f the C B O T in 1998, expressed this intertwining m a pow­

is about to fall, this heavily funded player presses the speed dial buttons on

erful statement marking the e x c h a n g e s o n e hundred and fiftieth anniver­

his t e l e p h o n e to call the desk managers or clerks who manage business

sary: " l b be n u m b e r one, n u m b e r o n e for the past 150 years. Not a'day, not

for his firm on the floor o f the C B O T .

68

*

Trapped in the Pits

Chapter Two

*

61

T h e clerks are usually high-school educated workers who act as channels

offer," strains his neck toward the initiating trader. He tries to make eye con­

to the brokers in the pits. Desk managers are traders themselves who may

tact while yelling a terse agreement: "Sold." According to the C B O T ' s rule

trade c o m p a n y accounts in addition to serving clients. W h o e v e r answers the

T 3 5.00, known as the "first" rule, the initiating trader is legally bound to give

strategist's phone call will "flash" the order to a broker's clerk in the pit. A

the desired n u m b e r of contracts t o the trader whom he perceives as having

series o f hand gestures at the level of c h i n , brow, or crown o f the head indi­

msponded first, distributing the remaining contracts among the other bid­

cates the exact price and numbers o f contracts to be bought or sold. I f the

ders. Because the trader can exercise discretion in his perception, personal

trade is above or below the current price, the clerk writes the order on a slip

relationships between traders are significant in gaining (or losing) access to

of paper, stamps it with a "time in" mark, and hands it to a runner. Runners,

crucial trades.

the lowest paid of the floor staff, weave their way through the maze of phone

T h e successful respondent verifies the trade with a flick of the wrist, c h e c k

banks to bring the order to a broker's clerks. T h e y may be traders in train­

mark in the air. T h e initiating trader responds with a nod. E a c h trader marks

ing, learning the inner workings of the markets by moving through the ap­

down the three-letter identifying code imprinted in bold letters on the other

prenticeship system. In contrast to these usually white, male runners who

trader's membership badge. Because this svstem relies on verbal agreements

have c o n n e c t i o n s in the pits, there is also a few "career" runners, whose

between m e m b e r s to c e m e n t each trade, it also requires trust and honor be­

m i n i m u m wage and outsider status leave them navigating the packed path­

tween m e m b e r s . T h e worst offense against both the formal and informal

ways between the pits without the possibility of b e c o m i n g traders.

honor codes o f the pit is for a trader to deny a trade on which both parties

After receiving the order, the clerk taps his broker, or shouts in his ear,

have agreed. As S e a n , a broker for twelve years, told m e , "1 trust that you are

c o m m u n i c a t i n g the new order. T h e broker either executes the transaction

going to card it up that I sold you ten. I have faith in you that you are going

i m m e d i a t e l y at the current market price, or slips the order form into his

to make that trade good." Pat Arbor described it in another way: " H o n o r is

deck, a fat pile of paper slips indicating at what price customers have com­

the lifeblood of the system." Trust and technology' are tied together in the

missioned h i m to buy or sell contracts. H e holds the deck, folded in half like

face-to-face exchange.

a hot dog bun, close to his body. T h e flow o f orders in the deck contains

T h i s choreography is not simply a pas de deux.

As the trade makes its way

valuable information. A large order could push the price of a bond down. A

back out o f the pit, another set of players launches into action. Ifhe employs

trader w h o knows such an order exists before it is brought to the market

a clerk to c h e c k his trades, the trader hands his trading cards, marked with

c o u l d sell ahead o f the lowered price and profit from his insider access."

his three-letter code and the name of the clearing firm responsible lor his ac­

Inside t h e pit, there are two levels of trading choreography—the legal re­

counts, to his trade checker, who circles the pit to find the initiating trader's

q u i r e m e n t s for a trade to o c c u r and another level o f verbal c o m m u n i c a t i o n

clerk. Leaning over an empty trading desk or supporting the cards o n an

and physical action that sets agreements into motion. T h e legal template for

available knee, the two confirm the trade. T h e trade c h e c k e r then deposits

the a c t i o n s of a trade is brief: o n e trader signals an offer or a bid with his

the cards in a basket for desk clerks to bring upstairs to the company's office.

voice. T h e responding trader vocally agrees to fill the opposite side o f the

I h e r e the flying fingers of back office staff will enter the trades into the c l e a r ­

trade. After one c h e c k for price and quantity ("I sold you 5 contracts at a

ing apparatus o f the C B O T , where the deals will be matched and a c c o u n t s

h a l f ) the trade is legally completed and enforceable.

settled. T h e s e skills do not c o m e automatically. Learning to use these sets of

In practice, however, this short sequence is elaborated by the local meth­

signals is a challenge everyone working in Chicago's futures pits must m e e t .

ods o f c o m m u n i c a t i n g and occurs in the context o f a pit packed with six h u n d r e d m e n . T h e initiating trader yells his bid or offer into the pit, using the leverage of the stiff soles ofhis steel-reinforced shoes to push past any ob­

Loea/s and

Brokers

stacles on the step that would block h i m from the view o f other traders.

From the perspective of the outside observer, the trading floor seems c h a o t i c ,

T h r u s t i n g his arms forward over the shoulders of traders on the steps below,

but in fact the frenetic activity o f the pits masks a finely tuned organization.

the trader curls his hands into position, indicating the number o f contracts

()pen

he would like to bid or offer. In a "fast," or busy, market, where prices are

kers in the pits, the most important connection in the arena of trade. B r o ­

outcry trading is based on the relationships between locals and bro­

rapidly rising or falling, the trader may b e joined in his bid by hundreds o f

kers are traders who accept orders from outside the market and c o m p l e t e

other b o d i e s and voices. A trader who wants to "hit the bid'" or "take the

these transactions in the pits in exchange for a commission on each trade.

62

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Chapter Two

Trapped in the Pits

+

63

T h e y e x e c u t e buy and sell orders for brokerage houses o r corporations for

Locals and brokers cultivate relationships with each other and generate

whom they generally work o n informal, fee-based contracts. Desk managers

a flow o f trades from friends and colleagues that is strong enough to support

are free to d i r e c t their business to an}- broker working in the pit. Brokers are

traders in tough times. Trading regulations allow for gray areas, where traders

the link b e t w e e n outside market participants and the trade in the pits, the

can use dreir networks and their judgment to assist friends and cultivate bonds.

conduits for orders from traders outside the pit to the speculators inside.

•\t times brokers rely on locals to take on trades even when the local will lose

The

l o c a l s , also known "as "market makers," are c o n c e r n e d with risking

money, cultivating a relationship with an implied, if nonspecific, reciprocity.

m o n e y for profit. T h e y are traders who deal for their own accounts, specu­ lating on p r i c e changes in the market. T h e presence o f locals allows outside

The

interpersonal organization o f the pits is tied to the social universe o f

C h i c a g o . M e m b e r s h i p a t the C B O T is mediated through the networks

market participants to trade at any time because they are always there to buy

of traders. Buying a seat in the C B O T that allows access to the trading floor is

and sell. In t h e market's own terms, the locals provide liquidity. T h e y are en­

a large investment. For example, a full membership traded for $ 3 5 0 , 0 0 0 in

trusted with responding to any bid or offer that money managers bring to the

O c t o b e r 2001.

m a r k e t p l a c e . Locals are "market makers" because they support the central

up a trading account, aspiring members must get sponsorship from an ex­

assumption o f the marketplace—for every buyer there is a seller, and for

isting member.

ever)' seller there is a buyer. In exchange for this service, they gain a time and place advantage by inhabiting the heart o f the market.

12

L o c a l traders hope to profit from correctly predicting the movement o f

In addition to finding the capital to purchase a seat and set

Within the hierarchy o f runners, clerks, traders, and brokers on the floor, a system o f apprenticeship creates a c h a n n e l for vertical mobility. Traders often train their clerks in trading techniques. Clerks watch the traders, learn

the market u p or down and risk losing their own money in the process. T h e y

the signals, and plug into their networks. Under the supervision o f the bro­

are speculators in the most pure sense — individuals making money purely

ker,

on the c h a n g i n g prices o f financial commodities. Although locals have a

trades during slower periods in the market. Traders can "back" younger,

variety o f trading strategies, most o f them are known as "scalpers." Scalpers

promising traders by lending them capital for their accounts and "guaran­

trade in a n d out o f the market within seconds or minutes, profiting from

teeing" their trades. T h e backers agree to cover their losses in return for a

a broker's clerk can take his first steps into the pit by executing a few-

small price fluctuations. M a k i n g hundreds o f trades during the course o f

(usually very high) percentage of the profits they make. T h e s e arrangements

the day, t h e scalper never goes h o m e owning contracts.

are often quite informal, arrived at through mentoring relationships or by

The

w o r d local

makes this type o f trader sound small and provincial, but

ties o f family and friendship.

this is often not the case in the C B O T pits. T h e skills and wealth o f the ma­

Given the informality o f these ties, it is not surprising that the C B O T is

jor traders a t the C B O T are especially important when markets are plung­

an insular environment. Knowing a family m e m b e r or someone from the

ing. I f t h e r e are no buyers in the outside market, the locals can take c o m ­

neighborhood who can give you a job as a runner or a clerk (a low-paying,

mand and support the market. As the market weakens, the professional

entry-level job) can put a hopeful trader's foot on the first rung of the ladder."

ethic o f t h e trader fills the breach. O n e bond trader described the job and

E t h n i c loyalties and family ties run strong. T h e C B O T has spawned main-

attitude o f t h e market maker:

trading families, and Irish surnames like Brennan, Hennessey, M c B r i d e , Cox,

When you're a local, your job is to make a market. So make the damn market.

O'Daugherty, and O'Brian head the list.

For example, Sean Curley and his father Sean Curley Sr. share an office

What is [the bid/askj? Give me a number. [Using the voice of a broker] "I got

m the older portion o f the C B O T building. A laminated feature article

a customer here who needs to be filled." When you get a cascading market or

about the older Curley published in Futures

a rallying market, [the challenge is] who's going to be the first one to step in and

O n his desk are two gifts recognizing his contributions to the C B O T — o n e

say " n o more"? Who's going to be the first one to say when the market is break­

is a miniature version o f the statue o f the R o m a n goddess o f grain that tops

magazine decorates the walls.

ing? . . . OK, that's.., where the market is. Here is where it is going to stop. In

the C B O T building, the other a M o n t B l a n c pen in an inscribed marble

the pit, you look to the guys that you know are going to b e the ones to do it. You

stand. Both Curleys are dedicated to the institutional life o f the C B O T and

know when you are in the bond pit that everyone looks to Tom Baldwin. . . .

have served on the organization's board o f directors. T h e clothes o f the ma­

There wouldn't have been a trade there without a local there to "step up,",

jority o f traders in the pit reflect their maverick attitudes, but the Curleys

that's what they call it on the floor. Who's going to step up and be the market?

wear neatly pressed shirts and ties under their oversized trading jackets.

64

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The

Trapped in the Pits

Chapter Two

Curleys trade soybeans. Sean Sr. has b e e n a m e m b e r at t h e C B O T

*

65

options in the slower-moving gram room. He lost everything and then

since 1 9 6 2 and Sean Jr. since 1996, when he left an unsatisfying career in

some; it took him about seven years to pay off his debt from those trades.

law. T h e father described his family's involvement from with the C B O T .

After managing to gather another trading stake, he went to work as a clerk in the Eurodollars pit at the C h i c a g o Mercantile E x c h a n g e .

My U n c l e Matthew and Geoff Curley were the first two who came down

W h e n the C B O T a n n o u n c e d that it would open a pit to trade in futures

here. M y U n c l e G e o f f came down in the early 1950s. And a third uncle, John.

on the Dow Jones Industrial Average, where trades would c o m e in smaller

Several nieces and nephews have followed. So we have probably fifteen fam­

denominations than the established (and more lucrative) bond futures c o m ­

ily members down here —if 1 were going to enumerate—most of them in dif­

plex, Henry saw his opportunity to reenter the pit without the risks o f trad­

ferent parts of the business. S e a n and 1 work in the bean pit. We have two girl

ing outright for his own a c c o u n t s . Like his father, h e would b e c o m e a

cousins who work in the [soybean] oil pit. W e have two other cousins in the

broker, gathering commissions on trades executed for the brokerage firms

bean pit. We have three cousins in the meal pit. So just on the grain floor in

whose trading desks surrounded the pit. Many people with whom he had

oil, meal, and beans, we have nine . . . and a couple in the financials.

traded were now moving to the Dow Jones. He felt he could rely on t h e m for business.

The

C u r l e y family has branched out, helping each other to secure the n e c ­

essary capital and learn the business.

To generate a coterie o f brokers who would "fill paper" for the surround­ ing desks, the C B O T required each broker to show that he had enough c l i ­

Traders' ties can keep t h e m in the business when losses and frustration

ents to c o m m a n d a top step position. Henry approached Iowa grain and n e ­

take over. Henry M u e l l e r runs his own small brokerage business in the Dow

gotiated with them to fill their orders. T h e owners knew his father. As a kid,

J o n e s pit and has sustained his trading through the c o n n e c t i o n s and de­

Henry was a fixture in their offices. T h e y were happy to give him their busi­

p e n d e n c i e s that support open-outcry technology. T h e M u e l l e r family's

ness. Henry used their business to argue that he needed a good spot in t h e

roots in t h e trading business and agriculture brought him to the C B O T .

pit. His location in the pit gives his clerks sightlines to the desks o f two o t h e r

T h r o u g h years o f successes and failures, his connections within the ex­

firms. T h e v havedirected their business to him and he has finally assembled

c h a n g e have supported h i m and allowed him to survive his mistakes in the

a stable place in the trading business.

business. Henry's father was a wheat broker for thirty-five years at the C B O T ,

S u c h ties develop over the course o f a trader's career both in and out o f

so Henry got to know the markets over conversation at the dinner table. H e

the pit as well as between pits and exchanges, and tie the technology to t h e

knew h e wanted to make a career in the pits, and when, after his third year

individuals who make that pit work. T h e interpenetration o f organization,

of c o l l e g e , a family m e m b e r fell ill, Henry left school and never returned.

family, friends, and neighborhoods links the C B O T to open-outcry trading

For a w h i l e he worked on the family farm in western Illinois, where his

as a way o f life.

father was trying to perfect a breed o f cattle. But he quickly migrated back to the city to b e c o m e a trader.

O n the August 13 edition of Chicago

Tonight,

a local PBS television show,

Pat Arbor put this point bluntly. " C h i c a g o breeds futures traders," he said.

1 lenry held a series o f jobs and traded in many different products and

Citing the family connections that support the market and create allegian c e

across exchanges before landing in the pit, where he now makes his living.

to open outcry, he stated, " T h e r e is a great deal of tradition attached to o p e n

W h e n he first arrived at the C B O T , lie leased a m e m b e r s h i p and tried his

outcry trading in C h i c a g o , and that will help sustain this form of trade. . . .

skill in t h e index, debt, gold, and energy markets. Trading did not c o m e eas­

C h i c a g o is truly the open-outcry exchange capital."

ily to h i m , and he lost steadily. A job in the back office offered an opportu­

Leo, a veteran o f the B o n d pit, agrees: "We all started here. It's really b e ­

nity to learn the business from the accounting perspective and to make some

c o m e an industry-in C h i c a g o . There's like nine thousand traders who are-

risk-free money. He checked "out trades," beginning at 5 a.m., before the day's

part o f the industry, and it's gone from generation to generation. . . . So it's

trading b e l l sounded, untangling problems in matching buyer and seller to

b e c o m e part o f C h i c a g o . 1 m e a n you could go to a city like Atlanta, G e o r ­

specific quantities and prices. H e traded in the afternoon and c h e c k e d more

gia, wonderful city. You can't open an exchange there— or you could, b u t

out trades in the evening. After another series o f losses, he abandoned trad­

where are you going to get the traders from?" Sean Curley points out t h a t

ing c o m p l e t e l y and took a 5 p.m. to 5 a.m. job in the back office o f a bro­

the fine-tuned operation o f the pits leans on a group of men he calls " p i t

kerage firm. He saved his money until h e had enough to begin trading wheat

rats," with a mix o f admiration and revulsion. To Sean, it is as if these m e n ,

66

*

Trapped in the Pits

C h a p t e r Two

*

6?

C h i c a g o l o c a l s , "can smell where the next trade is coming from, ( T h e s e are]

the C B O T ' s most threatening competitor. T h e growing volumes at C B O T

the kind o f guys who you wonder if [the pits] weren't here what these guys

affirmed the vigor o f its markets, but faster growth in Europe raised ques­

would b e doing."

tions about how long its d o m i n a n c e would last. By the end of 1998, the

C h i c a g o ' s traders have much in common—particularly their choreogra­

C B O T had traded 281 million contracts, an increase o f 16 percent over the

phy and a t e c h n o l o g y o f trading— but there are also deep rifts that divide the

year before. Despite the impressive growth o f trading volumes, seat values

m e m b e r s h i p o f the C B O T . T h e corridor that divides the financial room

were plummeting. Falling from their 1 9 9 7 high o f $ 8 5 7 , 5 0 0 for a full m e m ­

from the g r a i n room defines a split along lines of age, voting rights, and trad­

bership, values stabilized around $ 4 9 0 , 0 0 0 in 1998. T h e even more aston­

ing e t i q u e t t e . M o s t important for the fate o f the C B O T are the splits in

ishing growth at the all-electronic Eurex was partially to blame. Although

m e m b e r s h i p categories that define e a c h room. Traders at the C B O T can

the German-Swiss exchange still lagged behind the C B O T at 2 4 8 million

invest in different types o f memberships that give them access to markets in

contracts in 1998, the German-Swiss exchange's 63 percent growth over the

specific products and exclude them from trading others. Political rights are

prior year swamped the board's expansion. At the same time, a company

also tied to e a c h type o f membership. Full m e m b e r s , who can trade in any

that kept an office on the twelfth floor o f the C B O T addition initiated a

pit at the O B O T , dominate in the grain room, their yellow badges showing

challenge to its host's monopoly in the U . S . Treasury bond futures market.

their investment in full voting rights. T h e Associate members, who can trade

At the end o f September, Cantor Fitzgerald, one o f the world's largest deal­

any o f the financial products, but whose votes are worth only one-sixth o f a

ers in the primary bond market, launched its online T-bond futures market.

full share, s h o w little deference to the grain room traders despite their power

At h o m e and abroad, the C B O T ' s hegemony was under assault.

within the organization. W h e r e a s a gentlemanly trade rules in the grains, an aggressive style and hyper-masculine ideals mark the ethos o f the

Floor traders and financial experts alike began to question the traditional

financial

methods of exchange. T h e speed and efficiency of electronic trading set the

room. T h e m a c h o bond traders refer to the floor that lies on the other side o f

standard against which even the traders now measured their own work. T h e

the corridor as the "old man's room." Yet the weighting o f votes engineered

C B O T traders could no longer absorb the technological challenge of elec­

by the grain r o o m traders allows them to control the politics as the exchange.

tronic systems into preestablished ideas about the consummate effective­

B e c a u s e t h e membership ultimately ratifies major decisions of the C B O T

ness o f their local open outcry system and the self-evident superiority o f the

board of directors, threats to the value o f full m e m b e r s ' seats generally have

C B O T as a trading institution. T h e force o f the technological disruption re­

a short life at the Board o f Trade. T h e m e m b e r s value their investments in

quired the C B O T to take a new stance toward its most fundamental trading

the price o f t h e seats and in their relationships in the pits. Any decision that

operations. However, it was slow in responding to external pressures and in­

would c h a n g e the fundamental structure o f the C B O T or weaken open-

consistent in its actions. As the members tried to protect their place in the

outcry trading opens the door to conflict. S o when the abstract and anony­

industry, divisions reflecting seat values and voting rights emerged within

mous forces o f electronic technologies threatened their technologically and

the Board o f Trade.

socially b o u n d e d world, Chicago's open-outcry traders were apprehensive.

S i n c e 1998, the C B O T has struggled to remain in control o f its own en­ try into the electronic marketplace and at the same time define the shape o f electronic markets for the global futures industry. T h e C B O T ' s functional

Politics

monopoly on trading T-bond futures, a key tool for financial managers,

W i t h trading setting a record pace, the C B O T seemed very m u c h in a posi­

along with the sheer size and prominence o f the organization, positioned it

tion to c o n t r o l its fate. O p e n outcry was strong, but developments in the

to be a key player. However, the membership o f the C B O T had yet to de­

E u r o p e a n e x c h a n g e s were sending undeniable signals that the supremacy

cide on a way to balance their interests and the market values o f technolog­

of pit trading was in jeopardy. Earlier that year the F r e n c h futures exchange,

ical efficiency. T h e future o f futures trading was in the balance.

M A T I F , h a d closed its open-outcry floor. T h e introduction o f electronic

Given the deep ties between the C h i c a g o traders and their technology o f

trading had drained the flow of orders from the pits. Soon thereafter the Lon­

exchange, it is not surprising that the challenge of electronic systems spilled

don e x c h a n g e , L I F F E , had lost its most-traded contract, the ten-year Ger­

over into institutional politics during the 1998 election for the chairmanship

man bond future, to an all-electronic G e r m a n exchange. T h e Deutscheter-

of the C B O T . Advocates o f electronic trading were set against the defend­

minebourse ( D T B )

ers o f the open outcry pits, and the conflict peaked in the weeks leading up

then merged with its Swiss counterpart to form Eurex,

68

*

Trapped in the Pits

Chapter Two

*

69

to the D e c e m b e r 9 election. Both contenders were soybean traders. Patrick

In contrast to A r b o r , m a n y members, especially in the grain room, b e g a n

Arbor, the chairman o f the C h i c a g o Board of Trade tor three consecutive

v o i c i n g fears that an a l l i a n c e would compromise their autonomy and l e a v e

two-year terms, was running on petition after the board o f directors denied

the C h i c a g o exchange beholden to the G e r m a n s ' superior electronic tech­

him their nomination because o f his pro-electronic trading stance. Instead,

nology. T h e floor traders' desire to protect their open-outcry markets opened

they endorsed David B r e n n a n , a third-generation m e m b e r o f a prominent

an opportunity for a candidate who would c h a m p i o n the direct interests of

C B O T trading family and a staunch defender o f the open outcry system.

the membership. David Brennan, already experienced in exchange poli­

The

contest for chairman was played out in halls, offices, trading floors,

tics, filled the available slot.

and wherever traders met to debate the fate of the C B O T . B u t discussions

During the m e l e e that led up to the vote, Pat Arbor called David Bren­

of the issues were not limited to the organization's boundaries. T h e Board

nan "President of the Flat Earth Society." T h e slur referred to a disagree­

of Trade's business c a m e from around the world and was affected by market

m e n t between the two over the pitch of the trading desks on the new floor,

events in Frankfurt and Sydney, and the political contestants also used a

but the c o m m e n t was equally useful in characterizing B r e n n a n as turning

global stage. T h e financial media provided a forum where C B O T leaders

a blind eye to the pressures of electronic markets. Arbor remained c o n ­

and m e m b e r s could voice their ideas about their piece o f the global market­

cerned with how the exchange would maintain its competitiveness in the

place. Coverage in the financial media is important for the C B O T , espe­

global e n v i r o n m e n t He believed the C B O T would benefit by treating the

cially for the chairman, who is an envoy to the financial world.

markets as an expanding global network. Arbor took a long-term view that

Pat Arbor, whom C B O T traders alternately lauded and derided for his

could, in the short term, imperil the interests of some o f the C B O T m e m ­

media savvy, made ample use o f this forum. He had already taken a stance

bers who were committed to their daily work in the pits. Arbor advocated

on the role o f the C B O I ' in the emerging shape of the futures industry. T h i s

embracing the new technologies and moving toward alliances that would

included c h a m p i o n i n g the introduction o f more digital technologies into

extend the organization's reach while creating markets that would link

the C B O T marketplace and pursing alliances that would e n h a n c e the ex­

traders together through C B O T terminals across the globe. However, the

change's ability to c o m p e t e in electronic markets. However, exchange pol­

structure of the membership organization and the distribution o f voting

itics d e m a n d e d that he hedge his strong support for electronic technologies

rights made this a difficult position for an elected leader to sustain. Arbor's

by reaffirming his c o m m i t m e n t to open outcry. In the June 2 0 edition of the

m a i n constituents, the F i n a n c i a l C o m m i s s i o n M e r c h a n t s ( F C M ) , large

London-based Financial

firms that hold memberships in the C B O T , and the associate members w h o

Times,

he played to these politics while sending a

message to Board of Trade clients that their demands for efficiency would

dominated the financial room, were at a political disadvantage.

not be subjugated to the will o f the local traders: " T h e C h i c a g o Board ot

Brennan committed himself to protecting the value of the full m e m b e r s '

T r a d e , the world's largest futures e x c h a n g e , is positioning itself for a move

yellow badge, which meant defending open outcry. T h e more conservative

to full e l e c t r o n i c futures dealing if its customers demand a switch from tra­

members agreed. T h e s e traders were also c o n c e r n e d that the proposed al­

ditional open-outcry trading. 'We see no reason to c h a n g e from open-outcry

liance with Eurex would give away the C B O T ' s control over its own destiny.

trading. B u t we will make certain we are ready so that if we have to move to

Brennan told the Chicago

e l e c t r o n i c dealing, we can,' Pat Arbor, C B O T chairman, said."

14

Tribune

that "j njow it looks like we are following

the G e r m a n s around. W e look like we're struggling. . . . T h e Board o f T r a d e

As both the C B O T and Eurex were registering record trading volumes.

is in a position to set the agenda. W e should pounce on it." T h i s nativism

Arbor b e g a n to roll out details for a proposed alliance with E u r e x . Arbor's

opened an opportunity for Arbor, He spun Brennan's die-hard allegiance to

goals for a n alliance between the world's two largest exchanges were to ex­

open outcry as evidence ofhis Luddite nature. T h e press exploited the c l e a r

pand the r e a c h of the C B O T across the globe by increasing traders' access

division that Arbor had drawn. Yet this depiction did not fairly represent

to its products, to improve technology, and to prevent Eurex from compet­

Brennan's policy positions or experience. B r e n n a n had served on c o m m i t ­

ing in the U . S . debt futures market. T h e C B O T and E u r e x would collabo­

tees for implementing Project A, the exchange's electronic system for after-

rate to develop a platform that would carry both exchanges' products and

hours trading, and on the designing committee for the new $182-million

share the cost of improving and expanding their electronic networks. Arbor

trading facility.

was poised to bring institutional life to the idea that markets should c o n n e c t participants around the globe into a single, real-time market.

His position did not waver from assignment to assignment. B r e n n a n al­ ways fought to secure members' advantages by strengthening t h e open-outcry

A r b o r , B r e n n a n V i ef o r C h a i r m a n P o s t in C B O T A n n u a l E l e c t i o n

il Arbor

Paim h I'ITI'^i M. Attar k a ciiJio^u-fti vrvc. t w o - j n r term j * C l n i m m i of the IJWNI OF 1 )»(-•. TUN \;( t lie CHICSRJ^Jtoaps} ofTradV Arlmr vumuily >T >«rvmg ,AT third »<*mc(ucit<. tuo*>\'4r term PI Chuinttdi •of the CBOT. JL po«uofi vrtHcfefee(ir>: w,* vief the Cb*" . M i - ! ' , l " r i S , m m * . - j ; rinse ywi» ^> Viif t. l-.-uruii .nici .iiit-tdi-j t() \\-AH ii J i m ^ : . • rf.iJ.tii'ii [»• (.r.-ii.i; )i4d more tfoit\ U*f; t\ehaijjjt t&mtmii#e •-i.-t.4-. Ji-t aii.. v n for tilti-f \cjr>-
£3*v*D P lt(ci«,ai)fe*.FECIALW.MI.KTJLED 8i CJwtrmai: W (iw iiuaid ofTJucv'tor* of thp Chu^gi?

K» «rve i tWt^yiMr term

2.2

Completed in 1997. the new. technologically enhanced trading floor was known as "the

Arboretum," after chairman Pat Arbor. Courtesy of the Board of Trade of the City of C h i c a g o . :: :4k^wm*E^:-»Hieptmilcmtfvetfahatatthe evcitMtgf tmr? 1**8**. w » elected :o ->crw two thtveterms uk'-£BO V Hoard



01 t^'feCK*-.. Com 1'>«8 to 1990 4ndiio»i jy**2 u« I*W4. H« aiso served * ji uKiubct s^tW CBOT lixectiiitv t>»mmm«c in ^fi.*,A> a CBOT Director be aho *?rvcd the Buafxj of" thr MiiIArm-rio

system. In his bid for the chairman's seat, B r e n n a n campaigned for e l e c ­ tronic technologies to e n h a n c e the main open-outcry business o f the ex­ change. H e believed that the C B O T had to continue to draw business to the pits o f C h i c a g o by creating a more efficient version o f open outer)'. In c o n ­

1

*!yji«f!UV be t- >~HI she OTFJTI;* Aavisory OjoiEmtcee. lit > t!,.*R..\i rir , lwn.-.: •]•„:,,ort

trast to Arbor's vision o f an expansive network, Brennan's perspective was

,

Please turn to the inside pjgtt for ; biographies of nammtts .vul candidates '< V.c I:;LS-R.:IL|>. \jor Second i'Ut Cimirmau, Director '•and members of the Nominating Commit let. j

t^nHJik.:, I

J),,!

that the global market for U.S. futures should resemble a whirlpool with C h i c a g o at its center. He made his position against the Eurex alliance c l e a r and criticized Arbor for expenditures relating to it. In the press and among the membership, the "flat earth" attack created

® Chicago Board of Trade

a clear division between Brennan and Arbor. However, this neat catego­ rization obscured the fundamental agreements that bound their positions together. Both candidates saw that the C B O T had to respond to electronic

2.!

Biographies of Patrick Arbor and David Brennan, final candidates for the position of chair­

man, are presented to the C B O T board members in the exchange's internal publication. Courtesy of the Board of Trade of the City of Chicago.

trading. Both men advocated using digital technologies to make open outer)' more efficient and expanding some electronic capabilities of the exchange to achieve global distribution of products. B u t while Arbor advocated pur­ suing the Eurex deal to expand the reach o f the exchange, Brennan sup­ ported increasing the number o f terminals on the C B O T ' s own Project A network. According to Brennan's plan, Project A would remain entirely un­ der C B O T control and would always b e subservient to the open outcry pits. E a c h backed a n approach that mixed technological r e g i m e s . In " d e c -

tronic open outcry," digital "clerks" would route orders from the outside market directly into the pits, bypassing t h e army ot clerks and r u n n e r , D e c ironic technologies would pro\ idc grcatei speed m filling orders and greater accuracy in accounting procedures. '1 h e possibilities ot these new efficien­ cies were central to arguments both for maintaining and tor abandoning the open o u t c n system. B r c n n a n and Arbor's essential agreement that some de­ gree o f digiialization was necessary exposes their assumptions about tech­ nology. E a c h justified strategies that would eliminate h u m a n mediators ii 0 1 1 1 the market. Adding digital technologies to bring ordcis to and Irom the trading pits would decrease the cost o f h u m a n labor for clients while allow­ ing the traders to remain in the heart o f the market. Arbor and Brennan's disagreements, and those a m o n g the m e m b e r s , focused on how well suited each technology was lor achieving those ideals.

W h i l e the C B O T debated whether to go digital or retain the open-outcry

E l e c t i o n day arrived, and the traders brought these arguments to the bal­

trading system, Perkins Silver, a firm founded by C h i c a g o locals, was ma­

lot box. T h e i r ties to the pits proved unbreakable. W h e n the debates ended

neuvering to take advantage of the electronic upheaval. T h e two directors,

and the votes were tabulated, David B r c n n a n won by only the narrowest o f

Eric Perkins and Philip Silver, founded the company in 1985 as a clearing

m a r g i n s — 6 0 8 votes to Pat Arbor's 5 9 8 . David Roeder o f the Chicago

Sun-

firm managing the accounts of C h i c a g o locals. Both m e n were closely in­

Times

reflected on the significance o f the election, "He won because the

volved in C B O T politics and management, and both watched with frustra­

trading floor struck back, but his victory raises questions about whether the

tion as the C B O T swerved to avoid the coming of electronic trading. At the

C B O T is stepping dangerously away from the global stage" ( D e c e m b e r 7,

same t i m e , they recognized how their c o m p a n y c o u l d take advantage of

1 9 9 8 ) . W i t h i n a month, the membership had reaffirmed the vote by scrap­

the opportunities in the emerging overseas electronic markets.

ping the a l l i a n c e with Eurex. B r e n n a n moved quickly to dismantle the deal

E r i c Perkins saw a shift occurring in the global futures industry'. T h e

in favor o f expanding Project A and to focus his attention on increasing elec­

C h i c a g o exchanges no longer dominated the futures industry in trading

15

tronic order flow to the pits. Pat Arbor left to found an electronic trading firm o f his own. H e eulogized his last term in office in the New York Times

skill and knowledge. Perkins noted that both Sao Paolo and London had

busi­

successfully adopted "the C h i c a g o trading culture" during the past ten

ness s e c t i o n on D e c e m b e r 11 -, " T h e push for technology', I think, was maybe

years. In London, moreover, the financial futures exchange had been b u i l t

too m u c h for the membership to digest right now. . . . T h i s means that the

on the C h i c a g o model, and the market was already populated with scores

old guard is back; they thought we were going too far" ( D e c e m b e r 1 0 , 1 9 9 8 ) .

of C h i c a g o traders. Although this may have posed a threat to organizations

T h e e l e c t i o n proved that pit traders were still in control in 1998. T h e ex­

like the G B O T , Perkins knew that local trading populations in financial c e n ­

c h a n g e had created a method for hedging farmers' risks and perfected the

ters outside C h i c a g o could provide h u m a n materials for Perkins Silver and

related trading technique. O n e hundred and fifty years later, the pits had be­

other entrepreneurial C h i c a g o firms. Silver and Perkins positioned t h e m ­

c o m e m u c h more than a rationalized and elaborated form for handling risk.

selves to take advantage o f this experienced work force. T h e y intended to

O p e n - o u t c r y technology and the daily performance o f the market had

hone the skills of the British futures and foreign exchange dealers along the

linked C h i c a g o ' s traders to its m e t h o d o f exchange.

C h i c a g o model and train new ones who would ultimately supplant t h e m according to their plan for diversity. T h e y planned to set up an e l e c t r o n i c dealing room in L o n d o n that would bring C h i c a g o techniques of trading to the electronic financial frontier. Europe, in particular, presented a clear opportunity. Without the c o n ­ straining attachments to pit trading that held back the C B O T , in L o n d o n Perkins Silver would be able to bring Chicago-style speculation to the n e w

72

*

Chapter Two

tronic o p e n outer)," digital "clerks" would route orders from tin- outside market directly into the pits, bypassing Hie armv ol clerks and runners. E l e c ­ tronic technologies would provide greater speed in filling orders and greater accuracy in accounting procedures. T h e possibilities of these new efficien­ cies were central to arguments both tor maintaining and for abandoning the open outer}' s) stem. B r e n n a n and Arbor's essential agreement that some de­ gree o f digitalization was necessary exposes their assumptions about tech­ nology. E a c h justified strategies that would eliminate h u m a n mediators from the market. Adding digital technologies to bring orders to and from the trading pits would decrease the cost o f h u m a n labor for clients while allow­ ing the traders to remain in the heart of the market. Arbor and Brennan's disagreements, and those a m o n g the members, focused on how well suited e a c h technology was for achieving those ideals.

W h i l e the C B O T debated whether to go digital or retain the open-outcry

Election day arrived, and the traders brought these arguments to the bal­

trading system, Perkins Silver, a firm founded by C h i c a g o locals, was ma­

lot box. T h e i r ties to the pits proved unbreakable. W h e n the debates ended

neuvering to take advantage o f the electronic upheaval. T h e two directors,

and the voles were tabulated, David Brennan won b\ only the narrowest of

Eric Perkins and Philip Silver, founded the c o m p a n y in 1985 as a clearing

Sun-

firm managing the accounts o f C h i c a g o locals. Both m e n were closely in­

reflected on the significance of the election, "He won because the

volved in C B O T politics and management, and both watched with frustra-

margins—-608 votes to Pat Arbor's 598. David Roeder of the Chicago Times

trading floor struck back, but his victory raises questions about whether the

lion as the C B O T swerved to avoid the c o m i n g o f electronic trading. At the

C B O T is stepping dangerously away from the global stage" ( D e c e m b e r 7,

same t i m e , they recognized how their c o m p a n y c o u l d take advantage o f

1 9 9 8 ) . W i t h i n a m o n t h , the membership had reaffirmed the vote by scrap­

the opportunities in the emerging overseas electronic markets.

ping the alliance with E u r e v Brennan nu>\ cd quickly to dismantle the deal

Eric Perkins saw a shift occurring in the global futures industry. T h e

in favor o f expanding Project A and to focus his attention on increasing elec­

C h i c a g o exchanges no longer dominated the futures industry in trading

15

tronic order flow to the pits. Pat Arbor left to found an electronic trading firm o f his own. H e eulogized his last term in office in the New York Times

skill and knowledge. Perkins noted that both Sao Paolo and London had

busi­

successfully adopted "the C h i c a g o trading culture" during the past ten

ness section on D e c e m b e r 11: " T h e push for technology, I think, was maybe

years. In London, moreover, the financial futures exchange had been built

too m u c h for the m e m b e r s h i p to digest right now. . . . T h i s means that the

on the C h i c a g o model, and the market was already populated with scores

old guard is back; they thought we were going too far" ( D e c e m b e r 1 0 , 1 9 9 8 ) .

o f C h i c a g o traders. Although this may have posed a threat to organizations

T h e election proved that pit traders were still in control in 1998. T h e ex­

like the C B O T . Perkins knew that local trading populations in financial cen­

c h a n g e had created a m e t h o d for hedging farmers' risks and perfected the

ters outside C h i c a g o could provide h u m a n materials for Perkins Silver and

related trading technique. O n e hundred and fifty years later, the pits had be­

other entrepreneurial C h i c a g o firms. Silver and Perkins positioned them­

c o m e m u c h m o r e than a rationalized and elaborated form for handling risk.

selves to take advantage o f this experienced work force. T h e y intended to

Open-outcry technology and the daily performance o f the market had

h o n e the skills o f the British futures and foreign exchange dealers along the

linked C h i c a g o ' s traders to its method of exchange.

C h i c a g o model and train new ones who would ultimately supplant them according to their plan for diversity. T h e y planned to set up an electronic dealing room in London that would bring C h i c a g o techniques of trading to the electronic financial frontier. Europe, in particular, presented a clear opportunity. Without the constiaining attachments to pit trading that held back the C B O T , in London Perkins Silver would be able to bring Chicago-style speculation to the new

14

*

Social Experiments in London Markets

Chapter Three

*

75

world o f o n l i n e markets in E u r o p e a n futures. Perkins and Silver planned to

the London context and implemented them in their hiring practices. But

provide market makers to these electronic exchanges, but with a crucial dif­

their ideas did not play out neatly. T h e traders who already worked 111 the

ference. T h e C B O T markets remained largely based in tight networks re­

London financial markets had their own ideas of e c o n o m i c action, and

inforced In friendship and family rathci than the values oi education and

they, too, would have their say on the trading floor.

diversity. T h e pits did not necessarily reward ioiniali/ed knowledge or pro­ fessional commitment, and this financial shop floor was dominated by w bite m e n . Perkins and Silver decided that their company would improve on the

New L I F F E in the City

C B O T markets by welcoming groups that had previously b e e n excluded

Although L o n d o n had its own homegrown c o m m o d i t i e s e x c h a n g e s for

and set out to create a dealing room that was more efficient and open than

tangible goods such as metals, coffee, cotton, and sugar, the C h i c a g o ex­

the pits they were leaving behind. T h e y brought in educated professionals,

changes—the C h i c a g o Board of Trade and the C h i c a g o M e r c a n t i l e E x ­

including w o m e n and minorities, to replace the working-class traders who

c h a n g e (the M e r c ) —had been the powerhouses in c o m m o d i t y futures

had m a n n e d the London pits. T h e y assumed that traders with these back­

trading since the nineteenth century'. T h e C h i c a g o and London exchanges

grounds and experiences—often the ones that prevented entry' into the

differed in the way they had established financial futures markets. T h e L o n ­

C B O T pits—could provide profitable readings of the market. According to

don futures markets had drawn their clients from firms, which discouraged

the Perkins Silver philosophy, the a c a d e m i c approach o f the new traders

the retail business of smaller players. In contrast, the C h i c a g o markets were

would h e l p them to see new ways to interpret market activity. T h e i r multi­

heavily populated by local speculators trading mostly for themselves. T h e

2

cultural vision and neoliberal logic trusted that sound market behavior

designers o f the L o n d o n market identified these locals as the source o f

would have beneficial results. T h e s e criteria guided the Perkins and Silver's

the C h i c a g o markets' famed liquidity', and they explicitly set out to develop

hiring practices as they began organizing their European expansion.

such local talent to staff the pits of the new London exchange.

Perkins Silver opened an office in L o n d o n to train traders to deal in E u ­ ropean futures products and provide market makers to Eurex, L I F F E , and

The

development o f the London International Financial Futures Fix-

change ( L I F F E ) and the cultivation o f new London locals were part of a fi­

M A T I F , t h e European exchanges. London's time zone is only one hour ear­

nancial revolution that was taking place in England in the 1970s and 1 9 8 0 s .

lier than that of G e r m a n y and F r a n c e , and it is populated with native English

A move from "gentlemanly capitalism" to the new order of the "Big B a n g "

speakers. L o n d o n already had traders who were well seasoned in the foreign

was in progress and supported by Margaret Thatcher's policies. T h e B i g

e x c h a n g e (also known as F X ) and futures markets of the City of London, the

Bang was technically a series o f regulatory changes outlined in the F i n a n ­

3

district o f England's capital city. Perkins Silver planned to use es­

cial Services Bill that were put into practice O c t o b e r 2 7 , 1986, and o p e n e d

tablished L o n d o n traders to seed their new operation, while training new

the City to new kinds of firms and traders. T h i s transformation aroused c o n ­

ones who would change the social composition of the dealing room and thus

flicts that focused on the entry of i tew players and new organizational forms —

financial

generate diverse points o f view on the market. T h i s plan was itself part o f a

particularly on the foreign ownership of formerly British banks such as W a r ­

broader pattern, and the Perkins Silver executives were not the first to bring

burg and eventually Schroeder's and Barings —and on new financial products

Chicago-style speculation to London. T h r o u g h o u t their twenty-year history',

and the companies and individuals that traded them.

1

financial futures exchanges in E n g l a n d had been planned and populated by

The

death o f an older style of British capitalism was marked by the de­

C h i c a g o traders and administrators. By the 1990s, the London futures mar­

mise of a figure that represented the values of the old city—that of the gentle­

ket was a n assemblage o f e c o n o m i c forms from both sides of the Atlantic.

m a n capitalist who, as political commentator Will Hutton describes,

T h i s chapter provides an a c c o u n t o f Perkins Silver's entry into London and an introduction to London markets. It describes how the City's finan­

does not try too hard; is understated in his approach to life; celebrates sport,

cial futures markets began with working-class actors and then began to re­

games and pleasure; he is fair-minded; he has good manners; is in relaxed

place t h e m with university graduates. Next, it examines what happened when

control of his time; has independent means; is steady under fire. A gentle­

the Perkins Silver executives implemented their strategy to profit from new

man's word is his bond; he does not lie, takes pride in being practical; distrusts

market actors, particularly by developing a professional cohort of traders

foreigners; is public spirited; and above all keeps his distance from those

that i n c l u d e d minorities and women. T h e managers adjusted their goals to

below him.

4

76

Chapter Three T h e s e characteristics may have fit well with finance before the Big Bang

norms and the new organizational forms like the L I F F E and the Anierican-

era, as H u t t o n asserts, but they did not describe many o f the new actors who

and European-owned banks. With the B i g Bang, the City officially deregu­

entered t h e City, least of all the new traders brought in to staff the foreign

lated not only its securities markets but also it social space.

9

exchange r o o m s o f merchant banks. T h e market in currencies led the way, w e l c o m i n g working-class m e n with relatively little education. Soon finan­ cial traders were considering developing a financial futures exchange staffed

Barrow Boys and Essex M e n

by Chicago-style speculators to c o m p l e m e n t the currency markets thriving

As London opened up to new ownership o f its merchant banks and b e c a m e

in L o n d o n ' s banks. In 1 9 7 7 , John Edwards wrote a piece in the London-

a more cosmopolitan hub, the City's futures and foreign exchange dealers

based Financial

entitled "Speculators Are M a d e W e l c o m e , " lauding

were a strangely parochial group. T h e s e newcomers to the life of the City-

C h i c a g o traders and considering the potential o f such risk-takers for Lon­

were known as "barrow boys," streetwise dealers from East and South L o n ­

don m a r k e t s , "It is the 'locals' operating exclusively for themselves, who

don without the education and class of the "white shoe" financial firms a n d

make the U . S . markets so different from L o n d o n , where all the business is

the Bank of England. T h e newspaper-reading public could also identify the

Times

5

c h a n n e l e d through m e m b e r companies o f the exchange," he wrote. T h e

barrow boys as representatives o f the species "Essex Man." Simon Heffer,

article was a challenge to London to build an army o f such traders. Leaving

writing in the conservative Sunday

behind its own models o f financial activity and organization, London focused

those who had delivered Margaret T h a t c h e r to power and kept her in power.

Telegraph,

coined this phrase to describe

its sights o n the American Midwest to find the kind of trader who would

Essex M a n signified the heightened entrepreneurialism and conspicuous

populate t h e open outcry pits of the newly envisioned L o n d o n International

consumption associated with the e c o n o m i c styles of the 1980s among a ris­

F i n a n c i a l Futures E x c h a n g e ( L I F F E ) .

ing stratum o f the English middle and working class. Essex M a n was a key-

O n July 2 7 , 1 9 8 1 , an article appeared in the Financial

Times

entitled,

figure in the London of the 1980s and 1990s — so much so that the Guardia

n

" C a n F i n a n c i a l Futures Traders O u t S h o u t the Old-Timers in C h i c a g o ? "

could admit, in an article entitled "Barings Blood Spreads Wider," ( M a r c h

T h e reporter felt that "British bankers and other supporters o f the London

4 , 1 9 9 5 ) , that in the initial analysis, "it seemed simple enough to blame the

International Financial Futures Market are confident they can create a re­

downfall o f Barings on Essex Man."

spectable c o m p l e m e n t for the more difficult financial futures markets in

The

County of Essex, just to the east of the East End, b e c a m e the mi­

the U S A . " B u t these new British traders would be operating on C h i c a g o

gration site for working-class families whose crowded London neighborhoods

turf. Traders who ended up on the L I F F E floor had "to adjust to an envi­

were razed during urban renewal. Essex M a n was a type related to images

r o n m e n t firmly based on the C h i c a g o model," especially the pits, which

of an uprooted working class committed to bettering its e c o n o m i c prospects

were the key technology for the liquid market in American financial fu­

and showing off its success in its clothing, houses, cars, and women. S i m o n

tures. T h e L I F F E managers, with consultants from the C B O T and the

Heffer was quoted in an article by Nicholas Farrell in the Sunday

M e r c , seeded the floor with a dozen "natives o f C h i c a g o " and implemented

for November 10, 1 9 9 1 , saying that his interest in Essex M a n had b e e n

an educational program in speculation." W h e n the trading floor opened in

piqued by a minister o f Parliament who "had long been fascinated by the

1982, a n e w kind o f London trader had b e e n ushered into existence.

grim landscape o f South Essex and its atavistically C o c k n e y people. . . .

T h e Mail

on Sunday

Telegraph

described this social shift: " T h e City has produced

It was his view that the affluent, industrious, ruthless and caustic typical in­

a new breed ofbroker. H e swaps millions at the flick of an eye in the rainbow-

habitants o f South Essex were the shock troops o f the Thatcherite revolu­

hued F i n a n c i a l Futures E x c h a n g e . He's young and brash and sometimes 7

without an O-level to his name." T h e wild behavior and spending practices o f the mostly working-class traders b e c a m e legendary. In his autobiography, Rogue

Trader,

tion, the incarnation of the new e c o n o m i c freedoms she had bestowed upon a broadly ungrateful nation. I was inclined to agree." Essex M a n represented an intertwining o f politics, class, and styles of

N i c k L e e s o n , the most infamous o f these traders, chronicled

consumption that confounded the appreciation for restrained behavior o f

his exploits in the futures markets and bars o f Singapore, which ended in

England's tastemakers and social commentators. It seemed that deploring

8

the collapse o f the venerable Barings B a n k . F r o m the mid-1980s, London

Essex M a n on the L I F F E floor and in his h o m e county united the c o m ­

was no longer driven by English c o m m e r c e and class ideals. T h e models for

mentators o f the T o n Daily

proper financial c o n d u c t derived from relations and tensions between City

mally sniped at each other in their columns. T h e commentary concerning

Telegraph

and the liberal Guardian,

who nor­

78

*

Chapter Three

Social Experiments in London Markets

Essex M a n and his air-headed, Gucci-clad counterpart, Essex W o m a n , coded

*

79

n l i n n background was far removed from manual labor appropriated the

differences around consumption styles, language, and self-presentation as

•>l\k* Billy, whose father is the manager o f a soccer team, worked hard to

biological, implying that social c o n d u c t had a racial component."' T h e

piove his allegiance to these rude manners.

caustic terms imagined a new species that had resuscitated an earlier and

Others, like Trevor and John, c a m e by their working-class style by being

m o r e primitive form of humanity, presumably one better left to die. Heffer's

born into it. John, originally a South Londoner and an ex-FX dealer, had

"atavistically C o c k n e y people" invoked a life form revived by a c o m b i n a ­

crooked and yellowed teeth, was skinny, and dressed with little care. His

tion o f free-market policies and City innovation.

accent was so riddled with glottal stops that there seemed to be no m e a n ­

Stories from the floor o f the L I F F E made this discomfort understand­

ingful utterances. M a r t i n , on the other h a n d , e m b o d i e d the successful

able. In fact, the barrow boy traders seemed to pitch their raucous spending

Essex M a n . H e was in his early thirties and Perkins Silver's most prosperous

and n e w wealth directly against the dictates o f upper-class taste. W h i l e

tradei. His elegant sweaters and expensive haircut trumpeted his success.

British cultural commentators railed against him, Essex M a n played against

He wore his success in his clothes, arrogance, and aggressive style and in

upper-class conventions.

the way h e used h u m o r to dominate his fellow traders with metaphors o f

The

L I F F E floor traders spent lavishly what they earned— and, from

homo-sexual penetration.

their stories, some o f what they may not have earned. Tony Healy, an ex-

Knowing that the association o f their occupation with such characters

L I F F E trader working at Perkins Silver, told m e that many floor traders

would tar them, other traders positioned themselves in explicit opposition

treated "their trading a c c o u n t s like bank accounts." Expensive l u n c h e s

to Essex M a n . Darren, a currency trader at a large multinational bank around

were the order of the day. T h e M e r c e d e s showroom around the corner from

the corner from Perkins Silver, actively resisted the Essex moniker by e x ­

the e x c h a n g e thrived. Essex m e n famously donned designer clothes, par­

plicitly defining his relationship to money, family, and style. Darren told o r e

ticularly from G u c c i (and now, with a swing in fashion, from Prada). Essex

that he loves having the money that his success as an F X dealer brings, b u t

M a n t u r n e d the virtue o f thrift on its head. Barrow-bov traders spread the

he was quick to emphasize that he does not spend lavishly. H e appreciates

wealth t h e y acquired, tilting the b a l a n c e between saving and spending

the potential o f m o n e y without having to be a conspicuous consumer. l i e

that creates a productive tension in a working capitalist e c o n o m y . " Tony

was disdainful o f what he considered to be the obscene spending practices

neatly summarized this ethic: " T h e more m o n e y you spent, the bigger a

of many of the other foreign exchange and futures traders he knew. O n e h a d

m a n you were."

filled his garage with three Ferraris. Now he has nothing.

T h e Perkins Silver traders who had worked on the floor of the L I F F E told

W h e n and where the purchasing potential is or is not realized is c r i t i c a l

tales o f their erstwhile colleagues. T h e r e was Dickey, a South Londoner

to the aesthetics o f capitalism, class, and masculinity. T h e spendthrift ways

who ran his pit with an iron rod, and was reputed to have made 18 million

of the City's newly wealthy traders were a positional claim about the v a l u e

12

pounds in o n e year. T h e r e was Frankie the F r e n c h m a n , a wealthy man who

of money in relation to their upper-class neighbors who, as Hutton suggests,

would repeatedly lose all his m o n e y and then return to F r a n c e to plead with

were no longer able to assert social distance from those below them. T h e

his father to refill his accounts. O t h e r traders were given nicknames reflect­

claims to East and South London heritage and styles oppose yet are i n t i ­

ing their personalities or appearances, such as Knobby and Freddy (like

mately c o n n e c t e d to the members o f tire city's social clubs, just as the s e r ­

Freddy Krueger of Nightmare

vant classes were (and are) connected to their employers. T h e y redefined

on Elm Street).

In these tales, the British floor

traders outstripped their C h i c a g o counterparts in raucous revelry and under-

this relationship by embracing a working-class affect, a c c e n t and the l i n ­

the-table dealing. As o n e veteran told m e , it was "a playground for grown­

guistic turns o f phrase o f a market version o f C o c k n e y rhyming slang.

ups," a n d a paradise for "opportunists for wheeling and dealing." The

Representatives o f the well-meaning middle and upper classes o n c e v e n ­

Perkins Silver traders who c a m e to the City in this first wave o f fi­

tured with reformist fervor into East London neighborhoods like West H a m

nancial innovation mostly lived in Essex and claimed the working-class her­

and Bethnal G r e e n to civilize the inhabitants, but in the trading rooms of

itage Essex M a n was reputed to have. T h e y exaggerated the styles of working-

the City, the reformers' vision of crude, base, unrefined humanity had a l -

class L o n d o n . Having family that worked the docks on the Isle of Dogs (now

icadv triumphed —and the Perkins Silver crew wore this badge of affiliation

covered in towering office buildings and called Docklands) lent legitimacy

vv ith pride." T h e barrow boy traders of Perkins Silver purposely cultivated a

to their brash style and halting speech with its C o c k n e y accents. Even those

c rude aesthetic and made gritty, foul-mouthed masculinity a central part o f

86

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C h a p t e r Three

their trading selves. In the dealing rooms o f London, Essex M a n reigned, skimming undisguised filthy lucre from the global market. Yet their opportunities did not last long. In 2 0 0 0 , LI F E E evacuated their trading floors under the competitive pressures of the German-Swiss exchange 14

and o n l i n e technologies. T h e locals dispersed to the trading rooms and u n e m p l o y m e n t offices of London. All that is left of the L I F F E floor traders is the b r o n z e cast o f a man on the corner o f Walbrook and C a n n o n Streets. T h e figure poses, legs widely planted, one arm flung out and head angled toward an outsized cell phone. His loose trading jacket is permanently spread in the w i n d that streams through the glass and stone funnel o f the City's streets. T h e statue was erected in 1 9 9 7 to mark the fifteenth anniversary o f t h e L o n d o n financial futures markets. Just three years later the pits were g o n e . T h e m e t a l statue gives material form to the transition from open outcry to e l e c t r o n i c trading in the City o f London. By the millennium, the L I F F E floor trader had b e c o m e the most recent casualty of the ascendance of e l e c t r o n i c markets in financial futures. At the s a m e time that the L I F F E trading pits were closing, dealing rooms at large b a n k s were replacing the barrow boys with more educated employ­ ees. T h e original barrow boys were associated with currency and futures dealing, markets that used fairly simple trading techniques. As financial in­ struments g o t increasingly more complicated, with swaps and options be­ c o m i n g m o r e widespread, banks recruited university graduates to deal in 15

these c o m p l e x markets. T h e a s c e n d a n c e o f the educated group reasserted the class c h a r a c t e r o f the City that the barrow boys had challenged. Many of these original currency dealers and futures traders found themselves with­ out jobs as t h e L I F F E floor closed and dealing rooms in the City were re­ configured. T h e s e cast-off traders were very pleased to find work at Perkins Silver as their opportunities at other City venues closed. A Perkins Silver trader who had been a L I F F E fixture explained to m e that m a n y o f his buddies from the trading floor had tried and failed to make the transition to online trading. Freddy recounted the career trajectories o f his friends w h o had left the L I F F E . S o m e had gone belly up and some were driving minicabs. "It is very hard to go from making ten thousand pounds a month to that," he lamented. H e assigned dire percentages to the possibili­ ties of s u c c e s s — 4 0 percent of t h e m had tried to move to screen trading, and about 85 p e r c e n t of those had now quit. Freddy himself was struggling with the transition. I later learned from h i m that h e had had recently had his best month yet on the screen. H e had made a scant eight hundred pounds in profits. Joshua G e l l e r , whose experience as a trader, trainer, and manager lent more credibility to his estimates, painted a similarly bleak picture of the transition from pit to screen; 5 to 10 percent would succeed, he offered. Yet

. I T h e 1 ,tFt E tioor trader* MV mrnionali/cd h\ this l.ruiize statin, thai stands mi a comer ta) tlie d c f i i i K l iradin? Boor. Photo hj author

*

Chapter- Three

Social Experiments in London Markets

*

83

at the same time that Perkins Silver was hiring the barrow boys to try- their

the population o f the C h i c a g o pit. which they perceived as composed of de­

luck in online futures, the managers were also participating in the profes-

structive cliques. In their view, the insular networks corrupted the purity o f

sionalization of the City that was displacing these same actors.

the market and excluded potentially profitable traders who lacked the per­ sonal contacts or did not fit tire ethnic or gender profile that allowed access

A m e r i c a n Trading in E u r o p e a n Markets

to trading jobs. Perkins Silver wanted to build a trading team that would be most effective in the market and that would correct imperfections in the

As L I F F E went digital and the old markets closed, Perkins Silver sought to

C h i c a g o markets. T h e y would substitute abstract principals for personal re­

step into the void and supply some o f the liquidity that the London locals

cruiting networks. T h e i r recruitment and training strategies were based on

had supported in the rough and tumble pits. Not only the L I F F E but also

professionalization, American-style multiculturalism, and meritocracy. T h e

E u r e x and M A T I F needed online market makers to ensure that customers

Perkins Silver managers planned to engineer the social content and context

would find consistent markets on their exchange. Focusing on E u r e x , the

of their dealing room to create an efficient trading m a c h i n e .

largest and potentially most lucrative o f the three markets, Perkins Silver planned to capture 5 to 10 percent o f the business on that exchange. M o r e than that and "we would be trading with ourselves," Adam Berger, the lead

Recruiting Futures Traders

Perkins Silver manager and strategist, told m e . W i t h the expertise o f C h i ­

The

cago locals, Perkins Silver was positioned to skim profits from the transac­

structed a Chicago-style trading room in London, planning the social con­

tion^ that flowed through these exchanges.

tent of the trading room to draw profits to the firm. Parti cularlv, the Perkins

new traders were the raw materials from which the managers con­

As Perkins Silver was opening its office next door to the L I F F E , the pits

Silver managers sought to take advantage of the underutilized trading tal­

that writhed below its windows were slowly dying, and the C h i c a g o model

ent o f new university graduates, minorities, and women. T h e y believed that

of speculation was disappearing from the trading floor. B u t it was reappear­

individuals from these groups would bring new perspectives to reading the

ing o n l i n e as the Perkins Silver dealing room adapted to the new context of

market, allowing Perkins Silver to profit from their elimination of barriers to

e l e c t r o n i c markets for European financial futures. Yet the pit-trading tech­

participation based on race and gender. T h e Perkins Silver strategy was based

niques by which C h i c a g o traders and Perkins Silver founders flourished were

on the idea that education, experience, and membership in different racial,

not easily transposed to the L o n d o n marketplace or to the new regime of on­

ethnic, and gender categories and levels o f education shaped each individ­

line trading. T h e face-to-face auctions, where the Perkins Silver founders

ual's vision.

had developed their talents, thrived on the controlled chaos in the pits. In

The

Perkins Silver trainers set out to recruit traders. Adam Berger and

contrast, electronic futures markets link traders in a neatly networked web

Joshua Geller, the two leading Perkins Silver managers, had clear ideas

of dealing rooms, in which market transactions are played out not in shouts

about who would make a good futures trader. T h e most obvious were those

and frenetic hand gestures but through the boldface type of constantly

who already had some proven record in the industry'. In London, these were

c h a n g i n g numbers on a graphic user interface. Yet neither the Perkins Sil­

mostly currency traders recruited from investment banks and futures traders

ver executives nor the futures and foreign exchange traders who staffed their

from the floor of the L I F F E . With their dealing skills in place, these traders

dealing room had m u c h experience with online trading. At the same time,

would have to reorient themselves from the telephones o f foreign exchange

this radical break from open outer}' trading technology provided an oppor­

dealing and the face-to-face world of the pits to a new focus on the screen.

tunity lor Perkins Silver's managers to advance their ideas lor improving the

Perkins Silver recruited many barrow-boy traders who had been laid off as

c o m p o s i t i o n of the dealing room by recruiting new kinds o f traders. In this

the City labor market sought university graduates.

new technological and social environment, what resources could Perkins Silver draw on to pursue its ambitions in the new markets? The

Adam and Joshua interviewed some who applied in response to newspa­ per ads or word of mouth. T h e managers sought people with certain "per­

c h a l l e n g e facing the managers and trainers of Perkins Silver was to

sonality characteristics" that they used as proxies for undeveloped trading

translate Chicago-style speculation not only for the London lads who would

skill, even while acknowledging that, as one o f the codirectors of the firm

staff their dealing room, but also for the emerging technologies o f online

told m e , "no profile assures that someone will be a good trader." Joshua had

trading. T h e Perkins Silver executives were not content simply to reproduce

a list of traits they required, drawn trom the executives' collective experi-

84

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C h a p t e r Three

Social Experiments in London Markets

+

85

e n c e and knowledge o f traders on the C B O T trading floor. T h e y looked for

room. "Drinker" was apparently not the image they wanted to declare to

recruits w h o worked with aplomb under pressure, were "dogged," ambi­

their new employers and colleagues in their first day on the job. Matt broke

tious, and h a d decent math skills. T h e managers preferred their recruits to

the uncomfortable silence with a soft c h u c k l e and a light statement of self-

be single. T h e y observed that trading was a more difficult and stressful task

incrimination. Sarah c h i m e d in, "I've been known to have a few." T h e rest

when a family's budget was on the line. A speculator should not be worried

of us fidgeted while we waited for the managers to appear and take control.

about such "extraneous" matters as whether he will be able to pay for his

After about twenty minutes of early morning quiet, Joshua C e l l e r and

wife's car or t h e family vacation.

Andrew Blair, the London risk manager and trainer, entered the room. T h e y

T h e Perkins Silver managers were also looking for risk-takers. Joshua told

c o m p l e m e n t e d each other. Joshua's energy spilled out ofhis wide smile. His

me, "Give m e a room full o f outsiders. Immigrants. People who c a m e to the

fringe of hair circled his head electrically. Andrew, himself a currency trader

city with no friends. People who are hungry'." S o m e of the traders he had re­

in London markets for sixteen years, meandered through his introductory

cruited for t h e C h i c a g o dealing room served as models for his L o n d o n en­

speech, finishing his statement by articulating, with a schoolmistress's stri­

deavors. T w o prime examples were a woman who had worked on attack hel­

dency, a zero-tolerance policy for drinking during work hours. Alcohol, the

icopters in t h e Persian G u l f and a young man who had grown up in one of

managers believed, gave traders a sense o f false confidence, and the traders'

Chicago's m o s t notorious housing projects and was determined to escape

weakened judgment could cost them profits.

his poor n e i g h b o r h o o d . Joshua saw material desires as evidence of ambition

After the initial introductions, the training started. Manv of the recruits

and drive. O n e o f the directors of the firm was impressed with a woman who

had never b e e n in a dealing room before and had little experience with

told h i m she wanted to be a trader because she had expensive taste. For their

finance. But the Perkins Silver trainers understood that deep knowledge o f

newest c o h o r t of traders — the o n e that I was to join as an anthropologist and

the financial products was not necessary to trade successfully. According to

neophyte futures dealer—they were bringing in "graduate trainees," a group

the Perkins Silver executives, and many other traders I interviewed, a good

of young m e n and w o m e n between the ages of twenty-one and twenty-five

trader could deal in any product. T h e particulars o f the contract itself were

with university degrees. T h e Perkins Silver innovation was to build a group

not important; a good trader has mastery over the techniques of speculation.

of traders t h a t would have diverse ways o f reading the market.

So the Perkins Silver trainers focused on producing speculators, not experts

In m i d - S e p t e m b e r o f 2 0 0 0 , the new group that Joshua and Adam had as­

in government debt products. T h e i r techniques emphasized creating new-

sembled was gathered in the conference room in the Perkins Silver office.

relationships to the self and instructed the new group in the particular skills

From appearances, it was a truly motley crew. Sitting next to m e at the back

that futures dealers use. T h e y did not on insist on technical mastery of the

of the table was Paul. He slouched in his chair with his knees wide apart and

internal workings o f financial instruments or their theoretical bases.

arms crossed, showing off his thick rings, one with a polished black stone set

T h e lessons started out simply, with questions like: W h a t is a bond? W h a t

against his pale skin. His cagey style masked his rigorous training in math

is a futures contract? But the curriculum quickly moved beyond that to ex­

and science at Imperial College. Next to us, two neatly dressed white women

plain the two techniques that most o f us would use to trade in our own ac­

were flanked by a thirty-something m a n with an early Beatles-era haircut

counts: "scalping" and "spreading." Both techniques focus on the profits to

and a tall, round-faced b l a c k m a n with short dreadlocks and a Midlands

be made in the daily fluctuation of futures markets. Scalping focuses on the

accent. T w o small Asian (Indian) m e n , a sleepy, male Orthodox Jew, and I,

price movements in a single contract. T h e scalper buys contracts that he ex­

"the A m e r i c a n girl," completed this group. T h e thirty-something man was

pects to rise in price, or at least that he anticipates being able to make m o n e y

our group's sole representative of the barrow-boy traders who dominated the

by buying at the bid and selling at the asking price. Spreading, in the form

trading room we were all about to enter. Trevor had worked for eleven years

we were to practice it, takes advantage of the difference in volatility between

as a foreign e x c h a n g e trader, b e e n laid off, and spent a year traveling in Asia

bonds o f different durations. T h e Perkins Silver managers directed most o f

to tourist spots already filled with British vacationers. He broke the silence

their traders work with spreads in ten-, five- and two-year G e r m a n Treasury

in the room by spirting out a question in a thick C o c k n e y accent: " O K , so

bond futures nicknamed the B u n d , Bobl, and Schatz. T h e price of a ten-

who are the drinkers here?" H e assumed he would get a ready, affirmative

year bond is more volatile than that of a two-year bond because the longer

response. B u t instead o f pointing to themselves and making a date to go to

time frame presents more opportunities tor changing e c o n o m i c conditions

the pub after work, many of the new traders looked furtively around the

and involves greater uncertainties. A spreader takes opposite positions in

86

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Chapter Three

Social Experiments in London Markets

each o f two instruments, using the more stable contract to limit the loss po­

tensive art collection, and more women than he could fight off. Philip would

tential o f a position i n the more volatile product. T h e s e techniques take no

occasionally venture into the dealing room and trade on a terminal at 'he

more than a day or two to master conceptually, f o r traders whose c o m p u ­

edge of the room rather than the one in his office, to get a sense o f what the

tation skills were slow, "cheat sheets" were available that did the work o f cal­

"room was doing." He was also available for advice and discipline. Even

culating the initial position o f the spread.

with Philip present, the traders had contact mostly with Andrew, Joshua,

Joshua advised that we pursue other training techniques on our own time.

and Adam. Joshua and Adam were based in C h i c a g o but spent one week o f

Particularly, he suggested playing video games. Minefield was a favorite o f

each montli in London. T h e i r visits maintained a c o n n e c t i o n between the

Joshua's. W e spent the mornings in class and the afternoons in developing our

London and C h i c a g o offices and established a virtual presence in L o n d o n .

skills on a program that simulated an arbitrage market. G l u e d to our screens,

The

we simulated buying and selling cotton futures in New York and London.

all their traders in both C h i c a g o and London. Adam dropped in daily on

Later we graduated to trading with real data from past L I F F E markets. E a c h

tape to give lessons on the techniques o f speculation. O n the television

program tallied up our wins and losses in discreet rounds, as in a video game.

screen, he paced back and forth in front o f a group o f fledgling traders in

T h e s e m o c k markets allowed us to develop online trading skills before "go­

go, pausing to write statements o f trading philosophy in capital letters

ing live," armed with Perkins Silver cash. T h e s e programs taught the group some fundamental lessons about the gamelike character o f trading and the intense focus necessary, as well as sharpening our hand-eye coordination. The

C h i c a g o managers had constant live access to the trading accounts o f

on the board behind him. But neither these techniques nor the Perkins Silver vision o f a profes­ sional, egalitarian market were easily implemented and absorbed. W h e n

physical demands o f online trading centered on the ability to rec­

the graduate trainees entered the trading room, they encountered the sixty

ognize visually a profit opportunity and i m p l e m e n t a decision to buy or sell

traders already stationed at their trading terminals. T h e tensions between the

by c l i c k i n g a mouse. O n e crucial problem we had to surmount during this

Essex M e n , the graduate trainees, and their overseers were high. T h e gradu­

period was known as "fat fingering"—clicking the right button on the mouse

ate trainees represented the educated classes that were replacing the barrow-

rather than the left. Although this has little c o n s e q u e n c e in a word pro­

boy traders throughout the City and were part o f an American, multicul-

cessing or spreadsheet program, in a live market it is critical. T h e left hut-

turalist program that the barrow boys rejected. Perkins Silver c o m p o u n d e d

ton allows the trader to join the bid or offer. T h e right button, the danger

these distinctions by creating special arrangements for the new group. T h e

button, sells directly into the bid or buys the offer, establishing a position op­

managers dedicated two rows o f trading desks to the graduate trainees, sep­

posite to the one the trader intended. Establishing control over these oppo­

arating them from more experienced traders. T h i s separation helped the

site intentions embodied in a quick, sharp twitch o f barely separated fingers

new traders c o h e r e as a group and it also worked to preserve their unique

at first took m u c h concentration. E v e n the more experienced traders some­

work habits. T h e managers wanted the graduate trainees to adopt s o m e ol

times suffered from lapses in manual control. "Ahh, I've fat-fingered it," an

the existing dealing techniques and attitudes, such as adopting aggressive

unlucky trader would cry with disgust, desperately trying to get out ofhis po­

postures in relation to the market, while avoiding others.

sition before the losses m o u n t e d .

16

The

Perkins Silver managers changed the pay structure for the graduate

.After t h e s e basic physical skills were established, trainers provided tech­

trainees to avoid some other problems o f managing an independent work­

niques to h e l p the new recruits evolve from malleable university graduates

force. T h e barrow boys' pay was based on the model o f the local trader; as

into seasoned, Chicago-style speculators. T h e managers recognized that

independent contractors, most o f the traders in the room traded the firm's

this required creating a bridge between the C h i c a g o and L o n d o n offices to

money for a percentage of their profits. T h i s percentage was individually n e ­

bring the techniques o f the C h i c a g o managers into the L o n d o n trading

gotiated between the trader and the m a n a g e m e n t on the basis o f the trader's

room and m a k e their British recruits subject to inspection and evaluation

success. T h i s structure gave the barrow boys a lot o f control over their work

by C h i c a g o m a n a g e m e n t .

hours. T h e y could c o m e in when they wanted, leave when they wanted,

Andrew was in charge o f managing the London traders. Philip, the c o -

and vacation when they wanted. T h e y were subject to reprimand if they

founder, h a d recently moved his permanent residence to L o n d o n and spent

were chronically absent, if their profits fell off, or if they were not practicing

his days in an entirely glass-enclosed office. Rumors about him circulated

the firm's techniques o f speculation, but many maintained loose schedules.

more quickly than futures contracts. H e had a mansion in Belgravia, an ex-

1 would arrive at the trading room at 6:45 in the morning, but the room was

88

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Social Experiments in London Markets

Chapter Three

*

89

sparsely populated until 10:00 a.m. T h e glow o f computer screens that nor­

the service of profits, the managers believed that the women should have a

mally illuminated the room c a m e only from the full row of graduate trainees

space where they felt comfortable in expressing their views.

at that early hour.

T h e barrow boys, however, tried to keep the women feeling "out of place"

T h i s flexibility was frustrating to the Perkins Silver managers, who wanted

in the dealing room. T h e saturation o f sexual language of male domination

to develop a workforce committed to practicing speculation as a profession.

demands of women "a physically impossible performance." In an all-male

S o m e o f t h e best traders did not c o m e in until close to 1:00, when the C h i ­

trading room, "cunt" could be construed as a metaphor for the market or for

cago markets would "wake up," or c o m e online at 7:00 a.m. C h i c a g o time.

a particular competitor, usually a man. However, in the presence of women,

A m o n g t h e m was Pat, o n e o f Perkins Silver's best earners. S h e had been the

the insult slips uncomfortably, but perhaps intentionally, toward its referent.

17

only w o m a n on the trading floor before the managers brought in our group.

T h i s slippage did not seem to bother Pat, the original female trader at

She'd stride in after noon on painfully high heels and plunk herself in the

Perkins Silver. S h e took up the cause of the word with fervor. S h e rejected

chair at her workstation, which was adorned with fuzzy pink beasts. S h e was

the management's idea that the term might disturb her. S h e did not want to

always g o n e by 3:00 when the market began to slow. After she left her desk,

be singled out as a woman, but kept her identification with the barrow boys

her screen saver reminded the room in three-dimensional swerving letters,

with whom she shared history, class, and, o f course, Essex. In the conflict,

"I've c l e a n e d up."

the word b e c a m e a protest against the feminization of the dealing room and,

a r r a n g e m e n t for the new recruits was m e a n t to remedy what the

therefore, the social experiment o f the Perkins Silver managers. T h e man­

managers believed was a lax attitude toward producing profits for Perkins

agers' challenge to their swearing was a signal of the barrow boys' disloca­

Silver. T h e graduate trainees were required to be at their desks before the

tion. W o m e n in the dealing room were an assault on their already tenuous

market o p e n e d at 7:00 and remain there until 4 : 0 0 . T h e y received a set

position in the City. T h e barrow boys and Pat protested by defending their

n u m b e r o f vacation weeks and a bonus determined by performance. W h i l e

market lingo.

The

the graduates accepted this arrangement, it enraged Trevor. W i t h his eleven years as an F X dealer, he believed that he deserved the straight percentage

Essex Boys, G e r m a n s , and C h i c a g o

deal on w h i c h his buddies in the room operated. T h e tensions between Essex M e n and the new forms of Chicago-style in­

W h i l e these conflicts exposed divisions in City trading rooms, another set o f

teraction played out in their relationships with the graduate trainees. T h e

competitors was emerging online. T h e Perkins Silver traders were not trad­

older traders assigned nicknames to the new traders. Two in particular stood

ing exclusively with people whose habits and fears they knew, as they had on

out. T h e first was " T h e Fetus," their n a m e for Paul, the young, arrogant, and

the L I F F E floor or over the telephone networks o f foreign exchange deal­

seemingly natural trader. T h e barrow boys saw themselves in his swagger.

ing. O n l i n e trading networks stretch over the globe. Traders rely on knowl­

other was for Jason, the Orthodox Jew who would leave around 2:00

edge of their competitors to orient their own trading strategies; in the rhythms

p.m. on Fridays to make it h o m e before sundown. Jason got the nickname

of the changing numbers on their screens, the Perkins Silver traders con­

"son o f Adam," supposedly because he bore some physical resemblance to

structed virtual competitors. T h e y identified the competition by drawing

the disliked top manager, though I could discern none. T h e barrow boys'

conclusions about their trading styles from national and regional character­

discomfort with the characteristics of the new cohort were played out in the

istics that they observed.

The

marking o f Jason and Adam as Jews—different from the barrow boys and

In the market for G e r m a n bond futures, the groups that the Essex trad­

beyond the boundary o f the acceptable types o f traders, according to their

ers competed with were "the G e r m a n s " and " C h i c a g o . " T h e y had daily na­

own definitions.

tionalist battles with their G e r m a n and C h i c a g o counterparts. Essex was a

W o m e n in the dealing room also challenged this boundary. O n e o f the

locus o f identity for Perkins Silver traders who felt their trading prowess was

issues that dominated the m a n a g e m e n t of the trading floor in the fall o f 2 0 0 0

related to their social origins. T h e y drew on their own national and urban

was the use o f the word "cunt." Although it is used more blithely in Britain

identities as streetwise English lads to do c o m b a t with their C h i c a g o and

than in the United States, it was particularly obnoxious to Perkins Silver man­

Frankfurt counterparts in a market that operates on foreign territory—the

agers. T h e y insisted on excluding the word from the trading room to make

G e r m a n Treasury bond futures market.

the atmosphere m o r e comfortable for the newly minted female traders. In

T h e language the traders used to identify these groups linked local iden-

90

*

Social Experiments in London Markets

Chapter Three

*

91

titles with trading styles. T h e G e r m a n s were closely associated with an imag­

Perkins Silver dealing room and in Britain more generally. W h i l e the Perkins

ined set o f national qualities such as dishonesty and inflexibility. T h e Essex

Silver traders were negotiating the tensions between barrow boys and the

traders suspected t h e m o f collaborating with their government to gain mar­

new recruits, the shape o f British multiculturalism was being debated in the

ket advantages, especially in what they saw as the absence of street-smart

g o v e r n m e n t and in the newspapers. An independent think-tank called

trading skills.

the R u n n y m e d e Trust delivered a report developed by the C o m m i s s i o n

market is ruled by the logic of time zones that are coded by national

on the Future o f Multi-Ethnic Britain to H o m e Secretary Jack Straw. T h e

and regional participation in the G e r m a n bond futures market. T h e Perkins

two-year study called on Britain to reconsider the c o n c e p t of "Britishness."

Silver traders often griped that the timing o f market movements conveyed

O b j e c t i n g to the racial coding o f the nationalist term, it stated that the idea

that the G e r m a n s had inside information from the Bundesbank or the group

of Britishness was "southern England-centered" and that it potentially ex­

of banks that sets rates for G e r m a n bonds. T h e G e r m a n s were the subjects

cluded millions from the "national story and national identity." T h e race-

of the Perkins Silver traders' narratives in the hours between 7:00 a.m. and

based language and c o n c e r n s of the report elide the British c o n c e r n with

1:00 p.m. London time, when the Essex M e n and the G e r m a n s were seen

class. T h e usurpation of the privileged category of underprivilege was echoed

to be the majority o f players in the market.

in the tension between the Perkins Silver barrow boys and the new, multi­

The

T h i s changed daily at 1:00 p.m. Unlike the G e r m a n s , " C h i c a g o " was not identified with its national government. Instead, C h i c a g o traders were identi­ fied as a collective always referred to by the n a m e of the city where financial futures trading originated. Perkins Silver traders admired members of the Chi­

ethnic graduate trainees. W h i l e this report framed the tension between in­ clusion and exclusion in terms o f the political identity o f the nation, the Perkins Silver managers were importing the same logic of race and differ­ e n c e under the mantle of the market.

cago group for their aggressive style o f speculation. T h e markets were often said to be "more interesting" after 1:00 p.m. .Along with Pat, several of the most

The Market and Multiculturalism

successful traders chose to arrive shortly before then. T h e s e traders claimed that the afternoon hours gave the best opportunities for competition because

T h e Perkins Silver managers constructed their dealing room to create a c o ­

C h i c a g o brought larger volumes and more skillful trading to the market.

hort o f professionalized traders within an American-style, multiculturalist

C h i c a g o ' s involvement also gave clues to the identities and strategies o f

paradigm that resonated with the Runnymede Trust report. Perkins Silver

yet a n o t h e r set o f market actors. In the Perkins Silver dealing room, a cable

hired Asians, blacks, and women, all of them educated, to bring in different

line c o n n e c t e d Perkins Silver to the pits in C h i c a g o . W h e n the bond futures

views o f the market. According to this logic, the categorical differences of

pits were open for business, a speaker on the Perkins Silver floor funneled

each trader would lead him or her to interpret the market differently, pro­

the bids, offers, and final prices into the dealing room. A m a n with a flat-

viding a range o f insights into the market's actions. T h i s c o m m i t t e d a n d

voweled Midwestern a c c e n t called out the bids and offers and occasionally

diverse professional staff (certainly different from the population of the C h i ­

the identity of a bank. T h e Perkins Silver traders derided the predictability

cago pits from w h i c h the Perkins Silver managers c a m e ) , c o u p l e d with

of the big financial houses' strategies. W h e n the nasal voice called out, "Mer­

C h i c a g o trading techniques, would, they hoped, help their fledgling opera­

rill's a seller," a jaded reaction followed. " D i d you hear that, Billy, Merrill's

tions prosper.

selling?" Billy responded in m o c k surprise, "Yeah, fancy that." In fact, Mer­

The

Essex traders, their new colleagues, and their bosses clashed over

rill L y n c h ' s selling b e c a m e an ongoing joke. T h i s information oriented the

defining the appropriate e c o n o m i c subjects for a global market. W h a t char­

Perkins Silver traders to the players in the market and added to the notion

acterizes the kind of person who operates responsibly and effectively in e l e c ­

that these actors were consistent. T h e s e clues helped traders imagine and

tronic financial futures markets? T h i s was not an obvious question for Per­

identify patterns o f action in the market.

kins Silver, the C B O T , or the London financial world. Early in the process of building the financial futures market, C h i c a g o had a dominant role. In the first wave o f innovation, the L I F F E set out to copy the C h i c a g o model. B u t

Displacements

the electronic environment demanded further adjustments. Rather than re­

Tensions between a particular kind o f localism and the effects o f the glob­

producing the Chicago model, Perkins Silver set out to correct for the market

alization o f populations and markets were felt simultaneously within the

imperfections of the pits by creating a dealing room more closely in line with

92

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Chapter Three

market ideals. T h e Perkins Silver founders and managers worked to make their trading room conform to the image defined by their market ethic, us­ ing ideas at t h e intersection of American multiculturalism and capitalism.

18

Just as e l e c t r o n i c trading forced the C B O T to reconsider its c o m m i t m e n t to open-outcry technology, the ascendance o f futures trading outside o f the W i n d y C i t y f o r c e d a new perspective on- Chicago's cultural resources. T o create their, own trading room based on electronic technology and physically distant from their h o m e institutions, Perkins Silver managers had to isolate the key characteristics of Chicago-style speculation that they would bring to L o n d o n markets. T h e s e displacements gave the Perkins Silver managers a new perspective on the n o r m s and practices o f the C B O T . T h e London traders and elec­ tronic markets were simultaneously familiar enough and different enough

Risk is the business o f the futures industry. From the trading floors of C h i ­

to show C h i c a g o traders what was unique about their own methods, tech­

cago to the corporate Eurex offices in Frankfurt, futures markets manage

niques, and the mushy but significant area that E r i c Perkins identified as

risk. T h e temporal nature of risk, particularly the way disjunctions between

' ' C h i c a g o c u l t u r e " — t h e set o f relationships to the self and to competitors

the present and the future create situations o f fundamental uncertainty, is

interwoven with the trading techniques and the orientation to risk that were

a central problem for planning and control. As hedging tools, futures con­

rooted in pit trading. T h e synthesis o f nearness and remoteness enabled the

tracts work to "colonize the future," limiting dangerous exposure by bringing

Perkins Silver executives to develop their own trading techniques, modify­

the problem of future prices under the influence of the present. Futures ex­

ing t h e m for new technologies and geographies while identifying and re­

changes are quintessential modernist institutions: the contracts traded there

taining what they viewed as the key elements of Chicago-style speculation.

19

T h e i r approach blended C h i c a g o techniques with n e w techniques and practices rather than simply transferring them to a new location.

20

Perkins Silver tried to perfect its approach to trading by professionalizing

1

2

3

bring the contingencies o f passing time under human management.

4

Yet there is another side to risk. Risk reaps reward — in money, status, the elaboration o f the social space o f markets, and the construction o f a mascu­ line self. A close examination o f the uses o f risk on the dealing room floor at

speculators while establishing a cohort of mixed ethnicity, race, and gender.

the C h i c a g o Board o f Trade shows the productivity o f risk in the construc­

According to crude anthropological notion that the Perkins Silver managers

tion o f financial space and in the elaboration of e c o n o m i c selves. Financial

i m p l e m e n t e d , these differences would generate novel perspective and in­

speculation is an active, voluntary engagement with risk. Risk-taking and

terpretation, a process that they believed would lead to more profits. T h e

thrill-seeking behavior can be seen as challenges to the constraints of bu-

Perkins Silver managers were linking a basic market notion—that opposing

reaucratically organized social routines. In this light, it is a dissident prac­

views build a liquid market—with the values of professionalism and diversity.

tice, a critical contestation with the regimentation o f modern life. T o work

5

with risk is to engage fate and to play with the uncertainties of the future. Engagements with risk are more powerful than an interpretation that em­ phasizes spontaneous actions in the context o f bureaucratic control would imply. Risk is a constitutive element of contemporary power and e c o n o m i c practice. T h e work o f speculation shows that the c o m p l e x practices of eco­ n o m i c risk-taking are exemplary acts o f contemporary capitalism that con­ figure markets and shape speculators. T h e productivity of risk takes several forms in the organization and prac­ tices o f financial futures markets. T h e first aspect of productivity is located in the infrastructure and organization o f futures markets. Following actuar­ ial logic, financial risks require management, a service that the C B O T pro93

y4

*

Chapter Four

\ ides. T h e C B O T creates the contracts and establishes a market in finan-

trade in a matter of seconds. T h e self-fashioning of these risk-seeking actors

c-.il risk that allows baukeis, agribusiness, and others to protect themselves

is not a n o n g o i n g process ol reorienting c a l c u l a t i o n s to a market logic;

;;_,ain.st changes in interest rates, exchange rates, and the w father. E c o n o m i c

financial calculations are always p r e s e n t . However, w i t h e a c h trade, d e a l e r s

organizations like the C B O I

d e l m c , support, a n d routinize risks a.s they

wager m u c h more than money. T h e i r market engagements are significant

bring financial markets to lilc, 1 he\ create contracts, match orders to buy

social games, a form o f "deep play" in the heart o f capitalism." E a c h trader

and sell, perform accounting functions, and operate worldwide markets. T h e

displays a risk-taking self that his competitors, the market, and he himself will

C B O T packages a n d channels financial hazards, providing risk manage­

judge. T h e pit is an exemplary situation where character is gambled along

m e n t to shift the danger and the potential o f the market from its clients to

with m o n e y .

10

In that space, traders subject themselves to the judgment of

individuals or groups that specialize in profiting from risk. T h e organization

their peers, who will see them as successful risk-takers or as ineffectual los­

creates both markets in futures contracts and a population of speculators

ers unable to engage the market productively." T h e s e games o f risk gain

who trade in risk products.

their significance from the fact that a trader voluntarily places h i m s e l f

Rationalized risk-management markets establish the conditions for specu­ lation in financial contracts. But risk-taking does not b e c o m e routine for spec­

under threat©! annihilation. T h e potential reward of success is the creation of a newly defined person in the eyes o f the pit.

12

ulators. It retains the thrill of gain and loss. Traders must learn to manage

O n tire trading floor, Foucault's "limit experiences" meet daily market

their own engagements with risk and the physical sensations and social stakes

reality; traders m e e t a situation o f "maximum intensity" in face-to-face c o m ­

that a c c o m p a n y the highs and lows o f winning and losing. Traders c o m e to

petition, and confront the "maximum impossibility" o f s e e i n g into the fu­

these markets, hotbeds of profit and loss, to try their skill on the financial high

ture. Futures markets as risk-management organizations identify the l i m i t

wire. In the pit, they work to perforin a kind o f alchemy—turning risk into

of e c o n o m i c reason —the impossibility o f calculating future events —and

profit. T h e tightly regulated markets of the C B O T create the conditions that

provide methods to contain, objectify, a n d understand that uncertainty. Yet

m a k e speculation possible. Aggressive risk-taking is, therefore, established

there is an ecstasy in expressing and engaging these limits." T h e passionate

and sustained by routinization and bureaucracy; it is not an escape from it.

play with the boundaries of the self and reason—on the edge of

financial

In the trading pit, risk-taking helps to generate two levels o f action. First,

possibility—is the social stake of the trading pit. Traders who operate at the

aggressive e c o n o m i c risk-taking is crucial to the social and spatial constitu­

heart o f modern capitalist economies take risks with money a n d self every­

tion of the marketplace. T h e conflicts and contests among traders constitute

day. For speculators, retaining their integrity and identity is often a m a r k o f

the competitiveness of the marketplace. T h e traders sustain the market and,

successful work at the limit. At the edge of annihilation, surviving

financial

at the s a m e time, the market produces risk-takers. In the pit, a particulai

peril is enough. Situations that package and circulate well-defined risks, 1 ike

kind o f self is manufactured in relation to financial action. Risk is the object

the C B O T markets, are stages where modern actors play out these c r i t i c a l

that traders use in their individual projects o f self-creation and re-creation.

games o f self-definition.

Traders manipulate risk to manage their identities and establish status in the

A futures contract is a binding agreement to buy or sell a c o m m o d i t y at

eyes o f their competitors. T h e s e practices produce subjects who can sustain

an agreed-upon price several months in the future;

14

a farmer can l o c k in

themselves under high-stakes conditions to draw profit from e c o n o m i c risk.

the price to be paid for his crop, or a mortgage broker can know what p r i c e

T h e a s c e t i c practices and social displays of virtue enacted in the pit describe

he will have to pay for bonds at year's end. Futures contracts can be u s e d to

a capitalist ethie that centers on the mastery o f the self under conditions of

neutralize the possibility o f loss from unpredictable events. H u r r i c a n e s ,

hazard a n d possibility.

floods, interest-rate hikes, a falling Euro, or a presidential embarrassment

6

perspective on risk generated in the trading pit diverts attention from

can all affect prices in agricultural and financial commodities. Futures ex­

the negative consequences o f uncertainty a n d refocuses it on what is to be

changes around the world provide products that harness the risk of t h e s e

The

gained by taking risks. In futures markets, the obvious reward is money.

potential events. Futures contracts render the future subject to p l a n n i n g . "

Risk-taking includes the potential of creating wealth. But even in financial

,4s hedging tools, futures contracts protect against the negative effects of

7

institutions, it does not end there.

8

risk by formulating specific price risks and constituting rationalized t e c h ­

F i n a n c i a l futures traders work within a carefully defined market sphere

niques for their avoidance. From this perspective, w e can view futures c o n ­

and within radically short time frames, often moving in and out of a single

tracts as insurance, or as technologies of risk management, and this d e p i c -

96

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The Work of" Risk

Chapter Four

*

9?

In the past, speculators had often been in the business o f producing the 1

commodities before they entered the speculative melee." But, this c o n n e c ­ tion between commodity production and futures trading has b e c o m e more and more abstract. Traders joke about the attenuated connection between speculators and the underlying commodities they trade. Grain traders kid e a c h other about forgetting to sell all the contracts they own. A truck, they declare, will show up at the trader's h o m e and dump a container-load o f com

on his front step. T h i s image is funny to traders because the trader's re­

lationship to the physical commodity is so distant. Contracts based on the Dow

Jones Industrial Average Index and the debt of the United States gov­

e r n m e n t (now the most widely traded markets at the C B O T ) , rely on an ab­ straction similar to that of contracts based on future yields of Kansas wheat, a distance from production that points to the central place of exchange in speculation. O n the grain floor or in the financial trading room, knowledge of oat markets or m a c r o e c o n o m i c s is of limited use. • Speculation is a skill o f its own that c o m e s from the ability to negotiate the social layering of the pit and create a self that can read and react to rap­ -f. J A grain trader quotes a price to the pit. Prices, for the C B O T ' s agricultural contract* fluctu­ ate on the electronic boards, in the background. Photo b\ Bob Davit,.

idly changing market information. T h e s e are the keys to mastering risk and taking profit. E a c h pit and product has its own distinct characters, power dynamics, and rhythms. However, traders claim that a good speculator c a n

tion cjf risk m a n a g e m e n t is how futures exchanges justify their markets."' The

video that the C B O T shows in its visitors gallery begins with an inter­

trade in any market. 19

Speculators use futures contracts to exploit rather than to allay risk. S p e c ­

view with a fanner, followed by shots o f his corn field, before it finally cuts

ulators do not fully own the contracts they buy and sell. Instead, they buy

to images o f a mortgage broker at work in his office helping his customers

and sell contracts "on margin." T h e C B O T requires each trader to keep a bank a c c o u n t with a balance correlated to the value of contracts they trade.

purchase t h e i r h o m e s at low interest rates. The

use o f futures contracts to alleviate risk for farmers and users o f

T h i s balance, or margin, assures the trader's ability to pay for losses he may

grains soon spawned a secondary speculative market in contracts. T h e orig­

incur during the trading day. Margins are adjusted every night. A trader who

inal m e m b e r s of the C h i c a g o Board of Trade made and lost fortunes on the

has sustained major losses may get a margin call requiring him to deposit

variations in Midwest commodity prices without having a stake in the con­

funds into his a c c o u n t if he wishes to continue trading. With margin, traders

tents of a grain elevator. T h e C B O T b e c a m e a place where professional risk-

do not have to c o m m i t to buying the product and do not need to have the

takers gathered to buy and sell contracts, not grain. As the C h i c a g o futures

cash necessary for the complete purchase of the contracts. T h e y look for the

markets consolidated and grew to encompass contracts based on U . S . Trea­

short-term gain in price fluctuations apart from any ownership of a

sury debt, t h e s e speculators created a continuous, or liquid, market where

or agricultural commodity. T h e y reap the rewards (or sustain the losses) from

anyone w h o wanted to trade c o u l d buy and sell futures contracts.

17

financial

the price changes as the contracts pass through their accounts.

E c o n o m i e s tells us that liquid financial markets, like those in C h i c a g o .

In M a r c h o f 2 0 0 4 , more than 51 million contracts c h a n g e d hands in

L o n d o n , a n d Frankfurt, transfer e c o n o m i c uncertainties to speculators, the

C B O T markets. T h e C B O T estimates that only 3 percent of the trades made

market's risk specialists. In the language o f futures markets, these specula­

on its exchange end in "delivery," when the manager, farmer, or corpora­

tors perform a critical function: they "absorb" the risk that hed Hers want to

tion actually takes possession of the bonds or grain shipments that lend their

"lav off." T h e organizations that provide the opportunity to avoid the effects

value to the futures contracts. T h u s , almost all o f C B O T trading business

of risk also generate the ability to make a living by taking risks.

can be considered speculative.

98

*

The Work of Risk

Chapter Four

*

99

the outside market to the internal world o f the pits. In contrast, locals locus Watching and Being W a t c h e d

their energies on the pit itself. T h e y speculate with their own money.

1'hc strategics traders use to make a profit develop in the specific social and

The

second major division is between "big" and "small" traders. T h i s is

informational contexts o f C B O T maihets. In the pits, tradcis watch each

icferred to as "size," a measure of how much risk a trader is willing to take

others' moves and create a public definition of themselves a» risk-takers by

on in any given m o m e n t . A "small trader" may trade from two to five con­

performing for the watching eyes o f the other traders in the pits.- Traders

tracts at a time. A big trader may trade in lots of five hundred. Traders iden­

constitute their marketplace by examining each other';, risk-taking and act­

tify themselves and each other by their trading size —"I'm a two-lot trader,"

0

"He's a fifty-lot trader." "He does size" is a description laced with respect and

ing on their assessments. U n d e r such watchful eyes, risk reaches beyond the calculation o f the

a degree of awe. T h e ability' to take on greater and greater risks by increas­

possible financial loss and gain. W h a t is at stake besides the cash that a

ing size defines success among traders. As the mark of risk-taking skill, size

trader places in a market position? A trader submits h i m s e l f to the vigilant

i-, the most important factor in organizing the social and physical space o f

attention o f the hundreds o f others who will witness his successes and de­

the pit. T h e locker room overtones of the language o f size are unavoidable.

feats in the pits - what h e risks and what he reaps. W i t h money, h e wagers

T h e hierarchy of size translates itself to the ascending steps of the pit's o c ­

his r e p u t a t i o n and his self-definition in the eyes o f others. His status is

tagonal structure. T h e social divisions within the pits define the pecking or­

always on the line.

der and the structure o f opportunity for profit. T h e newest traders stand at

Traders scrutinize each other, but not all traders are considered worth

the center of the pit, the area that is least desirable and most obscured. T h e y

watching. Pit traders watch the movements o f successful traders closely;

at e literally and figuratively beneath the vision of the bigger traders and bro­

whether in order to emulate them or to evaluate them as competitors or po­

kers, who control the largest flow of contracts. T h e bigger traders stand on t h e

tential allies. T h e s e kinds of watching are tied to evaluating the risks a trader

step above the newest and "smallest" traders. T h e truly "size" traders stand

is willing to take and are a direct indication of the trader's "size."

closest to the big brokers on the top step of the pit. T h e biggest traders a r e

T e c h n o l o g y defines the potential audience for risk-taking performances. T h e pit is a n exchange technology intentionally designed as an arena where

legendary figures who serve as models for all o f those who stand beneath them. As a trader named Victor explained:

a trader c a n see and be seen by every other trader. O n l i n e markets reconfig­ ure the a u d i e n c e for traders' performances because they transform the abil­

Big traders are guys who are actively in there at all moments, and these people

ity to watch. O n l i n e markets enable risk managers and c o m p a n y executives

are watched.

, . . You know, Tom Baldwin, Joe Niciforo, and all those guys.

to watch any trader's transactions from the screens at their own desks. Only

They know that they have developed their authoritative presence in the pit,

the m a n a g e r s have access to the full picture of risk-taking; they c a n see each

and they know that when they just stick their hands in the air, everybody sees

trader's size and control it. In the trading room, managers walk the floor

them. You watch them. We watch the players. We watch the risk-takers; we

looking over the shoulders of the traders. B u t they do not always seek to limit

watch the big guys. We watch the shooters, as we call them. We don't sit there

a trader's risk-taking. T h e y are monitoring the company's exposure to loss,

and watch the little Mark guy who stands next to me who's never really good

but they must also balance potential losses with risk-taking strategies that

or offered a market at any given time. . . . These developed risk-takers, the big

m a k e profits possible: they may witness a trader's hesitancy in a market—a

guys, have the presence.

sign o f a failure of nerve. U n d e r the eye o f the risk manager, the trader tries to ride the l i n e between taking on too m u c h risk and not taking on enough. In the pit, risk surveillance operates m u c h more in the open, and it in­

The

little guys, the Marks o f the pit, revere these captains of risk. T h e y

aspire to the top step. B u t the move from the center to the top step is not e a s y

teracts with the ambitions of the traders and the social topology of the space.

or obvious. In order to b e c o m e "bigger" and move out of the center, a l o c a l

T h e r e are two major divisions within the pit. T h e first is between brokers

must increase his size by trading more contracts and assuming greater a n d

who e x e c u t e orders from outside the C B O T and locals, who buy and sell

greater risk. T h i s is not just a matter of deciding to trade more. A small trader

contracts for their own accounts. Brokers make transactions for

financial

must navigate the divisions that separate him from the financial action. M o v -

houses or corporations in exchange for a commission on e a c h trade, linking

u ig toward the top step where the biggest opportunities lie requires a strategy.

lie

*

chapter Four-

T r a d e r s use risk-taking as a strategy for gaining status and securing access

that they keep as margin, but this is invisible to the traders who watch h i m .

to the physical positions and social standing that are crucial trading resources.

W h a t they see is his size in relation to what he normally trades and to the

T h e y use t h e flexibility of the trading processes to their advantage. T h e rules

size o f the traders around him. W h a t is seen is more important than what is

of the pit d i c t a t e that the first trader who responds to a call has a right to the

hidden from the eyes of the pit.

order, b u t brokers and traders exercise discretion over whom they see or

So traders manipulate their risk-taking to curry favor with the traders

hear "first." S u c h regulatory gray areas provide opportunities for traders to

above them. Because of the spatial constraints of the pit, moving up onto

use their networks and judgment to assist friends and cultivate bonds with

the steps means displacing a trader who is already there. E a c h trader stands

other traders.

in his own spot, and the social order of the pit strictly enforces the owner­

W i t h i n the flexible procedures of the pit, locals and brokers cultivate re­

ship of spaces. If a trader stands in another trader's spot, he will likely be hu­

lationships with each other. At times brokers rely on locals to take on trades,

miliated, spit on, or literally shoved off the step. Yet despite the vehement

even w h e n the local will lose money. T h i s establishes a relationship of rec­

defense o f space, younger traders do manage to ascend in the hierarchy.

iprocity w i t h the implication that the broker will use his discretion to bene­

S m a l l traders know that brokers reward ambition with business. As o n e

fit the l o c a l in the future. S e a n Curley Jr., a broker, describes how the ties

broker told m e , "There's Joe S c h m o e , he trades five contracts at a time, but

between brokers and locals operate:

I know he's got that ego where he wants to trade fifty. And knowing he pos­ sesses that, I'm going to use him." W h e n a younger trader is ready to ascend

T h e r e isn't any quid pro quo. But of course a local will be more willing to do

in the ranks, he begins to try to gain a spot on the next step up. Paul, a top-

things that would seem on the surface to be irrational I because they cost that

step trader, told m e how he made his first move. Every day, he would step

local money] on the understanding or on the belief that later this human be­

up to the next level, and the traders there would shove him off. But Paul,'

ing he's trading with will remember. This happened to me the other clay. I got

from the lowest level, used an informal alliance with a top-step broker to be­

an order to sell from a big local trader in the pit who I have a great relation­

gin increasing his size. T h e traders above Paul b e c a m e embarrassed w h e n

ship with. He [the local] bought it from me at the highjest price] of the day.

he literally began going over their heads to complete his big trades. E v e n ­

I know that he didn't make any money on that trade. The next time I get an

tually he stepped up, and they let him stay. He increased his "size" by mak­

order to sell and there are a bunch of people who are bidding together, well,

ing successful trades with the help o f the broker. In the eyes of the pit, he

I'm going to remember that he bought it from me up there. So if I have to pick

gained the respect necessary to move up to the next step.

someone out of the litter, maybe I'll pick him. . . . There is a lot of discretion.

Even when a trader gains a better spot, holding on to it requires main­ taining the recognition o f the other traders. T h e experience of one ot the

The

l o c a l took a loss to the benefit of the broker and his client, and by-

few women who have worked in the thirty-year bond pit illustrates how this

doing so, h e strengthened his relationship o f reciprocity with the broker.

works. Although she is now a highly esteemed trader, for her first two years

By m a k i n g it possible for the c l i e n t to c o m p l e t e a trade, the local has

in the bond pit Theresa had to fight to hold her position. S h e would c o m e

added to t h e liquidity o f the market, and the broker will reward him at some

in every morning at 6:30, nearly a full hour before the pits opened for busi­

future t i m e .

ness, to sit in her spot. If she did not make an early appearance, another

Brokers are able to execute trades for their clients with better results

younger trader would displace her because she was perceived as a weak link,

when l o c a l s are willing to take on financial risks. Ambitious locals wish to

and her spot was a place where newer traders could establish their positions.

make a p u b l i c demonstration of their risk-taking skill and actively seek out

As a woman, Theresa's vulnerability was extreme. T h e mutual scrutiny

trades to integrate themselves into the society o f risk-takers. Brokers reward

of the pit is between men. W o m e n are not worth watching, and there are

those traders seen as risk-takers with increased business. T h e challenge for

few to lay eyes on. In 1998, when business was vibrant in the financial pits,

small l o c a l s is gaining the attention o f the big traders.

there were only two women among the six hundred regulars who took to the

To do s o , small traders must convince the bigger traders that they- deserve

steps of the thirty-year pit most mornings. T h e women who survived in the

a place a m o n g them. B e c a u s e status in the pits is directly linked to their po­

pit, like Theresa, could consider themselves as successful, respected traders.

sition as risk-takers, traders who are not content with a small stature must

But there was not a single woman among the "top dogs" of the financial pits.

take on greater size. Bigger risks might be out o f proportion to the money

At the time, more women traded on the agricultural floor. T h e r e , family

182

The liior-k of Risk

Chapter Four

*

163

c o n n e c t i o n s and the clubby networks o f established C B O T traders allowed

nm as the local] "I'm the market. You are not going through me." [Speaking

a n u m b e r o f women to operate. B u t the high-risk games associated with the

as the broker] "I'll sell vou a hundred at six." [Imitating the aggressiveness

financial

ot a local]. " O K . I'm the man." [ C o m m e n t i n g in his own voice j T h a t guy-

trading floor were decisively masculine. Successful women traders

spoke o f themselves as being outside the risk-based status competition that

was the man at six. And everyone in the pit saw him."

raged around them, even when upstart male traders made incursions into

The local acted out his desire to make the market and to gain position in

their spots. O n e woman who worked in the agricultural markets described

the pit by taking on risk. And even as the market went against him, he

herself as living off the "scraps" of the trading pit. But these financial remains

gained recognition by taking on the risk o f the broker's clients. T h e aggres­

were good enough to support her and her two children and get her h o m e in

sive local shows that he is "the man" by his willingness to engage with mar­

t i m e for their return from school. As a woman, Theresa was simply outside

ket forces when others are unwilling to do so. And even more critically, he

the pit's rules o f challenge and riposte. As a subordinate in the world o f risk,

puts it on display for all the other traders in the pit to see, establishing his

she was simply invisible in the pit.

21

risk-taking in the public arena. In stepping up to make the market, he shows

Competitions over space are critical in the pit. Traders will defend their

his willingness to assume risk. His ability to gain the trades he needs will be

spaces against any new bodies, whether they are unknown neophytes or

supported by t h e broker, who now identifies h i m with the sort o f " e g o

well-seasoned traders who migrate between pits to trv the market in a new

liquidity" that sustains his business.

product. Financial traders pride themselves on cutthroat competition and

New locals try to create opportunities to impress the brokers. T h e y stay

deride grain traders for using c o n n e c t i o n s . Even in the bond pit, however,

in the pit when others leave for lunch or golf, taking advantage of opportu­

the c o n n e c t i o n s of friendship and family can be especially helpful when try­

nities to be seen. " W h e n everyone leaves, you're in there, and you step up,

ing to gain access to a good place to stand. Dennis, a seasoned trader who

and the guys see you, and they know you are in there every day. 'He's b e e n

usually deals in corn futures, told m e about the day he decided to try his

in here ever}- day for years. Maybe we should throw him a trade.'"

hand in the thirty-year bond pit, where contract size and volume offered

Brokers challenge the locals to prove themselves. Victor, a young and

great opportunities. H e entered the pit and took a spot on the third step, the

ambitious broker in the financial room, describes a technique called " j a m ­

same p l a c e he stands in the corn pit. H e didn't go unnoticed. T h e trader to

ming" that brokers use to test the risk-taking fortitude o f locals.

his right got angry that D e n n i s was forcing him to turn his body sideways to stand on the step. A shoving m a t c h started. B u t during the exchange,

I've got an order to sell 2 0 and I call out " 2 0 at 6 " and somebody will say

D e n n i s realized that the man battling him for space was the son of an old

"sold," and I sell that guy 2 0 . Then this little five-lot trader starts yelling

friend from the North Side neighborhood where he grew up. T h e younger

like, "Sold, sold, sold. I want that trade. That's mine." And then my clerk says,

b o n d trader stopped fighting and made room for his father's friend.

"Hey, sell 50," and I know this guy doesn't trade 50 contracts at a time, and

W h i l e smaller traders fight to ascend in the ranks, bigger traders cultivate

he's aggressively bid 6 to me and I know he's a [small] trader. 1 say, "I'll sell

their own strategies to create and maintain their "neighborhood" o f risk-

you 50. Just stuff 50 contracts down on you guy." And the guy's usually sitting

22

takers. O n e broker described how he gets rid of encroaching traders whom

there and panting, staring into a couple of bright headlights, freaking out. . . .

he doesn't think will help absorb the risk his clients bring to the pit: "I've

So a lot of times we just stick guys with quantities that they don't want, and

had guys stand next to m e and I've b u m p e d them literally two or three hun­

you make them take it.

dred t i m e s a day with my elbow. . . . I can do it and not even blink an eye­ lash, like I'm not even doing it. And they just don't like that. They're gone. T h e y ' r e standing somewhere else."

Victor wields his discretion as a broker to test the local, who collapses un­ der the pressure of the risk. He cannot rise to the challenge o f increasing his

Brokers promote risk-taking locals as active partners. S m a l l e r traders try

size. Instead of mastering the potential gain that fifty contracts carry, t h e fear

to attract the attention of brokers by displaying a desire to "make the mar­

of the potential loss incapacitates him. Victor depicts the trader's collapse as

ket," w h i c h means being available to trade with the broker's clients. T h i s

a bodily breakdown exposing his inability to handle the risk. H e is u n a b l e to

creates t h e conditions for what o n e broker called "ego liquidity," trading

move and hot with anxiety. He has proven himself useless to the broker and

m a d e possible by the desire of a trader to show off his risk-taking prowess.

an embarrassment to himself.

Craig, a broker, acts out an engagement with an aggressive local: "[Speak-

A trader's m o v e m e n t through the ranks of the pit allows us to see t h e in-

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The Work of Risk

Chapter Four

»

105

terplay b e t w e e n risk-taking and its social returns. T h e possibilities and perils

a personal experience of risk, the traders taught the anthropologist an im­

of every trade link financial and social rewards. Traders play at the boundary

portant fieldwork lesson: abstracting the task can limit the analysis. A trader

between decisions and consequences that lies at the heart of the futures mar­

pulled a book of sociological essays about financial markets out of my

kets and determines the difference between social success and failure, wealth

pocket and told me that I might as well throw it away. T h e book was not go­

and bankruptcy. Risk-taking orders the social space of the pit. Traders use

ing to help my trading. Observing from a reflective distance is antithetical

e n g a g e m e n t s with risk to m a n e u v e r for social and physical position on the

to traders' norms of practice. As Henry directed my attention, my direct en­

steps o f t h e trading arena. However, taking risks is not only a problem o f

gagement, even at low stakes, helped m e notice specifics about the market.

social strategy and display. Learning to successfully handle financial risk re­

Paper trading showed m e the connection between risk-taking and the tech­

quires m a n a g i n g the self under the conditions o f i m m i n e n t gain and loss.

niques o f discipline that traders described to m e . . Trading is a profession that thrives on action undertaken tor what is felt to be its own sake.

M a n a g i n g t h e Risk-Taking S e l f

26

T h e intensity of focus, the thrill of testing my wits

against the market, the utter absorption in the moment-by-moment action,

Traders proudly identify with their role as risk-takers. T h e y describe "ab­

the absolute nature of being right or wrong, o f making or losing money on

sorbing risk" as their j o b , their p l a c e in the division o f financial labor, a

every trade helped m e to understand the importance that traders place on

job description that indicates how locals see themselves as taking risk into

engagement with risk for its own sake, not just for profit and loss. O n e trader

their selves and bodies. T h i s intimacy with risk links risk-taking and self-

told m e that with discipline, "you can experience the market and b e c o m e a

determination.^

part o f this living thing, intimately c o n n e c t e d to it." T h e e c o n o m i c incen­

D i r e c t e n g a g e m e n t s with risk are at the center o f traders' understandings of their own labor. During my first days at the C B O T , the locals in the pit

tive is not enough to explain the attractions of trading. T h e significance that traders draw from their risky work involves financial pleasure.

27

where I worked insisted that I would never be able to understand trading

For speculators, fate lies in the time gap between the present and the

without putting m o n e y on the line. T h e experience of placing a stake on the

future. T h e risk-taking trader assesses the market, places a stake, and faces

line was critical to their self-perceptions, and they did not believe 1 could

the time that must elapse between each decision and its consequence. T h e

understand it by just talking about it with them. T h e y asserted that risk-

market moves and determines his gain or loss, and the result is disclosed. In

taking was intensely personal, something that c a n be felt only in the i m m e ­

Erving Goffman's description o f the moments between placing the stake

2

diacy o f the m o m e n t and could not be properly translated. '' S i n c e I lacked the $ 1 0 , 0 0 0 m i n i m u m stake I needed to enter the pit,

and reaping the consequences, the trader "releases himself to the passing moment, wagering his future estate on what transpires precariously in the 28

Henry, a broker, offered to help m e learn about working with risk. He sug­

seconds to c o m e . "

gested that we "paper trade." I would "buy and sell" contracts by marking

and how large it should be, and then in facing the c o n s e q u e n c e s of his

e a c h decision on a trading card. If I made a successful trade, Henry would

action undaunted.

give m e a p e n n y for every c h a n g e in the price. I f the market turned against m y trade, I had to pay Henry in pennies.

His skill lies in determining when to place his stake

1 h e consequences o f taking risks evoke excitement and complete ab­ sorption into the action. T h i s state o f being in the present is similar to the

T h e r e is no room

experience of mob violence and shares the condition of immediate conse­

for distraction. J spent hours with my neck craned toward the price screen

quences. Bill Buford describes the pleasure o f participating in a not with

25

Henry taught me that risk-taking requires total focus.

with a pen in one hand and a trading card in another. Quickly, other traders

British soccer hooligans. "I am attracted to the m o m e n t when conscious­

too— both those I knew personally and those I had only known by s i g h t -

ness ceases: the moments of survival, of animal intensity, of violence, when

began to train m e . Mark tutored m e in his system o f limiting losses by plac­

there is no multiplicity, no potential for different levels of thought: there is

ing orders about fifteen ticks below the market. E t h a n told m e about trade

only one —the present in the absolute."

trends. Traders passing m e on their way in and out o f the pit took the op­

The

29

volatile atmosphere o f the trading floor also links risk-taking with

portunity to school m e in the adages o f trading, "Ride your gains and cut

fighting. Trading often erupts into contests of shoving and swearing, j o i n i n g

your losses." " T h e trend is your friend."

together literal and symbolic violence. T h e C B O T hired two paramedics to

By insisting that my knowledge of their task would be inaccurate without

staff the trading floor against the possibility o f everyday violence erupting into

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Chapter Four

something fiercer. D u r i n g my time on the trading floor, shouting matches

The

*

107

physicality o f the pit creates a direct c o n n e c t i o n between the mar­

and shoving vie) e so c o m m o n i often did not even write them down. S o m e ­

ket and the trader's body that plays itself out in stones o f self-destructive b e ­

times these altercations left physical marks. One trader showed m e a graphite-

havior and sometimes in suicide. S o m e o f these stories are, n o doubt, a c ­

-Tuned sear on his hand u here a colleague had -.tabbed h i m with a pencil.

counts o f actual incidents, but they all have the quality o f moral tales about

\ v-l. as Buford observes, ontward aggression can be pleasurably coupled with

the dangers o f wealth and hubris. T h e y are tales o f the fall, stories o f m e n

an i n n e r sense o f c o m p l e t e presence.

who had perfected the art of living within the uncertain gap between pres­

It is this state and the daily engagements with fatefulness that set trading

e n t and future but could not sustain their mastery and lost all their m o n e y

apart from other e c o n o m i c activities and other areas o f the financial indus­

as a result. T h e s e tales portray the price of linking risk-taking, personal

try. W h i l e engagements with action are defined as outside daily life for most

worth, and self-determination. T h i s urban mythology o f the pit's dark side

workers who labor in bureaucratic, routinized settings, traders seek them

expresses the collective fears of the trading floor and the ever-present possi­

out. T h i s makes them similar to fighter pilots, professional athletes, and oth­

bility of failure.

ers who thrive on the sense o f self-determination that c o m e s from being in

T h e pit-based tests of speed, skill, and status pump adrenaline into traders'

the a c t i o n or at risk and whose work involves reactive, disciplined labor,

bodies. T h e adrenaline buzz links the social and financial risks of the pit with

status competitions, injury, and even sometimes death.

physical pleasure and pain. Traders must work t o shed the physical feelings

A trader's increasing wealth is an outward sign o f his ability to perform

of risk-taking and the aggressive affect of trading when they leave the pit. As

the a l c h e m y of the risk-taker. E a c h trade is a c h a n c e to prove that he has

early as ten o'clock in the morning, traders perch on stools in the lobby bar

master)' over himself. H e draws on this mastery to read the market, interpret

of the C B O T . T h e y rid themselves o f the residue of competition by n u m b ­

its signals, deftly navigate its peaks and troughs, and skim profit from the

ing themselves with a l c o h o l a n d drugs, releasing energy in the gym, or even

global capital markets that circulate through his hands. H e is able to deter­

through meditation. As Jack c o m m e n t e d : "After work I go to the gym and

m i n e his own fate while subjecting himself to the whims of the market. T h e

other people will go get wrecked, go get drunk. . . . You have to realize that

values o f self-determination and free will are central to traders' daily en­

it is a very physically demanding job and you just have to do s o m e t h i n g .

g a g e m e n t s with risk in the futures markets. T h i s forges another link be­

It's like go out to drink or go h o m e and smoke a lot o f dope or go work out,

tween the financial and social stakes of the pit. With every successful trade,

whatever it is."

the trader accrues an aura o f self-determination and success.

T h e physical intensity of risk-taking links body, status, and games of risk.

Losing m o n e y is more complicated and ambiguous. Taking a risk that re­

It is not surprising, then, that traders express their fears o f loss and h u m i l i a ­

sults in a loss is not necessarily the reverse o f gain. Traders take losses every­

tion in terms of bodily and social destruction. A trader named L e o told t h e

day. T a k i n g losses is a mark o f the risk-taker. B u t over time a trader who is

following story:

n o longer able to make successful trades at the same time that he takes his necessary losses loses his sense o f efficacy and his social standing. W i t h every trade, a local stakes his money and his ability to define him­

I know guys that killed themselves in this business, put a gun in their m o u t h . Terrible things. . . . I m e a n I've seen drugs ruin guys. 1 saw .something h a p ­

self. F u t u r e s trading is a constant test on both levels. O n e good trade never

pen,

guarantees the next. T h o u g h traders are surrounded by a social order that

a young m a n there, very nice guy; H e and I started off at almost the s a m e

buttresses those who can prove their risk-taking a c u m e n , other traders are

time, . . . In the three years that I was there and he was there, he p r o b a b l y

swift to reject those who lose their skill. Even the most successful traders in

m a d e three times as m u c h m o n e y as I did, or five times. I didn't know h i m so­

the b o n d pit must continually prove their "big dog" status with each trade.

cially, but 1 heard he got caught up in drugs, and then I heard he got d i v o r c e d .

The

pit is the place where a trader with ingenuity, appropriate c o n n e c ­

it was p r o b a b l y o n e o f t h e saddest stories o f my trading career. I m e t

T h e n I heard h e got remarried and divorced again

H e was high o n the

tions, and discipline can c l i m b onto the top step and into the upper eche­

Board o f Trade, and through s o m e other people I sort o f heard little bits a n d

lons of the i n c o m e bracket. But the promise of the pit hides the pain and

pieces, w h i c h was basically h e was just sinking. And I c o m e to work o n e

desperation that can c o m e from living with constant uncertainty. T h e pit

morning, and I get to work about a quarter to six in the morning, and I was

collectively pays out social rewards; but traders experience the pain of loss

walking down L a S a l l e Street, and I looked down in the curb, and there was

as c o m i n g from the market itself and as lone individuals.

this guy sleeping. H e was homeless, whatever. It just broke m e up, b r o k e m e

188

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Chapter- Four

The Work of Risk

*

109

up. A n d the story doesn't have a happy ending that I know of. I r e m e m b e r I

they can earn their spot in the pit with every dollar that they pocket." In

was in h i s house, and he had a party, a n d I'll never forget it, it was such a big

the matrix o f firm decision and swift c o n s e q u e n c e , a trader rises and falls

party. H e had two bands. I never was at a party that had two bands. W h e n the

on his own merits. Anyone can play, but only a few can make their living on

first b a n d broke, the other o n e c a m e on. I m e a n , it was terrible. B u t those

the high wire.

kinds o f things h a p p e n .

Analysts have characterized high-risk activities as ways of escaping the routinized contemporary world. Skydivers and mountain climbers report

Joe told a similar story:

their attempts to escape social constraint to draw closer to their "true" selves." Traders participate in this R o m a n t i c understanding. T h e y take

[ T h e r e are] sad stories, suicide-type things. T i m C r e i g h t o n , somebody who

on risks that are generated in modern institutions through the exercise o f

killed h i m s e l f two years ago. An old timer in his early fifties, because of money.

rationalized control.

T i m p u t a gun to his head and killed himself. H e had two kids, fifty years old,

The

explanation that voluntary risk-taking is a simple rebellion against

always a very successful trader. B u t he went off the floor, traded, for seven

the limits of modernity is insufficient. Markets create high-stakes situations

years h e traded off the floor and lost all his money. H e was in debt to a lot o f

that have the power to create or destroy a definition o f the self. T h e strength

p e o p l e and killed himself. A n o t h e r killed himself in the garage. H e always

of social and individual rewards and punishments reflect this force. Traders

used t o give people cars. H e had a c o n n e c t i o n to a car dealer. C a r b o n monox­

take appropriate e c o n o m i c action by examining the risk-taking self, both in

ide. [ A third] overdosed o n Quaaludes.

the eyes of other traders and with an internal monitoring gaze. T h e i r re­ sponsibility as risk-takers requires active engagement with risk, not simply

T h e s e traders could no longer turn risk into profit. E a c h story describes

caution in the face o f danger.

the collapse o f self-management and the loss o f the successful speculator's

Risk-taking is not only a calculated decision but arises in the context o f

professional identity. T h e s e deaths expose the underbelly o f the Dionysian

the pit and through techniques of self-formation. T h e norms o f risk-taking

qualities o f capitalism that attract traders to the action o f the pit. Why

10

in the pits shape the habitus o f the traders who work there, creating an e m ­

w o u l d traders s u b j e c t themselves to these pressures? T h e action

bodied reason that is deeply informed by the rules o f the interlinked e c o ­

in the pit is a c o n s t a n t test o f self-discipline and fortitude. T h e constant

n o m i c and social games o f the trading floor. T h e s e techniques emerge in

g a m b l e o f s e l f demonstrates a trader's particular virtue. L i k e c h a m p i o n

traders' engagement with the i m m i n e n t future. Actors push the possibilities

31

boxers, traders return to the ring even when they can afford to retire. Ac­

of annihilation o f the self through e c o n o m i c risk-taking. T h i s wagering o f

cording to V i c t o r , "You have to understand. T h e U.S. T-bond p i t . . . it's just

the self shows how active engagements with risk do more than challenge the

amazing. T h e r e ' s guys there who make so m u c h money and there's guys ap­

daily experience of routinization and the bureaucracy of m o d e m life. T h e s e

proaching t h e i r fifties now and probably can retire twenty, thirty, forty times

are high-stakes situations where people are made and unmade.

over, and t h e y still c o m e in to work every single day." Simple e c o n o m i c logic c a n n o t e x p l a i n the c o m m i t m e n t o f traders to their task. The

W h e n we define risk as synonymous with danger, the orientation toward hazard occludes theoretical attention to the productive dimensions o f risk.

rewards are more than monetary. G a i n is a scorecard. T h e rewards

Risk shapes the social and physical space o f the financial exchange and

of trading l i e at the nexus of risk and self-definition. T h e pits—which on the

forms the fulcrum o f traders' self-definition. Traders generate strategies o f

surface s e e m to be only spaces o f crass materialism and e c o n o m i c reduc-

risk-taking that shape the social geographies o f the pit and support the cir­

t i o n i s m — a r e places where m e n take pleasure, court danger, and craft risk-

culation o f financial goods. W e need not see such engagements as critiques

taking selves as they create a market. It is significant that traders play the

of the m o d e m . Active engagements with risk are a locus for the production

g a m e , not t h a t they play to win. T h e possibility o f defining and redefining

of contemporary e c o n o m i c selves and social space.

the self every day in the eyes of the pit lures the wealthy speculator back day after day. It is not enough for these traders to be at the pinnacle o f their pro­ fessions. T h e y regenerate their character in the eyes of others with each new trade; e a c h n e w risk is a c h a n c e to reassert their discipline in the face of fate, their skill for riding the waves of the market. It is a c h a n c e to prove again that

P iii.inci.il trading floors are dens o f incivility. Before a visitor can get her vi­ sual bearings, her ears are filled with loud noise, her feet shuffle through the shredded paper that covers the floor, her shoulders are smashed by the flail­ ing bodies oftraders in garish attire, and her balance is threatened as traders shove their way into the action. From the din, coherent fragments of language emerge. Curses and raucous laughter flow freely, and dealers trade insults, both hostile and friendly, along with financial contracts. Trading floors are sat­ urated w ith the metaphorical language of violence, a fitting background for the dispositions, based in self-interest and mutual exploitation, that traders cultivate there. Just as the norms o f the trading floor guide conduct, traders' actions, language, and dress also shape the space of the trading room, defin­ ing the range of action appropriate to the motives o f profit-making. In the pits, traders bring to life a particular form of e c o n o m i c m a n — aggressive, competitive, fiercely independent, and often crude —that drama­ tize-) taking profits from the hands o f their friends and colleagues. B u t this unseemly behavior does not c o m e naturally. Traders reflect on and experi­ m e n t with how to break down the standards of good behavior that hold out­ side the marketplace. T h e resulting self-presentations invert the styles o f dress and the language o f formal business, professional codes o f respect and decorum, and standards of constraint—in short, the norms o f civility that n u i k the usual sobriety o f calculating e c o n o m i c activity.' T h e brash actions o f traders and the raucous atmosphere o f the pits c o n ­ trast shaiply with the sober technicality of the market. In the pit, traders do not express the cool rationality and instrumental calculation that are c o m m o n l y associated with the market in which they work. Instead, the price-setting func­ tion of the market is accomplished through impassioned competition among liidn lduals whose behavior is antagonistic, brash, and frequently outrageous. Crowds like those on the trading room floor have often been thought to undo itason and unleash passions, and traders' conduct certainly seems to

112

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Economic. Hen

Chap ter F i ye

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113

support that claim. Yet dealings with money have been thought to have tlu-

out this contradiction in dramatic form. T h e i r conduct identifies the mar­

opposite effect. T h e pursuit o f wealth, manv original philosophers of capi­

ket as a space beyond society that is necessary for unbounded competition

talism thought, would dampen socially destructive passions. T h e s e thinkeis

among men. In turn, this situation creates prices, which are essential to the

trusted that the pursuit o f wealth would counteract the more violent im­

circulation of commodities. T h e public's trust in the price o f bond futures

pulses o f competition and c h a n n e l them toward self-control. Albert ( ) .

is predicated on the distrust among traders.

7

H i r s c h m a n explains that,"among E n l i g h t e n m e n t philosophers, capitalism

Traders often describe their relationship to the market as o n e that draws

was lauded because "it would activate some benign h u m a n proclivities at

out the fundamental nature of h u m a n beings. In this vision, the market re­

the expense of some malignant ones —because of the expectation t h a t . . . it

duces the individual trader to his most basic instincts — competitiveness and

would repress and perhaps atrophy the more destructive and disastrous com­

self-interest—and the stylized performances o f the pit reflect this. T h e c o m ­ 8

ponents o f h u m a n nature." T h e n , as now, believers trusted that capitalism

petitive, anoinic actor of e c o n o m i c life is the product o f the financial trade.

would not only benefit the individual, but also create a hard-working and

In traders' vernacular, the market strips away the pretenses and rarified styles

cooperative society. T h e discipline ot self-interest, according to the hopes of

of society. W i t h o u t the social veneer, the e c o n o m i c man can emerge from

Adam S m i t h and others, would bring not only a particular kind of calculat­

his c o c o o n .

:

ing action, but a particular type o f affect—a calm, but insistent, passion.

9

O n the trading floor, participating in the collective requires contributing

E l e c t r o n i c dealing rooms foster more technical modes of conduct. T h e

to the sentiments and sensations of the space. C o n d u c t in the trading r o o m

trading screen encourages a calculating rationality, cooler conduct, and the

stands in opposition to the social conventions of politeness and sociality that

external trappings of self-control. U n d e r the influence o f the screen, traders

mediate smooth relationships outside the market. Traders' actions and lan­

b e c o m e instruments o f market activity, favoring the technically trained

guage in futures markets r e v o k e around competitiveness and individuality,

market observers dubbed "symbolic analysts." E l e c t r o n i c traders compete

which mark traders as hypercompetitive, masculine actors.

10

with the market as an entity in itself, removed from the people who make it

Traders construct selves according to vocational principles, but their per­

up. Still, many electronic dealers c a m e from the trading floor, and then

formances bear little external resemblance to the abstract e c o n o m i c s u b ­

bring their aggressive style to the digital dealing room, where the calmer cal­

jects of capitalism.

culations o f the screen are only beginning to emerge. In the pits, traders'

behavior, despite the fact that personal connections arc a critical c o m p o ­

passionate engagements are now shifting under the new influences of new

nent of pit life. In their performances, traders enact an asocial

dealers with college educations, new software with screen-based represen­

ducting themselves in accordance with the competitive, atomistic ideals o f

tations o f market movements, and new m a n a g e m e n t techniques.

self-interest. T h e "binding ideas" that hold traders together highlight a n d

11

T h e s e principles require what appears to be unsocial subject,

con­

In contrast with the dispassionate affect that m o n e y ideally encourages,

demand adherence to the principles of a war among e c o n o m i c c o m p e t i ­

h u m o r and hot-blooded behavior mark the trading floor and dealing room.

tors. Traders subscribe to feral codes o f behavior that appear to u n d e r m i n e

Traders engage ardently with money; they do not perform their economic

regulations and restraint."

12

c a l c u l a t i o n s with detached reason. T h e i r professional conduct creates a

In daily performance, traders work according to a maverick aesthetic, dis­

brash persona, whose self-interest and competitiveness anchor the market's

playing radical individuality amid the social density of the trading floor. A

5

key activity—finding the price o f a commodity. A price is a particular kind

maverick

o f truth — an aggregate of each trader's assessment of the market and attempt

ownership. Traders retain that sense of the unmarked animal that is free to

to profit from that understanding. A true price is, then, anchored in self-

wander. Traders create an aesthetic sphere that reflects their ideal of the self-

interested action, yet the self-interested person is paradoxically positioned - -

interested individualist competing for advantage and profit.

4

is an unbranded range animal, a beast without the markings o f

14

to create knowledge, on the o n e hand, and, on the other, to destroy trust in

T h e maverick trader does not arise naturally. He is dressed, marked, a n d

this knowledge by raising the suspicion that it has been manipulated for

molded in his actions and sentiments." T h e raw emotions that seem to be

gain.' As Steven Shapin has noted, " T h e very distrust which social theorists

impulsive expressions of personal feeling are both performances and t e c h ­

have identified as the most potent way of dissolving social order is said to be

niques for engaging the market. T h e postures, gestures, and displays of p h y s ­

6

the most potent means of constructing knowledge." Traders' behavior pla\ s

ical strength are styles that shape the physical being of economic man. T h ese

114

*

Chapter- Five

Economic Men

*

115

bodily and e m o t i o n a l methods are part o f the "practical reason" o f traders,

his face, and his eyes are set well below a protruding brow. W h e n he smiles,

critical parts o f their acquired abilities, memory, and routines that establish

his lips draw back to reveal a huge mouth gated with widely spaced teeth. A

6

fire habitus o f e c o n o m i c action on the trading floor.' The

prickly halo surrounds his head, where a few gray spikes are beginning to

m a v e r i c k aesthetic seems to u n d e r m i n e the c o n n e c t i o n s and in-

show through the black stubble. H e wears worn plaid shirts and rotates

t e r d e p e n d e n c i e s among traders, yet they are complimentary. Traders' inter­

among two or three pairs o f khaki pants. He is particularly fond o f a well-

d e p e n d e n c e and the system o f prestige organized around risk-taking do not

worn pair that exposes a large patch o f his boxer shorts. His speech is the

in t h e m s e l v e s contradict the asocial nature o f their performance. Maverick

Essex slang that reigns in dealing rooms all over London. Although he looks

aesthetics a n d asociality both align with the idea o f market action based in

like a middle-aged veteran, he is an astonishing thirty-two years old.

the a u t o n o m o u s individual.

Before Freddy settled in the Perkins Silver dealing room, he inhabited

T h e individualistic, hypercompetitive character of the trading floor is part

the trading floor o f the L I F F E . He was a bit o f a celebrity there. Everyone

of the d r a m a o f capital. Demonstrations o f individuality separate traders.

knew his habits —his penchants for flashing and for displaying his bodily

T h e i r a s o c i a l performance reaches beyond them and prepares the space o f

processes. He leaves little to the imagination. O n e o f his fellow traders on

the trading floor for e c o n o m i c action. T h e collective life o f maverick indi­

the Perkins Silver floor said admiringly, "He's disgusting; the more you get

viduals c r e a t e s the trading floor as a special space for the cultivation of a risk-

to know him, the more he disgusts you."

taking self a n d the exercise of "pure" market engagements. T h e grotesqueries

Freddy slouches in a padded desk chair, head and shoulders l e a n i n g

of the d e a l i n g room create a space where it is possible to devise e c o n o m i c

toward his screen. Sometimes, when the market is slow, he leans back in his

actions that a r e disconnected from the influences o f the social world.

chair to let his hands find their way to his nose. He likes to wipe the bounty

Ironically, the asocial life o f e c o n o m i c m a n is conducted in the thickly

on office equipment or surprise unsuspecting users o f the door handles or

social world o f the trading floor of the C B O T , in the L o n d o n dealing room,

the refrigerator. Nigel, a trader from the selective subgroup that trades in

and at their after-work hangouts. T h e sheer physical density o f the trading

Euribor derivatives, cringed as he headed for the nearest washroom, mut­

floor c r e a t e s a c o u n t e r p o i n t for this e c o n o m i c m a n . In his individuality,

tering curses at Freddy. "Fucking animal," he griped.

he thrives i n a crowd. Furthermore, he exists through his exchanges with o t h e r s — t h o s e who buy or sell. His performance requires an audience.

17

But such complaints do not dampen the spirits of the freewheeling trader. Freddy loves to sing. He often inserts his n a m e , making himself the hero o f

O n the trading floor, the traders' exaggeration, hyperbole, and exces-

the lyric. O n e Freddy standard was, " W h o let the Fred out?" T h e song pro­

siveness, m a r k e d by laughter, spontaneity, sexual h u m o r , and m o c k i n g

vided an excuse to bark like a dog, "Woof, Woof, Woof." Like football fans

of official propriety, blend with their sensual nature and strong e l e m e n t o f

all over America, Freddy put his animal nature on display by aligning h i m ­

play. In t h e grotesquery of the trading floor, the traders' bodies and base de­

self with canines on the rampage. O t h e r traders in the room often c o m ­

sires are essential to the composition o f the market. By participating in the

pleted the musical phrase for him with their howls.

18

d e b a s e m e n t o f the abstract market, the traders b e c o m e the materials o f an­

A c o m m e r c i a l for lite beer also caught Freddy's eye. T h a t year a large

other sort o f market, one that is explicitly embodied, located, and undeni­

American brewery released an ad that ran on British television showing a

ably h u m a n .

1 9

gigantic, self-animated belly, independent of any body, its round hairy mass

Traders work hard to fashion themselves into market beings like Freddy, a

rippling with fat. T h e belly chases a terrified looking man through the streets

trader for Perkins Silver and a former pit trader at the L o n d o n International

of a British city. T h e voiceover chants with m e n a c e , "Belly is gonna getcha."

Financial F u t u r e s E x c h a n g e . Freddy is a character in two senses of the word.

Freddy appropriated the jingle, alternating between Belly and Freddy.

First, he is o d d and interesting. Watching him will make you laugh or squirm,

The

m a n who shares Freddy's desk is named Billy. He keeps a baseball

turn away in revulsion, or stare riveted into his sneering face. S e c o n d , in the

bat by the side ofhis computer. W h e n he is not doing well in the market, he

d r a m a t u r g i c a l sense, Freddy is a character that C h r i s S m i t h created and

slaps the bat over and over into his open palm. He relies on Freddy to keep

enacts. F r e d d y is an alter ego with a personality and image all his own.

him amused, both during and after work. O n e Thursday night, the traders

Chris S m i t h ' s creation o f Freddy crystallizes the characteristics o f the

ended their after-work drinking rounds at a karaoke bar. Freddy shouted

crude market beast. Like any well-made character, Freddy's appearance and

into the microphone and stripped off his pants and shorts. T h e boxers m a d e

d e m e a n o r reveal something about his interior landscape. D e e p lines frame

an excellent headpiece until the m a n a g e m e n t dragged him from the stage.

116

*

Chapter Five

Billy, still exhilarated by the evening's mischief, began recounting the storv

London. S u c h e c o n o m i c characters also exist on the trading floor oi the

the next m o r n i n g as sat down at his station. "Freddy was totally on form last

C h i c a g o Board ofTrade. Traders adopt an aggressive demeanor and express

night," Billy reported to Martin, the biggest trader in the room, "And when

extreme masculine belligerence and overblown competitiveness when they

he's o n form he is in a different class." Martin responded with equal parts

arc on the floor and among other traders. T h e n they discard these manner­

esteem and amusement, "Yeah, a different class of human."

isms with equal ease in interview situations and when they are relaxing in

1 was surprised when he reported that Freddy was not his real n a m e . He told m e that Freddy c a m e from Freddy Kreuger, the ghoulish protagonist o f the slasher series Nightmare

on Elm Street.

their homes after work. T h e s e jarring extremes express the dramatic nature of traders' floor personae.

"I don't know what that says

Traders' actions make implicit claims about the c o n n e c t i o n between the

a b o u t your relationship with your neighbors," I said. H e smiled, knitting

market and h u m a n nature. T h e market, in the traders' view, strips away the

his bushy eyebrows. " O h , Neighbor" he ominously intoned. He was remark­

social veneer o f h u m a n decision making to expose an unadulterated e c o ­

ably convincing.

n o m i c core. Intimate contact with the raw forces o f the market, the sheer

It is appropriate that Freddy's n a m e would invoke the transgressions o f

power of speculation, of buying and selling, strips the trader of external c o n ­

a 1980s horror classic. In the story, vigilante parents burned the villain in a

straints and unleashes the force of the e c o n o m i c beast. Sean Curley Jr., put

b a s e m e n t furnace for killing neighborhood children. H e returned from the

it this way: "A pit distills things;. . . the pit boils you down to your essential

dead, scarred and wielding a glove with long, razor-blade fingernails, able

elements." In the pit where all o f these characters gather, traders describe

to enter teenagers' dreams and murder them in their sleep. Freddy Krueger's

the market as a kind o f war of all against all. Traders make a point of dis­

gothic transgressions break the codes that make us h u m a n .

playing their threadbare moral fabric. O n e London-based manager who has

D u r i n g the early 1980s, financial futures traders emerged with the trans­

traded for eleven years in the currency and futures markets gleefully stated,

formation and globalization o f financial markets. T h e C h i c a g o exchanges

"We thrive on other people's pain." T h e r e are profits to be made from t h e

were consolidating their business and spreading their model o f financial de­

e c o n o m i c distress o f countries and individuals, and among the asocial, there

rivatives trading to exchanges around the world. T h e L I F F E , Freddy's first

is no responsibility to any individual or to anything outside of their own goals,

h o m e , o p e n e d for business in 1982. Freddy and the global financial futures

laking advantage o f chaos in the e c o n o m y and of other people's losses to

markets grew together. He is a product of that m o m e n t , and he is a type that

make a profit is the stock-in-trade of speculation. E c o n o m i c man delights in

spread with financial derivatives trading.

the carnage. T h i s system of accountability—each trader for himself— is t h e

Freddy's bizarre behavior on the trading floor separates Chris Smith's work

defining feature of asociality, which allows traders to profit from the ruin o f

and his outside life, which enters into his interactions with other traders

others and escape moral implications. "It's like survival o f the fittest," o n e

20

only rarely. Chris Smith has an ex-wife, with whom he has a strained rela­

pit trader who stands on top o f the food chain told me. "A dog-eat-dog

tionship, a n d a son, about six years old, whom he visits on Tuesday evenings.

world," reported another. O n a day when groans of defeat were filling t h e

O c c a s i o n a l l y , Pat, his sole female peer, will ask about his child, but Chris

Perkins Silver trading room, Martin, whose ongoing successes were already

avoids discussing him in the office. T h e dealing floor is Freddy's space, where

trumpeted by his Prada outfits, hoisted a dry-erase board onto the d e a l i n g

outside attachments and obligations melt away. T h e focus in the room is on

room partition. In a taunting display, he mocked other traders in a r h y m e

the market, which brings out the absurd and aggressive parts o f Freddy the

drawn from the nicknames o f the G e r m a n debt instruments he trades:

trader, leaving little room for paternal affections.

"Schatz is red, Bobl is blue, 1 made shitloads today, Why can't you?" It is n o t

Freddy's performances epitomize e c o n o m i c m a n , trader-style. His ratty

surprising, then, that traders c o m e to think of themselves in animalistic

self-presentation and loutish deeds display the aggressive and naked desires

terms. S c a n described some of the best traders on the C B O T as "the kind of

of the debased market creature. Traders like Freddy bring to life the carica­

truys who you wonder what rock they crawled out from under before t h e y

tured b e i n g o f the trader in a typically satirical way. T h e y create characters

c a m e to work this morning."

that shun t h e manners their mothers taught them and push the envelope on

T h i s stripping away of the social is primarily mctaphoric, but at t i m e s ,

a c c e p t a b l e behavior. T h e y play along the edge of the tolerable, indulging

such as Freddy's karaoke striptease, the literal and the metaphoric m e l d .

in c o m i c a l l y exaggerated savage behavior.

Both on and off the trading floor, pure market action strips man to his m o s t

The

theatrical aspect o f trading is not limited to the dealing rooms o f

basic elements.

21

Preparations for the Perkins Silver Christmas party b e g a n

Economic Men

*

119

with a trip t o the American-style gym on the river a few blocks away, where

atrics create a place where e c o n o m i c man, trader-style, can flourish. T h e i r

the w o m e n o f the office —all ten of us, including support staff and the four

actions construct the marketplace as a place apart from the social world.

female traders —put on our party best. T h e n we headed out in black cabs to the c h i c W e s t E n d restaurant belonging to o n e of the company's partners. To restrain the consumption of this hard-drinking b u n c h , the restaurant offered o n l y beer and wine, and the bar was to close at 11:00, like all other

T h e Presentation o f the S e l f in E c o n o m i c Life Traders are not dapper, but they put effort into their style, a form of the stud­

English drinking establishments. T h e traders did what they could with the

ied, unstudied fashion that makes a fetish of utterly disregarding profes­

water\- offerings, bemoaning the absence o f their favorite vodka-Red Bull

sional norms o f dress. T h e y demonstrate the masculine e c o n o m i c freedom

c o n c o c t i o n ; the sickly sweet taste of Red Bull thoroughly masks the taste o f

of the trading floor with their clothes.

the a l c o h o l , leading to m a x i m u m drunkenness and energy.

T h e rules o f the C B O T require that ever)' trader wear a jacket and tie,

It took a b o u t an hour for the normal after-work conversation to die awav

and traders interpret this creatively. T h e y follow the letter o f the rule while

and the real festivities to pick up. A D J played American funk and hip-hop

aggressively snubbing its intention—to bring respectability and profession­

as the lucky traders who could monopolize the few women in the group made

alism to the trading floor. T h e floor is dotted with human confetti. E a c h

their way t o the dance floor. Eventually all the traders, with or without fe­

trader's ensemble adds a sprinkling o f color. T h e i r clothes also mark then-

male c o m p a n i o n s , crowded onto the dance floor. After two hours o f drink­

distinct place in the financial world. S o m e traders choose to wear trading

ing and sweating in the rising temperature o f the teeming space, the traders

jackets that identify their clearing houses: black with red piping denotes o n e

were ready for a show. T h e stripping began.

firm, and white mesh with blue lettering signifies another. Others choose

First to g o was Tony Healey, the fat, jocular, ex-Essex cop. He pushed his

jackets that both catch the eye o f other traders and make a statement. A

way to the c e n t e r o f the d a n c e floor and began to unbutton himself to the

quick scan o f the trading floor reveals the tastes of the C B O T traders. A few

beat o f T h e C o m m o d o r e s "Brick House." Having rid h i m s e l f o f his confin­

sport dark blue jackets dotted with American flags. O n e wears a

ing shirt, h e tried to kiss the girls, all of whom recoiled in horror. W h e n the

orange jacket with the black zigzag stripe o f Charlie Brown's shirt. Another

florescent

restaurant's owner had retired, Andrew Blair, the company's risk manager

wears a blinding yellow jacket with black flies swarming all over it. T h e

and general overseer, allowed himself to relapse into trader behavior. H e

patently ridiculous figures they cut implicitly critique the regimented mas­

too lunged t o the center of the dance floor, where he stripped off his shirt to

culinity o f corporate America. Trading jackets blare forth in shocking col­

expose his hairy- chest and backed up into a woman from accounting. Soon

ors and clash with the hideous ties slung around their necks.

the floor was filled with swirling, sweaty, half-naked traders.

Traders fix buttons to their lapels e m b l a z o n e d with messages like "I

Although this s c e n e o f holiday cheer took place outside the confines o f

care" and "I feel like shit," which convey their emotional states with char­

the Perkins Silver dealing room, this was a m o m e n t for the traders to per­

acteristic sarcasm and humor. American flag buttons and patterns are popu­

form for e a c h other. T h e excesses o f the Christmas party are not isolated in­

lar, aligning their own rough and tumble style with a specifically American

cidents; t h e y are an integral part o f performing the style o f e c o n o m i c man.

capitalism. T h e i r tags imprinted with three-letter identification codes also

T h e style h a s obvious affinities to locker room behavior, but gains symbolic

adorn their trading coats and have taken on another purpose in addition to

importance when taken as part of the professional ethic of the trader.

their administrative use. Traders use market names on the floor, and often

T h e s e traders turn the Organization M a n upside down and shake out the

refer to each other by the moniker on their tag. S o m e o n e named M i c h a e l B .

pockets of his suit. At the same time that they undermine conventional visions

G w y n n e might choose the code M B G and be known by those initials on the

of m e t h o d i c a l e c o n o m i c action, traders' performances have another effect.

trading floor. B u t traders do not have to use their initials. F U N , G U N ,

T h e i r antics work to establish the trading room as a separate space for eco­

and P W R are all characters on the floor, as is S W T , pronounced "Sweaty."

22

n o m i c a c t i o n . It is the work of a modern actor, yet the means for creating this

Pit names add to the sense o f the trading floor as a space apart from outside

separation d o not appear to arise from the rationality of the laboratory or the

social conventions, relationships, or consequences.

planning office. Traders' performances decouple their e c o n o m i c action from

To c o m p l i m e n t their getups, some traders sport novelty ties that only the

bureaucratic rationality. T h e y act on an e c o n o m i c impulse rooted in their

most oblivious geek would wear with any seriousness. S o m e of the more cre­

conception o f h u m a n nature rather than in the technical skill. Traders' the-

ative ones have images of South Park characters; others, o f spaghetti and

Economic Men

121

Mortara made enormous cartons of malted milk balls disappear in two gulps. D'Antona sent trainees to buy twenty dollars' worth o f candy for him every afternoon. Haupt, Jesselson, and Arnold swallowed small pizzas whole. Each Friday was "Food Frenzy" day, during which all trading ceased, and eating commenced. "Wed order four hundred dollars worth of Mexican food," says a former trader. "You can't buy four hundred dollars of Mexican food. But we'd try—guacamole in five-gallon drums, for a start.". . . They joked how the thin government traders who ran triathlons on weekends still couldn't make any money during the week, which was not entirely accurate. But it was true that no one made as much money as mortgage bond traders."

Lewis's c o m i c exaggerations still capture a truth as the traders he de­ scribes strain to display their insatiability in their eating habits. His a c c o u n t embellishes the dramatic qualities of e c o n o m i c man. E a c h phone thrown at the head of a flunky, the hamburger wrappers left on desks, the scream­ ing and cursing all add up to a virtuoso performance. S u c h labor takes its toll. Pit traders are marked by their gravelly voices, ?. I Traders do business in the Dow Jones Industrial Average Index Futures pit. E E L contem­ plates the market, while P[N makes a bid. Photo b> Bob Davis.

their vocal cords stretched and ragged from years of screaming. Victor tried to stave off this effect by drinking ginseng tea with honey. Shouting was not restricted to making trades, but the quick resolution o f other outbursts lim­

meatballs, as if the owner had dropped forkfuls of pasta on himself at lunch.

ited their consequences. During one fight that broke out in the Dow pit, o n e

S o m e ties are decorated with money themes —bags of cash tied with strings,

local thought another had cheated him and screamed curses about the

an oversized hundred-dollar bill, or the popular navy blue tie with simple

other's entire family one by one. A shoving match broke out, but after about

dollar signs. O n e trader satisfied the dress code with a long strip o f g a u / c

twenty minutes, they were standing shoulder to shoulder again. O n another

tape from a First Aid kit tied in a knot. Another declared his inner brute bv

day, a broker was toying with an emotionally volatile neighbor who loses

wearing the Incredible Hulk c l e n c h i n g his teeth, shredding his street clothes,

control frequently. T h e other traders, especially brokers, enjoy goading h i m into losing control. H e starts out on one side o f the pit flashing and offering

and thrusting out his muscular chest. T h e i r style mocks the corporate version o f manhood by rejecting out­

like every o n e else; the broker gives everyone else a cut first, just to watch

right its notions of propriety and by making an overly literal representation

this trader scream, jump up and down, and turn red. In making the trader

o f the purpose of business. T h e moneybags on their ties reduce business to

lose control, his tormentors show that anger and violence have a place in

its crudest motive —profit. T h i s performance separates the profit instinct

the traders' expressive repertory. Traders ought to be able to control their

from the social niceties that surround it in other contexts. O n the trading

emotions, according to the code of the floor. T h i s trader is a fool, b e c a u s e

floor, e c o n o m i c man lusts only for money.

his explosions are controlled by those around him. He spends his t e m p e r

Traders also enlist what lies beneath their clothes in the service o f pre­ senting e c o n o m i c man. A scene from Liar's

Poker,

indiscriminately rather than harnessing it for e c o n o m i c action.

M i c h a e l Lewis's book

I spent my first few weeks of trading working in the grain room, shuttling

about the b o n d markets of the 1980s, describes the foul excesses of the most

orders between the phone desk and the pits. Most orders would go to t h e

successful Wall Street traders. He describes exaggerated, insatiable ap­

soybean, wheat, and corn pits, but o n c e in a while I'd get an order for oats

petites in t h e chapter " T h e Fat M e n and T h e i r Marvelous Money-Making

or rice. E a c h o f these smaller pits held about five men. O n e of the funniest

M a c h i n e , " in which Lewie Ranieri's mortgage desk in the S o l o m o n Broth­

sights in the grain room was a "fast market" in oats, when the five m e n —

ers trading floor is the site of astonishing feats o f gluttony.

v\ ho could easily have made their transactions quietly—began screaming at

1'Z2

*

Chapter- Five

the top o f t h e i r lungs at e a c h other to get the trade. T h i s was another aes­

T h e cursing that colors flare-ups and everyday conversation contributes

thetic c h o i c e . Soft voices are suspect. Transactions between friends that ex­

to the aesthetic of asociality. T h e market is a place of uninhibited action.

clude the g e n e r a l market are said to be "done in whispers." Q u i e t voices are

Bodies dominate the metaphors o f e c o n o m i c c o m p e t i t i o n . F u c k i n g and

likely to b e subverting market ethics.

being fucked are the conventional expressions of financial dominance and

Traders a l s o indulge in superstition to protect their winning streaks and to stave off losses, and in extreme uncertainty, they appeal to the supernat­

ruin. Traders use the full range o f sexual words o f insult and debasement; asshole

and dickhead

are c o m m o n epithets. T h e swearing focuses on bod­

ural to p r o t e c t them. O n e antihubris stricture directs traders not to park in

ily words, especially organs that penetrate or that can be penetrated. T h e s e

the e x p e n s i v e covered garage just west o f the exchange. According to one

curses substitute a sexual part for the whole, disarticulating the h u m a n

trader, u s i n g the pricey c o n v e n i e n c e could lead to thinking that "you'll con­

body. T h e violent images o f sexual domination destroy the sovereignty o f

tinue to m a k e money. Instead, park in the open lot two blocks south." S o m e

the individual, subjugating his body to the will o f a competitor.

traders c a r r y talismans like a lucky tie or assign magical value to different

Traders describe financial losses in bodily terms of sex and violence: " H e

objects. L i k e professional athletes, some do not c h a n g e socks when they

really took it in the ass on that one." "I stuffed it in his face." Imager)- of sex­

are on a w i n n i n g streak. M a n y obsess over keeping all conditions exactly

ual violence slips easily into metaphors of physical destruction like " T h a t

the same. O n e superstition that is likely to help clear the area around any

really blew up in his face." Blowing

out is the generic term for a trader's los­

trader is " D o n ' t brush your teeth on a winning streak." T h e s e methods o f

ing all his m o n e y and being forced to leave the pit. T h e deeply physical

ensuring s u c c e s s are used with the same h u m o r that traders bring to the rest

expression o f power and competition makes explicit the will to dominate

o f their performances.

through e c o n o m i c exchange. E a c h deal parades the speaker's masculine

Men

m a n a g e their associations with other m e n in an idiom o f h o m o -

potency in front o f other men.

social h u m o r that plays on the paradigms o f masculine domination. During

W h e r e fucking is the rule, asociality reigns as a principal o f action. F u c k ­

my first days on the financial floor, D o n . the desk manager, tried to ease m e

ing and being fucked, both in sexual and financial terms, are shorthand for

into the trading floor ethos by supervising the desk chatter. Traders often

the use o f o n e person for the pleasure or profit of another. At the same t i m e ,

c a m e over t o the desk during slow periods to drop off trading cards and to

the explicit homosexual allusions of traders' vocabularies parody the single-

chat. T h e y c o u l d sit for a m o m e n t on an empty stool and relax. D o n told

sex relationships that dominate daily life on the floor, another marker that

traders to watch their mouths. " T h e r e is a young lady working here now,"

separates the e c o n o m i c competition of the floor from the world outside.

he'd say in a tone o f m o c k gentility. Studiously ignoring m e , o n e trader

During a slow period one afternoon, a broker who traded for the firm 1

responded, " T h i s is the boy's club here." D o n said, "But it's not the locker

worked for brought over photographs from his vacation. O n e picture showed

room." T h e guy said, "Yeah, it's more like the showers." D o n broke from his

his head poking above the water of a swimming pool. T h e hairy arms and

chivalrous posture and guffawed at the joke.

wiry legs o f a couple of other m e n jutted into the frame. Another showed

The

h u m o r and insults that pervade the trading floor c o m m e n t on the

him in his trunks on the beach, accompanied by other m e n in their bathing

homosocial environment and highlight man-on-man domination. Insults

suits. Making a joke of the continuity between his all-male work life and his

focus on the homosexuality o f one's trading neighbor or liken him to a "hard-

male companionship on vacation, he declared, "It's a gay tour." Everyone

on." S u c h s e e m i n g invectives slide easily into friendly banter. Jack

off is a

laughed. T h e joke turns on the fact that the tour is outside the market world,

ubiquitous term; inflection directs the listener to the appropriate interpreta­

and yet the photographs show only men. Outside the trading floor, this bro­

tion. It is frequently used to describe someone, as in, " T h a t guy is a jack off."

ker should have entered the social world where m e n desire women and

It is also used to get someone's attention, as in "Hey, jack off," pronounced

keep their company. But the photographs show that he was apparently un­

like "jag oft," with a long, nasal C h i c a g o vowel. O t h e r descriptive terms are

able to return to the social world outside the pits.

fag and cocksucker.

Prick

is a friendly attention getter, as is homo.

B u t these

Practical jokes, known in British market parlance as "goofs," are a favorite

words, even when they are used in a jocular way, maintain their aggressive­

pastime among traders and a staple of workday entertainment. Goofs often

ness; a slip in intonation c a n slide into real abuse. T h e pervasive playful use

engage the t h e m e o f homosexual relations between men. M y cohort o f Per­

of insults marks the constant threat that symbolic and physical violence may

kins Silver traders was initiated with one. After we completed our first two

erupt at any m o m e n t .

weeks of training, we took our seats in the dealing room. O n each of our desks

124

*

Chapter Five

w a s a m e m o printed on the Perkins Silver letterhead instructing all of us to

rooms of financial futures markets. T h e construction of e c o n o m i c m a n

call C h r i s t o f at Leeds and Critchley (Savile Row tailors) to arrange for a fit­

does not end with the collective performance o f the trading floor. Traders

ting o f our Perkins Silver trading jackets, Christof would c o m e to the Perkins

incorporate the principles of asociality into their systems of self-governance.

Silver offices to measure us. Nicholas, o n e o f the graduate trainees, agreed

Despite the external performance o f excess and recklessness, the internal

to arrange the appointment. After several phone calls, strangely aborted by

performance o f market action is governed by strict control over the highs

Christof, a time was set, Christof told Nicholas to be sure to wear clean un­

and lows of emotion and is devoted to creating a self that is an instrument

derpants because he would have to take his pants off. T h e briefs needed to

for reading the market and reacting to its every twitch. T h e asociality de­

be tight for the tailor to take his proper measurements. Nicholas protested,

scribed has its c o m p l e m e n t in traders' "discipline."

but finally agreed to comply. W h e n the day of the fitting arrived 1 was called in first, I approached the c o n f e r e n c e room but instead m e t T o n y Healey and Billy. "Sorry, love," they said, "we told the other girls, and we thought you already knew. Now go b a c k in there and send in the blokes." T h e joke was intended to shame the new guys for their inexperience and gullibility by arranging for them to drop their pants voluntarily for the older traders. By conning the new traders into displaying a desire for the natty dress o f Savile Row, they also got them to e x h i b i t a n effeminate desire for c l o t h i n g that marks respectability. By excluding the women from the joke, the traders defined us as outside the proper constitution o f the trading room. Traders brought explicit photographs to the trading floor in a kind of sex­ ual show and tell. In the fall o f 1998, Viagra was new on the market and was a great source of amusement on the trading floor. O n e trader brought to the floor a cartoon captioned, "Death by Viagra." A man's erect penis shoots through his head, obliterating his face. At Perkins Silver, the topless girl on display daily in the Sun merited dailyp u b l i c examination and c o m m e n t . B u t the Internet provided the easiest ac­ cess to such amusement. Pornographic photographs of women thrusting their genitalia toward the camera or contorted into unnatural sexual positions fre­ quently m a d e the rounds. Tony Healey kept a picture taped to his terminal of h i m s e l f mugging for the camera buttressed by two scantily clad strippers. "These are m y sisters," he told m e with provocative glee. M o r e disturbing was the a m u s e m e n t generated by a picture o f a nude, hugely obese woman. H e r bulk spread over a divan that could barely contain her. Her arms pushed aside her rolls of flesh in an attempt to find herself with her fingers. E v e n w h e n the focus of titillation is on women, traders' performances are about m e n and for men. T h i s is the locker room, a space apart from the fam­ ily world where women matter. M e n are the appropriate market actors, and w o m e n represent society and proper sociability unless explicitly subjugated to m e n ' s sexual will. In the theater of finance the principles o f asociality take the form of the exaggerated maverick speculators who inhabit trading floors and dealing

For futures traders who make their living interacting with global

financial

power, the market is separate from and larger than its individual partici­ pants. It is "an object o f attachment" that both provides profits and judges their personal worth.' Traders consistently describe the market as the high­ est authority, saying, " T h e market is always right." Joshua Geller, a manager at Perkins Silver, feels that the market acts as an instrument o f the divine. "We don't know value. Only G o d knows value." Geller sees value as some­ thing absolute. Yet every day G e l l e r and his trainees work to find the prosaic value o f financial commodities by identifying their price.

2

Joshua provided a potent description of traders' relationship to the fi­ nancial domain. T h e market holds absolute truths. It determines traders' financial fates and acts as the arbiter of the speculators' moral worth. Joshua told m e that in the market, "You test yourself every single day. You either made money or you lost money. I'm a good person or I'm a bad person." This c o m m o n understanding leads traders to respect the norms of specula­ tion that mediate their relationship to the market. T o participate in the mar­ ket and move into the transnational flow of capital, traders submit to the strictures o f the "discipline" of speculators. Traders use religious language to describe their engagement with the market, expressing the c o m m i t m e n t they bring to their financial conduct. Yet work in futures markets is consummately secular. Traders make them­ selves worthy o f their profits by practicing a particular form of regimented action before the otherworldly force o f the market. T h e faith, humility, and self-regulation that traders show us in their discipline reveals an e c o n o m i c ethic developed in and for global capital markets. Traders use techniques of self-formation to create a risk-taking person that can thrive in the action. T h e y calf this set o f techniques "discipline." In the discourse o f traders, discipline is both an idealized state and a concrete set of internal strategies. Managing a trading self requires the artful application

The Discipline of the Speculator of disciplinary methods.' T h e r e are four core elements o f discipline:

*

129

fiisf.

above imposes norms of behavior on those who lack the resolve to do it

traders separate their actions on the trading floor from their lives outside;

themselves. Traders work to internalize this m o d e of control and avoid the

s e c o n d , they control the impact o f loss; third, they learn to break down the

consequences o f a lapse.

4

continuities between past, present, and future trades by dismantling naira-

Speculators like those at the C B O T and Perkins Silver work on a second-

tives o f success or failure; and fourth, they maintain acute alertness in the

by-second basis. T h e y fill their accounts with skimmings from the vast flow

present m o m e n t . Techniques o f discipline are at the center of b e c o m i n g

of financial capital that circulates through futures markets. T h e demands of

proficient in speculation — o f inhabiting the identity and practice of the

discipline are most visible in the actions o f a subset o f traders who practice

risk-taker. O n e trader told m e that with discipline, "You can experience the

a particularly risky style o f trading. Scalpers buy and sell futures contracts

market and b e c o m e a part o f this living thing, intimately connected to it "

outright; without hedging their positions, they buy in anticipation of a quick

T r a d e r s ' sense of vocation is a n c h o r e d in the practice o f discipline. At the

rise in price or sell in expectation of a rapid fall. In the language of finance,

heart o f the financial system today, traders' ascetic practices of self-discipline

they do not "offset" any risk by buying or selling products that will limit their

create an ethical relationship to the domain of capital circulation. Examin­

losses. T h e financial consequences of scalping are immediate and stark, win

ing the intricate work of discipline will expand our understanding o f the

or lose. In an ideal trade, the scalper observes the market and its motions,

modes o f conduct that speculation produces.

makes a judgment, and executes a sale or purchase. He monitors each price

D i s c i p l i n e works to remove e a c h trader's concerns and desires from his

change and its effect on his stake, looking for the best m o m e n t to c o m p l e t e

e c o n o m i c judgments. T h e central virtue of the responsible trader is acute per­

the trade and reap his profit or take his loss. I f he gauges that the market is

ception o f financial information. Discipline demands that, while engaging

going to turn against his position he may "scratch" the trade, getting in and

with t h e market, traders purge themselves of affect and individuality, man­

out of the market at the same price, only to reenter it seconds later.' T h i s un­

aging investments and reactions with unobstructed perception. According to

complicated technique allows the scalper the flexibility to move in and out

traders' professional norms, discipline enables them to coast with the uncei-

of the market in an instant, taking advantage o f every rise and fall of a c o m ­

tainties o f t h e market and judge effectively when to enter and exit the game.

modity's price. According to the ideals o f discipline, the speculator should

According to the Perkins Silver trainers, " T h e market doesn't care what

never look back, whatever the outcome. An effective scalper must m a i n t a i n

you think or who you are." Discipline helps traders temporarily fashion a

acute attention and responsiveness every m o m e n t he is in the market. He

market actor in harmony with the impersonal and anonymous nature of the

must move on to the next trade with a clear mind to evaluate market condi­

market. Philip, the Perkins Silver owner/director, told me that he has spent

tions as they present themselves.

years trying to figure out a profile that assures that s o m e o n e will be a good

Traders learn this discipline in formalized and informal settings. O n the

trader, but he does not believe that o n e exists. Philip's c o m m e n t s reflect the

floor of the C B O T , new traders learn it as part of the apprenticeship process,

logic o f discipline. A good trader must "get rid of [his] ego." T h e quality o f

absorbing norms from the older members who sponsor them. In electronic-

a good trader is located not in personal characteristics but in the talent to

dealing rooms like the one at Perkins Silver, such opportunities are limited.

transcend individuality'.

The Perkins Silver trainers knew that in London the new traders would not

Traders are proud o f their showmanship and seem to enjoy swearing,

vet have learned the lessons central to the practice of trading. T e a c h i n g the

shoving, and indulging in language o f sexual violence. T h e i r performances

constraints of discipline was the key to creating a cohort of reliable risk-takers,

of self are marked by excess and recklessness. Yet the answer to a standard

and they created a formal training program to drive h o m e these lessons. T h e

question, "What makes a good trader?" yields a consistent response: disci­

managers c l a i m e d that they didn't care if money was made or lost as l o n g as

pline. Although discipline does not appear to have a place in their trading

each trader practiced obedience to the discipline. T h e trader's responsibil­

strategies, traders govern themselves with strict control. Discipline separates traders from the guiding principles of the outside world by differentiating the time and space ofthe market and creating a spe­

ity was to his technique of self-regulation, not to the profit and loss figure at the end of the day. With adherence to discipline, the managers believed that traders would prove themselves responsible and profits would follow.

cific market being. It breaks down the continuities that enforce obligations

T h e two-week training at Perkins Silver focused a part of each session on

to p e o p l e outside the financial arena. I f a trader breaks from his internal

creating a population o f responsible risk-takers. T h i s was a difficult task.

codes, t h e market "punishes" h i m by causing losses. T h i s discipline from

\ndrew and Joshua used many techniques to ensure that their traders w e r e

138

Chap ter Six

The Discipline of the Speculator

+

131

developing discipline. T h e y monitored the traders' activities through the on­

allows traders to separate the consequences of good and bad hades from the

line risk-management system that allowed manager Andrew Blair to oversee

necessities o f everyday life outside the market.

every c o m p u t e r on the trading floor in both London and C h i c a g o . In the

Dividing ticks and dollars also segments space. T h e space o f m o n e y

patterns o f a trader's profits and losses, the managers discerned marks of self-

and the space of ticks are physically and socially separated by their assigned

m a n a g e m e n t . T h e easiest thing to see was a weakening o f discipline. W h e n

currencies. Maintaining different names and accounting strategies for e a c h

traders are unable to maintain the division between their market and out­

currency divides the space o f the market from the world outside the trading

side lives, their trainers believed their trading suffered. Adam Berger, a

floor. An underlying tenet of discipline is that market and emotional mat­

Perkins S i l v e r manager, told m e , "I can tell by watching trades c o m e across

ters are irreconcilable. Traders who bring family financial concerns to the

my screen w h e n s o m e o n e has had a fight with his wife." According to the

domain of trading impair their ability to act and react in the temporal and

strictures o f discipline, dissolving those ties while inside the market is es­

physical space o f the market. A c c o u n t i n g practices that separate market

sential to m a k i n g oneself into an instrument that can receive market signals,

and social space allow traders to purify market calculations from outside

act on t h e m spontaneously, and take advantage of every opportunity.

considerations.

Perkins Silver traders dreaded early afternoon phone calls from Adam. H e

T i c k s are the c u r r e n c y of the market. Classically, from S i m m e l a n d

arrived at h i s C h i c a g o office at 7:00 a.m. (LOO p.m. London time], looked

Weber forward, money has been thought of as the ultimate tool of exchange­

over the trading records for the day, saw who was letting his losses run, and

ability. Assigning a price makes all things equal and exchangeable for money.

dialed the offending trader's extension. T o train traders to internalize their

Viviana Z e l i z e r has written, in contrast, about the ways in which people

t e c h n i q u e s , the managers required them to turn in weekly journals in which

assign specific functions and significance to money. Yet Zelizer's examples

6

they a n a l y z e d their trading, giving reasons behind trades and confessing

involve actors who are outside a formal market context. It deepens her in­

lapses in discipline or exulting in successes in maintaining a regulated trad­

sight to see how traders, whose sole professional task is to create a market,

ing p r a c t i c e .

decommensurate the money in the market in order

to enter

the

market.

Traders must work consciously to strip money o f its social connotations. A Separate Space

It takes orchestrated effort to maintain the segregation of market and "out­ side" currencies. T h e market, where money should appear as most abstracted

Traders use specific measurements to a c c o u n t for gains and losses. T h e y

and depersonalized, does not obey a pure quantitative logic. Traders invent

segregate m a r k e t currency from the money exchangeable for goods and ser­

their own market currency to remove it from the realm of outside social re­

vices outside the market, a practice that separates action in the market from

lations. Money's ability to foster and sustain social relationships and c o m ­

c o n s e q u e n c e s in their lives outside of it. Market money is specific to the

mitments such as those between a trader and his family is so strong that it

time and s p a c e of trade. It is not exchangeable for food, mortgages, tuition,

overrides its ability to add to the market state of the trading pits. M o n e y must

cars, and vacations that draw the trader into a web o f relationships outside

be transformed to serve the abstract context o f traders' market decisions.

the market arena. D i s c i p l i n e redefines the trading object. Traders transform the dollar bal­ ances in t h e i r accounts into the abstract market measurement o f "ticks." A

Taking Loss

tick is the g e n e r i c term for the price intervals o f any market. T h e market

Discipline manages the emotional effects of financial risk-taking while main­

moves up a n d down by ticks. In the futures market on the Dow Jones In­

taining air intense concentration and focus on the present moment. O n e o f a

dustrial Average (DJLA), ticks are measured in 1/100 increments in the price.

trader's greatest vocational challenges is to suppress his individual reactions,

If the price o f o n e contract moves from 1 1 0 . 8 0 to 1 1 0 . 8 1 , the .01 increase

desires, and concerns in order to make himself into an instrument for read­

in the price is a tick. In the DJLA, e a c h tick equals $ 1 0 on o n e contract, but

ing and reacting to the market. T h i s is especially difficult when taking losses.

discipline directs traders not to calculate the sums o f money at stake. T h e y

Even the best traders take losses repeatedly during the day. As Joshua

c o u n t their gains and losses in ticks. B e c a u s e traders gain and lose ticks

G e l l e r explained, "We are wrong all the time." Losing ticks is an inevitable

while they a r e trading, they separate their market actions from the space o f

part o f speculation, but the emotional impact can be devastating. Joe Rose

monetary e x c h a n g e outside the market. Distinguishing money from ticks

told me, " I f you are losing money on a regular basis, it hurts. You feel like

The Discipline of the Speculator

*

133

you c a n ' t trade. I feel like I never even knew what I was doing. W h e n 1 lost

T h e most important thing . . . is you have to b e able to take your loss. . . . If

m o n e y a c o u p l e of days in a row, I felt like I was just a fake." T h e repercus­

you don't take your losses then you're just going to get killed. . . . And often­

sions of losses can invade the trader's confidence and self-assurance, both of

times at the end of the day you'll remember the best trade you had was a loser, and you took your loss right away, and if you hadn't, you'd have gotten killed.

:

w h i c h are crucial intheir rapid-fire work. Ideally traders are able to forget about the consequences o f each trade. A d a m Berger told Perkins Silver trainees, "You can't ever make your money

As far as great trades, the best trade that I can recall was scratching I getting

back. I f you've lost money have a funeral for it. You have to have closure. It

out of a trade with no gain or loss] and then seeing (the market] go just totally

is g o n e . . . you have to look at the next trade." B u t in a one-on-one interview

against [the position I just left]. And had I stayed in it [I would have lost a lot

h e admitted the difficulties o f containing the effects of financial loss. "You

of m o n e y ] , like wow, that was great. S o I used the discipline, I stuck to my

c a n ' t m a k e that money back. It's gone. . . . And believe m e , it is a lot like

guns, and it just totally worked out. . . . So I was trying to become really aware

having a death. You go through that." Scalpers may take a hundred losses

of just doing the right thing, making the right trade, . . . following the rules.

in a day.

And that's very tough.

D i s c i p l i n e as a principle covers all types of speculation, but each trader must c o m e to understand his own personal limits. T h i s requires a special

Breaking Down Narratives o f Success and Failure

kind o f self-knowledge. T h e trader must assess how many ticks he can lose before h e loses his composure. T h e disciplined trader commits himself to

Isolating events in time—separating past and present—helps traders to form

take his loss after the market has gone a certain n u m b e r o f ticks against his

and sustain e c o n o m i c judgments in the maelstrom of the market and rein­

position. After, say, three ticks, he will c o m p l e t e the trade and take the loss.

forces the boundaries between market and outside space. l b observe t h e

H e will n o t allow himself to get to the point where he loses his cool and

quick movements o f the market and maintain discipline, traders must im­

8

merse themselves in the market and block out external influences. T h e y

clouds his judgment. Traders use discipline to control the emotional impact o f losing ticks.

treat e a c h trade as if it has no effect on the next. Traders deconstruct the on­

Everett Klipp, an old-timer at the C B O T , was famous for his techniques for

going narratives of success and failure that might accrue to them by break­

training young traders. He was utterly devoted to trading. Even after he re­

ing time into small segments that bear little relation to one another. A dis­

tired, h e would walk the halls wearing his signature bow tie and a trading

ciplined trader leaves every trade in the past, isolating o n e decision from t h e

jacket that draped from his aging frame. O n e friend o f his told m e , "He'd

next. He reacts to the market and leaves his own judgments quickly b e h i n d

say, 'You'll never b e c o m e a millionaire if you don't learn how to take small

when the market proves him wrong. H e does not build stories about his s u c ­

losses.'. . . H e didn't teach [new traders] how to win. H e taught them how to

cesses or failures that would provide a sense of weakness or invincibility that

lose." Klipp's belief in the salutary effects o f discipline was unshakable. He

could affect his decisions and timing in the market.

would stand behind the neophyte trader under his care and force him to take

O n e good trade never guarantees the next. Developing a sense of o n g o ­

small losses, a critical skill to learn. Discipline directs traders to exit the trade

ing success or failure is a trader's Achilles h e e l . Traders segment time in t h e

before t h e position moves against him more gravely. Klipp's theory was that

market to accentuate the constant regression to the mean that is a necessary

taking small losses teaches traders to b e c o m e familiar with losing and to gain

part of discipline. In the trade, there is no past and no projection ahead: the

control over the impact o f a loss. In M a y 1 9 9 9 , Futures

present m o m e n t takes precedence. O n e veteran trader lectured m e , " O n c e

magazine quoted

h i m saying, "You have to love to lose m o n e y . . . to be successful." T a k i n g losses is so significant for traders' discipline that traders often c l a i m that their "best" trades were the ones where they cut their losses be­

9

the trade is done, it is history." Part of discipline is learning how t o separate the c o n s e q u e n c e s o f e a c h trade from the next to limit the psychological effects o f success or failure.

fore a situation b e c a m e dire. T h e y insisted on a distinction between the

Dissociation from each decision is accompanied by dissociation from the

"best" trade and the trade that made them the most rnonev. T h e responses

circumstances of the individual decision maker—that is, whether profits are

below show the premium placed on applying discipline and taking the loss

up o r down for the day, week, or year. Traders must work t o break down any-

that the market has doled out.

7

narrative that might arise from a series of successive losses and gains. It t a k e s

134

*

Chapter Six

The Disoi p1i ne of the Specu1a tor

*

135

active effort to ignore the sense o f continuity that c o m e s with repeated suc­

the other traders. "Marriage" betrays a trader's weakness. He has formed a

cess or failure.

connection with his position that goes beyond the m o m e n t and the explicit

W h e n traders are unable to separate the consequences inside the market

purpose o f making money, investing himself in the object. W h e n a trade

from the potentials for wealth and possibilities o f devastation outside the

has gained some value in its own right, it loses the status o f pure instrument.

market, they may bring their personal desires into their e c o n o m i c decisions.

"Getting married" to a trade is a way to say that a trader has abandoned his

Traders whose discipline has lapsed may also invest themselves in a given

senses. T h e inability to separate market reason from personal attachments

position, personalizing the success or failure o f that single decision. Joshua

has undermined his craft.

G e l l e r warned against what he considers to be one o f the greatest dangers o f trading. O n the days when G e l l e r would wander the Perkins Silver trading floor, he would stand at a trader's shoulder and watch the rhythms o f his

E n t e r i n g the Z o n e

trades. If a trader increased a position that was already posting losses or hung

From the point o f view o f the scalper, the market resides in the present, in

on minute after minute in a trade that was running against him, Joshua would

the agreement between a buyer and a seller that is in the process o f closing.

hiss into his ear, "Wishing, hoping, and praying."

By the time a price has b e e n made and a trade settled, the market has moved.

W i s h i n g , hoping, and praying break discipline's cardinal rule, bringing

O n the floor o f the C B O T , the market is the agreement that is being made

personal desires and convictions into market judgments and clouding a

between traders in the pit at this very moment. In online markets, it is the

trader's view o f the market's objective movements. T h e s e desires then m e ­

trade that is now matching buyer and seller. As the C B O T traders explained

diate b e t w e e n the trader's actions and his reactions to the constantly chang­

to m e , o n c e the clerks record a trade and the result is printed on the elec­

ing information before h i m . T o structure the self as an instrument o f per­

tronic screens that hang in red, yellow, and green lights above the trading

ception a n d reaction, traders must give up their desires.

floor, the market that they represent is history. And history is gone. Scalpers

Scalpers' ability to skim a profit from market fluctuations relies on a con­

constantly attempt to grasp the direction o f the market. Because it is always

stant clarity of vision. In their second-by-second time frame, they must main­

moving forward in time, it always remains uncertain. Scalpers exist in a flex­

tain a reactive sense o f what is happening in the market. W i t h every extra

ible relationship to the just-emerging future.

m o m e n t spent on a losing trade, opportunity for reevaluating and taking a

-

O n the C B O T trading floor, the space and time o f the market are local­

profitable position is lost. For a self that is disciplined to b e an instrument

ized in the pit. Anything outside the pit is outside of the market. W h i l e "out­

for reading the market, taking the loss removes a constraint that would block

side events" (as traders refer to t h e m ) affect the flow of orders into the pit and

a quick m o v e into the next opportunity. Joshua G e l l e r warned us, " I f you are

the price o f the contracts, attention remains focused on the time and space

hoping for something to c h a n g e or c o m e back you are missing an opportu­

of the present. For floor traders, the sense o f being "inside" the market c a n

nity. You are not taking advantage of opportunities." Traders discipline them­

happen in only o n e place. T h e action in the pit links the time and the space

selves to push away their own judgments, desires, opinions, and c o n c e r n s to

of the market and creates the feeling that the market is a living thing.

absorb the rapidly changing information that the market conveys.

: T h i s bias for the present lends itself to Zen-like aphorisms. Joshua G e l l e r

Successful discipline allows traders to act instantly. Wishing, hoping, and

advised, "Accept the market as it is and fey-to be with it." A popular book that

praying undermine the ability to react quickly, extending the present mo­

outlines the path to success counsels traders to follow its title, The Tao of Trad­

m e n t forward in time. A trader who attaches hope to an individual trade is

ing.

no longer responding to the information available at the m o m e n t . W h e n a

sound like mystical engagements. T h e y n e e d to abandon self-consciousness

1 0

Traders speak o f their best trading moments in ways that make them

trader breaks his discipline, the c o n s e q u e n c e s o f an individual trade begin

to gain full access to the market's interior and use discipline to block outside

to matter. Wishing, hoping, and praying c a n easily slide into an attachment

contexts from their conscious thoughts and to e n h a n c e their abilities to

to an individual decision.

read, interpret, and ultimately merge with the market. Traders often speak 11

After a few minutes in the same position, watching the gains or losses tick

of being "in the z o n e " or o f a "flow" experience. In the zone, e c o n o m i c

up and down with the market, a trader's neighbors may begin to heckle him,

judgments and actions seem to c o m e without effort from the instincts o f the

"Are

you married to it yet? Hey, I think Charles has gotten married." T h e

unlucky groom may elicit a spontaneous recital o f the wedding march from

trader. T h e market and the trader merge, giving him special access to the natural rhythms o f

financial

fluctuations.

The Discipline of the Speculator

Traders most value a sense of total absorption in the market. In the "zoni. '

*

137

the disciplined crouch that brought his eyes inches from the screen. His in­

conscious thought disappears and an ultimate sense o f presence takes over

dex and middle fingers rested l i g h t l y on the right a n d left buttons on his

T h e y are able to act without explicit thought. T h e i r senses are heightened

mouse. "Have y o u r cursor over the relevant hot button so t h a t when the o p ­

to t h e rhythms and sounds o f the market and the flow o f trades. Achieving

portunities happen you are there to act on them immediately." Mustapha,

o n e n e s s with the market can wipe away thoughts beyond the m o m e n t . V

the most profitable scalper at Perkins Silver, visited the hospital because the

Joe R o s e , said, " T h e only time in my life when I am not anxious is when I'm

tendons in his hands were throbbing. T h e physical therapist there told him

trading. I am just out there making money, losing money. And it absoluteh

that clicking the mouse (indicating the frequency o f h i s t r a d e s ) was not to

wipes out all anxiety. I live in the m o m e n t when I trade."

blame for his injury. Rather, the damage c a m e from the holding his index

T h i s absorption in the present echoes descriptions of the athlete's and mu­ sician's crafts. Joshua G e l l e r attributed the success of o n e ofhis traders to his

finger slightly above the mouse, poised to click. Hours o f hovering e a c h day damaged his hand.

musician's access to the rhythmic flow o f the market; the man had been a

A trader must react neither to boredom nor excitement. O n e of the great­

d r u m m e r in a jazz band. "He sways with the market," G e l l e r said. He fol­

est challenges, especially for online traders, are periods when very little is

lowed t h e market c a d e n c e , switching his positions with the changing tempo

happening. T h e s e "flat" markets c a n be deadly. T h e y tempt speculators t o

of trading, moving his positions in and out with an improvisational technique.

"over trade," to take a position for the sheer stimulation of being in the g a m e .

A disciplined scalper always remains in the m o m e n t . He is flexible and

Discipline is equally important for deciding to enter or stay out o f the mar­

reacts to t h e market situation immediately at hand. H e c a n n o t put too much

ket. E a c h day, a flurry of activity surrounds the market opening, but that burst

c o n f i d e n c e in his own judgment, or have a sense o f weakness. T h i s paring

soon wanes. Depending on external events, or other market activity, t h e r e

down o f the selfleaves only the part that can b e c o m e absorbed in the market

may b e more spurts of activity or simply a steady drone o f trades that carries

with n o outside commitments. T h e technique allows a feral sense for market

the traders into the second period o f concentrated action around the closing

action to develop that bears little r e s e m b l a n c e to strict calculation. Scalpers

bell. T h e temporal rhythms o f the market try the patience o f speculators.

react to e a c h move o f price regardless o f their own judgments and desires

Discipline supports a trader as he stands in the pit or keeps his eyes g l u e d to

a b o u t what the market "should" do according to their individual estimates.

his screen, resisting the quicksand o f boredom, which dulls the senses a n d

Pit traders speak of living within the heart of the market. T h e y must have

tempts the trader into chatting, taking long lunches, and making t e l e p h o n e

the physical discipline to remain in the market through the adrenalin spurts

calls. Traders thrive on tire high-stakes game. Dead periods challenge t h e dis­

of active markets and the deadened tempo o f trading lulls. In the pit, this

ciplined trader to resist his desire for action. Josh G e l l e r held u p a c o w o r k e r

m e a n s standing shoulder to shoulder with hundreds o f other m e n , hour

in the five-year pit as the greatest example o f this aspect o f discipline:

upon hour, without sitting. Physical aches and pains c a n n o t distract a trader from focusing on the market and its movements. T h e physical immersion

The guy was a trading machine. He would make one, maybe two trades a day.

in the market is both a c h a l l e n g e to his focus and a powerful force for draw­

He would just stand there waiting to pick off a perfect trade. Put the e n t i r e

ing h i m in. O n the C B O T floor, the collective excitement o f the trading

stake on one moment where he was sure. He never left the pit. He didn't eat.

pits, t h e rousing noise, and the jostling bodies draw traders into the market.

He didn't go to the bathroom. I don't think he even blinked. He was an awful

T h e y are surrounded by and soaked in the sweat o f exchange.

human being but he was a great trader.

The

C B O T traders had the advantage o f this physical immersion in the

market, but the Perkins Silver traders were distanced from their dealing

Despite his own inaction, this trader was able to stay totally focused on the

partners by electronic networks and trading screens. T h e need for disci­

market. In Josh's portrait, his successful neighbor was able to excise the hu­

pline, both of body and spirit, is heightened in online exchange. In the elec­

man urges that lead others into trading traps. T h e neighbor's m a c h i n e l i k e

tronic dealing room, the market does not surround the trader. H e trains his

quality reverses the usual notion o f m e c h a n i s t i c motion. T o be a t r a d i n g

attention on the numbers on his screen that represent the market. O n l i n e

m a c h i n e in this case was to follow the dictates o f discipline to i n h u m a n

traders do not have much visceral stimulation to spur them into action and

extremes o f inaction. In his role as a Perkins Silver trainer, Joshua's g o a l

to reinforce the norms o f financial action. Joshua G e l l e r stressed the im­

was to produce such human machines.

p o r t a n c e o f constant physical readiness in our training. He demonstrated

T h e immediacy of the market forces traders to focus on each price m o v e -

13s

*

The Discipline of the Speculator

Chapter Six

+

139

m e r i t T r a d e r s act as if they are tracking an animal. Calculations or elabo­

mg himself to further losses. Setting limits for losses helps a trader to sepa­

rate strategies that take t h e m out o f market time are seen as an impediment.

rate h i m s e l f from the fear o f losses and from calculations that place his

Traders ultimately value reactive speed and perceptive clarity rather than

intellect above objective movements o f the market.

c o m p l e x c a l c u l a t i v e skill. S e a n C u r l e y Jr., who was trained as a lawyer, e x p l a i n e d how his legal training sometimes impedes his trading abilities:

Sometimes 1 think [my legal education] hurts me. Because I'm more prone

T h e Ethical Practice o f D i s c i p l i n e Most important, discipline requires traders to acknowledge that the market

to get set in my ways. I'll reason to a particular conclusion based on assump­

itself is the only authority. T h e movements o f the market represent finan­

t i o n s that I've got built into the market, whether it's based on fundamentals

cial truth. It is not surprising that traders" attitudes to the market take on a

or i t s based on s o m e t e c h n i c a l thing. You know, just like I'd craft an argument

quasi-religious aura. T h e i r discipline is, in a way, a technique of the sacred.

. . . T h e r e are a lot o f guys who may never look at a chart, they never read a

Practicing discipline allows traders to attain the proper state for engaging

newsletter, they don't care. T h e y just want to know what's bid and what's of­

the force o f the market, a state that parallels the asocial ideals o f the market.

12

fered. And they just trade . . . A lot of those characters aren't the kind of guys

I raders speak about the market in religious ways that make this analogy ap­

w h o went to dental school or have a law degree. Maybe they didn't get out of

propriate. " T h e market is always right," assigns ultimate truth to the market.

high school but they're d a m n good traders because they trade the market.

Men

must fit themselves to its requirements.

1 he market is the traders' moral authority, and it monitors their discipline.

T h e y know the market. T h e market has b e e n their education.

It judges their worthiness for profit. It is both the single truth and the arbiter T o m W a l s h , who holds an M B A in finance from M I T , agrees. H e believes

of a trader's work, hi many o f my discussions at the C B O T . traders returned

that his university education makes him consider situations too closely. Neil

often to the idea that the market disciplined them. W h e n a trader b e c o m e s

Marks, a veteran trader, acquired the n i c k n a m e " D o n ' t tell m e anything"

too confident from recent successes, he says that the market "knocks [ h i m ]

Marks e a r l y in his career because o f his belief that knowledge o f events or

down." Traders' action is based on a belief that "you can never be smarter

analyses outside the immediate market are a distraction. W h e n he began

than the market," an assertion that the market is a mysterious and powerful

trading a t the C B O T , he c a n c e l e d his subscription to the Wall

force that can be apprehended only if approached with the correct humility.

Street

journal.

H e said t h a t the minute h e started listening to the information, he started losing m o n e y Marks believes the traders' advantage lies in their presence in

1 )iscipline is an ethical system and a profit-making strategy. It is a m e t h o d both for engaging the market and being a c c o u n t a b l e to it. Maintaining dis­

the h e a r t o f the market. H e says that "traders have the pulse o f the market.

cipline allows traders to allay the dangers o f acting in the market. O v e r c o n -

T h e y are on top o f it ever)" second." For him the adrenaline rush o f trading

fidence brings punishment.

and the feeling o f being in the zone c o m e with the gut-level immediacy o f being directly inside and surrounded by the market.

You become very opinionated on the market, instead of just trading it and

D i s c i p l i n e checks the instinct to out-think the market. O n e danger foi

scalping in and out. I go in with a set feeling that I'm right. Sometimes I just

traders is having too m u c h conviction in their own assessments o f the mar­

don't want to give up. And that is when it happens, after I'm doing really well

ket b e c a u s e their second-by-second time frame scalpers continuously assess

and I'm feeling omnipotent. You think you're bigger than the market and

and reassess their positions. T h e Perkins Silver trainers instructed us, "Don't

then you just ask for it. . . You get killed whenever you start thinking like that.

think." Traders must remain flexible and ready to react immediateh to changes i n the market. As one trader told m e , "It doesn't pay to have too

Humility in relation to the market demands recognizing that success c a n

m u c h o f a view." A trader with too m u c h confidence in his judgment ma\

be perilous. A trader's c l a i m to special knowledge or access to the mysteries

c o m e to s e e a losing position as a temporary problem. H e may decide that

of the market invites retribution. T h e r e is a fine distinction between main­

his original j u d g m e n t is correct, that the market will soon turn around and

taining a basic confidence in one's ability to interact with the market and an

go in his favor. Discipline places a limit on the role o f explicit calculation.

arrogance that will draw its wrath. A disciplined trader knows that the mar­

If a trader persuades h i m s e l f that he has "figured out" the market rather than

ket takes away the earnings o f the arrogant trader: loss is the penalty for the

sticking to his discipline, he risks b e c o m i n g tied to his decision and expos-

hicakdown o f discipline. T h e trading journal o f one Perkins Silver trader

148

*

Chapter- Six

stated bluntly, "Just when you think you're starting to fiync tin v m nk<' out, they c o m e back and squash your ego like a peanut." 'I lit maikct s c c i to insist on the complete remaking o f t h e trader in a c c o r d a n c e w ill i iK re­ quirements. It does not.give out subtle hints. As Adam Berger said, *" \n\ crack or psychological weakness, the market will find if .

and will put a

chisel in there and bang* bang, rip it apart." W h e n discipline breaks down and the trader's mastery o f the game is called into question, he begins to use the language o f death. C o m m o n de­ scriptions o f losing money include "getting killed" and "getting burned." T h e s e physical metaphors draw attention to the danger o f close con i act with the market. T h e break from discipline lends these losses moral mean­ ing. O n e trader, David, described to m e the unraveling o f his proper trad­ ing t e c h n i q u e :

1 d F F E ' s open-outcry' markets opened in 1982. T h e wild behavior and spend­ ing practices o f the mostly working-class traders b e c a m e legendary- as these 1

There have been [trades] that I just got killed . . . just everything goes against

"barrow boys" stormed the City o f London. In the pits the traders would

you. You sell it when you shouldn't, you buy it when you shouldn't, all day

scream out orders, cut deals with their buddies, scribble out c o m p l e t e d

long and its a busy market, you're trading numbers you shouldn't, value

trades on note pads, and verbally abuse the clerks who checked their trades.

down, trying to get it back, so you're trading bigger. When you have a profit,

T h e clerks, knowing that many successful traders had begun on the lowest

normally you'd get out, but because you're down money, you're trying to

echelons of the hierarchy, hoped that someday they too would have the c o n ­

squeeze it, get more out of it. [You] turn it into a loser. Hate yourself. Hate

nections or the capital to c l i m b into the pits. T h e trading pit was more t h a n

yourself. Consumed with self-hatred. I'd still be down money but instead 1

the social world o f these rough-and-tumble traders. It shaped how traders

tried to squeeze it for another five hundred and now 1 lost seven hundred

perceived the market and, in turn, conditioned how they took action within

Hate myself, threw my pen. Oftentimes 111 throw my pen. Just hate yourselt

it. T h e pit, in this sense, was a "means o f perception" that structured h o w traders did their daily work to create circulation in financial c o m m o d i t i e s .

2

W h e n h e c a n n o t manage his profit-making strategies and emotions with

Information technologies, like the pit, underpin traders' daily p r a c t i c e o f

discipline, David's downward spiral o f loss gathers force. T h e more losses

e c o n o m i c judgment by shaping the available informational resources. Yet

he incurs, the greater his self-loathing, and the more losses he takes on. H e

these foundations o f financial knowledge and action are rapidly c h a n g i n g .

is c o n s u m e d by e m o t i o n and u n a b l e to divest h i m s e l f with t e c h n i q u e s

New electronic trading:technologies and all-digital exchanges are supplant­

o f discipline.

ing the traditional open outcry pits where traders meet to exchange c o n ­

D i s c i p l i n e is an ideal that traders work to enact. Yet even those who can

tracts in financial futures. For traders, this shift from face-to-face to s c r e e n

successfully lose themselves in the market e n c o u n t e r significant obstacles

technologies has transformed the relationship between trading skill and ex­

to m a i n t a i n i n g discipline over time. T h e greatest challenges to practicing

change technology.' T h e screen changes how traders apprehend and inter­

disciplined trading are the pressures that impose themselves on traders from

act with the market. Specifically, it reconfigures the embodied work, t e c h ­

beyond t h e market frame. T h e strains o f m o n e y and family tempt traders to

niques for understanding the market, and material context o f trading, hi

allow t h e i r thoughts to wander beyond t h e market present and, therefore,

doing so, trading screens create new kinds o f market actors. In the pits, the

to break t h e ethical imperative to separate e c o n o m i c and social sphert s

traders lived the markets in their bodies and voices. O n the screen, traders

S h a p i n g t h e self into an instrument that can read and trade in the market is

observe

the market and work on it.

a vocational practice that is difficult and painful to maintain. A d h e r e n c e to

T h i s technological shift in financial futures markets displays the tensions

discipline waxes and wanes. Traders operate under the constant threat o f

between the technological creation o f rational market players and t h e ex­

losing their discipline and with it their focus and trading skills.

isting norms and practices o f contemporary financial capitalism.- F u t u r e s

1

traders using both technologies enact a specific form of m o d e m e c o n o m i c

148

*

Chapter- Six

stated bluntly, "Just when you think you're starting to figure these markets out, they c o m e back and squash your ego like a peanut." T h e market seems to insist o n the c o m p l e t e remaking o f the trader in accordance with its re­ q u i r e m e n t s . It does not give out subtle hints. As Adam Berger said, "Anv crack or psychological weakness, the market will find i t . . . and will put a chisel in t h e r e and bang^ bang, rip it apart." W h e n discipline breaks down and the trader's mastery o f the game is called i n t o question, h e begins to use the language o f death. C o m m o n de­ scriptions o f losing m o n e y include "getting killed" and "getting burned." T h e s e physical metaphors draw attention to the danger o f close contact with the m a r k e t . T h e break from discipline lends these losses moral mean­ ing. O n e trader, David, described to m e the unraveling o f his proper trad­ ing t e c h n i q u e :

LI 1 1 l.\ open-outcry markets opened in 1982. T h e wild behavior and spend­ ing practices o f the mostly working-class traders b e c a m e legendary as these

T h e r e have been [trades] that 1 just got killed . . . just everything goes against

"barrow boys" stormed the City o f London. In the pits the traders would

you. You sell it when you shouldn't, you buy it when you shouldn't, all da\

s t r e a m out orders, cut deals with their buddies, scribble out completed

long and its a busy market, you're trading numbers you shouldn't, value

trades on note pads, and verbally abuse the clerks who checked their trades.

down, trying to get it back, so you're trading bigger. When you have a piofit,

'1 he clerks, knowing that many successful traders had begun on the lowest

normally you'd get out, but because you're down money, you're trving to

echelons o f the hierarchy, hoped that someday they too would have the c o n ­

squeeze it, get more out of it. [You] turn it into a loser. Hate yourself. Hate

nections or the capital to c l i m b into the pits. T h e trading pit was more than

yourself. Consumed with self-hatred. I'd still be down money but instead 1

the social world o f these rough-and-tumble traders. It shaped how traders

tried to squeeze it for another five hundred and now I lost seven hundred

p e i c e n ed the market and, in turn, conditioned how they took action within

Hate myself, threw my pen. Oftentimes I'll throw my pen. Just hate yourself

1

it. T h e pit, in this sense, was a "means o f perception" that structured how traders did their daily work to create circulation in financial commodities.

2

W h e n he c a n n o t manage his profit-making strategies and emotions w ith

Information technologies, like the pit, underpin traders' daily practice o f

discipline, David's downward spiral o f loss gathers force. T h e more losses

e c o n o m i c judgment by shaping the available informational resources. Yet

he incurs, t h e greater his self-loathing, and the more losses he takes on. I Ic

these foundations o f financial knowledge and action are rapidly changing.

is c o n s u m e d by e m o t i o n and u n a b l e to divest h i m s e l f with techniques

New electronic trading technologies and all-digital exchanges are supplant­

of discipline.

ing the traditional open outcry pits where traders meet to exchange c o n ­

D i s c i p l i n e is an ideal that traders work to enact. Yet even those who can

tracts in financial futures. For traders, this shift from face-to-face to screen

successfully lose themselves in the market e n c o u n t e r significant obstacles

technologies has transformed the relationship between trading skill and ex­

to m a i n t a i n i n g discipline over time. T h e greatest challenges to practicing

change technology. T h e screen changes how traders apprehend and inter­

disciplined trading are the pressures that impose themselves on traders from

act with the market. Specifically, it reconfigures the embodied work, tech­

beyond t h e market frame. T h e strains o f m o n e y and family tempt traders to

niques for understanding the market, and material context o f trading. In

allow t h e i r thoughts to wander beyond the market present and, thereto)e,

doing so, trading screens create new kinds o f market actors. In the pits, the

5

to break t h e ethical imperative to separate e c o n o m i c and social sphei c s

traders lived the markets in their bodies and voices. O n the screen, traders

Shaping t h e self into an instrument that can read and trade in the market is

observe

the market and work on it.

a vocational practice that is difficult and painful to maintain. A d h e r e n c e to

T h i s technological shift in financial futures markets displays the tensions

discipline waxes and wanes. Traders operate under the constant threat ot

between the technological creation o f rational market players and the ex­

losing their discipline and with it their focus and trading skills.

isting norms and practices o f contemporary financial capitalism. Futures

4

traders using both technologies e n a c t a specific form o f modern e c o n o m i c

142

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Chapter Sever,

Rmbiguous Numbers

*

143

rationality that c o m b i n e s lechuological a c u m e n with financial interprcU-

but ,-i financial commodity, and an offer, or "ask," is the price at which he is

tiou, 'J heir actions arc based on a torm of reasoning that is far from strict cal­

willing to sell. In the C B O T ' s own account, these numbers represent the

culation. Futures traders act under highly uncertain and lapklh changing

"needs a n d expectations o f hedgers and speculators." T h e y are not estab­

8

conditions. T h e i r techniques focus on creating fragile scenarios that account

lished price facts. Rather, they are temporary assessments o f market condi­

for constant shifts in the market. T h e s e scenarios identify the specific social

tions, momentary markers o f approximate valuation.

information — the identities and patterns o f their competitors—within the bid and offer numbers for financial contracts.

5

Bid and offer numbers surge into the market and fade away in instants. T h e tempo of the market speeds and slows as the n u m b e r of contracts on bid

Traders base their interpretations of financial conditions on the numbers

or offer increases or diminishes and o n e set o f possible trades slides into the

that represent the market. N u m b e r s are a cornerstone o f e c o n o m i c calcu­

next. T h e trader will not always "get em," or b e able to turn his e v a l u a t i o n

lation, the essential tools of rationalized action. Yet the practice o f e c o n o m i c

into a completed purchase or sale. He may add to or withdraw his bids and

j u d g m e n t in futures markets challenges this representation of e c o n o m i c ac­

offers as time alters market conditions. Traders develop styles of interpreta­

tion and requires a shift in the way we think about numbers. Numbers have

tion that incorporate the fluidity o f numbers at the same time that they c o n ­

often b e e n considered elements o f knowledge production that increase ob­

struct explanations for market

jectivity and certainty. T h e fluid numbers o f futures markets invite us to ex­

The

fluctuations.

technological transition from open-outcry pit to trading screen re­

a m i n e the use o f numbers more closely. Traders look for clues to the direc­

configures the foundations o f market knowledge by changing the represen­

tion o f t h e market by observing the numbers. At the same time, the short

tation o f the bid and offer numbers and how traders read them. E a c h t e c h ­

t i m e frame o f futures trading introduces a fundamental instability and un­

nology represents the market in numbers, but the numbers are not all alike.

certainty into e c o n o m i c judgments based on these numbers. T h e pro\ i-

The

sional nature o f market numbers and the approximate character o f traders*

apprehend and act within the market, shaping their techniques for manag­

structure and design o f the pits and the screen influence how traders

c o n c l u s i o n s suggest that their practices are best characterized as interpreta­

ing quantitative information, for fashioning their calculations, and for un­

tion rather than calculation. B u t scholarly theories o f numbers and quanti­

derstanding the dynamics o f competition and e m o t i o n that are c e n t r a l to

tative representation are insufficient to provide a full reading o f the power

financial action.

of n u m b e r s in financial futures markets. N u m b e r s acquire the status o f definitive statements through a process o f "firming up," becoming, in their ideal form, stable in time and meaning and

Informational Transparency

adding to a transparent presentation o f knowledge. T h e s e "firm" numbers

O p e n outcry pits and electronic trading screens are information t e c h n o l ­

that scholars point to as a foundation for accounting and scientific knowledge

ogies shaped and constructed in accordance with particular ideals o f e c o ­

6

contrast with the fluid numbers o f the pit and screen. F i r m numbers work

n o m i c information. T h e representation o f market action—whether in the

in the service o f accountability and objectivity as tools o f standardization

pit or on the screen—relies heavily on the capacity o f numbers to c o n v e y

and c o m m e n s u r a t i o n , establishing expertise and authority, making knowl­

abstract and objective information. Both trading technologies are based on

edge impersonal, portraying certainty and universality, and contributing to

highly rationalized techniques of exchange and information delivery. M o d ­

resolving situations of doubt, conflict, and mistrust. In Mary Poovey's words,

ern financial markets build toward an ideal o f informational transparency

n u m b e r s perform ideally as representations o f "non-interpretive facts." As

that presents market information as facts free from the distortions o f s o c i a l

7

stable o b j e c t s , numerical units resist conjecture or theory and serve in the

information. T h e numerical foundations o f financial markets reveal a de­

p r o d u c t i o n o f systematic knowledge.

sire for "correct representations" o f e c o n o m i c information. By supplying

The

p a c e o f trading in futures markets undermines this stability. Traders

9

these e c o n o m i c truths, market technologies lay the foundations for traders'

at the C B O T and Perkins Silver practice scalping and spreading that focus

calculations. In 1869 the C B O T introduced the pit to create a unified m a r ­

on the profits to be made within the daily fluctuation o f futures markets. In

ket space where all participants could see each other and hear all the bids

these trading styles, numbers that represent bids and offers for financial con­

and offers available. About a century and a half later, designers of o n l i n e

tracts are t h e material traders use to interpret market conditions and orient

trading systems have used technology as a tool to reshape traders' knowledge

their profit-making strategies. A bid is a price at which a trader is willing to

context. T h e s e architects o f financial exchange deliberately distilled the

10

144

*

Ambiguous Numbers

Chapter Seven

*

145

e c o n o m i c content of the market by removing the social information so read­

mmd. O n the screen, social information arises from the landscape o f c o m ­

ily a v a i l a b l e in the pits."

petitors that traders imagine and identify within ihe changing digital num­

d e s i g n e r s and the market managers who hire them rely on a narra­

bers. T h e s e competitors are cloaked in the abstracted numbers o f t h e mar­

tive o f rationalization that rests on a particular idea o f the way that market

ket, but traders assign personalities and motivations to the characters behind

The

data is c o n s t r u c t e d , transmitted, and received. In an ideal competitive arena,

them. In the L o n d o n dealing room where I worked, traders did not con­

market i n f o r m a t i o n must have self-evident meaning. T o achieve such •'in­

struct these visions alone; they reached out to their co-workers to help t h e m

formational

transparency," all information must b e visible for interpreta­

interpret the social dimensions o f the electronic marketplace. Software de­

tion. In t h e pit, this information is transmitted through the bodies o f traders

signers may attempt to excise such information from their technologies, but

and r e c e i v e d by their colleagues, who challenge and help them in face-to-

traders create new social contexts to replace the ones they have lost. The

face c o m p e t i t i o n . T h e numbers shouted in the pit have this claim to "clean"

profit-making strategies o f traders are based on the many-sided

representation. T h e designers o f electronic dealing systems seek simph to

nature o f market information. T h r o u g h their particular technological fram­

12

ings, quantitative objects that seem straightforward gain a complexity that

Alan l . i n t l , an ex-official at the G e r m a n - S w i s s E u r e x e x c h a n g e and the

conveys information far beyond what they apparently describe. Located in

"purify" t h e transparent representation that already exists in open o u t e r ) .

14

designer o f t h e Perkins Silver graphic user interface, c h a m p i o n e d the con­

the interaction between the presentation of market data and the technology

nection b e t w e e n technological rationalization and democratizing access to

of exchange, the layered information o f market numbers inspires e a c h

i n f o r m a t i o n . " T h e truth c o m e s out in the electronic world. T h e r e are no

trader to interpret its meaning.

physical c r u t c h e s required." O n the screen, a trader needs only eyes to 1 cad the m a r k e t and a finger to click. The

presentation o f the market as a set o f numbers is critical to the pro­

W h a t Traders Know about N u m b e r s

duction o f informational transparency. B u t t h e visual and auditory contexts

1 raders in both open outcry and online markets exploit the informational

of open o u t c r y pits create opportunities and ambiguities that are not present

ambiguities o f numerical information." T h e changing bids and offers o f fu­

in t h e g r a p h i c user interface of a digital exchange offer. In the transition from

tures markets demand interpretive agility. Traders learn that numbers have

the pit to t h e screen, the contrasting representations o f "the market" demand

contradictor)' roles in the market. Between the representation ofthe market

that traders develop new strategies for using numbers to understand it.

and the decision to buy and sell futures contracts lies what traders "know"

In b o t h technological contexts traders undermine the rationalizing ef­

about numbers.

fects o f t e c h n o l o g y . T h e tensions between the rationalized technology and

The first thing they learn is that numbers tell very little. Although the full

situated a c t i o n e m e r g e on the trading floor and in the dealing room as the

number o f a bond futures price is five digits long, traders use only the last

social is displaced and reconfigured." Traders search out social information

one or sometimes two digits, playing the differences between fractions o f a

c o n t a i n e d i n the bid and ask prices that a n c h o r their knowledge o f the mar­

point in the price o f a bond. Numbers, in this sense, are simply placehold­

ket. T h e y interpret the market numbers through the particular framing o f

ers in a sequence leading from 1 to 9. O n c e the last digit o f a price passes 0,

each t e c h n o l o g y and thereby unearth the specific social dimensions ofmar-

liaders refer to their bids and offers as 1 s or 9s again without specifying the

ket c o n d i t i o n s . Traders bring questions about the social c o n t e n t o f the mar­

larger change. T h e number is only a symbol in a sequence that stands apart

ket to their calculations. W h o are the competitors? W h a t are their individual

from its mathematical significance.

styles? Are they scared, stolid, eager, or anxious? Traders avidly pursue this

For short-term traders, larger numbers do not indicate potential for prof­

i n f o r m a t i o n , and when it is not apparent, they often fabricate it. Social con-

its

textualization and interpretation are critical parts o f a trader's calculations.

the price will rise, futures traders play both the rise and fall o f daily volatil­

W h a t constitutes "social" differs in the pit and on the screen. T h e tech­

ity

Rather than always "going long," or buying contracts anticipating that T h e y can also profit by "shorting" the market, selling contracts in ad­

nological c o n t e x t influences the scope and content o f the social in eco­

vance of a drop in price. If their predictions prove correct, they can then buy

n o m i c life. In the pits, social information is founded in deep knowledge o f

therm back at a lower cost and pocket the difference. Traders have the op­

the local e n v i r o n m e n t . Traders organize trading strategies with the situa­

portunity for profit as prices ascend and descend the scale.

tions and motivations o f their particular competitors and compatriots in

Traders know that numbers stand on their own without reference to

146

*

Chapter Seven

Rrobiguous Numbers

*

147

events outside the immediate bids and offers. Events external to the i m m e ­

and lesistance to the overall trend o f the market. Numbers that halt a de-

diate market, such as rate cuts, election news, e c o n o m i c reports, or iht in­

i line in the market are called "support levels" and numbers that "turn back

tervention o f a large buyer, can storm the market unexpectedly. T h e im­

a price advance" are attributed to powers o f resistance. T h e numbers them­

m e d i a c y o f the market dictates that attention remain on the bid/ask figures

selves in these statements are agents.

that represent the position of the market at that second. Outside news is sup­

According to the book considered to be the bible of chartists, J o h n ) . Mur-

p l e m e n t a l to the information available in the bid/ask numbers. Traders c an

p h \ ' s Technical

act with little information or understanding of the instruments they hade or

significance for t e c h n i c a l analysts b e c a u s e "traders tend to think in terms

the e c o n o m i c conditions o f the countries that issue them. G o v e r n m e n t an­

of important round numbers, such as 1 0 , 2 0 , 2 5 , 5 0 , 7 5 , 1 0 0 (and multiples of

n o u n c e m e n t s are some o f the most powerful forces that alter market condi­

1,000), as price objectives and act accordingly." Traders invest these n u i n -

Analysis

of the Financial

Markets,

numbers gain further

16

tions. A surprise intervention that occurred at Perkins Silver shows the at­

bcis with their own psychological significance and the expectation that

tenuated c o n n e c t i o n between trading in second-by-second markets and the

these numbers are significant to other traders." Numbers develop greater

fundamentals o f their underlying assets.

solidity as signs o f support or resistance as more traders invest in a particu­

O n N o v e m b e r 3, 2 0 0 0 , the Perkins Silver dealing room was relative!}

lar price area. According to Murphy, " T h e more trading that takes place in

c a l m . T h e market was steadily ticking up and down. Suddenly, shouts erupted

that support area, the more significant it b e c o m e s because more partici­

from b e h i n d computer terminals as routine patterns snapped and the mar­

pants have a vested interest in the area."

ket for all European products spiked upwards. Traders who had bought con­

price* defines a "trading range." Trades build up around the fair value, or

tracts rode the move upward. Traders holding short positions cursed as the

modal price. W h e n the market sharply departs from oscillation around the

18

T h e limited variation around a

market p u m m e l e d their bearish expectations and forced them to take losses.

mode, or between points o f support and resistance, technical traders call it

T h e m a r k e t move took only about thirty seconds but reversed the downward

a "range break" and seize the opportunity to buy into or sell that swing.

trend in bond prices denominated in the ailing E u r o , which had dropped

It is not only by watching investments at certain prices that traders assess

toward . 8 0 to the U . S . dollar. O n c e the action ebbed and the traders had re­

the quality o f a number. Traders identify the significance o f an individual

gained their composure, they leaned toward their neighbors and asked each

n u m b e r as the depth o f bids or offers builds up around a price. T h e larger

other what had caused the move. T h e first trader to lift h i m s e l f from his seat

the n u m b e r o f offers, the greater the expectation that the market will b e g i n

and find a terminal with a Reuters wire scrolled down the screen until a

to decline in price. And the greater the n u m b e r o f bids, the more likely it

h e a d l i n e appeared on the electronic tickertape. It read, "C-bank intervenes

seems that the price will go upward. Weighty numbers create an informa­

in E u r o . " T h e traders buzzed about C i t i b a n k until an older trader pointed

tional gravity attracting other traders to the price. For short-term traders, the

out, nonchalantly, that " c " bank m e a n t Central bank. Although such a ba­

perceived judgments o f other market participants contained in the bid/ask

sic mistake would make any e c o n o m i s t scjuirm, to these traders, it is imma­

hold an opportunity for making money. As critics ofteehnical analysis p o i n t

terial i f it is Citibank or the E u r o p e a n Central B a n k that takes action. T h e

out, this continuous evaluation o f others' perceptions o f the weight o f the

m a r k e t prints the result before the news c o m e s through the wires. Knowing

bid/ask creates a self-fulfilling effect that validates the circular j u d g m e n t o f

the c a u s e is more important for satiating an after-the-fact curiosity than for

traders in relation to the numbers they trade.

organizing market action. T h e news wire can supply the reason, but it does

Numerical information and technological presentation are intimately

not necessarily cause the reaction or even precede it. All the necessary in­

connected. Because the meaning o f these numbers is flexible, traders use

formation for these second-by-second traders is in the bid/ask numbers.

the context o f the technology to tell them more about the numbers t h a n

T r a d e r s also learn that numbers have particular personalities and effects

the\ represent on their own.

on the h u m a n mind. T h i s is especially so for traders who practice "techni­ cal analysis." T h i s interpretive strategy bases predictions o f future market m o v e m e n t s on historical trading patterns. T e c h n i c a l analysts are also known

In the Pit a n d on the Screen

as "chartists" for their use o f graphs and other visual tools that describe (he-

Standing on the trading floor of the C B O T , a roar from inside the raised o c ­

past m o v e m e n t s o f the market. In technical analysis individual numbers

tagonal pits follows the opening bell. Traders stand in the tiered pits, e a c h

gain strength or weakness, positive or negative potential, as points of support

dedicated to a single contract—some based on the American Treasury b o n d

148

*

Chapter Sever.

ftmb i guoeii Numbers

*

149

c o m p l e x , o t h e r s on the Dow Jones Industrial Average or other indexes. In­

and offers o f the pits are full bodily experiences that require stamina and

dividual v o i c e s pierce the din shouting "Fifty at three," or "Five for a hun­

strength. W h i l e there is only one e x - C h i c a g o Bears player on the floor,

dred," i n d i c a t i n g the quantity and price they are selling "at" or paying "for"

many traders compete with him in size. T h o s e who lack the natural stature

futures c o n t r a c t s . E a c h call indicates how many contracts a trader is willing

of a professional athlete can visit the cobbler in the basement of the C B O T ,

to buy or s e l l at their price.

who will add lifts to their shoes. Traders from the C B O T and the nearby

T h e s e shouts—which represent a key technology o f the open-outcry s\ s-

C h i c a g o Mercantile E x c h a n g e can be identified in the streets of the west­

t e m — a r e t h e main m e c h a n i s m for conveying bids and offers in the pit. T h e

ern Loop not only by the loud oranges, blues, reds, and yellows of their trad­

tiered steps of the pits organize the physical space of open outer)- trading.

ing coats, but also by the extra inches of black foam affixed to the soles of

M o s t i m p o r t a n t , the stepped structures create a unified space o f financial

their shoes.

c o m p e t i t i o n where e a c h trader c a n see and hear all the bids and offers m the m a r k e t .

19

A trader's physical location in the pit can limit or expand his access to

Every bid or offer is legally required to be shouted to the coi n-

other traders' bids and offers. Being seen or heard when they deliver their

petitive market. In this regime o f exchange, shouts are most often a c c o m ­

bids and offers to the market may be difficult or easy. T h e i r sightlines may

panied by h a n d signals. Hands turned toward the bodv, palms possessiveh

be obstructed by other traders or limited by their position in the pit, or they

pulling inward, show a desire to buy, and hands thrust forward, palms out,

ma)

indicate a n offer to sell. N u m b e r s from 1 to 5 are shown predictably with

the trading arena.

the fingers o n each hand extended upward and turned sideways to show the numbers 6—9. Zero is indicated with a closed fist.

-

have wide angles o f vision, enabling transactions with a large area o f

Because of the physical and emotional information conveyed along with the numbers, not all bids and offers are equal. Every bid or offer in the pits

In a s i m p l e transaction, a trader makes an agreement with another trader

is transmitted through the voice and bulk o f another trader. T h e numerical

by m e e t i n g his eye in response to a bid or offer. T h e selling partner in the

information cannot be divorced from the bodies through which it is con­

operation yells, "Sold." T h e two jot down the price, quantity, and three-letter

veyed and received. T h e tone of voice, the body language of the trader, who

c o d e of t h e i r trading partner on a card, and e a c h trader hands the card to his

mav be steadily and confidently holding his hands forward in engagement

clerk, who will hunt down his counterpart and confirm that e a c h party agrees

w lib the market, or who may be yelling his bids, spittle flying and eyes wide

that the trade took place.

m desperation to get out o f a trade, are crucial inflections that traders draw

By design and by regulation, all trades must enter into the space o f c o m ­ petitive bidding and offering. Rules 3 32.01 A and 3 3 2 . 0 0 of the C B O T hand­ book state that

on to form market judgments. In a pit bursting with six hundred screaming traders, a trader's skills and caldilative repertoire require physical and emotional techniques for trans­ mitting and receiving market information in the pit. L e o described training

Bidding and offering practices o n the Floor of the Exchange must at all times

himself for the vocal and emotional demands of open outcry trading: " W h e n

be conducive to competitive execution of orders. . . . All orders received by am

1 first got in the business, I had to go in front o f a full-length mirror every

member of this Association, firm or corporation, doing business on Change,

night and practice screaming, looking at myself."

to buy or sell for future delivery any of the commodities dealt in upon the

The intricacy o f physical strategy in the pit b e c o m e s particularly clear

floor of the Exchange must b e executed competitively by open outcrv in the

when smaller traders must compensate for their stature by manipulating

open market in the Exchange Hall during the hours of regular trading.

20

other resources to get the attention o f potential trading partners. It is not enough to be on the right side of the market; each trader needs to attract the

The

accountability and competitiveness o f the market reside in these

others' attention—to have another trader receive

the numbers they shout

shouted quotations. Any trades that happen beyond this arena, either out­

into the market. Victor, an ambitious young broker who is physically short

side o f trading time or through whispers of trading neighbors, arc illegal.

and narrow, described how he creates a presence m the pit that will attract

E a c h bid and offer in the market must be outwardly presented for all par­

attention to his bids and offers:

ticipants to s e e and hear. Physical strategies for delivering and receiving bids and offers in the pits

Voice is number one. . . . You have to be a controlled loud. You can't be like

are part o f the traders' financial strategies. Delivering and receiving the bids

a panic loud because o n c e the panic c o m e s out of your mouth, you're pretty

158

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Chapter

flmbiguous Numbers

Seven

*

151

m u c h admitting to whoever wants to assume the other side o f the trade with

honing as obstacles to rational decision making, these signals work on a n in­

you that that's n o t a good trade. . . . T o n e s o f your voice are very important. \

tuitive level as a central trading tool. Traders see formal c a l c u l a t i o n as a

lot o f guys have higher v o i c e s , . . . and they c a n really b e heard throughout

hindrance to their job and to their ability' to react. In training their bodies to

t h e p i t . . . . A lot o f it is h a n d gestures, being a b l e to kind o f like offer your

be both receiving and delivery' instruments for the underlying information

h a n d s out at just t h e right p a c e to c a t c h people's attention. . . . S o m e t i m e s it's

of market numbers, the first step is learning not to calculate.

j u m p i n g up. People watch m e s o m e t i m e s w h e n 1 start to c a t c h air, and they

S e a n Curley Jr. assessed the effects o f his legal education on his habits o f mind and trading practice: "I am prone to get set in my ways. I'll reason to

g o , hey, there's Victor, you know, bidding t h e m .

a particular conclusion based on assumptions that I've got built into the I n addition to orchestrating the presentation o f bids and offers, timing

market. . . . Just like I'd craft an argument. I'm crafting a plan, and t h e n all

t h e delivery is key. Victor described how h e attracted the attention o f o n e of

of the sudden my plan is this, and, boy, the market had better listen." It

the "big dog" traders:

rarely did. Sean's deliberative skills led him to conclusions that may h a v e been theoretically correct according to the system he had established, but

Just at the right t i m e , I m e a n literally it was within a second, a split second. I

in formulating arguments, he lost the ability to play on the indeterminacy

literally caught a little pause in his offer where h e was just kind o f looking m

of market movements. Explicit construction oflogical systems inhibited his

all directions. I just happened to jump and bid and scream at him at literally—

ability to adapt his positions to rapidly changing market conditions. L e o

I m e a n I'm not even going to say tenths o f a s e c o n d — I ' m going to say hun­

says, " I f you start thinking too m u c h during the course o f the day when the

dredths. . . . I f I didtot j u m p a n d jump a foot and a h a l f off the ground and bid

battle is on, it is really a disadvantage." Jack added, "It's just like you're in

fours at that guy just as I did and t h e way I did it, he wouldn't have s e e n m e .

there and, you know—like, sometimes you just don't want to be b u y i n g or you don't want to b e selling. I presume, like, you could figure [some things]

T h e presentation o f market numbers in voice forces traders to cope with

out after trading off the floor for a long time and really watching things and

the immateriality o f the bid or offer. A n u m b e r is rarely shouted o n c e . B e ­

charting—but nothing like knowing—nothing like standing there and hav­

c a u s e e a c h bid or offer hangs in the air for only a second, the trader barks

ing that feeling." T h e immediacy- o f the market requires traders to interpret

the n u m b e r into the pit repeatedly to make sure he is identified with it. At

every' present m o m e n t . Perceiving and interpreting sensor)- cues in b o t h de­

the s a m e time he holds out his hands, fingers extended into numerical sig­

livering and receiving numerical information in the pit requires all a trader's

nals, to bring a c o n c r e t e visual presence to his bid or offer. T h e sounds o f re­

wits and physical skill.

peated numbers form the c a d e n c e o f the market and c a n convey urgency or

In contrast to the overpoyvering sensory information in the pits, s c r e e n -

b o r e d o m . In receiving the numbers that others bring to the market, traders

based technologies actually narrow the scope o f information available to

appeal to "feeling." T h i s word, encompassing all sensory information, is one

traders. T h e representation o f the market as a set o f changing n u m b e r s on

traders use to characterize their knowledge o f the market.

the screen is the primary- source o f information for traders in electronic m a r ­

T h e body is a key interpretive instrument for the pit trader. Listening to

kets. At the same time, traders try- to gain contextual clues from other traders

rhythms o f the numbers as they r u n in the pits leads traders to judge the mar­

by calling across the dividers that separate them, offering interpretations o f

ket a s "heavy" or "light," likely t o rise or fall according to their sensory esti­

market movements. In addition to drawing contextual izing interpretations

mations. B e y o n d creating the basis for individual traders' e c o n o m i c judg­

from their co-workers, traders search within the numbers to find social rea­

ments, t h e a m b i e n t noise of the pit affects the market as a whole. Economists

sons for the m o v e m e n t o f the market. T h e y craft identities for their c o m ­

studying t h e C B O T pits found that increased sound levels lead to higher

petitors and construct motivations for these illusory- actors in the o n l i n e

trading volumes and foreshadow periods o f high volatility in the pits. B u t

arena. Fashioning a social narrative for abstract information helps traders

just a s n u m b e r s c a n n o t b e divorced from the bodies that deliver them, noise

create understandings o f market fluctuations that direct their d e c i s i o n s to

c a n n o t b e divorced from the numerical content that it conveys. Traders

enter and exit the market. Traders create stories,around the shifting d i r e c ­

m o n i t o r t h e changing bids and offers o f the pits through their eyes and ears.

tion o f numbers that many economists consider a "random walk."

21

22

N u m b e r s , in the context o f the dense arena o f exchange, produce emo­

T h e E-trader graphic user interface is the point o f contact b e t w e e n

tional states in the traders that shape their predictions. Rather than func-

Perkins Silver screen traders and the market. T h e interface refines the rep-

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resentation ot the market in numbers. In his design, Alan Lind, the creator

The

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153

interface organizes the market for each financial product into a ver­

ot E-trader, framed a numerical and visual representation o f the market.-'

tical or horizontal strip. T h e trader can drag each block to drop it where he

Fulfilling h i s role as a "pragmatic technician" o f e c o n o m i c rationality,

likes it on the screen next to a record o f his filled orders, a record ot all the

24

find's d e s i g n cleaves to the dictates of informational transparency. T h e in­

orders he has placed in the market, and the box that displays profit and loss

terface d e s i g n presents all market action and information as if available in

( P & L ) . A casual glance at a trader's screen can show if he has made or lost

plain sight, introducing the closest thing to a noninterpretive format pos­

money that day. I f the numbers in the P & L box are a profitable green, then

sible. It p a r e s market data down to a m i n i m u m —boldface numbers in rec­

he is up for the day. I f the numbers are red, the trader often slides the box

tangular b o x e s . Land's central c o n c e r n was to use the design to reduce the

off to the right of the screen so the numbers are invisible to him and any c u ­

distance b e t w e e n the trader and the market. For him this m e a n t assembling

rious bystanders. T h e most important information, the bids and offers and

the s i m p l e s t visual cues to represent market action. T h e outward simplicity

the "depth" o f the market, that is, the number and the price levels o f bids

of the user interface illustrates its numerically rationalized representation o f

and offers, are shown in black lettering against blue and red backgrounds.

the market.

T h i s spare visual depiction embodies a c o m m i t m e n t to reducing the in­ termediation between trader and market and to providing a simple and un­ adorned numerical representation o f the market. T h e use of numbers as a means o f transparency draws the trader toward a distilled idea o f the market where disembodied actors display supply and demand for futures contracts. T h i s attempt to reduce the interface to bare, numerical representation shapes the traders' informational environment by elevating numbers to the status o f the market itself. Numbers gain a synecdochical power in their re­ lationship—the price stands for the market as a whole. O n the interface, numbers that represent the bids and offers are supposed to raise all hidden information to the surface and deliver the total market information. In a sharp break from the complex information system in the pit, where fathers and sons, friends and allies passed information through tightly controlled networks, the interface displays the market in terms available to the eyes o f any trader with access to the screen. In addition to overcoming social and physical distance between actors in a global network o f exchange, numbers are, in Lind's design, a technology o f proximity drawing traders toward the market.

25

Lind's strategy endeavors to cast aside the intermediation o f the

social information o f the pits to present "pure" information, based on a rep­ resentation o f the market in numbers.

26

Lind created direct contact between traders and market information through the numbers o f his interface. As he explains, his plan was to "strip down the chassis" o f the exchange technology. [Traders] don't care about German e c o n o m i c status or European e c o n o m i c status. W h a t they're looking at typically are numbers. They're trading num­

bers, using numbers to make decisions all day long. I would say that it's like a motor racing driver that doesn't look at the scenery as he's doing two hundred 7.1 In a private office in the C B O T building, a floor trader examines the market on screen. Photo bv Bob Davis.

miles an hour going down the track. He's looking at the hazy outline of the road. He's looking at the n u m b e r s on his dial. That's it. He's focused.

154

The

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Chapter Seven

o r g a n i z a t i o n o f the trading industry p l a c e s many i n t e r m e d i a r i e s be­

tween p a r t i c i p a t i n g traders. T h e m e c h a n i s m s o f e x c h a n g e a r e located i n t h e

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155

has filled their trades. D u r i n g busy markets, tinny computer s p e a k e r s fill t h e room with the s i m u l a t e d sounds o f b r e a k i n g glass a n d r i c o c h e t i n g bullets.

c l e a r i n g firm, the m a t e r i a l t e c h n o l o g y itself, t h e C B O T and Eurex, and

Here, the Perkins Silver traders a n d m a n a g e r s brought A l a n L i n d ' s s p a r e ,

their p r o g r a m s for c o m p l e t i n g t r a d e s . H o w e v e r , in t h e t e c h n o l o g i c a l f r a m ­

s i l e n t n u m b e r s into s o c i a l c o n t e x t o f c o m p e t i t i o n both inside the d e a l i n g

i n g o f E-tradcr, t h e s e intermediaries b e c o m e virtually invisible, producing a n e x p e r i e n c e o f d i r e c t c o n n e c t i o n between t h e trader a n d the market.

27

r o o m and bevond it. T h e m a n a g e r s tried to supplement t h e weak s e n s o r y in­ formation a v a i l a b l e t h r o u g h the interface with a p r o g r a m c a l l e d Market

t e c h n o l o g y o f E - t r a d e r holds t h e i n f o r m a t i o n a l f r a m e s t e a d y w h i l e

S o u n d t h a t a u g m e n t s t h e visual data o f t h e s c r e e n . T h i s software replicates

it d e l i v e r s the c o n s t a n t l y c h a n g i n g bids a n d offers t o t h e trader's eyes, fixed

t h e a u r a l d i m e n s i o n s o f t h e pit by recreating a m b i e n t noise levels linked to

i n c h e s from his screen. U s i n g this data t o form interpretations, t h e elec­

the size of bids and offers in t h e market. A trader can hook into the program

The

t r o n i c trader can leap into the market with a click ofhis mouse. Understood

by plugging an earpiece into the speakers on his computer. Hardly any o f

in t e r m s o f informational transparency, t h e d e s i g n works t o e l i m i n a t e not

the traders used it. T h e algorithm that replicates the noise o f open outcry

only institutional intermediaries but also intervening tools o f evaluation. As

t r a d i n g recreates only a sliver o f the total body experience o f the pits. Al­

L i n d explains,

though there are demonstrated effects o f noise on trading activity in the pits, without the context o f face-to-face interaction, the noise of M a r k e t S o u n d

[I w a n t to c o m m u n i c a t e ] ultrafast prices. In other words, I want to show you

was more distracting than illuminating to the screen traders. T h e sort of sen­

the real market quicker than a n y o n e else so that you c a n m a k e the decision

sory information helpful to pit traders' interpretations was inappropriate to

to trade. I'm not going to give you analytics, fancy recommendations, because

the context o f the screen.

my recommendations may need some explanation, or they may need to be

Despite the raucous atmosphere, the Perkins Silver managers insisted on

m a t h e m a t i c a l l y c o m p l e x . . . . T h e Spartan approach with technology today

discipline from their new recruits. In our logs, we kept an abbreviated record

is still the best one. K e e p it down to the absolute minimum; get rid of the stuff

of our trades. S o m e excerpts from my own trading journal, which d o c u ­

you don't ever look at. . . . Only observe the market that you want to.

ments part of a morning's trading activity, show the focus on the patterns and 2

rhythms and the problem o f learning to make sense o f the numbers. * L i n d created a system o f information delivery that provides austere data a b o u t bids and offers. W h i l e reducing the market to a few printed numbers,

Trying to go long the spread at 7 or 8.

h e also o p e n e d t h e possibility o f interpretation based o n t h e very simplicity

Long at 8.

of t h e interface.

Very slow moving—trying to sell 9 now 0 alter shift in Bobl.

In the dealing room, Alan Lind's design b e c o m e s part o f the training m e t h o d s o f the P e r k i n s Silver managers and the daily practices o f Perkins Silver traders. T o enter the dealing room floor, traders pass through three

Back to 9s, out at 9. Looks like t h e spread is moving down. Bobl moving up again. A steady Schatz.

doors leading from the elevator bank. At each door t h e y swipe their key

Bought 62s

cards through a security lock. Swaths o f gray dividers partition the trading

Going 1/2/3 seems like upward pressure.

space. E a c h bank o f trading desks is split again into four workstations, p e r ­

Scratched.

sonalized by bits o f decoration that are pinned to the fabric walls. Light fil­

Buying the Spread at 6 1 , Spread .0/1/2

ters through the cloudy London sky, supplementing the blue-tinted glow o f

Bought 9s trying to scratch

the c o m p u t e r screens. A beige, p l a s t i c - e n c a s e d terminal sits at the center o f

Bought 0s

e a c h trader's desk. A thin layer o f glass screwed to the monitor shields the trader from the screen's radiation.

T h e s e spare representations show the trader's focus on numbers.

A walk down t h e left-hand corridor of t h e dealing r o o m reveals images o f

S o m e other cues were available that oriented us to the direction o f the

s o c c e r - c l u b p o s t e r s , hot c a r s , babies, a n d girly pix. T r a d e r s p r o g r a m t h e i r

market. For example, at the same time that the other new traders and I were

computers to m a k e a noise w h e n E u r e x , t h e G e r m a n - S w i s s f u t u r e s e x c h a n g e ,

developing our basic trading skills, we were learning to develop a narrative

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Hmbiguous Numbers

Chapter Seven

+

15?

around t h e patterns o f the market by listening to the calls and responses o f

he'd pocketed enormous profits. H e faked panicked reactions to market

the more e x p e r i e n c e d traders. Market chatter is an important device for in­

events, hoping to fluster the other traders into chattering about their own

terpreting market fluctuations, despite the ephemeral nature of the con­

positions. His status in the room meant that his opinions could confirm or

clusions t h a t arise from it.

29

T h e importance of market chatter lies in the

collective construction o f unstable interpretations. T h e s e weak narratives supply interpretive logics for the market's movements.

cast doubt on the other's abilities to read market action. Despite hints available in the environment of the dealing room, the in­ formation on the screen was the focus of traders' interpretive energies. T h i s

Jason a n d Paul were the most prolific chatterers in my cohort. In a pro­

absorption is pronounced in Perkins Silver's C h i c a g o dealing room. Joshua

cess that was at o n c e competitive and cooperative, they exchanged c o m ­

G e l l e r called m e in, worried that the London room had given me a distorted

mentary a n d tips back and forth across the aisle that separated them. T h e y

picture of the market chatter and the social nature of online dealing. W h e n

assessed a n d reassessed the market's movements in relation to their posi­

1 arrived at the C h i c a g o office, he led me to the trading floor, where about

tions, "I'd g e t out of there, the bid's about to disappear." " T h e offer is weak."

thirty traders sat in silence staring at their screens. "I try to get them to make

"The

B u n d is moving, watch out in the Schatz." T h e y c o m m e n t e d on the

some noise," he told me, but their attention was concentrated on their screens.

pace and depth o f the numbers, trying to evaluate the forces shaping the rise

During my visit, Alan Greenspan was scheduled to talk to Congress, and

and fall o f t h e digits. Market chatter could not produce a definitive expla­

G e l l e r turned on the trading room television set. T h e traders shrieked at

nation o f t h e action on the screen; the uncertainty and instability o f the

h i m to turn it off and then compromised on a lower volume.

c o m m e n t a r y paralleled the constant fluctuation o f the market.

For both t h e L o n d o n and C h i c a g o screen traders, the majority of players

Traders c o m p a r e positions with each other, or simply tell other traders

with whom they exchanged were outside the Perkins Silver room. O n l i n e

their positions to confirm their decisions or seek help in recalibrating their

traders' individual actions are represented in the aggregate numbers of the

interpretations. T h i s information is not usually shouted across the room,

bids and offers, which narrow the opportunity to understand the intentions

but shared between traders at the same desk. At the desk across the aisle

of particular traders. T h e r e is no access to individuals' strategies that traders

from m e , Freddy was flailing through the transition to screen-based trading.

can leverage for their own profits. Yet the social context of competition is cru­

The

three traders who shared his desk were helping h i m sharpen his skills

cial to traders as they form narratives of market action that offer an explana­

at interpreting the market. T h e y identified actors and significant changes in

tion for the market's behavior. W h e n d e n i e d the social information of c o m ­

the market. T h e y showed Freddy how to spot big traders by watching how

petition and strategy so easily available in the pits, the Perkins Silver traders

the bid/ask increased or decreased. If a big trader changed his opinion of the

constructed social scenarios to explain the movements o f the market.

market's direction and moved his orders, the bid n u m b e r would drop by a large, round amount, such as 500 contracts. T h e more experienced traders

The

Perkins Silver traders learned to look forsigns of key players hidden ;

in the rhythms and sizes of the changing bids and offers. T h e traders at Fred­

e n c o u r a g e d Freddy to a c c u m u l a t e knowledge o f the strategies o f other

die's desk were trying to help him notice and collect this kind o f informa­

players in t h e market by watching the changing quantities. Jason and Paul

tion about the social content of the market. T h e s e characters are usually types

picked up o n their remarks and discussed them between themselves. T h e

constructed on the basis of trading styles and risk-taking strategies. Traders

chatter at t h e desk helped Freddy, Jason, and Paul to form their own inter­

locate these characters in the swiftly moving bid and offer numbers, creat­

pretative strategies.

ing a conceptual sketch o f the market as a field of specific competitors.

Market chatter does not always help the traders who listen to it. It can be used as a tactic to u n d e r m i n e others' confidence. T h e confinement of an

Drawing this field establishes a narrative space o f competition into which they can insert their own strategies.

individual to his own screen and the faceless nature o f screen-based trading create opportunities tor savvy traders to supply misinformation to the room.

The

most persistent character was called the Spoofer. T h e Spoofer used

large quantities of bids or offers to create the illusion that there was more de­

A trader c a n misrepresent his interpretations in chatter to gain information

mand to buy or pressure to sell than the "true" bids and offers represented.

about the others' positions and opinions. Martin, the object of envy for most

The

Perkins Silver traders, fed his co-workers his own exaggerated reactions. He

go in his favor. Traders learned to identify' a spoofer by watching changes in

would gasp as if his gains had been decimated by a market move only to re­

the aggregate number o f bids or offers on the screen, creating a novel strat­

veal minutes later, as he headed triumphantly out the door for the day, that

egy for profit. By riding the tail o f a spoofer, a small trader can make money

Spoofer manipulated the weight o f the numbers to force the market to

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Chapter Seven

Ambiguous Numbers

*

159

on market direction. Traders who dealt in large contract sizes aspired to

could signal the market's sentiment that the contract was overpriced. T h e

"take out" the Spooler by calling his bluff, selling into his bid and waiting

trader might then find an opportunity to take advantage o f this information.

for h i m to balk. T h e r e was great symbolic capital attached to "taking out" a

Joshua G e l l c r believed that losing money to the market provided a "free

Spoofer by matching wits with this high-risk player. It showed the prowess

look" at dimensions of the market that were not visible in the numbers. T h e

of a trader in one-on-one combat.

market might be skittish or stolid, immediately giving in to pressure to sell

E l i m i n a t i n g the Spoofer has the effect o f enforcing the informational

or standing firm. S u c h metaphors expose the contradictions within the ideal

transparency of the bid/ask numbers. Although there was nothing illegal about

of informational transparency. In the methods Joshua taught, traders used

a Spooler's maneuver o f supplementing the numbers with the weight of his

the numbers presented on their screens to unearth information about the

bid or offer, he undermines the verisimilitude o f the bid/ask

representation.

strategies and characters that populate the market. Although their interface

Spoofer attempts to post bids and offers to manipulate the market, an

reduces the market to a set of visual cues, traders can use the patterns o f the

intention that disrupts the abilities o f other traders to interpret market num­

market and strategies for gathering social information to understand m o r e

bers with their usual tools. T h e trader who takes out the Spoofer returns the

about the bids and offers than the numbers alone can show.

The

market to the "true" bid and offer by eliminating the distortion. With the

T h e ideals of information systems designers and financial exchange m a n ­

Spoofer eliminated, traders can o n c e again use their interpretive techniques

agers fit neatly with familiar narratives of progressive rationalization. Yet

with c o n f i d e n c e .

there is reason to be suspicious of this neat fit. Traders' uses o f information

The

social information that traders construct is not limited to identifying

technologies can break down the analytical complicity with e c o n o m i c dis­

individual actors and their strategies. Traders considered the market as a

courses of standardization, depersonalization, and technological rationality.

whole to have convictions and sentiments. T h e y searched within the num­

As users of numerical representations, traders c o m b i n e abstract informa­

bers to understand these states o f market affect. For Perkins Silver traders,

tion with social narratives. In other words, they search out other individuals

the first task o f the morning was trying to understand the mood o f the mar­

to c o m p e t e with, both in the numbers and in their trading room. At t h e

ket. Traders approached this understanding by "testing" the market. T h e y

same t i m e , discourses and strategies o f rationalization are f u n d a m e n t a l

sold into t h e bid to see how easily the market would absorb their trades. A

e l e m e n t s for the design and i m p l e m e n t a t i o n o f information systems a n d

market with strong conviction could absorb the pressure from the sale with­

financial markets. Numbers operate as critical materials for rationalization,

out a shift in the bid/ask, supporting their conviction that their interpreta­

but they are not always used as the system designers intended. Traders w h o

tion o f t h e market was correct. T h e y were willing to ignore a signal that an­

use financial technologies do not perceive numbers as objective descrip­

other trader believed the market would fall. I f the test did not change the

tions o f supply and demand. In both pit and screen formats, traders find a

c o m p o s i t i o n of the bid/ask, the trader sensed confidence that the market

patterned logic in the movements o f market numbers by identifying c o m ­

would rise. H e would likely buy contracts in anticipation of this c l i m b . If the

petitors around whom they generate specific strategies.

other traders immediately withdrew from the bid, the Perkins Silver trader

T h e meaning of numbers must be understood within the specific c o n t e x t

would h a v e less confidence in his interpretation that the market would rise.

of their simultaneous production and consumption in financial markets,

Traders took short-term losses to make these tests. B u t the managers o f

and within the technologies that present them. In the context of both o p e n

Perkins Silver valued gaining information about market sentiment with this

outcry and screen-based t e c h n o l o g i e s , traders seek out nonquantitative

m e t h o d . T h e y trusted it would help traders make correct interpretations o f

information in the market numbers. In the new digital context, the s o c i a l

the market's direction and, therefore, secure profits. Andrew Blair said that

dimension is a market e l e m e n t to exploit for profit, and traders search it o u t

h e was always nervous if he saw that the company was making m o n e y in the

where there seem to be only non-interpretive facts. Traders prosper f r o m

early hours o f any market. Traders must "pay the price o f admission" to un­

understanding the layers of meaning that lie between market numbers a n d

derstand what lies beyond the surface representation o f the bid/ask.

their material presentation. T h e transition from pit to electronic trading

Losing m o n e y to gain information was not unique to the morning test. A trader w h o bought a large number o f contracts in expectation o f a market

creates a new informational matrix, and each technology demands c o m p e ­ tence in different skills of interpretation.

rise was said to "get run over" when the market reversed its direction. But

Flexible interpretation rather than formal calculation characterizes t h e

such losses were not entirely negative. A loss produced by a strong trend

styles o f reasoning c o m m o n in financial futures markets, both in the p i t s

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Chapter Seven

and on t h e screen. In contemporary trading rooms, sentiments, actors, and market n u m b e r s are always in flux. T h e technological presentation o f the market provides a c o n t e x t a n d establishes the parameters o f financial knowl­ edge. S e a r c h i n g for the hidden values and phantom figures that lurk behind the n u m b e r s is the anchoring activity in a global marketplace where the only c e r t a i n t y is instability.

During my last visit to the trading floor, the bond futures pits stood h a l f empty. T h e thirtv-vear T-bond is sleepv compared to the days when I began my fieldwork in 1998. M a n y traders had moved to the busy ten-year pit, and many others had left the floor altogether. T h e traders who continue to work in the pits, whether ten-} ear or thirty-} ear, suspend computer notepads from their waists to work both the online and pit markets simultaneously. Traders no longer have to compete for spots, and they leave their thick-soled shoes at h o m e in their closets. David, who first introduced m e to the C B O T , told m e flatly, " T h e physicality o f the pits is gone. You can't trade in here with­ out a computer." David still works in the pit, but h e rarely lifts his head from his monitor. With ears open, h e can glean a certain a m o u n t o f "feel" and the important information that the pit has to offer: who, exactly, is buying and selling. But for David, simultaneous trading in the pit and on the screen has caused problems. He pulls two trading cards out of his pocket and points to a number, 159, that he has labeled "pit." T h e n u m b e r is matched by what he has traded on tire .screen. He is flat, with no outstanding trades for the day, but he is uncomfortable with the arrangement. "One-fifty-nine is kind of a weird number," lie tells rue. U is not a round number, and he sees it as evidence o f the disorientation produced by trying to work across technol­ ogies and different visions o f the market: "I sold three in the pit and bought one on the screen. T h e n 1 sold eleven in the pit, so 1 was short fourteen in the pit and long o n e on the screen. It's hard to keep track." Today, the market exists somewhere between the pit and electronic space. The

traders' hand-held devices provide a window into the online world,

even as they stand in the pit, but the shift to the screen is almost complete — only about 5 percent o f ten-year contracts change hands on the trading floor. Many locals have left the pits to trade in offices or in boutique firms established to house the ex-pit traders. E c h o i n g the logic o f technological

Practical Experiments rationalization,

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163

David says that there is no longer any advantage to being ii

the building at all. I lieshitt to the s c r e e n n as not the h M t i n u that C B ( )'l had been through the process til rationalisation. As n c b a s e >ecn, the organization has a long history of aligning technology and market practice in an effort to remove so­ c i a l c o n n e c t i o n s and cultural life from markets. During the construction of the ]')>() building, as well as in the transition to electronic trading, managers and transnational trading firms worked to extricate the market from the web of persona] relationships. Although social ties create the basis among traders for

understanding and analyzing the market, the effort to create spaces,

t e c h n o l o g i e s , individuals, and representations that express pure market rea­ son is a key part o f t h e rationalization process. W h e n e v e r market designers

C.2 The pits, once teeming, now stand half empty. Photo by Bob Davis.

move to rationalize the marketplace, traders work to resituate rationalized information within their distinctive ways o f understanding,

interpreting,

and calculating. The

interplay between these two sets o f e c o n o m i c rationalities and p r o ­

fessional sensibilities drives a process of creative destruction in market forms. T h e shift to the trading screen, however, was the first technological c h a n g e to threaten the existence of the C h i c a g o nexus. O n l i n e technologies c r e ­ ated the possibility' o f a decentralized marketplace that stretched the insti­ tutional fabric between cities and forced managers and designers to r e i n ­ vent local trading styles for the increasingly global exchange. T h e C B O T , like so many institutions o f capitalism before it, is now endangered by t h e dynamic system.that it has worked so hard to produce. To managers, designers, and traders in the financial arena, the c o n t e m ­ porary markets pose the question o f how to create fields in which c o m p e t i ­ tive individuals can operate with what Max Weber might have called a "thor­ ough market freedom," a space where autonomy in judgment and a c t i o n facilitates competitive struggle. For Weber, as for contemporary market c h a m ­ pions, autonomy means that the participants orient themselves only to t h e thing being traded—the commodity—without "obligations.of brotherliness or reverence, and n o n e of those personal human relationships that are sus­ 1

C I A pit trader w a t c h e s the o n l i n e m a r k e t o n a m o n i t o r

tained by persona] unions." Creating autonomous market spaces d e p e n d s

h u n g a r o u n d his n e c k . P h o l o by B o b Davis.

on a c o m m i t m e n t to separating the trader from the ties of family, friendship,

164

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Conclusion

Practical Experiments

*

165

place, and work; it is, therefore, a political as well as an e c o n o m i c process.

e c o n o m i c action can flourish. Yet if, on the one hand, this form of market

An individual is to be measured solely in terms o f personal achievement,

rationalization seeks to eliminate the social from the market, on the other

not by the c o n d i t i o n s o f collective work life. 1 lowever, there is no clear way

hand, it manipulates the social to fashion what managers hope will be an

to establish the conditions in which e c o n o m i c competition and individual

autonomous market. In this sense, the materials of rationalization are both

a c t i o n are possible. T h e "rational, purposeful pursuit o f interests" that

h u m a n and technological, shaped by social labor and the culturally orga­

marks the a u t o n o m o u s e c o n o m i c sphere is not a natural tendency, but a

nized preferences and practices of the same actors they are designed to c o n ­

p r o j e c t t h a t requires strategic construction, c o n s t a n t vigilance, mainte­

strain. Moreover, such work is never quite finished: there is no end to the

n a n c e , a n d repair.

process o f producing the conditions o f formal rationality.

The

everyday work o f rationalization in financial markets takes the form

Nonetheless, the long-standing and ever-changing project o f creating

of "practical experiments," projects in which the goals o f e c o n o m i c ration­

purely e c o n o m i c spaces is not merely a fantasy. T h e drive to improve the

ality are b r o u g h t into l i n e with the existing and evolving social forms o f

conditions o f e c o n o m i c action leads to the making and remaking o f n e w

market a c t i o n . T h e experimenters—architects, C B O T managers, software

technologies, reformed rules, creative calculative practices, and emergent

designers, o n l i n e dealing-room managers—work to align ideals and mate­

classes o f professionals who bring the market into being. Design is central to

rial realities. In particular, the experimenters align the technological and

establishing a formal order that can influence e c o n o m i c action. T h e trans­

social infrastructure o f the market to create conditions in which traders can

formation o f futures trading from the pit to the screen and the extension o f

b e c o m e m o r e detached observers, providing distance from the heat o f ex­

Chicago-style trading practices to London markets demonstrate that there is

c h a n g e t h a t facilitates calculation based on pure e c o n o m i c information.

nothing self-evident about how professionals create the conditions in which

The

calculative actors c a n emerge, even in domains that we think of as the most

e x p e r i m e n t e r s conjure images of an observable market, the conditions

of observation, and the individuals who will c o n d u c t rational evaluation. T h e s e e x p e r i m e n t s are never binding and rarely durable; they remain provisional, often ad h o c , and constantly under revision. Yet market de­

formally rational. T h e labor o f creating a market takes unexpected forms, from constructing bridges in C h i c a g o and planning the architecture o f a trading floor to the rationalizing o f personal conduct through discipline.

signers r e m a i n devoted to the challenge of creating institutional conditions

Ultimately, financial markets are social and technical fields—groupings o f

and fostering professional habits that promote virtuous e c o n o m i c action.

actors, both collective and individual—held together by:material t e c h n o l ­

T h e y m a n i p u l a t e the materials o f market rationalization—space, technol­

ogies, the problems o f risk and circulation that they address, and by competi­

ogy, social c o m p o s i t i o n , the self, and the representational order—because

tion for profit' In financial markets, the overarching problem is circulation —

the success o f the e x c h a n g e or firm hinges on how well all these compo­

how to produce consistent circulation in markets that professionals c a l l

nents are organized. T h e c h a l l e n g e , though, is that it is never clear exactly

"liquid," while arranging a field of action designed with regard to e c o n o m i c

how the designers c a n bring market spaces, whether physical or digital, in

norms—particularly, how to make profits from individual competition.

line with e c o n o m i c norms. Consider some of the projects we have seen: the

W i t h i n these markets, organizational arrangements and collective expecta­

new trading floor o f the 1 9 3 0 building; the practice o f seeding the London

tions about individuals' behavior, or norms, work in tandem with exchange.

trading pits with C h i c a g o traders; the Perkins Silver dealing room, built

Financial markets pose a series o f problems to designers and practition­

around the principles o f multiculturalism. T h e s e are all practical experi­

ers. Focusing on these problems highlights how markets work in practice,

ments in m a r k e t rationalization.

how traders and managers think they should

work, and what kinds o f new

In these projects, managers and designers work with unstated notions

arrangements exchange managers, traders, and the technology profession­

about how individuals make decisions and take action in market environ­

als they hire generate in the interplay between practice and normative ideas

ments. T h i s everyday labor o f rationalization is one o f the kev elements o f

about markets. T h e s e problems are not simply e c o n o m i c ; they are, in im­

c o n t e m p o r a r y e c o n o m i c life that departs from the e c o n o m i c and political

portant ways, frames for political engagement as well. O n c e a problem is de­

2

4

engineering o f financial systems. Weber had a label for experiments like

fined, it creates needs, attracts resources, and draws attention, as we have

these: they a r e attempts to produce the "substantive conditions o f formal ra­

seen with the struggles o f the C B O T over e l e c t r o n i c trading. T h e world's

tionality," intended to create a material and social form in which individual

financial

calculation a n d competition can operate as fully as possible and autonomous

of problems that market managers must solve. Formal e c o n o m i c theories

e x c h a n g e s are organized around a constant and evolving series

166

Conclusion

Practical Experiments

often inform solutions to these issues, shaping the financial field m then im­ 5

*

16?

Within the pit, however, the whirl of speculation remains entangled in

age. However, the executives in charge o f managing these markets aie not

the social network of traders. T h e stepped rings o f the pit defined a space

often a c a d e m i c economists; rather, they are technicians who translatt gen­

where relationships of obligation and reciprocity between traders were put

eral ideas into practice, tweaking e c o n o m i c ideas as intentions c o m e into

to work and where information about financial commodities was evaluated

6

and solidified into a price. T h e social organization of the marketplace b e ­

T h e i r s is a stripped-down approach to making things work, concerned w ith

c a m e a central feature in traders' strategies, and deciphering the cultural

theory or system only when those are essential to its operation. T h i s ap­

life of the pit was a necessary first step for anyone who wanted to work in t h e

proach is itself meaningful, driven by constant calculation, judgment, and

exchange. T h e pit structured traders' daily e c o n o m i c actions by reliably

assessment o f profits and people—it constitutes the cultural life of contem­

pioducing liquidity. As a trading technology, it was successful enough to

porary e c o n o m i e s .

c o m m a n d the allegiance of the C B O T ' s membership when electronic trad­

conflict with existing techniques, technologies, and forms o f exchange.

At both the C B O T and Perkins Silver, managers and traders attempt to

ing appeared. Over time, as we see now, C B O T traders defined themselves

solve problems in market action by shaping five elementary forms of finan­

through their relationship to open outcry and the physical space of the pit.

cial life: space, technology, social composition, selves, and representation."

It b e c a m e their symbol, the official icon o f their organization, and many o f

To

c o n c l u d e , then, 1 return to these elements and consider what an an­

thropology of finance and exchange helps us learn about them and, in turn, about the culture o f markets.

its participants fought to maintain the pit when electronic systems trans­ formed other exchanges. Now that futures markets are electronic, they continue to be based in cities, yet traders who work together in digital dealing rooms and e n c o u n t e r global markets through a screen have developed new techniques of c a l c u ­

Space

lation and new understandings o f the market. For market designers, the rise The

problems o f arranging and profiting from financial circulation imme­

of digital dealing has renewed the challenge o f organizing the space of t h e

diately raise the question o f geography. T h e rhetoric o f globalization has

trading room, which is focused now o n the screen rather than on lace-to-

taught us to think about financial markets as generators o f flows that cross

face interaction. For market managers and city officials, the transformation

national boundaries. T h e spatial arrangements o f global capital exchange

of the market poses a new question: How can they retain their protected

involve both the possibility o f and conflict over practical experimentation

marketplaces and sustain the presence o f financial organizations m t h e i r

Historically, the city has b e e n the site o f capital markets, and the work of ra­

cities when new centers are competing for a slice o f the action?

tionalization has focused on drawing c o m m e r c i a l space together through 8

In electronic markets, a new sense of space emerges that unites l o c a t i o n s

the development of a central place, or urban nexus. In the nineteenth cen­

that share digital circuits rather than adjacent land.

tury, C h i c a g o grew to b e America's primary capitalist city as it drew together

nologies, the newest financial products, and the sharpest e c o n o m i c t a l e n t

western agriculture and the eastern market with railroad tracks and ship­

intersect in productive and sometimes reckless ways. Circulation h a p p e n s

9

10

Up-to-the-minute t e c h ­ 11

m e n t s o f grain and meat. T h e C B O T was instrumental in developing the

as capital moves from place to place, but some cities have greater roles t h a n

h u b city by orchestrating the physical development o f the harbor and mads

others. Especially in New York, London, and Tokyo, highly educated workers

that c h a n n e l e d Chicago's c o m m e r c e . Ultimately, however, the C B O T ' s ma­

produce, analyze, and trade on information that drives the global e c o n o m y . '

2

jor innovation was to replace the movement of goods with the m o v e m e n t of

T h e s e are capitals of finance and producer services, like law and a c c o u n t ­

m o n e y , drawing participants and information together in the trading pit that

ing. But other cities, like Chicago, have more specialized roles." Clusters o f

its m a n a g e r s designed and redesigned to create better conditions for com­

urban centers emerge as significant sites for some interests." Futures m a r ­

petition. B y creating open sightiines and good sound conditions in the

kets bind C h i c a g o , London, and Frankfurt together through ties of t e c h ­

space o f t h e trading floor, designers engineered a physical field that mini­

nology and trade. T h e s e cities house both major exchanges and traders w h o

mized t h e benefits of cliques and heightened the importance o f an individ­

deal in the others' markets. T h e exchanges wrangle over if and how t h e y

ual's s p e e d and a c u m e n . T h e plan was to atomize traders and generate

should engineer these connections. For instance, members of the C B O T

autonomous, rational, calculative actors. Immersed in the crowd, each spec­

and L I F ' F E have direct access to all of each others' markets, a deal that t h e y

ulator was to operate alone.

struck after a similar alliance between the C B O T and the G e r m a n - S w i s s

168

*

Conclusion

Practical Experiments

169

exchange, E u r e x , fell apart. E a c h alliance is forged through a complex pro­

as a membership organization. T h e elements of digital dealing, however, are

cess of political negotiation between exchange officials and the r e g u l a t o r

more difficult to delineate. Although the material connections provided by-

bodies that coordinate e c o n o m i c activity across national borders. In the case

fiber-optic cables that c h a n n e l the electronic impulses of individual trades

of the c o n n e c t i o n with E u r e x , the exchanges fought over the technologies

are important, I have concentrated on the trading room, where speculators

for c o n n e c t i n g the two exchanges. Although technology provides the infra­

act. T h e view from the dealing floor amplifies several elements: the social

structure t h a t makes these alliances possible, it is the struggle over potential

composition of the trading room, the skill of reading a social field from a com­

alliances a n d the arguments over the use o f new equipment and techniques

puter representation, and techniques for constructing information among

that ultimately shapes the network.

traders in the dealing room.

But even as markets move online, traders continue to do business from

T h e shift from facc-to-face to online markets requires that managers, de­

their desks i n the world's financial centers. T h e global network does not end

signers, and traders answer questions about who should be included in the

the i m p o r t a n c e of the city; rather, it raises new questions about how cities

collective constitution of the market and what kinds of faculties those indi­

influence o n l i n e action. Most important for our story, the trading tech­

viduals should have—both at the level of their trading rooms and on the

niques developed in C h i c a g o now form a c o m m o n reference for under­

scale of the global marketplace. With the transition from pit to screen,

standings o f risk and norms o f conduct in the global futures market. T h e

traders could no longer embody the market. In digital dealing, the market

m e m b e r s o f C h i c a g o derivatives markets have worked with their counter­

develops a material reality on a computer screen that traders can observe.

parts in o t h e r financial centers to spread Chicago-style trading. B u t the C h i ­

E a c h trader's relationship to the market requires social, personal, and cal-

cago forms a r e not simply reproduced elsewhere. T h e y are taken up and

culative capacities, some o f which are incommensurable across technolog­

transformed as they are refracted through local styles. T h e s e transformations

ical contexts. As the new cultures of trading evolve, some speculators will b e

have serious c o n s e q u e n c e s for cities. C h i c a g o has long been the leader in

able to make the leap and some will not.

derivatives markets, but since electronic trading has threatened to circum­

Today managers o f trading firms are redefining their criteria for who will

vent the C h i c a g o nexus, its exchanges are fighting to retain their city's place

make a good trader with the trading screen in mind—a decision that leads

a m o n g the global players.

to redefining who will be included and excluded in the field. N e w tech­ nologies thus provide opportunities for social experimentation at the levels

S o c i o - T e c h n i c a l Arrangements

of organization, trading room, and individual Debates about who should enter the marketplace and; how—as in the Perkins Silver strategy for re­

Markets are arrangements o f technical devices, such as the trading pit and

placing the working-class futures traders who began in t h e 1980s with uni­

telephone; t e c h n i q u e s , such as the bodily postures that traders mastei; and

versity graduates —make those technologies political.

institutional arrangements, such as the design o f the Perkins Silver trading room or a g r e e m e n t s for trading and payment with the German-Swiss ex­

The

16

practical experiments designed to shape electronic trading in new

institutional contexts leave little question that market-makers recognize the

change E u r e x . Technical devices such as computer screens, which may seem

i m p o r t a n c e o f the physical and social architecture o f finance. T h e history

freestanding, always operate in relation to h u m a n skills and institutional

of the C h i c a g o Board of Trade shows that earlier market makers had these

contexts, giving managers and designers the opportunity to organize their

same concerns when they designed the trading pit. T h e famous C B O T

15

use. T h r o u g h a messy set o f cultural and political processes, the managers

building in the downtown L o o p is a "walk-through machine," a structure

and designers plan and orchestrate the elements o f socio-technical arrange­

that both shapes the markets that operate inside its walls and is shaped by

ments that e n c o u r a g e individual calculation and competition.

t h e m . " But the edifice is also a symbol of the organization's place in the city.

Fierce debates over the prospects of Chicago's futures markets involve two

T h e trading pits that the building houses are themselves architectural tech­

socio-technical arrangements: open outcry and digital dealing. T h e particu­

nologies; the ringed steps shape competition as they arrange bodies and chan­

lar a r r a n g e m e n t o f the open outcry system features many diverse elements:

nel communication among traders. Electronic markets take on a different

the architecture o f the trading pits, the bodies and voices o f traders, trade is'

form. Telecommunications networks, electronic trading systems, and highly

social hierarchies and the skill o f exploiting them for profit, the structure o f

developed information networks create global i n t e r c o n n e c t i o n s a m o n g

the C B O T building, and the structure o f the C h i c a g o Board o f Trade itself

actors in real time. Financial markets would not have their contemporary

178

*

Cone 1 us i on

Practical Experiments

*

171

form without them. T h i s is the form of technology that Castells describes as

both the technical and social composition of the market. T h e y examine how-

the "material support fox the space o f flows [which is] actually constituted

traders use technologies and constantly reform them to bring them more

by a c i r c u i t of electronic impulses."'* Yet these material devices o f inter­

closely in line with market ideals such as impersonal competition, c o m ­

c o n n e c t i o n are important because they channel traders' deals, which them­

plete information, and direct contact between individuals and markets. B u t

selves depend on traders' techniques for gathering and deploying informa­

traders do not blindly accept the tools they are given. In their daily use o f

tion, their strategies of profit-making, and the legal arrangements between

them, they manipulate these technological devices to their advantage, and

e x c h a n g e s . T h e materiality of technological devices seems to crystallize the

tins often means discerning in technologies the social content that design­

possibilities o f interconnection and speed, two prospects that make them

ers have worked so hard to extract.

hard to ignore for institutions that value rationalization. However, material e q u i p m e n t simply marks the beginning o f the inquiry.

Although technology is crucial in creating the material conditions for formal e c o n o m i c rationality, the c o n d u c t that financial exchanges a n d

T h e first level at which technology matters is that o f the material infra­

managers promote and that traders teach, learn, and transform in their

structure o f markets, but it is equally critical at a second level. Information

everyday work is equally important. In other words, we need not only to un­

devices shape the way traders work —how they understand and interpn 1

derstand how machines and humans are tied together into a financial sys­

the market and how they take action in it. Technologies shape e c o n o m i c ra­

tem, but to focus on the relationship between technologies and practices —

tionality by establishing c o m m o n frameworks for the evaluation o f knowl­

ways of thinking about and acting in the market—that are linked through

edge and a c o m m o n trust in the contracts that constitute the objects of

practical experiments in rationalization.

transaction.

19

In electronic markets, actors with no physical contact and no

personal knowledge of each other are integrated through their trading screens into the global social system o f financial e x c h a n g e .

Social C o m p o s i t i o n

20

Socio-technical arrangements establish c o m m o n ways o f understanding

Rationalizers work n o t o n l y t o purge the market of social influences but also

and interpreting the market and, in doing so, set the basis for understanding

to use the social characteristics o f traders to engineer efficiency. T h i s was

how o t h e r actors will receive the information. Technological objects on the

most apparent in the efforts of the Perkins Silver managers to create a t e a m

trading floor and in the dealing room carry information to traders and pro­

that would bring their firm greater profit. T h e managers used American n o ­

vide frames for interpreting it. For the rapid work o f traders, the goal is not

tions of multicultural individualism to engineer their trading room, recruit­

firm knowledge but the creation o f fragile interpretations that allow traders

ing and developing a cohort o f traders that included Asians, blacks, a n d

21

to draw profit from uncertain e c o n o m i c conditions. Unlike scientists, whose

w o m e n . T h e i r goal was to increase profits by expanding the ways their traders

goal is to establish truth, traders regard their technologies and their under­

would perceive the market and strategize in it. T h e y assumed that including

standings o f the market simply as tools for producing profit. T h e y do not

individuals who were under-represented in the overwhelmingly white o c ­

strive tor stable knowledge; instead, their technologies enable profitable im­

cupation o f futures trading would extend their profit by multiplying per­

provisation. As Niklas L u h m a n n has explained, such forms o f understand­

spectives, an idea that dovetails with notions of standpoint epistemology.

ing are built on "a 'provisional' foresight," in which "value lies not in the

' 1 'liese managers believed that e a c h trader's ethnic or racial background a n d

certainty that it provides but in the quick and specific adjustment to a real­

gender would shape his or her approach to the market. Profitability would

ity that c o m e s to be other than what was expected."

22

c o m e from aggregating these diverse reasoning processes. Ideally, s u c h a

T h e s e c o m m o n styles o f reasoning form a kind o f c o m m u n i t y based on

mixed group would create a new kind o f instrument for perceiving and a c t ­

shared approaches to knowing and acting in the market. ' T e c h n i c a l devices

ing on the market. T h e multiple points of view stemming from varied social

are powerful agents for bringing these communities into being. T h e archi­

categories would add different facets to the lens, creating a new m e c h a n i s m

tecture o f the trading pit and the visual technology o f the trading screen art-

for profit-making.

2

inseparable from how financial traders ply their business. T h e tools condi­ tion how traders think and work every dav.

T h i s use o f perspective to build a dealing room ties ethnicity to a postnational discourse o f market inclusion. T h e s e traders worked from particu­

B e c a u s e technology in the second sense is such a powerful force in the

lar points of view, born in the history of British migration and gendered la­

operation o f markets, exchange executives meticulously design and manage

bor. T h e managers wanted the Perkins Silver trading room to be a c o l l e c t i o n

172

Conclusion

Practical Experiments

173

of their s o c i a l vantage points, from which would emerge a new way of see­

tion to realign the relation o f race and profit. T h e y harnessed the perspec­

ing the m a r k e t that would help the firm draw greater profit from it. T h e

tives o f their newlv hired traders to their profit-making strategies. T h e shift

R u n n y m e d e Trust's report on multi-ethnic Britain uses a parallel form of

away from the C B O T trading floor and the anonymity of the new trading

multictilturalisni, which marks an e c o n o m i c as well as a cultural transition.

screen assisted them in their project. It hid race and gender from the eyes o f

The

competitors, creating rationalized conditions in which an individual's skills

report replaces a c o m m o n notion that links Britain's class-based soci­

ety and industrialism with a multicultural vision that fits neatly with the vi­

could emerge.

sion o f the global marketplace expressed in places like the Perkins Silver

Paradoxically, at the same time that the Perkins Silver managers sought

trading r o o m . In this emergent vision o f global markets, individuals, re­

the new perspectives of diverse young people, they also worked to teach e a c h

gardless o f l o c a t i o n , social position, or personal characteristics, can seek

trader a particular relation to the market. In the Perkins Silver trading room,

profits t h r o u g h competition. T h i s is not a race-blind strategy. Rather than

managers blended multiculturalism and the notion of the self-regulating in­

denying t h e importance of ascriptive characteristics, it elevates them to use­

dividual. Although each trader brought a perspective, the managers trained

ful tools in t h e search for profits. Instead o f understanding the operation o f

them all to develop an ethical relation to the market by developing an inte­

race in m a r k e t s as "possessive investment in whiteness" or as discrimina­

rior space dedicated to market action and to regulating affect.

1

tion,-- this strategy prompts us to see how firms work with race in the pursuit of profits a n d also how they use race and gender to buttress collectivities (like trading rooms) that are spaces o f neither racial solidarity nor conflict. The

Self

P e r k i n s Silver managers treated race, gender, and ethnicity as re­

B e c o m i n g a finely tuned market instrument required e a c h trader to develop

sources, finding in the politics o f the trading room an approach to the social

a particular relationship between self and market that severs certain capaci­

and e c o n o m i c uncertainties o f the new online markets.

ties and connections and builds up others. Speculation requires temporarily-

A l t h o u g h not explicitly, the markets o f the C B O T were also produced

giving up part o f the self to enter into the space o f e c o n o m i c action. Specif­

through s o c i a l orchestration. Access to the market was informally granted

ically, daily self-discipline requires separating the world o f social responsi­

and restricted along social lines. T h r o u g h the networks of family and friend­

bilities from the world o f speculation. Despite the outwardly raucous at­

ship that g r a n t e d access to membership at the C B O T , the city's African

mosphere of a trading floor, there is an ascetic c o m p o n e n t to the way traders

American p o p u l a t i o n was excluded. S o when Pat Arbor declared that "Chi­

manage themselves to b e c o m e risk-takers. T h e s e practices enable a trader

cago breeds futures traders," the breeding grounds were limited primarily to

to focus on the movement o f the market alone and to act as a purely e c o ­

the white n e i g h b o r h o o d s o f the city and its suburbs. T h e C h i c a g o trader in

nomic individual. T o achieve this state of reason on the trading floor, traders

whose b l o o d trading runs is almost certainly white and male. T h e legendary-

use discipline to temporarily reject the responsibilities o f social c o n n e c ­

liquidity: o f t h e futures markets and the city's claim o f prowess at creating

tions, especially the connections to their families. Traders discipline them­

traders are products o f white ethnic networks o f trade.

selves to be responsible only to the market, which determines their success

T h e r e c r u i t m e n t o f traders through networks o f family and friends re­

or failure and reveals whether they have acted with virtue—that is, with e c o ­

stricted the c o m p o s i t i o n o f the t r a d i n g J e o r . E t h n i c networks and racial ex­

nomic a c u m e n alone, not from their responsibilities outside the market or

clusion s h a p e d the basic function o f the market.

25

Recruiters appealed to

from an arrogance derived from success. Separating his market self from his

the skills o f t h e local population and to the ties o f obligation in local rela­

social self, a trader refashions himself as a m a c h i n e for trading, i m m u n e to

tionships in order to create liquidity. Supporting and extending those ties

the physical discomforts o f standing for hours in the trading pit or hovering

determined t h e social composition o f the market. T h e networks of white,

over a computer screen —an actor who ignores the future consequences o f

Irish, G e r m a n , and Jewish m e n made the market work.

success or failure and whose sole aim is to draw profit from the market.

As the t e c h n o l o g i e s and spaces of the market change, new forms under­

Speculation positions traders at the edge of the present moment, a location

mine the networks that gave whites the advantages o f exchange member­

of high uncertainty where the authority of knowledge fades as traders try to

ship, in E n g l a n d , however, in the m o m e n t o f technological change, the ex­

anticipate slight market movements.

clusion o f o t h e r s from the market field began to appear as a hindrance to

traders orient themselves with charts and social knowledge, but the material

liquidity. T h e Perkins Silver managers took advantage o f this social disloca-

that they shape the most assiduously is the self. T h e discipline of specula-

26

With this murky view o f the future,

174

*

Conclusion

Practical Experiments

tors unites techniques o f profit-making with continuous formation and re­

limestone ribs run like railroad tracks from the building's base to the tower s

formation o f self. Shedding outside responsibilities and working to disconnect

peak. Interior details show ships and gram chutes but not the human hands

from desires for continuity, the trader makes himself into an e c o n o m i c man.

that operate them. T h e s e modern images represent the order that technol­

S p e c u l a t i o n places money and self-definition on the line simultaneously.

ogy can impose on nature and create a feeling of control over the matrix of

For the managers at Perkins Silver, nothing was as critical to convey to the

price and weather that futures contracts themselves accomplish.

L o n d o n traders as self-discipline. In the C h i c a g o pits, their friends, finan­

As the C B O T worked with architects to hone its modern image, it also

cial backers, and trading neighbors had instructed them in these techniques

designed the trading floor to establish the conditions of calculation and eco­

as markets rose and fell around them. T h e conditions of the electronic deal­

n o m i c competition. T h e arrangement ofthe trading floor and the invention

ing r o o m and the distance from the C h i c a g o pits forced them to examine

of the trading pit structured traders' sightlines. T h e pit's steps elevated

these techniques explicitly and plan how to train the L o n d o n traders. First,

traders so that they could see all of the bids and offers, bringing each trader

o n l i n e dealing separates traders, assigning them to their own neat spaces.

into contact with the full market. Engineering the acoustics of the trading

N o other trader can see or hear the positions a new trader takes on or the

floor was equally important to creating a centralized market. Designers and

panic or elation in his voice on a winning or losing streak. O n l i n e traders act

managers considered what materials would allow sound to travel without

a l o n e . In the absence of the informal training o f the pits, the Perkins Silver

producing disorienting noise and created an arena in which e a c h trader

managers improvised new techniques to develop self-discipline. First, they

c o u l d clearly perceive information —a level informational playing field

required traders to maintain trading diaries to record their deals and give

where traders could compete primarily on the basis o f their understanding

reasons for their them; second, they watched traders' deals through the on­

of the market and their speed at executing trades.

line surveillance system. As the managers formalized these techniques, they trained their traders to be rationalized observers o f t h e self.

T h i s marking of space at the C B O T is not the first example of Chicago's elite using the architecture of order to counterpoint the chaos of capitalism. At the famous C h i c a g o World's Fair, the W h i t e City—a literally purified im­ age—created an idealized Chicago: that:banished the m u c k o f capitalism,

Representation

replacing it with the rhythmic and regular display' o f neoclassical architec­

As we have seen, e c o n o m i c rationality is also aesthetically patterned. Whether

ture. Architecture's reflection of capitalism's operation continued in the con­

through t h e architecture ofbuiklings, the garish ties of traders, or even though

struction of the glass tower extension of the C B O T , where the constructed

t e c h n o l o g i e s that have symbolic aspects in addition to their rationalizing

abstraction o f capital matched the structured abstraction o f the building.

functions, the representational order defines the spaces of purified e c o n o m i c activity and shapes the affect and self-image of those engaged in trading.

T h e screens ofE-trader extended the project of establishing aesthetic dis­ tance between the image of the market and the h u m a n elements that c o m ­

T h e s e representations are part o f the practical experiments that separate

pose it. In representing the market in a set o f bid and ask numbers simply

e c o n o m i c activities from the social. T h e architecture and screen design at the

presented in the c o l u m n s of a trading screen, designers c o m p o s e d visual

C B O T and Perkins Silver create distance between the technological order,

elements to achieve a shift in calculative practice. " T h e numerical represen­

2

social interaction, and even nature. In contrast, a trader's self-presentation

tation of the market resonated with the principles of disintermediation,

and style o f interaction mark the trading space as asocial, where h u m a n na­

term that c a m e into vogue in the 1980s as companies began to use securities

a

ture is stripped o f the manners that smooth social interaction and reduced

like junk bonds to raise money from investors rather than banks, eliminating

to brutal competition. Markets are places where technological rationaliza­

intermediaries between the borrowers and their market. T h e design o f t h e

tion c o m b i n e d with the natural competitiveness o f e c o n o m i c m e n estab­

trading screen was intended to achieve a similar direct contact between mar­

lishes an autonomous space of e c o n o m y .

ket actors, creating disintermediation in the manipulation of visual informa­

28

Holabird and Root's design for the 1 9 3 0 C B O T building was an image

tion. O f course, from an analytic perspective, there are always agents, whether

of m a c h i n e - h o n e d nature. T h e new building committee and the C B O T

human, linguistic, m e c h a n i c a l , or electronic, between traders. However,

m e m b e r s h i p preferred the symbolism of nature transformed over the neo-

technological rationalization supports the idea that eliminating h u m a n in­

G o t h i c spires and the neoclassical c o l u m n s of the competing designs. Neat

termediaries provides greater contact with "true" market forces. T h e num-

176

*

Conclusion

Practical Experiments

*

177

bers c o n s o l i d a t e the image o f the market on a trading screen; in those num­

reflected the asocial e c o n o m i c actor, persisting in their intense competitive­

bers, traders confront only t h e aggregate market they receive through their

ness. In the digital dealing room, however, the new recruits submitted to the

c o m p u t e r s , not an image o f their h u m a n competitors.

newer affective order o f the market observer—more distant from direct

T h e a r c h i t e c t u r a l environment and the picture o f the market presented

competition, more reflective, and quieter. T h e new conditions of electronic

on trading screens give a particular look and feel to the market. T h e archi­

trading create a new e c o n o m i c aesthetic form, and with it is emerging a new

tecture o f t h e 1 9 3 0 C B O T building marks the transformation o f nature

variant o f e c o n o m i c man.

through t e c h n o l o g y that is the foundation o f the circulation in futures con­

T h e processes that produce abstract information in financial markets are

tracts. It a l s o marks the C B O T as a space o f modern action, where m e n not

not themselves abstract. Managers and designers integrate people, technol­

only work t o integrate the city with the market but also create circulation

ogies, places, and aesthetics into a zone o f autonomous e c o n o m i c action.

well b e y o n d its boundaries.

T h e move from the pits to the electronic screen realigns h u m a n abilities and

The

a e s t h e t i c rationalizations o f the trading screen heighten this effect.

technologies, just as the transition from the crowded old C h i c a g o Board o f

T h e y c r e a t e the image o f a c o m p l e t e market apart from the h u m a n actors

Trade building to the new, more spacious trading floors did in 1930. In their

who c o m p r i s e it and require that traders on the system b e c o m e observers o f

quest to make perfect markets, designers attempt to evade the social world.

this d i s t a n c e d entity. By changing what it looks and feels like, disintermedi-

Shifting the market from its location in the bodies and voices o f traders to

ation s h a p e s a trader's interactions. S e c l u d e d in front of the screen, he mea­

the quiet blinking o f a trading screen creates a new order o f formal ration­

sures his skills directly against the market as a whole. T h e tranquil and mea­

ality based on digital representations. Yet traders inevitably develop profit-

sured quality o f the screen leaves behind m a n y o f the habits o f the trading

making strategies that bring social and cultural materials back into the ra­

pit, but it retains others. In particular, it replicates the dispassionate aesthetic

tionalized market, producing a cultured structure that organizes everyday

of discipline. However, like the techniques for teaching discipline that t h e

life and labor in the futures markets. Today, at the dawn of the digital age,

Perkins S i l v e r managers employed, the new screen imposes a quiet inten­

market makers are inspired by the enticing possibilities o f electronic ex­

sity that t h e ex-floor traders who import their raucous work habits resist.

change. S o o n these technologies will appear insufficient, and a new gener­

W h e t h e r they remain in the pits or work in the new confines o f the deal­ ing room, traders display their c o m m i t m e n t to competition as the primary m o d e o f h u m a n interaction in their dress, language, and aggressive de­ m e a n o r — c o n d u c t that undoes, at the representational level, the social ties between p e o p l e and aims to dissolve any collectivity that might emerge. T h i s image o f competitive h u m a n nature, which links competition and profit to the vitality o f both m e n and the market, obscures the continuous use o f social information to make decisions. Traders say that being in the market brings t h e m closer to the maverick, uncompromising spirit they associate with h u m a n nature, as if the market strips away the pretenses of society. T h e o n e - u p m a n s h i p , crass jokes, and the insults that traders hurl mark the trad­ ing room as a place for war between m e n over money and status. T h e s e games o f d o m i n a n c e and defeat help to create an asocial space. W h e n the Perkins Silver managers tried to control t h e o b s c e n e language of the London traders, requesting t h a t they stop using the word cunt to mitigate t h e brutal­ ity o f the trading room for their new female recruits, t h e traders revolted. T h e new, seemingly feminized trading room threatened the c o n n e c t i o n be­ tween masculinity and market rationality t h a t gave these m e n special access to the market. T h e cosmopolitan order o f the American directors abstracted reason from m a s c u l i n e play. Y e t the traders clung to t h e crass characters that

ation o f designers will begin their own practical experiments, convinced that they can improve on modern markets.

Introduction 1. Peter Galassi, Andreas Gursky, and M u s e u m o f M o d e m Art, Andreas New York: M u s e u m o f M o d e m Art, 2 0 0 1 ) , 4 0 - 4 1 .

GURSKY

2. David Harvey, The CONDITION OF'POSTMODEMITY (New York: Blackwell, 1989), 164. 3. T h e s e depictions o f financial capital can be read as fetishism in the classic, Marxian sense in which the o b j e c t itself (here immaterial, but no less an object) seemingly imbued with powers to organize human action, obscures the conditions o f its own production. But these new critics of capitalism take a very different approach. T h e y do not examine the intricate relations o f production. Instead, their analysis focuses on the feelings and confusion that the movement of capital generates. T h i s positions capitalism as a producer of affect as much as a producer of goods. 4. Jean Comaroff, " O c c u l t E c o n o m i e s and the V i o l e n c e of Abstraction: Notes from the South .African Postcolony," American

ETHNOLOGIST

26, no. 2 ( 1 9 9 9 ) : 2 7 9 -

303; Jean Comaroff and John Comaroff, "Millennial Capitalism: First Thoughts on a S e c o n d Coming," PUBLIC CULTURE 12, no, 2 ( 2 0 0 0 ) : 2 9 1 - 3 4 3 . 5. Harrison W h i t e , " W h e r e D o Markets C o m e F r o m ? " American

JOURNAL OF Soci­

OLOGY 8 7 ( 1 9 8 1 ) : 5 1 7 - 4 7 ; Neil Fligstein, THE ARCHITECTURE OF MARKETS :AN ECONOMIC SOCIOLOGY OFTWENTY-FINT-CENTURY

CAPITALIST SOCIETIES ( P r i n c e t o n , N J : P r i n c e t o n Uni­

versity Press, 2 0 0 1 ) ; Mark Granovetter, " E c o n o m i c Action arid Social Structure: The

P r o b l e m o f E m b e d d e d n e s s , " AMERICAN

JOURNAL OF SOCIOLOGY 9 1 , no. 3 ( 1 9 8 5 ) :

4 8 1 - 5 1 0 ; M i t c h e l l Abolafia, MAKING Markets:

Opportunism

and Restraint

ON Wall

Street (Cambridge, MA: Harvard University Press, 1996); Michel Gallon, "Intro­ duction: T h e Embeddedness o f E c o n o m i c Markets in E c o n o m i c s , " in THE IMWS OF THE MARKETS, ed. M i c h e l G a l l o n , 1-57 (Maiden, MA: Blackwell, 1998); Donald M a c K e n z i e , "Physics and F i n a n c e : S-Terms and Modern F i n a n c e as a Topic for Sci­ e n c e Studies," SCIENCE, Technology

AND Human VALUES 2 6 , no. 2 ( 2 0 0 1 ) : 1 1 5 - 4 4 .

6. For clear explanations o f financial markets and instruments, see Doug Henwood, Wall Street (New York: Verso, 1 9 9 7 ) ; Burton Gordon Malkiel, A

Random

Walk DOWN WALL Street (New York: W. W. Norton, 1996); and Roy Smith and Walter Ingo, GLOBAL BANKING (New York: Oxford University Press, 2 0 0 3 ) . 7. Benjamin Lee and Edward L i P u m a , "Cultures o f Circulation: T h e Imagina­ tions o f Modernity," Public CULTURE 14, no. 1 ( 2 0 0 2 ) : 1 9 1 - 2 1 3 .

188

*

Notes to Pages 14-13

Notes to Pages 11-13

"> Wit A m i i ; ,m
Readei,

''. M a x Weber, The PnAcstanl J ,'f/w and the Spirit «/ Capitalism, tram. T. Parsons ' N e w York: Routledge, 1992 k G c o r g S i n n n e l , the Philosophy of ,\ loner 'New \ o i L Routledgc, 1 and "J )omination," in Giorg Simmel on Individuality and Social Forms, ed, D . Levine (Chicago: University o f C h i c a g o Press, 1 9 7 1 ; . 10. S t e p h e n G u d e m a n . The Anthropology of Economy (New York: Blackwell, 2 0 0 1 ) ; Bill Maurer, " C o m p l e x Subjects: Offshore F i n a n c e , Complexity Theory, and the Dispersion o f the Modern," Socialist Review 2 5 , nos. 3 - 4 ( 2 0 0 5 ) : 1 1 3 - 4 5 ; Daniel M i l l e r , " C o n c l u s i o n : A Theory o f Virtualisni," in Virtualism: A New Political Econ­ omy, ed. J . G . Carrier and D . Miller (New York: Berg, 1 9 9 8 ) , 1 8 7 - 2 1 7 ; Hirokazu Miyazaki, "'The Temporalities o f the Market," American Anthropologist 105, no. 2 ( 2 0 0 4 ) : 2 5 5 - 6 5 ; Annelies Riles, "Property as Legal Knowledge: M e a n s and Ends," journal of the Royal Anthropological Institute 10, no. 4 ( 2 0 0 4 ) ; 7 5 5 - 9 7 6 .

16. Clifford Geertz, Available

17. M i c h a e l M . Fischer, Emergent

Philosophical

Forms of Life and the Anthropological

Voice

Marcus, "Cultures o f Expertise and the M a n a g e m e n t o f Globalization: T h e Refunctioning o f Ethnography," in Global KnthrapologicalProblems,

Assemblages:

Technology,

Politics,

and Ethics

as

ed. A. O n g a n d S. C o l l i e r (New York: Blackwell, 2 0 0 5 ) ,

2 3 5 - 5 2 ; Aiwa Ong, Buddha

Is Hiding: Refugees,

Citizenship,

the New

America

(Berkeley and Los Angeles: University o f California Press, 2 0 0 3 ) ; Paul Rabinow, "Midst Anthropology's Problems," Cultural

Anthropology

17, no. 2 ( 2 0 0 2 ) : 1 3 5 - 5 0 .

Chapter One 1. Upton Sinclair, The jungle (New York: Penguin, 1985), 3 2 - 3 3 . 2. William C r o n o n , Natures

12. Clifford Geertz, "Stiq: T h e Bazaar E c o n o m y in Sefrou," in Meaning and Order in Moroccan Society, ed. C . Geertz, H. Geertz, and L . Rosen (New York: C a m b r i d g e University Press, 1 9 7 9 ) , 1 2 3 - 3 1 3 . Geertz saw his essay as working with the t h e n - r e c e n t e c o n o m i c theories (e.g., those o f K e n n e t h Arrow and G e o r g e Akerlof) that stressed the roles o f information, communication, and knowledge.

1932: The Development

15. Paul Rabinow, French Modern: Norms and Forms of the Social Environment ( C h i c a g o : University o f C h i c a g o Press, 1995 j ; James Holston, The Modernist City: An Anthropological Critique of Brasilia ( C h i c a g o : University o f C h i c a g o Press, 1 9 8 9 )

on

' D u r h a m , N C : D u k e University Press, 2 0 0 3 ) ; Douglas R. Holmes and George E .

W.W.Norton, 1991), 230.

14. Anthropologists have pursued a different trajectory, focusing on the problem o f e x c h a n g e , questions o f value, and the chains o f commodity production that link distant locations in equations o f production and consumption. Together diese have led to a burgeoning and productive interest in "cultures o f circulation" (see L e e and L i P u m a , "Cultures o f Circulation"; and Greg Urban, Metaculture: How Culture Moves Through the World [Minneapolis: University o f Minnesota Press, 20011). B u t the current neglect o f Mauss's other mission, analyzing the cultural nature o f eco­ n o m i c s and offering alternatives, is mysterious.

Reflections

181

Topics (Princeton, N j : Princeton University Press, 2 0 0 0 ) , 110.

11. J a m e s G . Frazier, preface to Bronislaw Malinowski, The Argonauts of the Western Pacific ( 1 9 2 2 ; repr., Prospect Heights, I L : Waveland Press, 1 9 8 4 ) , vii-xiv.

13. Marshall Sahlins, Stone Age Economics (Chicago: Aldine Atherton, 1972), xii. Today, economists like Gary Becker have taken up problems o f e c o n o m y and culture, claiming that processes considered to be cultural are, in fact, e c o n o m i c . For instance, by describing even family relationships and romantic love in terms o f rational-choice theory h e overcomes the dichotomy between e c o n o m i c s and culture by obliterating culture. His analysis assumes that individuals always maximize welfare. Although he c h a l l e n g e s economists by expanding the range o f h u m a n motivations, the individual and his or h e r desire to maximize are at the core o f his method. S e e Gary B e c k e r , " N o b e l L e c t u r e : T h e E c o n o m i c Way o f Looking at Behavior," journal of Political Economy 1 0 1 , n o . 3 ( 1 9 9 3 ) : 3 8 5 - 4 0 9 . T h i s approach takes e c o n o m i c logic to its ex­ treme c o n c l u s i o n , but it should also hold a warning for anthropologists. E c o n o m y c a n n o t be reduced to culture, nor can culture he reduced to economy. T h i s position c h a l l e n g e s us to hold e c o n o m y and culture botfi together and apart as we redraw the o b j e c t o f inquiry to overcome such analytic dichotomies.

Light: Anthropological

*

Metropolis:

Chicago

3. David A. Hounshell, From the American of Manufacturing

and the Great West (New York:

System to Mass Production,

Technology

1800-

in the United States (Balti­

more, M D : Johns Hopkins University Press, 1 9 8 4 ) . 4. Cronon, Nature's

Metropolis,

250.

5. T h e C B O T leaders translated the abstract ideals o f the market into the physi­ cal and social forms o f the marketplace. T h e s e "specific intellectuals" worked with the space o f the city and architects to build and experiment with how the market could and should work. T h e i r approach to finding practical ways to overcome im­ pediments to e c o n o m i c circulation and competition is similar to the work of mod­ ernist urban planners that Paul Rabinow examines in French Modern: Nonas and Forms of the Social Environment ( C h i c a g o : University o f C h i c a g o Press, 1995), B o t h groups used the newest technologies to shape both h u m a n behavior and the envi­ ronment. However, their projects differed in two key respects. First, the C B O T was c o n c e r n e d with creating a marketplace and conditions in which traders could flour­ ish; "society" was not their object. Another key distinction is in the role o f experts. T h e member-managers of the C B O T did not draw on formalized knowledge in t h e way that Rabinow's designers did. T h e i r approach to markets included unarticulated assumptions that were far from the measured certainties of science, and they did n o t use their organization as a case that would augment scientific discourse. T h e i r goal was practical in both ends and means: to create a working market in which its m e m ­ bers could profit. 6. (anies Carrier notes that separating marketplaces from the general life of the city is a "practical abstraction" supporting the notion that markets operate with t h e i r own sphere and with their own laws ("Abstraction in Western E c o n o m i c Practice," in Virtualism: A New Political Economy, ed. J . G . Carrier and D . Miller [New York: Berg, 1 9 9 8 ] ) . However, in C h i c a g o , the whole city was material for the practical abstraction o f the market. City and market rose together and supported the idea t h a t e c o n o m i c arrangements undergird the social life o f the city. 7. Creating an autonomous, "disembedded" market depended, paradoxical!), o n building infrastructure for smooth circulation. T h e work o f Richard Sennett and G a d Schorske on key urban streets shows how the values of movement take form i n

182

*

Notes to Pages 20-28

Notes to Pages 18-28

the city. In Flesh and Stone (Boston: Faber and Faber, 1994), Richard S e n n c t t aigucs that an individual's ability to move freely is a key condition of the capitalist u t \ 1 he free c i r c u l a t i o n o f bodies in the city parallels the circulation o f the individual uidim the specialized marketplace for labor. Without attachments, e c o n o m i c man could move, s e l l i n g his skills where and when the market offered a price. O n e effect of this free m o v e m e n t , epitomized,by the circular that bends around Regent Park in t e n ­ don, is a diminished sensory awareness. I agree that sensor}' awareness is a kt\ to ur­ ban space devoted to trade and exchange. T o bring the city in line with the domi­ nant value o f circulation. S e n n e t t depicts an urban space o f flat affect and rapid, smooth m o v e m e n t . But the infrastructure o f city streets and sewer systems channel* those senses and affects, rather than deadening them. In both the bleak scenes of m e a t p a c k i n g and the brutish competition o f the financial exchanges, another use of affect in t h e service o f circulation operates. T h e r e , disgust, greed, and, surprising!}, self-abnegation play key roles in supporting smooth circulation. Chapters 5 and 6 elaborate t h e s e themes. C a r l S c h o r s k e analyzes V i e n n a ' s Ringstrasse as a key architectural e l e m e n t of the value o f circulation. O n the Ringstrasse, " T h e public buildings float unorga­ nized in a spatial medium whose only stabilizing e l e m e n t is an artery o f men in mo­ tion" (Fin-de-siecle Vienna: Politics and Culture [New York: Vintage Books, 1 9 b l ) , 36). T h e k e y difference between Schorske's V i e n n a and Sennett's L o n d o n and C h i c a g o is t h e medium in which the planners work. T h e Ringstrasse and Regent's Park c i r c u l a r each smooth the physical movement o f h u m a n bodies. In C h i c a g o , planners worked specifically to move commodity goods and financial products through t h e city. T h e C B O T employs individuals to create that motion. T h e \ annot its s u b j e c t . 8. Information about the founders comes from W i l l i a m D . Faloon, Market Maker: A Sesquicentennial Look at the Chicago Board of Trade ( C h i c a g o : Board o f Trade o f t h e City o f C h i c a g o , 1 9 9 8 ) . 9. T h e futures markets allowed not only easy circulation but also fixity. T h e grain did not have to travel to market to gain a price. T h e physical absence o f the gram al­ lowed futures contracts to circulate freely, creating value separate from the exchange of physical goods. In Annette Weiner's explanation, value is based in part on objects that are withheld from circulation; see her "Inalienable Wealth," American Ethnolo­ gist 12, no. 2 ( 1 9 8 5 ) : 2 1 0 - 2 7 . T h e value o f these inalienable goods arises from the object's ability to bring past time into the present, allowing for histories o f anceslois to b e c o m e part o f contemporary identity. Futures contracts also keep objects out of circulation and create value by manipulating time. T h e y bring the future under the control o f present planning and also l i n k t h e present and the future by giving wilm to things n o t yet in existence. 10. Mary Poovey calls the remaining connection between abstract tokens o f \ a l u e , such as futures contracts, and their material underpinnings "residual materialities." showing both the financial world's constant push to extend value through abstrac­ tion and the impossibility o f completely separating value from the material world ("Residual Materialities," unpublished ms., 2 0 0 4 ) . 11. C h a r l e s Henry Taylor, History of the Board ( C h i c a g o : R o b e r t O . Law, 1 9 1 7 ) , 167. 12. Ibid., 1 6 1 .

of Trade of the City of

Chicago

13. Donald L. Miller, City of the Century: of America

The Epic of Chicago

*

and the

133

Making

(New York: Touchstone, 1 9 9 6 ) , 9 1 .

14. Cronon, Nature's

Metropolis,

295-309.

15. A . T . Andreas, History of Chicago:

From the Earliest

Period to the Present

Time ( C h i c a g o : A . T . Andreas, 1884), 2 6 3 . r

16. Ibid., 582. 17. Ibid., 583.

18. James Carey describes how the telegraph enabled a "redefinition from physi­ cal or geographic markets to spiritual ones. In a sense they were made more mysteri­ ous; they b e c a m e everywhere markets and even time markets and thus less appre­ hensible at the very m o m e n t they b e c o m e more powerful." S e e his "Technology and Ideology: T h e C a s e o f the Telegraph," in Communication as Culture: Essays on Media and Society (New York: Routledge, 1992), 2 2 0 . 19. Andreas, History of Chicago,

585.

20. tbid., 583. 21. T h e inspiration for this section on standardization and much o f the specificdetail about the early grain market c o m e s from William Cronon's chapter "Pricing the Future: Grain" in Nature's

Metropolis.

22. A redefined "bushel" o f winter wheat weighed sixty pounds; a bushel o f oats, thirty-two pounds (Taylor, History of the Board o f Trade, 189). 23. C r o n o n , Nature's Metropolis,

416.

24. Taylor, History of the Board of Trade,

189-90.

25. T h e architectural form does not foster the experiments with use and meaning that surround the development o f consumer technologies. Pinch and Bijker's ex­ ample o f the bicycle shows the flexibility involved in designing such an artifact; see Trevor P i n c h and W i e b e E . Bi jker, " T h e Social Construction o f Facts and Artifacts; or How the Sociology of S c i e n c e and the Sociology of Technology Might Benefit E a c h Other," in The Social Construction of Technological Systems: New Directions in the Sociology and History of Technology, ed. W i e b e Bijker, T h o m a s P. Hughes, and Trevor Pinch (Cambridge, MA: M I T Press, 1989). T h e design-of markets is less flexible because o f the capital investment involved in trying out new physical forms. 26. Designers consciously assessed what kinds o f human behaviors the market re­ quired and arranged the trading floor to encourage open competition between indi­ viduals. From this perspective, we can see buildings as tools that "configure users"; see Steve Woolgar, "Configuring the User: T h e Case o f Usability Trials," in A Sociol­ ogy of Monsters: Essays on Power, Technology and Domination, ed.-j. Law (1902: repr., New York: Routledge, 1991), 5 8 - 9 7 . ' 27. T h e C B O T buildings are technological artifacts that give "structures to so­ cial institutions, durability to social networks, persistence to behavior patterns," as T h o m a s Gieryn has argued in " W h a t Buildings Do," Theory and Society

3 1 , no. 1

(2002): 35-74). 28. Frank Norris, The Pit: A Story of Chicago

(New York: Doubleday Page,

1994), 39. 29. Norris gave his novel about the dangers of speculation and the passions o f trade the subtitle A Story of Chicago. C B O T are one.

For Norris, Chicago and the speculation at the

184

*

Notes to Pages 37-4?

Notes to Pages 28-36

30. T h o m a s Bender and W i l l i a m Taylor argue that the vertical and horizontal symbolisms o f architecture align t h e m with c o m m e r c i a l and civic purposes respec­ tively ("Culture and Architecture; S o m e Aesthetic Tensions in the Shaping o f Mod­ ern N e w York City," in Visions of the Modern City; Essays in History, Art, and Litera­ ture, ed. W . Sharpe and L. Walloek [Baltimore: Johns Hopkins University Press, 1 9 8 / ] , 1 8 9 - 2 1 9 ) . T h e y also note that skyscrapers' horizontal cornices and creation of "business b l o c k " lent a civic significance to New York's early tall buildings. Chicago's urban project o f greatness through c o m m e r c e complicates die opposition o f civic c o n c e r n and profit-driven motives in architecture. S i n c e its founding, the (;B( )'l has b e e n dedicated to both the city's development and the profits o f its members. 'Hie collective civic ideal that B e n d e r and Taylor describe in New York architecture did n o t have the same power in C h i c a g o , where a m o n u m e n t to profit could be also a m o n u m e n t to the city's civic life. 31. C a r o l Willis argues in Form Follows Finance (New York: Princeton \ r c h i i e e tural Press, 1995) that the imperative to generate rents dominates the architectural form o f foe skyscraper. T h e C B O T saw its building as a place in which to lease office space as well as to create markets in financial instruments, but this did not deprive architects o f flexibility in shaping the symbolism of the building. 32. G r a n g e r to Building C o m m i t t e e , August 2 5 , 1925. Richard J. Daley Special C o l l e c t i o n s , C h i c a g o Board of Trade Archive, University o f Illinois at C h i c a g o . Hereafter referred to as C B O T Archive. 33. T h e contract for the building was originally given to Holabird and R o c h e . T h e firm changed its n a m e in 1929, and all correspondence between the C B O T and the architects after that date was addressed to Holabird and Root. 1 follow the c o n v e n t i o n o f using the n a m e Holabird and R o o t for the architects for the 1930 building. 34. T h e skyscraper as an architectural form highlights the project o f the C B O T , linking the design values o f the "clean tower" to functionalism, efficiency, speed, and the "iron reason" o f the modern age ( C e c e l i a T i c h i , Shifting Gears: Technology. Literature, Culture in Modernist America [Chapel Hill: University o f North Carolina Press, 1 9 8 7 ] , 2 8 9 - 9 3 ) . 35. In Marilyn Strathern's formulation, the building is a place where the network is cut; see "Cutting the Network," Journal of the Royal Anthropological Institute 2, no. 3 ( 1 9 9 6 ) : 5 1 7 - 3 5 . T h e relationships between an organization like the C B O T , its individual constituents, and the firms that seek to influence it seem to multiply end­ lessly. T h e c o n c e p t o f actor-networks, developed in science and technology studies, amplifies the quality o f the limitless extension o f networks. Strathern turns our atten­ tion to h o w nodes in a network can stop (as well as carry) flows. T h e C B O T building is just such a site: certain relationships are continued, others are established, and still others are discarded as the network is given a solid form in architecture. 36. T h i s established the building as a "black box" o f network connections; see B r u n o Latour, Science in Action: How to Follow Scientists and Engineers Through Society ( C a m b r i d g e , MA: Harvard University Press, 1 9 8 7 ) . 37. R u m s e y to Dennis & C o . , November 2 5 , 1927, C B O T Archive. 38. R u m s e y to E . P. Peck o f the O m a h a Grain E x c h a n g e , N o v e m b e r 2 5 , 1927, C B O T Archive. 39. Holabird and Root to Rumsey, O c t o b e r 3 1 , 1 9 2 7 , C B O T Archive.

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4 0 . Ithiel de Sola Pool, ed., The Social Impact of the Telephone (Cambridge, MA: M I T Press, 1 9 7 7 ) , 1 4 0 - 4 1 . 4 1 . Christopher Paschen to Rumsey, March 15, 1929, C B O T Archive. 42. Rumsey to Glutton, April 19, 1930, C B O T Archive. 43. T h i s "heterogeneous design" process resolves conflicts among competing in­ terests—builders, managers, and city planners—at the same time that it creates a building (Gieryn, "What Buildings D o " ) , S e e M i c h e l Gallon, "Introduction: T h e Embeddedness o f E c o n o m i c Markets in E c o n o m i c s , " in The Lam of the

Markets,

ed. M i c h e l Gallon (Maiden, MA: Blackwell, 1 9 9 8 ) , 1-57; and John Law, "Technol­ ogy and Heterogeneous Engineering: T h e C a s e o f Portuguese Expansion," in Bijker, Hughes, and P i n c h , eds., Social

Construction

of Technological

Systems,

among oth­

ers, for further discussion. 4 4 . Building C o m m i t t e e to C B O T Directors, April 5, 1930, quoting a 1927 m e m o from Holabird and Root. C B O T Archive. 4 5 . Holabird and Root to Rumsey, O c t o b e r 4, 1928, C B O T Archive. 4 6 . J o h n Holabird from the Secretary o f the New Building C o m m i t t e e , D e a n Rankin Feb 1 5, 1929, C B O T Archive. 47. Ibid. 4 8 . Arthur Lindlev to John Bunnell, January 5, 1926; Rumsey to Lindley, January 18, 1926, C B O T Archive. 49. Rumsey to the President o f the Board o f Directors, April 5, 1930, C B O T Archive. 50. Ibid. 51. Chicago

Daily Times, November 1 3 , 1 9 3 1 .

52. John Fisher to Rumsey, D e c e m b e r 3, V>27, CBOT Archive. 53. Karin Knorr Cetina has argued that scientific practice is built on a "detach­ m e n t o f objects" from their natural environment; see V.pktemic Culture*: How the Sciences Make Knowledge I Cambridge, MA: 1 Iarvard University Press, l W i . T h e laboratory- creates a space o f science apart from nature in a way similar to the way the C B O T buildings and trading floors create a purified market environment. O n c e inside laboratories, objects gain the ability to circulate among laboratories I .ikewise, the creation uf a market space distinct and apart from the locations of c o m m e r c i a l transactions (where actual grain is inspected and changes hands) detaches the mar­ ket from the space o f physical transaction. 54. T h e C B O T ' s addition in the 1980s corresponded with a "particularly impor­ tant period o f landscape reconstruction'' in the City, London's financial district. As Linda M c D o w e l l points out, the revolution in communications technology sup­ ported a reorganization of financial trading. Open-plan trading rooms replaced the small, individual offices o f older buildings and often required banks and exchanges to construct completely new buildings, filling in the existing urban space with c o n ­ temporary constructions that lent new meaning to the city's space. T h e same clash of financial forms, made concrete in architecture, constitutes the contemporary sig­ nificance o f the C B O T buildings for Chicago's landscape; see Linda M c D o w e l l , Capital Culture: Gender at Work in the City (Maiden, MA: Blackwell, 1997), 57. 55. Anthony Giddens associates "disembedding" with the expansion of "synibolic tokens" and "expert systems," and futures markets include both o f these elements

186

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Notes to Pages 56-68

Notes to Pages 47-56

(The Consequences of Modernity [Stanford, CA: Stanford University Press, 1 9 9 1 , , Giddens's c o n c e p t s o f disembedding and time-space "distanciation" obscure the m a n i p u l a t i o n o f the physical and urban environment to achieve these effects 1 he C B O T ' s i n v o l v e m e n t in shaping the city of C h i c a g o and its manipulation o f its trad­ ing e n v i r o n m e n t show how "disembedding" is not simply a negation o f an olden rela­ tionship o f t i m e and space but rests on creating a new set o f physical relations that may create t h e appearance o f disembedding for symbolic purposes. 56. B l a i r K a m i n , "A New Fortress for Financial Wars," Chicago ary 19, 1 9 9 7 .

Tribune,

Febru­

57. M i k e Davis writes o f the fortress architecture o f contemporary Los Angeles that "the privatization of tire architectural public realm . . . is shadowed by parallel restructurings o f electronic s p a c e " (City of Quartz : Excavating the Future in Los Angeles [ N e w York: Verso, 1 9 9 0 ] , 226). T h e 1997 trading floor c o m b i n e s these de­ signs—the C B O T employed fortress architecture to produce and contain the hu­ man infrastructure and electronic information o f financial space. Unlike the 1 9 3 0 building's integration o f C h i c a g o and the region's agricultural e c o n o m y , the new stone pod w a l l s off financial space from its urban surroundings, physically cordoning off a section o f the city for producing financial circulation.

Chapter T w o 1. T h e p i t shapes traders' actions at the same time that traders' practices ou-i time configure t h e norms o f e c o n o m i c competition within the space o f the pit. T h e inter­ action o f t h e defined physical space and the conventions o f trading work together to define the n o r m s o f the pit. O n l y certain kinds o f problems can be considered and solved in the pit; others must be left at the trading room door. 2. T h e m o d e r n has always had such elements; the conflict at the C B O T simply exposed t h e s e repressed aspects. 3. O f c o u r s e personal relationships can facilitate as well as hinder criminal ac­ tivity, as D a v i d Greising and Laurie Morse describe in detail in Brokers, Bagmen, a n d Moles: Fraud and Corruption in the Chicago Futures Markets ( N e w YorkWiley, 1 9 9 1 ) . 4. M i c h e l Foucault, quoted in Paul Rabinow, Anthropos 'Today: Reflections Modem Equipment (Princeton, N J : Princeton University Press, 2 0 0 3 ) , 4 7 .

on

5. Janet Abu-Lughod, New York, Chicago, IMS Angeles: America's Global Cities ( M i n n e a p o l i s : University o f M i n n e s o t a Press, 1999); Saskia Sassen, The Global City (Princeton, N J : Princeton University Press, 2 0 0 1 ) .

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8. T h e analysis presented here owes obvious debts to Thomas Hughes's approach to the study o f technical systems. He stresses the importance o f relationships between organizations, technological artifacts, and political maneuvering. S e e his Networks of Power: Electrification in Western Society, 1 8 8 0 - 1 9 3 0 (Baltimore, M D : Johns Hop­ kins University Press, 1983), and " T h e Evolution o f Large Technological Systems," in The Social Construction of Technological Systems: New Directions in the Sociology and History of Technology, ed. W. Bijker, T . P. Hughes, and T . Pinch (Cambridge: M I T Press, 1 9 8 9 ) , 5 1 - 8 2 . Hughes directs us to look at technologies as "problemsolving systems," an approach that lends itself to teleological thinking, as John t a w has recently pointed out. Law prefers thinking o f technical objects in terms o f "frac­ tional coherence," avoiding the idea o f a technological march toward problem solv­ ing (Aircraft Stories: Decentering the Object in Technoscience [Durham, N C : D u k e University' Press, 2 0 0 2 ] ) . Instead o f beginning with the technological object, I raise the question, How does the form o f exchange within one organization shape the re­ action to new technologies and their development? How do the debates over the methods o f economics mold arguments about technological systems? T h e object o f the analysis is not technology itself but the fertile interaction between technologies and e c o n o m i c life that directs the arguments and decisions o f the C B O T members and directors. T h e i r actions in turn define the course for one o f Chicago's key global organizations by directing their problem-solving efforts. 9. T h e C B O T has recently stopped using the term open outcry in favor o f the term open auction.

T h e new phrase abandons the role o f voice in the dealing pro­

cess. Losing this mark o f the shouting trader reframes the trading-floor auction as in­ distinct from online markets. T h e phrase open auction

marks the discursive triumph

of online exchange. 10. William Faloon, Market Maker: A Sesquicentmnial

Look at the Chicago

Board

of Trade (Chicago: Board of Trade of the City of C h i c a g o , 1 9 9 8 ) . , 1 1 . Traders cannot legally use inside information to "front.run" the customers. But occasionally a broker may illegally expose his deck, doling out coveted informa­ tion to a favored trader. Social loyalties and exchange o f favors exist alongside bro­ kers' responsibilities to act as the agents o f outside buyers and sellers. T h e market is not simply a meeting place of outside forces but a social world o f its own where rela­ tions take shape and are cultiyated. T h e pit is not only a place o f trade but also a realm of social interactions and exchanges. 12. T h e founders o f the C B O T often had commercial stakes in the grain busi­ ness as well as the ability to profit from price changes. T h e traders who work in the open outcry pits for financial futures do not have this same dual interest. Most are

6. T h e C B O T ' s struggle with technology was fought on a very public stage. T h i s chapter c o m b i n e s field work with an analysis o f the official documents and profes­ sional reports that the exchange m e m b e r s used to substantiate their positions. T h e upheavals in the futures industry were frequently covered in the Wall Street Journal and Financial Times as well as in industry magazines and the city's newspapers. T h e s e records demonstrate both the content of the arguments for and against newtechnologies a n d the public nature o f these disputes.

speculators who trade in and out o f the market for profit. In the market's own terms,

7. Sassen argues that "[ujnderstanding the actual work that needs to be exe­ cuted in C h i c a g o captures the specialized functions o f the city's markets" (Global Ciry, 1 6 1 ) .

possibility o f moving into the pits as traders.

these speculators provide liquidity, the ability for any number of contracts to trade at any time. T h e y are the switchmen o f the exchange, and the market comes alive in their bodies and voices. 13. In contrast to the usually white and male runners who have connections in the pits, there is also a coterie o f "career" runners, whose minimum-wage and out­ sider status mean that they navigate the packed channels between the pits with no 14. Paul S o l m a n . " C h i c a g o May Consider E n d to O p e n Outcry," Times, fiine 2 0 , 1998.

Financial

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Notes to Pages 39-92

Notes to Pages 71-79

15, At that time there were 573 Pro-eel A workstations in use, including 18 in L o n d o n and 4 2 in New York.

+

189

model for those who were laud still are) doing the denigrating" (xv). In their midcentury text, Young and Willmott struggled against the stereotypes o f East Enders. By the time Perkins Silver began recruiting, London traders had appropriated

Chapter Three

pieces o f these stereotypes for their owe use as they constructed roguish personae

1. In the language o f D a n i e l B e u n z a and David Stark, the managers set out to e n g i n e e r "an ecology o f evaluative principles" ("Tools o f the Trade: T h e Sociotechnology o f Arbitrage in a Wall Street Trading Room," Industrial and Corporate Change 13, no. 2 12004]: 3 6 9 - 4 0 0 ) .

that fit the autonomous and competitive e c o n o m i c man o f foreign exchange and

2. David Kynaston L1FFE: 1997).

A Market

and Its Makers

(Cambridge; Grant Editions

14. Under the leadership o f Brian Williamson, L I F F K "demutualized" in 1 9 9 8 , switching from being a membership organization like the C B O T to a corporate structure, citing the demands for swift action required under an electronic regime. 15. Andrew Leyshon and Nigel Thrift, Money/Space

3. M i c h a e l Useem "Business and Politics in the United States and the United Kingdom," in Structures of Capital, ed. S. Skin and P. D i M a g g i o (New York: C a m ­ bridge University Press, 1 9 8 9 ) ; Linda M c D o w e l l , Capital Culture: Gender at Work in the City ( M a i d e n , M A : B l a c k w e l l , 1 9 9 7 ) ; W i l l B u t t o n , The State We're In (London: Vintage, 1996). 4 . I Iutton, State We're In. 5. J o h n Edwards, quoted in Kynaston, LIFFE,

futures markets.

10.

6. Kynaston, I.AFFE, 7 2 . 7. Ibid., 9 4 . By stating that the new City brokers did not have "an O-level to [their] n a m e [ s ] , " the Mail on Sunday was suggesting that they had completed only a very low level o f education and had dropped out o f school before the ordinary level ex­ ams were administered (at around age sixteen). 8. N i c k L e e s o n , Rogue Trader (London: Little, Brown, 1 9 9 6 ) . 9. M . Pryke, "An International City G o i n g 'Global'; Spatial C h a n g e in the City of L o n d o n , " Environment and Planning D: Society and Space 9 ( 1 9 9 1 ) : 197. 10. M i c a e l a di Leonardo has described how class b e c o m e s ethnicized for whites; see " W h i t e Ethnicities, Identity Politics and Babv Bear's Chair," Social Text 41 (1994V 1 6 5 - 8 9 . In the case o f Essex M a n , the class distinction, embodied in consumption styles, is inscribed on an evolutionary scale o f difference. Essex M a n is distinguished not on the basis o f race but by allusion to earlier forms o f humans—although race differences are easily coded in this way as well. 11. In The Accursed Share, vol. 1 (New York: Z o n e Books, 1 9 8 9 ) , Georges Bataille developed an idea o f e c o n o m y whose organizing principle was the con­ sumption o f wealth. T h i s idea shifts the perspective on the spending habits o f traders. Instead of seeing spending habits as a moral failure, it refrarnes them as necessary expenditures of energy. 12. Paul E. Willis, Learning to labor: How Working-Class Kids Get WorkingClass Jobs ( N e w York: C o l u m b i a University Press, 1 9 8 1 ) ; R o b e r t W . C o n n e l l , Masculinities (Berkeley-and Los Angeles: University o f California Press, 1995). 13. In Family and Kinship in East London ( 1 9 5 7 ; repr., Berkeley and Los Ange­ les; University o f California Press, 1 9 9 2 ) , sociologists M i c h a e l Young and Peter Willmott state the stereotypes that they intended to fight. "Manual workers are said to be shiftless, lazy, improvident, rascally, uncultured, acting for themselves alone." T h e y assert with earnest indignation, "We could not, on the basis of what we found, sub­ scribe to any such condemnation." In fact, they claim, the wav o f life in London's East E n d neighborhood, Bethnal G r e e n , "could in some respects be regarded as a

(New York: Routledge,

1 9 9 7 ) , 147. 16. Fat fingering was a critical mistake not only because o f its e c o n o m i c conse­ quences, but for the trader's engagement with the market. It precluded the trader's plans and disrupted his immersion in the market's fluctuations, throwing him o u t of the screen-world and back into the physical environment o f the trading room and his own noncompliant body. T h e games would, the managers believed, tram our bodies to operate as uninterrupted conduits between the dealing room and the online world, allowing our fingers to b e c o m e seamless extensions o f our eco­ nomic intentions. Fat fingering, the failure o f this training, showed that the body could not be trained to be a perfect instrument as it, at times, impeded the smooth transfer o f strategy to e c o n o m i c action. At the same time, fat fingering severed the space o f the dealing room from the space o f the market by shattering the trader's absorption, a key e l e m e n t o f his profit-making abilities. T h e managers prescribed the arbitrage and video games not only to discipline attention and action, but a l s o to train the body to b e c o m e an "intention extension," to maintain the union o f physical and o n l i n e action, and provide a medium for e c o n o m i c reason. In the fast-paced work o f futures trading, such an alignment could not b e taken for granted. 17. Linda M c D o w e l l , "Body Work: Heterosexual G e n d e r Performances in C i t y Workplaces," in Mapping Desire, ed. D . Bell and-G. Valentine, 77. London: R o u t ledge, 1 9 9 5 . 18. James G . Carrier and Daniel Miller, eds. Virtualism: omy

A New Political

Econ­

(New York: Berg, 1998).

19. In The Stranger (in Individuality and Social Forms, ed. D . N. Levine [Chi­ cago: University o f C h i c a g o Press, 1 9 7 1 ] , 1 4 3 - 4 9 ) , Georg S i m m e l states that t h e synthesis o f nearness and remoteness "is to be found in the objectivity o f the stranger. B e c a u s e he is not bound by roots to the particular constituents and parti­ san dispositions o f the group, he confronts all o f these with a distinctly ' o b j e c t i v e ' attitude . . . a distinct structure composed o f remoteness and nearness, indifference and involvement" ( 1 4 5 j . T h e power o f electronic trading and the possibilities o f export placed the Perkins Silver managers in the position o f the stranger with regard to their own practices. Chapter 1 described the problems of the C B O T members in finding this balance of nearness and remoteness in relation to their constituencies and their partisan dispositions with regard to technologv and their norms of eco­ n o m i c action. 20.1 agree with James Clifford's understanding that "practices of displaceinen t" are "constitutive of cultural meanings" and are not "simple transfer or extension."

190

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Notes to Pages 93-94

Notes to Pages 92-93

S e e his Routes: 'Travel and Translation in the Late Twentieth MA: Harvard University Press, 1 9 9 7 ) , 3.

Century (Cambridge,

Chapter F o u r 1. Both historical policy debates and contemporary social theory have drawn analogies between financial markets and casinos in their orientations to risk; see, for e x a m p l e , S u s a n Strange, Casino Capitalism ( N e w York: M a n c h e s t e r Univer­ sity Press, 1 9 8 4 ) ; David Harvey, The Condition of'Postmodernity ( N e w York: Blackwell, 1 9 9 3 ) ; and Frederic Jameson, "Culture and F i n a n c e Capital," Critical Inquiry 2 4 ( 1 9 9 7 ) : 2 4 6 - 6 5 . In the nineteenth century C h i c a g o futures exchanges worked to distinguish themselves from "bucket shops," establishments typically close to the e x c h a n g e s that offered betting on the direction o f futures prices. T h e exchanges e s t a b l i s h e d their legitimacy by denying the r e s e m b l a n c e between trad­ ing and g a m b l i n g . T h e y c l a i m e d that their contracts could be used in the service of p r o d u c t i o n as "hedging" tools; see W i l l i a m D. F a l o o n , Market Maker: A Sesquieentennial Look at the Chicago Board of Trade (Chicago: Board o f Trade of the City o f C h i c a g o , 1 9 9 8 ) ; and C e d r i c B . Cowing, Populists, Plungers, and Progressives: A Social History of Stock and Commodity Speculation, 1890-1936 ( P r i n c e t o n , N J : Princeton University Press, 1 9 6 5 ) . T h e analogy points to the criti­ cal role o f risk and risk-taking in financial markets, but this obscures the specifi­ cities o f risk-taking in financial markets and the special relationship between finan­ cial markets and capitalism. T h e suggestion o f illegitimacy denies us a more n u a n c e d u n d e r s t a n d i n g o f the significance o f risk and risk-taking in this highmodemist institution. 2. S o c i o c u l t u r a l examinations o f risk have focused on two major themes. T h e first is the t h e m e o f anticipation and avoidance o f loss. Risk is most often examined in the ways that groups or organizations classify, mobilize, and intervene against the threat o f loss o r vulnerability to loss; see Ulrich B e c k , Risk Society: Towards a New Modernity ( L o n d o n : Sage, 1992); Robert Castel, "From Dangerousness to Risk," in The Foucault Effect: Studies in Govemmentality, ed. G r a h a m B u r c h e l l , Colin G o r ­ don, and Peter Miller ( C h i c a g o : University of C h i c a g o Press. 1 9 9 1 ) , 2 8 1 - 9 8 ; Mary Douglas and A a r o n Wildavsky, Risk and Culture (Berkeley and Los Angeles: Univer­ sity o f C a l i f o r n i a Press, 1982); R o n Levy, " T h e Mutuality o f Risk and Community: The Adjudication o f Community Notification Statutes," Economy and Society 2 9 , no. 4.(2000): 5 7 8 - 6 0 1 ; Pat O ' M a l l e y , "Risk and Responsibility,"' In Foucault and Political Reason, ed. Andrew Barry, T h o m a s Osborne, and Nikolas S. Rose (London: University o f C h i c a g o Press, 1 9 9 6 ) , 1 8 9 - 2 0 9 . T h e focus on ecological and techno­ logical peril to exemplify the c o n c e p t o f risk in the two most widely cited theories, those o f Ulrich B e c k [Risk Society) and Mary Douglas and .Aaron Wildavsky (Risk and Culture), narrows their sense o f t h e concept. Particularly for Douglas and W i l ­ davsky, risk is synonymous with danger, a focus that fits their c o n c e r n with the sociocultural s e l e c t i o n o f r i s k . Although, unlike Beck, Douglas and Wildavsky do not see risk itself as a particularly modern problem, their claim that the concern with tech­ nological hazards is a m o d e m trait fits with Ulrich Beck's definition o f a "risk soci­ ety" that poses reflexivity as a central contemporary problem. Both o f these studies closely associate risk with the potential for loss and", even more specifically, the po­ tential for physical harm.

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3. From this perspective, futures contracts and markets work as a type o f insur­ ance—technologies for distributing risk. T h i s focus on the distribution of risk unites Schumpeter's figure o f the entrepreneur (who takes voluntary risks for e c o n o m i c profit) with recent writing on govemmentality. C o n n e c t i n g risk and the political ra­ tionality o f neoliberalism, work on governmentality identifies several manifestations of risk, focusing especially on risk-avoidance rationalities and self-governance as crit­ ical parts o f neoliberal subjectivities; see Andrew B a r n , T h o m a s Osborne, and Niko­ las S. Rose, Foucault and Political Reason: Liberalism, Neo-liberahsm and Rationali­ ties of Government (London: University o f C h i c a g o Press, 1996). Drawing the analysis into the e c o n o m i c sphere, Francois Ewald argues that insurance is a way to protect financial well-being that encourages individuals to conduct their lives in market terms; see "Insurance and Risk," in Foucault Effect (see note 2 ) . T h e existing litera­ ture, however, focuses less on generating wealth, even though wealth is a critical to satisfying needs. In the e c o n o m i c arena, the creation and conservation o f e c o n o m i c goods must be considered together. O n e important distinction between insurance and financial trading is the widely different contexts engaged by each. Insurance bridges the gap between social and e c o n o m i c domains, importing a logic o f risk and financial calculation into spheres less fully penetrated by market logic. T h e neoliberal subjects forged under these conditions project the odds o f harm and financial compensation far into the future, even potentially to the end o f their own existence in the case o f life insurance. 4. S e e Niklas L u h m a n n , Risk, a Sociological Theory (New York: A. de Gruyter. 1993), and "Describing the Future," in Observations on Modernity (Stanford, CA: Stanford University Press, 1 9 9 8 ) , 6 3 - 7 4 ; and Anthony Giddens, The Consequences of Modernity (Stanford, CA: Stanford University Press, 1 9 9 1 ) . Niklas Luhmann's work moves a step closer to a c o n c e p t that illuminates voluntary risk. He understands risk as a condition o f decisions, and places the responsibility for the loss (or gain) in the act o f anticipating a future that is still undetermined (see L u h m a n n , Risk). Risk is, therefore, a problem o f acting at the limit o f knowledge. In the work o f speculation, traders make hundreds o f predictive decisions in a day, placing a stake on the future direction o f the market. L u h m a n n focuses attention on the problem of making deci­ sions at the border between present and future, a problem central to e c o n o m i c action. Even though Luhmann's conceptual approach does not incorporate the work o f risk-taking, his framework can help us to understand the practices o f risk. 5. S e e Stephen Lyng, "Edgework: A Social Psychological Analysis of Voluntary Risk Taking," American journal of Sociology 9 5 , no. 4 ( 1 9 9 0 ) : 8 5 1 - 8 6 ; Richard G . M i t c h e l l , Mountain Experience: The Psychology and Sociology of Adventure ( C h i ­ cago: University o f C h i c a g o Press, 1983); Catherine Palmer, "'Shit Happens': T h e Selling o f Risk in Extreme Sports," Australian Journal of Anthropology 13, no. 3 ( 2 0 0 0 ) : 3 2 3 - 3 6 ; and Jonathan S i m o n , "Taking Risks: Extreme Sports and the E m ­ brace o f Risk in Advanced Liberal Societies," in Embracing Risk: The Changing Cul­ ture of Insurance and Responsibility, ed. T o m Baker and Jonathan Simon ( C h i c a g o : University o f C h i c a g o Press, 2 0 0 2 ) , 1 7 7 - 2 0 7 . 6 . 1 use the c o n c e p t o f productivity here to describe the formation o f risk-taking selves and active marketplaces. T h e c o n c e p t o f market productivity usually refers to the manufacture o f objects. However, in an economy based on the circulation ot signs, the concept o f productivity and the importance o f work are still central.

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Notes to Pages 95-96

Motes to Pages 94-95

7. W e can apply an analysis o f risk as a productive force equally to Douglas and Wildavsky's (Risk and Culture) and Beck's 'Ri.sA- S>K iety) arguments and also to the w!>'k on risk as a c o m p o n e n t ot goxerniiientalitv 'e.g., O'Mallev, "Risk and Respon­ sibility"), 1 lie negative side oi risk in all thiee ot thtse perspectives emphasizes pro­ tection lather than productivity b hi recent decades risk has emerged as a key c o n c e p t across the social sciences, particulady in studies of contemporary modes o f governance, self-formation, politi­ cal responsibility and icilexivity; see Beck, RUk Satiety; G r a h a m B u r c h e l l , "Liberal Government and 'leehniques of the Self," in B a m , Osborne, and Rose, Foucault arid Political Reason, Pi 3 6 : Douglas and Wikiavsky, Risk and Culture; Anthony Giddens, Modernity and Self-Identity; Self and Society in the Late Modem Age (Cam­ bridge: Polity Press, 1 9 9 1 ) ; C o l i n Gordon, "Governmental Rationality': An Introduc­ tion," in Foucault Effect 1 - 5 4 (see note 2 ) ; O'Malley, "Risk and Responsibility"), I agree with Asa B o h o l m and Pat Caplan that the metatheories o f B e c k and Giddens and the individualized, choice-based perspectives o f psychology and e c o n o m i c s leave the anthropological arena o f risk untouched; see Asa B o h o l m , " T h e Cultural Nature o f Risk: C a n T h e r e B e an Anthropology o f Uncertainty?" Ethnos 6 8 , no. 2 ( 2 0 0 3 ) : 1 5 9 - 7 8 ; and Pat Caplan, "Introduction: Risk Revisited," in Risk Revisited, ed. P. C a p l a n (London: Pluto Press, 2 0 0 0 ) , 1 - 2 8 . Explorations o f active, intentional e n g a g e m e n t s with risk are particularly underdeveloped, and here anthropology can intervene productively; see David G a r l a n d , "Rise o f Risk," in Risk and Morality, ed. R. E r i c s o n and A. Doyle (Toronto: University o f Toronto Press. 2 0 0 3 ) , 4 8 - 8 6 ; and D e b o r a h Lupton, Risk (New York: Routledge, 1 9 9 9 ) . A close investigation o f the way financial speculators work can yield new perspectives on both the c o n c e p t o f risk and the relationship between markets and risk-takers. E c o n o m i c s has long recog­ nized the i m p o r t a n c e of taking risks in making profits, both for individuals and for the dynamism of capitalism; see Joseph S c h u m p e t e r , Capitalism, Socialism and Democracy ( N e w York: Harper and Row, 1 9 5 0 ) . Drawing on the foundational work of Frank K n i g h t (Risk, Uncertainty and Profit [ C h i c a g o : University o f C h i c a g o Press, 1971 J), e c o n o m i c s maintains a rigid distinction between the probabilities o f risk and the haze o f uncertainty, the domain o f profit for the entrepreneur. As Pat O ' M a l l e y has observed, the positive human sciences have sought to subjugate the creative role of risk to rationally calculable plans. Weberian analyses of rationalization have also banished activities that have uncertainty at their center; see Pat O'Malley, "Moral Uncertainties: Contract Law and Distinctions between Speculation, G a m b l i n g and Insurance," in Risk and Morality, ed. R. V, Ericson and A. Doyle (Toronto; Univer­ sity- o f T o r o n t o Press, 2 0 0 3 ) , 2 3 1 - 5 7 . However, speculation is now receiving the kind of attention that it lost at the end o f the nineteenth century. T h e analytic distinction b e t w e e n risk and uncertainty does not hold up when we consider the practice o f s p e c u l a t i o n . Yet anthropology and the other h u m a n s c i e n c e s , where c o m p e t i t i o n is a s u b j e c t o f keen attention, have largely- neglected to a c c o u n t for the actions and potentials o f risk-taking that are most visible in the e c o n o m i c sphere. 9. M i c h a e l Burawoy and Leslie Salzinger have shown how social games work in the service o f manufacturing; see M i c h a e l Burawoy, Manufacturing Consent: Changes in the Labor Process under Monopoly Capitalism ( C h i c a g o : University o f C h i c a g o Press, 1979); and Leslie Salzinger, Genders in Production: Making Workers in Mexico's Global Factories (Berkeley and Los Angeles: University- o f California

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Press, 2 0 0 3 ) . T h e s e games are equally important in the postindustnal economy, where the circulation o f information and the exchange of signs is crucial. At the C B O T , the circulation of financial commodities fosters the daily re-creation of risktaking subjects. In this sense the trading pit is an important example o f a culture o f circulation where norms o f evaluation, constraint, and action develop around the act o f exchange ( B e n j a m i n L e e and Edward L i P u m a , "Cultures o f Circulation; T h e Imaginations o f Modernity, " Public Culture 14, no. 1 [ 2 0 0 2 ] : 1 9 1 - 2 1 3 ) . Like t h e rivalry o f the cockfight, the wagering o f the self and status that takes place in the pit is central to the action (Clifford Geertz, " D e e p Play: Notes on the Balinese C o c k ­ fight," in Interpretation of Cultures [New York: Basic Books, 1973], 4 1 2 - 5 3 ) , At t h e C B O T , the action is simultaneously the creation o f a market and the constitution o f a social field and the individuals that comprise it. 10. S e e Goffman, Where the Action Is, 2 3 7 , for a discussion o f the wagering o f the self under conditions o f "action." 11. In Where the Action Is, Goffman describes how in moments o f action, " T h e i n d i v i d u a l . . . displayfs] to himself and sometimes to others his style o f conduct w h e n the chips are down

T o display or express character, weak or strong, is to generate

character. T h e self, in brief, can be voluntarily subjected to re-creation" ( 2 3 7 ) . 12. T h e practice o f trading is strikingly similar to Goffrnan's moments o f m e a n ­ ingful action and Foucault's idea o f the "limit experience," performances that tran­ scend the subject and create something new. For Foucault, playing beyond the l i m ­ its o f reason is a powerful way to remake the self. In e c o n o m i c action, the future is that site o f unreason. We can imagine and plan for possible futures, but we can never know them. T h i s territory at the edge of the present is both fertile and poten­ tially destructive for the financial managers and traders who make up capital mar­ kets. T h e traders at the C B O T are financial specialists whose labor is handling t h e risk and uncertainty generated by the transactioas o f others. Yet they are not the ra­ tional, scientific classifiers who define and discipline objects o f unreason. Traders manipulate social situations, tacit knowledge, and corporeal strategies, all o f w h i c h they do to extract profit from the market. T h e i r forms o f reason, as Pierre Bourdieu would say, are practical, not scholastic (Practical Reason (Cambridge: Polity Press, 1998). Profit and loss figures are the measures o f successful action — not institutions or theories. 13. M i c h e l Foucault, "A Preface to Transgression," in Foucault: Method,

andEpistemology,

Aesthetics,

ed. J. Faubion (New York: New Press, 1998), 2 4 1 .

14. Futures contracts are examples o f the way that "tire future is continually drawn into the present by means o f reflexive organization o f knowledge environ­ ments" (Giddens, Consequences of Modernity,

3).

15. As with the work o f Niklas L u h m a n n , Ulrich B e c k , and Anthony Giddens, the work on governmentahty argues that efforts to manage risk and control uncer­ tainty are central to modernist projects. 16. Understood this way, financial exchanges are hubs in "the market for secu­ rity" (Ewald, "Insurance and Risk," 1 9 8 ) . 17. B r u c e Carruthers and Arthur L. S t i n c h c o m b e ( " T h e Social Structure o f Liquidity: Flexibility, Markets, and States," Theory and Society William C r o n o n (Nature's

Metropolis:

Chicago

28 [ 1 9 9 9 ] : 3 5 3 - 8 2 ) ,

and the Great West (New York:

194

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M o t e s to Pages 98-184

W. W. N o r t o n , 1991 J), and Wendy Espeland and Mitchell L. Stevens ( " C o m m e n s u ration as a S o c i a l Process" Annual Review of Sociology 2 4 [1998J: 3 1 3 - 4 3 ) have all shown the i m p o r t a n c e and complexity o f creating c o m m o n measurements and the "necessary fiction" (Cronon, Nature's Metropolis) o f homogeneity within products for c o m m e r c i a l circulation. T h e s e processes establish tradable commodities, the necessary first s t e p for creating liquid markets. Economists claim that liquidity miti­ gates: risk. I f traders or managers doubt their positions in the market, a liquid market allows t h e m t o close out the positions quickly rather than spending time (and thus incurring additional risk) searching for buyers. 18. Ira O . C l i c k , "A Social Psychological Study o f Futures Trading," P h D diss.. D e p a r t m e n t o f Sociology, University o f C h i c a g o , 1957. 19. In this s e n s e , futures markets are exemplary sites o f "cultivated risk" for specu­ lators ( G i d d e n s , Modernity and Self Identity, 1 3 3 ) . 20. L o o k i n g at risk as part o f the traders' self-presentation in the market draws on Avner Offner's essay on e c o n o m i c life as the pursuit o f regard and Harrison White's observation t h a t producers' scrutiny o f their competitors constitutes markets; see Avner Offner, " B e t w e e n the Gift and the Market: T h e E c o n o m y o f Regard," Eco­ nomic History Review 50 ( 1 9 9 7 ) : 4 5 0 - 7 6 . W h a t Harrison W h i t e claims for the level of the firm is a l s o true for individual traders in the pit. He claims that "what a firm does in a m a r k e t is to watch the competition in terms o f observables" ("Where D o Markets C o m e F r o m ? " American Journal of Sociology 87 [ 1 9 8 1 ] : 518). W h a t traders watch are t h e i r competitors' patterns o f buying, selling, and risk-taking. T h i s mu­ tual observation, imitation, and judgment o f risk-taking is a fundamental way that market makers learn successful techniques of trading and self-display and contribute to the structuring o f market transactions; see Christina Garsten and Anna Hasselstrom, "Risky Business: Discourses o f Risk and (Irresponsibility in Globalizing Mar­ kets," Ethnos 6 8 , no. 2 ( 2 0 0 3 ) : 2 4 9 - 7 0 ; and D o n a l d M a c K e n z i e , "Social Connectivi­ ties in G l o b a l F i n a n c i a l Markets," Environment and Planning D: Society and Space 22 (20(H): 8 3 - 1 0 1 . 21. T h e g e n d e r e d aspects o f the pit deserve a full-length treatment o f their own. I thank Ann Anagnost for reminding m e o f Bourdieu's essay, " T h e Sense o f Honor" (in Algeria 1960 (New York: C a m b r i d g e University Press, 1 9 7 9 ] , 9 3 - 1 2 3 ) , that in­ forms this analysis. 22. In addition to structuring the social landscape o f the pit, the creation o f trad­ ing n e i g h b o r h o o d s affects the price o f C B O T products. T h e neighborhoods create small markets w i t h i n the larger market, a fragmentation that exaggerates price volatility; see W a y n e Baker, " T h e Social Structure o f a National Securities Market," American Journal of Sociology 8 9 , no. 4 ( 1 9 8 4 ) : 7 7 5 - 8 1 1 . T h e social organization o f the pit has a d i r e c t impact on the overall market as well as the individual strategies o f traders. 23. Risk-taking among traders is not "compensatory" in the way that Richard M i t c h e l l describes for mountaineers who seek risks in the mountains that are ab­ sent in the rationalized, controlled workplace (see M i t c h e l l , Mountain Experience). T h i s perspective opposes "daily life" and risk-taking, whereas in the futures mar­ kets, these are o n e and the s a m e . For traders, risk-taking is the central activity o f their occupation.

Notes to Pages 104-189

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24. Risk-taking in futures markets thus resembles Erving Goffman's observation about the affective state central to "the action," where intensity and tatefulness are c o m b i n e d (Goffman, Where the Action Is). 25. T h i s state is very similar to the flow experience that Mihaly Csikszentmihalyi describes in Flow: The Psychology

of Optimal

Experience

(New York: Harper & Row,

1990). 26. Goffman, Where the Action Is, 185. 27. Goffman noted that working with risk differs from playing with risk as a leisure activity. He claims that in occupations where people take risks, a special rela­ tionship to die work world emerges—one that makes a virtue out o f voluntary en­ gagements with fate (Where the Action Is, 188). Goffman's distinction between work­ ing and playing with risk is important for seeing speculation as an ethical field rather than as just another expression o f gambling. However, his argument reduces the at­ tractions o f risk to a necessary evil. T h o s e that work with risk in his description must rationalize their risk-taking. T h e s e occupations reinvent risk as a virtue. Goffinau still begins from the assumption that positions of risk are undesirable —a notion that leads him to underestimate the pleasurable side o f risk in work. 28. Goffman, Where the Action Is, 185. 29. Bill Buford, Among the Thugs (New York: Vintage, 1990), 205. Mobs, violence, and speculation have been associated in social theorizing at least since the time when Gustave Le Bon 'The Crowd: A Study of the Popular Mind [New loik: Penguin Books, 1977J) and Charles Mackay (Extraordinan Popular Delusions and the Mad­ ness of Crowds | Boston: L. C . Page, 1974;) trained their Victorian iye.->on the irra­ tionalities o f crowds. Both o b s e n e d the dangers of s u c c u m b i n g to unreason, espe­ cially the loss o f individuality and the predisposition o f crowds to violence. H i e unreason o f crowds links speculative manias such as the tulip mania in seventeenthcenturv Holland, when tulip bulbs cost as much as real estate along Amsterdam canals, with the murderous nature of witch-hunts. For in-depth treatment o f specula­ tive manias, see Charles Kindleberger, Manias, Panics and Crashes: A History of Financial Crises (New York: Basic Books, 1989) and Edward C h a n c e l l o r . Devil Take the Hindmost: AHistor}'of Financial Speculation (New York: Plume, 1999). 30. S e e Nigel Thrift, Knowing

Capitalism

(London: Sage, 2 0 0 5 ) for a discussion

of the Dionysian qualities o f capitalism. 31. In " T h e Prize F i g h t e r ' s T h r e e Bodies," (Eihrms 6 3 , no, 3 [ 1 9 9 8 ] : 3 2 5 - 5 2 ) Loi'c Waequant shows how, for poor African-American men on Chicago's South Side, boxing is more about bodily and spiritual transformation than about the dream of getting rich. Wacquant's skepticism about e c o n o m i c explanations is as applicable in the C B O T pits, where m o n e y is central to traders' labor, as it is in the ghetto gymnasium. 32. T h i s quality is not unique to trading, yet it is not the central concern o f all jobs. As Gerald Suttles observes, "Most people reach the top of their profession or occupation relatively early in life, and if they are to continue to find interest m what they are doing, they must play with their stratification system. . . . Indeed, one might advance the hypothesis that the person who is a grind, someone who adheres to ac­ cepted practice with unfailing devotion, is unlikely to win the long-term acclaim that he is said to be heading for. He will expire o f boredom beforehand. Style and

19t-

*

Notes to Pages 109-113

Notes to Page 113

self-esteem, then, are as essential as the incentive o f ultimate social a c c l a i m " ["Intro­ duction." in M i t c h e l l , Mountain Experience, xi). 33. S e e , for instance, Joe Simpson, Touching 1988).

the Void (New York; HarperCollins,

Chapter Five 1. A first look at the trading floor might support Georg S i m m e l ' s c o m m e n t s on crowd behavior: "There develops a great nervous excitement at the expense o f clear and consistent intellectual activity; it arouses the darkest and most primitive instincts of the individual which are ordinarily under control" ("Domination," in Georg Simmel on Individuality and Social Forms, ed. D . Levine, (Chicago: University of C h i c a g o Press, 19711, i 12). 2. Albert O, Hirschman, The Passions Capitalism

before

and the Interests: Political

Arguments

for

Its Triumph (Princeton, N.J.: Princeton University Press, 1997), 6 6 .

3. T h i s elaborates S i m m e l ' s insights into the passionate potential o f e c o n o m i c ac­ tivity from his essay " l i r e Miser and the Spendthrift," a classic essay about e c o n o m i c affect, even if S i m m e l did not conceive it that way; see Georg S i m m e l , The Philos­ ophy of Money (New York: Routledge, 1 9 9 0 ) , 3 2 6 - 3 1 , 4. David Noble has pointed out the c o n n e c t i o n between celibacy and reason that emerged from medieval European monasteries; see A World without Women: The Christian Clerical Culture of Western Science (New York: Oxford University Press, 1 9 9 3 ) . Traders' use o f metaphors of sexual violence to establish dealing rooms as spaces o f base instinct is striking. 5. Often, m o d e r n forms o f trust are understood as situated in systems rather than people; see Anthony Giddens, The Consequences of Modernity (Stanford, C A : Stan­ ford University Press, 1991). B u t at the C B O T , trust in the price-making system re­ lies on the c o n d u c t o f the h u m a n beings that make it up. T h e organization presents itself as constituted by competitive individuals and assigns itself the role o f applying the limited constraints that allow trust in the prices arrived at through competition. 6. Steven S h a p i n , A Social History of Truth: Civility and Science in Century England (Chicago: University o f C h i c a g o Press, 1 9 9 4 ) , 17.

Seventeenth-

7. There is yet another twist to this paradox. In the pits, traders must trust their dealing partners to accurately record and honor the c o m m i t m e n t to the agreed price and quantity o f a trade. But this essential obligation is the only acknowledged and le­ gal c o m m i t m e n t to a social bond. T h e screen eliminates this piece o f the paradox by replacing the h u m a n system o f honor and trust with a m a c h i n e , allowing traders to pursue their self-interest more fully, free from the constraints o f interpersonal trust. 8. Incorporating this perspective into approaches to e c o n o m i c life requires a cri­ tique o f s o m e previous approaches. E c o n o m i c sociologists have approached the problem o f e c o n o m i c man by trying to resituate "undersocialized" ideas o f action within the " e m b e d d e d " social world; see Mark Granovetter, " E c o n o m i c Action and Social Structure: T h e Problem o f Embeddedness," American Journal of Sociology 9 1 , no. 3 ( 1 9 8 3 ) : 4 8 1 - 5 1 0 . T h i s approach engages economists on their theoretical biases. However, if an anthropology o f finance is to move beyond reforming the practice o f economists, analysis of e c o n o m i c man must move beyond a simple de­ bunking or a m e n d i n g o f economists' constructions. Revising the economists' models

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can do little to illuminate anthropologists' and sociologists' understandings o; eco­ n o m i c action because we already assume, as economists themselves do, that their models o f e c o n o m i c man are socially impoverished. Inspired by M i c h e l Gallon's introduction to The Lam of the Markets (Maiden, M A Blackwell, 1 9 9 8 ) , social studies o f finance have developed a set o f inquiries into the sources of rational e c o n o m i c calculations based in the performative logic of eco­ nomics and framed by calculative technologies. T h i s approach attempts to under­ stand how the ideals o f rational e c o n o m i c man enter the calculative apparatus: " H e is formatted, framed and equipped with prostheses which help him in his calcula­ tions and which are, for the most part, produced by e c o n o m i c s " (51). T h i s addresses the operational problem for calculative actors, but obscures the practices and set o f affects that create an always emergent figure of e c o n o m i c man. Gallon's approach risks reducing traders to the slaves o f financial modelers. 9. Traders' claims that they enact a form o f "natural" behavior call for investi­ gation o f the embodied practices, performances, and emotions that make up this "natural man." 10. T h i s analysis draws on the uses o f emotion and affect in service work; s e e Arlie Russell Hochschild, Managed Heart: Commercialization of Human Feeling (Berkeley and Los Angeles: University o f California Press, 1 9 8 3 ) ; Robin Leidner, Fast Food, Fast Talk: Service Work and the Routinizaiion of Everyday Life (Berkeley and Los Angeles: University o f California Press, 1993); Andrew Ross, No-Collar: The Humane Workplace and Us Hidden Costs (New York; Basic Books, 2 0 0 3 ) . Hochschild and Leidner focus on the production and exploitation of emotion in work. Corporate interests exploit the workers' presentation o f affect in the produc­ tion and consumption o f service-based labor. Rountinized displays o f affect distance workers from their own emotions or turn them into a resource for the industry. I n the context of finance, Linda M c D o w e l l has described how masculinity in invest­ m e n t banks is marked by bodily labor as men shape themselves into service workers to interact with clients ("Body Work: Heterosexual G e n d e r Performances in City Workplaces," in Mapping Desire, ed. D . Bell and G . Valentine (London: R o u t l e d g e , 1 9 9 5 ) , 7 5 - 9 8 . Although the focus on service work in these studies is not suited to an analysis o f the labor o f traders, the focus on emotion can extend to their context. I c o m b i n e attention to displays o f market affect with Goffnian s attention to the p r e ­ sentation o f self as located in particular times and spaces, and as dependent on s p e ­ cific social situations. At the same time, the idea that the market elicits the basic in­ stincts o f men who act within it forms the normative framework for these specific performances. 11. M a x W e b e r , The Protestant Ethic and the Spirit of Capitalism, T. Parsons ( 1 9 3 0 ; repr., New York: Routledge, 1992). 12. M a x W e b e r , Max Weber on the Methodology Edward Shils ( G l e n c o e , 1L: Free Press, 1949), 9 9 .

of the Social

trans.

Sciences,

eel

13. Norbert Elias describes the historical development o f "precepts o f c o n d u c t regarded as 'civilized'" in The Civilizing Process (Oxford: Blackwell, 1978). He e x ­ amines codes o f behavior that make specific ways o f controlling affect automatic a s well as "regulation and restraint imposed on the expression o f desires and i m p u l s e s ' (1 56). Traders' codes invert the codes of civilized behavior. T h e codes that govern "socially desirable behavior" on the trading floor emphasize the absence ot any s u c h

198

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Notes to Pages 118-131

N o t e s to Pages 113-113

codes. T h e " m a t t e r o f self-control" for traders involves stripping what is civilized from their b e h a v i o r . Traders craft behavior that matches their ideals. T h e y "make themselves o v e r into living embodiments o f their professional morality" (Loi'c W a c quant, " T h e Prizefighter's T h r e e Bodies," Ethnos 6 3 , no. 3 [ 1 9 9 8 ] : 2 2 ) . 14. T h e m a v e r i c k performances coupled with traders' risk-taking bravado critique and reject the constraints o f bourgeois social life. 15. In his essay " T h e Mandatory- Expression o f Sentiments," M a r c e l Mauss de­ scribes how e m o t i o n a l language and excitement are determined by formal strictures and obligations (unpublished ms., trans. Lore Wacquant, 1921). Mauss's observation of the n o n s p o n t a n e i t y of feeling applies to feelings that are constructed to convey spontaneity a n d the individuality o f action. It is a reminder to be particularly cau­ tious when c l a i m s to the impulsive and the natural are made. 16. Pierre B o u r d i e u , Practical

Reason

(Cambridge: Polity Press, 1 9 9 8 ) .

17. Erving G o f f m a n ' s approach to the theatrics o f social life provides insight on this drama. T h e asocial performances o f the pit and the trading floor are "frontstage," and the d e e p and useful networks o f trust, reciprocity, and loyalty among traders are "back-stage" actions (see The Presentation of Self in Everyday Life [ 1 9 5 9 ; repr., Marmondsworth: Penguin, 1 9 9 0 ] ) . T h e front-stage performances o f an eco­ n o m i c self a n c h o r the aesthetics o f risk-taking. Trading pits and dealing floors are theaters o f c a p i t a l i s m where the action has real consequences for markets around the world. 18. T h e a t e r and the marketplace have been always been entangled. Bakhtin's analysis o f grotesque aesthetics is enacted in and contained by marketplaces, and historian J e a n - C h r i s t o p h e Agnew has documented the tandem rise o f capitalism and the A n g l o - A m e r i c a n theater (Worlds Apart: The Market and the Theater in Anglo-American Thought, 1550- J 7 5 0 [New York: Cambridge University Press, 1986]). Bakh t i n ' s analysis o f the grotesque is particularly useful for the trading floor. T h e defining p r i n c i p l e of grotesque realism according to Bakhtin is degradation, "the lowering o f all t h a t is high, spiritual and abstract"; see Mikhail Bakhtin, Rabelais and His World, trans. H. Iswolsky (Bloornington: Indiana University Press, 1 9 8 4 ) , 19. 19. In B a k h t i n ' s description, marketplace and carnival are linked in grotesque performances. T h e carnival takes place in the market that offers a space removed from "official c u l t u r e . " In turn, the grotesque performance defines the space. Simi­ larly, the traders' maverick aesthetics define the time and space o f the market (Bakhtin, Rabelais). 20. As S i m m e l says, " T h e brutality of a man purely motivated by monetary con­ siderations and a c t i n g , to this extent, on the same axiom of greatest advantage and least sacrifice, often does not appear to him at all as a moral delinquency, since he is

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22. Echoing Weber's notion of modernity founded in the separation o f life spheres, Bruno La tour asserts in We Have Never Been Modern (trans. C . Porter [Cambridge, M A : Harvard University Press, 1993]) that the belief in the ability to separate spheres is the foundation o f modern action. 23. M i c h a e l Lewis, Liar's Poker ( N e w York: Penguin, 1989), 1 1 9 - 2 0 .

Chapter Six 1. Karin Knorr C e t i n a and Urs Bruegger, " T h e Market as an O b j e c t of Attach­ ment: Exploring Post-Social Relations in Financial Markets," Canadian Sociology

journal

of

2 5 , no. 2 ( 2 0 0 0 ) : 1 4 1 - 6 8 .

2. Futures are haded in auctions markets. According to Charles Smith's argu­ ment in Auctions: The Social Construction of Value (New York: Free Press, 1 9 8 9 ) , auctions.thrive where the value o f objects is ambiguous or uncertain. Futures c o n ­ tracts are just such objects. T h e y represent an obligation to buy or sell a financial commodity weeks or months in the future. Traders constantly process events that af­ fect national economies and new information about the future health or weakness o f stock markets and adjust their assessment o f a financial commodity's value accord­ ingly. T h i s evaluation is reflected in the changing price o f the commodity. 3. For Foucault, the art o f self-governance involves techniques for "training o f oneself by o n e s e l f (Herbert Dreyfus and Paul Rabinow, Michel Foucault: Beyond Structuralism and Hermeneutics [Chicago: University o f C h i c a g o Press, 1983], 2 4 6 ) . S u c h techniques treat tire self as an object to be fanned in harmony with a specific end. Traders strive to eliminate nonmarket influences in order to create a person who can be absorbed completely in the rhythms o f the market. T h e y work to sub­ mit himself to the authority o f the market, stripped o f their own thoughts, analyses, and desires. 4. M i c h e l Foucault has most famously employed the concept of discipline in Discipline and Punish: The Birth of the Prison ( 1 9 7 7 ; repr., New York: Vintage, 1995). Discipline, in this sense, produces individuals, yet Foucault's concept o f ethi­ cal work is more relevant to traders' practices o f discipline. Paul Rabinow states that "'jtjhe task o f ethical work for Foucault is to establish the right relationship between intellect and character in the context o f practical affairs" (Ethics: Subjectivity and Truth [New York: New Press, 1 9 9 7 ] , 1: xxxiii. Traders forge this relationship of the self to the self in and for the practice o f speculation. T h e process o f Foucault's disci­ pline is inverted. Trading as a performance o f discipline sublimates the individual and his particular inferiority to the larger market.

aware only o f a rigorously logical behavior, which draws the objective consequences o f the situation." ( S i m m e l , "Domination," 1 1 0 ) .

5. Traders may also try to reap a profit from the difference between the price bid and the price offered, called the "bid/ask spread." 'They buy at the lower price and sell at the higher price (or vice versa), taking advantage o f the insider's "edge." T h e spread is the market-makers' premium, but it is not always easy or available to take.

2 1 . In the m o v i e The Full Monty unemployed steel workers improvise a novel way o f making m o n e y in the eviscerated e c o n o m y o f northern England. T h e y trans­ form themselves from hardened factory workers to male strippers. In the ladies c l u b , their labor is r e d u c e d to parading sheer male flesh, ft is all that they have left to sell. T h e y are m e n w h o s e bodies are the source o f their labor and value—a statement o f the power o f e c o n o m i c forces to strip m e n to the raw. In the wasteland o f northern English industry, capitalism literally strips men bare.

6. Viviana Zelizer, in The Social Meaning of Money (Princeton, NJ: Princeton University Press, 1 9 9 7 ) , has shown that people create specific uses and meanings around money as they "cope with their multiple social relations." Her point, against the background of the classical theories o f Weber and S i m m e l , is that people use money to maintain social ties, and these ties mark money. M o n e y cannot simply create "sensualists without spirit" as Weber feared; rather, in Zelizer's analysis, moneyis subservient to logics o f the family, charity, and gifts. Yet the ability of money to dis-

286

*

Notes to Pages 139-143

Notes to Pages 131-139

*

201

t a n c e social ties must also be taken as an anthropological subject. If we begin with Zelizer's observation that social c o n n e c t i o n s personalize money, the trader's tech­ niques o f separation are all the more surprising. O n the trading floor m o n e y must be crafted into a technology o f social distance; such distance is not a property that in­ heres in m o n e y per se. T h e trader's reimagining o f dollars as ticks shows just how dif­ ficult it is to strip money if its power as a social connector.

obliged to b e c o m e a god himself in order to be capable o f acting upon them" (Sacri­ fice: ITS Nature and Function [Chicago: University o f C h i c a g o Press, 1964], 1 9 - 2 0 ) .

7. T h e m o s t profitable traders are the most willing to take losses quickly; see Peter R. L o c k e and Steven C . M a n n , D o Professional Traders Exhibit IMSS Realiza­ tion Aversion? (Washington, D C : C o m m o d i t y Futures Trading C o m m i s s i o n , ]999,i. In the language ot behavioral finance, this willingness to take risks with losses that may erode profits further is called "loss realization aversion " a term drawn from the "prospect theory" o f Daniel K a h n e m a n and Amos Tversky ("Prospect Theory: An Analysis o f D e c i s i o n under Risk," Econometrica 2 [ 1979]: 2 6 3 - 9 2 . ) . L o c k e and M a n n c l a i m that critics o f behavioral finance will find satisfaction in the fact that the more successful traders demonstrate less loss aversion than those who draw fewer profits, proving that the gainful traders behave "rationally" according to the profit motive. However, the strict e c o n o m i c rationality that the critics laud is not simply a characteristic o f successful traders that trumps the "irrational" weaknesses o f the oth­ ers. B o t h individually and collectively, traders consciously consider the problem o f action u n d e r uncertainty. T h e norms and practices o f discipline - the culture of the trading floor—encourage traders to reflect on and limit their inclination to gamble with losses. T h e s e techniques and models o f disciplined behavior make traders ap­ pear m o r e like the rational actors o f orthodox finance than like the biased and irra­ tional actors o f behavioral finance. Culture works to produce traders whose actions confirm the models o f rationality; it is not the agent o f irrationality, as is so fre­ quently assumed.

his exploits from a cell in a Singapore prison: see his Rogue Trader (London: Little,

C h a p t e r Seven 1. Nick Leeson, the currency trader who bankrupted the venerable Barings bank in the trading pits o f Singapore, is the most infamous o f this breed. He has chronicled Brown. 1996). 2. Jonathan Crary, Techniques Nineteenth

of the Observer:

On Vision and Modernity

in the

Century (Cambridge, MA: M I T Press, 1990).

3. Karin Knorr C e t i n a and Urs Bruegger, " T h e Market as an O b j e c t o f Attach­ ment: Exploring Post-Social Relations in Financial Markets," Canadian journal of Sociology 2 5 , no. 2 ( 2 0 0 0 ) : 1 4 1 - 6 8 . 4. T h e narrative o f progressive rationalization is, o f course, most familiar to us from the work o f M a x Weber. In " S c i e n c e as a Vocation" (in Gerth and Mills, From Max Weber), he bluntly states, " T h e fate o f our times is characterized by rationali­ zation and intellectualization"(l 55), a position still consistent with the work of abstrac­ tion in futures. It is important to distinguish between the power o f rationalization as an ideal in the financial industry that parallels Weber and S i m m e r s accounts o f pro­ gressive rationalization and an anthropological analysis o f rationalization that takes this ideal as a social fact.

8. T h e bias for the present and the short time increments o f market action are not shared by o t h e r financial actors. Financial strategists for investment banks or even mortgage brokers who are looking to hedge the risks o f simple interest rates work with time frames that can look months into the future. Scalping is a form o f speculation particular to the market makers who provide consistent liquidity for futures markets.

5. T h e social context o f financial interpretation is evident in the friendships a n d feverish affect o f pit traders. Looking first at the face-to-face context o f open outcry markets, where the density o f social life is overwhelming, we can observe and b e ­ c o m e attuned to the social dimensions of online calculations. T h i s sensitivity is especially important where self-conscious rationalization has actively sought to e l i m ­ inate the social as an e l e m e n t o f e c o n o m i c calculations. T h e problem is not o n e o f a dualistic division between face-to-face and online transactions. Rather, the prob­ lem lies in how rationalized technological systems create a specific context tor finan­ cial calculation.

9. Richard S e n n e t t has pointed out that "risk-taking . . . lacks the quality o f a nar­ rative, in w h i c h one event leads to the next"; see Corrosion of Character: The Per­ sonal Consequences of Work in the New Capitalism I New York: W. W . Norton 1998), 83.

6. B r u c e G . Carruthers and Barry C o h e n , "Knowledge o f Failure or Failure o f Knowledge? Bankruptcy, Credit, and Credit Reporting in the N i n e t e e n t h - C e n t u r y United States," paper presented at the American Sociological Association meetings, Washington, D . C . , August 2 0 0 0 .

10. Robert Koppel, The Tao of Trading: ( C h i c a g o : D e a r b o r n Trade, 1998).

Discovering

a Simpler

Path to

Success

11. T h e i r terms hue closely to Csikszentmihalyi's description o f optimal experi­ ences; see M i h a l y Csikszentmihalyi, Flow: The Psychology of Optimal Experience (New York: Harper & Row, 1990)." 12. Henri Hubert and Marcel Mauss's work on sacrifice helps to illuminate the problem o f actors engaging a divine presence: "Sacrifice is a religious act that can only b e carried out in a religious atmosphere and by means o f essentially religious agents. But, in general, before the ceremony neither sacrifier nor sacrificer, nor place, instruments or victim possess this to a suitable degree. T h e first phase of the sacrifice is intended to impart it to them. T h e y are profane; and their condition must be c h a n g e d . . . . All that touches upon the gods must be divine; the sacrifier is

7. T h e o d o r e Porter, Trust in Numbers: The Pursuit of Objectivity in Science and Public Life (Princeton, NJ: Princeton University Press, 1995); M i c h a e l Power, The Audit Society: Rituals of Verification (New York: Oxford University Press, 1 9 9 7 ) ; and Mar>' Poovey, A History of the Modern Fact: Problems of Knowledge in the Sciences of Wealth and Society ( C h i c a g o : University of C h i c a g o Press, 1998). 8. C h i c a g o Board of Trade, Action in the Marketplace (Chicago: Board ot T r a d e of the City of C h i c a g o , 1997). T h e difference between the bid and ask is called t h e "spread." Ideally the trader can make money buying at the bid and selling at the of­ fer, pocketing the difference, but this method is not always available. Bids and offers theoretically represent the totality o f supply and demand for a product in a given moment. Market participants must be able to sec all the bids and offers in the m a r k e t to evaluate market conditions accurately.

282

*

Notes to Pages 145-153

Notes to Pages 143-145

9. S e e Paul Rabinow's "Representations Are S o c i a l F a c t s " (in Essays in the Anthropology of Reason {Princeton, N J : Princeton University Press, 1 9 9 6 ] , 29—58) for a critique o f this epistemology in the social sciences. In the case o f financial mar­ kets, the epistemologies o f financial designers b e c o m e social facts as they direct the construction o f technologies in search o f "correct representations," 10. T h e C B O T created the pit structure to solve problems that arose as the mar­ ket space b e c a m e overcrowded with eager speculators. Originating in the agricul­ tural trade o f the Midwest, the C B O T was established by m e n trading certificates o f grain ownership to b e delivered several months down the line from farms in Nebraska, Iowa, or Illinois to the C h i c a g o grain elevators; see W i l l i a m C r o n o n , Nature's Metropolis: Chicago and the Great West (New York: W . W. Norton, 1991). By 1869 trading at the C B O T had b e c o m e so popular and crowded that the speculators could not see all the bids and offers available. Market reporters complained in the pages o f their daily papers that traders in search o f better sight lines were climbing onto their desks and obstructing the reporters' vision. After trying out several shapes for a raised structure that would provide better views o f the traders in the market, the C B O T introduced the octagonal pits in 1869; see W i l l i a m D . Faloon, Market Maker: A Sesqu icentenn ia I Look at the Chicago Board of Trade ( C h i c a g o : Board o f Trade o f the C i t y o f C h i c a g o , 1 9 9 8 ) . :

*

283

of e c o n o m i c action where risks are not calculable. I prefer to use ambiguity rather than uncertainty to underscore the many possible interpretations o f a present situa­ tion. Traders could be considered informational entrepreneurs because they create profit-seeking interpretations o f market direction out o f this ambiguity. This view fol­ lows Pat O'Malley's description of the uncertain subjects o f neoliberalism rather than appealing to older formulations o f entrepreneurship that fit a paradigm o f rational modernization. S e e "Moral Uncertainties: Contract Law and Distinctions between Speculation, G a m b l i n g and Insurance," in Risk and Morality, ed. R. V. Ericson and A. Doyle, [Toronto: University o f Toronto Press, 2 0 0 3 ) , 2 3 1 - 5 7 . 16. John Murphy, Technical

Analysis of the Financial

Markets

( New York: New

York Institute o f F i n a n c e , 1 9 9 9 ) , 6 4 . 17. Differences in opinions and interpretation yield opposing views. T h e s e con­ trasting outlooks on the future direction o f the market allow for every buyer to find a seller and every seller to find a buyer. At the same time, anticipating and acting on the presumed interpretations o f other traders in the market is a c o m m o n profitmaking strategy that can create a self-fulfilling prophecy in price action. 18. Murphy, Financial

Markets,

60.

19. Wayne Baker has shown how, in large pits, traders break up into trading areas within the pit, undermining the ideal o f competitiveness. T h e noise o f trading and

11. In this sense Alan L i n d and his fellow designers r e s e m b l e Paul Rabinow's d e p i c t i o n o f t e c h n i c i a n s o f g e n e r a l ideas (French Modern: Norms and Forms of the Social Environment [ C h i c a g o : University o f C h i c a g o Press, 1 9 9 5 ] ) : they put into p r a c t i c e normative ideas o f e c o n o m i c action. T h e y are self-conscious intel­ lectuals gravitating to and instantiating ideals o f rationalization and designing e c o n o m i c abstractions to facilitate practices m o r e closely r e s e m b l i n g perfect competition. 12. In We Have Never Been Modem (Cambridge, MA: Harvard University Press, 1 9 9 3 ) , B r u n o Latour discusses "purification," the division o f the social from the nat­ ural, as a h a l l m a r k o f modernism. Here, the numerical representation helps to rid the financial arena o f social influence. W i t h numbers, the e c o n o m i c sphere is con­ strued as a s p a c e o f natural competition. 13. In Plans and Situated Actions (New York: Cambridge University Press, 1987), Lucy S u c h m a n argues that purposeful action is "fundamentally concrete and em­ bodied." Actions are "taken in the context o f particular concrete circumstances." T h e v are "situated" and not the o u t c o m e of a process o f abstract planning. 14.1 use technological frame to indicate how technology shapes the content it pro\ ides to the user. W i e b e Bijker has used the c o n c e p t differently. Bijker uses tech­ nological frame to describe "the ways in which relevant social groups attribute vari­ ous meanings to an artifact" 1 W i e b e Bijker, T h o m a s P. Hughes, and Trevor P i n c h , The Social Construction of Technological Systems: Ne\i Directions in the Sociology and Historv of Technology [Cambridge, M A : M I T Press, 1 9 8 9 | , 1 0 b .

the potential errors of trading with a physically distant partner encourage traders to focus their attention on the area closest to them; see Wayne E . Baker, " T h e Social Structure o f a National Securities Market," American journal

of Sociology

8 9 , no. 4

(1984): 7 7 5 - 8 1 1 . 20. C h i c a g o Board of Trade, C B O T Handbook City o f C h i c a g o , 1 9 9 3 ) .

( C h i c a g o : Board of Trade o f the

.

2 1 . Joshua D . Coval and Tyler Shumway, "Is Noise Just Sound?" C B O T Educa­ tional Research Foundation Paper, 1 9 9 8 . 22. S e e Burton Malkiel, A Random

Walk Down Wall Street (New York: W . W.

Norton, 1 9 9 6 ) , and Peter Bernstein, Capital

Ideas (New York: F r e e Press, 1992) for a

synopsis o f t h e "random walk" in stock and commodities pricing and its implications for traders, investors, and financial theory. According to Malkiel, "A random walk is o n e in which future steps or directions cannot be predicted on the basis o f past ac­ tions. In the stock market, it means that short-run changes in stock prices cannot be predicted" (Malkiel, Random

Walk, 2 4 ) .

23. T h e interface that traders use at Perkins Silver is not the only o n e available. M e m b e r s o f Eurex have access to the exchange's stock interface, which is also nu­ merically based but visually more rigid than the E-trader model. Earlier interfaces, like those tor the now defunct C B O T Project A trading system, tried to replicate the facc-to-face environment ot the pit by associating names and personal trade histories with each exchange. T h e precursor to the E u r e x exchange, the D T B (Deustcheter-

;

15. H a n k Knight in his classic work Risk, ( ncertaintx and Profit defines uncer­ tainty as the condition oi judgment and ot enticpreneurial profit: "With uncertainty entifeh absent, everv individual being m possession o f perfect knowledge o f the situ­ ation, there would be no occasion for anything o f the nature o f responsible manage­ m e n t or control o f productive activity" (Risk, Uncertainty and Profit [ C h i c a g o : Uni­ versity o f C h i c a g o Press, 1 9 7 1 ] , 267). Knight's use o f uncertainty highlights problems

niiiieboursfc,, never operated with a pit system. Its electronic market has always re­ lied strictly on number*. 24. Paul Rabioow, French Modern:

Norms and Forms of the Social

Environment

C h i c a g o : I miversity of C h i c a g o Pi ess, 1995). 25. Porter. 1 heodoie, Trust in Numbers:

The Pursuit of Objectivity

Public Life (Princeton, NJ: Princeton University Press, 1995).

in Science

and

284

*

Notes to Pages 166-170

Notes to Pages 153-166

26. T h e term dismtermediation c a m e into vogue in the 1980s as a wav o f describ­ ing the development of new instruments, such mortgage-backed assets, that allowed c o m p a n i e s to borrow directly from the market rather than going through a c o m m e r ­ cial lender. T h e techniques of dismtermediation removed institutional ties and drew c o m p a n i e s to the '"core" processes o f the market. T h e same rationality operates in the logic o f reducing the market representation to numbers. 27. J o h n S. Brown, and Paul Duguid, The Social Harvard Business S c h o o l Press, 2 0 0 0 ) .

Life of Information

(Boston:

2 8 . 1 was practicing a technique called "spreading" in ten, five, and two-year Ger­ m a n treasury bond futures nicknamed the Bund, Bobl, and Shaz. Spreading is a t e c h n i q u e that takes advantage o f the difference in volatility between bonds oi differ­ ent durations. T h e price o f a ten-year bond is more volatile than that of a two-vear b o n d b e c a u s e the longer time frame introduces more opportunities for changing e c o n o m i c conditions and greater uncertainties. A spreader takes opposite positions in e a c h o f two instruments using the more stable instrument to limit the loss poten­ tial o f a position in the more volatile contract. 29. T h i s background communication is part o f the "ecologies o f evaluative prin­ cipals" o f the trading room' see Daniel B e u n z a and David Stark, "Tools o f the Trade: T h e Socio-Technology of Arbitrage in a Wall Street Trading R o o m , " Industrial and Corporate Change 13, no. 2 ( 2 0 0 4 ) : 3 6 9 - 4 0 0 .

205

Emimnmeni

(Chicago: University o f C h i c a g o Press, 1995) calls these translators "technicians of general ideas." 7. T h e s e are not the only materials used to rationalize markets. T h e standardiza­ tion o f contracts, for instance, is a crucial precondition for the operation o f futures markets that 1 describe. However, the daily work o f rationalization represents a differ­ ent order of action, one that requires tweaking and adjustment rather than the con­ struction o f systems. 8. B r u c e Carnithers, City of Capital

(Princeton, NJ: Princeton University Press,

1 9 9 6 ) ; David Kynaston, The City of London Leyshon and Nigel Thrift, Money/Space

(London: Pimlico, 1988); Andrew

(New York: Routledge, 1 9 9 7 ) .

9. William C r o n o n , Nature's Metropolis: C h i c a g o and the Great West (New York: W. W . Norton, 1991); Donald L, Miller, City o f the Century: T h e E p i c o f C h i c a g o and the Making of America (New York: Touchstone, 1 9 9 6 ; . 10. M a n u e l Castells calls this sharing o f connectivity without sharing of terri­ tory, "the space o f flows"; see The Rise of the Network

Society

(New York: Blackwell,

1996). 11. Arjun Appadurai calls these "technoscapes" and "fmancescapes," adding the suffix -scape to denote the "fluid irregular shapes . . . that characterize international capital" (Modernity

at Large: Cultural

Dimensions

of Globalization

[Minneapolis;

University o f Minnesota Press, 1996), 3 3 ) .

Conclusion 1. M a x W e b e r , Economy and Society California Press, 1978), 1:636.

6. Paul Rabinow, m French Modem: Norms and Forms of the Social

*

12. Castells, Network (Berkeley and Los Angeles: University of

2. D o n a l d M a c K e n z i e and Yuval M i l l o . "Constructing a Market, Performing T h e o r y : T h e Historical Sociology o f a Financial Derivatives E x c h a n g e , " American Journal of Sociology 109, no. 1 ( 2 0 0 3 ) : 1 0 7 - 4 5 . 3. E c o n o m i c sociologists Paul D i M a g g i o , Walter Powell, and Neil Fligstein have d e v e l o p e d Bourdieu's language o f "fields" to understand e c o n o m i c prac­ t i c e . F i e l d s are defined primarily by the distribution o f actors in social space. T r a c i n g t e c h n o l o g i c a l transformations reminds us that social space and the physical materials o f c o n n e c t i o n are interdependent. S e e Paul D i M a g g i o and W a l t e r Powell, " T h e Iron C a g e Revisited: Institutional Isomorphism and C o l l e c ­ tive Rationality in Organizational Fields," American Sociological Review 4 8 ( 1 9 8 3 ) : 1 4 7 - 6 0 ; and Neil Fligstein, The Architecture of Markets : An Economic Sociology of Twenty-first-Century Capitalist Societies (Princeton, NJ: P r i n c e t o n University Press, 2 0 0 1 ) . 4. D a n i e l M i l l e r refers to this as "virtualism"; see "Conclusion: A T h e o r y o f Vir­ tualism," in J a m e s G . Carrier and Daniel Miller, eds., Virtualism: A New Political Economy ( N e w York: Berg, 1 9 9 8 ) . 1 8 7 - 2 1 7 . 5. M i c h e l Gallon, "Introduction: T h e Embeddedness o f E c o n o m i c Markets in E c o n o m i c s , " in The Laws of the Markets, ed. M i c h e l Gallon (Maiden, M A : Blackwell, 1 9 9 8 i, 1 - 5 7 ; Bill Matirer, Mutual Life, Ltd: Islamic Banking, Alternative Cur­ rencies, Lateral Reason (Princeton. NJ: Princeton University Press, 2 0 0 5 ) ; Donald M a c K e n z i e , "Social Connectivities in G l o b a l Financial Markets," Environment and Planning D: Society and Space 22 ( 2 0 0 4 ) : 8 3 - 1 0 1 .

Society.

13. Saskia Sassen, The Global

City (Princeton, NJ: Princeton University Press,

2001). 14. Peter J. Taylor, World City Network: A Global

Urban Analysis (New York:

Routledge, 2 0 0 4 ) . 15. Andrew Barry, Political

Machines:

Governing

a Technological

Society

(Lon­

don; Athlone Press, 2 0 0 1 ) ; W i e b e Bijker, T h o m a s P. Hughes, and Trevor P i n c h , Social Construction of Technological 16. Barry, Political M a c h i n e s .

Systems (Cambridge, MA: M l ! Press, 1 9 8 9 ) .

17. T h o m a s F. Gieryn, " W h a t Buildings D o , " Theory and Society

3 ] , no. 1

(2002): 41. 18. Castells, Network

Society.

19. T h i s parallels S a m u e l ' s classic argument that money functions to objectify value across both social and geographic distance. It also emphasizes Simmel's obser­ vation that the use o f money entails trust in the institutions that produce it. For S i m ­ mel, this meant the state; futures contracts, however, require trust in the C B O T , its accounting practices, and its mechanisms for clearing trades; see Georg S i m m e l . The Philosophy

of Money

(190"

;repr.,

New York; Routledge, 1990).

20. Karin Knorr Cetina and Urs Bruegger, "Global Microstructures; T h e Virtual Societies o f Financial Markets." American

Journal

of Sociology

107, no. 4 ( 2 0 0 2 );

905-50. 2 1 . Beunza, Daniel, and David Stark, "Tools o f the Trade: T h e Socio-Technology of Arbitrage in a Wall Street 1 lading R o o m , " Industrial no. 2 ( 2 0 0 4 ) : 3 6 9 - 4 0 0 .

and Corporate

Change

1 3,

206

*

Notes to Pages 176-17?

22. Niklas Luhniann, "Describing the Future," in Observations (Stanford, C A : Stanford University Press, 1998), 6 9 - 7 0 .

on

Modernity

2 3 . In this way, traders form an "epistemie community"; see Karin Knorr Cetina, Epistemie Cultures: How the Sciences Make Knowledge (Cambridge, M A : Harvard University Press, 1999). 2 4 . G e o r g e Lipsitz, The Possessive T e m p l e University Press, 1998).

Investment

in Whiteness

(Philadelphia, PA:

2 5 . M i t c h e l l Abolafia (Making Markets: Opportunism and Restraint on Wall Street [ C a m b r i d g e , MA: Harvard University Press, 1 9 9 6 ] ) ; Wayne Baker ("The So­ cial Structure o f a National Securities Market," American Journal of Sociology 89, no. 4 [1984]: 7 7 5 - 8 1 1 ) ; and Donald M a c K e n z i e , in "Social Connectivities," have shown that t h e s e "local aspects" ot global c o n n e c t i o n s c a n affect prices and other basic market operations. 2 6 . Kris O l d s and Nigel Thrift identify this location in the present with t h e man­ a g e m e n t consultants and others w h o populate t h e "cultural circuit o f capital," not­ ing that it is " m e a n t to produce a kind o f dynamic equilibrium in which the brink (the 'edge o f c h a o s ' ) is the place to b e " ("Cultures on the Brink: Reengineering the Soul o f C a p i t a l i s m — O n a G l o b a l Scale," in Global Assemblages: Technology, Poli­ ties, and Ethics as Anthropological Problems, ed. A. O n g and S. J. Collier [New York: B l a c k w e l l , 2 0 0 5 ] , 274). T h e confluence o f expert and practitioner knowledge is remarkable, and underscores the idea that traders' self-production signals the h u m a n possibilities and costs o f working in a world that is permanently on the edge o f the future.

Abolafia, Mitchell. Making Markets:

Abu-Lughod, Janet. New York, Chicago,

2 8 . Roy S m i t h and Walter l o g o , Global Press. 2 0 0 3 ) .

Banking

(New York: Oxford University

and Restraint

on Wall

Street.

Los Angeles: America's

Global

Cities.

Min­

neapolis: University o f Minnesota Press, 1 9 9 9 . Agnew, Jean-Christophe. Worlds Apart: l'he Market American

Thought,

and the Theater

in Anglo-

1550-1750. N e w York: Cambridge University Press, 1986.

A m i n , Ash, and Nigel Thrift. "Introduction." In Cultural

Economy

Reader,

ed. A. Amin and N . Thrift, x-xxx. New York: Blackwell, 2 0 0 4 . Andreas, A. T . History of Chicago.

27. In this way, the new representational modes o f the trading screen extend the logic o f the t i c k e r tape, an information technology invented in 1867; see Alex Preda, "On T i c k s a n d Tapes: Financial Knowledge, C o m m u n i c a t i v e Practices, and Infor­ mation T e c h n o l o g i e s on Nineteenth-Century Financial Markets," paper presented at N e w York C o n f e r e n c e on the Social Studies o f F i n a n c e , C o l u m b i a University, May 3 - 4 , 2002.

Opportunism

Cambridge, MA: Harvard University Press, 1996.

From the Earliest

Period to the Present Time. C h i ­

cago: A. T . Andreas, 1884. Appadurai, Arjun. The Social . Modernity

Life of Things.

at Large: Cultural

New York: Cambridge, 1 9 8 6 .

Dimensions

of Globalization.

Minneapolis:

University o f Minnesota Press, 1996. Baker, T o m , and Jonathan Simon. "Embracing Risk," In Embracing Changing

Culture

of Insurance

and Responsibility,

Risk: The

ed. T . Baker and J. Simon,

1 - 2 5 . C h i c a g o : University o f C h i c a g o Press, 2 0 0 2 . Baker, Wayne E . " T h e Social Structure o f a National Securities Market." Journal of Sociology

American

89, no. 4 ( 1 9 8 4 ) : 7 7 5 - 8 1 1 .

Bakhtin, Mikhail. Rabelais

and His World. Trans. I I . Iswolsky. Bloomington: Indiana

University Press, 1984. Barry, Andrew. Political

Machines:

Governing

a Technological

Society.

London:

Athlone Press, 2 0 0 1 . Barry, Andrew, T h o m a s O s b o r n e , and Nikolas S. Rose. Foucault Reason:

Liberalism,

Neo-liberalism

and Rationalities

and

of Government.

Political Chicago:

University o f C h i c a g o Press, 1 9 9 6 . Bataille, Georges. The Accursed

Share.

Vol. 1. New York: Z o n e Books, 1989. Orig.

pub. in 1967. Beck, Ulrich. Risk Society: Towards a New Modernity.

1 ,ondon: Sage. 1992.

Becker, Gary. "Nobel Lecture: T h e E c o n o m i c Way o f Looking at Behavior." Journal of Political

Economy

101, no. 3 ( 1 9 9 3 ) : 3 8 5 - 4 0 9 .

Bender, T h o m a s , and William R . Taylor, "Culture and Architecture: S o m e Aes­ thetic Tensions in the Shaping o f Modern New York City." In Visions of the Mod-

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abstraction of the market, 17. 19; and tech­ nological tools, 54 Alba, Jim, 8 all-digital exchanges. SEE electronic trading Alschuler, Alfred, 30, 32 American legion. Board ot 'trade Chap­ ter, 44 American Treasury futures, 49 Andreas Gursky, Chicago Board of Trade U. 2 anthropology, J 1 , 12 apprenticeship process, 129-30 Arbor, Patrick, 172; backed an approach that mixed technological regimes, 7 1 72; biography of, 70; called David Brennan "President of the Flat Earth Society," 69; chairmanship election in ) 998, 6 8 - 7 2 ; on family connections that support the market in Chicago, 6S; founding of his own electronic trading firm, 72; on honor, 61; media savvy, 68; members meeting on electronic trad­ ing in Juh 1998, 51-52; pro-electronic trading stance, 68; proposed alliance with Eurex, 68; support for pit trading, 47,49,53 Archipelago, vii architecture. 184n30; Art Deco, 33; fortress architecture, 47 Armour, Philip, 16 Art Deco, 35 "ask," 143 asociality, 117, 123, 125 autonomous market spaces, 1 6 3 - 6 4

bank dealing rooms, replaced barrow boys with more educated employees, 8 0 Bank of England, 77 Barings Bank, 7 5 , 76, 201 nl barrow boys, 77, 78, 7 9 - 8 0 , 87, 89, 141 bazaar economy, Morocco, 12 Berger, Adam, 82, 8 3 - 8 4 , 87, 130, 132, 140 bid, 142, 143, 201n8 "bid/ask spread," 146, 199nS Big Bang era, 75, 76, 77 Blair, Andrew; 85, 86, 87, 1 IS, 129, 1 30. 158 boards of trade, developed standards ot reliable commercial news and price quotations, 22 Bobl, 8 5 , 204n28 bond futures pit, 102, 161 bond-pricing model, 59 Breiman. David: backed an approach that mixed technological regimes, 7 1 - 7 2 ; biography of, 70; 1998 chairmanship election, 6 8 - 7 2 ; defense ot open outer)-, 69, 71; opposition to Eurex alliance, 71 British multiciilturnlism, 9 ] brokers, 60; link between outside market participants and the trade in the pits, 6 2 , 9 8 - 9 9 ; relationship to locals, 6 1 6 3 . 6 3 , 1 0 0 , 102-3 "bucket Tiops," 190nl Buffalo B O T . 2 4 - 2 5 Bund. 85, 204n2S Burnliain, Daniel, 30 Business WEEK, 7

218

*

Index-

Cairo, Illinois, 2(J Cantot Fitzgerald. 1(1, 6~ capitalism: cathedrals of, 33; as dampen­ ing destructive social tendencies, 112; as a producer ot affect, 1 7 9 n \ as pure search for profit, 3 capitalist city, 181n7 "career" runners, 60, 187n 13 Castells, M a n u e l , 3, 4, 170, 2 0 5 n l 0 chartists, 146, 147 Chicago: arch itecture, 17; city govern­ ment, 18, 3 5 , 37: as a commercial nexus, 19—22; competition with other cities, 1 9 - 2 1 ; derivatives markets, 7, 168; expansion in the nineteenth cen­ tury, 15; G r e a t Fire of 1872, 26; infra­ structure, 17; stockyards, 1 5 - 1 6 , 2 1 ; telegraph, 2 1 ; as the west's rail hub, 20 Chicago Board of Trade ( C B O T ) , viii, 8 10; access t o informally granted and re­ stricted a l o n g social lines, 172; afterhours electronic market (Project A), 10, 51, 6 9 , 2 0 3 n 2 3 "the Arboretum," 71; arrangement of the trading floor and the invention of the trading pit, 58, 143, 169, 1 7 5 , 2 0 2 n l 0 ; Associate mem­ bers, 6 6 ; 1 8 8 5 building, 2 6 - 2 8 , 34, 40; election for chairmanship in 1 9 9 8 , 6 7 72; establishment of a market in finan­ cial risk, 9 4 ; establishment o f market in the price o f grain, 17, 18-19, 22; ethnicnetworks a n d racial exclusion, 172; ex­ emplary site o f modernity, 2; fight for its distinctive technology, 56; founding of, 16; full members, 66; functional monopoly in T-bond futures, 6 7 , 9 6 ; fu­ ture markets heavily populated by local speculators, 7 5 ; growth of trading vol­ umes but plummeting seat values in 1998, 54, 6 7 ; influence critical in build­ ing the cits o f Chicago, 2 1 ; insular en­ vironment, 6 3 - 6 6 ; member-managers, 18, 181n5; membership categories, 66; membership commitment to open out­ er), 5 2 - 5 3 ; move toward truthfulness and transparency in commerce, 23; of­ ficial symbol of, 57; open outcry traders {see open outer) traders), photo, grain ;

Index

trader quotes a price in the pit, 96; pho­ tograph of trading floor, 1-2; politics, 6 6 - 7 2 ; price o f full membership, 6 3 ; replaced the movement of goods with the movement of money, 166; rule 335.00 ("first" rule), 61; speculation, 97; struggle over shift to electronic trad­ ing, ix, 49, 67, 161-62, 186n6; trading pit remains the emblem and key tool for making markets, 49; Treasure Bond futures pit, 54; worked to standardize measure and coordinate commerce with others boards o f trade, 23 Chicago Board of Trade ( C B O T ) 1930 building, 2 5 - 2 6 , 2 8 - 4 4 , 162; adorn­ ments suggest relationship between the C B O T , modem technologies, and the future, 3 3 - 3 4 , 183n27; architectural submissions, 30, 31, 32; Art Deco tower, 2 8 - 2 9 ; glass tower extension, 175; housed Chicago Stock Exchange, 35; housed Chicago Transit Depart­ ment, 36; image of machine-honed na­ ture, 1 7 4 - 7 5 , 176; informational con­ duits o f the trading floor, 4 2 - 4 4 ; interior geography of, 25; laying of cor­ nerstone, 35; leasing of office space, 3 6 - 3 8 , 184n31; membership vote on, 3 4 - 3 5 ; New Building Committee, 30, 34, 3 9 , 4 2 , 4 3 - 4 4 ; 1980s addition and tradingfloor,4 5 - 4 7 , 185n54; 1997 trad­ ing facility, 4 7 - 4 9 ; opening of, 3 5 , 4 4 ; place for traders to congregate as men, 37; statue o f the Roman goddess of grain, 28, 29; street address, 3 7 - 3 8 ; as symbol o f the board's place in the eitv and nation, 4 4 ; trading floor, 3 8 - 4 4 , 41 Chicago Board Options Exchange, 25 "Chicago culture," 92 Chicago Dailv News, 44 Chicago Daily Times, 44 Chicago Mercantile Exchange (the Merc), viii-ix, 25

Chicago Tonight, 65 Chicago trading exchanges, provision local jobs, 55 Chicago "trading families," 5 5 , 6 3 - 6 6 Chicago World's Fair, 175

choreography of a trade, 58, 6 0 - 6 1 Chrysler Building, New York, 33 circulation, 181n7; architecture of, 4 5 - 4 8 : as project, 50; Weiner, Annette, 182n9 City o f London, 74, 80 Civil War, 18 clerks, 6 0 , 6 3

219

Douglas. Stephen A., 21 Dow Jones Industrial Average (DJ1A), 9; contracts based on, 97: futures markets, 130 Dyer, Thomas, 18

"economic man," 12, 111-25, 174, 1"7 economic rationality, 13, 141-42, 174 Cleveland Telegraph Company, 42 Economist. 7 Commission on the Future of Multieconomy as expenditure, 188nl 1 Ethnic Britain, 91 Edwards, John, 7 6 commodity, disconnected from the place "ego liquidity," 102-3 of its production and its producer, 17, "electronic open outcry," 72 24, 97 electronic trading, viii, cost of transition to, cultural economy, 11 vii; creates new kinds of market actors, Curley, Sean, Jr., 5 3 - 5 4 , 6 3 - 6 4 , 6 5 - 6 6 , 82, 141; creates opportunities for savvy 100,117,138,151 traders to supply misinformation to the Curley, Sean, Sr., 6 3 - 6 4 room, 156-57: global interconnections among actors in real time, 55, 1 6 9 - 7 0 ; Daily Telegraph, 77 heightened need tor discipline, 136; in­ death, language of, 140 dividual actions represented in aggre­ Dennis & Co., Baltimore, s4 gate numbers of the bids and offers, derivatives markets, 6, 7, 11, 168. See also 1 57; physical demands of, 86; "probfutures markets lematized" open outcry. 55; propo­ designers, 4, 5, 13, 164, 167 nents' arguments for, ix-x; reconfigures desk managers, 60, 62 audience for traders' performance, 9 8 ; Deutsche Terminborse ( D T B ) , 10, 6 6 . redefined criteria for who will make a See also Eurex good trader, viii, 167, 169; removed the digital trading. See electronic trading social information available in the pits, disassembly line, 16 143-44, 151; replaces personal rela­ discipline: checks the instinct to out-think tions with abstract associations, 55; the market, 138; creates a specific mar­ space that unites locations that shareket being, 1 2 8 - 2 9 ; in the discourse of digital circuits, 167; technologies cre­ traders, 127; ethical practice of, 1 3 9 ated the possibility of a decentralized 40; four core elements of. 128; "getting marketplace, 163; traders create new married" to a trade, 135; redefines the social contexts, 145, 151; traders exploit trading object, 130; removes trader's the informational ambiguities of nu­ concerns and desires from his eco­ merical information, 145; use of num­ nomic judgments, 128; separates past bers as a means of transparency, 153. and present, 1 3 3 - 3 5 ; separates world o f See also Perkins Silver traders social responsibility from world of spec­ Essex, County of, migration site for ulation, 173; supports dead periods, working-class families, 77 137; and taking loss, 1 3 1 - 3 3 ; trading as "Essex Man," 7 7 - 8 0 , 8 9 - 9 0 , I8811K) a performance of, 199n4 "Essex Woman," 78 disembedding, 181n7, 185n55 ethical practice, 139-40, 173 disintermediation, 175, 176, 204rt26 ethnographic fieldwork, 11, 14 division of labor, 16 E-trader graphic user interface, 151-54, Docklands, 78 175,203n23 Donovan, Tom, 58

Index

Eurex, 51, 6 6 - 6 7 , 6 b , SO, 1 4 4 , 1 6 8 , 2 0 3 n 2 3 European markets: American trading in, 8 2 - 8 3 ; arid electronic trading, 6 6 Earrell, Nicholas. 77 "fat-fingering," 86, 189ril6 "feeling," 150 finance, architecture, 2 5 - 3 0 financial

Commission Merchants

( F C M ) , 69 financial interpretation, social context of, 144, 201n5 financial life, five elementary forms ot, 166 Imancial markets, global: celebration, 6; chatter, 156-57; money, 1 3 0 - 3 1 ; pro­ ductivity, 191 n6; pure search for profit, 2 - 3 ; rationalization (see rationaliza­ tion); reliability and accuracy of infor­ mation, 23; soeio-technical arrange­ ments, 1 6 8 - 7 1 ; space, 166-68; temporal rhythms of, 137; transition from face-to-face dealing to online trading, vii, 5 - 6 , 1 3 , 8 0 , 143 financial media, 68 Financial Services Bill, 75 Financial Timet,, 76 financial trading floor, of Chicago Board o f t r a d e , 1-2 firm numbers, 142 "first rule," 61 "flat" markets, 137 How: architecture of, 45; concept of, 3; space of, 3, 170 "flow" experience, 3, 135 lord, Henry, 16 foreign exchange (FX) markets, 7 4 Foucault, Michel, 9 5 , 193nl2, 199n3, 199n4 Freddy, 1 1 4 - 1 6 tree will, 106 French luhires exchange (MA) IF), 6 6 Fujikawa, Johnson, and Associates, 47 The Pull Monty, 198n2l futures contracts: ambiguous or uncertain value, 199n2; defined, 19; as hedging tools, 9 5 - 9 6 ; most common derivative, 7; technology for distributing risk, Wins

futures markets: bind Chicago, London, and Frankfurt together, 167-68; chore­ ography of trade, 5 9 - 6 1 ; easv circula­ tion and fixity, 182n9; identity the limit of economic reason, 9 5 ; infrastructure and organization, 9 3 - 9 4 : made pos­ sible the circulation of commodity prices without the physical commodity changing hands, l , 19, 24, 97; man­ age risk, 93; particular spaces of eco­ nomic practice, 4; shift from face-toface to screen technologies, 11, 141; social and technical fields, 165 futures traders: manipulate risk to manage their identities and establish status, 9 4 95, 9 8 - 1 0 4 ; maverick aesthetic, 1 1 3 14; participate in the debasement of the abstract market, 114-16; pride themselves on cutthroat competition. 102. See also open outcry traders; traders 7

futures trading, global, 10, 73 Galassi, Peter, 2 Geertz, Clifford, 1 2 - H Geller, Joshua: and Chicago trading room, 1 57; on discipline of traders, 134; on "entering the zone," 1 3 5 , 1 3 6 ; on los­ ing money to gain information, 159; on market as an instrument of the divine, 127; as a Perkins Silver trainer, 85, 86, 87, 129-30. 136-37; prediction of suc­ cess of transition from pit to screen, 80; recruitment of online traders, 8 3 - 8 4 : on taking losses, 131 gentleman capitalist, demise of, 75 German-Swiss Exchange. See Eurex German Treasury bond futures, 85 "getting married" to a trade, 135 Giddens, Anthony, 13, 185n55 global financial markets: exchange fre­ quently conceived of in metaphors of flow, 3-4, 166; spatial arrangements of, 1 6 6 - 6 8 globalization. See financial markets, global Goffman, Ervmg, 105, 193nn 11-12, 195n24, 1 9 5 n 2 7 , 1 9 8 n l 7 "goofs," 1 2 3 - 2 4

*

221

C

government announcements, effect on market conditions, 146 grain, problem of measuring, 2 3 - 2 4 grain market, 9, 18, 23 grain traders, 121; distant relationship to the physical commodity, 97; "gentle­ manly" trade, 66; use of connections, 102 ' Greenspan, Alan, 157 grotesque realism, 198nl 8 Guardian, 77 Cudeman, Stephen, 11 Gursky, Andreas, 1, 3, 4 hand-held devices, 161 hand signals, 4 3 , 5 6 , 6 0 , 148 Harvey, David, 3 , 4 Healey,Tony,78, 118, 124 HefTer, Simon, 77, 78 Hirschinan, Albert O., 112 Holabird, John, 4 0 Holabird and Root, 29, 30, 34, 3 9 , 4 0 , 4 2 , 174, 184n33 Hubert, Henri, 200n 12 Hutton,Will,75, 7 6 , 7 9 Illinois Central Railroad, 20, 21 informational transparency, 143-45, 152 information technologies. See technology International Style, 33 Isle of Dogs, 78 Jahn, Helmut, 45 "jamming," 103 K a m i n , Blair, 4 7 Klipp, Everett, 132 Knight, Frank, 2 0 2 n l 5 kula, 12 La Farge, John, 28 Leeson, Nick, 7 6 , 2 0 1 n l Levi-Strauss, Claude, 3 Lewis, Michael, Liar's Poker, 120-21 "limit experiences," 95 land, Alan, 1 4 4 , 1 5 2 , 153, 154, 2 0 2 n l l liquid markets, 5 3 , 6 2 , 9 6 , 165, 1 8 7 n l 2 , 193nl7

locals, %~9 >; provide liquidity, 62: rela­ tionship with brokers, 6 \ 100; specula­ tors in the purest sense, 62; trv to im­ press brokers, 103 London currency markets, " 6 London foreign exchange dealers, 77 London International Financial Futures Exchange f l J F T ' E ) : based on the Chi­ cago model, ix, 73, 74, 76; and "Big Bang," 75; Chicago-style speculators, 74, 7(>; demise ot trading floors, 80; drew clients from firms, 75; floor traders memorialized b\ bronze statue, 81; floor traders spent lavishly, 78; lost its most-traded contract to an allelectronic German exchange, 66; open outcry markets, 141; traders tried and failed to make the transition to online trading, 8 0 losses, taking, 103, 126, 130-31 "loss realization aversion," 200n7 Luhmann, Niklas, 170, 191n4 Lutmck, Howard, 10 Mail on Sunday, 7 6 "make the market." 1 0 2 - 3 Malinowski, Bronislaw, 3, 12 Malkiel. Burton, 203n22 managers, 4, 5 margin call, 97 margins, 9 market chatter, 1 56 "market makers," 56 Marks, Neil, 138 MATIF, 1 0 , 7 4 Mauss, Marcel, 3, 12, 13, 198nl5, 2 0 0 n l 2 Maverick aesthetic, 1 1 3 - 1 4 Minneapolis Grain Exchange, 34 Mueller, Henry, 6 4 - 6 5 Multiculturalism, 83, 91, 92, 1"2 Murphy, John J., 147 Murphy/Jahn, 45 7

New York Stock Exchange ' N Y S E ) , vii New York traders: resisted shared standards with the West, 24; ties to Chicago mer­ chants, 20 non-interprctive facts, 142

non-quantitative information, sought in die m a r k e t numbers, i 59 Norris, Frank, The Pit, 16, 2 7 - 2 8 novelty ties, 1 1 9 - 2 0 numbers: contradictory roles in the mar­ ket, 145; critical materials for rationali­ zation, 1 5 9 ; and electronic trading, 1 5 1 , 1 5 3 , 155; "firm," 142; focus on at Perkins Silver, 155; futures markets, 1 4 2 - 4 3 ; what traders know about, 145-47 offer, 143, 2 0 I n S office staff, 6 1 Ogden, W i l l i a m , 20 Omaha G r a i n Exchange, 34 online trading. See electronic trading open auction, 187n9 open outcry traders: contested claims that electronic markets provide greater transparency, 54; desire to protect their markets, 6 9 . See also traders open outcry trading: ambiguities, 144, 145; based on t h e relationships between lo­ cals and brokers in the pits, 6 1 - 6 6 ; delivery a n d receipt o f bids and offers, 1 4 8 - 4 9 ; diverse elements of, 168; for­ mal steps of, 58; informational trans­ parency, 1 4 4 ; physical strategy in the pit, 1 4 9 - 5 1 ; social information founded in deep knowledge of the local environ­ ment, 1 4 4 ; space of the pit defines the market, 5 7 ; supported by physical and social organization ofthe pit, 5 6 - 5 7 ; transition from to electronic trading, vii, 5 - 6 , 1 3 , 80, 143. See also trading pit

markets, 7 3 - 7 4 ; Christmas party, 1 1 7 18; formal training program designed to create responsible risk-takers, 1 2 9 30; goal of substituting abstract princi­ pals for personal recruiting networks, 83; goal to increase profits bv expand­ ing the ways their traders would per­ ceive the market, 171-72; Market Sound, 1 55; notion that opposing views build a liquid market, 92; provision of market-makers to European exchanges, 74, 82; recruitment of professionalized traders within a multiculturalist para­ digm, 74, 82, 8 3 - 8 9 , 9 1 - 9 2 , 1 6 9 , 1 7 1 72, 173; recruitment of traders who worked on the floor of the L I F F E , 7 8 79; self-discipline, 174; tensions be­ tween new workforce and experienced traders, 8 7 - 8 9 , 9 1 ; training focused on producing speculators, not experts, 85 Perkins Silver traders, 1 5 4 - 5 9 ; admired Chicago group for their aggressive style of speculation, 9 0 ; construction of so­ cial scenarios to explain the move­ ments of the market, 1 5 7 - 5 8 ; construc­ tion of virtual competitors, 89; focus on numbers, 155; market chatter, 156-57; practice o f losing money to gain infor­ mation, 1 5 8 - 5 9

cal experiments, 1 6 4 - 6 5 , 169, 174; pro­ gressive, 201 n4; within a reflexive modernity, 13; sustained by routinization, 9 4 ; technological, 144, 162-63, 174 retlexivity, 13 representation, 1 7 4 - 7 7 risk-management markets, 9 4 risk managers, 98 risk-taking: acting at the limit of knowl­ edge, 19in4; as business ofthe futures industry, 9 3 ; linked with fighting, 1 0 5 6; productivity o f in the construction of financial space and in the elaboration of economic selves, 93; requires total focus, 104 Roeder, David, 72 Rose, Joe, 1 3 0 - 3 1 , 136 Ramsey, Henry A., 34, 35. 36, 37. 38, 40, 42-43 runners, 6 0 Runnyinede Trust, 9 1 , 172

simultaneous trading, in the pit and on the screen, 1 ol Sinclair, Upton, The ]ungk, 15 "size," hierarchy ot in the pit, 9 9 skyscraper, 184n31, 184n34 "small trader," 9 9 Smith, Chris, 114 social composition, of traders, 171-73 social eontextualization, of trades, 144, 20 In 5 social credit and debt, 12 social experiments, 8 2 - 9 2 speculation, 2 - 3 , 97; Chicago style, 82 speculators, 4, 5; buy and sell contracts "on margin," 97; provide liquidity, 1 8 7 n i 2 , use futures contracts to exploit rather than allay risk, 97 Speed, J. j . , 21 "spreading," 8 5 - 8 6 , 142, 201118, 2()4n28 standard grading of quality, 23 St. U r n s , 20 Stone Age Economics,

Sahlins, Marshall, 12. 13

Straw, Jack, 91 Sunday Telegraph,

Sao Paolo, successfully adopted "the Chi­

"support levels," 147

cago trading culture," 73

13

77

Swift, Gustavus, 16

scalpers, 62, 129, 134, 135, 136, 138 scalping, 85, 142, 200n8

taking losses, 106, 123, 130-31

Schatz,85,204n28

The Tao o\ Trading, 135

Philadelphia, 20

Schroeder's, 75

Taylor, Charles, 20

pit. See trading pit pit names, 119

screen-based trading. See electronic trading

Taylor, William, 184n3()

self. 1 7 3 - 7 4

"technical analysis," 146-47

"pit rats," 6 5 - 6 6

self-determination, 106

technological frame, 2 0 2 n l 4

Poovey, Mary, 142, 1 8 2 n l 0

self-discipline. See discipline

technological rationalization, 144. 1 6 2 -

practical experiments, x, 1 6 4 - 6 5 , 169, 174

self-governance, 199n3

price information, 39, 42, 11 2

self-knowledge, 132

open-plan trading rooms, 185n54 options, 7

professional norms, 128

self-management, 1 0 4 - 5 , 129-30; collapse

"out trades," 6 4

progressive rationalization, 201n4

Sennett, Richard, 181n7

Project A, 10, 5 1 , 6 9 , 203n23

Shapin, Steven, 1122

profit and loss ( P & L ) , 153

of, 108

Shepherdson, H. F., 34

Paschen, Christopher, 37

63, 174 technology: defines audience for risktaking performances, 98; of electronic trading, 141, 163; information, 6, 141; pitas, 167; shapes the way traders work, 170 telegraph: caused fundamental shift m the

P e c k , E . P , 34

"random walk," 151, 203a22

Shields, James, 21

concept of commerce, 22, and free

Perkins, Eric, 7 3 , 74, 92

"range break," 147

shoe lifts. 149

flow of information across space, 22;

rationalization: aesthetic, 174, 176; daily

"shorting" the market, 145

lines, 20; and redefinition of physical

Perkins Silver, 8, 10, 73: barrow boy traders, 7 7 , 78, 7 9 - 8 0 , 87, 89, 141: Chi­ cago dealing room, 157; Chicago-style speculation in online European futures

work of, 205n7; and design of informa­

Silver, Philip, 7 3 , 7 4 , 8 6 - 8 7 , 128

tion markets, 159; enacted by futures

Simmel, Georg, 11, 189nl9, 1 9 6 a l ,

traders, 1 4 1 - 4 2 ; in the form of practi­

198n20, 2 0 5 n l 9

markets, 1 8 3 n l 8 Thatcher, Margaret,

77

ticks and dollars, separating, 130-31

224

*

Index

"to-arrivc" contracts, 1B

trading families, 55, 6 3 - 6 6

trade: choreography of, 58, 6 0 - 6 1 ; legal re­

trading floor: of Chicago Board of "trade

quirements, 6 0 ; originates outside the

( C B O T ) , 3 8 - 4 4 ; demise of, viii, 80;

pits, 59; relies on verbal agreements be­

homosocial environment, 1 2 2 - 2 3 ,

tween members to cement, 61; rewards

See also trading pit

of at the nexus of risk and self- •

trading jackets, 119

definition, 1 0 8 - 9 ; stages of, 5 9 - 6 6 ; ver­

trading neighborhoods, 194n22

bal communication and physical ac­

trading pit, x; ambient noise affected the

tion, 60—61. See also open outcry

market as a whole, 150; apprenticeship

trading

system, 63; competition over space,

trade checker. 61

102; competitions over space, 102;

traders: adrenaline buzz, 107; asocial per­

crowding early on hindered speculators

formances, 1 1 3 - 1 4 , 198nl7; "big" and

from getting to all the available trades,

"small," 9 9 ; codes invert the codes of

S7; interaction with conventions of

civilized behavior, 1 9 7 n l 3 ; competi­

trading work, 186nl; interpersonal or­

tion, 176; deconstruct ongoing narra­

ganization of, 63, 99; octagonal tiers,

tives o f success and failure, 1 3 3 - 3 5 ;

58; realm of social interactions and ex­

describe financial losses in bodily terms

changes, 187nl 1; risk surveillance, 9 8 ;

of sex and violence, 123; in the Dow

risk-taking, 9 4 ; site for identifying the

Jones Industrial Average Index Futures

contours of the market, 57; space and

pit, 120; established the trading room

time of the market localized in, 1 3 5; as

as a separate space for economic ac­

symbol, 47, 59; traders can see and be

tion, 118; losses, 106; managing the

seen by even other trader, 98; as a trad­

risk-taking self, 1 0 4 - 9 ; market as moral

ing technology, x, 167; unified space of

authority, 139; maverick aesthetics,

financial competition, 148

198nn 14,19; performances of self, 101,

"trading range," 147

1 1 9 - 2 5 , 128; physical immersion in

trading screen: aesthetic rationalization,

the market, 136; physical location in the pit, 149; practical jokes, 123-24; re­ lationship to the market, 113; reliance on knowledge of their competitors, 89;

176; design of, 175 Treasury futures markets, 45, 4 9 , 54, 67, 85, 96 Trobriand Islands, 12

risk-taking as a strategy for gaining sta­ tus, 1 0 0 - 1 0 4 ; self-destructive behavior, 1 0 7 - 8 ; sense of vocation anchored in

urban nexus. 166 utilitarianism, 1 2

the practice of discipline, 128; sexual words of insult and debasement, 123;

Walsh, Tom, 138

style mocks the corporate version of

Warburg, 75

manhood, 120; superstitions, 122; tech­

"warehouse receipts," 18

niques o f separation, 199n6; unadulter­

Watson, F. R . , 4 0

ated economic core, 117; use of net­

Weber, Max, 11, 163, 164, 201n4

works and judgment to assist friends

Western Union, 42

and cultivate bonds with other traders,

Williamson, Brian, 1 8 9 n l 4

100; women, 8 8 - 8 9 , 101-2; working

women traders, 8 8 - 8 9 , 1 0 1 - 2

both the online and pit markets simul­

working-class traders, 76

taneously, 161; "in the zone," 135-39. See also electronic trading; open outcn

Yahoo, 6

traders trading cards, 61

Zeli/er, Viviana, 131, 199n6