How the Speed of Information Changed the Markets Forever — From 1844 to Algorithmic Trading
- ChartSaga
- May 24
- 5 min read
May 24, 1844: A Dot, a Dash, a Revolution
Washington D.C. to Baltimore. Roughly sixty kilometers. Four words from the Book of Numbers.
When Samuel Morse transmitted that message on May 24, 1844, he wasn't just testing a communication technology. Without realizing it, he was permanently rewriting the DNA of financial markets.
Until that moment, information traveled at the speed of the human body — horses, ships, messengers. The outcome of a battle could take days, sometimes weeks, to reach London. A company's bankruptcy in New York could arrive in Boston long after the market had already reacted. Financial markets were built, at their core, on a single foundation: information asymmetry. Whoever got the news first, won.
Morse's telegraph shattered that equation.
Information Asymmetry: The Oldest Weapon in Finance
Look closely at financial history, and you'll notice that the greatest fortunes were almost always born from early access to information.
In 1815, Nathan Mayer Rothschild learned the outcome of the Battle of Waterloo hours before anyone else. Using a private courier network and carrier pigeons, he discovered Napoleon's defeat well ahead of the market. He first sold his bonds, flooding the market with fear. Then, as prices crashed, he quietly bought everything back at rock-bottom prices. In a single day, he dominated the British bond market.
Information was the most valuable asset in the room.
But that kind of edge was reserved for bankers and aristocrats. Access to knowledge was a privilege of geography and class.
The telegraph cracked that structure open. For the first time, a price movement could ripple across continents almost instantly.
The Telegraph Hits Wall Street: A Financial Earthquake in the 1840s
Just a few years after Morse secured his patent, telegraph lines were connected to the New York Stock Exchange around 1846. The impact was immediate.
Regional price discrepancies — the kind of gaps that made arbitrage so profitable — began to close rapidly. The same stock now traded at the same price in Boston and New York. Markets were integrating.
But something more dramatic followed: speculators turned the telegraph into a weapon.
Pump-and-dump schemes, false news, and coordinated market manipulation became systematic tools of the telegraph age. In the Black Friday scandal of 1869, Jay Gould and James Fisk used the most advanced communication network of their era — the telegraph — to corner the gold market. Thousands of investors were ruined.
The technology had changed. Human psychology had not.
Greed, fear, manipulation — they existed before the telegraph and would persist long after. They simply traveled faster now.
The Speed Race: From Telegraph to Fiber Optic Cables Underground
Once Morse opened that door, there was no closing it. The next 180 years of financial history are, in essence, a history of speed.
1866 — The Transatlantic Cable: Near-instant price communication between European and American exchanges became possible. The arbitrage window between London and New York shrank from days to minutes.
1867 — The Stock Ticker: Thomas Edison's device printed real-time stock prices on a paper tape. Traders could now follow price movements as they happened. Wall Street began breathing to the rhythm of that machine.
1980s — Electronic Exchanges: NASDAQ launched as a fully computer-based exchange. Human floor brokers began giving way to screens and servers.
2000s — Colocation: High-frequency trading firms began placing their servers directly inside exchange buildings. The goal was reaction times approaching the speed of light. Even a few hundred meters of cable distance mattered.
2010 — The Flash Crash: On May 6, 2010, the Dow Jones Industrial Average plunged nearly 1,000 points in minutes before partially recovering. Much of the cause traced back to cascading reactions between algorithmic trading systems. No single human made that call. The market had collapsed — and partially healed — on its own.
Morse's question echoes differently now. What hath God wrought?
Algorithmic Trading: When Speed Leaves Humans Behind
Today, somewhere between sixty and seventy percent of all transactions on major global exchanges are executed by algorithms. These systems can analyze data and place orders tens of thousands of times faster than a human eye can blink.
High-Frequency Trading — HFT — captures tiny price discrepancies between markets in fractions of a millisecond. A single HFT firm might execute millions of trades in one day, with each trade earning a fraction of a cent. But when you multiply fractions by millions, the numbers become staggering.
So how different is this from Samuel Morse's telegraph, really?
At its core, not very. It's still a race to access information faster. Still an attempt to turn technological advantage into market profit. Still information asymmetry. The game is just played in nanoseconds now.
The Psychology Never Changed — Technology Just Made the Mirror Bigger
Here's the question that sits at the heart of ChartSaga's mission: Did all this speed actually change human behavior?
No. It made it more visible.
The algorithms that triggered the 2010 Flash Crash were ultimately expressions of human logic — coded instructions that said "if prices fall, sell faster." Panic behavior had been taught to machines. And machines executed that panic millions of times faster than any trader could.
Behavioral finance researchers today show that algorithmic systems inherit human biases. Herd mentality, loss aversion, hindsight bias — these patterns are baked into the code, whether the engineers intended it or not.
Rothschild's horses and pigeons in 1815. Morse's telegraph in 1844. Today's fiber optic cables and quantum computing labs. The tool keeps changing. The drive behind it never does.
The Future of Information: Markets at Quantum Speed
The speed race shows no signs of slowing down.
Today, some of the sharpest minds in finance are working on quantum computing — systems that could solve portfolio optimization and risk calculation problems in seconds that would take classical computers years to process.
At the same time, artificial intelligence models are no longer just fast — they're adaptive. They recognize market cycles, incorporate sentiment analysis, and interpret signals that make Morse code look like cave painting.
But this raises a genuinely interesting question: when everyone has access to the same technology, where does the real edge come from?
Perhaps the answer is the same as it was in Morse's era. Asking the right question. Breaking the pattern. Thinking differently from the crowd.
Jim Simons did that. Michael Burry did that. Mandelbrot did that.
And maybe the next great market insight won't come from the fastest algorithm — but from the
most original mind.
Closing: From a Single Click to the Nanosecond Age
When Samuel Morse pressed that key on May 24, 1844, he probably wasn't thinking about financial markets. He just wanted to prove that electricity could carry a message.
But that first quiet click set off the longest chain reaction in financial history.
Information is abundant — but speed has never been free. In every era, those who commanded that speed shaped the market. Telegraph operators, ticker tape traders, NASDAQ's early engineers, today's HFT developers.
The markets evolved. Human nature did not.
And perhaps that's the strongest argument that the greatest edge still belongs to the person who understands their own mind.
This article is part of ChartSaga's "This Day in History" series — where the overlooked turning points of financial history meet human psychology and market dynamics.
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