Long before GameStop, Wall Street’s legitimacy was challenged by ‘bucket shops’ in 19th century
For some, bucket shops were a ‘shadow market’. For others, a ‘financial netherworld’. Feb 03, 2021 · 07:30 pm ‘Watching the tape or watching the wheel - what is the difference morally?’, illustration by Will Crawford c.1912. | Puck Magazine/Library of Congress
The gleeful manipulation of GameStop’s share price is not the first time amateur investors have created a legitimacy crisis on Wall Street.
In the late 19th century, so-called “bucket shops” allowed the American public to gamble small amounts on the movement of stocks and commodities on the New York and Chicago exchanges.
The gleeful manipulation of GameStop’s share price is not the first time amateur investors have created a legitimacy crisis on Wall Street.
In the late 19th century, so-called “bucket shops” allowed the American public to gamble small amounts on the movement of stocks and commodities on the New York and Chicago exchanges.
In most cases, a bucket shop client wouldn’t own the stock they wagered on: the shop acted more like a bookmaker than a broker, with clients betting against the house that a certain stock would rise.
Historian David Hochfelder describes bucket shops as a “shadow market”. For American Studies scholar Peter Knight, they were a “financial netherworld”. Some bucket shops were outright confidence tricks. The house could manipulate the telegraphic feed of stock prices or arrange “wash sales” to tank heavily-favoured stocks.
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