Bucket Shops And Stock Market Interest

Bloomberg looks at how gambling at bucket shops in the late 19th century drove interest in stock markets for the general public (h/t Ritholtz):

In 1863, electrician Edward A. Calahan invented the stock ticker, a telegraph receiver capable of printing letters and numbers onto paper tape. At first, almost all ticker customers were brokers and bankers. By around 1880, however, the ticker had spawned a new kind of business, called bucket shops.
Bucket shops were the equivalent of off-track betting parlors where customers placed wagers on the price movements of stocks, offering a kind of vicarious participation in the market. Although bucket shops subscribed to the same ticker service that bankers and brokers did, no securities changed hands and the wagers didn’t affect share prices on stock exchanges. Several hundred of these shops were operating around the country by the turn of the 20th century.
Before their rise, the public had typically viewed the stock market from the sidelines, as fascinated but disinterested spectators. Financial failure was something that high-profile speculators suffered, not ordinary people. The bucket shops changed that. After 1880, stories began appearing in newspapers about reckless men who had squandered tens of thousands of dollars, bankrupted themselves, ruined their reputations and destroyed their families.
Although some contemporaries blamed the amateur investors for their own failures, others blamed the big exchanges for fostering a get-rich-quick mentality. In 1903, federal appellate judges prevented the Chicago Board of Trade from cutting off the flow of its quotations to bucket shops. The vast majority of transactions on the Board of Trade were “in all essentials gambling transactions,” they ruled. “The Board of Trade does not come with clean hands, nor for a lawful purpose, and for these reasons its prayer for aid must be denied.”
Those who believed in the social and economic utility of speculation on the organized exchanges, however, regarded increasing public participation via bucket shops as the real problem.

It is a good thing they got the gambling out of the capital markets.  Otherwise, we could have all kinds of trouble.