The year 1896 was a suspenseful one for American financial markets. William Jennings Bryan had been nominated for president by the Democrats on a platform of "bimetalism," a bid to adopt a gold and silver standard that would break what was seen as the sinister world dominance of Britain's single standard of gold.
Investors were nervous. So on election night, New York brokers tried something new. They stayed open to the early morning hours at special offices in midtown Manhattan, giving wealthy clients the chance to trade American securities in London, via undersea telegraph cable, basing their decisions on early election returns.
David D. Hale of Chicago's Kemper Financial Services calls it North America's first experiment at intercontinental trading. Today, international dealing through ocean-spanning telecommunications has become an enormous and entirely routine business, tying the world's financial markets together in a way never before seen.
Today's low-cost, instantly available telephone and data transmission lines allow people to follow closely price movements on markets anywhere in the world and, in many cases, to respond with orders to buy or sell.
But such communication technology is meaningful only because governments allow money to flow. Starting in the 1970s, the noncommunist world drastically eased regulations on capital movements, breaking with tradition in a deliberate decision to integrate markets and stand together.
Most of the United Kingdom's controls were lifted in 1979 shortly after Margaret Thatcher's conservative government came to power. In Japan, the big move was in 1980. The United States already had generally free movement of capital, but it has done its part by deregulating interest rates and stock transaction fees and easing barriers between commercial and investment banking.
The 1970s saw emergence of the so-called Euromarkets, enormous pools of stateless and essentially unregulated capital on deposit in banks around the world, waiting to be tapped. A new and often bewildering range of financial instruments came into existence to help in the business of moving money from country to country and managing financial risk.
The floating of international exchange rates in 1972 created a need for day-and-night trading in currencies. Today, foreign exchange is the market that has moved furthest toward the concept of 24-hour, global trading. Every financial center deals in basically the same currencies, and as the world rotates brokers electronically shift the place they do business to the spot where daylight shines, running in succession to New York, Los Angeles, Sydney, Tokyo, Hong Kong, Singapore, London and back to New York.
London is now the world's foreign exchange center, with trading of about $100 billion a day. The seven-year-old Iran-Iraq war, in the meantime, has hamstrung attempts to establish a world-class financial center in the tiny Persian Gulf states, midway between the east Asian markets and Europe.
Integration continues. Last year, London kicked off its "Big Bang," a one-stroke market deregulation effort aimed at making the city more of an international financial center. The long-exclusive Tokyo Stock Exchange admitted its first foreign members. This year, the European Community nations are moving toward lifting the few remaining limits on capital flows between them.
A career today with the world's big securities firms is truly an international undertaking. Clustered around each of the world's main markets now are basically the same collection of names -- Nomura, Merrill Lynch, Kleinwort Benson, Daiwa and Salomon Bros. In Frankfurt, seat of the most important of West Germany's eight exchanges, this year alone has seen the opening of offices by Salomon Bros., Goldman Sachs and Morgan Stanley.