This post is a bit late, but is interesting enough to read anyway.
J. Edwards at TickTalk gives a nice history of the tradition of dropping the ball on New Year's Eve. Here is an excerpt:
Although it’s arguably the most famous of ball drops, the concept of dropping a ball from a pinnacle point in the city to mark a precise point in time isn’t a Times Square first. The practice dates back almost 100 years earlier than the first Times Square ball drop. Initially conceived by Robert Wauchope, of England, time balls were used to synchronize the deck watches and ship chronometers of Navy vessels, who depended on accurate timekeepers to help them navigate longitudinally.
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