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million, that seemed excessive.1 It was the same old story of the supply at the increased price being underestimated.

The difficulties of running a corner increased with the world's production of wheat. Not only did it require more capital on account of the greater supply of wheat, but there were always many sources from which wheat unexpectedly poured into the market and broke the price. In the eighties, India wheat became a factor in defeating corners in the Chicago and San Francisco markets. As the operations of the bull clique increase in magnitude they cannot be concealed, and "the shorts become extremely wary about getting in too deep." Traders as a class had a pronounced aversion to corners, "for they broke people, unsettled values, and made the pit as dangerous as a powder mine." By 1878, many of those who were best qualified to know did not believe that it was still possible to run a successful corner.

In spite of all these opinions, however, in spite of the gigantic magnitude and numerous difficulties of the task, it remained for a young man with great command of capital, with amazing audacity, with unlimited self-confidence, with an unusual capacity for appreciating and comprehending extensive business situations, and with a prodigious recklessness, to show that even under conditions existing at the end of the nineteenth century, not only is a successful speculative corner possible, but also a corner in actual wheat.2 Joseph Leiter appeared in 1897, and his operations extended over about a year before they closed in June, 1898. He began with the strongest position ever held in the wheat trade, for the world's wheat crop in 1897 was less than that of 1894 by over 400,000,000 bushels, and less than that of 1895 by over 300,000,000 bushels, while the production of Europe was over 200,000,000 bushels less in 1897 than in 1896. The United States was practically the only country that had a large surplus for export. Leiter's plan was to control this surplus, and make Europe pay his price for it. With this end in view, he sent an army of purchasers into the Northwest, "contracted for vast storage space, chartered miles of cars and a

1 Hutchinson, N. Amer. Rev., 153:416-7.

2 For verifying the correctness of this account of the Leiter corner and for furnishing important statistics used in the account, the writer is indebted to Mr. Joseph Leiter, who ran the corner.

whole fleet of vessels, secured large contracts for delivery abroad, and prepared to supply all comers at good prices.'' *

Opposed to Leiter were the elevator interests, headed by Philip Armour, as wily and dangerous opponent in a wheat deal as could well be found. Leiter was endeavoring to establish his corner by buying more wheat than Armour could deliver. Armour was endeavoring to deliver more wheat than Leiter could pay for, and thus break his price. The battle for supremacy which followed is one of the most spectacular in our commercial history. Leiter soon held not only millions of bushels of actual wheat, but also contracts for millions of bushels of the December delivery in Chicago. The latter were chiefly short sales by Armour and the elevator people, who already held enormous quantities of wheat, and who expected to deliver actual wheat for every bushel contracted. Being in the elevator business, they were thoroughly equipped for extensive buying and rapid delivery. Their agents and those of Leiter frequently were competitors in securing grain. With such competition, the price of wheat began to jump. At every upward movement of the price "grain appeared as if by magic." By December it was thought that Leiter had the Chicago market cornered, but Armour used steel prowed tugs in plowing through the ice at the head of the lakes, and made a midwinter movement by lake and rail of 6,000,000 bushels from the interior. Unprecedented quantities of wheat were poured into Chicago. With perfect equanimity, Leiter not only paid for every bushel of it, but marked the price up from 85 cents to $1.09. He is reported to have taken over nine million bushels in one month. Armour was able to deliver all that he had sold, and Leiter was able to pay for all that he had bought. A great battle had been fought, but which man out-generaled the other, and with whom was the victory? The bond was paid, but just what its nominations were will perhaps never be known.

After the deal, Leiter owned enormous quantities of wheat. He seemed in no haste to sell, however, and began buying May wheat. His ambition seemed boundless, and his confidence unparalleled. The tension was great, and his movements were watched by the trade and by the public with the intensest interest. The foreign demand remained strong, and all of the 1 Emery, Econ. Jour.. 9:56.

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market factors were bullish. The Spanish-American war could not have come more opportunely if it had been contrived for the deal. Europe now desired to purchase its wheat at once, for a grave vision of Spanish men-of-war cutting off American wheat shipments arose. The French import duties of 36 cents per bushel were suspended. Other countries suspended similar duties. Anticipations of bearish crop news were not fulfilled. These conditions were most favorable for the exportation of wheat, and Leiter took every advantage of them. He seemed to have a monopoly of the wheat business. How profitable a business it was, however, is not known, for many claims were made that he was paying freight charges and granting large discounts on export wheat. That the demand was not purely speculative is shown by the fact that low grades of wheat were bought heavily. Leiter's profits were figured far into the millions by the newspapers, and the pluck and coolness with which he had carried through the great deal largely won for him the admiration of the American public, in spite of the prejudice against speculation. He continued operations by selling off his May wheat and buying about all the cash wheat that came into the market. His further purchases may have been necessary in order to maintain prices, but it was a widely prevalent opinion that he courted the inevitable by not furling sail.

It is claimed that at one time in his wheat corner Leiter had $5,000,000 profits, but in the end he lost this and millions more. Wheat bought by him as low as 64% cents per bushel sold at $1.85. At one period he controlled 35,000,000 bushels of cash wheat and over 140,000,000 bushels under options. He exported and sold 25,000,000 bushels during the course of his famous deal. He was carrying about 15,000,000. bushels of cash wheat in the Northwest and in the course of transportation to Europe on June 13, 1898, when the tremendous load became too .heavy to carry, and his deal ended.

The details of his manipulations cannot be known. He doubtless lost a fortune, and he completely disorganized the wheat business for 10 months. It is claimed that "Leiter's gambling in human food" caused a great rise in the price of bread in England and on the Continent, and that it brought about riots and bloodshed in Italy. While the operations of Leiter undoubtedly had a marked influence on the price of wheat, an influence that was not merely that of a speculative squeeze, but such as to be felt throughout the world, it is entirely unjust to attribute to them the great rise in price and consequent hardships, for "the high prices of wheat from August to June were not mainly the work of Mr. Leiter. For the first time in many years the bears in the wheat market were destined to learn the lesson that the production of wheat might run far short of the required needs, and, whatever direction the efforts at manipulation had taken, the price of wheat was bound to make remarkable advances in the season 1897-98. Leiter was wise enough to recognize the way things were going and to early put himself in a positon to profit from the inevitable outcome, and it was only when he tried to control the market in the face of adverse conditions that he failed."1

It is claimed that an international corner of the surplus wheat of the world was proposed to the United States by the Russian government in 1896. The two governments were to buy wheat at $1 a bushel, and were to sell none below the price which would cover all expense of buying it. The theory was that all of the wheat which could be produced at that price would be needed for food, and that the consumers would pay the price without either government having to buy any wheat. This visionary plan met with no support from the United States.

Public Gambling and "Bucket Shops."—The ordinary dealer or producer can do nothing more foolhardy than to risk his small capital in speculating and "playing the market," for he has no means of adequately knowing the world-wide conditions which determine price, he has not the judgment for properly interpreting such conditions even if he could know them, and those conditions often bring about results of such a magnitude as to sink a fortune completely in a very short time, if the speculator does not keep in touch and harmony with pricedetermining events. The character of speculation has changed somewhat with the increase in wheat supply, and fortunes are now made by men who watch the drift, and shape their way from day to day, "like prudent merchants, according to the current."

The "bucket shop" made its first appearance about a quarter of a century ago. It is always ready to take the opposite side 1 Emery, Econ. Jour., 9:62.

of any speculative transaction which may be proposed. It deals on margins only, and as a rule its transactions are never executed either in a market or on a board of trade. It acts as a clearing house for the deals of its patrons by matching contracts, that is, purchases and sales. Those contracts that are matched cancel each other, at least as far as the bucket shop is concerned. Being simply booked, they never come into the market, and can have no effect on prices. It is only when the bucket shop has a large balance of contracts on one side of the market that it sometimes fears a loss and seeks insurance by itself making the counterbalancing transactions in the speculative market. It is only this small fraction of the bucket shop's transactions that really comes into the market and affects prices through the medium of the speculative supply and demand.

According to the law of chances, the bucket shop has an entirely safe and sound basis from its own point of view. By matching contracts it makes its patrons carry the greatest part of its insurance. The remainder of the insurance is carried by the bucket shop itself. Its advantages over its patrons are in three ways. It carries the risks of only a small fraction of the contracts involved. As a result of this, on a relatively smaller amount of capital, its chances of permanency are greatly increased. By being in continuous existence it secures the effects of advantageous changes in price as well as the disadvantageous ones. These will, at least in a measure, offset each other. It charges the same commissions as the exchanges and thus has a substantial income. The speculator, however, not only must carry all of his risks himself, but usually his capital is also very limited and he has no regular income from transactions. When his capital has been engulfed by a disadvantageous change in price, his operations must cease, and he secures no benefits from subsequent advantageous changes. The great revenue of the bucket shop consists chiefly of its commissions, but it is also continually acquiring the capital which is sunk by its patrons. How certain a process this is, is shown by the fact that the list of names of those dealing with the bucket shop usually changes completely within a few years. If the game were a profitable one to the speculator, it is quite safe to assume that his name would remain permanently on the list.

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