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to 1,443,875,000 bushels. The New York market for wheat is small compared to that of Chicago. Record of the amount of trading in options is no longer kept, but in a lively market it runs into millions of bushels daily. Under very exceptional circumstances it is said that ten million bushels of wheat have been sold in the Chicago pit in less than ten minutes. The unit on the Chicago and New York exchanges is 5,000 bushels of wheat. In Chicago 1 per cent variation is allowed on the contract, and in New York 5 per cent. When wheat is sold in “boat-load lots to arrive” 8,000 bushels is understood as the unit, and 10 per cent deficit or excess does not vitiate the delivery. The Evils of Speculation.—The modern speculative system is of such recent origin, and its operations seem so complex to the ordinary layman who is unacquainted with produce exchanges, that it was and is little understood. Its evils were more easily recognized than its benefits. Without an understanding of speculation, it was easy to ascribe many evils to it with which it had no connection. “The modern system of “futures’ has proved itself a convenient scapegoat for all the evils of the grain trade. It is charged with being the cause of low prices and of high prices, with increasing trade risks, and with diminishing them till there is no chance for profit. A few years ago the farming class clamored for the suppression of the speculative market, while recently the Kansas farmers started a movement to contribute a cent a bushel on all their wheat to a fund for the benefit of the most daring speculator of the Chicago market.’’’ As the functions of modern speculation were better understood, its advantage became more apparent, and the speculator was looked upon as something more than a mere gambler. Opposition became more rational and less intense. The evils of speculation may be divided into three general classes: (1) Corners; (2) public gambling and “bucket shops;” and (3) manipulations in general. Corners.--To “corner'’ wheat is to secure such a control over the existing supply as to be able to dictate its price. Success in this is so difficult that it is very rare. Corners and the onposition to them are not of modern origin, for even in antiquity there were prohibitions to cornering grain. Perhaps the first great corner was that of Joseph in Egypt. He bought grain outright. This was the only type of corner that could be effected before the advent of the modern speculative market. The appearance of the world market has made impossible the perfect control of the whole supply of actual wheat. Even partial control is possible only under very unusual and favorable conditions. Neither can any great or extended control over local supply be maintained, on account of the ease and rapidity with which wheat can be transported to any market.

1 Emery, Econ. Jour (1899) : . 15. * Lexis, Hand worterbuch d. Staatswissenschaften, 3:861.

The speculative corner arose with the practice of selling short. This is not a corner of the world supply of wheat, but only of wheat for delivery at a particular time and place. Such a corner is always run by the bulls, who effect the overselling of the market by securing control of local supplies and by inducing short-selling. The result is that there is no wheat with which to cover short-sales. Such a corner is absolutely effective, for the short sellers must cover their contracts before the end of the month, or default. It is not without its difficulties, however. In order that the shorts can move no wheat for delivery except on the terms of the cornerer, he must buy at rising prices all that is offered. Almost in variably the amount that can be offered at the increased prices is more than was calculated. Corners in Chicago have been broken by the big Minnesota millers who, at the last moment, have found it profitable to sell their large stores by telegraph. After the corners were broken, they could buy back most of this wheat before it had left their elevators.

After the supply has been successfully cornered the hardest part of the game is still to be played. The grain accumulated in cornering the supply must be disposed of. This is what Hutchinson, the first great cornerer, called ‘‘getting rid of the corpse.” High prices were paid for enormous quantities of wheat that must be sold on a continually falling market, for after the cornerer settles with the shorts the price falls at once. He must squeeze enough out of the shorts to make himself whole in selling his own accumulation at the lower price. In such a corner wheat in general does not rise in price, but only wheat for delivery at a particular time in that market where the corner was run.

As Chicago is the great center of the wheat trade, it is the most advantageous place for running a corner, and the Chicago Board of Trade has been the scene of the great corners. The first one was run by B. P. Hutchinson in 1867. He bought the million bushels of contract wheat stored in Chicago warehouses, and all of the options, or privileges, that he could induce the shorts to sell. At the maturity of their contracts, the sellers were unable to deliver the wheat which they had sold. They ‘‘walked to the captain's office,’’ and settled their accounts at $2.85 per bushel. Within an hour after they had settled, . the price of wheat fell 50 cents, and within a day it fell 90 cents. It was an attractive manipulation, and looked easy. John B. Lyon repeated the operation during the next year, and the price rose to $2.20 per bushel. In 1872, Lyon started another corner, but the Northwest now had more wheat than he could control with his limited capital. The corner broke ruinously, and within two days the price fell 50 cents. Corners were run on the Chicago board in 1880, 1881 and 1882, but they were of no great magnitude.

In 1887 a mysterious “bull clique” was buying strongly of the May option. The clique was variously accredited as being John W. Mackay and his bonanza friends; as the Standard Oil millionaires; and as E. L. Harper and some of his Cincinnati associates. The conflict between the clique and the trade resulted disastrously to the former. When the wreck was cleared away, E. L. Harper was found in the débris. Accused of looting the Fidelity National bank of Cincinnati, of which he was vice-president, he was sent to the Ohio penitentiary, but was subsequently pardoned.' The last chapter of the corner was written in 1906, when the United States circuit court rendered a verdict against E. L. Harper for $5,280,333 in favor of the receiver of the Cincinnati bank. “

Another corner put wheat to the two dollar mark in 1888. This was a corner in September wheat, and B. P. Hutchinson was again a prominent manipulator. He figured that not more than three million bushels could be delivered to him on his contracts, but this amount was exceeded by 330,000 bushels on the last day of September. It was these, and not the three

1 Payne, Century, 65:748. * Wall St. Jour., Jan. 6, 1906.

million, that seemed excessive.' 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. 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 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 * Emery, Econ. Jour., 9:56.

1 Hutchinson, N. Amer. Rev., 153:41 6-7.

- 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.

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