U. S. v. The Pit

Through wars, panics and the Fire, Chicago's Board of Trade, world's largest grain market, has never closed since it was founded in 1848 on the same day that the city passed an ordinance to put a stop to "horse racing and careless shooting on Chicago's principal streets," But last week a commission composed of President Hoover's Secretary of Agriculture. Secretary of Commerce and Attorney General, tried to throttle the strident voices of the Pit by ordering it to suspend all trading in grain futures for 60 days from Aug. 7. Basis of the order was Farmers National Grain Corp.'s charge that it was illegally denied clearing privileges.

Originating in the Federal Farm Board's effort to support wheat prices, the feud between the Pit and the U. S. has been long and bitter. Much of the Farm Board's trading is conducted through Farmers National, a co-operative buttressed with Farm Board funds. Though Farmers National has always been able to buy & sell, it lost its clearing privileges when its subsidiary, Updike Grain Co., a member of the Board of Trade's affiliated clearing corporation, was suspended because its officers were charged with swearing false affidavits of ownership (TIME, June 6).* To avoid paying commissions to other members of the clearing corporation for handling their settlements, Farmers National applied for the privilege of settling its heavy transactions itself, was refused membership in the clearing corporation because of the Board's ruling prohibiting corporations (as against partnerships with unlimited liability) which were not members of the Board before April 2, 1929, from becoming members of the clearing corporation. The Board of Trade also contended that Farmers National (which agreed to abide by all rules of the Board when it was admitted in 1930) was violating the rule that 51% of a cooperative's business must be its own. Because farmers throughout the land are now marketing their wheat, no one believed the Board of Trade would actually close. Suspension of the world's largest grain market would throw the grain trade into chaos. Observers thought the Commission's order would undo much of the good political work done when President Hoover made Everett Sanders, a representative of the grain trade, chairman of the Republican National Committee. The Commission hedged by offering to rescind its penalty if the Board of Trade "receded from its position'' within 15 days. President Peter B. Carey said the Board would appeal, if necessary "all the way to the Supreme Court."

*Last week it was revealed that "about three barrels of wine" were included in the price paid by Farmers National Grain Corp. for suspended Updike.

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