Confusion in the Pit

Every morning at 9:30, a big bell rings in the pit room of Chicago's Board of Trade. It sends traders swarming over the floor, starts the furious finger signaling which means "buy" and "sell" in the world's greatest grain exchange. But one day last week the big bell did not ring at 9:30; for the first time in 13 years,* grain trading stopped in Chicago.

The stoppage was part of a dizzy disruption caused by an OPA boost in grain ceilings early in May. On May 11, the Board of Trade stopped all trading in old futures contracts (i.e., promises to buy or sell grain at a future date) except at old ceilings.

On May 21, the No. 1 U.S. grain trader, Cargill, Inc., let out a yowl. Cargill, famed for cornering corn in 1937, had again bought heavily in corn, anticipating the OPA action. Now, with six million bushels on hand, it stood to lose "in excess of $1 million" if it could not sell grain on its futures contracts at the new ceilings. Cargill sued the Board of Trade for treble damages.

Exchange directors gulped, quickly shifted ground to allow trading in old contracts only at new ceilings. Thus the pinch was put on traders who had sold "short" (i.e., sold grain they didn't own in hopes of buying it at a lower price before the delivery date). They stood to lose an estimated total of $1,870,000.

Off to Court. None of these traders was as powerful as Cargill. But one of them, Chicago's Robert W. Buckley, a well-heeled gentleman farmer and trader who had sold short, decided that he, too, would go to court. He persuaded Federal Judge William H. Holly to convene court nearly 45 minutes early on the day that the second ruling was to take effect, won a temporary restraining order against the Board of Trade.

Instead of opening the exchange, the board went to court itself. It got another federal judge, Elwyn Riley Shaw, to dissolve the Holly order. Said Judge Shaw: "Just because one man is short is no reason for suspending operations of the world's largest grain market."

Finally, at 11:30, the big bell rang. After the delay, trading (in old futures at the new ceilings) was even more lively than usual. By week's end, all grain prices were up to their new ceilings at Chicago and the luckless "shorts" stood to lose their shirts. The Cargill suit was still pending. Robert Buckley (suspended from trading on a technicality) was still fighting mad and might go to court again. Nobody was selling confusion short.

*In 1933, shortly after Franklin Roosevelt's emergency devaluation of the dollar, the Board of Trade closed down for two days.

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