Chicago by day and night

by Harold R. Vynne

This is the principle on which a “flyer” may be taken on the Board. This outside speculation is of course only a feature of the vast legitimate buying and selling that is daily transacted on the Board; but it is there, just the same, and it will remain just so long as it is legal to deal in “futures.” There is a bill now before Congress making it unlawful to deal in “futures” when those futures affect the market price of the necessaries of life. If the bill should become a law it would put a sudden stop to outside speculation on the Chicago Board of Trade. The proposed measure has awakened such a storm of opposition, however, that it is hardly likely to go through. Many people claim that such a law would virtually kill business on the Board and that it would result in direct disadvantage to the farmer, for whose benefit it was framed.

Quite aside from the facilities that it presents for a bit of high speculation the Board of Trade is in itself an interesting place to visit. The great stone building at the head of La Salle street, where so many colossal fortunes have been lost and won, is invariably one of the first places that strangers seek. It is the largest institution of its kind in the world, being constructed mainly of gray granite. The height of the tower is 322 feet above the street. Around the great hall where the daily sessions of the mammoth exchange are held are galleries to which visitors are admitted free. During periods of great excitement, caused by a rapid advance or decline in prices, these galleries are thronged with people who watch with thrilling interest the half-wild human panorama below. At such times the stranger may be excused for imagining that Bedlam had broken loose. Groups of brokers stand about shouting at each other like so many madmen. Messengers are scurrying hither and thither, and at times the scattering yells break into a chorused roar beside which the screeching of a dozen locomotives in unison would seem tame in comparison. The Board of Trade has 2,000 members. The membership fee is $10,000, but the places of members who die or resign may occasionally be purchased for about half that amount. While the claim is always made that only legitimate business is transacted on the Board of Trade the statement cannot be disputed that it presents the greatest opportunity for high gambling in the whole world. Perhaps it is not altogether gambling, either, inasmuch as it is not so much a game of chance as a game of judgment and skill, in which the cleverest and not the luckiest players come out on top.

However that may be there have been some mighty fortunes won and lost on the Chicago Board of Trade. There was one memorable Saturday morning, nearly ten years ago, before the Board moved into its present quarters, when a dozen houses that had hitherto been regarded as the most substantial among the substantial went down with a crash. It was the year of the famous lard corner. Peter McGeoch, the great speculator and capitalist, tried to buy all the lard in sight. He succeeded in advancing the price considerably, but the inevitable break came and lard suddenly declined $3 a tierce. All the other products declined in sympathy. McGeoch, in the parlance of the day, went broke, and he dragged a lot of other men with him. Old operators say they never saw such scenes on the Board as were witnessed that day. Strong men stood about crying like babies at the sight of their vanishing fortunes, and even those who were earning thousands of dollars with the flight of every five minutes stood transfixed with terror lest prices should suddenly bulge the other way and land them in ruin before they had time to realize their profits. There was another very similar scene in the year 1887, when E. L. Harper, President of the Fidelity Bank, of Cincinnati, tried to “corner” wheat in Chicago. He and the syndicate he represented came within an ace of success. They ran the price up nearly 15 cents a bushel and had an enormous profit on paper. But there came a call for more “margins.” Hundreds of thousands of dollars in greenbacks were shipped to Chicago from Cincinnati, but the sum sent was not big enough, and before the required amount could be raised the reaction came. There were rumors one bright morning that a crash was pending. The crash came and wheat dropped 20 cents a bushel in one hour. The syndicate was ruined and the very men who had sold “short” and had risen that morning in the expectation of meeting ruin themselves found by the same freak of fortune which had overwhelmed their adversaries that they were enriched by hundreds of thousands of dollars. The aftermath of that famous corner is history. It was found that Harper had used the Fidelity Bank’s money as well as his own and the United States authorities took charge of the institution. Harper was tried and sent to the penitentiary for ten years.

In order to realize the splendor of such a game one must ponder on the actual facts. If Harper had been able to raise about $50,000 more (he had already put up $500,000 in margins) he and his friends would have cleared millions. As it was they just fell short of the mark and were irretrievably ruined. But would not any confirmed gamester claim that such a royal game was worth the risk?

The attempts to run a corner on the Chicago Board of Trade have not always been unsuccessful. B. P. Hutchinson, an old gentleman who afterward went to New York as offering a more profitable field for his operations, was one of the few men who have had money enough to engineer a “corner,” run it to its end and pocket the enormous profits. “Old Hutch,” as he was then familiarly named, was credited with losing a half a million cold dollars in the Harper deal. The gentlemen who got this money were of course those who sold “short,” and they were said to be a group of millionaires who “had it in” for “Old Hutch,” and had laid a trap to catch him. Whether these rumors had any substantiation in fact the writer knows not. If so, however, it may go on record as a fact the “Old Hutch” got right royally even with the gentlemen who “did him up” on this occasion. For a year or so after this Harper deal he ran a corner in wheat entirely on his own account. It was the option for the month of November to which he turned his attention. Be that as it may, he bought all the wheat that was offered him and paid for it at prices ranging from 90 cents to $1.10. The month drew to a close. The “bears” had one day in which to fill their contracts to “Old Hutch” at ruinous prices. They held off and on the last day of the month, at the expiration of which the men who had sold “short” to Hutch were compelled to either pay their difference or default (that is fail), the old gentleman stepped up and bought a single car-load of wheat at $2.00 per bushel, in order to establish a price, and in, slang parlance, “that was where he had ’em.” He not only recovered his losses but milked the alleged clique of millionaires for at least a million dollars besides. They were able to pay the loss, and “Old Hutch” went on his way rejoicing. It was whispered about that time that “Old Hutch’s” intellect went a little awry after this terrible strain. He disappeared, and the newspapers were full of dire hints as to the probability of his having wandered off and drowned himself, or else blown out his brains. He turned up all right in New York, however, carrying on his operations with the old-time skill and nerve, and is, presumably, still making more money to leave his sons. A very fat and interesting volume might be written about Mr. B. P. Hutchinson and his operations in the Chicago grain market.

The very magnitude of deals like those above described is calculated to appall the average mind. Let not the reader suppose, however, that the same opportunities of which the millionaire capitalist avails himself lie open to every one. Far from it. Unlimited resources and a life-long familiarity with the intricacies of the market are necessary adjuncts to the manipulation of a corner. If the wayfarer desires to try his luck to the extent of a $50 bill, or a $100 bill, or a $1,000 bill—all well and good. But he is not advised to do so. He would better let it alone. Only on the supposition that there are some men who cannot keep out of a glorious game like this are the foregoing hints given.

On the Board of Trade proper nothing smaller than a 5000-bushel lot of grain or a 250-package lot of provisions can be dealt in. On the other side of the street, however, is the Open Board of Trade, to the floor of which strangers are admitted free, and where one may deal in 1000-bushel or even 500-bushel lots. Here is a place where quick action may be had for one’s money. The intending speculator may make his deal, watch the blackboard, close out and walk away $50 richer or $50 poorer, as the case may be, inside of ten minutes. The speculator takes big chances—he must never forget that he is playing against a certainty of a loss of ⅛ of a cent a bushel (the commission), but the profits, if there are any, are handsome. So are the losses. That, however, is merely information. If you are wise stay away from it, but if you must go in take an old-timer’s advice and go slow.

In addition to the two Boards of Trade there are numerous “bucket-shops” all over town where the stranger can, if he chooses, relieve himself of his wealth without the trouble of a visit to either Boards. A bucket-shop is a snap commission house which claims to operate on the Board of Trade quotations. Their existence is forbidden by law, but plenty are to be found, nevertheless. The quotations come over a “ticker.” The customer buys or sells grain or stocks at a certain price, reports his “margins” and awaits events. In an hour at the outside he will get “action” for his money. There are some bucket-shops that ignore the Board of Trade and carry on their operations by telegraphic quotations from the New York Stock Exchange. If the customer, therefore, would rather operate in Wall street than on the Chicago Board he can readily be accommodated.

The Chicago Stock Exchange, located at the corner of Dearborn and Monroe, is a comparatively new institution but one that flourishes exceedingly. It is devoted to the purchase and sale of Chicago securities of all sorts, such as bank and street railway shares, stocks, bonds, etc. Several of the banking and commission houses connected therewith have private wires to the New York Stock Exchange and if their customers grow weary of “playing” Chicago securities, which do not often fluctuate largely or rapidly, they can be transported to Wall street as quickly as the telegram can transmit the deal they wish to make.

And here the chapter on gambling may be brought to a close. It is only presented as showing the opportunities that the city affords for those of speculative tendencies, and once again the author, conscious of having performed his task with all the conscientiousness at his command, gratuitously advises the reader to let gambling of all sorts and conditions severely alone during such time as he may remain in Chicago. For, while a few may win, the vast majority lose. Always remember that.