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Once a week we publish a short story about money, exchanges, investing and the economy: a real case from market history, with every fact checked against a source. If you would like to receive stories like these, themed collections or digests, message us.

Market story

How two traders cost the exchange its onions

Published .

A sack of onions was once worth less than an empty sack. In the autumn of 1955, traders Sam Siegel and Vincent Kosuga bought up nearly all the onions in Chicago, along with the futures on them. By threatening to flood the market, they persuaded farmers to buy their onions, promising to hold back the rest, and then began betting on a fall in prices themselves. Spoiling onions were shipped out of the city, repackaged and brought back, passed off as new shipments.

A sack that had cost $2.75 in August fell to 10 cents. Siegel and Kosuga made millions, while many farmers were ruined and even had to pay to get rid of their onions.

In 1958, onion futures were banned by law. The Chicago Mercantile Exchange lost a profitable commodity and turned to pork bellies and frozen orange juice concentrate. In 1972 it opened the first financial futures market, and today it is the world’s largest exchange by open interest. Onion futures are still banned, and since 2010 the same sentence of the law has listed movie box office receipts alongside onions.

Source: Wikipedia, Onion Futures Act

Story archive

All issues in order, newest first.

  1. How a goatskin bond outlived the guilder and pays in eurosOf the tens of thousands of manuscripts in Yale’s rare book library, one still earns interest.
  2. The pension where the last survivor winsThe tontine insured against a misfortune nobody expects: living too long.
  3. How a pact of 24 brokers became the New York Stock ExchangeThe world’s largest stock exchange began as a cartel: 24 brokers promised each other to hold their commissions.
  4. How “Bogle’s Folly” grew into trillionsThe first index fund for retail investors raised just $11 million, and competitors dubbed the venture “Bogle’s Folly.”
  5. How two traders cost the exchange its onionsA sack of onions was once worth less than an empty sack.

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