While Kosuga and Siegel’s plan to corner the onion market may have been the most ambitious manipulation scheme seen in the Chicago Mercantile Exchange, it was by no means the first. In 1897, a man named Joseph Leiter attempted to corner the wheat market and nearly pulled it off if not for the efforts of a man called Philip Armour.
The well-known businessman hired ships to break the ice along parts of the Great Lakes so that ships carrying wheat could be transported from Minnesota to harbors in Chicago. It effectively dashed Leiter’s plans to take advantage of wheat shortages in the same way that Kosuga would count on the onion shortage nearly fifty years later.
Kosuga’s Farm Was Pictured in the News
When the regional newspaper “The Newburgh News” reported on the summer floods that affected farmers in and around Orange County, New York, it was a picture of Kosuga’s own farm that made the front page on August 24th, 1955. “The onion and celery crops of Vincent Kosuga at Pine Island were inundated when the Wallkill River and Pochuck Creek overflowed their banks,” stated the news article, which also mentioned that other crops affected included carrots, beets, cabbages, and potatoes.
Several government bodies such as the Vegetable Commodity Committee, as well as the U.S Farmer’s Home Administration, worked to declare an agricultural disaster. That kind of declaration gave affected farmers the opportunity to apply for federal loans that helped them gain financial footing after their heavy crop losses.
A Classic Eddie Murphy Movie Was Inspired by Kosuga’s Story
“Trading Places” is a classic comedy from 1983 by John Landis, director of other iconic 80s films like “The Blues Brothers,” “Animal House,” and “Coming to America.” It stars Eddie Murphy and Dan Aykroyd, then at the top of their careers and comedic powers, in a story that was inspired by Kosuga and his partner Siegel’s onion market scheme.
In the film, a snobby executive and street-smart hustler team up to bankrupt a pair of rich and corrupt brothers by cornering the frozen orange juice market. Frozen orange juice, used as a substitute for Kosuga’s onions, was actually one of the commodities introduced by the Chicago Mercantile Exchange once onions were banned from the market because of Kosuga’s antics.
Cornering Markets Happened in the Early 20th Century
When Kosuga cornered the onion market in the Chicago Exchange, he was joining an already rich tradition of people attempting to manipulate markets and businesses. The first of these cases in America at the turn of the 20th century was the cornering of the Northern Pacific Railway in 1901. This case caused such waves that it was partly responsible for the very first crisis of the New York Stock Exchange.
As opposed to cases like Kosuga’s, where the culprits were more or less average businessmen, this scheme involved some of the biggest business titans of their time: J.P. Morgan and William Rockefeller. Along with their respective partners, they were in a fight to control the Northern Pacific Railway — the transcontinental railroad that ran from Minnesota to the Pacific Northwest.
A Pair of Brothers Tried to Imitate Kosuga in the 1970s
The Hunt brothers, Nelson and William, tried to corner the silver market — not of a city or state but of the whole world. Both worked on an elaborate scheme to control a huge amount of the globe’s available silver and did, in fact, at some point hold the rights to over half of the world’s deliverable silver.
Their actions contributed to a large change in silver prices: the beginning of 1980 saw an ounce being worth nearly 50 dollars, up from around 11 dollars from September of the prior year. When prices finally did go down in March, they went down hard, falling well below 11 dollars an ounce in what came to be known as “Silver Thursday.” All in all, the Hunt brothers lost over a billion dollars in the ordeal.