Think Google, Apple, or Procter & Gamble have a monopoly? What if I told you 2 guys controlled 98% of all onions in Chicago at one point. Why? To pocket nearly $100 million through market manipulation.
Sam Siegel and Vincent Kosuga were American farmers and commodity traders who saw the opportunity of a lifetime. In 1955, onion futures became the most traded commodity on the Chicago Mercantile Exchange, making up 20% of all trades.
Siegel and Kosuga pounced. They bought up as many onions and onion futures as they could get their hands on. And by the end of 1955, Siegel and Kosuga controlled 98% of all onions in Chicago, which totaled around 30 million pounds - crazy right?
What now? The two men began short-selling their futures, meaning they were betting that the price of onions would drop. Why would they short onion futures if they controlled 30 million pounds of onions? Because it was a guaranteed bet.
Kosuga and Siegel began flooding the market with their onions. They knew if they started selling their ridiculous amount of onions on the market, supply would dramatically increase, in turn dropping the prices of onions.
Overall, a pretty straight-forward game plan:
Buy up a ridiculous amount of onions Short onion futures Dump your supply of onions to crush onion prices
And wow, did it work. The impact was so strong a bag of onions that had previously cost $2.75 was being sold for 10 cents.
By the time the Commodity Exchange Authority figured out what was happening, the two men had pocketed $8.5 million in profits.
$8.5 million in 1955 (after adjusting for inflation) is $96,819,456 in 2023.
Yes, the two men made nearly $97 million (in today’s money) from manipulating the onion markets.
The Fallout
The Commodity Exchange Act was amended and signed into law by President Dwight Eisenhower in 1958, which included a stipulation known as the Onion Futures Act.
The Onion Futures Act made onions the only commodity in the country to be banned from trading.