Rye-Jinks

Traders in the grain pit on the Chicago Board of Trade have not had so much excitement since the Cargill Grain Co. of Illinois cornered the corn market in 1937. This time it was an alleged corner in rye. As usual at such times, the air was hot last week with acrimonious charges and countercharges, all hinting at scandalous disclosures involving Government agencies and politicos.

What happened, according to the War Food Administration, was that in December 1942 big General Foods Corp., and their brokers, Daniel F. Rice & Co., began buying rye futures, i.e., promises of delivery of rye at a future date. General Foods, which ordinarily uses little rye, had a plan to use it in place of corn syrup. By May 1944 General Foods and Rice controlled 11.8 million bu.--almost 89% of the deliverable rye. Other speculators soon realized that a corner was in the making, and they waded into the market with big chunks of cash. The rye pit seethed with all of the excitement of the old days (see cut). Result: the price of rye soared to $1.53 1/4.

Inevitably, as the trading in rye got hotter & sharper, some traders got hurt. One of those hurt the most (he lost over $800,000) was Vienna-born Bernhard Rosee (pronounced Roo-say), a cosmopolitan gentleman who has traded on the commodity exchanges of Liverpool, Paris, Rotterdam, Bucharest, Winnipeg and New York.

Rosee's story got to Wisconsin's silo-sized Frank Bateman Keefe. He reared up in the House and demanded a Congressional investigation of rye. What he wanted to know: why did Commodity Credit Corp. help maintain the corner in rye by purchasing between four and five million bushels of rye last March for export at prices ranging from $1.18 1/2 to $1.29 a bu.? At the time, Argentine rye was available at 64-c- a bu.

Representative Keefe hinted that the answer would involve Government agencies, Congressmen, Senators and other bigwigs. He went to Chicago to probe by himself. By last week one speculator, other than General Foods and Dan Rice, had been identified: tall, ministerial Plane-Builder Glenn L. Martin. The Department of Agriculture charged that he and his broker had violated a Government regulation that limits the amount of rye futures an individual may trade daily to 2,000,000 bushels. Glenn Martin's broker had traded 3,000,000 bushels.

In a belated attempt to stop these rye-jinks, Chicago's Board of Trade upped the margins for rye trading, stopped all trading in July futures except to fill contracts. Promptly rye prices dropped. But at week's end, as reports of a short rye crop came in (see Food), the price of rye was climbing again.

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