9. Speculative corners.—A sharp distinction should be made between real corners in actual grain or cot ton, and the speculative corners that occur when the outstanding futures maturing in a particular month are bought up by a group of operators who suddenly threaten to require delivery. Only a temporary squeeze results, which lasts until the operators who sold short for delivery in that month settle up at an advanced price. An actual corner of spot grain or cotton would be a national calamity, but it is prac tically impossible to engineer one, because of the vast ness of these crops and the stupendous amount of capital required. The price effects of speculative or one-month corners are short-lived because the vic tims quickly settle. Spot prices do not, as a rule, fol low the inflated prices at which the futures of a par ticular month may sell during the period of a specula tive corner. The evils of these prices lie chiefly in the losses of the speculative victims and an upsetting of legitimate hedging operations.
A leading example of a one-month corner on a large scale is that engineered by Messrs. Patten, Hayne, Scales and Brown in 1910, when the August option on cotton was squeezed up to twenty cents as the month ran out, and hundreds of thousands of bales of cotton were delivered to the pool. In this case the corner operators acquired vast quantities of cotton and resold at a profit, but their operations were con fined to a single month.
Even if there were no system of futures, there would still be the same possibility as there is now of corner ing actual wheat or cotton, because of the fact that at certain periods of the year only small amounts of these products are available. In other words, the existing
evils of speculative corners are less than the appalling dangers of monopolistic operations in actual grain would be if there were no future system.
10. Corners in eheat.—According to the records, corners in wheat took place as early as 1879. In that year, as a result of the prosperity that existed, prices were artificially boosted far higher than the real value of the commodity warranted. But exports of wheat were blocked and eventually, the market fell thirty four cents a bushel. In 1887, coffee and wheat were often cornered, but the experiment was always at tended with disaster. In 1888, the price of wheat was raised to $1.85. The farmers, however, were able to sell a great quantity of the commodity at a compara tively high price and the corner broke down.
11. Leiter corner.—Joseph Leiter, a daring specu lator, in 1902, became convinced that the wheat crop was much below its usual size, and that a world-wide scarcity would follow. He proceeded to buy up all the wheat that dealers were willing to sell, and to ar range that it should be delivered upon a specified date. On the fatal day when, according to Leiter's estimate, the sellers would have to settle at his figures, the tide turned, and to his consternation his debtors acquired a supply of wheat sufficient to liquidate their contracts. At the last moment they had secured wheat from certain elevators which Leiter had ap parently overlooked, and had rushed it post-haste to Chicago in order to fulfill their obligations. The re sult was that the famous operator lost millions.