Two traders cornered the onion market and forced Congress to permanently ban onion futures
The two conspired to buy nearly all Chicago onions, forced distributors to sign a secret deal, then shorted the market and crashed prices to historic lows, leading Congress to permanently ban onion futures trading.
The video won't play here. Listen to the audio instead:
The argument · tap a timestamp to hear it
Futures were supposed to stabilize prices, but the data didn't support it
The classic justification for futures trading is that it lets farmers and wholesalers lock in prices early, making markets more stable and prices less volatile. But the show cites a 1956 Commodity Exchange Authority report showing that from 1929 to 1956, onion prices actually swung wider than many other commodities with futures markets. The stabilizing effect futures were supposed to provide never materialized for onions.
The two conspired to corner nearly all Chicago onions
Vince Kasuga, a floor trader with onion-farming roots, and Sam Siegel, an exchange member, quietly bought 928 November onion futures contracts in late 1955, accounting for 45% of that month's open interest. When the contracts settled on November 30, Kasuga alone held 262 railcars of onions—over 7.8 million pounds—half of Chicago's entire onion supply. Including outstanding contracts, by early 1956 the two controlled roughly 1,000 railcars, nearly equal to Chicago's entire cash onion supply.
They pressured distributors into a secret deal
Kasuga and Siegel didn't stop at hoarding. They approached 13 onion distributors in Chicago and threatened to dump their entire stockpile on the market—crushing everyone's prices—unless the distributors bought onions from them at their set price. The distributors eventually agreed to purchase 287 railcars for $1.60 per bag, totaling $275,000, with the condition that Kasuga and Siegel would not make any additional deliveries for the rest of the season. Both sides understood the deal had to remain secret.
After the deal fell apart, they shorted the market
In January and February 1956, distributors began suspecting Kasuga and Siegel had reneged on their promise. All but one refused further payments or deliveries. The two then secretly shorted March onion futures, selling 858 railcars—44.3% of that month's open interest. They were the only ones holding short positions; everyone else was long. Distributor Dave Slinger later testified that Kasuga even called him urging him to short as well, saying the market would collapse to 50 cents in minutes if they all acted together.
Onion prices hit historic lows—the sack cost more than the onions
When the March 1956 futures settled, the market was flooded with onions. Prices plummeted to as low as 10 cents, closing at 15 cents—an all-time low for the exchange, beating the previous record of 43 cents. According to Kasuga's nephew in an NPR interview, a mesh sack for onions cost 20 cents to make, yet a full sack sold for only 10 cents. The show notes this crash wasn't purely artificial—Texas onions unexpectedly harvested early that same period, which also drove the collapse.
Intent is harder to prove than harm
The Commodity Exchange Authority's hearing found that Kasuga and Siegel's December 1955 coercion of distributors and March 1956 short-selling to suppress prices both constituted illegal market manipulation, even though they claimed they only wanted to stabilize prices. But regarding their massive November futures purchases, the ruling acknowledged that manipulation was common on the onion exchange and ultimately found insufficient evidence of manipulative intent—that charge was dropped. The line between legal trading and manipulation can be blurry.
Congress directly prohibited onion futures despite existing market manipulation laws
After the 1960 ruling, Kasuga, Siegel, and National Produce Distributors were barred from all futures markets for 10 months. But the bigger consequence came earlier: on August 28, 1958, a bill introduced by Representative Gerald Ford—pushed by affected Michigan onion farmers and signed by President Eisenhower—directly prohibited onion futures trading, even though market manipulation was already illegal under existing law. The Chicago Mercantile Exchange sued claiming it was unconstitutional; they lost and didn't appeal. The law remains in effect today.
Movie futures: the only other commodity banned after onions
After the onion case, commodity futures saw another scandal in 1963: the soybean oil swindle. Tony DeAngelis substituted water for soybean oil, stockpiled it as collateral, and manipulated soybean futures, ultimately serving 10 years. Regulatively, Congress passed the Commodity Futures Trading Commission Act in 1974, and the Dodd-Frank Act addressed the 2008 crisis in 2010. But trying to legislatively ban a specific futures contract has succeeded only once since onions: the 2010 movie futures ban, prompted by the Motion Picture Association's lobbying. In the same law, onions and movie box office remain the only two commodities explicitly prohibited from futures trading.
In their own words · checked verbatim
making contracts for the purchase of a commodity and then taking measures to render it impossible for the seller to fill his contract for the purpose of extorting money from him.
I was completely dumbfounded because I thought they were on the long side of the market.
Dave Slinger19:36
That the only way to do it was to control it somewhat and only one person know about it.
Dave Slinger20:36
March Onion Futures, the price reached a low of 10 cents before closing at 15 cents, which was the lowest price ever recorded on the exchange.
drawing a line between legitimate trading and trading with manipulative intent is sometimes a very difficult task.
petitioner evidently is willing to take the bitter as well as the sweet from this passage.
Figures
| November 1955 futures contracts purchased | 928 contracts (45% of open interest) | 13:24 |
| Early 1956 combined onion holdings | approximately 1,000 railcars | 14:24 |
| March 1956 short position | 858 railcars (44.3% of open interest) | 18:34 |
| March 1956 futures prices | Low 10 cents, close 15 cents per bag | 21:37 |
| Previous all-time low price | 43 cents per bag | 21:37 |
| Trading ban duration | 10 months | 27:44 |
| Onion futures ban enacted | August 28, 1958 | 27:44 |
| Penalty for violating onion ban | $5,000 maximum | 28:44 |
Glossary
- corner
- Buying up nearly all of a commodity's supply in order to manipulate its price
- long position
- Buying futures contracts expecting prices to rise
- short position
- Selling futures contracts expecting prices to fall
- open interest
- Total outstanding futures contracts that have not yet been settled or closed out
How to listen
Investors and legal enthusiasts interested in futures regulation history and market manipulation precedents
If you're already familiar with futures basics, you can skip the opening explanation of long and short positions (about 1-3 minutes).