UofM Commodification and Globalization of Tobacco Essay

3
Pricing the Future:
Grain
William Cronon, 1991.
Nature?s Metropolis.
Note: I have edited this for length.
You can skip over the parts that
are crossed out in red.
Prairie into Farm
T
he train did not create the city by itself. StriPped. of the rhetoric that
made it seem a mechanical deity, the railroad was simply a go-between whose chief task was to cross the boundary between city and
country. Its effects had less to do with some miraculous power in the
scream of a locomotive’s whistle than with opening a corridor between
two worlds that would remake each other. Goods and people rode the
rails to get to market, where together buyers and sellers from city and
country priced the products of the earth. In this sense, Chicago was just
the site of a country fair, albeit the grandest, most spectacular country fair
the world had ever seen. The towns and farms that seemed to spring
magically into being when railroads appeared in their vicinity were actually responding to the call of that fair. But so was Chicago itself. Its unprecedented growth in the second half of the nineteenth century was in
no small measure the creation of people in its hinterland, who in sending
the fruits of their labor to its markets brought great change to city and
country alike. “The cities have not made the country,” reflected one longtime resident of Chicago in 1893; “on the contrary, the country has compelled the cities…. Without the former the latter could not exist. Withom farmers there could be no cities.”1 Nowhere was this more true than
in Chicago.
Farmers brought a new human order to the country west of the Great
Lakes, as revolutionary in its own way as the train or the city itself.
Potawatomis and other Indian peoples had been raising corn on small
plots of land around Lake Michigan for generations, but always on a
…..
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limited scale. The new Euroamerican farmers, on the other hand, raised
corn with an eye to the market, and so grew much greater quantities on
much larger plots ofland, especially once they could ship their harvest by
rail. In addition to eating some of the grain themselves, they did things no
Indians had ever done with it: turned it into whisky or fed it to hogs and
other livestock, in both cases so that they could transport it more easily to
market. They also began to raise crops that had never before been part of
the regional landscape: old-world grains, especially wheat, as well as a
wealth offruit and vegetable species.
Like maize, which Indians had been breeding for millennia, each of
these grain and vegetable crops had a long history of human use and
manipulation. People had been improving them with selective breeding
for countless generations, so wheat or oats or rye were themselves products ofhuman technology-first and second nature woven together in the
life of a single organism. Most varieties had become specialized enough
that they could scarcely survive in a wild setting; their success thus depended on specialized habitats maintained solely by the labors of human
beings. To reproduce such habitats, people resorted to a variety of tools.
To prepare the heavy, dense prairie sod in order that exotic seeds could l
thrive in it, farmers had to turn over the grass and work the soil with ‘i
plowshares and harrows made ofiron and steel. To pull these heavy tools,
they needed draft animals-horses and oxen-whose domestication was
itself one of the great chapters in the global history of technology. Once
seeds had become mature plants awaiting harvest, farmers needed still
other tools-scythes, reapers, and threshers-each of which underwent
important technological changes during the period of Chicago’s greatest
growth. 2
The glaciers had left the region west of the Great Lakes unusually well
suited to the organisms and farming techniques that American and European migrants brought with them. 3 In the valleys where braided streams ”
had dropped their glacial silt, and on the hillsides where dusty winds had
redeposited that same silt, mineral-rich soil had been accumulating for
millennia. Atop it, prairie grasses had made their own contribution. The
black soil they had produced measured in feet rather than inches and
contained well over 150 tons of organic matter per acre in what seemed
an almost inexhaustible fund of fertile earth. The parent rock beneath
often contained a good deal oflime, which the prairie grasses were adept
at transporting to the surface. This kept the soil from becoming acidic,
making it more suitable for the crops farmers sought to raise. Considering the favorable climate as well, it would be hard to imagine a landscape?
better suited to agriculture. 4
Families trying to farm such soil at first found it almost too much of a
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good thing, for the native vegetation so thrived upon it that traditional
plows had trouble cutting through the sod. The grasses formed a mat so
dense that in upland areas rainwater rarely sank more than six inches into
the ground, preventing all but the hardiest of competing plants from
taking root. 5 Wooden plows with cast-iron edges quickly came to grief
here. What farmers needed was a steel plow that could cut the tangled
roots and still hold its edge-exactly the sort of plow thatJohn Deere and
other prairie manufacturers began to produce in their shops during the
1840s. 6 Many farmers hired professional “prairie breakers” who owned
oversized plows to do the initial cutting. The work had to be carefully
timed, for if it was done too early the prairie grasses grew back and overwhelmed the crops; if too late, the turned-over vegetation did not rot
soon enough for a successful planting in the fall. Professional prairie
breaking was expensive, but well worth the cost for small landowners who
could not afford to purchase special breaking equipment themselves. 7
Spared the initial plowing, and also the task of dearing the trees and
stumps which consumed so much time on forested lands back east, farmers could begin at once to seed their land.
As they did so, the native grasses-big and little bluestem, side oats
grama, Indian grass, and all the others-began their long retreat to the
margins of cultivation. The dozens of species that together defined .the
prairie ecosystem quickly gave way to the handful of plants that defined
the farm. The two most popular of these were corn and wheat. Unlike
their Indian predecessors, who planted with hoes and human labor,
American farmers could prepare large fields of corn by plowing with draft
animals. They sowed corn seed, as the prairie proverb recommended, in
the spring when oak leaves were the size ofa squirrel’s ear. To protect the
young seedlings from weeds, they ran harrows and plows between the
rows several times before the Fourth ofJuly, when the plants could usually fend for themselves. Families had to harvest corn by hand, but that
task could wait until October or November, or even the following spring,
with little damage to the crop. Even though corn brought low prices-few
Americans, and even fewer Europeans, regarded it as a prime food
grain-it became a major part of prairie agriculture. People might not
enjoy eating corn, but animals loved it; moreover, its crop yields were
extraordinary compared with those of other grains.
Because bread was near the center of most American and European
diets, wheat was the classic cash crop of western farming. Highly popular
in most early frontier communities, it brought the best market prices of
any grain, and was a ready source of income in a way that corn was not
(unless first converted to pork or alcohol). Farmers sowed winter wheat in
the fall, harrowed it to cover the seeds, and then harvested it in spring or
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PRICING
early summer. Unfortunately, wheat farmers in Illinois and Iowa experienced a series of bad harvests in the late 1840s and early 1850s, caused by
bad weather, winterkill, blight, rust, and various insect attacks. They tried
many different techniques for responding to these problems, sheltering
the wheat seeds to protect them from winterkill and changing the timing
of crops so that they would not coincide with the life cycles of pest insects,
but winter wheat continued to have difficulties. Many farmers therefore
turned to spring wheat, which they planted after the thaw and harvested
in late summer or fall.
Harvesting wheat was always much trickier than harvesting corn. Each .
ear of corn sat protected in its own husk, and so generally remained
undamaged by wind, rain, or the death of its parent plant. Not so with
wheat and the other small grains, which could topple from their own
weight, or drop seeds to the ground when overmature, or rot if harvested
wet. Timing was everything, causing considerable anxiety to farmers for
whom a few days might make the difference between a profitable crop and
a failed one. The hazards and hard labor of harvesting wheat were the
chief reasons that prairie farmers responded quickly when Cyrus McCormick began to sell mechanical reapers from his Chicago factory in the
1840s and 1850s.
Risks such as these kept farmers from depending too heavily on any;;i
single grain. Although no farm resembled the original prairie in diversityJ,I
of plant species, the typical one grew several crops, each in its own
cultural field. Wheat and corn were the most popular, wheat because itj
served as the classic frontier cash crop, corn because it was prolific and:l
served well as animal feed. Farmers tried to arrange plantings of other:i
crops so that they would not interfere with the life cycles and labor re..,j
quirements of these two mainstays. Oats, rye, and barley sometimes gotJ
fields for themselves, with oats becoming more popular in the years
lowing the Civil War as Chicago and other cities began to purchase
quantities for horse feed. For animal feed closer to home, farmers
on hay, which they cut on remnant prairies in their vicinity. As prairies
became scarcer later in the century, “tame grasses” raised in separate,t
meadows took their place, with timothy, bluegrass, and clover the
red crops.8 Farm animals fed themselves on open pastures during the1,
warm months of the year, and then subsisted on hay and corn whenter in the century, speculators 1lo1d of how hard it
was to “bury the corpse” when the corner was done. ,
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In 1868, other traders knew that the speculators who had run the
corner would have to dispose of their grain, and also feared that the
Lyon-Smith syndicate might be in a position to repeat its performance in
July.133 Because uncertainty about the future direction of local wheat
prices was so great, traders were “skeery,” and refused either to buy or to
sell until the direction of the market became clearer. “It is well known,”
wrote the Tribune’s reporter, that the corner’s operators “have a large
amount on hand, which may be thrown on the market at any time and
swamp it. This destroys the desire to buy, while sellers are equally
scarce….”134 As the stagnant market dragged on into the’ middle of the
month, speculators who had earlier contracted to deliver wheat at the end
of July started to fear that they might be caught in a corner again, and
they therefore purchased grain from other cities to be able to make
delivery on time. The bizarre result was that wheat began to be shipped
!iouth to Chicago from Racine, Wisconsin, “at a cost nearly equal to that
required to carry it from Chicago to Buffalo,” even though Chicago
continued to have large quantities of wheat in store. 135 Wheat prices
remained higher in Chicago than in nearby markets-Milwaukee’s No.1
spring wheat was cheaper than Chicago’s No.2-so millers and other
large consumers of grain simply stopped buying from the city.136
This state of affairs persisted until the end of July, with only a few
thousand bushels of wheat changing hands each day in a marketaccJstomed to handling ten times that quantity. Traders lamented that “the
rushing torrent of last month had become a peaceful gully, without a
stream.”137 Farmers and merchants whose railroad connections to Chicago made them dependent on the Board of Trade had trouble getting
any price at all for their grain. In Chicago itself, grain traders grew angry
about the disruption of their ordinary business. By the end of the month,
the Tribune, which had initially held itself aloof from commenting on the
shenanigans at the Board, issued a stern indictment of the whole business:
If anything more sick than the wheat market of the preSent time can be
invented, we do not want to see it, and if the members of the late combination can take pleasure in viewing the demoralization they have wrought,
they are exceptions to the ordinary run of human nature. The Corner was
as disastrous in its influence on the wheat trade, as a long continued strike
is to the business ofa city. It has completely upset the order of things, kept
the cereal from the city, driven operators away, and forced millers to buy
elsewhere. The chances are that the exhaustion will not be recovered from
iIi many months, though … the arrival of New Wheat will surely produce
some current, though a small one, in this hitherto important channel of….
trade. 138
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Corners, in short, seemed to call into question the legitimacy of the entire
futures market.
The market finally did become more active in August after traders
realized that the syndicate had apparently failed (or perhaps had not even
tried) to cornerJuly wheat. 139Just when everyone had begun to feel more
comJortable, however, an equally severe corner in September corn
squeezed many bear speculators so badly that some of the most prominent trading houses in the city found themselves hard pressed to honor
their commitments. Even E. V. Robbins, president of the Board ofTrade,
became so financially embarrassed in the September corner that he felt
obliged to tender his resignation to the Board’s directors. They refused
to accept it, on the grounds that he was an honorable man who had been
caught out through no fault of his own. Instead, they castigated the corner operators themselves. On October 13, Board members passed a resolution that
i.
the practice of “corners,” of 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, has been
too long tolerated by this and other commercial bodies in the country to
the injury and discredit oflegitimate commerce, [and] that these transactions are essentially improper and fraudulent …. 140
To put teeth in this resolution, members amended the Board’s bylaws so
that traders could appeal to a disinterested panel if they felt they had been
cornered. The panel had the formal power to recognize the existence of a
corner, and then to break it by allowing cornered bears to use nonstandard grades of grain in paying off their futures contracts. In addition,
the Board could suspend the membership of anyone who tried to run a
corner. 141
If the purpose of the new rule was to put an end to corners, it failed.
The Board’s directors proved reluctant to enforce the anticorner regulations, and corners continued unabated to the end of the century and
beyond. They became if anything more spectacular with time, the most
famous being the Leiter corner of 1896, which Frank Norris immortalized
in his novel The Pit. 142 Although members sometimes invoked Board
rules to try to close out corners once they had been run, few grain traders
expected corners to disappear altogether. 143 Indeed, their emotions
about corners were an odd mixture of fear and admiration. A corner
operator was a gambler’s gambler. Whether one saw such people as
heroes or as villains, one still had to admire their daring: tales of great
corners and their operators became the stuff o…
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