Cornering the Onion Market ... and Getting Away With It - OZY | A Modern Media Company

Cornering the Onion Market ... and Getting Away With It

Cornering the Onion Market ... and Getting Away With It

By Laura Secorun Palet



Unscrupulous people will always find a way to manipulate markets, unless they are stopped.

By Laura Secorun Palet

Oil, wheat, movies, the weather — it seems there’s nothing people can’t trade on these days. Yet there is still one commodity banned from futures trading under U.S. federal law: onions. The reason for it was a man named Vincent Kosuga, who, in the 1950s, became a millionaire by making the onion futures’ market his personal playground.

A “future” is a contract to buy a commodity at a future date for a price agreed upon today. The buyer hopes the market price will go up and he’ll save money, while the seller usually wants the price to go down so he’ll make a profit. Kosuga became dangerously good at selling futures and ensuring that onion prices would consequently plummet, making a fortune in the process.

There was more money to be made selling future onions than planting present ones.

This small-built man had a larger-than-life ambition and a significant advantage over other onion traders: He was a farmer. Growing onions on his New York farm in the 1900s, he had learned everything there was to know about the stinky vegetable, including that there was more money to be made selling future onions than planting present ones. His first attempts at trading were a failure though. After nearly going bankrupt, he even promised his wife he would stop, but Kosuga just couldn’t keep himself away from the floors of Chicago Mercantile Exchange.


Onions were a potentially lucrative market because, given that they are typically planted and harvested at specific times during the year, their storability was very limited and their price could change wildly from one day to another. Kosuga recruited the help of Sam Siegel, who owned cold-storage facilities outside Chicago — where he stored and distributed onions — and began buying all the onions he could find and shipping them to him. Soon both men controlled such a large portion of the local onion stock that they essentially cornered the market, enabling them to manipulate the price. And that’s what they did.

A group of male traders stand and watch a man make hand signals, at the Chicago Mercantile Exchange, Chicago, Illinois, 1940s.

A group of traders at the Chicago Mercantile Exchange in the 1940s.

Source Herbert/Hulton Archive/Getty

Of course, this shady move did not go unnoticed. The $1.5 million scheme led to serious governmental scrutiny and the passing, in 1958, of the Onion Futures Act, banning the trade of future contracts on onions. The investigation also found both men guilty of price rigging; Kosuga’s registration as a floor broker was revoked, and he and Siegel were banned from trading for 10 months. Even so, many people continued to perceive of Kosuga as an outstanding member of society and a philanthropist because he gave much of his money to Catholic charities and even had private audiences with three popes. Kosuga did not take the money and flee to a tropical island but instead stayed in his community of Pine Island, New York, where, in 1987, he was voted citizen of the year. The once poor farmer turned millionaire ended his career as the owner and chef of a restaurant called — naturally — The Jolly Onion Inn.

Onions suddenly were worth less than the bags they were being sold in, while carts of them were being dumped in Lake Michigan.

Despite Kosuga’s retirement from the trading floors, his strategies are still being studied today, and many ambitious and dishonest people have followed in his footsteps. Like Anthony “Tino” De Angelis, a trader who, in the ’60s, managed to make millions by cornering the soybean oil market, before the market collapsed and De Angelis landed in jail. That’s how a farmer taught America there’s nothing you can’t speculate on — except onions, that is.

This OZY encore was originally published Nov. 26, 2014.

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