Daily globe. [volume] (St. Paul, Minn.) 1878-1884, 1880-07-31
CORNERING THE CORNER.
Armour Making Hog of HImself-The
Shorts Lack Grit, Or He Would be Made
to Squeal.
lChicago III mes 2Sth. |

Shorts Lack Grit, Or He Would be Made
to Squeal.
Chicago III mes 2Sth.
Tho excitement on Change subsequent
upon the advance in pork continued yester
day, and there were large transactions al
prices ranging from 1850 to $16.O5, though
the volume of business was not as great as on
the day preceding. The speculative element
was greatly stirred, and. as on Monday much
wild talk was INDUCED in. The
only thing that looked at all
like an organized resistance to the
speculations of the corner, however, was the
action taken by Messrs. J. w. Rumsay & Go.
This firm had a short deal of $50 barrels with
N. B. Benin & Co., at $l4.3O. It had
margined the deal up and kept ahead
| Of the market, but yesterday. feeling
that the fun was all on one side, call
was made on Benin & Co. for additional
margin, proceeding that is permissible
undsr the rules of the board of trade. Benin
4 Go. promptly refused to put up the margin,
holding that The profits (unrealized) on the deal
| was margin enough. A communication was at
once addressed to the board of directors, set
ting forth the facts in the case and asking that
| the board
ESTABLISH MARGINAL VALUE
| on pork.
In lorder that the general public, which is
presumably unacquainted with the rules gov
erning business on Change, may understand
the import of this, it is only necessary to state
that when marginal value upon any COM
modify is fixed anyone having deal may call
upon the other party to margin up or down to
this value, when the market is in his favor just
the same as when it is against him. Thus, If
A buys 900 barrels of pork of B at $11, and
the price goes up to SIG, A is compelled to
margin up to that point, while B is let off with
the original margin. and this he can take out
whenever the profits accumulate to an
If, however, A takes it into his head
to make B do more quitting up." he calls on
BIS broker for additional margin, and in the
event of a refusal to ''come to the CENTRE" to
use street phrase, the board of directors is
asked to establish marginal value. If this
should be $l4, B is required to margin down to
that figure. Thus, if pork is quoted at $16
he is forced to put up $2 per barrel, and il
it should go up to 800 he would be compelled
to put mp $6 per barrel. There would be ac-
tual money represented on both sides, instead
of money on one hand and intangible profits
on the other. Marginal values when once es-
tablished, apply not only to the case arbitrated
but to all pending deals as we'll.
1t will be seen, therefore, that the move
taken by j. W. Kumsey d Go. was one in which
THE ENTIRE SHORT INTEREST WAS DEEPLY
CONCERNED.
1t was hoped that q marginal value would be
fixed at $3.50 or $l4, in which event Armour
d Co. would be called on to margin back to
that figure. As this firm is supposed to be
$50, 1000 or 100000 barrels ''leng," it would be
required to place from $500, 900 to 800, 900 in
cash on deposit to secure the shorts
againet loss in case of a tumble. If pork
should be forced up to 800, the amount of
actual money needed to carry it to that point
would be between $1,700,00O and so. OO0 900.
which is considerable currency to lie repre-
sented in speculative deal operated by
single house.
The board of directors met In She afternoon
to act upon the application of Rumsey & Co.,
but before time was allowed for action Behm
& Co. deposited the additional margin asked.
Kapirg TINS complied with the demand,
nothing remained for Rumsey & Go. to do but
to withdraw their communication and
THE MATTER WAS DROPPED
for the time being. Considerable disappoint-
ment was manifested by the shorts when
they learned of the result of the movement,
but nothing remained for them to do but to
wait for another chance.
Times reporter called on J. W. Rumsey &
Co., after the adjournment Of the directory
to learn what they thought about the market,
how they were satisfied with the work of the
day, and how they liked the smell of pork, any,
way. Mr.. Rumsey was willing to converse and
much of his talk was in italics. In terse and
comprehensive English he advanced the opinion
that the Shorts were a set of cravens who
were afraid to call their souls their own. None
of them, he said dared openly buck against
Armour & Co., for fear that powerful firm
would crush them out of existence. There was
no concert of action on the part of the Shorts"
for the reso nthat not one in ten will acknowl-
edge being on the wrong side of the deal. They
had rather be pinched and suffer in silence than
make noise which will attract attention to
their weakness.
''wILL ANOTHER ATTEMPT BE MADE
to have marginal rate established?" asked
the reporter.
81 don't KNOW was the reply. "All the
short deals are with Armour's brokers, and
when a fellow musters up courage to
call on them for margins, the margins
will be forthcoming. The Armour house
had rather accede to few isolated demands
take official cognizance of the fact that they
are running a corner and let the whole board
of trade turn on them. They claim they
are not manipulating the market,
but that is allfolderol. You can buy all the
pork you want for actual consumption at S12@
1850 per barrel, vet the speculators' price ap-
proximates $16. If this is not corner, then
I do not understand the meaning of the
term.
''What is to be gained by the establishment
of marginal value on pork?" inquired the
Times agent?
Mr.. Rumsey answered this question by Civ
ing the reasons which led to the creation of the
rule on this point.
''When John B, Lyon engineered the cele-
brated deal in August wheat, seven or eight
years ago. he said, che run the price of that
cereal up SO fast that the fellows who wanted
to call on him for additional margins could
not catch up with him at all, and they
were forced to put up good money against east
wind. When he collapsed, wheat went down
forty cents in one day. and the men who had
been buying of him and his brokers, found
themselves unable to realize on their
contracts. Lyon had not been required
to put up any money with his brokers beyond
the first margin, and, as the brokers themselves
could not pay the losses they went by the
board. When the wreck was cleared up
this rule was established for the pro-
lection of operators who run afoul
of corner and ride it through to the end.
Now suppose that Armour & Co.. finding it i'm
possible to unload at high figures, should run
prices up to 800, get settlements from as many
shorts as can be induced to come |
to terms, and then withdraw their |
money from the hands of their brokers and let |
the market drop. The consequence would be |
that
THE BROKERS WOULD GO TO SMASH,