Tulip Mania? but What About Onions? by Karla Stover

 

Click link to purchase Parlor Girls by Karla Stover

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    History tells us that tulips arrrived in Holland in the 16th century, having come from the Ottoman Empire, ie: modern Turkey. At the time, native plants in Holland included Swiss cheese plant, Yorkshire Fog, Bigleaf hydranges, and creeping buttercup. Not the most exciting, so when Tulips showed up, the people went wild. The price of a rare, coveted bulb skyrocketed, sometimes selling for the same price as a house.The Tulip Mania market ran from 1634 to 1637 before collapsing. 

    I already knew the "Tulip" story when I was studying for my stock broker's license and strangely the tulip frenzy was included in the correculum. During my brokerage house years, I worked through a number of these Bubbles, as they're called: The Soybean Bubble, 1972 - 1973 after which the United States government banned soybean exports; The CB Radio Craze, 1974 - 1977 before interest faded; Silver Mania, 1979 - 1980 forcing the commodities market to initiate new trading rules; The Japanese Bubble, 1986 - 1991 which resulted in interest rate hikes, and The CD Rom Multimedia Startups Hype, 1993 - 1996 which was killed  by that new kid on the block, The Internet. There were a bunch of other Manias: Beanie Babies, Ostrich Farming, all-things Thomas Kincade, and the Y2K Survival Goods Panic, for example. However, the I mostly remember the Japanese Bubble because where I worked, if a stock, bond, or mutual fund included anything Japanese, the brokers were all over it.

 What I missed, though, maybe because it was well before my time, and only just learned about, was the Great Onion Manipulation (read scam ) of 1955 - 1956. 

 Here's the story. In late 1955, traders, Sam Siegel and Vincent Kosuga bought so many onions and onion futures they soon controlled 99.8% of all the available onions and onion futures in Chicago which gave them control of 98% ( In stock market parlance, a Future is a financial contract whose value is derived from the performance of an underlying asset ). Then Siegel and Kosuga put the moves on onion farmers by threatening to flood the market, and "persuaded" them to buy their inventory. After that, they began short selling onions. In a short sale, you borrow something and sell it hoping the price will drop when you buy it back. With all 98% of the onions in stashed away in storage, they were able to short sell onions at a high price, then take their onions out of storage and flood the market with them, which drove the price down. They then bought sufficient onions to cover what they'd borrowed and made a butt-load of money. 

And now, sixty-eight years later, thanks to Congress and the Onion Futures Act, you cannot legally trade onions futures contracts in the United States. 

Will there be a Cryptocurrency Mania? I'm waiting.