Wednesday, March 6, 2013

The Story of a Speculator

The Story of a Speculator 
by Arthur W. Cutten

Book Description: Alanpuri Trading, Los Angeles, CA, U.S.A., 2013. Soft cover. Reprint. 4to - over 9¾ - 12" tall. Softcover, pictorial (vintage-look) photo wrappers, Exact Facsimile Reprint of the Original 1936 First Edition. (Originally self-published by the author in 1936),

Book Condition: New,

Contents: Autobiography of the author, a trader who traded the largest number of wheat contracts of any trader in history. A spell-binding detailed account of the author's experiences in trading and observing the industry from the time he arrived at the Chicago Board of Trade building in 1890 to the end of his career in the early 1930's.

About the Author (text originally published in The Wellington Business Digest Vol. 1, Issue 5, April 1985): Cutten's first major market success is said to have been in 1906, in Soo Line rail stock in which he made a profit of $220,000. A Canadian Press report describes how Cutten cornered the wheat market in 1924: "Forearmed with the knowledge of weather and crop conditions, he foresaw an impending world grain shortage.he bought grain futures slowly and unobtrusively and held them as prices climbed rapidly, eventually reaching more than $1 a bushel over normal price in eight months. Estimates of his profits ranged from $12 million to as high as $30 million."

Not all of Cutten's time was spent in Chicago's corn pit. In 1925, Cutten moved his market operations to the New York Stock Exchange. In 1928, Cutten was reportedly involved in a gigantic investment scheme headed by the seven 'Body by Fischer' brothers of Detroit. From this, Cutten was said to have made, at one time, a paper profit of more than $50 million. Some years before his death in 1936, Cutten described himself as "a cash grain merchant and dirt farmer." He was far too modest. The dirt farm was an 800-acre estate located 25 miles from downtown Chicago. As to being a 'cash grain merchant', one wonders if Cutten wasn't being ironic in his use of the word 'cash'. The great stock market collapse happened when speculators turned out not to have the cash necessary to pay for their high flying ventures.

After his death, Cutten's Will was officially proven and it seems his estate was worth only slightly more than $350,000. The terrible depression of the 1930s set in after the stock market crash. Not unreasonably, people felt these two events to be somehow related. They demanded to know who was to blame for these disasters. In 1933, Cutten and other famous market speculators were summoned to Washington to participate in the Stock Exchange Practices Hearings.

With much tongue in cheek, the economic historian John K. Galbraith claims that ''as a market operator, Arthur Cutten surmounted substantial personal handicaps. He was very hard of hearing, and some years later, before a congressional committee, even his own counsel conceded that his memory was very defective." " Cutten was not the only Wall Street tycoon whose hearing and memory proved defective at the Stock Exchange Practices Hearings. The hearings showed that in 1929, more than 100 issues of stock on the NYSE had been subject to manipulative operations. The same games had been played in 1928. Radio stock, in which Cutten invested heavily, went from $85 to $420 - and this without ever having paid a dividend.Montgomery Ward stock, part of the Cutten-Fischer brothers scheme, rose from $117 to $444 (Times Industrial Averages). 
 
By 1935, the U.S. government was on Cutten's case with a vengeance. The grain futures commission accused him of making false reports of his grain holdings to manipulate prices. He was barred from trading on grain markets for two years. Cutten fought the penalty all the way and won when the Supreme Court agreed that the commission could not suspend him for something that had happened five years before. No doubt his lawyers argued that it was not until after the Crash that legislation had been passed prohibiting pools, wash sales, short selling and tipsters bearing false information.

The government took its final revenge the following year. In March 1936, a federal grand jury in Chicago indicted Cutten for income tax evasion. Three months later he was dead of a heart attack. The charges were dropped, but the government nevertheless sued the Cutten Estate for the money. The hefty tax bill was apparently settled, in part, by selling properties outside the estate.

Cutten show below on the cover of Time Magazine December 10, 1928

Although few outside of the wheat markets remember Cutten, his story is compelling and memorable, giving us another look at the days when one man was capable of cornering a commodity market.

Reprint, EXTREMELY SCARCE, Highly Recommended.

The Story of a Speculator (softcover) by Arthur W. Cutten


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$150.00


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