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Chicago Tribune, August 22, 1897
Board of Trade gossip is not the most reliable news in the world, and men have been wrongfully accused ere this of making fortunes in big bulges when they were not guilty. Hence it follows that apologies are hereby tendered to any gentleman who may feel resentment because of his inclusion or exclusion in or from the above table. That large fortunes have been made in the upward movement of the grain market is beyond argument, but, like the foul ball that goes over the grand stand, the spectators of the game usually are too much interested in its progress to watch for what becomes of the ball after it leaves their ken.
“Smart” people on the curb are sure, however, that so and so has made a “killing” on the market, because they know he “got in early” and “staid with it.” If he “got out” surreptitiously, when he should have known better, it was his own fault, of course, and he is given no sympathy. The “I told you so” fellow is in his element at the foot of La Salle street these days.
The old timer on the board will find something interesting to say about each one of the happy number included in the above list. Most of them are men who have devoted a lifetime to the business and their present good luck is more nearly a matter of realized profits on many years of devotion to the business than outsiders will belikely to understand. There is one name, however, which is a striking exception to the rule. This is Joseph Leiter.
A new star of the first magnitude does not appear in the financial firmament every day, and perhaps none has ever risen more auspiciously than that of young Joseph Leiter. His name was unknown on the board six months ago. Now it is spoken with the same sort of awe and respect that R. P. Hutchinson and Ned Pardridge commanded in years gone by. For Joseph Leiter is credited with being the biggest winner in the world, with one possible exception, on this world wide movement in the upward tendency of the price of wheat. Two others share with him this distinction—Charles A. Pillsbury of Minneapolis and B. S. Barnes of St. Louis. But both of the latter are old hands at the game, and their success excites no wonder.
It is one of those moss covered, bifurcated traditions that sons of preachers always turn out badly, and that the sons of rich men never “amount to much.” But the world is full of examples to the contrary. When it first became noised that Leiter was “in the market” one curbstone gossip said the another:
“I hear Leiter is in heavy on the bull market.”
“O, I guess not. The wheat pit has no attractions for Levi Z. Leiter.”
“I mean Joe Leiter.”
“Who the devil is Joe Leiter?”
The profane curbstone orator knew very well who “Joe” Leiter was, but his amazement found no better expression. He had heard of “Joe” Leiter as the son of the one of the richest men Chicago has produced, and perhaps had “tabbed” and labeled Joseph as one of the “sons”—an appellation not uncommonly used persons who do not claim to be “sons” in designating others who do not claim to be “sons” in designating others who have the misfortune to be born with fathers of some note in the world.
It is nevertheless true that Joseph Leiter has been known to the public heretofore chiefly as a society man, who might possibly have an ambition to “burn” money instead of make it, so far as the curbstone and other divisions of the public knew. And when Joseph Leiter appeared on the horizon of the rising wheat market this summer the amazement was greater than if he had been plain “Joe” Smith or “Joe” Johnston.
Mr. Leiter saw a good thing and knew it when he saw it. The fact that he has made $500,000 or $1,000,000—as the gossips say—does not prove that he saw this good thing earlier or appreciated it more highly than others who have made less than 10 per cent of that figure. But it is believed that Mr. Leiter has made thousands where others have made cents, and henceforward he must submit to finding his name mentioned in the samll type market reports as well as in the society chronicles which are embellished with pictures of pretty girls.
- Wheat Pit
Chicago Board of Trade, 1887
Of course Mr. Leiter himself does not appear in the wheat pit with disheveled raiment, fighting and gesticulating in the manner from which the galleries derive so much bucolic wonderment. It is doubtful whether he has been within the walls of the Board of Trade during the time that this comfortable little fortune was being piled up by his brokers. A quiet, unostentatious gentleman named George French has been ther, however. Yet even Mr. French has not precipitated himself into the hurly burly of the bit. Mr. French has been Mr. Leiter’s agent in his operations, and Mr. French in turn has dealt with the regular commission houses. There are three of these which are supposed to be carrying the Leiter line of bull wheat, the Allen, Greer & Zellar company, C. B. Congdon & Co., and Norton, Worthington & Co. The firm first mentioned has figured conspicuously in the market reports the last few weeks, and before Mr. Leiter’s name was mentioned in this connection frequent referrals were made to “the Allen-Greer crowd.” Doubtkess there are many persons associated with Mr. Leiter, through common interest, in the bull side of the market, and it was not until recently that Mr. Leiter emerged from the obscurity of an anonymous member of “the Allen-Greer crowd.” Mr. French, who has prospered himself, it is said, by the appreciation in the market quotations, and who is credited with being Mr. Leiter’s alter ego in the business, is a New Yorker, and other New York men are said to be affiliated closely with Mr. Leiter.
It was six months ago when Mr. Leiter first essayed the market. He was a bull then and made money. His brief career on the board has not been entirely a summer’s dream, if reports are to be credited. His September line was sold out at 75 cents to 78 cents, and he went short. But a brief reverse was a mere incentive to greater victories, and when the market got around 80 cents he was back on the bull side, and now is said to hold between 3,000,000 and 5,000,000 bushels on the September option, with an ssured profit on that alone of nearly half a million. He also is said to have made a neat sum in corn.
Among the other notable beneficiaries of Dame Fortune is found in the name of David R. Francis, ex-Governor of Missouri and a member of the Cabinet of former President Grover Cleveland. Mr. Francis is an old hand at the business and has made comfortable fortunes in past years the same way. It is one of the most essential facts inn telling the story that St. Louis and the St. Louis clique with which Mr. Francis is intimately associated were the first to “get in on the ground floor.” They were the biggest bulls at low prices and they have stuck it out through months of uncertainty. In fact, it is asserted that St. Louis and the seaboard have grabbed off the bulk of the profits in the Chicago market this spring and summer, a circumstance which Mr. Leiter’s success does much to balance. It is believed by Chicago operators that B. S. Barnes of St. Louis has made not less than a million dollars on wheat in the last six months. Credit is given more to Mr. Haarstick than to any other, although he may not be among the heaviest plungers, for it is said that the “tip” on which St. Louis has pinned its faith came originally from him. He is the owner of a barge line which transports immense quantities of wheat to Europe, and through his correspondents he had early information of the shortage in the supply of the rest of the world. His information was of such an accurate character that there was no reason to doubt it.
Chicago Tribune, June 15, 1898
It Is not a Leiter wheat deal now; It is an Armour deal. By an arrangement made be tween Levi Z. and Joseph Leiter and Philip D. Armour yesterday morning and ratified at a meeting of Chicago bankers in the afternoon the Leiter holdings of cash wheat between the Northwest and Europe have been placed in control of Armour & Co.
In this manner the Armours take between twelve and thirteen million bushels of this cash grain off the hands of the Leiters. The total amount of wheat involved in the crash of Monday was not far from 15,000,000 bushels, but in the harmonious settlement one and possibly two smaller interests were not cared for. The wheat owned F. H. Peavey of Minneapolis was not included. He will have to shift for himself. Just what his line is cannot be learned, but it is known that he has between 2,000,000 and 3,000,000 bushels going to Mr. Leiter, which was bought at $1.40 to $1.45. Cash wheat in the Northwest is now worth about 90 cents. The Pillsbury wheat is included in the transfer to Mr. Armnour and A. D. Thomson, who stood between Mr. Plllsbury and Mr. Leiter, is breatjeing easier today. The external evidence is that Mr. Peavey Is the man who has laid himself open to charges of double dealing.
As to Local Stock.
It is possible that the small local stock will not be included in the deal made yesterday. It may go into control of a local distributor and be sold to mills in a retail way, The wheat involved Is In Duluth, Minneapolis, Buffalo, New York, on the way to the seaboard, and in and on the way to foreign markets.
The details of the plan for its disposal have not been worked out and will naturally from now on be subject to Armour ideas. All the parties in interest confirmed the change of control to Mr. Armour. John J, Mitchell went further and said that it was a sale and that the banks would get their money. The news was confirmed by Mr. Leiter and by a half dozen of the bankers who were at the meeting at the Illinois Trust and Savings Bark in the afternoon.
The two points which were not made the subject of official or semi-official an rouncement were the quantity of wheat transferred and the terms on which the transfer was made. It is knows that the bank interest in the grain represented in the aggregate over $10,000,000. If the bank loaning level has averaged 80 cents it is easy to figure that the total quantity of wheat is above rather than below 14,000,000 bushels. The estimate last night ran from 10,000,000 up to 16,000,000 bushels. The Monday visible supply statement showed about 12,000.000 bushels in the Northwest, including millers stocks. There was bout a million bushels at Buffalo, as much at Chicago, 400,000 bushels on lakes and canals, and 3,600,000 bushels at New York. Last Saturday there was 1,600,000 bushels afloat for orders. In this there is room for figuring a larger total even than 53,000,000 bushels.
As to the Terms.
There is, of course, no statement as to terms. The banks’ interest was said to be about 80 cents a bushel, and they have been satisfied. The statements, on one hand, that it is not possible to figure the Leiter losses, and on the other that the banks get their money just as if a sale were made, furnish the basis for a surmise as to the nature of the deal. Mr. Armour is not going to “hold the bag.” He has probably underwritten the wheat holdings somewhere below the bank price, agreeing to divide actual net profits with Mr. Leiter, who probably stands in the gap to the banks between the Armour underwriting price and the price representing the bank loan interest. In this way Mr. Armour has Mr. Leiter and the Leiter interest in full sympathy with him in his campaign of merchandising the wheat. In the original plan Mr. Geddes was to look after tho wheat going to British markets and Mr. Enghster the wheat going to the continent. When it is marketed the Leiter balance-sheet can be made out.
From the Bankers’ Standpoint.
The settlement relieves the banks of a responsibility they otherwise would have reluctantly been compelled to assume. It is doubtful if the banks could have reached any definite understanding as to the common disposition of the wheat thus left on their hands, for each bank had its own margin price with Mr. Leiter and each therefore would have had to consider its own special chance of profit or loss in carrying the wheat or in letting it go. Moreover, the Illinois Trust and Savings Bank, which had the largest Leiter loan, was so specially protected by the personal guarantee of L Z. Leiter, who is a director in the bank, that it could hold its wheat for possible good profit, while the other banks might have felt it necessary to close out their wheat at once in order to avoid chance of losses.
The lack of systematic plan in taking care of the market, with each bank acting for Itself in trying to get out without loss, might have resulted in some severe common losses. Two of the smaller Chicago banks having loans in the Northwest of about $50,000 each safely liquidated their wheat in the morning without making any previous inquiries as to the policy of other banks.
At the Bankers’ Meeting.
At the meeting of the Illinois Trust and Savings Bank in the afternoon were present the following:
- J. J. Mitchell Illinois Trust and Savings.
L Z. Leiter.
Joseph Leiter.
George B. French.
J. H. Eckels—Commercial National.
R. A. Ware—Northwestern National.
J. C. Black—Continental National.
Manager O’Grady—Bank of Montreal.
Several others were also present and the whole meeting soon developed into a “hurrah” gathering, at least in so far as the bankers were concerned. There was great rejoicing when it was learned that the bankers were relieved of the trouble of looking after the fickle wheat pit, and as there was to longer need of any especial concerted action the bankers left the meeting one by one in good spirits. As they separated they said that the price which Mr. Armour was to pay for the cash wheat had not been announced to them, but they had been given full assurance that Mr. Leiter was to receive enough. to make it easy for him to pay back every cent on the bank loans.
Financial Backing of DeaL
The financial backing which Chicago gave to the deal is supposed to have been from a $8,000,000 to $9,000,000. New York probably backed it to the extent of $1,000,000 and other financial centers in this country and abroad also lent some aid. Some of the leading banks of Chicago are reported to have loaned as follows to Mr. Leiter—in every case on wide and safe margins which would have guaranteed against loss, even had the loans not been repaid so quickly:
What the Bankers Say.
Regarding the matter of loans and the meeting. John J.Mitchell said: “The deal ends to our satisfaction, for we are rid of the trouble of having to look after the wheat market. But there was no possibility of loss to us, even had this settlement not been made. All the banks were amply protected in this matter by a margin of at least seven cents. The Illinois Trust and Savings Bank was specifically protected by the guaranty of L. Z. Leiter.”
J. B. Forgan of the First National Bank said:
“The banks get their money and are well satisfied with the arrangement made.
There were no out of town banks represented at this meeting, but a majority of local concerns had loans. The First National line was about $1,000,000.”
J. H. Eckels of the Commercial National Bank said: “The banks of the city could
never have lost anything on the Leiter deal, so amply were they protected on; the wide margins Mr. Leiter had given. The arrangement with Mr. Armour makes a satisfactory, close to the deal for all interests concerned.”
W. F. Dummer, Vice President of the Northwestern National Bank, said that his bank had not loaned a cent to Leiter from the day the deal began until it ended. “We have much business,” he said, “with brokers, and Mr. Leiter may, through them as agents, have secured the use of some of our money. The amount, however, cannot be estimated, for the bank has dealt with the brokers as individual customers and has known nothing of the use they put the money to. Not having an interest in the deal, the officers of the bank have no reason for expressing opinions on its outcome.”
John C. Black of the Continental National said: “We had about $300,000 loaned to Leiter, and never at any time felt a bit of worry over it. Mr. Armour’s exceptional facilities for marketing wheat will, however, render him an especially desirable medium in taking care of Chicago’s interest in the matter.”
Chauncey J. Blair said: “The Merchants’ National Bank had no Leiter paper at any time during the deal—not, however, that it was undesirable, for loans on warehouse receipts are always of the best class. I am glad that everything is wound up satisfactorily.”
B. A. Hamill said: “The Corn Exchange Bank had no Leiter paper, but we would have felt no worry if we had, for the credit of the family could not be better. I am glad that all of Mr. Leiter’s creditors have reason to be so full of thanks.”
A. O. Slaughter said: ” Our loans to Mr. Lefter were on options, and not on cash wheat, and we shall get back every cent we loaned, and maybe a penny besides.
Joseph Leiter Talks.
With reference to his settlement with Mr. Armour, Joseph Leiter said last evening:
“My wheat is now in strong hands, and there is no doubt that its new holder will come out well with it. Mr. Armour takes up all my cash wheat in this country, all that is afloat, and all that is still unsold abroad. I do not wish to say anything about those who are reported to have worked to accomplish my ruin, but I am glad to acknowledge the kind offers of financial help from Chicago, and also to be able to announce, through the settlement with Mr. Armour, that not a creditor of mine is to be out a cent. The Chicago banks are saved the trouble of marketing the wheat they held as collateral, though I do not see how they could have been losers anyway. The wheat is now in hands where it may demonstrate its naturally strong position.”
George B. French said that the deal meant higher prices and a feeling of security all around.
L. Z. Leiter refused to discuss the matter or to give any details of the arrangement which had been effected between him and Mr. Armour.
Mr. Armour went home early right afte the deal had been ratified, but had nothing to say about its terms, he was outspoken in his belief that the price had got down where the millers will buy. He is a bull on the market and believes in a reaction and better prices.
Leiter Wheat Attached.
The announcement from New York that O. E. Lohrke had secured an attachment on a lot of Leiter wheat in transit through New York to secure money advanced for freight charges did not cause much of a flurry on the board, It being considered only an incident in comparison with the magnitude of the entire deal. The attachment was for $794,000, but not all this sum, it is alleged, was owing to the shipping agents at the time the attachment was secured. The sum, it is said, was made to cover claims which might arise within a reasonable time in the event the actual claim of $150,000 was not promptly settled.
But the matter was quickly adjusted through the New York banks and immediately following the settlement lhe attachment sued out by Mr. Lohrke was dismissed. Mr. Lohrke has attended to the shipment of about all the Leiter wheat which has gone out of New York in vessels and had a large number of interests to protect besides his own. This is one of the reasons why the sum named in the attachment so greatly exceeded the amount actually owed by Mr. Leiter.
No Excitement in the Pit.
The people who were accustomed in December and May to crowd the Board of Trade gallery to see the “rocket go up,” were on hand early to see “the stick come down.” There were a few splinters In the way of a Liverpool break of 10¼ pence, or a little over 12¼ cents a bushel, the report of the big attachment suit in New York, and the possibility that the pool among interested bankers would miscarry, but nothing worth while. The visitors were disappointed. There was no display of excitement in the pit, and it was soon evident that the “stick,” representing upwards of 15,000,000 bushels of cash wheat in all positions between Duluth and Europe, would be cared for.
The report that Mr. Armour was to take hold of the Northwestern cash wheat was undoubtedly one of the steadying influences of the day. The fluctuations in prices were surprisingly narrow. September and December wheat never sold more than a cent below the close of Monday, and closed with only fractional concessions. July wheat. even with the break of 12 cents in the corresponding delivery in Liverpool, only showed a net decline of 1½ cents. The pit trade, instead of being of the liquidating order, suggesting trouble ahead, was almost exclusively in the hands of scalpers, with no particular views as to development.
There was decided improvement In the cash wheat situation. B. A. Eckhart said he could not find any cash wheat offering for sale in this market. Millers generally were asking for offers, and some No. 2 red wheat went to Indiana at 87 cents, or two cents above the best June price of the day. The Monday export purchases at the seaboard aggregated a million bushels, ana there were further export sales yesterday. Exports were large, and there were important decreases in the available supply of the world and in the English visible supply. Minneapolis closed with a net advance for the day of one cent on cash wheat, and there were no important shrinkages of values in any of the domestic markets.
Viewed from Out of Town.
London. June 14.—The collapse of the Letter wheat deal has caused a panic in the Liverpool market. In London the news of the collapse was received with equanimity. The consensus of opinion of a number of operators on Mark Lane is that the English markets will gain steadiness now that “the plunger operating without regard to market precedence is shaken out.”
It is asserted on Mark Lane that the collapse was due to Messrs. Armour and Pillsbury. The newspapers generally rejoice at the breakdown of the Leiter plans and point to it as a moral. The Star says:
“If the prime mover in this war against mankind is beggared by his greed the retribution is well merited. Nothing can atone for the awful suffering Leiter and his accomplices have caused.”
New York, June 14—(Special.)—A ripple of excitement was caused in all street today by the announcement that Joseph Leiter had been sued by a firm of local grain traders. For a time it was thought that several such suits might follow and that some local embarrassment might result. It turned out, however, that the suit was rather friendly in character and had been brought by Lohrke & Co. of the Produce Exchange, correspondents of the young speculator here, to attach money to the amount of $793,924, held on deposit to the account of Mr. Lefter in the Chase National, Hanover, and Manhattan Banks. Mr. Lohrke’s attorneys said the attachment was to protect Mr. Leiter as well as Mr. Lohrke. The most salutary effect of the Leiter collapse has been the promise of an early reduction in the price of flour. A telegram received in Wall street yesterday from Chtcago stated that flour probably would be reduced there from $8 to $5 a barrel within a week.
The Trilogy of the Epic of the Wheat by Frank Norris:, includes the following novels:
- The Octopus; A Story of California.
The Pit: A Story of Chicago.
The Wolf: A Story of Europe.
These novels, while forming a series, will be in no way connected with each other save only in their relation to (1) the production, (2) the distribution, (3) the consumption of American Wheat. When complete, they will form the story of a crop of wheat from the time of its sowing as seed in California to the time of Consumption as bread in a village of Western Europe.
The first novel, The Octopus, deals with the war between the wheat grower and the Railroad Trust; the second, The Pit, is a fictitious narrative of a “deal” in the Chicago wheat pit; while the third, The Wolf, will probably have for its pivotal episode the reliving of a famine in an Old World community, Mr. Norris died on Oct. 26, 1902 in San Francisco.
In 1903 The Pit was adopted into a play and into a card game which is still very popular today.
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