Open outcry is dead, and the Chicago Board of Trade will never be the same. Long live the CBOT.
Well, that ‘s what you might say, anyway, if you were a fan of that deafening roar that was once the trading floor. All of that has been silenced by computers, which is where most of the trading has gone now for agricultural and other commodities. This recent article buried on the New York Times’s Dealbook web page tells the story, which is also part of Chicago history and Route 66 history, as the CBOT has been located on Route 66 for decades before the route existed.
CBOT is also important to the nation’s economic history. To quote Wikipedia: “In 1864, the CBOT listed the first ever standardized ‘exchange traded’ forward contracts, which were called futures contracts. In 1919, the Chicago Butter and Egg Board, a spin-off of the CBOT, was reorganized to enable member traders to allow futures trading, and its name was changed to Chicago Mercantile Exchange (CME).” Ever since its founding, CBOT has been an economic innovator. To Route 66 fans, however, the end of the open outcry system at CBOT means visitors will never again get to see actual trading being conducted – trading that means billions upon billions of dollars to the world economy. We, the public, will no longer get to see in action what it is that CBOT does. And I’ll miss that.
Personal observation: Once again, I wonder why I have to read the New York Times rather than the local papers if I want to get a thoughtful perspective on a local event or phenomenon. Reuters weighed in with a story nearly two years ago when someone filed suit to keep open-outcry prices as the benchmark for end-of-day settlement prices instead of capitulating to electronic trading prices. Modern Farmer ran a well done story three months later, and The Western Producer caught up in February 2015 after CBOT finally decided to close most of the pits; but the constantly shrinking Chicago Tribune merely ran the Reuters piece in 2013, then forgot about how CBOT was changing. Typical. And if there was any coverage of it by the Chicago Sun-Times, it didn’t show up in the search results. Sigh …
Yours truly remembers a very different CBOT, one that reigned for 165 years under open outcry (a system it developed, just as it did futures contracts) and will never return. I saw it for myself, every working day for a year.
Back when I was a newly minted college graduate, I realized that: a) my local-college alma mater had taught me just enough about journalism to realize just how much I didn’t know about the subject and, therefore, I needed to go to grad school at one of the top J-schools in the country, where presumably I’d learn more and better skills and maybe catch the eye of a recruiter (which I’d never even seen or heard of at my alma mater), and b) the Nixon recession and the decline of evening newspapers meant that the job market in my chosen profession was tightening considerably, especially in Chicago (it was also a sign that newspapers would go generally downhill for most of my career in journalism), and maybe I should be looking to get some experience elsewhere. As I’d moved out of my parents’ house to a then pricy apartment ($400 a month!) on Clark Street in Lincoln Park/Old Town that I shared with three other roommates, I also needed a job to make some money while I figured things out. One of my roommates had just snagged a job as a trading floor runner at the Board of Trade through another acquaintance, and I figured (with my interest in business journalism) that this might work for me, too.
That was my introduction to commodities trading and the CBOT. I went to work for Gus Nesvick, who ran the CBOT outpost of Central Soya Co., which had house brokers trading on the floor for the company and for its clients. Central Soya in those days was both a broker and a user of soy products (it manufactured its own soybean-oil-based margarine) as well as a trading firm for farmers. I unwittingly lucked out: Gus Nesvick turned out to be a straight shooter; he didn’t promise me that one day I might work my way up from runner to apprentice broker, to house broker and then, one day, an independent broker with my own very expensive seat on the exchange. Quite the contrary: when I inquired about that, he sympathized with my momentary ambition but minced no words in telling me that Central Soya was, unfortunately, a very conservative company that didn’t recruit women as house brokers and it would take some major consciousness raising to change that – which wasn’t likely in the forseeable future. He did tell me, though, that he would help me learn as much as I could about the CBOT without actually becoming a broker.
Thus began my year-long career at the Board of Trade, the start of which consisted largely of risking deafness and trying to avoid flying elbows and arms as I tried to deliver buy and sell orders to specific brokers on the floor with whom our company traded. We got to the company offices at least half an hour before the start of trading and down onto the floor at least 20 minutes before opening. I’ll never forget the incredible roar I heard when the opening bell sounded as I stood for the first time on the trading floor as a runner. It was beyond deafening: the scream of a Biblical storm or an army on the attack couldn’t have been louder or more terrifying. It’s a sound I’ll carry in my head for the rest of my life. No one could forget it. To describe the sight of all that furious activity at the bell is just as difficult: it’s just like watching warfare, with several battles going on at once in every octagonal pit – except that whereas war is usually chaos, trading on the floor of the CBOT only looks that way. In truth, it’s highly organized frenzy. Or at least it was.
Gus Nesvick had warned me about the opening bell, with an oh-so-slight smile. Maybe understating the sound of that roar the first time was akin to hazing the newbies. Nesvick, however, also provided me with plenty of reading material about how commodities trading worked at the time, why it was done, why more farmers should protect themselves by hedging, and how intelligent trades were made, and he answered all my questions about that material in the little time that he could afford. I was fascinated. I quickly learned how to stay out of the traders’ way while pushing up a paper order for a broker to grab, fulfill and push back into my face. It was either that, or nurse several bruises a week and, possibly, a few black eyes in the process. Nothing else I’ve ever done has ever equaled the feeding frenzy, the adrenalin rush, or the jet-engine-equaling noise level of the CBOT trading floor.
And when some months later a vacancy occurred among the teletypists on the trading floor (who earned more money than we peons, the runners, did without having to go out onto the floor and risk injury daily), Gus Nesvick promoted me to a teletypist at the desks on the outskirts of the trading floor, where I took and printed out orders that came in and sent out trade confirmations after the fact. That was as far as any woman could go at Central Soya, at a time when there were only two women commodities brokers trading on the floor at CBOT (one of them was Carrie Cashman, whose daddy was Cashman & Co., a local brokerage firm; the other woman, whose first name was Barbara but whose surname I can no longer recall – forgive me, Barbara – was an independent trader who had bought her own seat. I admired them both of them for persevering in another outpost carved out by and overwhelmingly dominated by men, few of whom welcomed them).
Had there been a way back then for Gus Nesvick to train me or any other woman at Central Soya to be a house broker without suffering the immediate ire of company headquarters in Fort Wayne, IN, I have no doubt that he would have done it. And then I might have become one of those wild and crazy commodities brokers (and by now might have been part of the One Percent I loathe, or maybe a big-time philanthropist; who knows). But training women to become traders was not to be, not that year nor for many more years to come. Certainly, nothing had changed by the time I returned from grad school at the University of Missouri School of Journalism; so, journalism got me (and I was poorer for it for nearly all of my career; but then, nobody in those post-Watergate Woodward-and-Bernstein days entered journalism to get rich: silly us, we did it because we thought it was important to a functioning democracy to have a well-informed public. Little did we know that 30-plus years later, most of the public – especially the younger generations – would no longer care about being well informed, being too absorbed in social media and ‘reality’ TV). But I digress.
The CBOT, like many industries in much of the industrialized world, went electronic. The advent of computers eventually made trading easier, but – as the New York Times article aptly noted – it also eliminated yet another way for working-class kids to learn a trade that could make them upwardly mobile, considerably wealthier and more successful than their blue-collar parents. That, too, will never return, no more so than the observation booth that used to overlook the fifth-floor trading room, which is also gone.
The CBOT building, of course, remains – as does the activity that fuels it and our local economy. But the structure itself, though also of architectural and historic importance, is more like an empty shell now that we can no longer see what it is that people do there. It’s harder now to grasp the importance of that enterprise without the aid of charts and statistics, most of which would bore us to tears. The sight of the trading floor when the opening bell went off, however, was rarely boring and conveyed the excitement of the commodities markets the way nothing else ever could. Will future visitors understand that the octagonal symbol of the CBOT is really a grapic image of a trading pit, or what that pit was like? I doubt it. But I’ll never forget. My stay on the trading floor was the most tumultuous, unforgettable year of my life. Only those who have been there understand.
Until next time,
your faithful Route 66 correspondent, Marie