The Great Chicago Onion Ring: Why Selling Onion Futures Is Against Federal Law

If you’ve ever seen Trading Places — the comedy starring Eddie Murphy, Dan Aykroyd and Jamie Lee Curtis — you probably know what “futures” and “shorting” are. If not, a “future” is a contract to buy a certain commodity at a date in the future for a price set today, and “shorting” is when the seller of a futures contract doesn't yet own what they're selling. In 1955, onions made up 20% of the commodities traded at the Chicago Mercantile Exchange. Two traders — Sam Seigel and Vincent Kosuga — saw an opportunity and began buying onions and onion futures in huge amounts. By that fall, they had cornered the market and ended up with roughly 98% of all the onions in Chicago — roughly 30 million pounds of them. The pair walked away millionaires, but left the onion market in shambles. Onion producers were going out of business and quickly turned to Congress. President Eisenhower signed the Onion Futures Act in the summer of 1958, and the trading of onion futures has banned in the United States ever since.