There was an onion craze on the stock market in the 1950s.
You can buy and sell all sorts of commodities on the stock market, from gold and oil to soybeans and cattle. One thing you can’t trade, however, is the humble onion, and there’s a good reason for it: The vegetable was once the subject of a stock market scam. It took place in 1955, when onion futures became the Chicago Mercantile Exchange’s most traded commodity and two investors saw a get-rich-quick scheme in the making. Sam Siegel and Vincent Kosuga bought 30 million pounds of onions, a full 98% of Chicago’s stock, as well as onion futures. They then set a plan in motion to short sell the vegetables, which is when investors buy a stock they think (and hope) will decrease in value, sell it on the open market, and then buy it again for the lower price. They then profit from the difference between the sale price and purchase price.
Siegel and Kosuga didn’t just think that onion prices would drop — they knew it. They flooded the market with their massive inventory, dropping the price from $2.75 a bag to just 10 cents a bag. They made millions but bankrupted countless farmers in the process, leading to congressional hearings and the 1958 passage of the Onion Futures Act, which made it illegal to trade the pungent allium on the stock market. To this day, onions are the only banned agricultural trading commodity in the United States — not that anyone’s tearing up over it.
