Chapter 1. A Crash Course in Commodities
How It All Began
Given the urban nature of the city of Chicago, we often forget that it is located in the agricultural heart of the mid-West. In the mid-1840s the windy city emerged as the agricultural market center for neighboring states. Chicago was the meeting place for farmers looking for buyers of their crops and grain mills looking to purchase product for their operations. However, despite the central location, timing and logistic issues created inefficient means of conducting business and thus inflated commodity prices.
At the time, grain elevators were sparse, which made it critical that a farmer sell his crop upon harvest at the annual meeting in Chicago due to a lack of storage. Even for those ...