Business: Piper nigrum

In a current cinema called When Thief Meets Thief, mention is made of a man who committed suicide because of fluctuations in the pepper market. Last year two top-flight British financiers went to jail after cornering the pepper market in an unsavory pool which rocked London’s Mincing Lane. Last week, partially as a result of this scandal, the U. S. officially became the world’s greatest pepper market as the New York Produce Exchange inaugurated trading in pepper futures on an equal basis with silk, coffee, rubber and other established commodities.

“I demand 5,000 lb. of gold and 3,000 lb. of pepper as the city’s ransom!” declared Alaric the Goth when he beleaguered Rome in 408 A.D., and for another 1,000 years pepper ranked with gold as a basis of wealth. Landowners sometimes paid rent or taxes with pepper. Vasco da Gama was in search of pepper when he first skirted the Cape of Good Hope, and when he found it on the Malabar Coast, Portugal had a corner on pepper for over a century until England’s East India Co. was formed by Queen Elizabeth to capture the spice trade. Pepper’s popularity is not due to physiological necessity (as is salt’s, which all animals must have in order to live) but to its taste and its indestructibility. About the only way to destroy pepper is to eat it. Never attacked by insects, it neither deteriorates nor shrinks, can be stored indefinitely and therefore has the same permanence as gold as an investment.

Pepper grows as clusters of pea-size berries on a tropical vine called Piper nigrum. On rich, steamy plantations of Netherlands East Indies, British India, Borneo, French Indo-China and Siam, natives train the vines on poles or upon trees, gather crops in December and July. If the berries are dried and ground whole the pepper is black; if the husk is removed before drying, the pepper is white. Black pepper production is four times that of white, which is milder.* Since the vines reach maturity in five to six year cycles, the pepper market has regular cycles in volume and price. In the past century black pepper prices have ranged from high to low to high again about every twelve years. Low prices have ranged around 4¢ per lb., high have touched 43¢ . This great fluctuation makes pepper a speculator’s dream and in London’s Mincing Lane where speculation hums in everything from ant eggs to dried flies, trading in pepper futures has been so popular that London has always until this year dominated the pepper world.

Years ago an astounding character named Garabed Bishirgian emerged from Armenia to gamble in rugs, caviar, tin and finally pepper with such success that he was known as the “Pepper King,” threw parties which were the awe of London and owned a model farm in Surrey on which he raised 600 thoroughbred pigs even fatter and greasier than their owner. In 1935 “Pepper King” Bishirgian joined with his friend “Tin King” John Henry Charles Ernest Howeson in an attempt to corner the pepper market. When a bumper crop threatened their corner, they resorted to a fraudulent stock issue which brought several old commodity firms to bankruptcy, cost the public many a million, landed Kings Bishirgian & Howeson in jail and London’s pepper market in thorough disrepute (TIME, Feb. 18, 1935 & March 2, 1936). This scandal combined last year with a freight war (making it cheaper to ship pepper to the U. S. than to Europe) to steer many pepper consignments to New York instead of London. For years the world’s largest pepper user (30%), the U. S. then for the first time displaced England as a pepper mart. This led logically to last week’s establishment of pepper trading on the busy floor of the New York Produce Exchange.

To guard against the fluctuations which characterize Mincing Lane pepper trading, margins are closely regulated on the New York Pepper Futures Market, daily fluctuations are limited to 1¢ per lb. per day and pepper stocks must be kept in licensed warehouses subject to inspection. The trading unit is 33,600 lb. of Lampong (Netherlands East Indies) black pepper, with Aleppy and Tellicherry (British India) as optional deliveries. Pepper prices are currently very low (6¢ per lb.) because last year’s crop was the largest in history (87,000 tons were shipped) and there is now a glut of pepper on the market. But this is the fifth year since new plantings matured and the down-roll of the pepper cycle is due soon, meaning smaller crops and, agreed pepper experts last week, much higher prices.

*Aside from those who buy it as a long-term investment or, currently, as a hedge against inflation, main pepper purchasers are the grinders, who maintain “spice mills” all over the U. S. Packers and canners take the balance of the 18,000 tons used annually by the U. S. Not to be confused with black or white pepper is red pepper, cayenne or paprika, which comes from a different plant, has small volume, little speculative value, is not traded on pepper exchanges.