GOVERNMENT: Corner in Rye?

In the old days, cornering a market in commodities or stocks was a favorite pastime among the wizards of Wall Street and the giants of the grain pits. But now, making a corner is illegal, unless it is done accidentally; in recent years the feat has been accomplished only rarely. Last week there was a growing belief that a combine of speculators had cornered the July futures market in rye—and made a big killing.

The evidence of a corner was strong. From July 2 to July 20, rye for delivery that month had jumped 37¢ a bushel to $2.15½; in the last three days of trading alone, it shot up 21¢ a bushel. But in the same period, rye for September delivery actually dropped 8¢ a bushel, to $1.652. Obviously, plenty of speculators had been caught short in July rye and their rush to “cover” had pushed up the price. Another factor pointed to a corner: at the end of the trading period, there were still 952 “open contracts” in July rye (i.e., agreements to buy and sell), which could riot be executed because there was no grain available, indicating that someone had bought up the visible supply.

What gave the case added weight—and interest—was the fact that the Agriculture Department, guardian of the nation’s farmers and cop on the beat of commodity speculation, had sworn testimony to the effect that a speculating combine—including some Government officials—had been formed to corner commodity markets. Agriculture’s Commodity Exchange Authority got its evidence from Dyke Cullum, a speculator whose accounts had been manipulated. Under oath, Cullum told of being invited to join the group by a man who promised the connivance of Government officials with access to advance information on Government buying plans.

(Sample information: a sudden Government decision last March to buy 870,000 tons of rye.) Cullum named some of the combine’s members: the Washington lobbyist for one of Chicago’s grain speculators, a U.S. Senator, an ECA official and his wife, two staffers of the Senate Agriculture Committee.

So far, the department has taken no action on Cullum’s information. Columnist Drew Pearson has charged that the same combine offered a $1,000,000 bribe to an Agriculture official who was eased out last spring. Last week, one more Agriculture official was fired, another suspended for unannounced reasons.But the whole story probably would never be known, unless Congress dredges out the facts.