EDUCATORS ’ PERSPECTIVE
The first day of pork belly trading on the Chicago Mercantile Exchange , 1961 .
Courtesy of tradingpithistory . com pork belly ?” and “ One man ’ s Polaroid is another man ’ s pork belly .”
The success of pork bellies assured the continuing existence of the CME . In 1964 , the CME realized a profit for the first time in three years . Pork bellies contracts were so successful that the CME began to be referred to as , “ The house that pork bellies built .”
While Melamed was pleased with the success of pork bellies , he realized that the exchange ’ s future success lay elsewhere . The pork belly contract was a stop-gap measure , a transitional phase to something bigger , but what was that something ? Live cattle futures contracts began trading in late 1964 — building on the success of pork bellies — and live hog contracts started trading in early 1966 , but Melamed did not view these contracts as the path to the future . Neither were metal contracts , which first began trading in 1971 with the introduction of silver contracts . Although these innovations helped to diversify the futures contracts offered by the CME , Melamed knew there was something more revolutionary on the horizon .
The answer became clear in 1971 with the termination of the Bretton Woods Agreement , which established fixed currency exchange rates . The demise of Bretton Woods meant that exchange rates would be allowed to fluctuate , opening the door for currency futures contracts . Melamed was not only ready to storm through that door , but to expand quickly into interest rate futures and equity index futures . His vision would transform CME ’ s lowly pork belly traders into traders of financial
10 FINANCIAL HISTORY | Summer 2024 | www . MoAF . org