Financial History Issue 130 (Summer 2019) | Page 11
EDUCATORS’ PERSPECTIVE
The Pit necessitated an extended stay
in Chicago where his former Berkeley
classmate, George Gibbs, tried to help
Norris understand the intricate workings
of the Chicago Board of Trade. Norris
biographers Joseph R. McElrath, Jr. and
Jesse S. Crissler wrote, “Not since he was
a student of mathematics at Berkeley 2 did
he find himself so intellectually challenged
as he was when trying to comprehend the
complex machinations of speculation in
commodities like wheat.”
Gibbs wrote, “While [Norris] was in
Chicago securing the necessary informa-
tion in regard to the book called The Pit
I was with him constantly and he was
unable to understand the short side of
the market and how anybody could sell
a thousand or a million bushels of wheat
when he did not possess them. I tried in
many ways to make this question clear
to him, but it was many weeks before he
could gain the right conception of short
selling 3 in the wheat market.”
However, an unconfident Norris, who
moved to New York after completing
his research in Chicago, continued to
glean information from Edwin Lefevre,
who’s recently published Wall Street Sto-
ries touched on the kinds of market spec-
ulation Norris wanted to write about.
Business journalist George Moulson also
helped Norris with the technical aspects of
the novel. According to Moulson, Norris
“…had spent days watching brokers in the
Chicago pit, he was a writer and under-
stood very little about the speculative end
of markets.” Moulson reviewed chapter
after chapter, helping with the technical
details. He recalled how vividly Norris, “…
portrayed the scenes, endowing my matter
of fact, technical information with life and
soul and how rapidly and fluidly the vari-
ous chapters were composed during the
intervals between our sessions. This went
on for several months. He revised each
chapter after our evening talks, so that
the progress was consistent and timed to
coincide with the progress of the market-
ing season. His grasp of the whole subject
was amazing, and no effort was spared on
his part in securing such thorough famil-
iarity with a broker’s psychology as would
make his characters true to life.” Norris
Often Jadwin had noted the scene, and, unimaginative though he was,
had long since conceived the notion of some great, some resistless force
within the Board of Trade Building that held the tide of the streets
within its grip, alternately drawing it in and throwing it forth. Within
there, a great whirlpool, a pit of roaring waters spun and thundered,
sucking in the life tides of the city, sucking them in as into the mouth
of some tremendous cloaca, the maw of some colossal sewer; then
vomiting them forth again, spewing them up and out, only to catch
them in the return eddy and suck them in afresh.
Thus it went, day after day. Endlessly, ceaselessly the Pit, enormous,
thundering, sucked in and spewed out, sending the swirl of its mighty
central eddy far out through the city’s channels. Terrible at the centre,
it was, at the circumference, gentle, insidious and persuasive, the send
of the flowing so mild, that to embark upon it, yielding to the influence,
was a pleasure that seemed all devoid of risk. But the circumference
was not bounded by the city. All through the Northwest, all through
the central world of the Wheat the set and whirl of that innermost
Pit made itself felt; and it spread and spread and spread till grain in
the elevators of Western Iowa moved and stirred and answered to
its centripetal force, and men upon the streets of New York felt the
mysterious tugging of its undertow engage their feet, embrace their
bodies, overwhelm them, and carry them bewildered and unresisting
back and downwards to the Pit itself.
— Frank Norris
so appreciated Moulson’s help that he
thanked him in The Pit’s Preface. 4
Norris based his tale on an actual
attempt to corner wheat that was still
fresh in everyone’s mind. Joseph Leiter,
a wealthy Chicagoan, was only 29 in 1897
when he attempted to corner the inter-
national wheat market. According to his
obituary, he “…lost $10,000,000 of his
father’s money.” 5 Leiter saw that a com-
bination of a weak wheat harvest and the
rising threat of war with Spain would pro-
duce ideal conditions for cornering wheat.
He began buying wheat futures contracts
when wheat was selling at $0.73 per bushel
and eventually drove the price up to $1.85.
The corner eventually failed because Leiter
tried to hold on to it too long, even after it
was clear that a bumper wheat crop was in
the making. Philip Armour, who had been
bearish on wheat, battled Leiter’s corner,
and he worked with Leiter’s father to
stabilize the market after the corner failed.
In Norris’s account, Curtis Jadwin, a
successful Chicago real estate mogul, is
lured into the wheat market by his broker,
who offers Jadwin a piece of a sure-deal
short in wheat. Jadwin resists at first say-
ing, “…I had sort of made up my mind
to keep out of speculation… A man gets
into this game, and into it and into it, and
before you know he can’t pull out—and
he don’t want to.” His broker, Sam Gretry,
prevails upon him telling Jadwin, “…this
ain’t speculation. You can see for yourself
how sure it is.” Jadwin gives in and sells a
million bushels of wheat short. He makes
money on the deal, but, as he feared, he
becomes hooked on wheat speculation.
Jadwin continues to be bearish for quite
some time, but when he realizes that the
price of wheat will soon bottom out, he
changes strategies. “Sam,” says Jadwin to
his broker, “the time is come for a great
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