Grain Failure

Emanuel ("Manny") Rosenbaum has been a member of the Chicago Board of Trade since 1896. A loud, baldish Jew of 60, he likes to boast of the fact that his

Rosenbaum Grain Corp. has one of the largest storage capacities (18,000,000 bu.) of any grain house in the U. S. On busy days fast-talking Manny Rosenbaum. a cigaret hanging on his nether lip, keeps the grain pit lively with his orders. On dull days the pit brokers sometimes amuse themselves at his expense by parodying the German melody "O Tannenbaum" with loud choruses of "O Rosenbaum, O Rosenbaum."

The name of Rosenbaum was on every broker's tongue one morning last week when, precisely at 9 o'clock, the great 1,500-lb. bronze bell on the trading floor boomed not once--the signal for trading to begin--but five times. High up in the visitor's gallery an official uprose to bellow that the market would not open until later in the morning. At 12:30 it was announced that because of peculiar circumstances the market would not open at all.

Every broker knew what the "peculiar circumstances" were: with 4,000,000 bu. of wheat, rye, corn and oats, Rosenbaum Grain Corp. had gone to the wall the previous afternoon. The scarcity of wheat caused by Drought had eaten into Manny Rosenbaum's warehouse business. Income from storing other people's wheat (1 1/2-c- a month per bu.) had sunk out of sight; in its place was a heavy drain on cash for upkeep and taxes. And loans from banks were large. Rosenbaum Grain Corp. filed petitions in Delaware's and Chicago's Federal Courts to reorganize under Section 77b of the Bankruptcy Act.

When news of the failure flashed westward, both the Kansas City and St. Louis grain exchanges closed down. Wheat sank on the Winnipeg and Minneapolis exchanges, only major grain markets open in all of North America. Grain brokers from coast to coast held their breath in anticipation of a grand market smash.

No smash came. Shrewd Emanuel Rosenbaum had timed his movements skillfully. He knew the Board of Trade must sooner or later carry out its rules which call for suspension of any member unable to meet his obligations. When President Boylan of the Board of Trade summoned the Board's directors to a secret meeting, they found Mr. Rosenbaum one jump ahead of them. He had secured an injunction to restrain the Board from suspending his company on the grounds that suspension would force a reckless liquidation of the company's holdings, knock the bottom out of the grain market. But Mr. Boylan had one ace left. If the court would not let him suspend Rosenbaum Grain, at least he could prevent the company from buying & selling grain, by closing the Exchange, which he did. Before it was opened next day, the court conceded his point, forbade Rosenbaum Grain from trading in its own name. Then President Boylan sat down to devise a scheme for closing out the company's open contracts without upsetting the market.

Here he was in luck. He soon discovered that of Manny Rosenbaum's 4,000,000 bu. of grain contracts, the commitments on the long side were more than offset by contracts on the short side. Liquidation would not dump quantities of grain on the market at once. By agreement with the banks, who had most of Manny Rosenbaum's spot grain as collateral, the Board of Trade Clearing House selected a group of independent brokers (whose names were kept secret) to close out the Rosenbaum open contracts privately. Within a half hour after the market opened. President Boylan proudly announced that the job had been done. The liquidation was accomplished with a net loss for the day of only 1-c- in the price of wheat.

In La Salle Street the crack-up of Manny Rosenbaum was not altogether unexpected last week. After inheriting the firm from his father about 20 years ago, Trader Rosenbaum began an ambitious program of expansion, considered himself something of an Insull in the grain business. Besides loading himself up with grain elevators, he opened a string of 15 branch offices. Lately he was reported slapping quantities of cash into Polish rye, Argentine corn and oats. Sincerely disliked by many a grain broker for his personality and methods, Manny Rosenbaum was a central figure in the Armour grain scandal of 1925. and the failure of Dean, Onativia & Co., a brokerage house which he helped organize. Last week most of Manny Rosenbaum's negotiations with the Board of Trade and the court were conducted not by Manny Rosenbaum but by a vigorous, grey-thatched Irishman named Louis T. Sayre, secretary of the company and its trustee in bankruptcy. Trustee Sayre stopped Manny Rosenbaum's salary last week and it was reported that Rosenbaum Grain Corp. was due for a big shake-up in personnel.

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