In Chicago: A Frenzied Bastion of Capitalism

By Madeleine Nash

It is just 8:30 a.m., but the room is already throbbing with the ardent and unabashed pursuit of money. As the pace picks up, the shouts of jostling men rise like the roar of the crowd at Churchill Downs when it's neck and neck in the home stretch of the Kentucky Derby. The participants are dressed like stockroom clerks in brightly colored cloth jackets, and they are flashing elaborate hand signals to each other and yelling phrases in a jargon all their own. "Even 17 D's!" cries one exasperated figure as he elbows for room. Another day of seeking fortunes has begun at the 130-year-old Chicago Board of Trade, where the tension, the gambles, the losses and the gains can make the action at Las Vegas seem like a kids' game of Old Maid.

Put very simply, the game at the Board of Trade is to bet on the future. Those gesticulating and shoving men are brokers and dealers who are selling each other contracts to deliver goods months in the future at a fixed price--when the real market price may be higher, or lower. Nerve-racking enough, but the goods they are buying and selling are extremely volatile, their value subject to human whims, storms in the farm belt, or a boost in interest rates in Washington. Most of the trading takes place in traditional commodities, such as wheat and corn, but in recent years the Board of Trade has added futures in U.S. Treasury bonds and the enticing "Ginnie Maes" (as the Government's National Mortgage Association certificates are blithely called). The Board of Trade is the nation's largest commodities exchange, a market that has become to the late '70s what the stock market used to be to the late '60s: a heady, go-go whirl that amounted to some $730 billion last year. Intones one Chicago broker: "This is the last bastion of pure capitalism in the world."

Small wonder, then, that a lithe, black-bearded man is nimbly dashing among three octagonally shaped enclosures, known as pits, where the trading takes place. Ray Cahnman, 34, is resplendent in a jacket that is Kelly green, the identifying color of a clearinghouse that guarantees his credit. Suddenly he spots the man who is bobbing up and down in the crush like a crazed jack-in-the-box and still screaming "Even 17 D's!" Raymond Elbin, wearing the apple red coat of another clearinghouse, is offering to buy 17 $100,000 Treasury bonds next December (the "D's" in his call) at no price change. Cahnman and Elbin begin bargaining nose to nose, yelling and jabbing fingers in each other's faces. Eventually they agree on a price and, presto, Cahnman has sold 17 of his December bonds to Elbin.

A onetime tennis instructor, Cahnman began playing the Chicago market three years ago when he gave up his job as a computer-time salesman, scraped together $5,000 and bought a permit to trade Ginnie Mae futures. Although he refuses to divulge his earnings, he has done well enough to buy a full membership in the Board of Trade for $135,000, which allows him to wheel and deal in all phases of the market. But there have been frightening lurches along the way. "Three tunes I've lost massive amounts of money," admits Cahnman, who is married to a schoolteacher and has no children. "Once I thought I was so far down the tubes that I thought I wouldn't even get out with my house."

To retain his house and his senses, Cahnman surveys his territory with the intense look of an eagle searching for supper. Suddenly he is off, chasing pigeons in the Treasury-bond pit, only to resurface later among the Ginnie Maes. "I make sure I go to the washroom before the market opens," he confides to a visitor. "You just can't leave the floor. Too much can happen in minutes."

Now the market is turning soft and Cahnman is turning edgy. He dashes into the Treasury-bond pit. "Sell three D's at 29!" he yells. There are no takers. "It's getting bad," moans Cahnman, munching on a bag of potato chips that he keeps in his jacket pocket for just such moments of anxiety.

Then he spots it, the kind of break he has been looking for all day: the price of bonds he could buy for cash has fallen slightly below the price on the futures market. In two simple moves, buying on the cash market and selling on the futures, Cahnman makes a profit of at least $20,000, or more than his salary for an entire year before he joined the market.

Cahnman cheerfully plays both ends against the middle, dealing with the conservatives who are hedging their investments in grain, and the go-for-broke gamblers out to make a killing. He sells a contract he has just bought, if the differential is right, and buys back into a market he has just spurned. "I never back away," he boasts. "Just when everyone else gets real panicky, that's when I like to step in and do the opposite."

Cahnman is constantly struggling to reduce his inventory, and he has accumulated some inventory during recent sessions. The card in his top pocket shows that he owns well over 1,000 contracts worth approximately $100 million. To lighten his load, Cahnman is always on the lookout for what he calls "fresh money" brought to the exchange by new traders. Says he: "I love to see them come in. I know I can run circles around them." Indeed, Cahnman can run circles around a number of experienced brokers. One rival compares Cahnman's moves to those of a pro running back like the Bears' Walter Payton: "The timing, the speed, the agility are the same."

When the bell ending the trading rings at 2:45, Cahnman has reduced his inventory by 400 contracts, but he is exhausted. "I don't know how long I can keep on doing this physically," he complains. He's kidding no one. Ray Cahn man will stay with the market as long as he's making money and the excitement lasts. Says he: "I couldn't dream up a game that intrigues me more than this, not even tennis. I'd want to do it even if I were playing for bottle caps. "

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