by Studs Terkel
I see labor coming together with the farmers. For a long time they kept us separated. Whenever a farmer complained about a high-priced tractor, they say the labor man is the cause of all that. We come to find out, you take a $100,000 combine, the labor man got eleven percent of that. That includes his benefits, even his parking-lot cost. So it wasn’t him that was causing it. They was trying to keep us split, but we have got ourselves educated. We’re coming more and more together.
I went to the line a lot of times on different things. We was picketing the Board of Trade in Chicago. They are the ones that control our prices. They can sell one bushel of beans that we grow fifteen times on paper. We was trying to get them to change that policy.
We had a tractorcade to Omaha, Nebraska, last September. That’s about 130 miles. It took four days to get there. We tractorcaded from four different directions. There was some four hundred tractors when we all got there. My tractor and our bunch barricaded the main street downtown to keep the traffic out. We was kickin’ off the Harkin-Gephardt bill to give us parity. During the 130 miles, we got horns and waves supportin’ us and some was givin’ us the finger. Those was thirty-year-old people.
The young guy that lives on his mother-in-law’s farm over there doesn’t speak out. But he privately supports us. He donated fifteen dollars for diesel oil for the tractorcade. The older guy right by here won’t publicly back us. But I’ve talked to him in his shed. He got so mad, he was takin’ the wrench and beatin’ it on the corn picker. He was almost in tears as he was doin’ this. His son just went through a foreclosure. When we protested the Board of Trade in Chicago, he said we should have drove a loaded gas tanker through the front door.
It takes a lot of time and a lot of studying to get insight into what is going on. And that’s another thing. Time. A farmer is just like a bird. When it comes spring, a bird flies north, and a farmer is the same way. When it comes spring, he’s gonna go out and plant his corn. He don’t care if he’s gonna lose money. It’s born in him, it’s a natural instinct.
When it comes time to go to the field, I throw away whatever I’m reading to educate myself, and go out there. Even at times when I should be someplace screaming and hollering, I’ll still be in the field. Every one of us is like that.
REX WINSHIP
He deals in futures. In fact, he deals in just about anything: grains, metals, livestock, bonds, bills, currencies, interest rates. “Anything you can buy, we can trade.”
His offices run to two floors in a skyscraper near the New York Stock Exchange. There is a plenitude of art work, courtesy of his personal collection. He is one of the Forbes 400 richest Americans. His estimated net worth is more than $400, 000, 000.
Adjacent to his private office, the size of a small gym, is an enormous trading room, where forty young commodities brokers are single-mindedly studying the quote machines, one on each desk. They are among his 470 employees in this city. His payroll, in cities throughout the world, runs to 1, 500.
Imagine Robert Duvall, to whom he bears a remarkable resemblance, in shirtsleeves, handling a continuous flow of messages, the phone constantly ringing. His feet are, of course, on the desk. He is, it is plain to see, a take-charge guy. One of his young traders said it all: “When he says jump, you ask, How high?”
In his private dining room, a chef attendant serves lunch. “This is all macrobiotic, no fast food.” The talk, though, is a fast flow, free-associative.
I’m just a poor old country boy, a fella who likes to work. Some people enjoy tennis, I enjoy work. I only put in about sixty, seventy hours a week. I enjoy being a leader. I enjoy being the guy everybody looks to. I like the responsibility of having thousands of people working for me.
I started out as a runner twenty years ago. Eighty-two bucks a week. When I got out of the army in ‘66. In 1968, I bought a membership; 1969, my uncle and I started the company. In ’74, I bought him out. A whole bunch of people from the grain industry came with me. In those years, I was probably the largest commodities trader in the world. I had a vision I was in the right place at the right time. I also have a high energy level.
It was a robber-baron period for the commodity business. LBJ. Guns and butter. The Shah of Iran. Decontrolling of railroads, of airplanes. Gold-market window closed. Floating foreign-exchange rates. All taking place at the same time, okay? As that happened, we expanded the money supply.
We had every fruitcake as president, but they made you make money. We had oil at three dollars a barrel. We had interest rates at five percent maximum yield. We had everything pushed down. When they released it all, the budget doubled, inflation took off.
I was dealing in cattle, grains, gold, everything. You had a tax roll, so you could defer your taxes. If any dummy cannot make success out of that—The robber barons made a lot of money. They didn’t have to pay any tax. The rules of the game in 1975 were very loose. The robber barons had everything going for them. We did, too. We were coming out of control prices, out of control exchange rates, out of control currencies. All of a sudden they were let go. I was in the business where you could trade it. I knew it was a unique period in history and it wouldn’t go on forever.
If you were in real estate in Houston, up until five years ago, you were considered a business genius, right? If in the same twenty years, you were in some real estate business in Sioux City, you were considered a schmuck. You’re in the wrong place, okay?
In ’66, what if I had gone into the stock business instead of futures? The only thing I knew that was smart was being able to sell short. Having the flexibility of being short easily was a big advantage.
What if General Motors could hedge their auto production for a year out? What if every pension fund could hedge? What if U.S. Steel could sell futures forward and lock up their margins? I saw the concept of futures as a winner.
Now in our world of money, money management has become the sexiest topic there is. We’re risk managers.
I’m sure we’re close to another change. I don’t know if it’ll come next week or ten years from now. I’m not sure if we’re going to have inflation or deflation. Deflation takes money out of the country into the city. New York’s a gold mine. Inflation moves it away from cities back to the country. So all you have to do in life is figure which way the money flow is gonna go.
Nothing is forever. You always have to stay flexible, so you can change. That means education. Five years ago, we were in the commodity business. You bought and sold. The customer was a farmer in Iowa. Today he is a major New York bank. That kid who talked to the farmer can’t talk to a New York City bank. The kid isn’t educated enough. Either I fire him and hire one of those guys at $500,000 a year. Or I have to re-educate him. I re-educate him.
There’s a business we should go into: training people to be in the service business. Give them basic skills: math, speaking, diction. Right now, we give diction courses here. I take ’em. You can’t be in the business world and not be able to communicate. It wasn’t as important when you had a screwdriver in your hand. Now there’s satellite communications all over the place. The globalization of the communication market is going to be dramatic. You’re going to be able to sit in your office in Chicago, look up at the wall. The conversation will be about interest rates and taxation.
It’ll mean you’ll have longer days. It’ll be a young man’s game, which it is already. Back in the fifties, when you went in for a job, the guy said, How old are you? Twenty-six. Married? You bet. Boy, that’s good. What a guy, you’re married. Stabilizing force, right? Today, you don’t want the kid married.
You want to be able to move. You want to be able to send him to Singapore for two years, Sydney, Australia, for a year, and then back to Chicago. Two, he’s gotta go to school nights. He’s gotta learn math, statistics, he’s gotta learn Fed policy. When he goes to school from seven o’clock till nine three days a week, and he’s newly married, and he gets to work at six, gets out at six, has to be at school at seven, gets home at nine-thi
rty, what’s his new wife gonna say to him?
How can you compete when the Japanese come over here, without their wives? They get to work at eight o‘clock in the morning, get home ten o’clock at night. The average work week of the American executive is fifty-four hours. It’s probably sixty-some hours in Japan. It’s a question of time before the guy who works sixty hours will have all the marbles. Everybody must adjust to the marketplace.
What happens to that most solid of citizens and family men, the American farmer?
Why is he a solid citizen? That’s a myth. The myth is that land is good, right? Farmers work hard, right? That’s also a myth. The guy that runs the local dry-cleaner store works longer hours, right? He’s in a fixed location. He can’t move. He’s got his plant and equipment tied up in his building, right? Except no one sends him a check and says, You’re entitled to 3¼ for your corn. What business in the world says you gotta make money? Why should you make a profit? Without loss, no one can win. Unless you have losers, you cannot have winners.
Just because, forty years ago, half the population lived on the farm, and people thought, Wasn’t that a great life? Today nobody lives on the farm. The American government ruined the American farmer. Three embargoes: ’73, ’76, and 1980. There probably aren’t as many Third World countries that have defaulted as much as we have. An embargo’s defaulting tells you that your contract’s no good, rip it up. That’s why we have to spend 35 billion a year to support the farmers. Australia, Canada, Argentina, Brazil expanded. We made them all rich.
Cargill takes half their money outside the United States. When you go spend a billion in Brazil to build railroads and trucks and terminals, it doesn’t come back very easy here. Harley-Davidson never got it back from Honda, did it?
Ten years from now, there will be less farmers. We don’t need them. We’ve imported food. We import more meat than any other country in the world: more chicken, more beef, more pork. When the government gets out, the people that are left will produce what we want. Some farms will collapse, some won’t.
And unions. As you change society, unions are not set up for the change. They’re designed to keep people out. They’re designed to lock prices. Isn’t that how you raise prices? They’re built for inflexibility. They have to go the way of the fixed exchange rate. Why should the most talented electrician make the same as the biggest dummy? The union is unfair to its own people.
Why aren’t there any more craftsmen today? What happened to all those ethnic craftsmen? I believe kids work harder today than ever before. Maybe they don’t want to go into these crafts because the pay wasn’t right. Maybe the greatest carpenter didn’t make enough money because the guy at the low end made as much as he did. Unions.
They stop the top guy from becoming great. Why shouldn’t the greatest carpenter become a multimillionaire? The greatest basketball player does. Why shouldn’t the greatest stonecutter? Why? Why? Because the union says, You gotta stay here because we gotta pull this other guy up.
Unions are less and less important. The trend’s already in place. It’s gonna keep goin’. The market will take care of it.
We need accountability. You can’t fire the union guy, so the boss has an unaccountable work force. What if the girl types up your manuscript backwards? I couldn’t fire her because she’s gonna go to the grievance committee. No accountability, you have no business. Another obstacle to free progress: government regulations. The government caused the Depression in the first place. The Federal Reserve didn’t know what it was doing. It kept tightening the money supply. Today, if our Fed was not expanding our money supply, we’d have a depression, too. To say controls took us out of the Depression, that’s another myth. Like the farmer’s good, and the land’s good. Myths.
We have Social Security, right? Japan doesn’t have it. You got to save your money to protect yourself in old age. Does anyone ever think maybe there’s a correlation between Social Security and non-saving? The Japanese weren’t born savers and we weren’t born spenders. My uncles and aunts and grandma and grandpa saved string and butter wrappers and everything else. They were savers. Now, with Social Security, why save? Everybody consumes.
Reagan had a chance to change the Social Security laws and didn’t have the guts to do it. So that will be a tremendous debt in the future. Reagan is a good president and could have done something. He could have gotten rid of the COLAs, cost of living adjustments. He could have changed America forever.
Jimmy Carter’s administration was a trader’s dream. Made more money with him than either Nixon or Reagan. Because he made distortions. Wage and price controls, no wage and price controls. Credit controls, no credit controls. Embargo, no embargo. Wonderful for me.
It’s very hard to make a profit in a free market. Look at the airlines decontrolled. It’s hard to make a profit since Jimmy Carter. With controls, you’re simply smarter than the controllers. You just outsmart the regulators. Knowing how to get in and get out, you make a profit. It’s easy. Christ, if you can’t outsmart one little government staff, you shouldn’t get to work in the morning.
If you’re called a freebooter—
A free what?
A pirate, a robber baron. Is that a put-down?
It’s a compliment. Absolutely. I wish I had their money. Who developed America? The regulator? The President? Or was it Mellon, Rockefeller? I mean, tell me what they did bad? Seriously, what did they do bad?
Rockefeller shot down some workers in the copper fields. Some say he exploited them...
Absolutely. And who’s benefitted? There’s still Standard Oil, isn’t there? Mellon’s bank’s still around. Chase Manhattan’s still around. Listen, how many charities were started by these people? How many national parks were preserved by these robber barons?
We look at them, we say they didn’t play fair. Absolutely not.
Kid Pharaoh, a minor syndicate tiger in Chicago, caught in a reflective moment:
“I might have been a success at the turn of the century. If I was born fifty years ago, I believe I would have been a multimillionaire. I shoot the same shot that Rockefeller shot while somebody was tapping an oil well that was competitive to him. He put guys in trick bags. Got ’em in jail. There’s a history written about these guys. John Jacob Astor, with his trapping, with his furs. Hitting guys. This is the way the system works. What else is there? These new laws are holding them back, destroying incentive.
“These were the giants who built the cities. These are the guys who built our country. They elect presidents. All these guys came up the hard way...shoeshine guys and bust-out crapshooters...shoot a shot against blackjack. These are the guys we need in our country. Who needs educated moochs?”73
The robber barons made it because the marketplace wasn’t fluid enough. The Rothschilds had carrier pigeons. H. L. Hunt had the guy drunk in the room and had his friend out on the pay phone. Today this could never happen. You’d have nine hundred reporters there. And it’s all on the news the same night. Instant communications. Our robber-baron period lasted from ’73 to ’80. What killed it was [slaps hands] instant communications. Now it’s shifted to securities. The market’ll take care of it.
The rules of the New York Stock Exchange on insider trading make more profits for the rich arbitrager. If they had no laws against insider trading, these risk-arbitrage guys couldn’t make any money, ’cause the market’s broader and they don’t have the edge. The law makes it easier for them because they outwit the regulators. I’m saying the marketplace knows more than the regulators.
Here’s another kind of flow: mergers and acquisitions. Everybody’s merging, right? Big conglomerate, right? What’s the next thing’s gonna happen? They’re gonna take ’em all apart.
Small, independent companies? Good, right?
Wrong. Terrible. Very, very scary to me. A lotta competition. I can move quicker against the big inflexible ones.
The only way you can keep everybody upwardly mobile is to have the GNP get bigger and grow.
If it grows, you don’t have to have have-nots. If it doesn’t grow, you have to have have-nots.
Like the frontier was. Space mining, space technology, space health. How far can we grow? Forever. We’re only limited by our imaginations.
In the trading room, where his scores of young brokers are intently studying their quote machines, his public relations person, in the manner of a gracious hostess, guides me. “We are young and energetic. It’s fast, intense. But it offers a lot of money. At a certain age, that’s what you’re interested in, making money.
“The turnover is tremendous. Two to five years with one firm and then out. The business just changes so fast. Lots of stress, so if you make a lot of money, you get out early [laughs.]
“We affectionately call it the war room. You feel like you’re going to battle [laughs]. Yeah.”
POSTSCRIPT
Another visit, another macrobiotic lunch. It is precisely one month after Black Monday, October 19, 1987.
A five-year bull market had a correction. As long as there is greed, you’ll have days like October 19. Interest rates and lack of leadership were the cause. It will probably take two years for us to get back in shape again—’89 and ’90 will be bad.
It will not be like 1929. The bear market can be over in a day. Isn’t it better to have a down in one day than for four years? Bonds went up twelve points in twenty-four hours. In my business, futures, it was pretty good. I picked up a few bucks.
