Even though Kosuga’s first experiences in trading futures turned out badly and forced him to focus solely on his farming, by the time he was in his forties, his venture into that area of investment resulted in much larger success. In the mid-1950s, he became involved in the Chicago Mercantile Exchange, where onion futures were hotly traded products.
It was in Chicago that Kosuga began working with Sam Seigel. Seigel owned a facility that worked well as an onion storage, so both partners began buying onions not just locally but from all over the country and soon after began buying onion futures. It was a strategy that eventually led them to corner and manipulate the onion market.
Vincent Kosuga Got Rich by Manipulating the Onion Market
In the 1950s America, farmer and commodity trader Vincent Kosuga and his partner Sam Siegel hatched a plan to control the onion market in and around Chicago. Not only did the scheme work for a time, earning them millions of dollars, but it also caused the United States to pass a law to prevent those practices from being implemented.
Vincent Kosuga was born in 1915 in Pine Island. It's a small hamlet in New York state that is part of what is called the Black Dirt Region, which is best known for so-called “black dirt onions,” so his knowledge and familiarity with the vegetable went back to his earliest days.
Kosuga Started Out as a Farmer
Kosuga came from a Russian-Polish Jewish family before converting to Catholicism. His devoutness and generosity made him important in his church and community. In his early years, Kosuga labored only as a farmer, growing onions, celery, and other crops. Kosuga’s customers included small-time businesses and big companies like Campbell’s Soup, but his involvement in trading wheat futures in the 1930s nearly bankrupted him.
Commodities trading is when investors buy and sell different commodities like oil, gold, and vegetables and speculate on their prices. This kind of trading may be done to create liquidity, secure raw materials, and as a way to invest by speculating on the future prices of such commodities.
Kosuga and Seigel Prompted the “Onion Futures Act”
It wasn’t long before Kosuga began using deceitful strategies to boost his success as a futures trader. His actions led him to become a wealthy and famous man, but they also directly resulted in the United States Congress passing the “Onion Futures Act” in 1958, which banned the trading of futures contracts on onions.
It is not surprising that the U.S. government eventually took notice of Kosuga and Seigel’s activities: by the end of 1955, the pair had bought millions upon millions of pounds of onions and were so involved in futures trading that they allegedly controlled over 95% of all available onions in Chicago. The reported windfall for Kosuga and Siegel was huge: over 8 million dollars, which today would amount to over 80 million dollars.
Using Bribery and Deceit to Succeed
Kosuga’s strategies to manipulate the onion market and increase profits came in different shapes and sizes. He once convinced a local weather service, most likely through bribery, to issue a frost warning on the region when there was no indication a cold front was coming. This warning, if real, would pose a great risk to onion crops, which inflated the price of onion futures contracts, thus making the owners of such contracts, like Kosuga, a pretty penny.
Clearly, thinking outside the box wasn’t the only way Kosuga rose to success: creating and maintaining relationships with the right people was also essential. He was known to shower associates with gifts and bonuses, even gifting his brokers expensive cars during a particularly successful business year.