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1¢ Equals $12 Million. In 1962 Tino set out on a fantastic scheme to corner the entire market in soybeans. He plunged into commodities futures, a frantic market of paper and promises, where fortunes are made or lost on fluctuations of a fraction of a penny. Betting that the price of soybeans would rise, Tino bought huge contracts for future deliveries of soybeans from other speculators who in turn were betting that the market would fall. He was helped by the fact that commodities markets work on bargain-basement margins of 5% to 15%—that is, big traders need to put up as little as 5% of the purchase price.
Still, his purchases were so enormous that he needed plenty of credit. He got loans from two old-line Wall Street brokers, Ira Haupt and J. R. Williston & Beane, who also handled his futures trading and pocketed commissions totaling up to $100,000 a month. For collateral, they took De Angelis' warehouse receipts for the nonexistent oil. In turn, the brokerage houses used this paper to borrow money from such eminent banks as Chase Manhattan and Continental Illinois.
What made the matter more complex was that Tino by then had grown so cocky and creative that he bypassed even the lax warehouse inspectors, forged some of his own receipts. By mid-1963, he had contracted to buy 20,000 tank cars of oil—an astonishing 1.2 billion Ibs., worth about $120 million. With every 10 shift in price, he stood to gain or lose $12 million.
Assist from the Soviets. For a time it seemed that the gamble would pay off. The market soared, thanks to De Angelis' big buying and an assist from—of all people—the Communists. Russia was clamoring to buy U.S. wheat, and when reports hit Wall Street that the Soviets' sunflower crop had also failed, rumors flared that the Russians would soon be shopping for U.S. vegetable oil. In six weeks during the autumn of 1963, soybean oil climbed from 9.20 per Ib. to 10.30. But on Nov. 15 the market cracked—and so did Tino.
On that day, the U.S. Senate broke off debate on the Russian wheat deal, and prospects looked dim. In the next 48 hours, soybean oil tumbled to 7.60. The commodities exchanges began pressuring Ira Haupt—by far the biggest broker for De Angelis—to put up another $14.1 million in margin to cover Tino's vast contracts. The Haupt brokers frantically called Tino for the money. But Tino could not make it.
Now Haupt was on the hook to the exchanges. The firm desperately undertook to cover Tino's contracts, for which it was responsible. In all, it borrowed some $30 million from U.S. and British banks. But when the soybean market failed to rise, Haupt went under.