Arthur W. Cutten
Encyclopedia
Arthur William Cutten was an Canadian-born businessman who gained great wealth and prominence as a commodity
trader in the United States
. He was called to appear before the Banking and Currency Committee
in regard to the causes of the Wall Street Crash of 1929
. He was under indictment for tax evasion upon his death in Chicago
in 1936.
, Ontario
, Arthur Cutten was the eldest of eight children by Walter Hoyt Cutten, a prominent Guelph barrister.
After studying at Guelph Collegiate
, in 1888 a young Arthur Cutten left home, making his way to the United States where he settled in the rapidly growing city of Chicago. Hired by commodity broker
A. S. White & Co., he worked as the company's bookkeeper for $4 a week. Cutten's employer was part of a growing business community that made Chicago a major economic bridge between the established financial community in New York City
and the emerging farm producers of the American Midwest. Having grown up in a farming community, Arthur Cutten understood the up and down nature of farm production and his job with the Chicago broker afforded him the opportunity to learn the intricacies of trading in commodities on the Chicago Board of Trade
.
After working at the brokerage house for some time, Arthur Cutten felt confident enough to approach his boss with a request to open a trading account. Dismissed out of hand by his employer because of his lowly position and modest means, the frugal Arthur Cutten used his limited savings from his employment income to begin speculating on commodity prices through the purchase of forward contracts
. While highly risky, gambling on the future price of commodities could bring enormous profits on a very small amount of invested capital. Cutten built a small fortune speculating on the price of several products, but most notably by capitalizing on the rising prices during the boom in demand for Midwest wheat
. By 1906, his investments had made him a very wealthy young man, and he left his employer to set up his own investment operation with a seat on the Chicago Board of Trade. In the next few years, he made and lost a fortune betting on the price of cotton
but accepted losses as a normal part of the business of speculating, and continued to successfully invest.
Arthur Cutten frequently referred to himself as a "dirt farmer", and in 1912 he bought a 500 acres (2 km²) farm property not far from Chicago near Glen Ellyn
, Illinois
in what is now the Hidden Lake Forest Preserve. Cutten called his home "Sunny Acres Farm", and on it he built a large mansion with extensive gardens that included two 12 feet (3.7 m), 51⁄2-ton statues representing agriculture and industry that once stood on the second-floor ledge above the main entrance to the old Chicago Board of Trade Building
that had been torn down in 1929 to make way for the Board of Trade's new home. At the same time, Arthur Cutten never forgot his roots in rural Ontario and donated funds for the construction of a number of community charities and local projects.
and made himself an important player on Wall Street
, where his success eclipsed even that of the renowned stock speculator, Jesse Livermore. In 1925, farm prices began a steady fall from which they would not permanently recover for more than fifteen years. Nevertheless, at the time Arthur Cutten remained optimistic about the American economy and was featured in a cover story of the December 10, 1928 issue of Time magazine in a parody as one of the leading market "Bulls." However, less than a year later Cutten had lost more than $50 million as a result of the Wall Street Crash of 1929. The ensuing investigation of the Crash by the United States Senate's
Pecora Commission
brought a public outcry over rich speculators such as Cutten who had made huge amounts of money by forming trading pools to manipulate market prices. New legislation was introduced to end market manipulation and the U.S. government targeted certain of the high-profile speculators.
Henry A. Wallace
, the then United States Secretary of Agriculture
charged Cutten with improper trading activities and tried to have him barred from trading on all futures exchange
s in the United States. This ultimately went to the US Supreme Court in the case of Wallace v. Cutten
, 298 U.S. 229 (1936)
The government then went after him for income tax
evasion. The tax suit would only be settled by the executors of his estate, because Arthur Cutten, his fortune vastly depleted by the stock market crash and the cost of lawyer
s to defend him from the government lawsuits, died in Chicago of a heart attack
a few weeks short of his sixty-sixth birthday. His body was brought back to his Canadian birthplace and interred in the family plot in Guelph's Woodlawn Cemetery.
Commodity
In economics, a commodity is the generic term for any marketable item produced to satisfy wants or needs. Economic commodities comprise goods and services....
trader in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. He was called to appear before the Banking and Currency Committee
United States Senate Committee on Banking, Housing, and Urban Affairs
The United States Senate Committee on Banking, Housing, and Urban Affairs has jurisdiction over matters related to: banks and banking, price controls, deposit insurance, export promotion and controls, federal monetary policy, financial aid to commerce and industry, issuance of redemption of notes,...
in regard to the causes of the Wall Street Crash of 1929
Wall Street Crash of 1929
The Wall Street Crash of 1929 , also known as the Great Crash, and the Stock Market Crash of 1929, was the most devastating stock market crash in the history of the United States, taking into consideration the full extent and duration of its fallout...
. He was under indictment for tax evasion upon his death in Chicago
Chicago
Chicago is the largest city in the US state of Illinois. With nearly 2.7 million residents, it is the most populous city in the Midwestern United States and the third most populous in the US, after New York City and Los Angeles...
in 1936.
Early life
Born in the rural community of GuelphGuelph
Guelph is a city in Ontario, Canada.Guelph may also refer to:* Guelph , consisting of the City of Guelph, Ontario* Guelph , as the above* University of Guelph, in the same city...
, Ontario
Ontario
Ontario is a province of Canada, located in east-central Canada. It is Canada's most populous province and second largest in total area. It is home to the nation's most populous city, Toronto, and the nation's capital, Ottawa....
, Arthur Cutten was the eldest of eight children by Walter Hoyt Cutten, a prominent Guelph barrister.
After studying at Guelph Collegiate
Guelph Collegiate Vocational Institute
The Guelph Collegiate Vocational Institute is a public high school located in the city of Guelph, Ontario, Canada...
, in 1888 a young Arthur Cutten left home, making his way to the United States where he settled in the rapidly growing city of Chicago. Hired by commodity broker
Commodity broker
A commodity broker is a firm or individual who executes orders to buy or sell commodity contracts on behalf of clients and charges them a commission. A firm or individual who trades for his own account is called a trader. Commodity contracts include futures, options, and similar financial...
A. S. White & Co., he worked as the company's bookkeeper for $4 a week. Cutten's employer was part of a growing business community that made Chicago a major economic bridge between the established financial community in New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
and the emerging farm producers of the American Midwest. Having grown up in a farming community, Arthur Cutten understood the up and down nature of farm production and his job with the Chicago broker afforded him the opportunity to learn the intricacies of trading in commodities on the Chicago Board of Trade
Chicago Board of Trade
The Chicago Board of Trade , established in 1848, is the world's oldest futures and options exchange. More than 50 different options and futures contracts are traded by over 3,600 CBOT members through open outcry and eTrading. Volumes at the exchange in 2003 were a record breaking 454 million...
.
After working at the brokerage house for some time, Arthur Cutten felt confident enough to approach his boss with a request to open a trading account. Dismissed out of hand by his employer because of his lowly position and modest means, the frugal Arthur Cutten used his limited savings from his employment income to begin speculating on commodity prices through the purchase of forward contracts
Futures contract
In finance, a futures contract is a standardized contract between two parties to exchange a specified asset of standardized quantity and quality for a price agreed today with delivery occurring at a specified future date, the delivery date. The contracts are traded on a futures exchange...
. While highly risky, gambling on the future price of commodities could bring enormous profits on a very small amount of invested capital. Cutten built a small fortune speculating on the price of several products, but most notably by capitalizing on the rising prices during the boom in demand for Midwest wheat
Wheat
Wheat is a cereal grain, originally from the Levant region of the Near East, but now cultivated worldwide. In 2007 world production of wheat was 607 million tons, making it the third most-produced cereal after maize and rice...
. By 1906, his investments had made him a very wealthy young man, and he left his employer to set up his own investment operation with a seat on the Chicago Board of Trade. In the next few years, he made and lost a fortune betting on the price of cotton
Cotton
Cotton is a soft, fluffy staple fiber that grows in a boll, or protective capsule, around the seeds of cotton plants of the genus Gossypium. The fiber is almost pure cellulose. The botanical purpose of cotton fiber is to aid in seed dispersal....
but accepted losses as a normal part of the business of speculating, and continued to successfully invest.
Arthur Cutten frequently referred to himself as a "dirt farmer", and in 1912 he bought a 500 acres (2 km²) farm property not far from Chicago near Glen Ellyn
Glen Ellyn, Illinois
Glen Ellyn is an affluent village in DuPage County, Illinois, United States. As of the 2000 Census, the village population was 26,999.-Geography:...
, Illinois
Illinois
Illinois is the fifth-most populous state of the United States of America, and is often noted for being a microcosm of the entire country. With Chicago in the northeast, small industrial cities and great agricultural productivity in central and northern Illinois, and natural resources like coal,...
in what is now the Hidden Lake Forest Preserve. Cutten called his home "Sunny Acres Farm", and on it he built a large mansion with extensive gardens that included two 12 feet (3.7 m), 51⁄2-ton statues representing agriculture and industry that once stood on the second-floor ledge above the main entrance to the old Chicago Board of Trade Building
Chicago Board of Trade Building
The Chicago Board of Trade Building is a skyscraper located in :Chicago, Illinois, United States. It stands at 141 W. Jackson Boulevard at the foot of the LaSalle Street canyon, in the Loop community area in Cook County. Built in 1930 and first designated a Chicago Landmark on May 4, 1977, the...
that had been torn down in 1929 to make way for the Board of Trade's new home. At the same time, Arthur Cutten never forgot his roots in rural Ontario and donated funds for the construction of a number of community charities and local projects.
Speculation charges and death
During the boom years of the 1920s, Cutten rose to national prominence as one of the United States' most important commodities traders. He acquired a home in Atlantic City, New JerseyNew Jersey
New Jersey is a state in the Northeastern and Middle Atlantic regions of the United States. , its population was 8,791,894. It is bordered on the north and east by the state of New York, on the southeast and south by the Atlantic Ocean, on the west by Pennsylvania and on the southwest by Delaware...
and made himself an important player on Wall Street
Wall Street
Wall Street refers to the financial district of New York City, named after and centered on the eight-block-long street running from Broadway to South Street on the East River in Lower Manhattan. Over time, the term has become a metonym for the financial markets of the United States as a whole, or...
, where his success eclipsed even that of the renowned stock speculator, Jesse Livermore. In 1925, farm prices began a steady fall from which they would not permanently recover for more than fifteen years. Nevertheless, at the time Arthur Cutten remained optimistic about the American economy and was featured in a cover story of the December 10, 1928 issue of Time magazine in a parody as one of the leading market "Bulls." However, less than a year later Cutten had lost more than $50 million as a result of the Wall Street Crash of 1929. The ensuing investigation of the Crash by the United States Senate's
United States Senate
The United States Senate is the upper house of the bicameral legislature of the United States, and together with the United States House of Representatives comprises the United States Congress. The composition and powers of the Senate are established in Article One of the U.S. Constitution. Each...
Pecora Commission
Pecora Commission
The Pecora Investigation was an inquiry begun on March 4, 1932 by the United States Senate Committee on Banking and Currency to investigate the causes of the Wall Street Crash of 1929...
brought a public outcry over rich speculators such as Cutten who had made huge amounts of money by forming trading pools to manipulate market prices. New legislation was introduced to end market manipulation and the U.S. government targeted certain of the high-profile speculators.
Henry A. Wallace
Henry A. Wallace
Henry Agard Wallace was the 33rd Vice President of the United States , the Secretary of Agriculture , and the Secretary of Commerce . In the 1948 presidential election, Wallace was the nominee of the Progressive Party.-Early life:Henry A...
, the then United States Secretary of Agriculture
United States Secretary of Agriculture
The United States Secretary of Agriculture is the head of the United States Department of Agriculture. The current secretary is Tom Vilsack, who was confirmed by the U.S. Senate on 20 January 2009. The position carries similar responsibilities to those of agriculture ministers in other...
charged Cutten with improper trading activities and tried to have him barred from trading on all futures exchange
Futures exchange
A futures exchange or futures market is a central financial exchange where people can trade standardized futures contracts; that is, a contract to buy specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified time in the future. These types of...
s in the United States. This ultimately went to the US Supreme Court in the case of Wallace v. Cutten
Wallace v. Cutten
Wallace v. Cutten, 298 U.S. 229 , was a case in which the Supreme Court of the United States held that the authority of the United States Secretary of Agriculture under the Grain Futures Act Wallace v. Cutten, 298 U.S. 229 (1936), was a case in which the Supreme Court of the United States held that...
, 298 U.S. 229 (1936)
The government then went after him for income tax
Income tax
An income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...
evasion. The tax suit would only be settled by the executors of his estate, because Arthur Cutten, his fortune vastly depleted by the stock market crash and the cost of lawyer
Lawyer
A lawyer, according to Black's Law Dictionary, is "a person learned in the law; as an attorney, counsel or solicitor; a person who is practicing law." Law is the system of rules of conduct established by the sovereign government of a society to correct wrongs, maintain the stability of political...
s to defend him from the government lawsuits, died in Chicago of a heart attack
Myocardial infarction
Myocardial infarction or acute myocardial infarction , commonly known as a heart attack, results from the interruption of blood supply to a part of the heart, causing heart cells to die...
a few weeks short of his sixty-sixth birthday. His body was brought back to his Canadian birthplace and interred in the family plot in Guelph's Woodlawn Cemetery.
Further reading
- The story of a speculator, by Arthur W. Cutten with Boyden Sparks. The Saturday Evening Post, November 19,26 and December 3,10 1932.
- The Rich and the Super-Rich. Lundberg, Ferdinand. New York: Bantam Books, 1969. 1009 pages.
- The Amazing Life of Jesse Livermore, by Richard Smitten. Greenville, SC: Traders Press.