Market Manipulation and The Price of Eggs

"Meticulously researched and rich with insight, Ress provides a compelling look at how market prices are determined by behind-the-scenes trading behavior often invisible to everyday consumers. Bridging the gap between price theories posed by early economists and the frantic energy of modern commodity trading pits, the book deftly illustrates both the philosophical foundations and present-day practice of price discovery. It navigates complex debates over what constitutes a 'fair' price, when a price might be considered 'artificial,' and how to distinguish legitimate, informative, and productive trading activity from illegal market manipulation." – Christopher M. Herrington, Associate Professor of Economics, Virginia Commonwealth University

This Palgrave Pivot presents a microhistory of an important but little-known incident of futures trading. The case in question concerns an incident in the futures market operated by the Chicago Board of Trade (CBOT) in 1968, where an individual trader David Henner was able to set an unusually (and, ultimately unjustified) high closing price for delivery of eggs in six months. By examining the legal and economic theoretical context of this incident, the book argues that the definition of market manipulation is not straightforward, and has been complicated by a reluctance among regulators to accept the idea that ordinary market dynamics can produce a false price.

Unlike most other cases of financial market manipulation, the finding here did not involve a market corner or some form of insider trading, but instead suggested that the inherent dynamics of an open outcry market could produce an unreal price. As narrative history, it offers scholars and practitioners of financial market regulation and operation a valuable way of looking at why otherwise inexplicable breaks in prices occur. This book will be valuable reading for those interested in law and economics, financial regulation, and the history of commodities and futures trading.

David Ress is a research associate at the University of New England (Australia) and the author of The Half Breed Tracts (Palgrave, 2019), Deeds, Titles and Changing Concepts of Land Rights (Palgrave, 2020) and The Kansas Blue Sky Act (Palgrave, 2023).