From "Chicago and the American Century" by F. Richard Ciccone © 1999


1. The Franchiser: Ray Kroc
2. The Manager and the General: Julius Rosenwald and Robert Wood
3. The Kind of Power: Samuel Insull
4. The Spin Doctor: Albert Lasker
5. Moon to Earth, Moon to Earth: Paul Galvin
6. Butter to Billions: Leo Melamed
7. Double Your Pleasure: William Wrigley
8. Color It Yellow: John Hertz
9. Paddy and Me: Joseph Kraft
10. Foot Fetish: William Scholl

Ernest Hemingway was always looking for the one true sentence. Calvin Coolidge, of all people, said it: The business of America is business. Businesspeople are salesmen, innovators, marketers, hucksters, charlatans, distributors, managers, promoters, or advertisers. They are rarely statesmen or inventors. Only a few inventors ever had their names planted on great American businesses - Alexander Graham Bell, the first American to invent the telephone, and Thomas Edison, who invented everything else.

With rare exception the brand names that Americans purchase belonged to peddlers with great ideas and great determination. There has been nothing new in business since the first toolmaker traded a sharpened flint to the first hunter for a slab of mastodon ribs. Supply and demand. But some of the merchant princes who became household names in America were simply better at it than anybody else for a variety of reasons. Some of them had great ideas about how to sell something. Some of them had sound principles and integrity. Most of them were only a few steps ahead of competition. Some of them were only a few steps ahead of a grand jury.

It would seem, at first glance, much easier to deal with the great businessmen of Chicago's nineteenth century, men who established great companies that are still thriving on the eve of the twenty-first century. But none of them brought to the world anything particularly new other than the way they did it. Before Marshall Field opened his first store on Lake Street, R.H. Macy had opened a similar one in New York. The Willard Hotel in Washington was serving great bourbon to presidents before Potter rented his first room. P.D. Armour and Gus Swift didn't invent slaughtering hogs, they were just the first who never threw anything away. It is even doubtful that Cyrus McCormick invented the reaper, although his claim was always vindicated in courts. If any McCormick invented the reaper, it probably was Cyrus's father. None of the great robber barons of the last century were much different than their Chicago peers. Cornelius Vanderbilt didn't invent railroads. He bought them. John D. Rockefeller didn't make oil. God did, although Rockerfeller apparently never was convinced of that.

While Armour and Swift certainly changed the eating habits of America, the two Chicago companies that had the greatest impact on the country at the end of the last century were Montgomery Ward and Sears, Roebuck. It would be easy to say that Aaron Montgomery Ward, who began the catalog that brought needles and thread and pots and pans and stoves and irons to rural America, had the most significant impact on the nation of any Chicagoan of his era. A dozen years later, a natural huckster named Richard Sears set out to beat Ward at his own game, and by the turn of the century he did. Ward was a man of principle who believed he was doing people a needed service. When he retired from actively running his company, he spent the last dozen years of his life spending millions in legal suits to stop anyone from building anything on Chicago's lakefront. It was Ward who saved the lakefront, not Dan Burnham's pithy admonition "Make no small plans" in his Chicago plan that created the lakefront parks system.

Richard Sears, on the other hand, would have been jailed if truth-in-advertising laws existed.

But Sears's store prevailed to become the single largest retail giant in America for most of the century, and the men who followed Sears were obviously of great significance in the twentieth century. And for a brief while, so was one of Ward's successors.

As in the areas of law, sports, and media, Chicagoans who were merely successful at making money or keeping it did not necessarily impact America. There are a slew of them. The Crowns, the Pritzkers, John D. MacArthur and W. Clement Stone in insurance, Nathan Cummings and the Levy brothers in food, Dan Rice and Richard Dennis in commodities, and a whole new breed of venture capitalists and real estate moguls such as William Farley and Sam Zell. And then there are the successors to the great fortunes: the Morton salt folks, the McCormick harvester folks, the Armours, and the Swifts. The inflated salaries of corporate chieftains in the 1990s do not equate to national or world influence. Rising to the helm of a Fortune 500 company in the 1990s was not quite the same as building one from scratch. If annual income were the criteria of greatness, the entire Chicago Bulls bench and the middle of the White Sox batting order would rank ahead of the CEOs of Abbott, G.D. Searle, Motorola, and all the rest.

But the most influential businessmen of Chicago's twentieth century shared something very much in common with their predecessors of the previous century; they were always aware of how Americans were changing the way they lived, they way they worked, the way they played. One man changed what people ate all over the world.


One theme that is consistent among the Chicagoans who made major contributions to the twentieth century is that so many of them came from somewhere else.

Nobody came as far as Leo Melamed.

Nothing grew as fast as the financial futures industry he launched at the Chicago Mercantile Exchange.

When Leo Melamed first joined the "Merc" in 1955, after graduating from John Marshall Law School and briefly practicing law, the exchange was trading just two agricultural futures contracts and facing collapse. The Merc, whose roots were in the Chicago Butter and Egg Board of the 1800s, was created in 1919, but by the late 1950s government price supports ended futures on butter and the Merc's business was in eggs and onions. In 1958, a scandal in the onion pits caused the federal government to ban onion futures trading. In the 1960s the Merc established futures trading on live cattle but was best known as the place that traded pork bellies (bacon). Radio announcers who paid no attention to any financial markets in those days often read the daily prices of pork bellies just because they thought it was such a funny name.

Then, two significant things changed the Merc: In 1969, Melamed was elected to his first term as exchange chairman. And in August 1971, Richard Nixon declared the United States would no longer back up the dollar with gold, which meant the value of the dollar would float on the world monetary market.

Economists understood this, and some, like Milton Friedman, had been urging such an action. Most Americans had no idea what it meant. The first indications were brought back when American tourists returned from Europe chagrined to discover that the dollar didn't buy as much as it once did.

Leo Melamed knew what was happening. He understood that if the dollar was worth 330 yen one day and worth only 310 yen six months later it was not much different than pork bellies. People would want to hedge their selling or purchasing power by investing in monetary futures. Leo Melamed and others - president of the Merc Everette B. Harris, other Merc members, and the economist Friedman - pushed to establish a financial futures exchange called the International Money Market.

Before the IMM opened in 1972, the Chicago Mercantile Exchange sold contracts whose value was counted in the millions. By 1990, the underlying value of all contracts traded at the Merc totaled $50 trillion dollars.

There was not that much money in the world when in 1939 Adolf Hitler invaded Poland. As Polish Jews, Isaac and Fayga Melamed and their seven-year-old son, Leo, were marked for extermination. The Melameds fled across Lithuania and into Russia, beginning a fifteen-month journey that would bring them safely to America. They rode the Trans-Siberian Railway from Moscow to Vladivostok.

"I remember the trip well," Melamed said in a Chicago Tribune Magazine article in 1992. "The trip took four weeks; my father taught me how to play chess; there was little food; and the whole time, the temperature hovered around 40 degrees below zero."

From Vladivostok, the Melameds made their way to Japan and in December 1940, a year before the attack on Pearl Harbor, set sail for America on the Heian Maru. They landed at Seattle, Washington, and traveled across another continent to reach New York, where the family remained a short time before moving to Chicago and settling in the Humboldt Park neighborhood.

Leo Melamed went to Roosevelt High School and the University of Illinois before attending law school and in a very brief time becoming one of the reformers trying to shove the Merc out of its indolence.

From his first election as chairman in 1969, Melamed remained leader of the Merc for more than twenty years in various positions: chairman of the IMM, chairman of the executive committee, special counsel to the board of governors, and whatever title he needed to push through all the new enterprises he envisioned to make Chicago the capital of the world's financial futures markets.

But it began with the IMM.

"The birth of financial futures was the convergence of three ideas going around in my head: The Merc needed to diversify its product line; I knew the Bretton Woods agreement [which pegged currency exchange rates to the dollar] was doomed; and I and a group of other young traders were looking for ways to make money, including speculating in certain foreign currencies we knew were vastly overvalued," he once explained. Melamed's plan to launch seven futures contracts based on the fluctuating value of seven different foreign currencies changed the course of modern investing throughout the world.

These currency futures paved the way for the successful marketing of a dizzying array of similar products at the Merc, the Chicago Board of Trade, and the Chicago Board Options Exchange. By the 1990s, these exchanges were trading futures and options on everything from Asian and American stock indexes to interest-rate swaps, Eurodollars, currency cross-rates, and Treasury bills, and their success transformed Chicago almost overnight into the risk-transfer capital of the world. In those early years, Melamed traveled the world selling bankers and moneymen on the economic need of his financial futures market. It was heady stuff for the son of Polish immigrants who were both Yiddish teachers. Melamed has described himself as a "laborious perfectionist by nature and almost obsessive." Others say the man of small stature, intense drive, and gigantic ego generally gets his way, and this was no exception.

Financial futures trading opened new industries and changed the way market information was related to the public. The complexities of trading Treasury notes (interest rates inversely affect the sale price) and the addition of Standard & Poor's stocks lists created new avenues of data and led to the formation of cable television stations reporting financial data twenty-four hours a day to keep up with GLOBEX, a twenty-four-hour international trading service that Melamed was the driving force behind in 1989.

After twenty-one years of leading the Merc, Melamed stepped away from all of his leadership posts, leaving the operation to one of his many proteges, Jack Sandner.

But Melamed apparently did not think his successors were doing the right things.

He hinted he was being frozen out of exchange policy decisions by his successor, Sandner. In 1997 he returned to power when the board of directors elected him permanent advisor to the board and its executive committee, a title, like so many he held, that belies the influence Melamed was given.

His continuing role at the Merc will probably require another biography and surely a final appraisal of his role in both Chicago business and worldwide investments. Until then this summation by the Chicago Tribune's George Gunset will suffice:

Head and shoulders above the few of his generation was Leo Melamed, perhaps the dominant figure in futures in the last half-century. One could make a case that he is the most significant individual in the industry in the last 100 years.

For many others, Leo Melamed is simply the "father of financial futures.

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