In 1909, as one of the scores of short pictures he turned out that year, D.W. Griffith directed “
A Corner in Wheat,” a 14-minute film adaptation of a story by the populist antitrust novelist Frank Norris. In it, a Wall Street speculator buys up so much of America’s wheat and keeps it off the market that prices soar and millions — including the farm family Griffith shows laboring in the fields — go hungry.
Americans’ long-standing apprehensions about banks getting control of the stuff of life are, as we’ve learned again in recent weeks, generally justified. The latest episode of Wall Street’s manipulation of commodity prices was revealed Sunday in a remarkable
New York Times article by David Kocieniewski that showed how Goldman Sachs, just by warehousing 1.5 million tons of aluminum, has managed to raise the price of every beer and cola can the world over. Goldman doesn’t own the aluminum, yet in the best tradition of middlemen who add no value to the product but manage to nonetheless take a hefty cut, it owns a vast expanse of warehouses outside Detroit, where much of the nation’s aluminum is stored. And stored. And stored.
Before Goldman bought the warehouses three years ago, the Times reported, aluminum ingots generally were kept in the warehouses for six weeks before being shipped to factories to be turned into goods. Now they linger on average for 16 months, during which Goldman collects a daily storage fee from the banks, hedge funds and traders who own the ingots — a fee that is factored into the metal’s spot-market price and that raises the price for all aluminum sold on that market, no matter where it’s stored. (Goldman thoughtfully
pays those traders a premium so they won’t suffer too much from the lengthy rentals.) Regulations imposed by the London Metals Exchange — so they won’t suffer too much from the lengthy rentals.) Regulations imposed by the London Metals Exchange — which until last year was owned by banks, including Goldman and Barclays, that are its members — say that an ingot can remain in a particular warehouse for only a certain period, so Goldman employs truckers to move the ingots from one warehouse to the next in its vast storage yard.
This is capitalism straight out of Frank Norris — or Franz Kafka.
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