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GUELPH'S WHEAT KING: ARTHUR CUTTEN
(published in The Wellington Business Digest, Vol. 1, Issue 5, April 1985)
The Carillon of St. George's Anglican Church is a familiar sound in the WBD offices on Woolwich St. The Carillon is housed in the lovely spire you see when you look down Douglas St. to Woolwich from the Square. Along with a new organ, choir stalls and organ loft, the Carillon was given to the church in 1925 and '26 by Arthur Cutten, a resident of Chicago, Illinois.
Cutten's generosity towards his home town of Guelph extended well beyond his former parish church. In 1927, he revealed his plans to build a golf course, a 200 room CPR-run hotel, and a sports complex to be located in the area of the Ontario Agricultural College.
The gifts to Guelph were offered in the years before the great stock market crash of 1929, years when Cutten is reputed to have amassed a fortune estimated on paper at more than $90 million. Although Cutten invested in many of the great speculative schemes of his day, he was notorious for having cornered the wheat market in 1924. To the press he became 'the wheat king'.
Arthur Cutten's is not a rags to riches story. He was born in 1870, the second oldest of eight children, into the family of Walter Hoyt Cutten, a prominent Guelph barrister. The family home still stands at 13 Stuart St. In the 1890s Arthur Cutten joined a general exodus of young Canadians to the United States. After a brief stint in a Chicago dry goods store, he joined a firm of grain brokers specializing in wheat and corn futures. In the next 14 years, he advanced to bookkeeper and then to full-time trader, buying and selling commodities for the firm's clients. In 1903, he left the company and purchased his own seat on the Chicago Exchange.
Cutten's first major market success is said to have been in 1906, in Soo Line rail stock in which he made a profit of $220,000. A Canadian Press report describes how Cutten cornered the wheat market in 1924: "Forearmed with the knowledge of weather and crop conditions, he foresaw an impending world grain shortage...he bought grain futures slowly and unobtrusively and held them as prices climbed rapidly, eventually reaching more than $1 a bushel over normal price in eight months. Estimates of his profits ranged from $12 million to as high as $30 million."
Not all of Cutten's time was spent in Chicago's corn pit. In 1925, Cutten moved his market operations to the New York Stock Exchange. In 1928, Cutten was reportedly involved in a gigantic investment scheme headed by the seven 'Body by Fischer' brothers of Detroit. From this, Cutten was said to have made, at one time, a paper profit of more than $50 million.
Some years before his death in 1936, Cutten described himself as "a cash grain merchant and dirt farmer." He was far too modest. The dirt farm was an 800-acre estate located 25 miles from downtown Chicago. As to being a 'cash grain merchant', one wonders if Cutten wasn't being ironic in his use of the word 'cash'. The great stock market collapse happened when speculators turned out not to have the cash necessary to pay for their high flying ventures. After his death, Cutten's Will was officially proven and it seems his estate was worth only slightly more than $350,000.
The terrible depression of the 1930s set in after the stock market crash. Not unreasonably, people felt these two events to be somehow related. They demanded to know who was to blame for these disasters. In 1933, Cutten and other famous market speculators were summoned to Washington to participate in the Stock Exchange Practices Hearings. With much tongue in cheek, the economic historian John K. Galbraith claims that ''as a market operator, Arthur Cutten surmounted substantial personal handicaps. He was very hard of hearing, and some years later, before a congressional committee, even his own counsel conceded that his memory was very defective."
Cutten was not the only Wall Street tycoon whose hearing and memory proved defective at the Stock Exchange Practices Hearings. The hearings showed that in 1929, more than 100 issues of stock on the NYSE had been subject to manipulative operations. The same games had been played in 1928. Radio stock, in which Cutten invested heavily, went from $85 to $420 - and this without ever having paid a dividend. Montgomery Ward stock, part of the Cutten-Fischer brothers scheme, rose from $117 to $444 (Times Industrial Averages).
By 1935, the U.S. government was on Cutten's case with a vengeance. The grain futures commission accused him of making false reports of his grain holdings to manipulate prices. He was barred from trading on grain markets for two years. Cutten fought the penalty all the way and won when the Supreme Court agreed that the commission could not suspend him for something that had happened five years before. No doubt his lawyers argued that it was not until after the Crash that legislation had been passed prohibiting pools, wash sales, short selling and tipsters bearing false information.
The government took its final revenge the following year. In March 1936, a federal grand jury in Chicago indicted Cutten for income tax evasion. Three months later he was dead of a heart attack. The charges were dropped, but the government nevertheless sued the Cutten Estate for the money. The hefty tax bill was apparently settled, in part, by selling properties outside the estate.
The Guelph project caused additional trouble for Cutten after the crash. Plans for the 200 room hotel were scrapped. His local lawyer, C.L. Dunbar, did begin to buy up land for the hotel but it seems one or two shopkeepers in the area - where the Post office and the Baker Street parking lot are now - upped their land prices to the point where Cutten refused to buy. He'd intended to build the golf course and clubhouse and present them to the city. In 1931, the city fathers declined his offer. Title to the lands and buildings continued to be held in trust by Mr. Dunbar until a buyer was found in 1939.
Both Arthur Cutten and his wife Maud are buried in Woodlawn Cemetery where he provided the iron fencing and much else.
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