Friends of the Chicago Public Library
Freedom to Read Award
Union League Club, Chicago
November 1, 1996

We are all but a product of our parents, our education, and our experiences.

I was only nine when we arrived in the United States, but what an unusual history I had already endured. I was party to a miraculous escape—the only family to escape from Bialystok, Poland, intact at the outbreak of World War II. I was the product of fear, danger, strategy, and luck. I had witnessed my parents playing hide and seek with the Gestapo and the KGB. I had spent two weeks on the Trans-Siberian railroad and traversed three-quarters of the way around the globe. I had been taught in six languages: Yiddish, Polish, Lithuanian, Russian, Japanese, and English. I had been baptized into my parents’ movement whose ideal was human dignity and equality for all. And I had learned firsthand the harsh realities of political dictatorship. While I had a great deal of trouble with playing baseball in my new homeland or adjusting to new friends and a new social order, I had forged an inner resolve that would see me through.

In a very real sense, I was saved from the ovens of Treblinka by the eighteenth-century philosopher Moses Mendelssohn, the little hunchback from the Dessau ghetto in Germany and grandfather of composer Felix Mendelssohn. Mendelssohn together with dramatist Gotthold Lessing had become the pioneers of Jewish emancipation and advocated that Judaism must leave the ghetto.

It was this movement, a century later, that snared my father, Isaac Moishe Melamdovich, and mother, Feygl Barakin, into its current and carried them into the era of new enlightenment. In doing so, the movement wrestled them away from the all-consuming religious moorings of the shtetl and replaced it with an ethnic identity based on biblical morality, the printed word, the Yiddish language, and the ideals of one of the prevalent political movements of the day.

My parents were ardent Bundistn, a Jewish faction of the Socialist movement that fought for the working man, was adamantly opposed to communism, and was eternally committed to preserving Yiddish as the language of the Jewish masses. Indeed, my parents were both Yiddish school teachers in the parochial schools of Bialystok. Their new bible included the writings of the giants of Jewish literature: Sholem Aleichem (Peace be with you—Salomon Rabinovitch—from the original Sholom Nochem Veviks) on whose writings Fiddler on the Roof is based; Mendele Mocher Sforim (Mendel the Bookseller—Shalom Jacob Abramowits); and Itzchok L. Peretz, the philosopher-writer who taught the Jewish masses that morality was the highest of all the commandments.

My parents were among the intellectuals of Poland, leaders in a movement that demanded equal rights for Jews along with all nationalities. They were building a new utopian world, one based on freedom of thought and equality for all. The movement had catapulted my father to its forefront and resulted in his election to Bialystok’s City Council; for a Jew, an honor without parallel. My mother was one of the pioneers of the modern women’s movement, outspoken in social affairs and an equal breadwinner in our household. Indeed, one of her favorite songs was Beethoven’s Ninth Choral symphony with Friedrich von Schiller’s words, “Alle Menchen Seinen Breeder,” “All humans are brothers.”

Alas, on September 1, 1939, the Nazis marched into Poland, shattered Schiller’s ideal and all normalcy. Although at the time we didn’t know it, our destiny was to be doomed along with 6 million other Jews of Eastern Europe.

Miraculously fate intervened. Moses Mendelssohn’s movement had provided my father with an escape route. Bialystok councilmen, my father included, were advised to leave the city lest they be taken as hostages by the Nazis. My father had to make the painfully difficult decision to escape and leave his wife and only child behind. Fortunately he did. It was the first of many life-or-death decisions made by Isaac Melamdovich over the course of the next two years. They were decisions in a chain of events that led the Melamdoviches out of the clutches of both the Nazis and the Bolsheviks, across the steppes of Siberia, through Japan courtesy of Ambassador Sugihara, and eventually to the freedom of these shores.

But no transition of this magnitude is without pain. Although Chicago was a far cry from what was experienced by the generations of immigrants who were thrust into the tenements of New York’s Lower East Side, there were many similarities and common ordeals. This was especially true for the children who, like myself, were unmercifully immersed in a foreign environment and left to cope with the unvarnished and often cruel demands of their fellow compatriots. Indeed, I was a struggling, unhappy, greenhorn kid until I entered Roosevelt High School on the North Side of Chicago. Suddenly, it was as if I were reincarnated. No one knew of my refugee history, no one cared. At last I was accepted as an equal.

Life in Chicago’s inner city for teens during the late 1940s was right out of J.D. Salinger’s Catcher in the Rye. We hung around the neighborhood drugstore, we had social and athletic clubs; we had best friends and worst enemies; we played baseball and basketball; we dated, loved, and tried to make it with girls; we drove old beat-up cars; we jitterbugged and crooned with Frankie Lane, Peggy Lee, Perry Como, and Frank Sinatra; we listened to the radio soaps and thrived on the adventures of Tom Mix, Captain Midnight, and Jack Armstrong.

Then came the 1950s and, while none of us knew it at the time (no one does while it is happening), those were undoubtedly the best years of our lives. Just as Diner and other movies of note attempt to depict the years following the end of World War II, life was relatively simple, well organized, and pleasant. You followed the rules—whether it was the rules of your family, your social sphere, or the neighborhood. Although as young adults we sometimes experimented with the forbidden and often skirted the niceties of the social structure, we knew where the lines were drawn and, for the most part, did not transgress them. Although there was great social strife around us, it didn’t frighten us; although there were street gangs, the inner city streets were still safe; although there were reefers, there was really no drug problem. Most of all, government was still “good” and federal officials still respected.

And when we entered college, there was a world of literature to be consumed: Lawrence Durrell, Ernest Hemingway, Aldous Huxley, James Joyce, D.H. Lawrence, Thomas Mann, Henry Miller, Erich Maria Remarque, and so many others that one’s lifetime seemed far too short. These literary greats became our personal friends, offering us a never-ending parallel, albeit informal course of education. It is this beholdency to literature that makes tonight’s Chicago Public Library’s Freedom to Read Award so exceptionally meaningful to me. Books were always a profound part of my life, I suppose a consequence of my parents’ deep-seated respect for education and literature—after all, they were teachers first and foremost.

And, as I noted in Escape to the Futures, my zeal for education had a very practical application in advancing the cause of futures markets. Futures were an arcane and mysterious neck of the woods that most of the world considered a sub-rosa activity, best left to the zany and the gamblers. We were shunned, not only by the public at large, not only by our respected cousins on Wall Street, whose activities were really not so dissimilar, but even by the financial media:

“It’s ludicrous to think that foreign exchange can be entrusted to a bunch of pork belly crapshooters,” so proclaimed a prominent New York banker back in l972 on the eve of the Merc’s launch of the International Monetary Market.

“The New Currency Market: Strictly for Crapshooters,” echoed Business Week.

And the respected Economist in 1976 compared the International Monetary Market (IMM) to Linda Lovelace, the girl with the deep throat. How dare we, it asked, trade the sacred Treasury bill on the same floor with pork bellies.

Derogatory comments, defamatory innuendos, inflammatory jokes, false accusations, misleading opinions, half-truths, out-and-out lies—such has been the burden and fate of futures markets. And why not? From time immemorial, predicting the future has been a hazardous occupation. “Behead the messenger of bad tidings!”

As a result, I knew that our only hope was in education of the public and made it a permanent fixture at the Merc: workshops, seminars, global symposia, the publication of books, brochures, trading analysis, the establishment of programs and courses at colleges and universities, grants for fellowships and studies, lecturers, educational programs, and even permanent university chairs for the study of futures.

But I’ve gotten ahead of the story. Back in the 1950s there was also politics. In our college crowd, political interaction, whether by personal involvement or simply by way of heated discussion, was a holy and daily ritual. I was more fortunate than most. What better way to learn civics than to experience the Joe McCarthy era from the vantage point of John Marshall Law School. Gunner Joe represented a very real danger to the basic tenets of individual freedom, and this was critical to law students who, by definition, were ardent protagonists of the American ideal and for whom the Bill of Rights was a holy sacrament.

Indeed, for college students of the 1950s era, the civil rights movement that unfolded wasn’t a mere intellectual exercise—something to be studied, to write essays about, and to answer questions about—it was a living monument, an everyday event, a happening in real time. There was a revolution in the making before our very eyes and the world was never to be the same. We were online witnesses and participants—marchers in the marches, singers of the songs—We Shall Overcome! Montgomery, Alabama, Martin Luther King Jr., Governor Orval Faubus, sit-ins and boycotts, Justice William Brennan, the National Guard in Little Rock: Those weren’t historical references, they were our everyday newspaper headlines.

Earl Warren was appointed as Chief Justice of the Supreme Court by President Eisenhower just as I entered law school. What better way to study the magnitude of Brown v. Board of Education—that segregation was a violation of the equal protection clause of the 14th Amendment to the U.S. Constitution—than from within Professor Braunfeld’s classroom where constitutional law was alive and the only subject that mattered.

But constitutional law meant much, much more for me than the 14th Amendment: It put into focus for this law student the rights of the individual as measured against the rights of the state. Constitutional law became an intellectual learning experience that opened for me an entire new thought process and a roadway to my understanding of capitalism. Whereas my father’s socialism focused on the betterment of society as a whole, capitalism focused on the betterment of the individual to the benefit of society as a whole. This proved to be a cataclysmic revelation and caused a revolutionary reversal in my inherited beliefs. Ultimately it brought this young patriot to the realization that the socialistic concepts of his parents were in conflict with precepts of the free market and contrary to the very essence of the American success story—and were wrong!

One day I privately confronted my father on this issue. He and I quite often engaged in serious discussions of a political or social nature. Sometimes these discussions became quite heated, and on occasion ended in shouting matches that to my children, who watched from a respectful distance, no doubt seemed like arguments of a life-threatening nature. Actually, I considered my father the smartest man I ever met, our discussions notwithstanding. His instinctive feel for an idea or situation was nothing short of uncanny.

In most matters, my father, who was highly opinionated, would take the so-called traditional European and intellectual side, and I, what was to him the modern American and superficial point of view. For instance, one of his favorite topics was the American preoccupation with sports, which to his way of thinking, except that which was practiced in school, was a complete waste of time; anyone sitting around listening or watching a sports event was allowing his brain to atrophy. In similar fashion, but to a much harsher degree, he detested card-playing of any sort, which for him was the unquestionable work of the devil and a direct path to a life of depravation and sin. My love of tournament bridge was a source of unending grief to my father and a topic of constant discussion.

But on this occasion my father was unusually subdued and thoughtful. Yes, he admitted, in America some of the old notions under socialism had less validity, but, he explained, it was a hard-fought-for transformation: The workers of America had won most of the demands which he and his fellow European socialists had stood for and never achieved. It took, he said, the American union movement and socialist ideals to overturn the sweatshop mentality of the early 1900s. Now, my father agreed, an individual had the ability to pursue his or her own dreams, which could result in a betterment of society as a whole.

Not too many years later, the economic lessons and theory learned in constitutional law at John Marshall Law School could suddenly be put into practice. The floor of the Chicago Mercantile Exchange became the laboratory. But by then, this student of law had fervently embraced Milton Friedman’s conviction that the story of the United States was a story of two separate but interdependent miracles: an economic miracle and a political miracle. Each miracle based on a separate set of revolutionary ideas, both of which by a curious coincidence were formulated in 1776.

One set of ideas was embodied in the Adam Smith’s The Wealth of Nations. It established that an economic system could succeed only in an environment that allowed the freedom of individuals to pursue their own objectives for purely personal gain. The second set of ideas, drafted by Thomas Jefferson, was embodied in the Declaration of Independence. It proclaimed a set of self-evident truths: that all men are created equal, that they are endowed by their Creator with certain unalienable Rights; that among these are Life, Liberty, and the pursuit of Happiness. The success of our nation, as Milton Friedman asserted and Merton Miller will certainly attest, is a consequence of the combination of these two basic ideals. Economic freedom coupled with political freedom. One without the other cannot work.

As chairman of the Chicago Mercantile Exchange, this graduate of John Marshall Law School was provided an opportunity to implement these ideals in an exchange that was but a backwater marketplace with a questionable future, dealing in butter, eggs, and onions. The process involved some diverse and special ingredients:

First, as I already mentioned, it required a modern rule book, for without law and order, no economic house can exist. Next it required a bit of imagination coupled with a healthy dose of innovation. Then it needed a great deal of good luck. As futures traders, all we ever asked for was maybe a little war, some pestilence, a couple of floods, an occasional famine. On this occasion the Almighty was very generous. We were benefactors of a world in chaos. I daresay, if ever one needed proof that “necessity is the mother of invention,” one need only review the economic disorders leading up to and following the creation of the International Monetary Market.

For a setting, there was, of course the breakdown of Bretton Woods, the system of fixed exchange rates. Then on August 15, 1971, President Nixon closed the gold window, releasing a seismic economic shock with financial reverberations to be felt even a decade later. This precipitated unprecedented economic disarray, which included the oil embargo of 1973. What followed was an era of financial turmoil rarely equaled in modern history: The U.S. dollar plunged; U.S. unemployment reached in excess of 10 percent; oil prices skyrocketed to $39 a barrel; the Dow Industrial Average fell to 570; gold reached $800 an ounce; U.S. inflation climbed to 20 percent; and interest rates went even higher.

For us it was a virtual paradise. These events ensured that the IMM’s formula for successful innovation based on necessity of the times would be a sure-fire success. Indeed, in May of 1986, precisely 14 years after its inception, Merton H. Miller bestowed upon the IMM a supreme and unparalleled honor by nominating financial futures as “the most significant financial innovation of the last twenty years.”

The process also required people who could be molded into an army, an army of traders—for no one person alone could do what had to be done. They came from all walks of life, and as I stated in Escape, they had two common denominators: tenacity and a dream! I described them in this little poem which I read at the IMM’s 10th anniversary:

Who were we?
We were a bunch of guys who were hungry.
We were traders to whom it did not matter-
whether it was eggs or gold, bellies or
the British pound, turkeys or T-bills.
We were babes in the woods, innocents,
in a world we did not understand,
too dumb to be scared.
We were audacious, brazen, raucous pioneers-
too unworldly to know we could not win.
That the odds against us were too high;
That the banks would never trust us;
That the government would never let us;
That Chicago was the wrong place.

The final ingredient was a tribute to my parents’ equality ideal. The markets we built epitomized Schiller’s Alle Menchen Seinen Breeder. No, it is not utopia yet, but I know of no other private sector establishment that is more free of human prejudice and less concerned with race, gender, or religion than are the free market structures of American finance.

Indeed, tonight’s master of ceremonies, Terry Savage, is a first-class example of the Merc’s nondiscrimination ideology—and living proof of the equality between genders. In 1967, one of my first actions was to expunge the discriminatory rule at the Merc which prohibited floor participation by females. Terry was one of the early women to come to our pits, hold her ground with the male traders, and learned economics from the bottom up. As I stated in the book, Terry was smart enough to parlay her acquired trading skills into a career as a superb national business newscaster. Similarly, my personal friend and former bridge partner Carol (Mickey) Norton, who was the first lady trader at the IMM—indeed, the first in futures markets. She too never gave an inch in the male-dominated world of futures, and became one of the outstanding traders of the era.

Yes, in our markets, the trophy goes not to the Catholic or the Jew, not to the white or the black, not to the man or the woman, it goes to those who understand the economic principles of supply and demand. No, it is not utopia yet, but in Chicago’s financial markets it is not what you are—your personal pedigree, your family origin, your physical infirmities, your gender—but your ability to determine what the customer wants and where the market is headed. Little else matters.

As an eight-year old sitting on that Trans-Siberian train and staring out the window for days on end, I could no more imagine the course my life would take—that I would escape to the futures—than I can today discern what the world will be like, say, 50 years from now. We are all captives of events and circumstances over which we have so little control. In my case, fortune was most generous. It offered me the opportunity to partake in the American miracle. And if this refugee has in any small way contributed to the precepts of Thomas Jefferson and principles of Adam Smith, he is humbled, but it is not to his credit. He is after all but a product of his parents, his education, and his experiences.

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