Back to the Futures: When Were Futures First Traded?

Ancient Origins of Futures Trading

The history of futures trading takes us all the way back to ancient Mesopotamia. In his Code of Hammurabi, the Babylonian king permitted goods and assets to be delivered for an agreed-upon price at a future date. In order to provide a record of these agreements, written contracts were drafted.

Prologue to the Code of Hammurabi, circa 1780 BC
Ancient olive press, similar to one Thales would have used

First Formal Futures Exchanges

Fast forward a few thousand years to Japan where the first “modern” futures exchange began in 1710, within the Dojima Rice Exchange. This marketplace was created for farmers to hedge against the possibility of a poor yield by trading rice futures.

Chicago Board of Trade

Meanwhile, the first official commodity trading exchange in the west was created in 1848, the Chicago Board of Trade (CBOT). The location was a natural choice as Chicago served as an agricultural marketplace & a major railroad hub. The first commodity futures contracts traded in the US were corn, wheat and soybeans. These three grains still account for the bulk of trading at the CBOT today.

Crowded interior of the Chicago Board of Trade, 1909

New York Mercantile Exchange and Chicago Mercantile Exchange

The New York Mercantile Exchange was established in 1872, originally known as the Butter and Cheese Exchange of New York. The exchange was founded by a group of Manhattan dairy merchants as a means to hedge against the possibility of a less-than-ideal harvest. In 1882, the name was changed to the New York Mercantile Exchange coinciding with the addition of dried fruit, canned goods and poultry.

Manhattan’s Lower East Side, circa 1900

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