This law is notable as the first and only ban on the trading of futures contracts of a specific commodity in United States history, and as a unique modern case with which to study the effects of the existence of an active futures market on commodity prices. In particular, proponents of futures markets often claim that they serve to stabilize otherwise volatile commodity supplies (and thus, prices) by providing a market-driven consensus mechanism for future price estimation. The conclusions drawn in subsequent studies of the effects of the Act upon price volatility have been mixed.
The law was enacted after national protests from onion farmers who accused the futures traders at the Chicago Mercantile Exchange of cornering the market for onions, a form of market manipulation that they claimed resulted in absurdly low prices for their crops.
The ban provided academics with a unique opportunity to study the effect of an active futures market on commodity prices. Holbrook Working concluded that onion prices had been less volatile during the years when the contract was active than previously.
Roger Gray, a professor emeritus of economics at Stanford University and an expert in agricultural futures markets, analyzed the effects of the ban in 1963 and concluded that the existence of a standardized futures contract had reduced volatility in onion prices while they existed compared to after the ban went into effect.
A subsequent 1973 study by Aaron C. Johnson contradicted that result and concluded that onion prices were less volatile throughout the 1960s than when the contract had been traded.