WASHINGTON - The disclosure that Hillary Rodham Clinton parlayed $1,000 into nearly $100,000 through highly speculative commodities trading may create political embarrassment for the Clintons, who have sharply criticized a national culture of greed during the Reagan and Bush years in the White House.
But the information released yesterday by the White House covering investments in 1978 and 1979 also appears to support the couple's contention that they had done nothing illegal or unethical in the trades.
As a presidential candidate, Bill Clinton had decried the speculative wealth-building of the rich during the Reagan and Bush years as "a gilded age of greed and selfishness, of irresponsibility and excess and of neglect."
Mrs. Clinton, whose commodity trading came during the early years of her husband's political career and before Ronald Reagan was elected president, was guided through the risky trades by James Blair, a friend and top lawyer for one of Arkansas' most powerful companies, Tyson Foods Inc. She also "talked to other people" and read the Wall Street Journal to research her trades, a White House official said yesterday.
Commodities trading, which involves anticipating the future value of a commodity, is done on margin - meaning that it takes only a small amount of money to control a large contract. Mrs. Clinton made dramatic gains by investing in live cattle futures, which are contracts linked to an anticipated future value of 40,000 pounds of slaughter-ready beef cattle.
Commodity trading is generally thought to be extremely risky, because if the market goes down, an investor can be liable to come up with the full amount. By some estimates, more than three-quarters of all investors lose money. But a skilled trader, or one with special knowledge of a market, can reap millions of dollars.
"Making the kind of money that she did at that time was possible but very difficult," said Chuck Levitt, senior livestock analyst at Alaron Trading Corp. in Chicago. "It just so happened that she caught the biggest cattle market boom in history and at just the right time."
Herds had shrunk for four years and inflation was soaring in 1978-79, said Levitt, who has tracked livestock markets for more than 30 years. Prices on virtually all commodities were "in a very strong upward trend."
"There were other people who made the money she did," said Levitt, but they were lucky, and their timing was perfect. As a new player, he added, "she had to have one heck of a good adviser or one very good broker."
The White House released the information in part to rebut allegations in the April 4 issue of Newsweek magazine, currently on sale, that Mrs. Clinton did not put up any of the money herself. The White House has strongly denied that accusation, and Newsweek has backed off its story.
Mrs. Clinton, who is on vacation with her family in California, was not present for the briefing. Her spokeswoman Lisa Caputo and John Podesta, a White House spokesman, said Mrs. Clinton "put up her own money, invested it in her own accounts and assumed the full risk of loss."
Mrs. Clinton's highly speculative trading dramatically boosted the Clintons' income at a time when Bill Clinton was earning $26,500 as attorney general of Arkansas and Hillary Clinton was making $24,250 as a young lawyer in Little Rock.
Mrs. Clinton initially invested $1,000 in cash on Oct. 1, 1978, in an account at the Springdale, Ark., office of the Ray E. Friedman & Co. commodities brokerage of Chicago. By Oct. 12, she made $5,300 and reinvested the $6,300 in several transactions. In a series of trades through the rest of 1978, she accumulated profits of $49,069, offset by losses of $22,548. The White House calculated her net gain at $26,521 in 1978.
In 1979, Mrs. Clinton continued trading in this account with profits of about $109,600, offset by losses of about $36,600. Her net gain for 1979 was $72,996.
One monthly statement from the account was not included in the records released yesterday. There was no reason given for the omission.
Mrs. Clinton stopped trading in that account in July 1979 after she became pregnant with Chelsea. "She couldn't stomach it anymore," an administration official said. "It was too nerve-racking."
An administration official said Bill Clinton was "not involved in this account. This was her account. It was in her name."
Mrs. Clinton opened a second account in October 1979 with $5,000 in cash, and her trading resulted in small net losses in 1979 and 1980. She stopped trading in this account after Chelsea was born, and the account was closed in March 1980.
The disclosure of Mrs. Clinton's trading came amid reports that her former broker, Robert Bone of Springdale, Ark., had been disciplined for trading violations in 1977 by the Commodity Futures Trading Commission and in 1980 by the CFTC and the Chicago Mercantile Exchange.
Bone, who had formerly worked as a professional poker player and an executive at Tyson Foods, often traded without orders or permission from his clients, and "at the end of the day the winning and losing trades would be allocated to the accounts selected by Bone," reported Securities Week, a McGraw-Hill newsletter focusing on securities and futures.
In January 1980, a committee of the Chicago Mercantile Exchange banned Bone from trading on the exchange for three years, Securities Week reported.
Bone consented to the sanctions without admitting or denying charges that he had committed "serious and repeated violations of record-keeping functions, order entry procedures, margin requirements and hedge procedures."
According to Securities Week, Bone's violations all involved the cattle futures market in which Mrs. Clinton made her profits and occurred at about the time she was investing.
A senior administration official said yesterday, "She did not know at that time that he ever had been suspended."
There is no evidence that Mrs. Clinton benefited from allocation of profitable trades to her account.
Blair also denied that Mrs. Clinton benefited from the allocation of profitable trades to her account, and said she received no special treatment in the investment.
Bone was broker for both Blair and Hillary Clinton. Blair was also Bone's personal lawyer, Securities Week reported.