THE huge hall is bustling. Businessmen gather in groups. The din grows louder as the minutes tick away. Excitement is intense.
Suddenly, a gong sounds. The people in the hall begin to wave their arms furiously and yell. What is going on here? A corporate free-for-all? Well, no. It is merely the push-pull of Chicago's own brand of American capitalism.
The men and women gathered here are traders. Their goods, a rather odd assortment of commodities futures from soybeans to heating oil. The place: the Chicago Board of Trade.
To many, the CBOT is a grand Chicago tradition - anchored like a crusty board chairman at one end of the city's financial district. But within these stone walls - and in other nearby commodity exchanges - a revolution is taking place. This traditionally industrial city is gaining more international recognition as a world-class financial center.
Last week, the exchange began trading a new version of Government National Mortgage Association (GNMA) contracts, commonly known as ''Ginnie Mae.''
ADAM Smith, the 18th-century Scottish economist, would have admired Francis D. Wolfe. Christopher Columbus, who bumped into a continent on his way to trade with India, might have envied him.
With a flick of his hand and a couple shouts, the independent floor broker completes deals that Columbus could only dream about. As a CBOT member, Mr. Wolfe can walk from raised platform to raised platform - known as ''pits'' - and trade in an amazing variety of commodities. In two huge rooms - that combined are larger than a football field - his peers deal in such things as wheat, plywood, and US Treasury bonds. On an average day, the dollar value of trades here are two to three times higher than on the New York Stock Exchange.
While New York is the acknowleged center of traditional financial markets, ''the new markets are emerging here,'' says Michael Weiser, president of the Weiser Group, a financial market and communications companythat does business in both cities. ''The world is utilizing Chicago as a risk-management center.''
And in fact, the wheeling and dealing here is really not about corn or oats or T-bonds. It is about risk. The people who trade here - or the far larger number who phone in their orders - come to the CBOT for one of two reasons. Either they want to reduce their business risk (the hedgers). Or they are willing to take it on in the hopes of making money (the speculators).
ON the trading floor itself, a kind of institutionalized frenzy exists.
A corn trader in a green jacket shouts repeatedly: ''Sell 200 at a half. Sell 200 at a half'' in a kind of verbal shorthand that everyone else in the corn pit understands. With his outstretched hands, he signals the same message: He wants to sell 200 contracts of March corn at $3.22-1/2 per bushel.
Most traders are cautious, though. A major crop report is due this evening and its results could send prices flying or tumbling. Lose just a penny per bushel on a deal this big - $3.2 million worth of corn that would take an average Illinois farmer almost 20 years to produce - and you've lost a cool $10, 000.
No one takes up the green-jacketed speculator on his offer.
On the edge of the trading floor, another equally important activity is going on. Clerks, usually young, man banks of phones. They take down ''buy'' and ''sell'' orders that are coming in from around the world, slip them to waiting messengers known as ''runners,'' who will give the order to a particular broker and then return the slip once the order is executed. Time elapsed from a customer's order to when he gets confirmation of its execution: commonly two minutes.
The original customer may be one of those bold individuals trying to make money while not being on the trading floor. But more often, the orders are from hedgers. These are farmers or companies that handle commodities who want to insure their future by locking in a price.
How do they do it?
It works this way for Buzz Gibbons, controller at Ty-Walk Liquid Sales, a Minooka, Ill., grain elevator that got its name from selling liquid fertilizer.
In the summer, for instance, local farmers begin selling their as yet unharvested corn to Mr. Gibbons at the current CBOT cash price. Gibbons won't get the corn till the October harvest, so he's anxious to guard against falling prices. One way is through futures contracts.
In August last year, Gibbons bought corn at $2.94 a bushel and offset that by selling an equal amount of corn deliverable in March on the CBOT futures market. At the time, the price for March corn was $3.20 - guaranteeing a nice profit of 26 cents per bushel. By mid-November, though, the cash price had jumped to $3.60 and March corn at the CBOT was $3.58. So Gibbons reversed his position, selling his corn at the cash price and offsetting the futures contracts he had sold on paper by buying an equal amount on paper.
What did this do for profits? He lost 38 cents a bushel in the futures but made 66 cents profit in the cash transaction, making a net gain of 28 cents per bushel. This is one of many strategies called hedging.
This process helps lock in prices not only for grain elevators but for cereal companies and other grain users as well.
And what guarantees that there will always be a buyer or seller on the futures market? The presence of commodity speculators who - as economics textbooks are fond of pointing out - are the oil that keeps the system running. Outside the circles of textbook writers, though, the speculators are perhaps the most misunderstood businesspeople in America.
THEY'RE called many things. High-pressure gamblers, greedy moneymakers, one local businessman calls them ''the Nike-shoes-and-weird-suit crowd.'' In a new complex nearby, there are even separate entrances for traders at the Chicago Board Options Exchange and the businesspeople who will occupy the connected office tower.
Farmers are also suspicious of commodity traders who, as one farmer put it, ''are playing with my paycheck.'' Many accuse speculators of causing a price collapse last fall - a charge the federal Commodity Futures Trading Commission is looking into.
The stereotypes, however, don't always fit the bill.
''I personally get rattled in the pit,'' says Carol Ovitz Hancock. She sits at one of the many booths to the side of the pits, studying a grains stock report. Unlike the scalpers who trade continuously for quarter-cent profits, she prefers position trading, waiting on the sidelines until she believes there will be significant price movement.
Originally, she had planned to pursue a PhD in experimental psychology but decided instead to get a job. Commodities was a natural choice because she had worked summers in the commodity department of a brokerage house. In 1969, she became the first woman to break the all-male CBOT membership.
''It was a different era,'' she recalls. One trader actually threatened that she should never enter the wheat pit. But other women followed and now make up roughly 5 percent of the CBOT membership.
There have been other changes. ''I used to know everybody's name on the floor ,'' says Mr. Wolfe, a 25-year veteran trader. But the CBOT has seen a rapid influx of younger traders. One reason is that the value of a membership has risen so much that older members are leasing their slots to beginning traders.
And as numbers have mushroomed, so have trading volumes. The CBOT has set annual records in 14 of the past 15 years.
The floor became so crowded that a new annex was opened two years ago, more than doubling trading-floor space. In the past 10 years, the number of commodities traded on the CBOT has almost tripled.
Most of that growth has come from the exchange's move into financial futures.
The first one - the original GNMA futures - was introduced in 1975 and drew little initial interest.
''We stood around for most of the day,'' recalls Tom Ramseth, who is now vice-president in the Paine Webber real estate securities department.
In 1977, for example, when T-bond futures were introduced, trading in the financial instruments was only 2 percent of overall CBOT volume. But by 1981, T-bonds had become the most actively traded futures contract in the world.
WHAT does it all mean? To John F. Gilmore Jr., a CBOT director and vice-president of Goldman, Sachs & Company, it signals a rise in the volatility in the financial world. Thomas P. Cunningham Jr., chairman of the exchange, is more cautious. ''What it really shows is an awareness . . . that these markets have worked for people in similar risk situations in the past.''
Not all the futures contracts - such as commercial paper and petroleum futures - have succeeded. But the exchange already hopes to get government approval for municipal bond futures and agricultural options. And there are a couple more ideas on the drawing board, Mr. Cunningham says.