Before Bre-X, there was Allied Crude Vegetable Oil Refining Corporation. In 1962, Anthony "Tino" De Angelis set about to corner the soybean oil market through a combination of futures and fraud. De Angelis's company was heavily involved in the shipping of foodstuffs between the U.S. and Europe following WWII. During the following decades, Allied focused on the soybean oil used to make salad dressings. Along with a checkered past in the meat business, De Angelis gained notoriety for shipping substandard or uninspected vegetable oil to government contractors and then overcharging them.
As a result of his shipping operations, De Angelis learned that consumer credit giant American Express was entering the field warehousing business. This appealed to De Angelis because American Express, following inspections, would vouch for the goods of clients that stored inventory shipments in its warehouses. Clients then could use American Express's warehouse receipts to take out loans, putting up the authenticated value of their inventories as collateral. De Angelis became one of American Express's first big clients.
Moving from dubious business practices to outright product fraud, De Angelis began filling his oil tanks with water and then adding thin layers of oil to the tops of each tank in an attempt to deceive inspectors. Liter upon liter of watered down inventory piled up in warehouses while De Angelis took out millions in loans from banks. He used much of the money to buy up soybean oil futures so that he could completely corner the market. Problems started to crop up, however, when the soybean oil being stored at American Express warehouses vastly exceeded soybean producers' output. Somebody blew the whistle and American Express inspectors swooped in to discover the tanks of oil-sprinkled water that De Angelis had been storing. In total, the tanks in De Angelis's inventory represented more than $175 million worth of faked soybean oil.
On November 19, 1963, Allied Crude Vegetable Oil Refining Corporation filed for bankruptcy. De Angelis filed for personal bankruptcy as well, leaving American Express to foot the bill on the bad loans. In addition to American Express, the scandal weakened other Wall Street firms, which contributed to the financial chaos that followed the Kennedy assassination a few days later. With massive losses, American Express shares dropped sharply and Warren Buffett, value investor extraordinaire, scooped up a 5% interest in the ensuing fire sale. De Angelis was sentenced to seven years in prison. However, the ultimate losses from the salad oil scandal were difficult to separate from the general bloodletting on Wall Street in 1963.
This question was answered by Andrew Beattie.