The Petroleum Humbug

Every sham, as has often been said, proves some reality. Petroleum

exists, no doubt, and is an important addition to our national wealth.

But the Petroleum humbug or mania or superstition, or whatever you

choose to call it, is a humbug, just as truly, and a big one, whether we

use the word in its milder or its bitterer sense.



There are more than six hundred petroleum companies. The capital they

call for, s certainly not less than five hundred million dollars. The

money invested in the notorious South Sea Bubble was less than

two-fifths as much--only about $190,000,000.



Now, this petroleum business--very much of it--is just as thorough a

gambling business as any faro bank ever set up in Broadway, or any other

stock speculation ever conjured up in Wall Street--as much so, for

instance, as the well known Parker Vein coal company.



I shall here tell exactly how those well known and enterprising

financiers, Messrs. Peter Rolleum and Diddle Digwell proceeded in

organizing the New-York and Rangoon Petroleum Company, of which all my

readers have seen the advertisements everywhere, and of which the former

is the Vice President and managing officer, and the latter Secretary. In

June 1864, neither of these worthy gentleman was worth a cent. Rolleum

shinned up and down in some commission agency or other, and Digwell had

a small salary as clerk in some insurance or money concern. They barely

earned a living. Now, Rolleum says he is worth $200,000; and Mr.

Secretary Digwell, besides about $10,000 worth of stock in the New York

and Rangoon, has his comfortable salary and his highly respectable

"posish"--to use a little bit of business slang.



Mr. Rolleum was the originator of the scheme, and let Digwell into it;

and together they went to work. They had a few hundred dollars in cash,

no particular credit, an entirely unlimited fund of lies, a good deal of

industry, plausibility, talk, and cheek, considerable acquaintance with

business, and an instinctive appreciation of some of the more selfish

motives commonly influential among men.



First of all, Rolleum made a trip into the oil country. Here, while

picking up some of his ordinary agency business, he looked around among

the wells and oil lands, talking, and examining and inquiring of

everybody about everything, with a busy, solemn face, and the air of one

who does not wish it to be supposed that he has important interests in

his care. Then he talked with some men at (we will say) Titusville and

thereabouts; told all about his valuable business connections in New

York City: and after getting a little acquainted, he laid before each

of half-a-dozen or so of them, this proposition:



"You can have a good many shares of a first class new oil company about

to be formed just for permitting your name to be used in its interest,

and for being a trustee." A thousand shares apiece, he said; to be

valued at five dollars each, the par value however, being ten dollars.

Five thousand dollars each man, and to be made ten thousand, as soon as

the proposed puffing should enable them to sell out. After a little

hesitation, a sufficient number consented. There was nothing to pay,

something handsome to get, and all they were asked for it was, to let a

man talk about them. What if he did lie? That was his business.



This fixed four out of the nine intended trustees.



Rolleum also obtained memoranda or printed circulars showing the amounts

for which a number of oil land owners would sell their holes in the

ground or the room for making others, and describing the premises. He

now flew back to New York, and went to sundry persons of some means and

some position but of no great nobility, and thus he said:



"Here are these wealthy and distinguished oil men right there on the

ground who are going to be trustees of my new company.



"You serve too, won't you? One thousand shares for your trouble--five

thousand dollars. No money to pay--I will see to all that. Here are the

lands we can buy,"--and he showed his lists. The bribe, and the names of

those already bribed, influenced them, and this secured three more

trustees. Two more were needed, namely the President and Vice

President. Rolleum himself was to be the latter; his next move was to

secure the former.



This, the most critical part of the scheme, was cunningly delayed until

this time. Rolleum went to the Honorable A. Bee, a gentleman of a good

deal of ability, pretty widely known, not very rich, believed (perhaps

for that reason) to be honest, no longer young, and of a reverend yet

agreeable presence. Him the plausible Rolleum told all about the new

Company; what a respectable board of trustees there was going to be--and

he showed the names; all either experienced and substantial men of the

oil country, or reputable business men of New York City. And they have

agreed to serve, in part because they know what a very honest company

this is, and still more because they hope that the Honorable A. Bee will

become President.



"My dear Sir," urged Rolleum, sweetly, "this legitimate business

enterprise must succeed, and must secure wealth, reputation, and

influence to all connected with it. We know that you are above pecuniary

considerations, and that you do not need our influence, or anybody's. We

need yours. And you need not do any work. I will do that. We only need

your name. And merely as a matter of form, because the officers are

expected to be interested in their own company, I have set apart two

thousand shares, being at half par or $5 a share, $10,000 of stock, to

stand in your name. See how respectable all these Trustees are!" And he

showed the list and preached upon the items of it.



"This man is worth so many millions, that man is such an influential

editor. Could I have obtained such names if this were not a perfectly

square thing?"



Ten thousand dollars will go some ways towards squaring almost anything,

with many people, even if it is a mere matter of form; and so the old

gentleman consented. This fixed the whole official "slate."



Now to set up the machine.



In a few days of sharp running and talking, Rolleum and Digwell

accomplished this, as follows:



First, they hired and furnished handsomely, paying cash whenever they

couldn't help it, a couple of pleasant first floor rooms close to Wall

Street. No dingy desk-room up in some dark corner or attic, for them.

Respectability is the thing for Rolleum.



Second, they hired a lawyer to draft the proper papers, and had the

New York and Rangoon Petroleum Company "Duly incorporated under the

mining and statute laws of the State of New York," with charter,

by-laws, seal, officers' names, and everything fine, new, grand,

magnificent, impressive, formal, respectable and business-like.



Third, they now had every requisite of a powerful, enterprising and

highly successful corporation, except the small trifles of money, land

and oil. But what are these, to such geniuses as Rolleum and Digwell?

Singular if having invented and set the trap, they could not catch the

birds!



They bought about three pints of oil, for one dollar; and that settled

one part of the question. They bought it ready sorted and vialled and

labelled; some crude and green, some yellowish, some limpid as water,

half a dozen or so of different specimens. These, in their tall vials of

most respectable appearance, they placed casually on the mantel-piece of

the outer office. They were specimens of the oils which the company's

wells are confidently expected to yield--when they get 'em!



Last of all--land and money. Subscriptions to capital stock are to

furnish money, money will buy land. And saying we've got land will

procure subscriptions.



"It's not much of a lie, after all," said Rolleum, confidentially, to

brother Digwell. "When we've said we've got it for awhile, we shall

get it. It's not a lie at all. It's only discounting the truth at sixty

days!"



So he and Digwell went to work and made a splendid prospectus and

advertisement, the latter an abridged edition of the former. This

prospectus was a great triumph of business lying mixed with plums and

spices of truth, and all set forth with taking "display lines."



It began with a stately row of names: New York and Rangoon Petroleum

Company; Honorable Abraham Bee, President; Peter Rolleum, Esq., Vice

President; Diddle Digwell, Esq., Secretary; and so on. With cool

impudence it then gave a list headed "Lands and Property"--not saying

"of the Company" for fear of a prosecution for swindling. But the list

below began with the words "the oil lands to be conveyed to the

Company are as follows:" "that's exactly it" quoth Rolleum--"no lie

there, at any rate. They are to 'to be conveyed' to us--if we

choose--just as soon as we can pay for them." And then the list went on

from "No. 1" to "No. 43," giving in a row all those memoranda which

Rolleum had obtained in Venango County and the region round about, of

the descriptions of the real estate which the landsharks up there would

be glad to sell for what they asked for it.



The Prospectus said the capital of the company was one million dollars,

in one hundred thousand shares at ten dollars each. But in order to

obtain a WORKING CAPITAL, twenty thousand shares are offered for a

limited period at five dollars each, not subject to further

assessment.



And it added, though with more phrases, something to the following

effect: Hurry! Pay quick! Or you will lose your chance! In conclusion

the whole was wound up with many wise and moral observations about

legitimate business, interests of stockholders, heavy capitalists,

economical management, and other such things; and it bestowed some

rather fat compliments upon the honorable Abraham Bee and the Trustees.



Having concocted this choice morsel of bait, they set it in the great

stream of newspapers, there to catch fish. In plain terms, with some

cash and some credit--for their means would not even reach to pay in

advance the whole of their first advertising bill--they managed to have

their advertisement published during several weeks in a carefully chosen

group of about thirty of the principal newspapers of the United States.



The whole web was now woven; and Rolleum and Digwell, like two hungry

spiders, squatted in their den, every nerve thrilling to feel the first

buzz of the first fly. It was natural that the scamps should feel a

good deal excited: it was life or death with them. If a confiding

public, in answer to their impassioned appeal, should generously remit,

they were made men for life. If not, instead of being rich and respected

gentlemen, they were ridiculous, detected swindlers.



Well--they succeeded. So truthful is our Great American Nation--so

confiding, so sure of the truth of what is said in print, even if only

in the advertising columns of a newspaper--so certain of the good faith

of people who have their names printed in large capitals and with a

handle at one end--that actually these fellows had a hundred thousand

dollars in bank within ten weeks--before they owned one foot of land, or

one inch of well, or one drop of oil, except those three pints in the

vials on the office shelf!



And remember this is no imaginary case. I am giving point by point the

exact transactions of a real Petroleum Company.



Everything I have told was done, only if possible with a more false and

baseless impudence than I have described. And scores and scores of other

Petroleum Companies have been organized in ways exactly as unprincipled.

Some of them may perhaps have proceeded as real business concerns. Some

have stopped and disappeared as soon as the managers could get a

handsome sum of money into their pockets for stock.



What the result will be, in the present case, I don't know. The New York

and Rangoon Petroleum Company, when I last knew about it, "still lived."

They had--or said they had--bought some land. I have not heard of their

receiving any oil raised from their own wells. They have sent off a

monstrous quantity of circulars, prospectuses and advertisements. They

caused a portrait and biography of the Honorable A. Bee to be printed in

a very respectable periodical, and paid five hundred dollars for it.

They had themselves systematically puffed up to the seventh heaven in a

long series of articles in another periodical, and paid the owner of it

$2,000 or so in stock. They talk very big about a dividend. But

although they have received a great deal of money, and paid out a great

deal, I do not know of their paying their stockholders any yet. If they

should, it would not prove much. For it is sometimes considered "a good

dodge" to declare and pay a large dividend before any real profits have

been earned; as this is calculated to enhance the price of shares, and

to make them "go off like hot cakes."



I shall not make any "moral" about this story. It teaches its own. It is

a very mild statement of what was done to establish an actual

specimen,--and far from being of the worst description--of a great part

of the Petroleum Company enterprises of the day.



It is whispered that somehow or other the trustees and officers of the

New York and Rangoon do not own so much stock of their company as they

did, having managed to have their stock sold to subscribers as if it

were company stock. If this is so, those gentlemen have made their

reward sure; and Mr. Peter Rolleum, having the cash in hand for that

very liberal allotment of stock which he gave himself for his trouble in

getting up the New York and Rangoon Petroleum Company, is very likely

half or a quarter as rich as he says.