South Bend news-times., October 20, 1919, EVENING EDITION, Image 5

About South Bend news-times. (South Bend, Ind.) 1913-1938

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POT
MONEY
i
Of
l . II U t 1 - r 1 ti
Oil Has Become a Magic Word in the Realms of Finance and Banks and Bankers Who Refused to Talk or Deal
Years Ago Are Now Busy Reading Up on It, Getting Piles of Information to Furnish Their Customers About Its
IT is most Improbable that at any That does not mean they all feel
time in tho history of the world sure that they are going. to get rich,
has so much money been Invest- Not at all. By far the greater number
in any speculation as is at present of them know that they are taking a
lIng invested in oil, petroleum, by tho long chance, merely making a bet that
American people. Since the finish of they will win a pot of money. They
tho war the people have their minds know there is a great chance that they
off the struggle In Europe, and back may lose, but they are willing to take
to their rropor business of making, or the chance.
of trying to make, money, there has The great selling point If the oil
been an inpourlng of money into oil stock salesman is this: "Mr. ,
stocks that has been simply amazing, have you $100 to 1500 on which you
The people got the habit of investing are willing to take a chance of making
during tho war. Then, for all the from $1,000 to $100.000 In a year?"
howls about the high cost of living The chances are that you have. In
which are true enoughmost of us any event you are interested enough
have had some money to invest. "VW to say:
had money. Everything was high. We "Maybe I have."
did not care so much about buying "Then." proceeds the oil stock sales
clothes or going on railroad trips, for man, "take a chance with me. 1 am
clothes and railroad transportation not guaranteeing you anything. But
cost a lot of money, were at prices so Wc have a good oil prospect. The ad
disproportionate, that we hated to joining ten acres have four gushers on
stand for them. jt. Here we are between a lot of
Farm lands were high, and, besides, proved wells. We have a lease on the
city people can not handle farm lands, land. We may lose. Our wells may
Farm lands are hard to handle, bo- not come in. Hut we have a chance,
cause help is hard to get. r.old was not Are you willing to lay ?10" to 'Son, or
new. We had no Klondike or Cripple as much more as you wish, on that
Creek, and even if wo did have the chance? You may lose every cent of
Klondike, it would be too far away. It it. I am frank with you. But you may
would not bo an attractive place, become rich. Are you on?"
Whereas oil was rieht at our doors. That is a frank, and. very often, an
The great states of Oklahoma and honest appeal. The salesman may
Texas, parts of Kentucky and f Loui- back up his talk with statistics, for
siana and Illinois, w, ro wild with tin? which the American people have sud
oil boom. Wo could got on a train in dmly taken such a fancy. The sales
tho evening and bo in the oil regions ,nan and his company may bo
by morning. lb Iter still, oil stock Inmost. There is a chance that they
sab smen could 1. avc tho pushers in
the evt nir.g and s o us in the morning.
the smell of
oil o:i 1 1; i r
certificates of stock in tV ir h.m-.K
l'oor t Bich (Jo
Mild on (Ml.
The result has been tli.it oil stocks
have become the f.noritts of investors
of all sorts, of regular d ed-in-the-aoo1
speculators, ganibl r most of
would call th m. of cor.s rvativ . ex
perienced investors, and. in the nd. of
people who have from Jl"1 to 5 ".00 to
invest in something that may make
them rich. This is the most important
class of all. Tht re are few Americans
who do not hold ;n thtir hearts the
Idea that some day tiny ill rt rieh
i' ,V t)l.- Mill i..t T-l'.O,
v. ...1 Wit l.V.i
shoestring into a
ty nothing, run a shoestring into a tits of the new financial giant Oil.
tannery or a $1 note into a million Banks and bankers did not know
dollars. It may be fool'.sh. but it ha.- what the word petroleum meant two
been don time and tiuw ai:ain. and no years apo. are now more interested in
matter what wise nun may say. Col. it than thty are in the very best first
Mulberry Sellers struck the sb'gan lor mortgages on downtown real estate at
tho American nation w h n he said. homo. Very rich and very conserva
"There's millions in it." The- great tive bankers, men who have done what
American working class, from the girls they are pleaded to call a "legitimate
in the factories to the judges on the banking business for fifty years, ar
bench, have gone wild on oil. regretting that they did not get Into
may bo dishonest. It is up to you.
Will you take a chance to make a mil
lion with the $100 to $50! that may bo
drawing 2 por cent a year in the bank?
Tho chances are that you will tako
the chance.
Banker and Brokers
Compile Statistics.
Oil has become a magic word in the
realms of finance. Brokers and fian
ciers who did not know anything about
oil three ytars ago are busy reading
up i n it now, getting information, pil
in? up the always attractive statistic;
tho Germans imparted that passion
to us and in very way preparing In
furnish their customers with inform:. -
tbm regarding the wonderful possibili
a business that makes men rich quick-
ly, are getting into oil now. They
think of the paltry $100,000 or so they
have been laboring to make all these
years, and then of the billions that the
Standard Oil Company has run up in
tho same time. And they go into oil.
Rockefeller no longer has it all to
himself.
It is estimated that since January 1.
1919, 5,000 new oil companies, with a
capitalization of $1,500,000,000, have
uvt-ji uiamtru. it in hui I'uamviv iu
get a true estimate, but this much is
known: That the organization of a
$100,000.000 company does not cause a
ripple of excitement where it would
have created a furore three years ago. the gasoline engine and the oil-burn-The
great tide of new investment in ing engine.
oil, estimated at $1,500,000,000, since
January 1, 1919, may be appreciated
when it is stated that the total capital
ization of all the Standard Oil com
panies is only $550,000,000.
Thus we find that thrice as much
money has been invested in oil since
January 1, 1919, than the great Stand
ard Oil Company has invested in al
most fifty years.
All 1 eared
Standard Oil Co.
In seven months, Americans have
financed the equal of three Standard
Oil companies, and it was only ten or
twelve years ago when some people
thought that Standard Oil was too rich
and too strong to submit to govern-
ment by the United States.
The great growth in oil stock specu-
lation is an interesting study in invest-
ing phychology. Five years ago the
investors and the brokers through
whom they have been in the habit of
investing knew little and cared less
about oil. The world knew that the
Standard Oil companies had been very
successful, and that stockholders
and that stockholders
received handsome div
therein had received handsome div-
idend up to the dissolution in 1911.
But most financial sharks thought that
this success was due to the great abil
ity of the Standard Oil crowd. John
D. Rockefeller. Henry II. Rogers and
John I) Arehbold. and the monoily
w hich they are known to have on the
oil business in the United States.
Anon, the investors and their tu
tors, the brokers, felt that Standard
Oil had the business "sewed up." thit
you could not sell a barrel of oil with
out the consent of the Standard, and
that that consent could only be bought
at a price which left you no profit; in
a word, that money put into oil was
sure, in the end. to be gobbled up by
the "trust."
The Standard Oil folk never had to
go to Wall street for money. They had
lots of their own. So there was little
study of oil by banks and brokers in
the United States. Those in the oil
business did not need money. Those
out of the business were glad enough
to stay out, for they feared to risk
competition with the bogey of the
Standard.
This condition was changed by five
things:
Discovery of oil In many fields.
Plentiful supply of money in the
uiuifu diaus.
The dissolution of the Manaara uu
Company.
The greatly increased consumption
of oils and oil products, especially by
The war.
Did "ot (let Money
From Wall Street,
All these things combined to open UP
. ... uu
the oil business and to let the public
into it anywhere from the subcellar to
the thirty-fifth floor. Of course, the
Standard is still in the business. The
various companies unscrambled out of
the old combine are at work, and doing
handsomely. But they have not the
same control over the industry that
thev once had. In other words, the
United States proved too big for the
Standard Oil Company to control. This
means not so much the courts as the
country itself. The country just
thought it would spoil the Standard's
alleged graft and monopoly. So it
turned in and spouted oil through ev-
ery well. The courts helped seme with
their decisions to break the Standard
grip, but it was the great United States
themselves, the good Amrican conti-
nent that did the work. Now many en-
ergetic men have enough money to go
ahead and bo independent of the
Standard in the oil game.
The indept ndents did not have the
money that the Standard had. So they
were obliged to go to Wall street for
it. They had to educate the bankers
of that famous thoroughfare in oil.
They did so. Out of that education,
which began about five years ago, has
grown the present tremendoues boom
in oil stocks. Harry F. Sinclair, who
was largely identified w ith the Federal
League baseball venture, and J. S.
Cosden wore the oil pioneers in Wall
street. Many others have followed
them. The great independent com
panies, the Texas and the Gulf Refin
ing Company, were already in busi
ness, but they did not have to go to
Wall street for money.
More amazing still is the demand
or petroleum products for fuel pur-
poses. The interior combustion en-
gtnes which, move motor cars, boats,
airplanes, which pump water and
which have taken the place of 3team
engines in doing 1,000 things, created
an immense demand for gasoline. The
demand in this line is so apparent that
it is no wonder investors, seeing It,
should rush to buy oil stocks. The
The gasoline or internal combustion
engine has revolutionized locomotion
on land and water, and now threatens
to revolutionize it again by sending it
... -, D
was once thrown aside as a useless
iactor in petroleum.
These uses, of course, are for the
lighter and more refined essence of
petroleum. Yet the greatest possiblli-
ties of All li in hpavv and fnpl oil for
,
steamships, railroad locomotives, etc.
It is not impossible that stationary en-
gines may depend upon fuel oil at no
late date. Figure firemen at $25) a
month and that nil will sive flromn
moiun ana inat 011 wm save nremen,
a d whpre fupl oil nav
ana juu can see wnere iuei on iaa
ln f stationary engines.
The oil burning ship is said to be
the ship of the hour. The navies of
the world are anxiously looking to
wards a supply of oil. One of the
things that British and American na
vies most carefully guarded during
the war was access to the Tampico oil
fields. Had that access been cut off,
the British Navy would have been very
seriously handicapped.
Earl Curzon said that the allies float
ed to victory on a sea of oil. The Unit
ed States has set aside million!, of
acres of oil-producing land for navy
use alone.
Oil Burning .Ships
to Have I)8y.
But the use of fuel oil by merchant
ships is far more important than the
use of oil by navies. There are thou-
sands of merchant ships where there
is one warship. The vast advantage
oil has over coal is that it reeiuires in-
finitely less space ln a ship, makes in-
t finitely less labor and is infinitely
easier to load. Oil gives more room
for cargo or passengers, relieves the
hard-worked stoker of all labor, and
can be taktn on board through a ptpe
üne, instead of being shoveled on as
coal has been. Then oil is clean, while
coal is filthy. One of the great causes
of the boost in the present boom in oil
stocks is said to be a letter written ty
Chairman F. N. Hurley of the United
Statcs Shipping Board, in which he
estimated the enormous amount of oil
the new merchant marine, of all coun-
tries. might need. Mr. Hurley said
that if American shipping plans alone
are carried out, the United Stites
merchant marine would need one-third
of the present annual production of
the oil supply of the world, and If the
world's program is attained, there will
not be half enough oil at present
rates of production to meet the de-
mand. This without considering other
uses for the product. To be sure, the
shipping of the United States and of
the world is far from being on an oil
basis. Mr. Hurley was caieful to point
this out. His figures, however, give a
perspective on the subject.
inuiviauais are noi me onij m'fuvis
after oil atlons are going into the
business. Great Britain is searching
every part 0f her dominions for oil.
eyen tne r)ritj?h Isles, where petro-
leura never has becn found, are be-
i .....iu j.t v... ,.n -jii
Jng wiiq caueu u) Ami-miiuunmiu-
prs rtrmanv-, nian nf ronnuest had
a large eye on the oll flclds of Russia
and Rumaniat and France is eagerly
lt .uu Minnr rhina.
i i -1 j
-wen great nations go seeking oil. in-
. , . . n.
dividual Investors are sure to follow.
Nations Golm?
Into Oil Kusine.
It is said that there is plenty of oil
in the world for years to come, but
the nroduction of 1919 is not up to
. ,,. ti,n rrrtf
consumption, even though the great
Northeast Texas fields have been add-
ed to the output. Production always
ran some 50.000.000 to 60,000,000 bar
rels ahead of consumption until 191 C.
when they ran 15.000.000 short. They
ran 53.000.000 barrels short in 1917,
and 26.000,000 barrels short in 191S.
Now, in spite of the incoming of the
Texas fields and imports from Mexico
of around 45.000.000 barrels a year, the
United States is barely keeping up
with consumption. It was expected
That that demand would relax with the
end of the war. but not so. Europtn
countries were so far behind in petro-
leum that they have kept up tne ae
mand to war-time figures
At the pres-
ent. daily production is running very
slightly ahead of daily demand,
The tremendous work done by petro-
leum products during the war in rur-
nlshing power to motor cars, trucks.
airplanes, etc., wa3 luridly press
agented during the war.
People got a
good idea of the Importance of petro-
leum products in war and in peace,
Then for four years, investment and
speculation had been held up by the
war. The people had money, the spec-
ulative Instinct was strong in the ven-
turously incline-d, and the investing in-
rtinct strong in the conservative. The
end of the war saw the petroleum in-
dustry in a most favorable position for
resumption. It was not In need of any
period of rest, reconstruction, o
dation. The business was
f liqui-
staple,
in Oil Three
Possibilities.
Prices had never gone very high in the
industry. The people got a good idea
from "gasless" Sundays of the inesti-
mable value of the product. Stocks
were low. The automobilo industry
was millions of ears behind. Every-
thing was set for a b'o.. "
came,
Public Hefldy
to Take Chance.
T. . ,
xne events. iow'v. .
wanted rather to tak
with
a small sum than to huv stock
in the old and substantial oil com
panies. The investors seem to want
to buy into new companies that were
trying to produce rather than to refine.
to transport and to sell oil. This bont
was helped along by the discovery of
the great North Texas oil fi Id. one of
the greatest and mo.n sensational ever
brought in. This n-v district mad- it
easy for a lot of new companies to
organize for production. Some of the
new companies have valuable proper
ties, others hae nothing but good
chances. But the investors as well as
the gamblers ser m to ft el that the new
oil company has more possibilities of
profit than the old one. The old-estab-
iisnea on company, witn producing
wells, refineries and a selling organi
zation, may pay from 12 to ZZ per cent
on the $I0'. invested, but the new field
.ay return $?',)')) to S.Vj.'.'jo on the
Jhj'j. Then, again, it may not make
any return at all. But the American
investor, or speculator, Se-m3 to be
willing to take a Jong chance with his
?K'0. The Wall strt people used to
hold off the old producing companies,
on the ground of risk. They preferred
the companies that produced, refined
and sold as the Standard did. More
chance of profit they taid in such com
panies. However, the new Investors
are a11 for lh IonS gamble on the pro
ducing companie-s. Profits from refin
ing and selling are close compared
with those from producing; that Is.
if you do produce.
Oil turns out. sells quicker than gold
or silver or lumber or copper or coal.
One good well may make a whole
county rich, Wealth comes so audden-
ly that all sense of proportion is lost.
There is no doubt about it, many men
have made immense and rapid for-
tunes in the oil fields. "No-account"
whites and half-breed Indians, tramps,
"cracker" farm r3, have been mad
rich by oil found on their iands. One
company which Lad been miring coal
in the Burkburnett region struck oii
Its stock went up from ?1"5 to 5-
f0
a share. The town bum ln Rani,,
came a many-Lime.s inilü' Uuiro.