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
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
"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
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
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
"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
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
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.