It was the greatest petroleum exploration and production since the birth of the U.S. oil industry in 1859. Hundreds of new companies formed in the wake of the spectacular 1901 “Lucas Gusher” at Spindletop Hill near Beaumont, Texas. See Spindletop creates Modern Petroleum Industry.
It was a highly competitive and risky business. Among those ready to make fortunes for investors were two new “Gladys Oil” companies. One was from Beaumont, the other from Galveston.
Contemporary maps show the Gladys Oil Company of Beaumont to have drilled a successful well very close to the famous January 10, 1901, “Lucas Gusher” well on Spindletop Hill.
That same year, after 29 days of drilling in block 37, the company reported production from “Gusher No. 67” at a depth of 1,025 feet. Locating the “black gold” did not necessarily promise success.
By 1903 the Texas Secretary of State reported that Gladys Oil Company of Beaumont had “forfeited its right to do business in the state of Texas” due to a failure to pay franchise taxes.In a scenario that would repeat itself in other oilfields in coming decades, production from the giant field soon brought a collapse in oil prices. By January of 1902 stocks of both Gladys Oil companies were trading for less than 10 cents a share.
The company was sued, lost, and United States Investor magazine reported it to be worthless two years later.
Meanwhile, because some cash-strapped and desperate companies made questionable claims, newspapers began referring to Spindletop as “swindletop.”
In 1907, Success Magazine named the company in its “Fools and their Money” expose of fraudulent promotion schemes perpetrated by the New York, Chicago, and Beaumont Security Oil Trust.The Gladys Oil Company of Galveston lasted a little longer than its Beaumont twin, but not without controversy.
The trust had proclaimed, “it was impossible to lose” with an investment Gladys Oil Company of Galveston. In 1911 R. M. Smythe’s, Obsolete American Securities and Corporations, reported the stock to be worthless.
Read about Pattillo Higgins, the man behind the great Spindletop discovery, and his Gladys City Oil, Gas & Manufacturing Company. See Prophet of Spindletop.
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The stories of exploration and production companies joining petroleum booms (and avoiding busts) can be found updated in Is my Old Oil Stock worth Anything? The American Oil & Gas Historical Society preserves U.S. petroleum history. Please support this AOGHS.ORG energy education website. For membership information, contact bawells@aoghs.org. © 2018 Bruce A. Wells.
