by Bruce Wells | Apr 14, 2016 | Petroleum Companies
Union Oil Company (Unocal, 1890-2005) drilled the “Chapman Gusher” in March of 1919 near Placentia, California. When completed, the well produced 8,000 barrels of oil a day, prompting a landslide of investors and speculators. The well was southeast of Los Angeles oilfields discovered in 1892.
Los Angeles businessmen organized the Richfield-Union Petroleum Company in October 1919 to join the fray. Extensively reported in the Los Angeles Herald, the Chapman Gusher opened the prolific Richfield-Placentia oilfield. The discovery well would continue producing for 70 years, but not all oil companies were so fortunate.
The July 1919 Mining and Oil Bulletin noted the “tremendous rush for oil lands, the paying of unheard of bonuses and royalties, and the tieing-up of all property for miles around.” Richfield-Union Petroleum managed to secure a 40-acre lease south of Placentia (Section 31, Township 3 South; Range 9 West) and began aggressive promoting stock sales to fund drilling.
The company offered an initial block of 50,000 shares of its stock for 50 cents per share in November 1919. Richfield-Union Petroleum was capitalized at $850,000 and raised the derrick for its first well within six months. It inticed investors with free sight-seeing trips and proclaimed, “You Should Buy Richfield-Union for its great speculative chances.”
However, relying on investor capital to sustain drilling operations made slow progress. New advertising offered company stock for $1 per share (or $1.03 “on time payments”) through the Los Angeles Stock Exchange. “Take our advice while you can – Get down on Richfield-Union’s Dollar Stock.”
By December 1920, the company’s first exploratory well was down to 2,150 feet, but “held up by a fishing job, the drill pipe having twisted off at 1,700 feet.” With dwindling finances, it took six more months to drill another 650 feet and still there was no oil.
The Los Angeles Herald of July 20, 1921, reported Richfield-Union’s properties were being taken over by the Comanche Oil & Refining Company, another Los Angeles venture. Comanche Oil & Refining subsequently reorganized as Comanche Oil Company with plans to drill more wells in the Richfield-Placentia field, but the California Department of Oil, Gas, and Geothermal Resources has no record of this.
Today, Richfield-Union Petroleum Company stock certificates survive as collectible reminders of an oil venture that failed. The first California oil well that launched the state’s petroleum industry was an 1876 gusher north of Los Angeles.
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The stories of exploration and production companies trying to join petroleum booms (and avoid 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.
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by Bruce Wells | Sep 25, 2015 | Petroleum Companies
Fraudulent promotion of Alaska Dakota Development served an important purpose regarding the state’s oil industry
The 1957 discovery of the giant Swanson River oilfield on Alaska’s Kenai Peninsula excited interest from potential investors. As petroleum companies rushed to the new field, some shady promoters saw an opportunity.
By the end of the decade, New York Attorney General Carl Madonick noted that with securities fraud, the first big step was creation of a national market price via fictitious quotations and phony transactions.
Investors should be wary of shady promoters seeking to take advantage of the lure of “black gold.” Photo courtesy FBI.
Madonisk expained that such fictions helped to convince potential investors of a company’s legitimacy. He cited Alaska Dakota Development to illustrate such fraudulent schemes. (more…)
by Bruce Wells | Sep 24, 2015 | Petroleum Companies
A typical South Dakota drilling site in Custer County in 1929 – decades before the state’s first commercial oil production. Photo courtesy South Dakota Department of Environment and Natural Resources.
The first true oil production in South Dakota came in 1954 in northwestern corner of the state. Harding County wells produced oil from the massive Williston Basin.
A year later, discoveries came from other formations to the south in Custer County. The Black Hills of the Powder River Basin brought new waves of exploration companies. (more…)
by Bruce Wells | Mar 11, 2014 | Petroleum Companies
Exploring the companies and Ponzi schemes of a 1920s fake oilman.
Wherever men meet “to tell stories of great achievements of the gigantic industry, someone will always tell, amid a breathless silence, the amazing story of Hog Creek Carruth.”
He called himself J.W. “Hog Creek” Carruth. The investors he betrayed do doubt called him much worse. His “amazing story” began in a Texas boom town.
Hog Creek Carruth Oil Company was one of several Texas exploration companies created by Carruth, who gained his nickname after falsely claiming to have discovered the giant Desdemona oilfield at Hogg Creek.
The Hog Creek Carruth Company was among several 1920s companies formed to take advantage of unwary investors seek petroleum wealth in Eastland County, Texas.
In fact, it was Tom Dees and the Hog Creek Oil Company that brought in Desdemona’s discovery well on September 2, 1918. The historic well blew in at 2,000 barrels of oil a day, delighting company investors, who reportedly profited more than $100 for every dollar they had invested. Carruth was among them.
“Hog Creek” Carruth, Stock Promoter
Located along Hog Creek and once called Hogtown, abundant oil production caused Desdemona to boom — and speculators to swarm. As it revelled in its newfound wealth, the town earned a nasty reputation. Texas Rangers had to intervene to keep order. Carruth’s relentless self-promotion and exuberant claims about the discovery soon earned him the “Hog Creek” Carruth moniker.
“The tiny peanut-farming hamlet of Desdemona in Eastland County was transformed when oil was struck in 1918,” notes the Texas State Library and Archives Commission. “Tents and shacks sprang up all around the town to house speculators and workers who flocked to the area, and the population grew from 340 to 16,000 almost overnight.”
Awash with prosperity, people and mud, by April 1920 the Texas Rangers had to be sent into Desdemona to keep order in the oil boomtown.
A contemporary account of the boom reported, “tales of Hogtown during the wicked oil days are too lurid for these pages, but we can say that its debauchery might be so well remembered because so much of it supposedly took place in broad daylight and sometimes not in private.”
Similar Texas drilling booms were taking place in Burkburnett along the Red River and in nearby Ranger, where the “Roaring Ranger” of October 1917 was Eastland County’s first gusher. Read more in Pump Jack Capital of Texas.
With speculators eager to profit from Desdemona, Carruth formed the J. W. Carruth Oil Company in 1919. Despite drilling several dry holes, he profited from selling his exuberantly advertised company stock.
However, just one year after its discovery, the Desdemona oilfield’s production would reach its peak of 7,375,825 barrels and then drop sharply, chiefly because of over drilling, according to the Texas State Historical Association.
Profiting from “Sucker Lists”
J.W. Carruth and his oil company prospered in 1919 by becoming a Ponzi scheme in which Carruth used naïve investors’ purchase money to pay dividends, thereby luring more buyers in a spiral which lined his pockets while emptying theirs. He personally profited by selling his buyers’ personal information.
“Sucker lists” with names, addresses and investment history of people who might buy oil shares had great value. The lists expanded during the multiple oil booms in Eastland County – and similar discoveries in Oklahoma, Kansas and California.
“Depending on the extent and quality of a list, its price ran from several hundred dollars to several thousand,” notes Roger Olien in his 1990 book, Easy Money: Oil Promoters And Investors In The Jazz Age. Predictably for Carruth Oil Company, litigation dogged “Hog Creek” Carruth.
Disputes over leasing and mineral rights continued for several years. He nonetheless sold about $600,000 worth of stock. After more dry holes and more stock sales, in January of 1922, Carruth even announced a new venture.
“I have called this company the Hog Creek Carruth Company, since it resembled so closely the famous Hog Creek Oil Company which I organized in 1917 and which in 1918 paid $10,135 cash dividends for every $100 that had been invested in it,” Carruth proclaimed.
Producing a blizzard of full-page promotions in newspapers from Ft. Worth to San Antonio and Port Arthur, the oil stock salesman finally ran afoul of “blue sky” laws, which sought to restrain such scams.
“The advertising of still another promoter, ‘Hog Creek’ Carruth of Fort Worth, Texas, caps the climax,” reported the Providence News on January 3, 1923.
“Modestly he admits that wherever men meet to ‘tell stories of great achievements of the gigantic industry, someone will always tell, amid a breathless silence, the amazing story of Hog Creek Carruth.’”
Indicted in 1923 along with 25 other Texas promoters for “fraudulent use of U.S. mails,” Carruth joined some nationally recognized swindlers.
Among those indicted were some of the most infamous stock promoters of the day: Dr. Frederick Cook, who had falsely claimed to have discovered the North Pole before Robert Perry, and the “genius of bunkum,” Seymour E. J. “Alphabet” Cox, the author of such enticements as, “Oil! Guaranteed Gushers! Five hundred percent, dividends. Pots of gold!”
After testimony from almost 300 witnesses and a lengthy trial, Carruth, Cook, Cox and others were convicted of “dispersing stock-sales revenues as dividends, claiming income from non-producing wells, and otherwise misrepresenting the company’s position.”
“Hog Creek” Carruth was sent to the Federal Penitentiary in Leavenworth, Kansas for a year. He died in obscurity in 1932.
In 1934 the Securities and Exchange Commission was established to regulate the issue and sale of securities to protect the public from deceptive stock promotions. Also see the Spear Oil Company and Arctic Explorer turns Oil Promoter.
J.W. “Hog Creek” Carruth’s fraudulent oil ventures (also see Pilgrim Oil Company) have left behind stock certificates as family heirlooms that might some value for some financial certificate collectors. The history of more legitimate exploration companies trying to join petroleum booms (and avoid busts) can be found in Is my Old Oil Stock worth Anything?
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The American Oil & Gas Historical Society preserves U.S. petroleum history. Join today as an annual AOGHS annual supporting member. Help maintain this energy education website and expand historical research. For more information, contact bawells@aoghs.org. Copyright © 2021 Bruce A. Wells. All rights reserved.
Citation Information – Article Title: “Hog Creek Carruth Oil Company.” Authors: B.A. Wells and K.L. Wells. Website Name: American Oil & Gas Historical Society. URL: https://aoghs.org/oil-almanac/oil-riches-of-merriman-baptist-church. Last Updated: September 9, 2021. Original Published Date: March 11, 2018.
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by Bruce Wells | Oct 26, 2013 | Petroleum Companies
Mrs. H. H. Honore Jr. of Chicago in 1915 was named president of a new petroleum exploration company led exclusively by women.
Although later derided for having “petticoat management,” a 1915 oil company run by women was part America’s growing suffrage movement. The Woman’s Federal Oil Company of America was a gender pioneer.
At the time, with nine out of 10 wells resulting in “dusters,” far more exploration companies failed than succeeded. Competition was fierce in the technical, speculative and very expensive search for new oilfields.
Most newly formed enterprises were run by men whose ambitions often exceeded their drilling experience and investment capital.
One gender exception was Mrs. H. H. Honore Jr. of Chicago. In 1915 she was named president of a new oil company led exclusively by women – five years before they were granted the right to vote for a U.S. president.
The Woman’s Federal Oil Company of America incorporated on November 22, 1915, in the District of Columbia with $750,000 capitalization. “Mrs. Honore was head of the company, which kept mere males out of the organization,” noted one reporter.
“The history of this woman’s oil corporation forms an intensely interesting story of the rare accomplishment of women, absolutely unaided by man,” gushed the reporter about the widow of prominent real estate businessman Harry H. Honore Jr.
“The reason men were kept out,” the reporter added, “is because ‘women are destined for equal leadership with men in the world of finance and promotion.'”
The company’s officers included, “some fifteen other equally well-known women, as executives and directors, (who) began the tremendous task of establishing a dividend-paying oil industry.”
More than 2,100 women bought shares in Woman’s Federal Oil and by 1917 it had acquired a charter to do business in Kansas.
Although the company acquired leases for 350,000 acres in Kansas, Oklahoma, Texas and Louisiana, Woman’s Federal Oil’s first two success wells came in Illinois.
In April and June of 1918, the company drilled near the town of East Oakland, Illinois. Both wells produced commercial amounts of natural gas. The company paid first dividends to stockholders the same year.
“It is no wonder that the entire financial world is doffing its hat to the Woman’s Federal Oil Company of America, and to the able women who manage it,” reported one industry trade journal. “This woman’s enterprise has made good.”
However, the next three exploratory wells drilled by Woman’s Federal Oil were expensive dry holes. Debts soon mounted and investors became wary. An article in a popular investment magazine did not help the company.
“Woman’s Federal Oil Company of America is purely a speculation and in our opinion, you would be better off to leave the stock alone,” declared editors of United States Investor magazine in January 1919.
The magazine frequently issued far harsher criticisms. In May 1919 it exposed the Prudential Oil and Refining Company as a stock scam run by notorious ad-man Seymour E. J. “Alphabet” Cox.
Petticoat Management
Meanwhile, Woman’s Federal Oil’s former company attorney, George Holmes, led a move against the board of directors to oust Mrs. Honore and her fellow female executives, whom he described as “petticoat management.”
“These women have no idea of the relation between income and disbursements,” proclaimed Holmes at a contentious meeting that included both sexes.
“Jeers, taunts, wild shouts prevailed through every minute of the session,” and the New York’s Syracuse Journal reported this exchange at the meeting:
The victory was short lived, although the company failed soon after men joined the board in 1920.
“I don’t think you’re much of an oil man, Mr. Ellis” interrupted Mrs. Honore. “And your statements are not true.”
“I don’t think you’re much of an oil woman, Mrs. Honore,” replied Ellis.
Mrs. Honore shattered her gavel.
“I am merely trying to get efficient management,” Holmes maintained. “I am prepared to go the limit, in court or out, to get this management, which the stockholders are entitled to,” Holmes said.
In the end, the attorney’s move to change board leadership failed.
“Women Triumph Over Men Foes In Oil Company,” exclaimed the Syracuse Journal headline when a final board vote retained Mrs. H. H. Honore Jr., as president. But the victory lasted only a year.
Despite some reported successful wells in Kansas oilfields, Woman’s Federal Oil’s fortunes continued to diminish. A January 12, 1920, meeting of stockholders in Chicago reviewed the company’s financial position. “The value of the 75,000 shares of stock, held mostly by women, deteriorated from $1,087,500 to $75,000,” noted one reporter.
“Amid heated argument five directors were elected. All were men. Mrs. H. H. Honore Jr….made no effort to retain her place on the board,” added a brief article headlined, “Woman’s Federal Oil Co. Has Merry Meeting.”
Mrs. Honore, who had resigned on December 31, 1919, was unavailable when creditors, including a bank in Independence, Kansas, announced the firm should be thrown into bankruptcy.
A newly formed H & H Oil Company of Kansas City prepared a stock exchange agreement to avert bankruptcy – but the best stockholders could hope for was receiving a fraction of their investment.
“Oil company which tabooed mere man, to pay 20-cents on dollar,” concluded a June 1920 newspaper. Although neither company survived, Woman’s Federal Oil stock certificates are valued by collectors.
The 19th Amendment to the Constitution, granting women the right to vote, was ratified on August 18, 1920. Mrs. Harriet Denham Honore, widow of Harry H. Honore Jr., died in New York City at 75 on July 18, 1938. “Although her marriage had united her to one of Chicago’s wealthy families, she had been reduced to the gifts of friends and a $20 a month old-age pension,” reported the New York Times.
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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.
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