The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1875-03-20
Another Big Bonanza.

The English journals have brought us the re-
port of an extraordinary case which has just
been decided in the London courts, Lord Chief
Justice Cockburn on the bench. The story is
that in 1871 a person named Longbottom
arrived in London from Canada, claiming to
possess certain oil wells in a place called
Petrolia, in the province Of Ontario. He had
documents, supported by the seal of the
British Consul at Buffalo, averring that these
wells yielded five hundred barrels Of oil day.
and that the profit upon them was equal to
about five hundred thousand dollars year. He
offered this property to various city bankers,
but they declined it. He called on Mr.. Albert
Grant, to whose genius we owe much of the
success of the Emma Mine; but that gentle
man, although not having the best reputation
for financial impartiality, also refused to accept
it. He then induced a Mr.. Mowatt, chair.
man OF financial company, to purchase his
property for about one hundred and twenty
FIVE thousand dollars cash and three hundred
and seventy-fve thousand dollars Gin bills"
This property was then formed into COM
pany, called the Canada Oil Works Corpora
ton, and the capital stock was two million
two hundred thousand dollars, being, at a
very moderate estimate, at least thirty times
the highest value OF the property, and GER
tainly about five times the amount for which
board of directors was formed, and five gen.
rlemen-among them Sir John Hay, Sir Sey-
mour Blame and Mr.. Mccullough Torrens-
were placed upon the direction. An agent
was sent out to look at the wells. He was
shown several tanks full of oil, and, being of
a credulous turn of mind, and believing that
because he saw oil was in the tanks it must
certainly be in the earth telegraphed back
that he was thoroughly satisfied So the
company was formed, the shares were
sold, Longbottom and his colleagues disap-
peared with the money, and it was soon found
that the whole thing was bubble. One of
the shareholders brought suit against the
directors, claiming that fraud had been shown
in the issue of shares. The Lord Chief JUS
tice ruled that unless direct bad faith could be
shown on the part Of the directors it was i'm
possible, under the English law, to convict
them of fraud. Notwithstanding this ruling
the jury disagreed, and the practical effect of
this disagreement is that the directors, not
outstanding their rank and social position,
who gave their names to q swindling corpora
ton without due scrutiny, are marked men in
England.
The facility with which the English public
were induced to buy these shares, without
taking the most ordinary steps to inquire into
their value, shows that financial people gen.
orally are a good deal like the buffalo. They
herd together and skim over the plains and
follow their leader, even if he takes them to
precipice. 1t is only a repetition of the Big
Bonanza speculation in Nevada, which cul-
minated the other day in enriching the few
and impoverishing the many. 1t only illus
trates the character of many Of the shares in
Wall street. If we look down the history of
the stocks which are favorites to-day
and of the others which have been
favorites in times past, we find that
thousands of shares Of rotten steamship
company, or O robbed railroad company, or n
company mortgaged four or FIVE times beyond
its value, could be sold to greedy operators.
while honest wholesome investments would
be overlooked. The Big Bonanza fever, we
fear, is as much an endemic in our financial
circles as the ague is in the outlying marsby
districts. But the prudent plan is for oil
prudent business men to avoid alluring stocks