The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1884-11-26
INSIDE THE OIL RING.
A Retired Broker Tells How Prices Are Made
and Lambs" Shorn.


and Lambs" Shorn.
New York Herald.
In a conversation with Herald reporter yes
terday gentleman formerly well known as a
petroleum broker in this city made statement
purporting to be an expose of the inner workings
of the socalled Petroleum Ring
If you need the commodity for refining or ac-
tual consumption" said this gentleman, "buy
the oil-the actual stuff-and take it in your
possession as you would barrel of flour; but
don't buy United Pipe Line certificates either
on margin or by paying for them in full, as you
put yourself in dangerous position and your
hand in the lions jaws the moment you do it.
There are many reasons. First, these certifi-
Gates are not registered, and there is nothing to
prevent an overissue by skilful and manipulate
ing monopoies. In the second place, the United
Pipe Line Company is virtually the Standard
Oil Company, a complete mononly in every
branch of the petroleum trade Third, the stor-
age and interest, or carrying charges will cost
You per day from fifty cents TO So on each and
every thousand barrels you hold. Fourth if
any oil should be destroyed in any way by fire you
would be assessed according to the amount of oil
you were holding at the time of the fire.
Fifth and finally the Standard Oil Company
sells the oil to the public, and if the public sue
ceeds In getting the price up few points the
Standard may issue thousands of certificates and
throw them on the market, thereby breaking the
price down. so they can buy in their certificates
anG retire them. On the other hand, if they
want to put up the price, they can call in the
certificates, make them scarce and loan at a
premium, and up goes the price, and the public
gets whipsawed again. Then, too, if you are
speculator your broker nine times out of ten
will bucket your deal, charge you heavy carry
ing rates and very perceptibly reduce your
margin in that way. Again, if the price is
higher in Oil City than New York, the price is
often held back in Oil City until the members of
the New York ring buy all they wish. Then
the Oil City prices are telegraphed and up goes
the price and vice versa. This may be done by
bribing an operator at either end or getting
some one to disconnect or cut the wires.
The operators often say that the wires work
badly, and from fifteen to thirty minutes will
elapse before you can get prices from Oil City
During all this time, however the ring sharps
are at work buying or selling as the case may
be, as they know that Oil City makes the price
of oil at all times Then, too, the rings work the
market for all it is worth in another way
through the producers of oil, the latter getting
their share of the pie rs we'll"
"How is that Accomplishment asked the re-
porter.
"Well, for instance, well comes in--per-
haps gusher, flowing hundred barrels an
hour Down goes the price ten cents or more,
and everybody gets short, say at fifty At night
the we'll is plugged, and it ceases to flow the
next morning; in other words, it is given out
that the we'll Is good for nothing. Then up
jumps the price to sixty or seventy, the shorts
all trying to cover their oil at top prices Then.
after they have covered and got long the plug
flows better than ever-perhaps five hundred
barrels per hour Then as matter of course
down goes the price say to forty this time; the
public sells out again at the bottom, and this
time get heavily short and feel sure of their
position. But unfortunately the producers get
together at night and agree not to produce any
more oil for one year and then up goes the price
again to seventy, at which price the shorts all
cover again and go long. Unfortunately the
producers com bination breaks, and down goes
the price again to fifty, then Europe comes in as
heavy buyer, and up it goes to sixty. Next a
cablegram comes from Russia at night that
large oil fields have been discovered and Europe
will want no more of the American product;
then down it goes to fifty, and SO on. The pub
lie, under various pretexts, is continually whip
sawed"
"Of course the Standard company is the largs
est holderl'
'At present the Standard Oil Company has
probably seven-eights of all the crude petroleum
in America and predict that even this great
monopoly will come to grief ere long if its pro
motors continue to take the big petroleum snow
ball which is being rolled up for them by all thu
producers in the land Besides, there is no use
to deny the fact that Russia has immense oil
fields, the quality of which is far superior to
that which was discovered year ago. Hence
the great desire of the Standard to relieve itself
of the great burden it is carrying In my
opinion oil to-day is dear at fifty cents per bar
rel, and predict ere long forty cents for the
stuff Tobin, Drew, Willard and Gould have
had their day, and the Standard oil monopolists
are fast having theirs"