Los Angeles herald., 1910-02-17
AUBREY ATTACKS
WILDCAT SCHEME
MINERAL0GlST FIGHTS BAD
OIL COMPANIES
THREATENS TO SEND FAKERs TO
PRISON
State official Declares Many Stock
Promoters Incorporate Mostly
on Wind and with High
capitalization

Having noticed an article in the
Chronicle of February IA. under the
heading Threatens Mushrooms, I
wish to state that wrong impression
may have been conveyed by certain
newspaper articles regarding the ac-
tivity of the state mining bureau In
suppressing wildcat oil companies"
writes Lewis e. Aubrey. state min
eralogist, in a personal letter to The
Herald.
"There are two different kinds of
'oil Wildcats and while 1T may seem
paradoxical--one can be considered a
legitimate corporation. the other can
not. Any company with honest inten-
tions, prospecting outside Of a proven
field. and who is expending the
stockholders money legitimately in an
attempt to develop new territory, can
not be subject to criticism, but the
class of wildcat we are cunning Tor
are of an entirely different character
and it is proposed to rub their fur the
wrong way. The latter class are a
menace to the legitimate operators
and California suffered to very large
extent from these cormorants ourlng
our first oil boom.
Companies are Incorporated among
this class mostly on wind, and with a
high capitalization. A frequent prac-
tice is to locate a mineral claim or
twenty acres (costing the locator about
$20), anywhere within an oil producing
county-maybe miles away from a.
known oil belt.
Leases Are Popular
"Where locations cannot be resorted
to they sometimes find 1t necessary TO
lease a tract--anything to give sem
blance to title. Then the glittering
prospectus Is published, showing the
location of some well known produc-
ing property, and of course placing
their holdings In direct line and on
the same belt. Attention is called to
the millions made by Rockefeller and
a few other notables, and the pros
pective investor is made to bel1eve
that unless he gets in on the ground
floor he will be missing oil KINDS OF
golden opportunities.
"Freouently the takers go so far as
to erect the derrick and put In rig
and even sink a few hundred rect. rms
bluff is a good one, and often lands
the sucker Later, If the operations
of the faker cause too much comment
among the stockholders and dissatis-
faction is manifested, the air becom-
ing tropical may cause the faker to
swan the stock into q new company
and prevent legal action being taken
against the company.
'nThis class of takers appear to have
no difficulty in selling all the stock
they can print. They intend 70 SWIM
die before they begin. On the other
hand. the legitimate operator. In nine
cases out of ten. cannot dispose OF his
stock because his representations are
not so roseate.
Should Employ an Expert
vroo many investors, not only In oil
companies. but In other branches OF
mining, are prone to invest on the
strength of the talk made by some
glib-tongued individual, instead OF
making a personal investigation of the
officers of the company and their re-
ported holdings, or If they are not
competent to judge as to the value OF
the latter they should secure the opln-
ion of an expert who can assure them
beyond all doubt.
"In my opinion there is more ne
cessity nowadays for an investor to In
yestigate the personnel of compan ny
than 1t Is to investigate their mold
ings. There are certain operators In
San Francisco who have made II a
business for years to incorporate rake
companies and sell stock on worthless
properties. Some Of them have be-
come wealthy and have associated
themselves with disreputable tcrnevs,
who manage to keep them out of jail
''This class are on my list, and sooner
or later they will fall into the net.
at is a hard proposition to protect
the fool and his money and it has
often been said that it cannot be
done, but the bureau intends to put
forth its best efforts to suppress the
fake operators, and If sufficient evil
dence can be obtained they will go
to iail."