Barton County democrat. [volume] (Great Bend, Kan.) 1885-1915, 1913-05-09
THE CALIFORNIA PETROLEUM
COMPANY.

II
The methods used to separate the
unsuspecting investor from his hard
earned cash are well Illustrated in
the promotion of the California Pc
troleum Company, investigated by our
committee.
We found that this company was
organized in May, 1912. That it is
purely a holding, and not an opera
ting company, having been organized
to hold the stocks of the American
Petroleum Company and the Ameri-
can Oil Fields Company, both of
which are California corporations and
limit their activities entirely to that
state.
Neither the California Petroleum
Company, nor either of its subsidiary
concerns own or control any pipe lines
or refineries, or sell any refined oil,
due notice and that such action
ture presented to our committee. to-
gether with the evidence of the pro-
motors, clearly indicated that the
assets of the subsidiary concerns
consisted principally of wild Cat"
and other undeveloped prospects, and
that its promotion was speculative
venture, pure and simple.
The Petroleum Company has an
authorized capital stock of sS5 .OOO,-
600, of which s17,5OO 900 is preferred
stock and s175OO,OOO common stock.
Of this amount $12,5OO, 900 of the pre-
terred stock, and $15,OOO,OOO of the
common stock was Immediately is.
sued and plan of campaign outlined
to get it onto the market and into
tne hands OF the investors.
On the 21st of September, 1912, a
promoting syndicate was formed COM
posed of Lewiston Brothers, Will
liam Solomon & Company and Hall.
garten & Company, all of New York
City, for the purpose of unloading as
much of this stock as could possibly
De unloaded on the New York stock
exchange, the balance to be disposed
OF in London and Paris. This syndi.
cate acquired 100000 of preferred
stock and $2,5OO,OOO of common stock
Tor the purpose OF trying it out in
New York, and succeeded so we'll in
their first venture that they acquir-
ed S5,OOO,0OO more of the preferred
stock and $4,000 900 more of the com.
mon stock, making total of ST..
100000 of stock disposed of there.
The stock Of the new concern was
listed on the New York exchange on
the Ord of October, 1912, and being
an unknown Oil proposition was of
practically no value whatever when
the syndicate began is operations
to create a market. 1t was under
stood among the members of the syn
dlcate that all persons interested
should remain undisclosed, except
Lewisohn Brothers, who had control
of the campaign on the stock ex-
change. The Lewisohns Immediately
secured the services of a number of
stock brokers for the purpose of
either buying or selling this stock un
der their instructions, in order to ere
ate an appearance of genuine activi.
ty and attract the attention of pur-
chasers, they having at one time
nineteen different brokerage firms en-
gagged in making these bogus sales
back and forth to each other.
At the time these operations began
there was listed on the stock ex.
change 1O5,779 shares of California
Petroleum Company stock, and SO
active did this syndicate become, thai
when their campaign was finally
closed on the 9th of October, 1912,
the records of the exchange showed
that 362,27O shares of this unknown
stock had been traded in during these
three weeks of manufactured activi
y, showing that the syndicate had
bought and sold the entire capital
stock of the concern nearly three ant
half times over, and escaped with
some seven or eight million dollars
of profits.
The New York exchange seems t.
have framed its rules with the OBJ
Ject in view of permitting its mem
oers to create these fictitious activ
tiles through wash sales. These
rules provide that each buyer anG
seller Of stock on the exchange shall
pay a brokers' commission of s12.5(
on each one hundred shares sold
without regard to the actual value Of
the stock or the price that it brings
This rule makes an exception, how
ever, to members Of the exchange
by permitting them to buy and sell