Pine Bluff daily graphic. (Pine Bluff, Ark.) 1893-1942, 1919-08-03

overestimating to say that there is
more gambling at present by honest
but misguided persons through the
putting of money into companies of
which they cannot on the face Of it
know anything about than there is
on all the stock and grain exchanges
in the world.
Every Venture Has Some Risk.
Another illustration taken from
the oil industry of the difference be-
tween investment and speculation:
A large company, we'll financed, with
an established position in the indus
try, determines to develop it's lease
has been proven, but there are ele-
ments of risks that must be taken
into consideration. This company
lays it's plans, which call for the drill
ing over number Of months of one
hundred wells. Through the employ
ment of biologists, engineers, chem
lists and the most experienced men
in the industry the company has
minimized every risk to the lowest
possible degree. It may drill some
dry holes; that is to be expected, but
out Of the hundred holes drilled there
will be so many wells brought in that
the undertaking turns out exceeding
lily profitable. Now the stakeholder
of that company is usually, but not
always, an investor. He is an in
weston if he has some knowledge of
the industry and if he has made
study of the company before buying
the stock. If he has bought the stock
merely on the say-so of some friend,
or if he has bought it on margin, he
'is either Spectator or a gambler,
depending upon the amount he has
bought in comparison with his total
wealth and also upon the size of the
margin.
The small oil company has just as
much chance, other things being
equal, to bring in well as large
company. But the large company is
not hurt to any great extent by
bringing in dry hole, whereas a
small company would probably go
broke.
Four Branches of Industry.
The investor in oil securities should
have some knowledge of the industry
other than that large number Of
persons are being made millionaires
almost overnight. The industry is
divided into four branches: produc-
ing, transporting, refining and
marketing. To engage i'm it most
successfully and safely, it must be
carried on as whole and in large
way. The president of one of the
largest companies in the United
States recently issued warning to
a group of bankers on this phase of
the industry when he said:
Taken separately each branch of
the industry is extremely hazardous,
but taken as a whole the business is
safe provided the management has
experience and good Judgment and
the policy of the company is to have
"a long outlook ahead for reserve
, supply, markets and financial re-
quirements for the future.
The oil business Of today is no
business for a company of uncertain
financial strength. It has grown to
j be stable industry, and is CONDUCT
ed along modern, scientific lines Wy
the large companies. The investor in
securities of well established, prop
,erly managed, and well financed oil
corporations, which have not only
established oil production, but also
pipeline systems, refineries and dis
trlbuting stations for the sale of their
/ products, has an opportunity not
only for large income on the secu-
rites purchased, but also for good
profits in enhancement in market
prices of his securities. On the other
hand, the purchaser of stocks of
newly created companies of limited
capital, with improved leases, and
with no source of revenue beyond the
possible production Of oil from these
leases, has a limited chance only of
securing any return on his money, let
alone being able to obtain the return
OF his capital through the sale of his
stock.
/ This article is not intended to dis
courage the investor who is consider
ing the securities of legitimate and
reputable oil companies. But upon
investigation he will find that such
companies are organizations of men
of known experience, commercial
genius, and high standard of bust I,
ness ethics. Such men cannot afford
to lend their names to any concern
that has even the slightest indication
! OF taking. They are men to whom
geology is more than a myth to be |
used for stock-selling purposes.
They understand the value of geology
chemistry and engineering in the oil |
industry, and they have commercial |
and financial training that makes
them competent to handle the multi !
farious problems of business
Organization.
Can't Afford Anything Dishonest.
1t is only the companies organized !!
by such men that can continuously |
and successfully follow certain we'll |
defined lines and coordinate all their
resources toward the development of !
their business along such lines. In |
vestment in such companies is sound. |
The industry is in most fortunate !
condition in that the demand for Pc |
troleum products in this cohntry ex-
ceeds the production. Profits are
large and the risks are no greater to !