The height of this oil madness was marked by enormous speculations and the extensive organiza tion of so-called stock companies. In speculations on the oil exchange, many of the early operators who had "struck it rich" saw their fortunes vanish in a night before the sharply fluctuating market, and had to begin over again, perhaps as laborer or drillman. But in the stock companies people of all classes throughout the country were fleeced of their hard-earned hoards with no chance to begin again and quickly recoup their losses. Unscrupulous pro moters bought lands or secured leases which, re valued at a hundred or a thousand times their original cost, were used as the basis of a company. One Pennsylvania concern had a capital stock of $5,000,000 divided into a million shares, and sev eral different Boston and New York companies had capitals placed well up in the millions. It is esti mated that not less than a thousand of these com panies were launched in the middle sixties, with stocks nominally aggregating some $600,000,000, while the actual amount of money invested was not less than $100,000,000, or more than the entire capital of the present Standard Oil Company.
The best idea of these boom concerns, and the methods by which they played on the credulity of the masses may be gained from the many satirical accounts in the sober press of the times. One of the best samples is found in a pamphlet published in Pittsburg and represented to be the prospectus of "The Munchausen Philosophbr's Stone and Gull Creek Grand Consolidated Oil Company," with a capital stock of $4,000,000,000 ; a working capital of $37.50; paying guaranteed dividends semi-daily except Sundays. The Munchausen Company held four tracts, the one from which the concern was named having already a shaft some 16,000,000 feet deep and "yielding cooking butter, XXX ale, tur tle soup and bounty money" among other things too numerous to mention. The "Moonshine Tract" was heavily wooded ; the "Ananias and Sapphira tract" was small, embracing only 65,000,000 acres, while the "China and Hades tract" was known to be "especially rich in tea!" Far fetched as this satire appears to us now, it pictures most vividly the absurdity of some of the claims set forth in the pretentious circulars of speculative companies. In actual prospectuses which have been preserved as curiosities are found the elaborate descriptions of $1,000,000 concerns with a working capital of $20,000; shares selling at a tenth, or even a fiftieth, of their par value, "for the benefit of the public" ; and properties, not even known to be oil produc ing, guaranteed to pay at least five per cent, divi dends monthly.
This speculative craze reached its height in 1865, and then the bubble burst. A variety of causes aided in precipitating the crash. The yield of the great Pithole wells fell almost to nothing ; fires swept away whole blocks; the operators and the roving multitudes moved on, and in a few years Pithole City, the magnificent, was merely a mem ory. Its once crowded streets are now flourishing grain fields, and where the famous wells stood is no sign of oil. The great floods and fires in the spring of 1865 destroyed large amounts of oil prop erty throughout the region. The reaction follow ing the close of the war brought reduced returns from the foreign shipments. Many of the fraudu lent oil companies were exposed, causing suspicion to be cast even upon the most legitimate operations. A war tax of $1 per barrel for national revenue still further added to the depression. Many own ers of oil property, discouraged by the outlook, were so anxious to realize on their holdings that a rapid reduction of values began.
In the face of these adverse conditions stock company after stock company failed to meet the expectations of the stockholders and lost their sup port. The fraudulent concerns were already rap idly going to the wall, and in the fall and winter of 1867 to 1868 the companies toppled over right and left, one after another, like a row of bricks, carrying down to ruin thousands of people whose entire capital had been invested in them. The de pression in the oil regions was universal. Thou sands of acres of oil lands held by the bankrupt companies, their engines, tools and machinery had to be sold by the sheriff to pay their debts. Equip ment which represented an investment of $2,000 or $3,000 sold at auction for less than a hundred. The collapse of the great oil bubble was complete and disaster reigned temporarily in the oil fields.
But the stagnation was short-lived. Increased consumption and better prices abroad ; improved means of transportation and storage at home ; the ridiculously low prices at which engines and drill ing machinery could be secured in forced sales, and the decreased production owing to a suspen sion of operations, all combined to make the out look brighter when the Tidioute pool in Bradford County was opened in 1868, and gave the necessary new impetus to the business. From that time the industry has increased with enormous strides, not entirely without temporary booms and reckless speculations, but never again in danger of toppling to ruin.
Such is the story of the rise and fall of the first great oil boom, and the greatest of all the oil bub bles which this country has ever seen. In a meas ure, however, history has repeated itself in every one of the fields discovered since Drake's first ven ture a half century ago. To all these places the oil derrick has come like a conquering army driving all before it. Farms, fields, orchards, gardens, dooryards, and even homesteads have been given over to the mad search for oil. In nearly all appear the same steps of progress ; a lucky strike, the rush for leases, sudden wealth to the fortunate ones, boom towns, stock companies, and sooner or later the inevitable decline.
Whole volumes might be written about the un paralleled ups and downs of fortune during the great boom of the sixties. But saddest of all was the fate of Drake, the pioneer. He not only failed to take advantage of the early boom, which he him self had started, but he also neglected to patent his process of drilling, which had been adopted by everybody and would have paid him valuable roy alties. Early in the sixties he sold out all his in terests in the oil fields and removed to New York, where he speedily lost all his property in specu lating on the petroleum exchange. For a time he and his family were reduced to actual want, but, much to the credit of his former associates, as soon as his pitiful condition became known, a purse of several thousand dollars was collected for him. Subsequently the State of Pennsylvania granted him a pension of $1,500 a year as a mark of grati tude for the service he had rendered the country. Great indeed was the part which Drake had played in blazing the way for the modern petroleum in dustry. But just as a chance fate brought him, a poor conductor from a New England railroad, to be the prophet of a new era, so the same wheels of chance denied him the full fruit of his service. Nothing could be more truly typical of the oil boom.