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"Deep Speculation"
The Oil-Speculator's Dream
In 1865, as the Civil War neared its conclusion, Harper's Weekly began
chronicling the rise of the petroleum industry in news stories, editorials,
advertisements, illustrations, and cartoons, including this one by an unknown
artist.
In the early 1850s, the groundwork was laid for an oil boom later in the
decade. In England in 1850, James Young patented the first process for
refining crude oil. In 1853 in Titusville, Pennsylvania (in the northwest
corner of the state), Joel Angier negotiated the first lease of a petroleum site
in the United States. Although he soon gave up the venture after
collecting an insufficient amount of oil, it attracted attention and stimulated
scientific experimentation for improved methods of extraction. In 1855,
chemist Benjamin Silliman Jr. of Yale reported the findings of his experiments
on the beneficial properties and uses of petroleum, especially as a
illuminant. This document was distributed widely to promote the infant oil
industry. In the late 1850s, Edwin L. Drake's invention of a cast-iron
drive pipe allowed a safer and more efficient means of extracting the
oil.
At Titusville in 1859, Drake's successful drilling of an oil well at what
became known as Oil Creek (in the cartoon, it flows down the dreaming man's
back) started the American oil boom, with an excitement rivaling the Gold Rush
of 1849. Boomtowns sprang up as numerous men moved to northwestern
Pennsylvania or started oil-drilling enterprises in other eastern states.
Others sought easy wealth indirectly by investing in oil company stock.
The greatest demand in the early years was for using petroleum oil in
lighting, but as other uses developed, the demand continued to grow.
The first petroleum company in the United States was the Pennsylvania Rock
Oil Company of New York (later, the Seneca Oil Company). In December 1864,
the first advertisement for a petroleum company appeared in Harper's Weekly:
the
New York and Liverpool Company selling stock at five dollars a share. The
journal agreed that investment in the firm, headed by New York businessman and
politician Daniel Dickinson, seemed advantageous. By 1865, the annual
production of crude oil in Pennsylvania, by far the largest state producer, was
3,500,000 barrels worth $24,000,000.
Besides covering the burgeoning oil industry, the newspaper also reported stock scams perpetrated by the Napoleon Oil Company and other fly-by-night
ventures, some of which were being prosecuted in the courts. Stock
speculation was also a risky venture because of its volatile value. Stock
for the United States Petroleum Company of New York, for example, began at $5 a
share, increased to $36, fell to $12, then revived to $30. There were 500
petroleum companies in 1865, but the vast majority were not able to make a
profit, and only a few would prove to be worthy investments. This cartoon
warns that the dream of quick wealth from oil speculation could turn into a
nightmare. Businessmen like John D. Rockefeller, however, would make vast
riches in the oil industry.
Robert C. Kennedy
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