The Great Los Angeles Swindle: Oil, Stocks, and Scandal During the Roaring Twenties [First ed.] 9780195054897

Citation preview

In Los Angeles in the 1920s, C.C. Julian and

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the Julian P e troleum Corporation were household words, and the Julian Pete swindle ranked with Teapot Dome as one of the great scandals of the era. It symbolized not merely what FDR would call "a decade of debauch­ ery of group selfishness," but the failed hopes and dreams of the great boom of the 1920s. Indeed, no single story captures the essence of that decade in America-its boos­ terism

and

ramp ant

s p e c u lation, its

entrepreneurial mania for mergers, its over­ lap of business and politics, and its infatua­ tion with wealth, whiskey, and Hollywood glamor-quite so well as the Julian Petro­ leum swindle.

The Great Los Angeles Swindle begins with a murder (the sudden courtroom shooting of banker Motley Flint, the debonair movie financier and city booster), ends with a spec­ tacular suicide in Shanghai, and, in between, takes as many unexpected twists and turns as any mystery novel. Jules Tygiel offers a grip­ ping account of this wonderfully complex scandal, which features such legendary fig­ ures as Louis B. Mayer, Cecil B. DeMille, Charlie Chaplin (who decks Julian in a fist­ fight in Hollywood's posh Cafe Petroushka),

Los Angeles Times publisher Harry Chandler, H.M. Haldeman (grandfather of Watergate's H.R. Haldeman), and pioneer radio evange­ list "Fighting Bob" Shuler. Bankers, conmen, underworld kingpins, political bosses, cor­ rupt public officials, bribed jurors, and other colorful characters round out the cast. At the book's center stands the flamboyant C.C. Julian, a likable if suspect promoter, whose life was flavored with controversy. Tygiel follows Julian to Los Angeles, where during the spectacular oil boom of the 1920s, his innovative newspaper advertising and early successes won him a devoted following. Forced by major oil companies to cut back production, he created Julian-Petroleum, which he promised woulJ soon rival Standard ..

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THE GREAT LOS ANGELES SWI NOLE

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THE GREAT LOS ANGELES SWI NOLE Oil, Stocks, and Scandal During the Roaring Twenties

JULES TYGIEL

New York

Oxford

OXFORD UNIVERSITY PRESS 1994

Oxford Un iversitv Press Oxford Delhi

Ne"· York Bomba,·

Kuala Lumpur Nairobi

Toronto

Calcutta

Dar es Salaam

Melbourne

Madras

Singapore

Auckland

Karachi

Hong Kong

Tokyo

Cape TO\rn 'vladrid

and associated companies in Berlin

Ibadan

Copyright© 1 994 by Jules Tygicl Published b,· Oxford Uni,·ersih Press, Inc. 200 \1adison A\·enue, New York, New York 10016 Oxford is a registered trademark of Oxford Uni,·ersih· Press All rights reserved. No part of this publication ma\· be reproduced, stored in a retrie,·al s�·stem, or transmitted. in any form or b�· any means. electronic, mechanical, photocopying. recording. or otherwise, without the prior permission of Oxford Uni,·ersil\· Press. LibrarY of Congress Cataloging-in-Publication Data T,·giel, Jules. The great Los Angeles swindle : oil, stocks, and scandal during the roaring l\\·enties p. cm.

I Jules Tvgicl.

Includes bibliographical references and index.

ISBN 0-19-505489-X

I.

Julian Petroleum Corporntion.

2. Petroleum indmtrv aml trade-California-Los Angeles-Corrupt practices. I. Title.

J-ID9569.J8T93

1994

364.1'68'0979493-dc20

9 87654321 Printed in the United States of America on acid-free paper

98-19552

For Luise, no one else can ever know

ACKNOWLEDGMENTS

"Brave is he who would attempt to write the true story of the notorious Julian Petroleum overissue fiasco," observed The Critic of Critics, a Los Angeles weekly, in 1 9 30. More than sixty years later, it takes far less bravery, and far more dil igence and determination, to unravel the threads of the tale. I first chanced upon the Julian Petroleum swindle i n Carey McWilliams's classic 1 946 book, Southem Califomia: An Island on the Land. It seemed a simple saga of greed, ch icanery, and corruption set against the backdrop of the 1 920s Los Angeles boom. Furthermore, it featured many of the elements I look for in a historical project: a strong narrative storyl ine; bold, vibrant characters; a window into the essence of a bygone era; and a m i rror reflecting aspects of our current age as wel l . At first glance, it appeared that t h e Julian story could be researched and written within a reasonably brief period of time. Indeed, my primary fear was that there would not be enough information to flesh it out. Yet, as so often happens in h is­ torical research, the more closely I probed, the more complex the subject became. The cast of characters ran first into the dozens, then the scores, then the hundreds. The available sources proved seemingly limitl ess. Newspaper accounts were sup­ plemented by voluminous advertising, myriad city and federal· court cases, and assorted clues and pieces to the puzzle hidden in personal papers, FBI records, and other archival resourc es. Perhaps more perplexing was the challenge that the Julian Petrol eum scandal presented to my conception of historical truth . Th e swindle offered not j ust what The Critic called "addenda of charge and countercharge," but it im mersed me in a world of confidence men, promoters, and boosters who made their l ivings con­ cocting convincing lies and artful exagge rations. Arrayed against th em was a body of business l eaders, pol iticians, and publ ic servants, ensnared in the con artists' webs, who invented defenses out of whole or partial cloth and newspapers skilled at twist­ ing the truth for promotional and political purposes. l felt at one with the the grand jury foreman who complained that "about the time one group of witnesses had succeeded in painting a well-rounded pictur e and the jury was preparing to vote an indictment or two, along came another witness with an entirely different 'set-u p' of

VIII

ACKNOWLEDGME NTS

the whole situation . . . . Then \\'Ould come another picture"; or the defense attorney who challenged the jury to "pi _ c tum Diogenes looking for an honest man among these . . . witnesses." Piecing togeth er this "simple saga" thus took the better part of a decade, and even so I do not claim to have written "the true story" of the Julian Petroleum s\\'indle. I have, however, attempted to weigh the evidence and sift through the conflicting testimony to arrive at the likeliest version of events. In the end, of course, that is all that any h istorian can hope for. As is true of any work whose completion spans so long a period of time, I have incurred debts of gratitude to many individuals. If there is anyone I forget to men­ tion, rest assured it is due to absentmindedn ess, rather than neglect or lack of appre­ ciation. My first debt is to the late Carey M cWil l iams for introducing me to the Julian Petroleum swindle. All historians of southern Cal ifornia follow in his formidable footsteps. Wh ile my conclusions do not always agree with his, the example Mc­ Williams set of l ively, lucid, and iconoclastic interpretive writing, underpinned by a strong moral conscience, remains an i nspiration. I also must thank two men who stand at the opposite end of the political spectrum from Mc Williams: Ronald Rea­ gan and George Bush. Their economic pol icies, and the consequences thereof, continually breathed fresh life and relevance into the Julian Petrol eum saga . As always, my coll eagues in the San Francisco State History Department offered support, encouragement, and that oft-talked-about but rarely achieved commodity, collegial ity. The School of Behavioral and Social Sciences and the Professional Research and Development Committee at San Francisco State provided released time and research funds that greatly facilitated the completion of th is project. Many people provided invaluable research assistance. They include Eleanor Stardom , who traced Julian's life in Canada, also Don Jordan, Bob Giroux, Tom Clark, Cynth ia Taylor, Nancy Quam-Wickham, Jeff Quam-Wickham, Stuart McElderry, and Frances DeNisco. I am also deeply indebted to the many librarians who offered assistance, often above and beyond the call of duty: Dace Traube, who makes working at the Regional H istory Center at the University of Southern California an always-pleasant experience; Kay Briegel , at the Cal ifornia State Un iversity Long Beach Oral History Proj ect; Dick, Nadine, and Will Hathaway, who h ave created and operate the won­ derful Hathaway Ranch Museum in Santa Fe Springs; Joe Da Rol d, the former curator of the Hathaway Ranch Mu�eum; Robert Freeman of the Los Angeles City Archives; William Frank at the I Iun tington Library; and Laura McCarthy at the Pac ific Southwest Regional Branch of the National Arch ives. Cary I loffman of the Texaco Legal Depa rtm ent gave me access to company files related to the Julian Petrol eum Corporation and offered valuable clues to unearth ing th e fate of the Julian properties; Rockwell H ereford and the late Dick Hathaway provided me with their enl ighten ing recol lections of the Julian scandal; Tom MacDonald allmyed me to read his manuscript on the history of the Los

ACKNOWLEDGMENTS

IX

Angeles District attorney's office; Bill Rintoul offered constructive criticism on the oil industry sections; \ViTi iam Gard iner Hutson generously shared his research mate­ rials with me; and the late Gerald Wh ite gave val ued encouragement. Peter Carroll , Mike Pincus, and Richard Zitrin, all of whom had pai nstakingly critiqued my first book, consented to repeat the chore for this one, plowing through the lengthy original draft. I cannot thank them enough for their perseverance and friendsh ip. Luise Custer, Bill Issel , and Howard Ro itman also read and critiqued the first draft. Robert Cherny, Naomi We instein, and Jim Gregory read parts of the book and offered helpful suggestions. Gail Cooper ably copy-edited th e book at Oxford Un iversity Press, while Karen Wolny shepherded the art through the pro­ duction process. Amy Hosa devoted her considerable creative talents to the maps and graphics. Two other people consistently demonstrated their patience, faith, and forebear­ ance throughout the lengthy evolution of this project: Peter Ginsberg, my agent at Curtis-Brown , always bel ieved that this unfamiliar saga would yield a worthwh ile book; Sheldon Meyer, my editor at Oxford U niversity Press, offered his counsel , support, and most of all, his friendsh ip. Research for th is project frequently brought me to Los Angeles, where I invari­ ably enjoyed the hospitality of Tom, Mary, Tommy, and Caitlin Pilla, my southern California fam ily. I cannot imagine more loyal and loving friends. Finally, I would l ike to thank my wife, Luise C uster, who has shared me for the past ten years with those two talented con artists and taskmasters, C. C. Julian and C. C. Tygiel . I respect and treasure her contributions to my work, our children , and our life together above all else. One difficult decade later, she continues to make my world a far better place to l ive in.

CONTENTS

Cast of Characters,

xm

I Oil I. The Seminal Lunacy, 3 2. C. C. Julian Breaks I nto Santa Fe Springs, 17 3. Widows and Orphans, This Is No I nvestment for You , 4. The Dividend Payer of the Age, 56

5. The Truth, 6.

36

74

When a Feller Needs Some Friends,

90

II Stocks 7. Wouldst Thou Make Money?,

107

8. Death Valley's H idden Treasure,

130

9. A Thoroughgoing Businessman, 157 I 0. The Million Dollar Pool, 174 11. It Appears That There Is an Overissue,

192

Ill Scandal

12. 'I 'he Greatest Swindle Ever Perpetrated in America, 13. The Institutions Themselves Must Not Be Tried, 14. You Cannot Convict a Mill ion Dollars, 15. Well, What of It?,

243

258

16. Wh en J ustice Fa ils,

276

17. New Vistas of Rottenness, 18. What Price Fugitive?,

292

310

Notes, 329 Bibliography, I ndex, 389

381

213

229

ILLUSTRATIONS AND TABLES

Map, Location of Major Oil Fields, Los Angeles Basin, 1 920-2 2, Map, Santa Fe Springs, ca. October 1 92 2 ,

28

"Widows and Orphans" advertisement (facsimile), C. C. Julian advertising collage (facsimiles), Map, Downtown Los Angeles 1 920s,

41

44

121

Western Lead advertising collage (facsi m i les),

138

Julian Petroleum stock certificate (facsimile),

175

Table I. Julian Petroleum Chronology and Stock Prices, Table 2. Julian Petroleum Stock Overissue , Table 3. Western Lead Stock Prices, Photo section follows page 224.

137

117

115

15

CAST OF CHARACTERS

Adkisson, Arthur vice-president, Merchants National Bank; arranges loans for Julian Petroleum

Allen, Walter B. former president, Los Angeles Harbor Commission; Julian Pete investor

Barber, John

E.

president, First Securities Company

Barneson, Harold J. stockbroker, Barneson and Co.

Bauer, Harry J. chairman, board of directors, Southern California Edison and California-Eastern

Bell, Herbert A. vice-president, Pacific Southwest Bank; member, Bankers' Pool No. I

Bennett, Jack sec Jacob Berman

Berger, Jacob boyhood friend of C. C. Julian's; director, Julian Petroleum, Western Lead

Berman, Jacob (Jack Bennett) associate of S. C. Lewis; "bright youngster" of Julian Petroleum

Berman, Louis brother of Jacob Berman

Campbell, Henry F. vice-president, Julian Petroleum

Cannon, David former

U.

S. Special Attorney; lawyer for C. ·c. Julian

Carnahan, H. L. former corporation commissioner; receiver for Julian Petroleum

XIV

CAST OF CHARACTERS

Chandler, Harry

publisher, Los Angeles Times Chaplin, Charlie

movie star Chessher, H. B.

stockbroker, A. C. Wagy and Company Clark, David

attorney; candidate for Municipal Court Conroy, T. P.

secretary, Julian Petroleum Crawford, Charles

leader of Los Angeles underworld Cryer, Edward

mayor of Los Angeles, 1 92 1 - 1 929 Dabney, Joseph

director, California-Eastern Daugherty, Edwin M. "Mike"

California Corporation Commissioner, 1 92 1 - 1 926 Davis, Harold L. "Buddy"

assistant district attorney DeMille, Cecil B.

Hollywood di rector; Julian Petroleum investor Doran, William C.

Superior Court Justice Durbrow, C. W.

official, Southern Pac ific Ra ilroad; director, California Eastern Fitts, Buron

Los Angeles District Attorney, 1 929- 1 940 Flint, Frank

attorney, former United States Senator Flint, Motley

vice-president, Pacific South west Bank; member, Bankers' Pool No. 1 Frank, Alvin

stockbroker; member, Bankers' Pool No. Friedlander, Jack

California Curporation Commissioner, 1 927- 1 929

CAST OF CHARACTERS Gans, Robert

slot machine king of Los-Angeles Getzoff, Ben

owner of tailor shop Greer, Perry

auto dealer, politician; Julian Pete investor Hackel, A. w.

Julian Pete pool member Haldeman, Harry M.

businessman; head of Better American Federation; member, Bankers' Pool No. l Hervey, William Rhodes

vice-president, Pacific Southwest Trust and Savings; member, Bankers' Pool No. l Hill, Liberty

county clerk Hollingsworth, W. I.

realtor; member, Bankers' Pool No. l Jardine, John Earl

president, Los Angeles Stock Exchange Johnson, Archibald

San Francisco attorney; son of Senator H iram Johnson; pool member Johnson, Leontine

secretary to S. C. Lewis Julian, C. C.

founder, Julian Petroleum, Western Lead Julian, Mary Olive

wife of C. C. Julian Keaton, Frank

murderer of Motley Flint Keyes, Asa

District Attorney of Los Angeles County, 1 923- 1 929 King, L. J.

board of directors, California-Eastern King, William

U. S. Senator from Utah Kottemann, William C.

accountant

xv

XVI

CAST OF CHARACTERS

Krause, Louis jury-fixer

Lavine, Morris reporter,

Los Angeles Examiner

Levy, Leonora secretary for C. C. Julian in Shanghai

Lewis, S. C. president, Julian Petroleum

Lickeley,

E. J.

Los Angeles City Prosecutor, 1 927- 1 929

Loeb, Arthur Julian Petroleum stockholder

Mayer, Louis B. president, Metro-Goldwyn-Mayer; member, Bankers' Pool No. I

McComb, Marshall Municipal court judge

McCormick, Paul J.

U.

S. District Court justice in charge of Julian Petroleum receivership

McKay, Henry S., Jr. attorney; member, Bankers' Pool No. I

McPherson, Aimee Semple evangelist

Miller, J. H.

U.

S. Department of Justice agent; comptroller, Julian Petroleum

Morris, A. W. stockbroker

Morrisey, Thomas vice-president, cashier, Merchants National Bank

Nix, Lloyd Lo, Angeles City Prosecutor, 1 929- 1 9 3 0

Packard, Fred Julian Petroleum transfer department employee

Parrot, Kent Los Angeles political boss

Pettingell, Frank president, Los Angeles Stock Exchange

_ -

CAST OF CHARACTERS

Pike, Milton

tailor in Ben Getzoffs sll\)p Porter, John

mayor of Los Angeles, 1 929- 1 933 Ramish, Adolph

theater owner; member, Bankers' Pool No. 1 Reese, Charles E.

vice-president, A. C. Wagy and Co. Reese, Richard

president, A. C. Wagy and Co. Richardson, Friend

governor of California, 1923-1927 Robinson, Henry M. president, First National Bank

Rolapp, Frank receiver, Sunset-Pacific

Rose nberg, Ed associate of Jacob Berman's

Roth, Jules H. "Jack" vice-president, Julian Petroleum

Rouse, I. Linden ice- pres ident, Pacific Southwest Trust and Savi ngs ; member, Bankers' Pools

v

Rule, 0. Rey president, Pacific Finance; director, California-Eastern

Sartori, Joseph president, Security Trust and Savings

Scott, Joseph receiver, Julian Petroleum

Shipp, Pat

Julian

Petroleum

transfer department

Shuler, Robert

evangelist Silberberg, Mendel attorney; member, Tia Juana Pool Smith, John A., Jr California oil man

XVII

XVlll

CAST OF CHARACTERS

Stanley, Hubert A.

Price-Waterhouse accountant Stern, Charles F.

president; Pacific Southwest Trust and Savings Streeter, C. C.

stockbroker, H . J. Barneson and Company Toplitsky, Joe

realtor; member, Bankers' Pool No. l Wagy, A. C.

stockbroker, Wagy and Co. White, Leslie

detective, district attorney's office Young, C. C.

governor of California, 1 927- 1 93 1

PART I

THE SEMINAL LUNACY

Frank Keaton could well have served as a prototype for the original Homer Simpson , the n ightmarish caricature of the transplanted Midwesterner driven mad by the fail ure of the Los Angeles dream in Nathanael West's Day of the Locust. Keaton was born in 1 872 in Titusville, Pennsylvania, the site th irteen years earlier of the fi rst great American oil discovery. He grew to manhood in the M idwest, married, fathered two sons, and divorced. In 1 902, Keaton moved to Los Angel es, where he worked as an expert machin ist. On one job in 1 9 10, a swinging block and tackle crashed i n to his head, temporarily d isabl ing him. By World War I he had recovered sufficiently to earn h igh wages at the San Pedro shipyards. During these years he married and divorced aga i n . Like many southern Californians o f modest means, Keaton invested in stocks and real estate . By 1 9 2 1 , when he married his th ird wife, Miriam, he had accu­ mulated what she described as "a little fortune" of about $35,000 to $40,000. Keaton owned a home in Los Angeles and prope rty in the tmvn of Lennox in addition to banking and other stocks. During the next few years, he and M iriam l ived a com­ fortable life as Frank continued to work as a machin ist and spec ulate successfully. In 1 925, M i riam gave birth to a daughter. But two years later, thi ngs began to go horribly wrong. Since 1 92 2 , Keaton's investment portfolio had incluclccl forty-five shares of First National Bank stock. In May 1 927, the Julian Petrol eum Corporati on, a company underwritten by a First National subsidiary, collapsed amidst charges of fraud and corrruption. A pani cky Keaton sol d his First National stock for $4,500 less than he might have before the Julian Petroleum sca ndal. The setback marked the begin n ing of a series of m isfor­ tunes. Keaton suffered a second major industrial accident when a h igh-power wire

3

4

OIL

burned him severely. I n l 929, he incurred fu rther inj uries i n an automobile acci­ dent leaving him with a recurren� pain in his head. Keaton continued to i nvest i n the stock market, with diminishing returns. The Great C rash of October l 929 dropped the value of his rema ining stock portfolio to $ 1 ,000. In 1 92 8 , Miriam Keaton had given birth to a second daughter, and Frank's l osses forced th e family to l eave th eir home in Los Angeles and move to a smaller home in Inglewood. Unable to find work, Keaton opened a small real estate office, where he unsuccessfully tried to dispose of his remaining property. He made but one minor sale in two years. After the stock market crash, said M i riam Keaton, "my husband seemed to have lost his reason altogether. . . . I remember during last November when the stock crash came. Frank would lie in bed and cry for hours at a time . . . . My husband has had a terrible time getting food for those two babies. Where he has got th e money to do it I don't know. Possibly he borrowed it and possibly he mortgaged what l i ttle he had left." During these trying times, Keaton grew obsessed by the calamities that had befallen him and the nation. He came to believe that they all stemmed from th e collapse of Julian Petroleum. According to Miriam, "Frank blamed the Julian crash for every reaction on the stock market and every security in wh ich he was interested . . . . Frank explained it to me this way. If you take a hatchet and cut off your foot it affects the head and rest of the body." In his growing dementia, Keaton identified a scapegoat for h is plight. It was not C. C. Julian, the flamboyant promoter who had founded Julian Petroleum; nor was it S . C. Lewis, th e sm ooth-talking oil exec­ utive who had caused the stock overissue that destroyed the company. Keaton fixed the blame on First National banker Motley H. Fl int. If the dour, nondescript Frank Keaton symbol ized the hundreds of thousands of ordinary Americans lured by the promise of Los Angel es, Motley Flint, the well­ groomed, flashily dressed ban vivant, personified the world of Los Angeles high finance. Flint l iked to boast that for more than thirty years he had reigned as "a Santa Claus to Los Angel es." Indeed, to many, Motley Flint and his brother, Frank, epitomized the marriage of business, boosterism, politics, and publ ic serYice that characterized th e finest features of the Los Angeles elite. Descended from colonial forebears, the Flints were born i n Massachusetts and raised in San Francisco. They moved to Los Angeles in th eir early twenties, lured by the great southern California land boom of the 1 880s. Together they had plunged into local Republican politics, which in Los Angeles meant collusion \Yith the political machine financed by the . Southern Pacific Railroad. The arrangement proved beneficial for both Fl ints. During the 1 8 80s and 1 890s, each received a succession of federal patronage appo intments. Frank rose through the ranks of the Un ited States District 1\ttorney's office to become the Un ited States Attorney for the Southern District of California in 1897 . .1\lotley worked as a postal inspector until 1 898, when he was named Los Angeles Postmaster. !11 1 905, the Fl ints abandoned governm e11t service to enter ba11king. They orga­ nized the Metropolitan. Bank and Trust Com pany, a n d Fra11k became the i nstitu-

THE SEMI NAL LUNACY

5

tion's first president. Shortly thereafter, the state legislature, dom inated by the Southern Pac ific, elected Frank Flint to the Un ited States Senate. Senator Fl int turned over his bank presidency to his younger brother. Four years later, when Los Angeles Trust and Savings absorbed the Metropol itan Bank, Motley Flint became a vice-president and d irector of the new organ ization. In 1 9 1 1 , political and banking developm ents reun ited the brothers. Frank, confronted with the Progressive rebel­ l ion against the Southern Pac ific and the first direct election of senators, chose to retire from the Senate. At the same time, First National Bank merged with Los Angeles Trust and Savings. Both Motley and Frank became directors at First National . Frank became the bank's legal counsel; Motley remained as a vice-pres­ ident of Los Angeles (later Pacific Southwest) Trust and Savings. By this time, the tall , d istingu ished Motley Fl int had developed a reputation as one of the city's leading boosters. "He was a genuine enthusiast about Los Angeles," commented the Los Angeles Examiner. "He predicted its future; he helped make his predictions actual ities." Long active in numerous fraternal and social organi­ zations, most notably the local Shri ners and Elks, Fl int was often referred to as "the best known lodge man in the United States . " He organized and chaired the Los Angeles Convention League, which encouraged groups to hold their national meet­ ings in the city. He became an unofficial "greeter" for Los Angel es, always present when visiting d ignitaries appeared. The home he shared with his wife, Gertrude, became the center of lavish social gatherings. His wealth and influence notwithstanding, Motley Flint took even greater pride in his charitable work and fund-raising activities. "Under an exterior that was some­ times gruff and a manner that was often m isunderstood, there beat a great heart full of tenderness and sympathy," stated his friend William Rhodes Hervey. Fl int served for twenty years as president of the local board of rel ief, finding jobs for the unem­ ployed and offering assistance to the downtrodden . His efforts on behalf of i mpov­ erished children earned Fl int his " Santa Claus" reputation. With the rise of Hollywood, Motley Fl int's life took another fortu itous turn. Fl int was the first member of the local banking establishment to recognize the importance of the movie industry to Los Angeles. He organized the C inema Finance Company, wh ich made First National a leading financier for Hollywood. After 1 9 1 7, when he separated from his wife, Fl int's downtown hotel suite became a favorite gathering place for the Hollywood crowd . Top stars and studio executives regularly frequented his lavish luncheon and dinner parties. When the fledgl ing Warner Brothers Corporation faced bankruptcy in 1 920, Fl int encouraged Fi rst National to back the struggl ing studio. Thereafter Fl int formed a close personal friendship with Jack Warner, reassuring the innovative motion picture producer, "I never worry about your debts. You and Sam are going in the right direction and I know you 'll make it." At Fl int's urging, First National became a key backer in Warner Brothers' revolutionary experiments with talking films. Broth er Frank, meanwhile, had also prospered. H istorian Kevin Starr describes Frank Fl int (in terms that could just as easily fit Motley) as "one of the most impor­ tant players in the drama of making Los Angeles happen . . . a comforting symbol

6

OIL

of publ ic and private ambitions working togeth er in creative synergy." Frank Flint's law partnership with Henry S. fyl c Kay was among the city's most successful. His diversified business interests, board d irectorships, and real estate developments flour­ ished. In the 1 920s he founded Fl intridge, an exclusive residential community built into a hillside to resemble a Greek Mediterranean village. Motley erected a four­ teen-room mansion at Fl intridge as a retreat from his cel ebrated downtown apart­ ment. To Frank Keaton, however, Motley Fl int resembled, not Santa Claus, but Shy­ l ock. While Keaton and thousands of others had lost millions of dollars as a result of the Julian Petroleum scandal, Flint and his fellow bankers and businessmen had organized a "Million Dollar Pool" backed by the company's stock. The pool del iv­ ered a 5 7 percent profit for its investors. One month after its l i quidation, Julian Petroleum collapsed. Many believed that Fl int and his fellow mill ionai res had knowingly bled Julian Petroleum while thousands of smaller speculators lost their l i fe's savings. Frank Flint had served as legal counsel and d irector for the discredited firm. Devastated by the charges emanating from the scandal , Motley Flint had returned his profits and withdrawn from his myriad business, soc ial, and charitable activities. "They have broken my h eart i n the city I love ," Fl int told his secretary; "I never want to see Los Angeles aga i n . " Fl int moved to France. As the Frank Keatons of Los Angeles struggled to recover from their losses, Flint l ived in Nice, from which he sent back reports of l ife on the Riviera and i n Paris. In the months after the October 1 929 stock market crash, Keaton became increasi ngly obsessed with the unfolding Julian Petroleum scandal . "He followed carefully all the exposures in the Julian failure," related his wife. He expressed sympathy for the tens of thousands of investors who had lost money, blaming their misfortune on Flint and his fellow bankers. Keaton drew encouragement from the radio broadcasts of fundamentalist preacher Robert P. Shuler who regularly attacked the Los Angeles "banking crowd" for i ts role in the Julian affair. Shul er's diatribes fueled Keaton's paranoia. In the end, explained Miriam, "he finally came to the belief that Mr. Flint was the cause of all his losses i n stock deals. I believe that his mind became so full of this that i t snapped ." Despite h i s disillusionment, Keaton never lost faith i n the curative powe rs of the stock market. Every morning he would leave home before five in order to arrive at the Los Angeles Stock Exchange when it open ed. He would visit his stockbrokers and, despite his steadily decl ining resources and mounting debts, place new buy and sell orders. Wh en finished he would haunt the myriad trials emanating from the Julian Petroleum swindle. On the morning of July I 4, 1 9 30, Keaton left his home before dawn as usual. He had not slept well the past two nights, and the pa in in his head had intensified. In his pocket was a . 38 caliber n ickel-plated hammerless revol\'er he had own ed for forty years. He sa id that he planned to have it cleaned and polished. There were bullets in three of th e chambers. Keaton reached down town Los Angeles and stopped at his broker's office, where he placed an order for 1 00 shares of motion picture stock. He overdrew his bank account to cover the margin.

THE SEMINAL LUNACY

7

Keaton wandered the downtown streets until an article in the newspaper caught his attention. At ten o'dock that morning, read th e item, Motley Fl int would appear as a witness in a Los Angeles courtroom . Keaton walked to City Hall and asked for directions. H e entered the courtroom quietly as the hearing began and took a seat. The trial pitted David 0. Selznick against First National Bank. Selzn ick's great­ est successes (most notably th e 1 9 3 9 production of Gone with the Wind) lay in the future . But at age twenty-e igh t he al ready reigned as one of th e brightest young producers in Hol lywood. Two months earl ier he had married Irene Mayer, the daughter of M-G-M mogul Louis B. Mayer, assu ring his position in th e local fir­ mament. His suit involved the disposition of 1 ,000 shares of United Studios stock worth between $ 1 5 0 ,000 and $ 2 5 0,000, wh ich Selznick and his family had placed with Pacific Southwest Bank, a First National affil iate, as security for a loan in 1 92 2 . Flint, a bank vice-president at t h e time t h e loan was made, had recently returned from France to face criminal charges stemming from the Julian Petroleum scandal . Attorneys hoped that he might shed some l ight on th e disputed transaction. As he seated h i mself in th e witness chair, the sixty-five-year-old Fl int appeared as debonaire and distinguished as ever. H is silver mane and mustache offset h i s b l u e serge s u i t and b l u e shirt with a striped collar. Expensive j ewel ry bedecked his hands and wrists. A Panama hat rested on the table in front of him. Flint sat facing th e bench directly opposite and below Judge Frank C . Collier. Attorneys for Selz­ nick occupied th e long table to Fl int's left; the bank's lawyers flanked him on the right. To Fl int's rear, behind the rail th at demarcated the seating area, Selznick's brother Myron and his parents, Lewis and Florence, occupied the first three seats of the front row. Only a handful of people were present in the small courtroom; most of th em court officials, attorneys, or parties to th e case. Frank Keaton, seated in the second row directly behind Florence Selznick, was the sole uninvited spec­ tator. At one point he leaned forward to ask Mrs. Selznick if th is was th e Selznick case. Keaton later asked another woman to point out Motley Fl int. Keaton watched silently, but intently, as Flint identified letters and telegrams exchanged by Pac ific Southwest and the Selznicks in 1 92 2 . Fl int failed to recall the details of most transactions. "You have no definite recollection as to how the sum was disposed of, have you, Mr. Flint?" asked the plaintiffs attorney after twenty­ five minutes of testimony. " I couldn't positively state, no, sir," responded Fl int. Fol lowing th is exchange, Judge Coll ier dismissed the retired banker from th e stand. Fl int pi cked up his hat and turned to leave. A sl ight, relaxed smile came over his face. In the spectator section , Keaton felt a twinge in his arm and the pain in his head grew sharper. "The gun that I held concealed in my pocket seemed to be as big as a cannon," he said later. Fl int opened the enclosure gate and stepped into the spectator section. He bent forward as if to talk to Mrs. Selznick. Suddenly Keaton leapt to his feet behind her. His hat hid the gun in his right hand as he fi red directly over Fl orence Selzn ick's shoulder, just a foot or two away from the leaning Flint. Fl ame leapt from the muzzle of the old revolver. The shot shattered the banker's neck and lodged in his

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collarbone. Flint fell to his knees without uttering a sound. Mrs. Selznick began to scream . Keaton fired two more shots, one wh ich pierced Fl i nt's h eart and the other his lung and l iver. The i mpact knocked Fl int backward, l eaving his body lying full length, angl ing from the rai l , his feet pointed at the door. Fl int was dead before he hit the floor. Keaton tossed his gun in the direction of Fl int's body where i t landed between the arm and body of the corpse. He sat down, squeezed his eyes shut and clenched his hands. "Oh , my God, why did I do it?" Keaton repeated over and over again. Judge Coll ier, upon hearing the reports of the gun, had jumped from the bench and boldly ran toward the shots. Keaton offered no resistance as the judge seized and restrained h i m . Whe n police deputies arrived, they searched both t h e assassin a n d his victim. In Flint's pockets they found $63 ,000 i n cash. In Keaton's they found ten cents, a pack of cigarettes, and a well-thumbed sixty-four-page pamphlet written by the Rev­ erend Robert P. Shuler. The treatise was entitled "Julian Thieves." It purported to unravel the tangl ed web of affairs known as the Jul ian Petroleum scandal .

11

In Los Angeles in the early years of the Great Depression, C . C . Julian and the Julian Petroleum Corporation were household words. They symbol ized, not merely what President Frankl in D. Roosevelt would later depl ore as "a decade of debauch­ ery of group selfishness," but the failed hopes and dreams of the great boom of the 1920s. Indeed, no single story captures the essence of the 1 920s in America - its booster opti mism and rampant speculation, its entrepreneurial mania for mergers, i ts overlap of business and politics, i ts appl ication of new communications tech­ nology, and its cast of oilmen, stock promoters, Hol lywood stars, cinema moguls, banking executives, Prohibition era-gangsters, and evangel ists - qu i te so well as the Jul ian Petroleum swindle. During the 1 920s the American people, chides economist John Kenneth Gal­ braith , "display[ ed) an inordinate desire to get rich qu ickly with a minimum of effort. " No one engineered th is speculation or led investors to the slaughter, writes Galbraith . It was "the product of free choice and decision by hundreds of thousands of individuals . . . impelled to it by the sem inal lunacy which has always seized people who are seized in turn by the notion that they can become very rich." The "seminal lunacy" appeared not just on Wall Street or in Los Angeles, but in vi rtual ly every section of the nation. The Florida land boom remains the most celebrated of the mid-'nventies speculative excesses, but suburba nization and high­ rise building construction triggered smaller bubbles in urban areas throughout the United States. Oil d iscoveries in Oklahoma, Texas, and Louisiana attracted spec­ ulators from around the nati on. Mining prospects in the Far West and Canada excited the interest of hundreds of thousan ds of i n\'estors. Ivar Krueger, the s,,·edish "Match King," sold alm.ost $ 1 5 0 ,000,000 in lnte mational Match securities; Samuel

- THE SEMI NAL LU NACY

9

lnsull constructed a half-bill ion dollar nationwide utilities pyramid on the dreams of those seeking instanti'iches. American culture encouraged the acquisitive mental ity. In New York C i ty an electric sign advised passersby: "You should have $ 1 0,000 at the age of 30; $ 2 5 ,000 at the age of 40; $ 5 0,000 at the age of 5 0 . " Self-made millionaire and National Democratic chairman John J. Raskob entitled a 1 929 Ladies ' Home Journal article "Everybody Ought to Be Rich." In many respects Ital ian imm igrant Charles Ponzi stands as the patron saint of the 1 9 20s. In late 1 9 1 9, the B oston-based Ponzi created the Old Colony Foreign Exchange Company. Ponzi claimed that by buying fore ign currencies at low market prices and selling them at h igher offic ial rates he could guarantee investors quick and easy profits . He promised to return $ 1 5 for every $ 1 0 entrusted to him after ninety days. Miraculously, Ponzi consistently made good on his pledge. Within nine months he had become rich and famous. More than $1 mill ion poured into Old Colony Fore ign Exchange every week. Ponzi announced the opening of branch offices and bought a controll ing interest in the Hanover Trust Company. Investors continued to receive their 5 0 percent profit every n inety days. But in August 1 920, the money ceased to flow. Ponzi, it turned out, had purchased few foreign cu rren­ cies. The only exchange that Ponzi had performed was to pay off old investors with the ever-increasing money collected from th e new. Th is strategy could only last as long as the investment pool continued to grow. Ultimately it had to collapse, with the most recent arrivals footing the bill. Millions of dollars disappeared. Ponzi spent several years in prison before being deported, but his missing mill ions were never found. It is not surprising, as Robert Sobel has argued, that the decade that began with the development of the "Ponzi scheme," as these rotating investments are still known, ended with the collapse of Wall Street's great bull market. Both reflected the speculative mania that had seized the American publ ic i n these "ballyhoo years. " Accord ing t o h istorian Ellis Hawl ey, "the 1 920s are best understood n o t a s the Indian summer of an outmoded order . . . but rath er as the premature spring of the kind of modern capital ism that would take shape in the America of the 1 940s and 1 9 50s." Warren I . Susman identifies th e culmination of "a crucial change in the nature of the capital ist order and its culture" occurring in the 1 920s. The "ballyhoo" aspects of th is decade were part and parcel of the emergent "capitalist order." Confronted by an "extraord inari ly rapid accumulation of both new knowledge and ne\v experiences," Am ericans, argued S usman, "were made constantly and fully aware that they l ived in a new era." The key to th is em bryonic society \\'as a revolution in communications. The automobile, motion pictures, and rad io were the most dramatic innovations. But tabl oid newspapers with their greate r emphasis on photography, the increasingly visual nature of modern ad\·ertising, and the popularity of cartoons and comics all added to the transformation. Together, argued Susman , these devel opments marked the "emergence of ne\\ . ways of know­ ing that stood in sharp contrast with the old ways of knowing available in the book and the printed \\"Orel. " Th rough newsreels, photographs, and rad io broadcasts,

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Americans vicariously experienced and participated in the expl oits of Charles Lind­ bergh and Babe Ruth or events l ike the Scopes trial or the Leopold and Loeb murder case on a level of intimacy never before possible . Moreover, according t o Susman, t h e commun ications revolution offered "newer and more effective techni ques in the manipulation of men." Many commentators during the 1 920s recognized the rising tide of consumerism and the emergence of a mass market made possible by these strategems. The expanded volume of adver­ tising offered ample evidence of this phenomenon. Before World War I, Am erican busin ess had spent an estimated $ 3 0 0 to $400 mill ion a year in advertising. By 1 927, the figure had jumped to $ 1 . 5 billion; by decade's end it would exceed $ 1 . 8 billion. Newspaper advertising increased by 600 percent, claiming the l ion's share of these figures. Magazines, billboard, and direct mail campa igns also mushroomed. Radio represented the fastest growing segment of the advertising market. The techni ques of mass marketi ng found a welcome among those seeking to squeeze investm ent dollars from an eager populace. Promoters of all stripes took advantage of the increased fl ow of advertising. The introduction of machines l ike the addressograph and the multigraph revolutionized mail-order sol icitation, all ow­ ing con men l ike Frederick Cook, the polar explorer turned Texas oil man, to ci rculate tens of thousands of come-ons each day. Some experimented with radio and movie promotions. Others adapted the tried and true methods of the real estate and mining promoters of the past, substituting bus and auto excursions for the tra in and streetcar tours of an earlier era. Federal tax pol icies also nourished the speculative urge . At the behest of Trea­ sury Secretary Andrew Mellon, the scion of a leading banking family, Congress enacted a series of cuts primarily designed to reduce the taxes paid by America's wealth iest individuals. Freed from the onerous burdens of taxation, argued Mellon, the rich would invest i n comm erce and industry, providing jobs and prospe rity for all. In 1 92 1 , Congress repealed the wartime excess profits tax, eliminated many luxury taxes, l owered corporate taxes, and slashed the maximum personal income tax from 65 percent to 3 2 percent. Mellon successfully advocated fu rther reductions in 1 924, 1 926, and 1 928, all of wh ich offered windfalls for the wealthy. Mellon's personal tax reduction exceeded that of the entire population of Nebraska. That this type of supply-side economics frees money for i nvestment and may stimul ate short-term growth is beyond question; whether the beneficiaries of this federal largesse invest wisely is another matter. Many h ave blamed the infusion of new money and inexperi enced investors for the excessive speculation of the 1 920s. But one is also struck by how readily the nation's old wealth and leading busin ess­ men succumbed to lures of short-term profits and get-rich quick schemes, di,·erting cap ital from constructive proj ects into high-turnover, speculative \'entures and risky securities. Th e benefits of these tax cuts may or may not hm·e "trickled do\\'n" to the masses, but the speculative fever that they h elped release defin itely did. Many ha,·c dis­ missed the misleading hyperbole that "every corner bootblack \\'as speculating in the stock market" during the 1 9 20s. Yet, in a nation of 1 2 0 mill ion peopl e, an estim ated four mill ion Am ericans own ed stock. The vast majority \\'ere undoubtedly

-TH E SEMI NAL LUNACY

II

smal l i nvestors. The size of their stakes only tempered, but rarely extinguished, their enthusiasm . More sign i fi.cantly, the stock market represented just one destination for risk capital . When one consid ers the full panopoly of investment opportunities ­ from oil, to min ing, to real estate , to ind ustrial opportun ities, both real istic and bizarre , offered on and off local and regional stock exchanges - a considerable seg­ ment of the American populace took at least one plunge, and probably several , into the specu lative swim. Nowhere were the waters more inviting than in southern Cal ifornia. That Los Angeles should succumb to the lu res of speculation in the 1 920s seemed as natural as the climate. Indeed, the city's enti re history resembled a Ponzi scheme of fantastic dim ensions. Since the 1 880s, as one banker noted, "th e perfectly prodigious busi­ ness of growth " had been the c i ty's lead ing industry, its primary reason for existence. "Th e steady, speedy growth is the one important th ing to understan d about Los Angeles," wrote Bruce Bl iven during the 1 920s. "It creates an easy optim ism, a lax prosperity, which dom inates people's lives . . . . The first corners if they can just get their fingers on a l ittle property, are sure to grow rich with the unearned increment." "Los Angeles," explained Morrow Mayo in the 1 93 0s, "is not a mere city. On the contrary, it is, and has been since 1 8 88, a commodity; someth ing to be advertised and sold to th e people of the United States l ike automobiles, cigarettes and mouth­ washes." In 1 888, city business leaders, reel ing from th e collapse of the first great land boom, declared a "new beginn ing." They centered this rebi rth upon a recon­ ceptual ized Chamber of Commerce. In Los Angel es th e Chamber would function, not simply as an informational agen cy, but rath er as a high-powered munic ipal promotioml vehicle. The Chamber launched an ambitious nationwide advertising onslaught to extol the virtues of Los Angeles. It distributed more than two mill ion pieces of l i terature- in its first three years and dispatch ed a "California on Wheels" train, laden with photos and exh ibits, to the major cities of the South and Midwest, to boost the promise of Los Angeles. The campaign el evated Los Angeles from a modest commun ity of 50,000 i n I 888 to a metropol is of over half a million in I 920. Th e booster spirit permeated Los Angeles. "These square miles are peopl ed with nothing but boosters . . . . They've been psyched into a hoorah frame of mind which knowns no scoffing," praised Paul Augsberg in "Advertising Did It!" his l 922 paean to the city's success. "From the highest to the humbl est of its citizens," wrote Guy Finney in 1 929, "their chief desire seemed to be to contribute, with fine enthusiasm, all they could i n material and vocal acceleration to the movement that was sending the city ahead at a dazzling pace." Lou is Adam ic, among others, dismissed this enthusiasm as crude Babbittry. The big businessmen, wrote Adam ic in the mid-'t\\'enties, were "Super-Babbi tts" . . . possessed by a mad and powerful dri\'C . . . gri m, ra ther inhuman, indi\'iduals with a tcrri�·ing singleness of intention: they sec a tremendous opportunity to enrich thcmsch-cs beyond anyth ing they could have hoped for . . . and they mean to make the most of it.

Thousands of lesser Babbitts , "al l motivated by the sam e motives for \\·eal th , power, and pe rsonal glory, and a greater Los 1\ngeles," trailed in their wake. Together they

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preached a gospel of growth and adhered to what the Los Angeles Record called "the psychology of 'boost-don't knock. "' The darker side of Los Angeles - the epi­ demic arrests for vagrancy, the �abid repression of dissent and organ ized labor, the extraordinary rates of divorce, insanity, and drug addiction - could not be men­ tioned, wrote Adamic, "for the tourists must not get the idea that anyth ing is wrong \\'ith Los Angeles." The contribution of the Los Angeles elites, howeve r, went beyond advertising and boosterism. Los Angeles in the 1 880s had lacked not just recogn ition but sig­ n ificant harbor facil ities and adequate water suppl ies to susta in growth . By the sec­ ond decade of the twentieth century, the con certed efforts of Los Angeles business and political leaders had created a man-made harbor at San Pedro and procured (or, as many would argu e, purloined) water from the Owens Valley via a 200-m ile aqueduct. With th is infrastructure in place, the visions of the "Super Babbitts" and the "lesser Babbitts" converged in the 1 920s in a reality that fulfilled the dreams of even the most optim istic boosters. Los Angeles boomed as never before. Between 1 920 and 1 924, over 1 00,000 people a year settled permanently in the city. The rate of growth sl owed i n the latter part of the decade, but by 1 9 30, the c i ty's population had soared from 5 7 7 ,000 in l 920 to over l .2 million. The C hamber of Commerce effectively promoted the municipality as the nation's "wh ite spot," one of the few areas to escape the recession of 1 920- 1 92 1 . It organized a photo news service that distributed thousands of portraits "to expl oit the nearby bath ing beaches and give th e sun-backed damsels a chance to reveal their charms." In 1 92 1 , the All-Year Club, a Chamber subsidiary financed by both public and private funds, embarked on a multimillion-dollar campaign to convince potential tourists that Los Angeles had "a year-round appeal and not merely one that lasts through the winter months." Millions of advertisements in news­ papers and magaz ines convinced the nation's tou rists that southern Cal ifornia was more than a retreat from cold weather. With in three years, summer visitors exceeded th e traditional wi nter influx. Thousands of touri sts became permanent residents. No commentator captured Los Angeles in th e 1 9 20s better than Albert At\\'ood, who wrote a series of articles about the city for the Satu rday Evening Post in 1 92 3 . Los Angeles alternately bemused, shocked, astounded, and a\\'ed Atwood with its vibrant energy, shamel ess booste rism , astonishing growth, and speculative excesses. In an article entitled "Money from Everywhere," Ahmad commented on the "extraordinary and almost unprecedented pouring of population , money and pros­ perity into one section of the conn try, and more particularly into one c i ty." What struck Atwood was the unusual affl uence of the new arrivals: "There gravitates toward this region a constant succession of crops as it were of reti ring persons, farmers from the Middle \Vest, and man ufacturers, merchants and business and professional people from all arts of th e coun try. People retire at the most liquid moment of th eir lives . . . in the aggregate they make th is a very rich country." Th e inA11x of reti cees represented a massive transfer of \\ ealth and capital to

- THE SEMINAL LU NACY

13

southern California. Lucrative investment opportun ities awaited these newcomers. In the past, agri culture,-eommerce, tourism, and service had dominated the local economy, but with the rise of Hollywood, the discovery of oil, and the expansion of the tire and other industries, Los Angeles developed an industrial base as well . Manufacturing output tripled during the 1 920s, jumping the city from twenty-sixth to n i nth place among the nation's manufacturing centers. The harbor at San Pedro became the busiest port on the Pac ific Coast. Southern Cal ifornians, recent arrivals and established settlers alike, sought to share in the prosperity. Many invested conservatively, taking advantage of the l egit­ imate opportun ities generated by industrial growth , but the get-rich-qu ick mental ity pervaded the region. "Speculation is in the air," stated one banker, "because the people think of it as the land of easy money, and because for so many it has proved these things." In The Great Los Angeles Bubble, local journal ist Guy Finney described a city "particularly ripe for heedl ess financial adventure ." The "emotional hash eesh" of the get-rich-quick message "scattered whatever horse sense" people possessed. They knew their city was galloping along at dizzying speed . . . . The easy-money carnival spirit gripped them . . . . They sang it from every real estate and stock ped­ dling platform, in every glittering cafe and club, in banks and at newstands . . . . The dollar sign was on parade. Why marvel then that l ike epidemic measles among the young, i t spread from banker to broker to merchant to clerk to stenographer to scrub­ woman to office boy, to the man who carried his dinner pail. . . . The mass craving wanted its honey on the table when the banquet was on. It simply couldn't wai t a sobere1 day.

Ambitious hustlers prowled hotel lobbies courting recent arrivals. "Hopeful young men with something to sell penned them cordial notes, cal led them by tel ephone, i nvited them to come and take a look around," wrote Finney. Salesmen offering sightseeing tours and opportun ities "to see the movie ladies in their cozy bungalows on the big 'lot,"' instantly became "friend[s] for life" before they sprang their invest­ ment schemes. Bankers played the same game on a more lavish scale . Junior vice­ presidents, and even bank presidents, entertained wealthy prospects who had dropped in to transfer funds from the East with tickets to the Hollywood Bowl or other attractions. An "insistent element of speculation . . . permeates all walks of l i fe," wrote Atwood. But the real estate subdivision continued to symbol ize the speculative soul of Los Angeles. Real estate in southern California, noted Atwood, resembled "a stock market craze of the first magn itude." During a twelve-month period starting in November 1 92 1 , realtors in Los Angeles County proposed 6 3 1 new subdivisions. Enough housing was built in 1 922 to supply a city the size of Albany, New York. The legitimate demand for housing for new residents kindled the real estate boom, but the speculative dreams of the masses fueled the bonfire. "One is struck, not altogether pl easantly by the great number of people who have sol d , or expect to sell their homes at a profit," observed Atwood. "Time and again people have

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bought land at prices that were highway robbery at the time, only to sell at an advance in a few years. People have bought into subdivisions and found themselves unable to sel l . . . . Compelled to build and l ive on the property, they have sold in a few years at a large profit." One real estate leader estimated that nearly 6 5 percent of those buying houses in the subdivisions anticipated resel ling at an increased price. At the peak of the boom in 1 92 3 , a veritable army of 1 2 ,000 realtors trooped across the subdivided terrain. Unregulated by l egal or moral restraints, the lords of real estate gave new meaning to the terms laissez-faire and caveat emptor. "One is disgusted by the grotesque circus character of the subdivision development," wrote Atwood. "High pressure sales methods have passed th eir hitherto known peak in an orgy of fantastic blah." Robert Cleland found the aesthetics and the architecture of the boom as limited as its ethics. Cleland described Sun day afternoons at the Palos Verdes peninsula featuring Hollywood stars, Spanish dancing, stunt flying, athletic contests, aquaplaning, yacht racing, and a "Kiddies Tent" compl ete with playground teachers, physicians, and free toys. "Like the enterprising phil istine that he was," criticized Cleland, "the Los Angeles real estate promoter, who thought primarily of quick and easy profits, subordinated beauty to uti l i ty and ridiculed the idea of l etting aesthetic considerations i nterfere with the maximum gain to be derived from the subdivision and sale of the good earth . " Real estate remained a primary focus o f speculative dreams throughout the 1 920s, but in 1 920 and 1 92 l , aston ishing events just south of Los Angeles added a new, more exciting di mension to the boom. Oil was d iscovered i n southern Cali­ fornia. Oil, wrote Samuel B lythe, was "th e flame i n which the small moneyed moths of this country have burned their wings for more than 60 years." And, he reported, the already speculation-crazed population of southern California went "stark, star­ ing, oil mad." The d iscoveries occurred along the coastal corridor where Los Angeles and Orange counties converged. The first strike came in the quiet resort town of Hun­ tington Beach. Standard Oil of Cal ifornia had drilled several wildcat wells at Hun­ tington Beach i n 1 920. The first produced a modest forty-barrel-a-day well on Res­ ervoir H i l l . A second, on the edge of the "Gospel Swamp" peat bogs, roared to life with an explosion heard fifteen miles away. The initial flow of 20,000 barrels of h igh gravity oil per day announced the birth of a great new oil field. Five months later and less than fifteen miles distant, the Royal Dutch Shell Company sank a well on the east slope of Signal Hill, a 34 5-foot dome protru ding above the small city of Long Beach. Shell had already spent $ 3 million in the California oil fields, to no avail. Industry experts predicted further disappointment on the Long Beach promontory. A Shell crew labored for three months atop Signal Hill. On May 2 3 , they found oil standing in the hole. One month later, as th e night crew worked under the derrick l ights, they heard an underground ru mble, which grew louder and louder until the black liquid spouted from the earth , shooting 1 1 4 feet into the air. JI undreds of local residents came ru nning to share the excitement. S ignal Hill would p rove to be one of the world's richest oil fields. Nearby, in Santa Fe Springs, Union Oil awaited results on a wildcat \\-ell on

VI

PA C I FI C O C EA N

1 920 - 1 922

LOS ANGELES BAS I N

LOCATIONS OF MAJOR OIL FIELDS

INGLEWOOD

LOS ANGELES HARBOR

arJJ�

LONG BEACH

/

r

�r

:

_,.J

r ··· - ···

ANAHEIM

rrOrange County ,,,.-- ·'

Los Angeles County

Fi

.

ta e Springs �SanField .

WHITTIER

/ \

-···

�

TO PASADENA

Beach Field/ Signal Hill .:

�

COMPTON

LOS ANG ELES

Los Angeles .Fie/cf.

- ·· · -+- · ··-

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land owned by former tennis champion Alphonzo Bell. On th e morning of October 30, 1 92 1 , the earth roared and mud and wate r came rush ing out the hole, followed by a rich stream of black liquid. Bell scrambl ed out of bed and donned a corduroy suit and sombrero, both of which were soon covered with oil. Th us, wrote Atwood, "before the effects of Huntington Beach had a chance to wear off, Signal Hill came i n ; and when the Aood from both was just coming on, the th ird and largest of all, Santa Fe Springs came rushing in." Within a fifteen­ mile triangle, there materialized what one geologist has called "the greatest out­ pouring of m i neral wealth the world has ever known ." Never before had three prolific fields in such close proxim i ty appeared within such a short span of time. Individually, each was a sensation; coll ectively, they rent th e fabric of southern California society. "For all th e h igh tides in the affairs of men," wrote Atwood, "none is at once so productive and destructive of . . . wealth, and none combines such beneficent effects as one of those Aoods of l iquid gold . . . with its accompaniment of sheer frenzy." Th e Los Angeles oil boom, h e noted, repl icated conditions of earl ier strikes: "the same optimism in th e air, the same enrichment of landowners, the same ener­ gizing and sti mulating of th e communities directly affected . . . the same exagger­ ated expectation of riches for all." But several major differences distinguished the new mania. Although most pre­ vious discoveries had occurred in rugged, isolated terrain, th e new strikes heralded the first oil boom to unfold with i n reach of a great metropol is. I n addition, the three oil fields were not located on vast wilderness estates or lands i n the public domain but on previously developed real estate subdivisions. S ignal Hill contained almost one thousand individual l ots. Hunti ngton Beach and Santa Fe Springs added hun­ dreds more. Hunti ngton Beach had won renown for its "Encyclopedia lots." I n 1 9 1 4, a publishing house had marketed its encyclopedias b y offering Huntington Beach land as premiums. Each purchaser received a 2 5-by- 1 00-foot parcel. Many recipients failed to pay taxes and their ownership lapsed. Others throughout the nation retained their i nterests. Suddenly the Encyclopedia lots sat atop of one of the nation's richest oil fields. Those who had kept their "premiums" received healthy monthly royalties, symbols of the oil fortunes available to anyone. Los Angeles thus offered, in Atwood's words, "a wonderful , superb, unprece­ dented situation from the oil promoter's standpoint. The wel ls are there, the oil is there and the investors are there . " These conditions, he wrote , "afforded an oppor­ tunity for human greed to operate on a scale wh ich has overreached itself. " C . C. Julian strode onto th is stage in 1 922. The events he s e t in motion transfixed the attention of southern Cal ifornians and transformed their l ives throughout the 1 920s and for many years beyond.

C . C . J U LIAN B REA K S INTO SA N TA FE S P RIN G S

Any description of Courtney Chauncey Jul ian's early life must be viewed with skep­ ticism. Ava ilable accounts of h is formative years derive from his own often self­ serving saga of hard work, ambition, and fortunes ga ined and lost. Wh ile publ ic records support the broad outl ines of his tale, many details escape confirmation; others fall into the realm of fabrication. C . C . Julian portrayed h imself as one part Horatio Alger and one part frog prince, born a generation removed from a life of wealth and le isure. He was, he claimed, the grandson of a prom inent I rish attorney, the Crown sol ic itor for King's County in Ireland, who at his death in 1 896 had amassed a $ 5 ,000,000 estate, and British documents do l ist the appointment in 1 844 of a John Julian to the sol i citor post. According to C. C . , his father, Francis, had thus been born into a worl d of comfort and culture, "a man of extensive education , a graduate of Oxford, and master of seven languages ." Francis Julian served as a captain in the British army, but "reared as a gentleman without any training along commercial l i nes . . . he had no notion in the world of what work was." Fran cis, recounted C . C., fell from grace at age twenty-e ight when he dared to love and ma rry an Irish Catholic girl . John Julian, an Orangeman and a l\lason, bequeathed his son $ 1 5 ,000 and severed all relations. In the early 1 8 80s Francis and his young bride left Ireland to seek a ne\\" life in the Canadian colonies. \Vith the money recei\'ed from his father, Francis ern·isoned becom ing "a colonial 0 1 1 the grand scale, in the best British manner." I le bought 600 acres of land near the town of Morris, l\lanitoba, halfway beh\·een \Vi nnipeg an cl the Un ited States border. C. C. recalled his father as a man whose com fortable upbringing "made him forever afterward incapable of understanding the true value of money or taking care

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of it." As he had sunk most of his capital into land, "ready cash" became "too scarce an article with a man who didn't know how to get along on anyth ing else." Th e land itself yielded only an unprofitabl e mustard seed crop. Seven births were registered in Morris, Manitoba, in 1 88 5 . Among them was Courtney Chauncey Julian, born on October 1 0 on what he l iked to call "one of the poorest farms of North America . " By 1 894, C. C. had four younger brothers and sisters. He spent his early years performing the arduous tasks of a farmboy: milking cows, herding sheep, chopping firewood, and harvesting the mustard crop. The habits fostered by the rigorous seventeen-hour work day, he later boasted, never left h i m . Morris, Manitoba, marked t h e first o f Julian's repeated exposures t o the boom­ and-bust mentality of the industrial age. Julian doubtl ess took note of th e unabashed promotional activities of the townspeople. A local h istory, using language that might apply to Julian's later career, described the era as one of "activity, courage, deter­ mination, and an overly generous vision of expenditure." But the city's modest boom ended in the 1 890s, and Francis Julian ranked among the victims. C. C. remem­ bered how "the refractory land suck[ed] the life blood" out of his father, "engaging him in a fight in which he seemed unable to win . " In 1 898, the family sold i ts possessions, surrendered the mortgage on the land, and moved to \Vinnipeg. A contemporary described the Wi nnipeg of C. C . 's youth as "a lusty, gutsy, bawdy frontier boomtown roaring through an unequalled economic debauc h . " A fledgl ing city of 40,000 at the turn of the centu ry, Winni peg more than tri pled in size during the next decade, em erging as the metropol is of the Canadian West. Twenty-four ra ilway lines radiated from the city, dispersing gra i n and cattle from Canadian prairies to national and international markets. By 1 902, Winnipeg had surpassed Chi cago as a center of the wheat trade. Hordes of young, single men seeking employment on the farms, factories, and railroads passed through Winnipeg, the gateway to the prairies, wh ile an influx of "undesirabl e" immigrants from Russia and the Slavic countries unleashed a torrent of ethnic tensions. Julian later depicted his l i fe in Winnipeg in heroic terms. His family arrived, h e related, virtually penniless. He himself sported a cut-down suit from his father's wardrobe that made him the butt of cruel neighborhood jokes, leaving an indelible imprint on his young mind. His father, claimed C. C., had died in 1 898, prec ipi­ tating the abandonment of the farm and leaving C . C., the oldest son at th irteen, as family head. His mother rented a ten-room house and took i n boarders to support her large brood, while C. C. worked a series of odd jobs to supplement the family income and allow his sibl ings to attend school . Winnipeg city directories, however, show Francis Julian alive as late as 1 904, describing him first as a "farmer" and later as "retired." As a wido\\' and board ing house-keeper, C. C . 's mother would normally be l isted, but neither she nor her enterprise appear. In addition, the family mo,·ed three times in five years, unusual behavior for boardinghouse-keepers. More reveal ingly, the di rectories include a second Francis Julian, living at the same address and working for the C�madian Northern Ra ilroad. C, C., at one time, spoke of an older brother born and left in

C. C . J U LIAN BREAKS INTO SANTA FE SPRINGS

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England and raised b y his mother's family, who never joined the Canadian exiles. But this tale, l ike the premature death of his father, appears to have been fabricated to enhance the Algeresque imagery. C. C. found work as a newsboy, "bucking the snowdrifts, peddling papers early and late . . . trying to grab enough nickels and pennies each day to supply bread and butter for a lot of little hungry mouths at hom e . " The city boys, wrote Julian, "were 'plenty tough . ' But I soon got just as tough as they were . " One evening "with the mercury hanging around forty below zero," he spotted two newsboys "pounding the knuckles" to a th ird. Although he did not know the victim, and "I expected to get the whey beat out of me, I dived in with feet, teeth and fists (and] pryed the underneath kid loose. " C . C. and his comrade stood "toe to toe, swapping punch for punch with two of the toughest kids I ever mixed with . " In the end, C. C . had acquired a "l ittle Yi ddish friend," Jake Berger, who would join him in his later ventures. At age fifteen, C. C . graduated from peddling newspapers to driving a milk wagon from 3 :00 a.m. to noon each day. For two years h e braved the blustery Winnipeg mornings before landing his fi rst i ndoor job, clerking at a drugstore. His eager, engaging personality proved ideal for sales work. He soon secured a job for higher wages at a clothing store where he "carried forward his education in the art of meeting people and influenc ing their decisions." Through this succession of dead-end , low-paying jobs, C . C. dreamed of becom­ ing a lawyer, l ike his estranged grandfather. But because he lacked funds or formal education, law school was beyond his reach. He enrolled instead i n night classes at a Wi nnipeg business college, where he l earned shorthand, typi ng, and stenography. In 1 90 3 , armed with these rudimentary weapons of commerce and his first tailor­ made suit, seventeen-year-ol d C. C. Julian moved 300 miles westward to Regina in the Saskatchewan territory. A frontier community of 2, 500 people, Regina was primed for growth . Within two years Canada officially recognized Saskatchewan as a province, and Regina became the capital city. New railroad connections and a flood of westward migration inflated hopes and property values. This latest Canadian boomtown exposed Julian to the great industry of the American West: real estate speculation. He became personal secretary to the head of a real estate firm, taking dictation, writing letters, and handling insurance, deeds, and records. He earned $7 5 a month, more than doubling his previous income, which allowed him to provide for his family in Wi nn ipeg and accumul ate modest savings. Claim ing to have watched the wild escalation of real estate prices for a year before yielding to the temptation to speculate, C. C. bought a lot for $200, sell ing it six months later for $2 50. He quickly invested in five more land parcels, turn ing them over after three months for an $800 profit. During the next year, by his O\\'n account, C. C. Julian quickly acquired and disposed of thousands of dollars \\'Orth of empty lots. In 1 906, a land boom erupted in Edmonton, Alberta , several hundred miles farther west. Jul ian liqu idated his Regina holdi ngs, with the exception of one unsal­ able lot, and headed for Edmonton. He was twenty years old and worth $6,000. He

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signed on with an Edmonton real estate firm and, attempting to duplicate his Regina success, i nvested his profits in Edm onton properties. This time h e had arrived at the wrong end of the boom . With in months the Edmonton bubbl e burst, and C . C . 's first fortune evapor. ted i nto the cold Alberta a i r. In later life Jul ian reported that, at that moment, ashamed to face his mother, he returned to Regina, sold his one remaining lot, and headed west for Vancouver to recoup his losses. The city d i rectory, however, reveals that Courtney l ived, at least brieAy, in Winn ipeg in l 906, employed as a stenographer. Th e following year, h e appeared in the Regina di rectory as the manager of a men's clothing and tailoring establ ishment, a position he omitted in later accounts of his life. Jul ian's brief return to Winnipeg may have been motivated by the presence of Mary O'Donohue. He had met Mary, the "dark and attractive" schoolmate of his sister Violet, before originally departing for Regina in l 90 3 . Her picture, h e told a biographer, "kept him from running around with the girls and spending his pocket money on them." The pair later claimed to have exchanged daily letters during his three-year absence, a practice they continued throughout their unusual courtsh ip. In 1 907, Jul ian left Regina for Vancouver, but the recession had already reached the western metropol is. Unable to find work, Julian and a friend saw an advertise­ ment for l aborers in the oil fields of Bakersfield, California. The two men aban­ doned the i r native Canada for the l u re of California's black gold. Bakersfi eld, in th e heart of the rugged Kern River oil field, introduced Julian to a new type of boom town , one based, not on agriculture, rail roads, or land specu­ lation, but on crude oil pumped from the earth . The American industrial revol ution of the late nineteenth century had rel ied heavily on the availabil ity of two natural resources: coal for propulsion and heating, and oil for l ubrication and illum ination. California had seemingly lacked both. As early as l 864, Yale chem istry professor Benjamin Silliman, Jr., had predicted, "California will have more oil in its soil than all the whales in the Pacific Ocean." But initial expl orations inspired by Silliman's optimism had yielded few positive results. Wildcat drill ing brought forth either dry holes or modest A ows below commercially viable level s. Furthermore, Cal ifornia crude produced inferior lubricants and kerosene that generated more smoke and smell than l ight. Silliman's prophecy had foundered, not on the absence or quality of oil, but on the difficulty of its discovery. "Cal ifornia geol ogy," writes Hartzell Spence, "is a study in surprises. " Th e scen ic, low, rolling hills that traverse southern California covered what Spence described as "eccentric rocks and crevices," forged by earth­ quakes and underground erupti on .s that "twisted and d istorted rock folds to great depths." Within these "stratigraphic traps . . . locked in by hard rock cages," lay vast reservoi rs of oil. But the unfam iliarity of the terra in and primi ti\·c nature of explo­ ration and drilling technology protected the earth's secrets. By 1 890, the Pico Canyon in Ventura County was Cal i fornia's sole colllmcrcial oil field. As late as 1 89 5 , a correspondent reported frolll Los Angeles, " Fuel is so scarce and high here that it is the practice of local manufacturers to utilize for their

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furnaces the dried manure of the streets, and even office sweepings, carted for the purpose to their door." Edward L. Doheny, an attorney turned min ing prospector, became the first to tap the riches hidden beneath the southern Cal ifornia soil . Doheny arrived i n Los Angeles i n 1 892. Gazing out his boardinghouse window, he noticed a wagon laden with ch unks of tar. Mexicans had used the brea to waterproof roofs and fenceposts. Americans lubricated machinery with it and, on rare occasions, burned the tar for fuel and heat. Doheny knew nothing of oil and had never seen a drilling rig. But he sensed intuitively that th e tar might be oil seeping from the ground and con­ gealing on contact with the air. Doheny and his former silver min ing partner, Charles Canfield, leased a lot in a residential ne ighborhood just east of downtown Los Angeles. Using picks and shovels they dug a 1 5 5-foot mine shaft, then sharpened the trunk of a eucalyptus tree into a makesh ift drill. On November 4, 1 892, at the modest depth of 460 feet, they struck oil, which they bailed from the well with a bucket. The Doheny discovery inaugurated an oil boom in the heart of downtown Los Angel es. During the next five years derricks "as th ick as the holes in a pepper box" sprouted along a narrow two-mile residential strip. Gardens, palm trees, and even homes d isappeared as steam-powered rigs and primitive hand-driven drills probed the earth. Most found oil at shallow depths and produced a paltry ten daily barrels. But by the turn of the century, thousands of wel ls in the Los Angeles field yielded almost tv.·o mill ion barrels a year. The California oil strikes coincided with a growing nationwide demand for petroleum. The nineteenth century had been the "age of illum ination . " The oil industry, centered in Pennsylvania, Ohio, and Indiana and dominated by John D . Rockefeller's Standard O i l , refined kerosene fo r gas lamps as i ts primary product. Coal provi ded the energy that propelled locomotives and heate d homes. Gasoline, a m inor byproduct of the refin i ng process, was used exclusively for cleaning, sol­ vents, and some cooking stoves. By the turn of the century, h owever, Western rail­ roads had converted to oil-burning engines, and fuel oil warmed a growing number of homes and businesses. More significantly, the automobile had captured the imag­ ination of America. In 1 899, only 8,000 motor vehicles were registered in the United States; twenty years later, automobile registrations numbered 7.6 mill ion. By 1 9 1 9, automobiles accounted for 8 5 percent of all gasol ine use, and gasol ine had long since repl aced kerosene as the industry's major revenue producer. The increased demand for petroleum transformed the oil business. \Videspread exploration opened up new fields i n California, Texas, Oklahoma, and Lou isiana, creating opportunities for new companies and loosening Standard Oil's strangl ehold on the industry. Beginn ing in 1 900, the h eart of the California oil boom shifted to Kern County, 1 20 miles north of Los Angeles. Discoveries at Kern River, Mc­ Kittrick, and M idway-Sunset made Bakersfield and nearby towns "the center of the oil un iverse." C . C. Julian arrived in Bakersfield in 1 907 with "just enough money to rent a

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room and buy a square mea l . " He quickly procured pick-and-shovel jobs digging ditches for pipel ines, tasks that required "only muscular arms and a knowl edge of which side of the shovel is the top side." The arduous, unskilled \\"ork paid $ 1 . 50 a day. During the next three years Jul ian received his training as a "roughneck," the common term for the men who worked in drill ing crews. He learned to fire boil ers, dress tools, fish out dropped casing and tools, cement and complete wells, and handle and store oil. Wages were h igh and expenses low. In late 1 909, Julian returned to Canada. Personal considerations may have moti­ vated his decision. He was twenty-four years old. For seven long years he had courted Mary O'Donohue from afar, writing and receiving daily l etters. The time for a commitment had arrived, and the life of a roughneck held few attractions for a young city woman. In addition, his mother required care, which he could not supply amidst the oil camps. Accounts of Julian's life d iverge at th is point. Julian claimed that he had saved $ 3 ,200 in the oil fields before return ing to Vancouver where, after working several months in a jewelry store , he secured a job with Champion and Wh ite, the city's largest suppl ier of building materials, heating appliances, pipe, and hardware. Julian told later biographers that he qu ickly rose to the front rank of Champion and White's thirty-five traveling salesmen "by a wide margin." With in ten months, he states, the company named him sales manager at a salary of $ 500 a month . With the security of a well-paying job, Julian moved his mother to Vancouver and on December I , 1 9 1 0, finally married Mary O'Donohue. Mary Julian presented a less flattering account of their marriage. In 1 9 1 0, she later recounted , C . C . was employed in a pl umber's shop in Winnipeg, with l ittle means of support other than his meager earnings. He borrowed "various large sums of money" from her, which she had obta ined from her father. Available records could support either account, but even if Julian exaggerated his sales success and adj usted the chronology of events, it is clear that by 1 9 1 1 he was employed by Champion and White in Vancouver. S ince h is birth in Morris, Julian had been nurtured on booms in Winn ipeg, Regina, and Bakersfield, but the pre-World War exc itement in Vancouver dwarfed these earl ier experiences. Plans for a new transcontinental railroad line in 1 909 spurred an influx of foreign capital from the United States, England, Germany, and other European countries. Population increased by 1 ,000 residents a month and, by 1 9 1 1 , exceeded 1 1 0,000. Infectious optimism engulfed Vancouver and its sur­ rounding communities. Once aga in Julian found hims�lf am idst a raging real estate boom. Land values quadrupled in 1 9 1 1 as apartm ent houses, office buildings, and hotels sprouted throughout the c i ty and new subd ivisions ri11ged the suburbs. Realty offices out­ numbered grocery stores in Vancouver by three to on e. Julian plunged i11to the market, registering, by his own count, a $ 3 0,000 profit in the first few mo11ths. In 1 9 1 2 , he left Champion and White and joined a real estate firm . But cornpetitio11 in Vancouver, where there was a "real estate salesman for every telepho11e pol l "

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proved forbidding. By 1 9 1 4, Julian had moved to Victoria o n nearby Vancouver Island and launched his -trwn realty concern. On Vancouver Island in these years, "hammering could be heard everywhere . " Julian remembered t h e heady days o f the Victoria boom with great relish. "Every­ th ing I touched seemed to turn to money," he recalled. "I made it more rapidly than I had ever done before. I cleared $80,000 net profit on one subdivision of 56 acres . . . . I had my holdings concentrated in $200,000 of city business property." But beyond confirming that Julian was engaged in th e land market, first in Van­ couver and later in Victoria, it is impossible to verify his claims of success. Whatever the extent of Jul ian's holdi ngs, his fortune tottered on an unstable base . While real estate speculation flourished, mining and agriculture, the two basic industries of B ritish Columbia, had stagnated. Reports of land swindles circulated through the province. As World War I approached, foreign investors withdrew their capital, and the economy sagged. When hostilities erupted in Europe, the real estate market collapsed . "Soon you couldn't give anyth ing away in Victoria," recalled Julian. "All my property was clear, but the taxes were devilish. Without any money coming in I paid the first year's taxes, but I couldn't pay the second ." Ulti mately, he stated, the city of Victoria seized his properties. In late l 9 l 4, Julian left Victoria, bankrupt. After a decade as office clerk, oil field roughneck, hardware salesman, and real estate speculator, C. C. found h i mself back where he had started, selling men's cloth ing in Winnipeg. According to Julian he opened his own retail store, but "war conditions doomed it to failure," and he found employment with another company. By 1 9 1 7, Julian, now th irty-one, had two daughters, Lois and Frances. Th e income of a clothing salesman barely sup­ ported his family. The l ifestyl e did not appeal to h i m . In California, meanwh ile, American entry into the war had stimul ated demand for oil and oil workers. Julian, although absent from the petroleum fields for almost eight years, moved his family to Taft, Cal ifornia, an oil town southwest of Bakersfield. C. C . secured a job with Tecumseh Oil and worked twelve-hour shifts and received a healthy $22 daily wage. Although employed as a driller, Julian boasted, typically, that he "acted practi cally as a superintendent of operati ons." \Vh en Tecumseh Oil opened new fields in Full erton, south of Los Angeles, Julian mo,·ed Mary and the girls to the Los Angeles beach community of Ocean Park and regularly made the triangular two-hundred-m ile commute from Taft to Ocean Park to Fullerton. With in a year of arriving in California, Julian set his sights on larger flows of oil . The great discoveries of the \Vorld \Var I era had occurred, not on the Pacific Slope, but in Texas and Oklahoma. In m i d- 1 9 1 8 , Julian left h i s family in Los Angeles and \\'ith three other drillers drove his Ford touriug car to Texas. For se,·eral months Jul ian worked for independent con tractors, \\'ho paid to drill by the foot, drm·e their \\'Orkers mercil essly, but compensated them wel l . Skilled roughnecks received extraordinary \\'ages fo r that era, but the real profits ·

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in the petroleum industry came from leasing and developing oil lands. In September 1 9 1 8, Julian met Edward St. �!bans, a Cal iforn ia oil man seeking to expand his operations into Texas . " H e was forming the Texas Holding Company," Julian recalled, "and wanted an oil man to look over the holdings. I got a geologist friend of mine and we made a complete inspection for St. Albans. He made me a part­ nership proposition if I would stay in the field and take charge of the operating end . " Julian quickly seized the opportunity to produce oil on his own. St. Albans returned to Los Angel es to "push his financing" for the Texas Holding Company. Julian joined him there in December 1 9 1 8. Over the next two months, C. C . gained his initial experience in selling oil stock. By March 1 9 1 9, St. Albans and Julian had fully subscribed the Texas Holding issue and secured 600 acres of oil leases on the outskirts of productive Texas fields. Julian took command of the drilling operations, his first real effort as drilling supervisor. Financial experts later estimated that between 1 9 1 8 and 1 92 1 , over 270 similar Texas oil schemes took root in Los Angeles. Ninety percent proved worthless; none returned significant profits. Texas H ol ding, to the chagrin of its investors, produced four dry holes. According to Julian, the company withdrew from the Texas fields, and he resigned his position. H e formed his own contract drill ing business and over the next year and a half sank twenty-four wells. H is cl ients included Union Oil and a former governor of Oklahoma. Despite his earlier fail ures, he recounted, most of these efforts struck oil. Still anxious to join the ranks of independent producers, Julian invested his earnings in oil l eases. H e drilled three wildcat wells on these properties, each one a "duster." In early 1 92 1 , Julian returned to his family in Los Angeles. He had spent two and a half years in the Texas oil fields and, he later claimed, accumulated just one dollar per month for his efforts. I n addition, according to his wife, Julian had also acquired a mistress. While in Texas, C. C . met "a young girl" named Maybelle Smith , who soon followed him to Cal ifornia. With a wife, two daughters, and a mistress to support, Julian was flat broke. Events thirty miles south of his Ocean Park home, however, encouraged new hope. In November 1 920, Standard Oil d iscovered its spectacular Huntington Beach bonanza. Since Huntington Beach had already been subdivided, the dis­ persed land ownership opened opportunities for small operators to obta in leases. Julian, fresh from his Texas failures, sought to recoup his l osses. He recru ited former Texas Holding Company backers to stake him in a new venture . Persuaded by Jul ian's energetic appeal and the tales of wealth emerging from the new field, they laid out money for a lease and driUing syndicate. The only surviving accounts of Julian's exploit at H u 1 1tington Beach are based on his own rem in iscences. He spent the year ra ising funds and supervising drill ing, "nurs[ ing] his oil well along l ike a sickly Boston Terri er." His busy sch edule, he claimed, all owed him few nights at home. But the apartment he had establ ished for Maybelle Smith may explain his frequent absences. At the well , Julian later lamented, "about everyth ing happened that could happe n . " The wel l "contracted all the diseases oil hQles are heir to - from swallowing tools that had to be fished

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fo r to malnutrition due to lack of fu nds." On one occasion Julian traveled to north­ ern Cal ifornia to ra ise H'loney \\'h en he received a desperate tel egram. A string of tools had dropped down the wel l, and repeated efforts to rem o\'e them had dis­ patched more gear do\\'n the shaft. "Have four strings of tools in th e hole," wired his foreman. "What'll I do?" "Dump in the boiler and call it a day," shot back Julian. He quickly returned to Huntington Beach and supervised operations that successfully rem oved the tool s. On a cold, gray dawn in i\.fay 1 922, Julian and his crew prepared for the decisive thrust into th e oil sands. Julian had spent $ 1 40,000 to drill this \\'el l . Thirty of his backers and friends had shared his \·igil th rough the night. Julian had not slept for two days. At 5 :00 a . m . the drill bit into the sand and liquid came pouring out. But the flow was water, not oil. Julian had hit another "dry" hole. Julian, according to his later account, stood al ongside the derrick, "tombstone at the grave of many dollars of cash and hours of effort," chewing on a toothpick. Th e long sl eepl ess nights had left "his eyes and cheeks . . . pretty hollow and his face . . . kind of grey. " As the morning sun appeared in the east, he stepped into his automobile and turned the wh eel, not toward home, but in th e direction of southern California's newest oil field, Santa Fe Springs.

11

Twelve miles southeast of Los Angel es, Santa Fe Spri ngs was, according to one resident, "a gentle, qui et, serene place, too small to be a town ." The community traced its origins to the 1 880s, when a local doctor discO\·ered a sulphur spring beneath his land. Claiming great curative powers for these waters, the doctor built a lavish resort wh ere hundreds of "excessively portly matrons of society, gouty old gentl emen, rheumatics of all cl asses, and conformed 'soaks"' sought a cure for a variety of ailm ents. Sanitariums appea red in su rrounding areas promising treatm ents "to dissolve and remove all morbid accumul ations . . . restore the vital powers of nature . . . [and] strengthen and harden the whole organism . " This harbinger of California h ealth fads pro\·ed short-l i\·ed, howe\·er, and in the early twentieth cen­ tury the area began to attract wealth ier residents \vho purchased substantial acreage and constructed la\·ish homes. Prom inent among these settlers was Al phonzo Bell. Bell was a tru e nati\·e son of southern California nurtured by the orth odoxies of Protestant theol ogy, irrigation, and real estate specul ation. His father, James Bell, had acquired and subcli\·icled thousands of acres of und e\·elopcd Los Angeles land, and Alphonzo, born in 1 87 5 , grew u p a m i dst th e h eady euphoria of the 1 8 80s land boom. I n 1 888 h e entered Occidental Academy, th e austere Presbyte rian forernnner of Occidental Coll ege and, upon graduation in 1 894, enrolled at the San Anselmo Theological Seminary, to pursue the min istry. But \\ ithin hrn years Bell inh erited 1 1 0 acres and promptly left to seek h is fortu ne in real estate. Bell irrigated the land and subdi\·idccl it into homesites, \\ h i c h sold briskly, gi,·ing h i m his first busin ess success.

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In 1 902, Bell reinvested his profits in land in Santa Fe Springs. H e irrigated the property and moved his family there- in 1 908. At its peak, Bell's Santa Fe Springs estate boasted 200 acres of prime agricultural land, producing alfalfa, oats, hay, barley, lemons, and oranges. Bell drove an expensive Hudson automobile and employed the services of two servants and as many as twenty-five h ired hands. The most unusual feature of Bell's home was h is tennis court, a rarity in southern Cal­ ifornia and a testimony to his athletic prowess. From 1 900 to 1 9 1 0, Bell gained fame as the outstanding tennis player on the Pacific coast, three times winning the California singles' championship and ranking briefly among the nation's top ten players. But by 1 9 1 0, a new passion had replaced Bell's devotion to tennis and farming. While drilling for water, Bell repeatedly struck pockets of gas that shot streams of water over several acres. Although he had no background in geology, Bell surmised that where gas appeared, oil must follow. Scattered pieces of tar in the d iggings fed h i s conviction . By 1 9 1 0, Bell was certain that his land sat above a vast reservoir of petroleum. Al phonzo Bell was not the first to suspect the presence of petrol eum i n Santa Fe Springs. As early as 1 86 5 , Pioneer Oil had explored the land for petroleum. In 1 907, Marius Meyer, a shrewd Basque sheepherder, leased his property to Union Oil, which immediately began drilling efforts. Although gas escaped from the hole in copious amounts, sand, gravel, and water blocked the path to oil, leading Union to abandon the wel l . In 1 908, Union made a second unsuccessful attempt to probe Meyer's land. The tribulations on the Meyer property bedeviled Bell's efforts to interest oil companies in his estate . For years Bell pestered officials at Standard Oil and Union Oil, but his entreaties evoked only vague prom ises of future exploration . World War I brightened Bell's prospects. In April 1 9 1 7, he l eased his land to Union Oil, but the company decided to first test Marius Meyer's claim one more time. For two years and e ight months Union's roughnecks battled the precarious sand, gravel, and water of the Meyer land. In October 1 9 1 9, their efforts produced a spectacular 3 ,000-barrel-per-day stream of precious h igh gravity oil. The capricious Meyer soils, however, had one last trump to play. With in hours, water broke into the wel l, interrupting the flow of oil. Th e depth, diffi culties, and ultimate disappointment of Meyer No. 3 caused most companies to shy away from Santa Fe Springs. Nonetheless, Union Oil agreed to sink the long-awa ited test well on the Bell property. For Alphonzo Bell the com­ pletion of a successful well had acquired a new urgency. The once prosperous country squire now sat perched on the edge of a financial abyss . The mortgage on his ranch had fallen i nto default, as had a second short-term loan. His remaining workers rece ived property in lieu of wages, and for several years the town grocer had provided Bell with food and supplies on cred it. Bell was clearly approaching the l i m its of his resources. The former tennis champion wa ited anxiously for two years as the drill plunged deeper into his land. B;• the morning of October 30, 1 9 2 1 , Bell No. I had reached

C. C. J U LIAN BREAKS INTO SANTA FE SPRINGS

27

a depth of 3 ,763 feet. As Bell sl ept, workers resumed the downward drilling. After five more feet of progress ; the earth roared, and mud and water came rush ing out of the hol e , followed by a rich stream of black liquid. Bell No. 1 was the greatest well in the West, and two-th i rds of Bell's Santa Fe Spri ngs property sat atop a vast pool of oil. More than a decade after he had first smelled sulphurous gas at a water well, Al phonzo Bell had become incredibly rich, a yardstick to measure success by in southern California. But the excitement had barely begun. On the evening of January 4, 1 922, two months after the Bell strike, an oil crew resumed drilling on Alexander No. 1 , a few hundred yards from the Bell d iscovery well. Mud suddenly began to boil from th e hole and the head driller warned h i s men to run. Nine hundred feet of drill pipe blew high into the air and landed 200 yards away. Mud and debris covered the surrounding area, and windows rattled in Whi ttier, several miles to the northeast. With i n hours a crater I 00 feet wide and 30 feet deep had formed, swallowing the derrick, water tanks, and two automobiles. Terrified local residents took fl ight. Gas, mud, and rocks spewed continuously for over a month before Al exander No. I ceased its eruption, choked off by i ts own mud. B efore the devastation from the great Al exander blast had subsided, on February 1 1 , the drill b i t on nearby Bell No. 2 pierced a subterranean gas cap. A section of pipe arced skyward, then plunged rapidly, imbedding itself i n the earth . Workmen struggled to control the flow of gas as rocks shot 300 feet into the air. After thirty hours a spark ignited the sky. The blast destroyed telephone poles with in a 1 00-yard radius and threatened the Bell ranch house. "When the paint in our kitchen began to bl ister," recalled Alphonzo Bell, Jr., "we knew we'd better get out." The Los Angeles Times reported flames reaching 5 00-foot heights. Illumination could be seen for twenty m iles. Thousands of sightseers flocked to the scene. "We drove to view it and i ts heat kept us many blocks away and its roar made conversation impossibl e," reported one observer. H u ndreds of workers battl ed the blaze, to no avail. After ten days the fire extinguished itself, only to erupt aga in the foll owing day. The flames, raging as hard as ever, burned across the base of a fifty-foot crater created by the initial explosion . Fi rebal ls soared h igh above the surface . After several more days sand and mud again plugged up the well , bringing the spectacular con­ flagration to a halt. The Al exander blowout and Bell fire made Santa Fe Springs the best-known oil field i n the nation and enhanced the rom ance of the oil industry. Here, within a short car ride of Los Angel es, was adventu re, danger, and spectacle, "the greatest thrill of recent years," said the Times. What better way to spend a weekend than to pack the family into the car to watch the roughnecks at work. If lucky, one could witness the arrival of a gusher or a grand conflagration. Los Angeles already offered real estate booms, Hollywood, and a wondrous climate, but could even these com­ pare to the excitement of Santa Fe Springs? Throughout southern California, Santa Fe Springs became a beacon for those seeking instant fortune. Overn ight, a resident complained, the community became an "ugly place . . . . All the l m-ely trees were gone. Most of the houses were tom

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THIS IS NO I NVESTM ENT FOR YOU

45

only realize how truly sincere I a m trying t o b e with you, th is would b e the last message I would have to send . " "A promise made is a debt unpaid," Julian preached in a later ad. "The day I break one of mine, 'I wa n t you to walk in and shoot me.' " He hoped to "fall headfirst into the deepest well in Santa Fe Springs" or let the "Buzzards pick my bones and the wind whistle Star Spangled Banner through my ribs" should he betray the "royal confidence" of his investors. C onfronting an audience anxious to invest but surrounded by dire warnings about con men and oil schemes, Julian d i rectly countered the charges leveled aga inst oil promoters and turned them to his advantage . Even before he struck oil, competitors aped his approach and boasted of their proxi mity to his lease. But none could match C . C . Julian as the articul ator of the no-risk, get-rich-quick speculative dream.

II

C . C . Julian had mesmerized his audience, but he had yet to strike oil, and, despite h is confident assurances, del ivering one wel l , much less three, was fa r from a sure thing. The Brunson lease, while no longer distant from the main Santa Fe Springs field, remained on the fringes of proven territory. To reach oil Julian woul d have to drill to a depth of almost 4,000 feet, a process fraught with peril. Even in the richest field, warned Samuel Blyth e, "an oil well is a tricky and malignant object." Under the terms of Jul ian's lease, he had to launch preparations within ten days and commence drilling within forty. Workers immediately began constructing the wooden derrick, which would tower over l 20 feet in the air, bedecked with electric lights for round-the-cl ock work. Huge boilers to generate steam to drive the engine had to be set in place, along with a sol id cement block created to support the large stationary engine that would power the drill. On June 30, the rotary drilling equip­ ment arrived. It included a "rotary table" for the center of the derrick floor, which, when turned, would rotate the drill bit into the earth . The table was connected to the engine by a steel chain of the type once described by Upton Sinclair as "exactly l ike the sprocket of a bicycl e, except that the l i nks were as big as your fist. " A square hole graced the center of the table and a corresponding opening penetrated the derrick floor. The top drill stem, equipped with an eighteen-inch bit, fit through these holes. With rig built, boilers set, and rotary table in place, Julian held a gala ceremony to launch Julian No. l . "Come down to the field Sunday and look it all ove r from cellar to Crown block and see me spud th is baby in," he wrote on Friday, July 7. "Seeing is believing. " Two days later, five days before the forty stipulated on the lease expired, a l arge, festive crowd gathered near the corners of Clark Avenue and Norwalk Boulevard in Santa Fe Spri ngs. With a flourish Julian ch ristened the der­ rick with champagne, which flowed so freely, according to one participant, that the local ducks and geese staggered drunkenly through the town for the next day. The

46

OIL

drill pierced t h e earth with the familar "Spud! Spud !" sound. "JULIAN 'BALLIN' THE JACK' AT SANTA FE SPRINGS," cro\\ed the ad in Sunday's papers. 'The basic principle of rotary drilling," writes William Rintoul , "is the same as that for a carpenter's auger. A hole is made - in \\'Ood or the earth - by turning a cutting tool wh ile weight is put on the tool ." Underground, the "blunt steel teeth" of the drill b i t operated "l ike a nutmeg grater," gri nding dirt and rock into pmYder. The drill bit was attached to a steel pipe, or drill stem, through which passed a special fluid, called drilling mud. The fluid escaped through holes i n the bit, picked up crushed pieces of rock, and was forced up to the surface, where it sluiced through a screen th at separated the rock cuttings, and into a "sump hole" from which it c irculated back into the wel l . The process also created a mud cake along the sides of the hole, which protected against the loss of the fluid and shored up the walls against cave-ins. Competent mudding prevented fluids, whether oil, gas, or \\·ater, from passing in or out of the hole. A porous mudding job doomed the wel l . As the well grew deeper, additional l engths o f steel pipe had t o be added t o the drill stem. Each thi rty-foot-long 3 80-pound cyl inder had to be carefully slid dmm the hole and screwed to the next. A 4,000-foot hole requ ired forty tons of steel pipe. When the bit became dull, or when a smaller bit was necessary, the roughnecks hoisted the entire drill stem from the hole with a block and tackle system, stacking the pipe vertically in stands on the derrick. They attached the new bit and then l owered the thousands of feet of pipe back into the hole to resume dril l i ng. Throughout the process, care had to be taken to stop water, "the foe and con­ queror of oil fields," from killing th e wel l . The drill stem regularly passed through underground streams and pools. If th is water m ixed with the oil, i t would destroy, not only the well , but possibly the entire field. To prevent this, oil workers would "cement off" the \veil, forcing vast quantities of pure cement down th e well under heavy pressure so that it rose outside th e casing and tightly sealed off the sides of the hole, filling every crevice. The entire job had to be completed within an hour, before the cement began to set. Work would cease for two to three weeks wh ile the cement hardened. In the end a giant plug woul d remain, sealing off the well . The drillers would then bore a hole through the block and resume their quest. If these efforts failed to stem the flow of water, as Bl�the wrote , "there's an oil well that has gone to glory." Julian's ads enthusiastically chron icled the "downward plunge" in detail. "Do you stop to remember that my offer has been before you for three weeks and I am now drilling at 900 feet?" he asked on July 14. Ten days later Julian No. l reached l , 5 00 feet and his crew successfully engineered th e first cementing task. By July 30 i t passed the 2 ,000-foot mark. The troublefree journey ended abru ptly on August I 0. With .No. I at 2,80-+ feet, 1 50 feet of drill stem twisted off and blocked the hole, necessitating, as Julian described in his ad, "A i\1can Fishing Job." To sa\·e the wel l, thousands of feet of pipe had to be ho isted and unscrewed until the break was discm·ered. Th e drill ers then began "fishing," lm'l:ering a heavy "o\'ershot" dmrn the hole \\·ith a cable, attempting to hook milo the dam aged drill stem and pull it up. Fish ing jobs could

THIS IS NO INVESTM ENT FOR YOU

47

take days, weeks, or mon.!ps. Sometimes the junk could not be moved, in which case i t became necessary to drill around or "sidetrack" the broken equipment, or worse, drill .through it in a lengthy, expensive "mill ing" process. In many cases th e well had to be abandoned. Maintaining his straight-shooting image, Julian reported the setback in his August 1 1 ad. Instead of th e vague promises offered by tent show orators, he " ( laid his] cards face up on the tabl e." "Wh en you l ay your 'Jack' on the line with me, you know exactly what you get and how you get it," Julian promised. "I am here to give you the stra ight dope. Whether it is good or bad, I'll give you the lowdown always." Julian reassured his investors, "You may bet your spare change I will have the fish out within 24 hours. 'Are we downhearted ?' Not on your old straw hat." Julian proved as good as his word . " FOLKS ," he crowed on August 1 2 , "At three o'clock this morning we laid the 'old fish' on the walk and my 'Bearcats' are again rambling to that 'Gusher' oil sand . . . . I'm a l i ttl e groggy but had to scribble you th e word before hitting th e hay." Three days later, on August 1 5 , however, Julian aga in bore bad tid ings. "Ain't it Awful?" he asked. "We no sooner got out of one fish ing job than we stepped into another. 'Folks Hold Your Breath ."' Th is task proved more challenging. On August 1 7, Julian wrote, '"Yes Indeed' Still Fish ing . . . but don't you lose any sleep. I'm doing that for you ." Julian decided to cease fishing and instead sidetracked th e drill bit and collar l odged i n the hole. "H I-BALLIN THROUG H," announced Julian on August 1 8. "We're Sitting Pretty Aga i n . " In t h e aftermath o f these difficulties, Julian dramatically offered his investors an opportunity to sell back their units. 'Tm Calling the Roll Today," he announced on August 2 3 . " Does anyone think I'm wrong? Does anyone doubt my sincerity? If there is anyone among my ' Thoroughbred supporters' who have 'cold feet,' step up to my office today and I will cheerfully hand you back your money. " For Julian, this represented a no-lose proposition. With other wells at Santa Fe Springs now coming in and demand for his u nits running h igh, he could easily resell them at a profit. By his own account, the "roll call" found his backers " '99' per cent standing behind me like a ' Stone Wall.' " Julian's willingness to satisfy disgruntled customers, his forthrightness on the "fishi ng" difficulties, and the alacrity with wh ich he and his drillers had handled that challenge, all reinforced his reputation for honesty and ability. These lessons occurred at an opportu ne time; Julian was about to launch another offer to th e publ ic. On July 26, Julian had started to prime his readers for a new investm ent oppor­ tun ity. "KEEP YOliR HAND ON THAT BANKROLL FOLKS ," he advised. "I have another S\\'eet deal brewing at Santa Fe Springs on tht> most \\'Onderful piece of oil land you ever laid your eyes on." His offer, he prom ised, wou ld be "the Eagle's Il ips and you will be on the ground Aoor and I guarantee there will be no base­ ment." The new property sat 1 , 320 feet west of the Brunson lease, far beyond pro\·en

48

OIL

territory. But Julian was not alone i n his interest i n th is sector of Santa Fe Spri ngs. Standard Oil had l eased the Jand Dn three sides of Jul ian's claim. George Getty occupied his northern border. Throughout August, along with progress reports on wells no. 1 and 2 , which had spudded in at the start of the month, Julian whetted investor appetites for his new proposition. "Are you saving up dough for my new offer?" he asked. "It's going to 'knock you dead ."' Finally, on September 3 , Julian tossed his pitch: "IF YOU LOVE M E SHOW M E NOW" Here it is, Folks, short, sweet and simple, and take it from me as clean and keen a gamble as was ever submitted anywhere in the world. Folks, I am mighty tired of piling up dough from the big fellows. There is lots of money to be made in producing oil, providing you operate legitimately, and with your assurance I know I can make us all some real dough. I don't want to hog the game and become a millionaire over n ight, and in return for your support I will always give you the "lion's share." "\Vith me, your interests come first - mine come second."

I n th is offer, unl ike his first, Julian pooled the proceeds of two wells, Nos. 4 and 5 , into one syndicate. Each $ 1 00 i nvested netted 11> ,ooth of 6 0 percent of the combined production of the wells, after the landowners and Jul ian's backers received their shares. Furthermore, prom ised Julian, "If I drill the first well on this tract dry, I certa inly won't drill the second one on the same property . . . . I'll step out and select the surest spot in Cal ifornia that I can find and drill the second of these two wells th ere." For his new campaign Julian had honed his tec hnique and intensified his mes­ sage of opportunity. "FORTUNE KNOCKS BUT ONCE," warned Julian. On th e fourth day h e beckon ed: " FAINT HEART NE'ER WON A LADY FAIR" "YOU MUST TAKE CHANCES TO BECOME A MILLIONAIRE" Life is a gamble after all, we are here today and gone tomorrow, it's just a collar, just a coffi n when you die, don't you know. Every well drilled is more or less a gamble . . . the gamble I'm offering you is a "Royal One."

In anoth er ad he quoted Shakespeare, who advised investors, "OUR DOUBTS ARE TRAITORS AND DO MAKE US LOSE THE GOOD WE OFT MIGHT WI N BY FEARING TO ATTEM PT. " "He must have been th inking of me and Santa Fe Springs," concluded Julia n , "when he said that mouthful . " With two wells drill ing, N o . 4 riggi11g up, and a synd icate to subscribe, Julian found h i mself "busier th an a one-armed paper-h anger with the itch ." I n later years Julian l iked to boast of and perhaps exaggerate his arduous work regimen. H e claimed h e would arri.ve a t h i s downtown offices a t 8:00 a . m . and spend the day

THIS IS NO INVESTM ENT FOR YOU

49

sel ling units, supervising the sales staff, meeting customers, personally answering all i l etters, and buying suppl es. After a brief break for dinner, Julian would return to the office to compose the next day's advertisement, then curl up in the back seat of his chauffeur-driven automob ile for a quick nap on the way to the oil fields. At Santa Fe Springs he would monitor the progress of h i s wells and consult with h i s rough necks. If possible he would return h o m e b y fo u r t o catch a few hours' sleep. More often he returned to his office and bedded down on the floor, before renewing his grueling routine. His top assistant claimed to have lost forty pounds chasing Julian. "Nobody could keep up with Julian whi l e he had his syndicates on," stated an assoc iate. "We all ran ourselves ragged trying to do it." Julian had hoped to del iver Well No. 1 to coincide with his new offer, but th e repeated fishing episodes made th is impossible. In addition to th e two bottl enecks reported in h i s ads, the drilling operation's log reveals two smaller fishing jobs. Meanwh ile, No. 2 experienced a remarkably smooth trip. By September 1 2 , the depth of the second well had surpassed that of the first. On September 24, No. 2 hit th e oil sands, the coveted strata that lay atop the black reservoir, at 3 , 8 5 3 feet. Jul ian's crew cemented th e well and waited while the plug hardened before begin­ ning the final thrust. To cel ebrate, Julian "called th e roll" aga i n , offering to buy back units in either well for $ 1 40, a 40 percent profit after j ust sixty days. "No one ever went broke taking profits," he advised. Meanwhile, according to Jul ian's probably apocryphal recollections, events built to a dramatic cl imax. His spartan regimen had taken a toll . Chills and fever plagued his nightly visits to the field. I n early October, as No. 2 sat cemented and No. 4 prepared to spud in, a phone call from Julian's doctor confirmed h i s worst fears. An interm ittent form of malaria he had contracted i n Texas had resurfaced. Th e doctor advised him to spend the next month recuperating. S imultaneously, on anoth er line, his drilling supervisor told Julian, "We've j ust dropped 3 ,000 feet of drill stem 600 feet" on No. I . Julian sat shocked at h i s desk. "It was surely a one-two punch to the chin," he later recalled. "There I was, sitting in the mud, with my first well full of dropped stem and my blood full of malaria." To his readers, Julian described th e problem as "another l ittl e fish ing job." If his later accou nts can be bel ieved, however, he feared the sunken drill stem meant "the certa in loss of the hole." M i racul ously, he recounted, "We managed to tie onto it and lift it out without dropping a single l i nk - one chance in thousands." The drilling log confirms th e fishing job but also reports sidetracking at least some of the junk. Whatever the truth, by October 1 3 , No. 1 had joined its counterpart cemented in the oil sand. As for the malaria, Julian "went on working 1 8 hours a day, on my easy days, and th e germs must have got discouraged, for they quickly left my system." Meanwhile, Julian's new issue sold rapidly. "Only Four More Days," Julian tru mpeted on October 19. By October 2 1 , Julian announced, "I nstead of Two Days More, I will shut her off ton ight, because I will be absolutely sold out before 9 o'clock th is even ing." In less than two months, Julian, who had yet to del iver a single wel l , had raised $ 3 5 0 ,000 for h i s new project.

50

OIL

As if to punish those who had not supported him, on October 24, Julian's drill ers began to bore th rough the cement on No. 1 . Two days later, at five in the morn ing, Julian No. 1 '\vent over the top . . . pouring 'a wicked stream' into our storage tanks ." While the 1 ,600-barrel-a-day rate did not match th e "4,000-barrel pay" that Julian had predicted (or the 3,600-barrel flow he claimed in h i s ads), he had deliv­ ered what the Times called "one of the star producers of the Santa Fe Spri ngs field." "If you happen to hold a ticket on me to win on 'th is baby' you are in the right ch urch and in the right pew," exulted Julian. Three weeks later, with "Daddy's Sweet Baby" (No. 1 ) 'struttin her stuff,' " her si ster, Julian No. 2, came to life on November 1 5 , with an in itial flow of 2,400 barrels. Less than five months had passed since an obscure C . C . Julian had publ ished his first advertisment. In that brief span, his sales revenues approached the $ 1 mil­ lion mark, his units had almost doubled in val ue, and his two wells poured 3 , 500 barrels of oil into his storage tanks each day. Julian reigned as one of southern California's great success stori es, an inspiration to oil promoters and investors al ike. "Julian No. 1 investors, We congratulate you !" advertised a rival company. "You were brave enough to scoff at those who deride oil investments . . . . You were awake wh ile others were asl eep." Oil Age, the respected industry journal , sal uted him in an editorial entitl ed "Julian Makes Good . " The Los Angeles Exam iner hailed him as an "experienced operator, not a promoter of the fly-by-n ight type," concluding, "People who have invested in h i m will get a run for their money." On December 1 9, the fi rst dividend checks for unit-holders in wells no. l and 2 came due. "Th e Bank . . . [has] kindly consented to allow me to pass them out to you this month," wrote a gleeful Julian, "and I can promise you 'I am going to get a kick out of doing it.' " He had pledged to investors that he woul d "be your Santa Claus next Christmas Eve . " As everyone now knew, C. C. Julian was as good as his word.

111

At the dawn of 1 92 3 , C . C . Julian was the prince of oil promoters. His advertise­ ments had become a southern California instituti on. Although he had no new units to sell, his prose flowed as regularly as the oil from Julian wel ls no. 1 and 2 . C . C . entertained h i s publ ic with a never-ending melange o f drilling reports, dividend notices, poetry, cartoons, sage advice, and homespun philosophy. Cartoons depicted "A Happy Family ofT0111orrmv" -a man, his wife (a Julian unit}, and their offspring (scores of stock dividends } ; or a poker player demonstrating "A \Vi nning Hand" five cards depicting Julian wells number l through 5 . Supporters composed poetry extol ling his virtues. ( "For " Honesty's" his middle name, I And "action" is his first; I Just take a tip and shoot yom wad I If for dividends you th irst"} , to \\ hi ch Julian added his own hand iwork:

THIS IS NO INVESTM ENT FOR YOU

5I

"TQ..o you have tried and lost And tried and lost again, My most sincere advice to you is Reach for your check book, grab your pen. "

Once sold to the public, Julian units assumed a life of their own , the ir prices fluctuating with the fortunes of the wells. By late I 922, a l ively market in the buying and selling of Julian un its had surfaced on Spring Street, the financial center of Los Angeles. With wells No. I and No. 2 both on production , units originally priced at $I 00 sold for as much as $I 90. Rumors disparaging Julian's success and deflating unit values coursed through the financial district. " [ notice they are trying to pound down the price of my units on the market," he admonished on December 3 I , when prices on wells no. 3, 4, and 5 actually dropped below the $ 1 00 level , "but don't let that concern you . " Julian blamed the drop on "sharks . . . concoct(ing] measly stories . . . to try and dampen your confidence in my security," and "knockers" who "seem to delight in circulating the meanest kind of stories about my different wells." When his other wells came in, he boasted, he would "present all the knockers with 'Barbed Wire Tooth Brushes' and a mouth wash of TNT." In real i ty, the price man ipulation of his units worked l ittl e hardship on Julian. Assuming the rol e of protector of his Aock, C . C. reaffirmed his hold on the faithful and won converts to his cause. By offering to buy back units and period ically "calling the roll," he helped break price slides. At the same time, like other brokers, Julian purchased un its at reduced values and resold them at a profit, pocketing additional sales commissions. Indeed, some charged that Julian h imself was responsible for the rumors that created the roller-coaster market in his wel ls. In the wan i ng months of I 922, large corporations, independent producers, and wild-eyed promoters del ivered gushers at Santa Fe Springs with uncanny regularity. Over 200 wells appeared over a vast stretch of terra i n . More significantly, Standard Oil made a staggering d iscovery. In the early months of the boom, drillers had drawn oil from the "Bell" sands, a 300-foot-thick stratum of continuous oil-bearing sand and shale, approxi mately 3 , 500 feet below the surface. D isappointed with the potential of the Bell sands in the eastern portion of the field, Standard had driven one of its rigs deeper. On October 2 3 , the drill bit pierced a second, even richer, reservoir of oil at a depth of 4,644 feet. On th e first day, 4,2 50 barrels of petroleum gushed from the wel l . During the next week the Aow un expectedly increased by 50 percent to a spectacular 6, 34 5 barrels a day. The Standard ,,·ell was hailed as the "Wonder Well of the West," a title it held for less than three \\'eeks. On November 1 2 , a small company operating a few hundred yards away reached the new "Meyer" sands, and del ivered a well at 8,000 barrels. Th e latest well, reported the Times, "stands without an equal in the \\·orld today for the amount of oil that is being produced and the high gravity of the product." Q,·ern ight, the phrase "l\ 1eyer Sands" entered the everyday lexicon of southern Californ ians. This development came not a moment too soon for C. C . Julian. Julian No. I

52

OIL

produced almost 40,000 barrels in its first month, but production had dropped off and water had begun to seep into the wel l . In the southwestern portion of the field, Julian No. 4 had already passed 3,000 feet and showed littl e prom ise of producing in th e Bell sands. \Vh ether Jr not the Meyer sands extended to either of th ese tracts remained uncertain, but Julian unhesitati ngly seized the initiative. " Folks," he informed his readers on November 27, "I have closed Wel l No. l and am getting ready to drill her deeper. " On Julian No. 4 and Julian No. 3 (wh ich was j ust rigging up), he decided to bypass the Bell sands entirely and head for the big "Meyer Pay." Only Julian No. 2 would continue production from th e h igher stratum. "As long as we can pull 2000 barrels a day each from this upper stuff we had better do so, but if [ it] ever shows any signs of weakening on me, I'll kick it down to the big pay," vowed Julian. As his drillers probed the lim its of the Meyer sands, C. C . scanned the horizon for new leases. \Vith the discovery of the more prol ific reserves, bonuses and royal ty rates had again skyrocketed. On January 3 1 , Julian acquired drilling rights to five more acres at Santa Fe Springs. Lease-hounds had driven the price of th e ne\Y tract, adjoining the Getty interests just southeast of the main town-l ot drilling area, to unprecedented l evel s. S ince th e end of September the land had been leased and subleased three times. Julian paid a staggering $80,000 and a 5 0 percent royalty for the acreage. "Th is new issue of mine is going to be a knockout," he boasted two days l ater, converting his h igh overhead into an asset. "Just let me tell you I'll be drilling on the h ighest priced piece of oil land in the worl d . " With in a week J u l i a n ga ined rights t o a second five-acre parcel , this o n e in the southwestern edge of the field, far from any proven production . The cost, though not as exorbitant as that of the oth er l ease, was still substantial. Julian paid $ 5 0,000 and granted a 30 percent royalty. Julian planned to include both tracts in a new four-well syndicate. To sweeten the offer, however, he awa ited the imminent arri\'al of Julian No. 4 in the Meyer sands. Julian had originally "scheduled" No. 4 as a "Christmas present" to his backers. But oil wells, particularly those drilling to 4,600 feet, rarely adhere to sched ule. On December 27, with th e rig "cutting ditch pretty fast" at 4,4 5 5 feet, Julian beseeched his followers, " Don't weaken any on this child." Two weeks later, he delivered "bad news . " "\Ve twisted off th e drill stem . . . yesterday leaving seven joints in th e hole, and right now we have a brute of a fishing job, and being so deep makes it rather mean . " His crew "speared the old fish" the next day and continued downward . By mid-January l 9 2 3 , Julian had dubbed his recalcitrant well "the prodigal son of th e family." But, he promised, "we'll kill the fatted calf very soon no,,· to cel ebrate the incoming of th is wayward child." On January n , Julian's men cemented well No. 4 at 4,460 feet. With in days, Jul ian's original ,,·ell , No. l , also reached the Meyer sands. But the battl e had not yet ended. " H ere I am fighting rny way foot by foot deeper and deeper into the Meyer pay on both No. l and No. 4," note Julian on February l l , "and the deeper we go, the harder it is to control th em. The gas pressure on both of them is terrific."

THIS IS NO INVESTM ENT FOR YOU

53

Bv this time, as Oil Age reported, "all eyes" in the oil industry were "being . to prove the Meyer sands in th e southwestern reaches of di rec t ed to Julian No. 47' the field. On February 18 at 4:00 a.m. on a Sunday morning, "that darling No. 4" roared to life, th e crude oil flowing at a rate of 6,200 barrels a day. The Los Angeles Times lauded No. 4 as "a real d iscovery. " Oil Age hailed the arrival of the Julian well as a development "of tremendous importance" that extended the producing area of the Meyer sands. For Julian, the well spelled vin­ dication and opportunity. "Where are the birds that promised to drink all th e oil I ever got on that six-acre l ease?" he crowed. With wells no. 1 , 2, 3 , and 5 now "a cinch for still bigger producti on," he asked, "do you wonder that I am wearing 'a smile that won't come off?"' Furthermore, noted Julian, "I feel that th e results I produced for you entitle me to subm it my new offer." One week later, on February 25, Julian ina ugu rated his latest campaign, harking back to his most succ essful theme: " I f You C a n ' t Afford to Take a Chance" "You Can't Affo r d to Play With Me"

And while

I

have reduced the element of risk of losing your money to the min­

imum, every oil investment, no matter how sure it looks is more or less speculative . . . no matter how carefully or skillfully a man may operate, there is always that element of chance.

...I

am going to strain every nerve in my body to make your investment . . . the

most profitable one of your life, but at the same time "I don't want any widow's mite." 1 don't want any life savings that you have sweat blood to put away to take

care of you in your old age; I not only don't want it but I positively refuse here and now to accept one dollar from anyone if by losing it there will be a hardship worked on them.

Th e offer was stra igh tforward. Julian would drill two new wells on each of his new Santa Fe Springs l eases. Investors would share in the total production of all four wells. "Th ere are 2 500 assignments in each well or l 0,000 in all, at $ 1 00 each," wrote Julian. Th e capital ization thus totaled $ 1 ,000,000. In addition, Julian offered two overriding guarantees. Wh ile he retained a 1 2 Yi percent interest in the pro­ duction, he would defer his share until all assignment holders "rece ived back I 00% on th eir investment." Second, Julian promised "to fin ish all of these four wells regardl ess of any condition that may arise. What I mean by that is should I be unfortunate enough to lose a hole before go ing to the nec essary depth I will skid the rig and drill the \\·ell over at my own expense without e\ er calling on you for another dime." Over the next three weeks, Julian conjured up his old magic and added several new tricks. 'Tm not appealing to the unintel ligent," he explained. 'Tm talking to you Mr. Man \vho makes the investments on the actual merit of his project." Julian's appeal was addressed, not only to those unfamiliar with th e oil business, but "to every oil operator and every driller" in California. Among his backers, he boasted, were "men who ha\·e been engaged in producing oil all th e i r lives ," "representati,·e

54

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men" from all the major companies. Nonetheless, he reassured the small in\'estor, "you and your l ittle hundred doll ars means as much to me as a man who waiks in and th rows me five, ten , or twenty thousand." If he failed to del iver on his four wells, Julian would "pretty near promise to eat 4000 feet of drill stem." With No. 4 pumping thousands of barrels of oil each day, customers needed littl e prodd ing. Six hundred thousand dollars arrived in the first twelve days. "It Will Soon Be Curtains For You," warned C. C., "and the old saying 'He who hesitates is lost,' will have run true to form again." On March 2 5 , exactly one month after the issue had open ed, Julian issued "THE LAST CALL" on "the greatest money making opportunity ever submitted to any community." The following day Julian officially halted sales, having attracted $ l ,000,000 in twenty-two working days. Hundreds of thousands of dollars, worth of orders continued to pour in. March 26 gave Julian and his backers additional cause for celebration. For over a month his crew had battl ed Julian No. 1 , wh ich had become "a l i ttle unruly" at the lower depths. "Her gas pressure is so terribly strong," he reported on March 3 , "that it's a l i ttl e difficult to make the cement set." I t took three tries before the state Mining Bureau approved the cement job. Final ly, at 1 1 :00 a . m . on the day his "four-well entry" closed, Julian No. 1 began " Struttin Her Stuff" with an 8, 1 00 barrel-flow. "Julian No. 1 is today one of the 'greatest wel ls' in the greatest oil field in the worl d," boasted Julian. Not even his harshest critics could disagree. Julian units in nos. 1 , 4, and 5 now commanded as much as $22 5 on the open market, and in April a "cartload" of d ividend checks went out to unit-holders. With his star in the ascendancy, Julian wasted little time organizing another syndicate. Iron ically, while Julian had found fortune on the western portion of the Brunson lease, Globe Petroleum had only met with disappointment on the five acres it had retained for itself. Th us, when in March, Julian offered a $ 2 5 0,000 bonus and a 50 percent royalty for drilling rights to the remainder of the Brunson lease, reportedly the highest price ever paid for an oil lease, Globe readily accepted. In addition, for the first time, Julian ventured away from Santa Fe Springs, to the nearby Compton oil field in a "wildcat" enterprise. For a modest $ 5 000 bonus and a 30 percent royal ty for twenty acres of land, Julian joined corporate giants Union Oil and General Petrol eum in sinking test wells in the unproven new field. On April 22, 1 92 3 , Julian linked these l eases into a new proposition. Capitalized at $7 5 0,000 ( 7 , 5 00 $ 1 00 units) this syndi cate offered interests in two wells, Julian no. 1 1 and 1 2 , drilled in Santa Fe Springs; and a th ird , a "·i lclcat named "Pico," at Compton. Th is will be, announced Julian, "My Last Oil Syndicate Th is Year." "Play Ball,'' he cried with a seasonal flourish, "This is the 'last game of the season' and the 'Grandstand seats' are going fast. I'm at bat no,,· and due to knock out another home ru n . " By May 8, Jul ian's three-,,·ell $75 0,000 "Issue Deluxe" had sold out. Since June 1 9 22, in less than a year of operation, Julian had coll ected $2. 5 million from the investing public. His wells had produced tens of thousands of gallons of oil. Now, at !mt, he began to enjoy his rewa rds. "How is Julian taking his

THIS IS NO I NVESTM ENT FOR YOU

55

success?" h e had mimick� d street talk i n February. "Is h e 'all swelled up' or i s he 'holding up his head?' " He was not, he guaranteed his foll owers at that time, "the kind of 'hair-pin' that a little success could make 'nigger-rich . ' . . . You won't find me living in any swell home . . . in 'Beverly Hills'; I'm still parked in the l i ttle old furnished flat. I'm not spending any of my profits on Rolls Royce cars - I still bump along in my same old fifteen hundred dollar boat." After all, "even with 'two mill ion dollars' a man can 'wear only one collar' 'one tie' and occupy 'one coffin when he d.1es. ' '' By May, however, a great transformation had begun. Clothes-conscious since his youthful embarrassment in Winnipeg and his years of work i n Canadian men's stores, Julian now sported many collars and ties - a new wardrobe of expensive suits, candy-striped shirts, polkadot ties, and wh ite spats. A rakish derby and gold-headed cane compl eted the ensemble. Julian still disdained the Rolls-Royce but purchased instead a "great grey" Pierce-Arrow. "Oh! by the way folks," he gush ed i n his April 5 ad, "do you remember m e telling you about the ' $ 1 500 Hack' I 've been driving, well its gone now, just traded it in on a 'real wagon' th anks to good old number one. As Julian approached the first ann iversary of his arrival in Santa Fe Springs, he moved his wife and two daughters from the "l i ttle old furnished flat" into a $ 1 5 0 ,000 home on Los Fel iz Boulevard on four and a half acres overlooking the l igh ts of Hollywood. The ten-room house boasted a gymnasium and a th irty-by-forty foot l iving room "panelled in beautiful soft woods." Over the next few years, Jul ian woul d sink a reported $ 1 00,000 into h is estate, adding nine new rooms, h idden pools and waterfalls, a heart-shaped swimm ing pool, a gold-l ined bathtub, a large l ibrary of rare books, and "an Al i-Baba l ike array of rare rugs, furniture, tapestries, art objects and paintings . " Julian had attained the wealth he had pursued th rough out h i s Cana­ dian-American odyssey. But success had emboldened h is dreams and grander visions loomed before him. "

T H E DIVI DEN D PAYE R O F T H E AG E

Th e 1 920s oil boom offers a compact, accel erated demonstration of the free market at work. Fears of petroleum shortages after World War I had driven oil rates to almost $3 a barrel. High prices precipitated expanded exploration and technological innovation. By 1 9 2 3 , these efforts had proven successful, not only in southern Cal­ ifornia, but in other parts of the world, creating a sudden and unexpected gl ut of o i l . Supply quickly outstripped both demand and the existing capacity of pipel i nes and storage tanks. The price of h igh gravity crude oil pl ummeted from almost $ 2 . 50 a barrel in 1 92 2 to as low as .76¢ in October 1 9 2 3 . In addition, the fevered drill ing of the southern California oil boom led to massive waste. ''Town lot" and offset drill ing drained oil fields that should have flourished for decades in a matter of years. Overproduction repl aced fuel shortages as the greatest threat to the oil indus­ try. The new crisis pitted large corporations aga inst promoters and small producers. Major compan ies and their industry experts laid the blame for the surplus at the doorsteps of greedy landholders who included rapid chilling cla uses in th eir l eases and "town lot" promoters who encouraged wasteful practices with large bonuses and royalties. In an attempt to stab ilize the industry, they counseled l i miting pro­ duction to susta in yields, eliminate waste, and ma intain prices. The small ind ependents, however, while h urt by decl i n i ng prices and recogniz­ ing th e long-term wisdom of this approach, lacked the resources to survive a cu tback. Standard, Union, and the other giants had vast tank farms to store cru d e oil ,,·h ile awaiting h igh er prices. Smaller companies had to vend their oil as it rose from the ground, accepting the going rate . In add ition, attempts to "pinch back" wells and l i m i t their Aow often ·permanently damaged production, an outcome that large

56

THE DIVI DEND PAYER OF THE AGE

57

corporations could absorb, but that was fatal t o the firm with only one, two, o r even ten wells. Thus, oil promoters resisted the efforts of industry leaders to coordinate produc­ tion, denouncing them as ploys to monopolize the market. "There is a lot of pro­ paganda in the oil business," admitted the conservative Los Angeles Times in Sep­ tember 1 922, as fears of a serious overproduction crisis ga ined credence, "and it isn't always confined to the stock, l ease, and unit promoters . . . . The near panic induced by the recent agitation may be sl ightly overdone." A visit to the oil fields, argued the Times, would d ispel any notion that the industry feared overproduction, since the large companies were "doing more to increase their production, any one of them, than a half dozen of the littl e fellows. " C . C. Julian, whose a d s gave h i m a broad forum , entered t h e fray even before striking oil. Designating hi mself the spokesman for the small producers in the cru­ sade against Standard Oil, he repeatedly bel ittled the idea of impending crisis. "Big Boy Don't Kid Me," he responded on August 2 . " H OW DO THEY GET THAT WAY ON THIS OVERPRODUCTION GUSH?" he asked on September 1 , repro­ ducing articles about the demand for oil in Japan and South America. As he later explained, "Naturally the 'Big Boys' don't l ike our competition in this 'worl d market' nor do they l ike such 'birds' as me paying legitimate prices for l eases on th eir property." As the frenzy at Santa Fe Spri ngs, H unti ngton Beach, and S ignal H i l l showed no signs of abating and prices continued to fall, the advocates of "pro-rationing," a vol untary curtailment of production, gained strength . In this ongoing struggle , the large companies held one trump card. They alone controlled the refineries nec es­ sary to convert crude oil into marketable gasol ine. By threaten ing to refuse to accept excess production, they could force the smaller oil men to cut back. The pro-rationing campaign reached a cl imax in the spring of 1 92 3 as oil prices plunged below the dollar-a-barrel mark. On Ap ril 27, Julian joined 400 oil producers "from the big fish to the small fry" at a meeting to resolve the issue. Industry leaders introduced a resol ution cal l i ng for all producers and marketers to effect a system of pro-rationing by reducing the flow from all wells by a minimum of 30 percent. They sought unanimous approval, but one lone voice dissented. C. C. Julian demanded a vote , and th en, standing atop his table, cast a l01,1d, lonely "No." Julian defended his opposition on both ideal istic and practical grou nds. Pro­ rationing, he a rgued, in jured the publ ic by short-c ircuiting the laws of supply and demand and helped only large companies. Wh ile the "big boys could honeyfugl e the littl e fell ows into this course on the grounds of patriotism and good business," charged Julian, large quantities of oil continued to flow into their storage tanks. From a purely selfoh standpoint, he adm itted, the "pinch back" could not have come at a worse time. If he were unable to m arket the increasing flow of oil from his wells, he \vould be driven out of business. One day after th e ind ustry-wide meeting, General Petrol eum, which refined Jul ian's oil, informed him that they \\·mil d take only 70 percent of his production. These events, claimed Juli;i n , cl ro\·c home his ulti mate dependence on the oil bar-

58

OIL

ans. Th e great fortunes in oil, like those of John D. Rockefeller, had been made, not i n production, but i n refining. "The refining of crude petroleum is the balance wheel and stabi l izer of the oil industry from an earnings standpoint," Julian later explained. "Wh en production increases . . . the price of crude automatically decreases wh ile the prices of refined products vary but l i ttle . . . . The loss of the producer is the ga in of the refiner." To break the stranglehold of Standard Oil, General Petroleum, and their ilk, he had to create his own vertically integrated company, which would provide all operations, from production, to pipelines, to storage, to refinery, to distribution. In this burst of inspiration, the Julian Petroleum Corporation was born . Julian's recollection of these events, as always, embellished the truth . The "pinch back" decision undoubtedly accelerated h i s plans, but Julian had long incubated th e idea for h i s own corporation. C. C . epitomized the small producers described by h i s contemporary Samuel Blythe, who, "having ach i eved one or two or three maybe good producing profitable wells . . . get delu­ sions of grandeur. . . . They see themselves putting the Standard out of business." As early as March 30, 1 9 2 3 , Julian had informed his followers, "My great ambi­ tion in l i fe today is to build an oil corporation second to none in our " Golden S tate . On May 1 5 , 1 92 3 , less than th ree weeks after the oil industry meeting, Julian incorporated Julian Petroleum. The corporate charter, isssued in Delaware, called for a capitalization of $ 1 0 million, including 200,000 shares of preferred stock, valued at $ 5 0 each , and an additional 200,000 shares of common stock without nominal value. On May 1 8, he hinted to his readers, "I know I can make six to eight dollars a barrel . . . and all it takes to accomplish th is result is a 'Real Wad of Mone y. ' 'You have th at' and 'You'll tell 'em Jamaica, I've got the ginger to carry it all through ."' Two days later, on May 20, Julian unveiled his grand scheme: "

REFINERIES How Does This Lineup Appeal To You?

1 - A settled production of from 3 0 ,000 to 40,000 barrels a day, entirely owned by ourselves, and \\'ith no possibility of ever hm·ing to step out in the market and buy our production in competition \\·ith the " B I G B OYS . " 2 - A tank fa r m o f ove r ! 00 acres at Santa F e Springs . . . 3 - Pipe lines from each of my properties direct to my steel storage tank farm. 4- \Vharfage facilities at the Harbor, \\·here our tankers can steam in under their O\\·n power and load out for points on the "Atlantic Coast," " the Orient," " South Am erica," " Great B rita i n , " " C anada" and " Fran c e . "

5 - A refinery site adjoining the Harbor and right in beside "REAL B I G BOYS . "

all

the plants o f the

THE blVI DEND PAYER OF THE AGE

59

8-A Corporation with-no "h igh and mighty" board of directors always waiting l ike a "flock of vultures" to swoop down and take the "cream" \vhile you get the "crumbs that fall off the table."

The following month Julian embarked on his customary whirlwind preparations. "My pol icy has always been to be well under way with my program before I invite you to partic ipate ," he advised. "Do You Hear Me Calling You to the Tune of Five Million Dollars?" he asked on May 2 3 . 'Tm here to tell you I'm sure spending it l ike a 'drunken sailor' these days . " On June 1 7, Julian reported aston ishing prog­ ress: the purchase of an eighty-acre tank farm site; the acquisition of "what I consider to be the finest refinery site of 1 00 acres i n Southern California"; and over $ 1 . 5 mill ion worth of material on order for immediate del ivery. To expedite matters, Julian advanced his personal funds to the corporation. Simultaneously he primed his investors with promises of extravagant profits. " 'One lonely share' of Henry Ford's original stock, which sold for $ 1 00, is worth over $47,000 today," he wrote . " ' One lonely share' of Atlantic Refi ning Company, which sold for $ 1 00 paid over 9003 in one year. 'One lonely share' of Standard Oil C o . , wh ich sold for a few dollars, is today worth a fortune." Standard, h e noted, made 87 percent of i ts profits from refining and marketing, "and they make some profits too." In response to alleged whispers that the large oil companies viewed him "as a menace that should be rightfully stamped out, and were going to 'clip my wings,"' Julian predicted, "It can't be did . . . . I'm l osing a lot of sleep about that angl e , 'in a Pig's Nightie,' I a m . " According t o J u l i a n , an "avalanche" o f letters, telegrams, tel ephone calls, a n d visitors descended on his office requesting reservati ons for stock i n J u l i a n Petrol eum. By May 3 1 , he reported, prospective investors had pledged nearly a mill ion doll ars in amounts ranging from $ 1 00 to $ 5 0,000. "Were I to l ive to be thousand years old," he enthused, "and accumul ated more money than H enry Ford, 'I will never again get the thrill that 'your thousands of messages of en couragement gave 1n e . ' " On June 2 5 , Julian proclaimed the birth of "THE DIVIDEND PAYER OF THE AGE, " and outlined his coming offer. Wh ile the ultimate capitalization of the proj ect would be $ 1 0 mill ion, the in itial subscription would be for half that amount. One hundred thousand shares of preferred stock woul d be placed on the market for $ 5 0 per share. Each hrn shares of preferred stock purchased would include a bonus of one share of common stock. \Vith the preferred, investors would receive an annual 8 percent dividend. Earnings above this \\ Ould be divided among common stockh olders three times a year. The common stock held the Yoting power in the company. Al though Julian conveniently omitted it from his ad\'ertising, the corporate charter also rewarded Julian with one share of common stock for e\'ery two shares of preferred sold, guarantee ing h i m con trol of th e company. During the last week of June, Julian No. 3, the last of his origi nal synd icate wells, began producing from the Meyer sands. Julian gl eefully dispatched o\·er

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$ 1 50 ,000 worth o f dividend checks. With all components o f J u l i a n Petroleum now in place, only one obstacle stood between Julian and the start of his greatest stock­ sell i ng campaign : th e Corporation Commissioner of California, " Iron Mike" Daugherty. II

O n the surface, Edward Michael Daugherty and C . C . Julian had much i n com­ mon. Like Julian, Mike Daugherty was in his late thi rties and father to two children. A tal l , muscular man, he shared with the oil promoter a reputation as "a most l ikable man . . . the kind of hail-fellow-well-met, who inspires confidence and amiabil ity." He arrived in Cal ifornia from his native Illinois as a young man and plied a number of trades, first as a newsman with the Los Angeles Times, then a house builder, and later a publ icity man. Active in Republican politics, Daugherty worked i n George Cryer's 1 9 2 1 mayoralty campaign. A group of Los Angeles Republicans and busi­ nessmen prevailed upon Governor Wil l iam Stephens to place Daugherty in charge of the state Corporations Department. In 1 922, j ust as Julian began drilli ng his first Santa Fe Spri ngs well, Daugh erty assumed the post of corporation commissioner. The department Daugherty inherited represented one of the great experiments of the Progressive Era. Since the turn of the century, public officials and business­ men had sought a means to eliminate fraudulent promoters who promised their clients everyth i ng, including the "blue sky" above. Progressive pol iticians called for a regulatory agency to protect small i nvestors. They received support from a wide array of business groups that feared that speculation in illegitimate endeavors would inj ure th e reputation of all enterprises ra ising capital from the publ ic. The campaign for "blue sky" laws reached national proportions. California adopted the Investment Companies Act i n 1 9 1 3 , one of thi rteen states to enact this type of legislation that year. Cal ifornia's blue sky law required that all corporations selling securities in the state procure a permit from the newly created Corporations Department. The act gave broad discretionary powers to a c orporation commissioner, appointed by the governor, who could deny or revoke perm its from the enterprises he deemed "unfair, unjust, or inequ itable," or whose methods would "work a fraud on the publ ic." The commissioner could attach conditions to the granting of a perm it and had the "power to establish such rules and regulations as may be reasonable to carry out" his mandate. Wh ile most businessm en praised the legislation, its revolutionary nature gen­ erated fierce oppos ition from the start. Many real estate and investment brokers , both l egiti mate and otherwise, feared they would be forced out of business. Others raised philosoph ical objections to the creation of a regulatory agency that intervened i n the free market and put arbitrary authority in the hands of a single unelected official. A 1 9 1 4 referendum to repeal the blue sky law foiled \\'hen the Los Angeles Investm ent Corporation, the leading advocate of repeal , collapsed shortly before the election amid revelations of \\'id espread fra ud. The scandal com-inced \'Oters of the need for a regulatory oth of total oil production, but that fraction of the oil after promoters deducted bonuses, royalties, drilling, sales, and office outlays before paying divi­ dends. For exampl e, a well leased for a 50 percent royalty and capitalized over $200,000 an acre held scant hope of returning a profit to individual i nvestors rece iv­ ing Yi1;oth of the remaining production . While most promoters retained a percentage of the oil for th emselves, argu ing that this guaranteed they would profit only when their c l ients did, they rel ied pri­ marily on sales comm issions for their income. Daugh erty discovered that many firms "pocketed enormous profits as sel l i ng costs," ru nning as h igh as n i n ety cents on eve ry dollar invested. Lavish promotional outl ays, including advertisements, buses, free lunches, and healthy sales commissions, meant "the money of one sucker was being used l argely to catch another. " Accord ing to Daugherty, these enterprises "were purely promotional schemes wh ich dissipate the funds of the i nvesting pub­ lic." The Record reported capitalization in th e Santa Fe Spri ngs field ru nning as high as $1 mill ion an acre, a figure well beyond the potential return of all but th e greatest wells. In these instances, a dry hole could be preferable to a gusher. "One of the mangiest of the fakes," expl ained Samuel Blyth e, "was to sell $200,000 worth of units in a well that cost $ 1 5 0 ,000 to drill whereby the promoters made $ 5 0,000 whether they struck or not." These wells might be found on the outskirts of the field, well beyond proven territory. Santa Fe Springs m ayor William Emmens recalled that several promoters "sold more percents than they had. They could not afford to bring the well in so they muddied them and just let them go. " N o t even a gush er, howe\·er, guaranteed profits. Dividend amounts \\'ere often pal try and failed to match the initial investm ent. Although promoters predicted four­ and five-th ousand barrel wells and prom ised long-term income, flush production

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typically l asted only a few days or weeks at most before level ing off. The greatest yield occurred during the first year, after which the flow ceased or fell to a relative . trickl e. Th us, wh ile hundreds of wells produced oil and some syndicates returned large profits to their investors, state officials estimated that two-th irds to three-quar­ ters of the money deposited in promotional oil ventures woul d be l ost. In the summer of 1 92 2 , Comm issioner Daugherty declared war on the coyote operators and unl eashed a new "field investigating division." "All oil companies sell ing securities in any form without a permit," warned Daugherty, "will be con­ s idered as resorting to subterfuge and will be required to submit themselves to supervision." The wily unit-selling coyotes, however, were not so easily trapped. For one th i ng, Daugherty's heralded "division" had only two overworked operatives . Furthermore, most promoters had organized common law trusts, which they con­ tended exempted them from the Corporate Securities Act. Units, they claimed, represented "interests" rath er than stock, removing th em from the j urisdiction of the statute . In October 1 92 2 , the State Supreme Court ruled in favor of the cor­ poration commissioner. The court held that units were securities and therefore fel l with i n the purview o f the blue sky law. This decision failed to resolve the issue. In March 1 92 3 , a federal di strict court dealt Daugherty a sharp setback. The judge ruled that a promoter who had sold units as an individual, not as a trustee of his syndicate, was not subject to the Corporate Securities Act. Th is ruling, protested the Record, "handcuffied) " Daugh­ erty and sent a message to promoters to: "Go to it! The corporation commissioner is powerless to touch you ! B roadcast your lurid advertisements. Entice 'em into your free buses . . . fill 'em up with free dinners and rob 'em right and left." Confronted by a loophole that threatened his authority, Daugherty turned to the legislature, which quickly amended the Corporate Securities Act to spec ifically include bonds, mining stocks, and oil units sold by individuals. Daugherty faced yet another obstacle. The new governor, Friend Richardson, a fiscal conservative hostile to Progressive reform , had launched a round of spending cuts. Wh ile he reappointed Daugherty and endorsed his efforts, he slashed the already inadequate Corporations Department budget. Daugherty put on a bold face. "As long as I am in office," he declared, "there will be no letting down . . . . There is plenty of money left us to keep a n eye on the oil sharks. " O n April 20, Daugh erty reopened his o i l campaign. "Th e reduction in the price of oil makes the condition of these unit holders even more precarious than before," proclaimed Daugherty. "Drastic action is warranted on our part. . . . Th e fellows we will try to curb are those that use th e publ ic's money." With his funding cur­ ta iled, however, Daugherty needed a prom inent example to bolster his authority. Increasingly, his attention came to focus on the promoter who had gath ered more of "the publ ic's money" than any other. In the \'ast menagerie of honest oil men, promoters, and swindlers, Daugh erty wondered, echoing th e question asked by many, what breed was C. C. Julian? Th e answer proved elusive. Julian had unden iably mastered the tricks of his trade. His ads prom isfd "the cleanest offer(s] ever tendered the publ ic," but, on

THE- DIVI DEND PAYER OF THE AGE

63

close examination, they obscured as much as they revealed. His repeated pred ictions of l 00 percent returns e-ach month and 30 to l for each unit fel l well beyond the range of even the greatest wells at peak prices. "I am riding dollar for dollar right down the line for you ," he asserted, "and until this well is flowing into the tanks I will never pull down a sol ita ry 'thin' dime." however, Julian, like all promoters, had assured his profits once he had fully subscribed the issue. He had capital ized his first five wells for $ 1 7 5 ,000 each, for a total of $87 5 ,000. Julian claimed that this reflected the actual drilling and operating costs. But this figure, while arguably correct, gave him a comfortable margin of error. His total expenses on these five wells, including drilling, operations, advertising, and the payment of l oans and l ease bonuses totaled less than $700,000, leaving Julian with over a $ 1 7 5 ,000 surplus. In addition, Julian had secretly subdivided his personal oil interests in the first three wells and sold them as "Special" units, bringing him an add itional $ 1 62,500 in clear profit. On these wel ls Julian would real ize no additional gain by striking oil. Thus, Julian received a guaranteed $ 3 1 2, 500 profit, even without sales com­ m issions, long before any oil flowed from his wells. These commissions (for the oil fields, a modest ten percent) amounted to $ 1 0 3 ,000. Much of this accrued to Julian. Julian also made money by buying and resel ling his units. Julian's next two syndi cates brought him additional profits. His $ 1 ,000,000 pack­ age on wells 6 through 9 produced a $400,000 surpl us, without commissions or oil. On his final three-well offer, h igh drilling costs ultimately reduced his guaranteed earnings to a still-respectabl e $ 1 7 5 ,000. Thus, in less than a year, Julian had gar­ nered a minimum income of $ 8 7 5 ,000. Although Julian had unden iably played l oose with the truth and pocketed large profits, had he actually violated the Corporate Securities Act? Julian had operated without a perm it in his in itial venture, but the legal position of u n i t sellers was still in doubt at that time. On all subsequent offers, he acquired the necessary permit. Since Julian frequently "called the roll " and offered full repayment to dissatisfied customers, the Corporations Department had received few complaints against h i m . More important, h a d J u l i a n committed t h e cardi nal sin b y overcapitalizing h i s syndicates? "For every $ 1 00 you invest you w i l l receive Yirnith part of 7 0 % o f m y total n e t production," J u l i a n had advertised for wells l , 2 , and 3 . Th e language implied that the investor's share would be based on th e total flow of oil after the landowner had received his 30 percent royal ty. Actually, unit-hol ders were to divide 70 percent of the remaining 70 percent of production, or only 49 percent of the valu e of the oil. Twenty -one percent was reserved for Julian and his original backers. Nonetheless, Julian had definitely not overcapitalized. His total of $ 5 2 5 ,000 for five acres fel l far below the $200,000-per-acre l i m i t accepted by Corporation Comm is­ sioner Daugherty. Wells No. 4 and 5 , while farther from proven territory, offered an even better proposition. Investors wou ld divide 60 percent of the total production. By th e end of May 1 9 2 3 , Wel l No. I had al ready paid back 87 percent of its invest­ ment, wh ile No. 2 and the 4- 5 syndicate had retu rned 3 2 and 44 percent, respec­ tively. The Julian syndi cates for wells no. 6 through 9 and 1 1 , 1 2 , and Pico present a

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less clear verdict. The 5 0 percent royalties and $80,000 and $ 2 5 0,000 bonuses on the more promising tracts stra ined the prescribed $200,000-per-acre l imit. Further­ more, Julian d ivided his offer into 2 , 5 00 rather than 1 , 7 5 0 shares per wel l , capital­ izing each at $ 2 5 0,000. Nonetheless, given the acreage i nvolved, Jul ian had not exceeded the boundaries delineated by the corporation commissioner. In early May 1 9 2 3 , Jul ian and his attorneys held a preliminary meeting with a deputy corporation comm issioner and state engineers to outline the proposed Jul ian Petrol eum Corporation. According to Julian, the government representatives approved his plan as "fair, just, and equitable," and encouraged h i m to proceed. They promised to issue the company a permit to sell $ 5 mill ion worth of stock as soon as i ncorporation was complete. In late May, however, when a formal permit request reached Daugherty's desk, it encountered a far l ess hospitabl e recepti on. Recent developments had rei nforced Daugherty's doubts about Julian. I n late May, fall ing gas prices had prompted thirty-five companies to file plans for publ icly funded refineries. This meant almost $ 1 00 mill ion dollars in stock and a doubling of the state's refining capacity. Daugherty sensed a new oil scam afoot. Most of the plans, including Julian's, allowed up to 20 percent i n sel l i ng expenses and issued a majority of the voting stock to the promoter. Under these conditions, the refineries m ight be overcapital ized. "That's a h eavy burden," warned Daugherty, "even if the load is efficiently managed ." On June 1, Daugherty announced that the processing of all appl ications would be del ayed pending thorough investigation. The comm issioner stipulated that appli­ cants must show sufficient suppl ies of oil, enough capital to finance th eir projects, efficient refining processes, and long-term contracts for output before perm its would be issued . For Julian, wi th materials arriving daily and paym ents due immediately, Daugherty's decision proved devastating. "Ruin was j ust around the corner," he later lamented. "It looked as if my first bright idea of ordering materials in advance was to be my downfall and busin ess burial ." Jul ian unsuccessfully sought an audience with Daugherty. On June 1 5 , after two weeks of frustration, Julian composed a long letter expl aining his pl ight. "Your Department has backed me into a comer and I a m fighting for my very existence at this moment," wrote Julian. "I a m only requesting that you . . . extend to me what I consider I am entitled to, a wh ite man's break." Despite financial obl igations "piling up on my shoulders," Julian refused to accept the $ 5 0,000 to $75 ,000 a day offered by his investors. "I have al ready spent every dollar I possess in the world to further this enterprise," he protested, "all th is without a dollar from the people I expect to finance this project." Julian specifically outl ined his preparations and . expenditures, warn ing, ''The materi al is rolling in here now by both boat and rail with h u ndreds of thousands in payments on same falling clu e almost immed iately." Without additional funds he would also lose his options on the wharfage and refin­ ery sites. "I a m at the end of my rope," h e told Daugherty. Jul ian's plea went unanswered. In desperation, he later recounted, he turned to Ha rry Chandler, the publ isher of the Los Angeles Times. Chandler, Daugherty's former employer and t11c most powerful figure in south ern C�1 l ifomia, had readily

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accepted thousands o f dol lars' worth o f Julian's advertising. Julian later clai med that Chandler promised to he1p and even met with Daugherty. But th e following morn­ ing Daugherty called Jul ian's attorneys and, according to Julian, vowed that if the promoter l ived to be ni nety, he would never get another permit from the corporation department. Daugherty finally agreed to see Julian, but when asked when th e perm i t m ight be issued, he repl ied, s a i d Julian, "It might be a week, a month, a year o r ten years." Legally, Julian's sole remedy for a perceived abuse of power by the commissioner was to file a writ of mandate in court, compel l i ng Daugherty to show cause why a permit should not be issued. Th is procedure, however, would take weeks, exacer­ bating Julian's financial straits. Hemmed in, Julian wondered if he were "Houdini enough to figure a way out of the hopel ess jam." The escape artistry ultimately came from his attorney, Dean Goodwin . Goodwi n, a former Corporati ons Depart­ ment deputy, suggested that despite recent changes in the law, Julian Petroleum could sell the stock to Julian himself outside of Cal ifornia and Julian could th en resell it as his personal stock without obtaining a permit. On June 22, Julian and the four other members of the Julian Petroleum Board of Directors boarded a tra in to Las Vegas. The directors approved the sale of I 00,000 shares of preferred stock and 50,000 shares of common stock to Julian for the sum of $5 mill ion as a "preparedness move for use only as a last resort. " Julian would pay $200,000 down (toward wh ich they credited the monies he had already advanced) and $200,000 every fifteen days until repaym ent was compl ete. The board then returned to Los Angeles. Julian waited five more days in hopes of obtaining a permit. Finally, on June 28, his ads announced: "FOLKS" "I'm Calling on You" Yes, and I'm calling like no human being ever called before, and I 've spent a goodly gob of cash to make my refining project one hundred percent legitimate before I invited you to participate . . . . I have used all my o\\'n money up to date, to accomplish in ni nety days time, what I fully believe would take the average company a year to accompl ish . . . . I've made you "a thousand sacred promises" during the past year and I'm calling on the world to ask, ha\·e I e\'cr violated one, even in the minutest detail? I feel you believe me when I stand up and tell you on my "word of honor" that I \\'Otdd sooner be on the corner of Seventh and Broadwav in m·eralls, \\·ith all my pockets turned inside out, and without a dime in the world to eat on, "than to stray from the straight and narrow path " Folks, time is the essence of th is deal and your dollars mean more to me today than I can begin to tell mu, so if you bcl ic\'C in me, "my great urgent appeal" is "show me now" and I'll " d i e l ike a dog" in a ditch before I 11·ill e1·er gi1·e you any cause to say I betrayed your confidence.

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That day, working from his own offices without the assistance of outside brokers, Julian sold over $200,000 worth of-stock. Comm issioner Daugherty responded swiftly and decisively. "Cal ifornia i nvestors are warned that the stock offered in [Julian Petroleum] . . . may be determ ined by the courts to be inval id," Daugherty proclaimed in a formal statement on June 28. "This Julian Petroleum Corporation has no permit to sell stock i n the State of California . . . . It is therefore the request of the Corporation Department that all persons . . . withhold or resc ind their subscriptions until the legal ity of sai d stock is determ ined." Daugherty charged that the company had failed to answer questions regarding i ts suppl ies of oil, transportation facil ities, refining processes, and distribution. Jul ian's attorneys, h e stated, offered "general ities where spec ific answers could have been made." Daugherty also alleged that Julian had attempted to "bludgeon a permit out of the department." An u n named friend of the promoter's had called Daugh erty and advised him to compromise with Julian. If he refused, the caller threatened, Julian woul d try to ruin Daugherty with rumors that he had acted at the bidding of the oil trust. On June 29, Daugherty dispatched a deputy commissioner to Julian Petroleum offices to confiscate all books and records. After a telephone call, presumably to Julian, company vice-president Jack Roth refused to release the books until Julian returned that afternoon. Daugherty immediately suspended Jul ian's broker's l icense and asked the d istrict attorney for a warrant to seize the books and arrest Julian. Spring Street brokerage houses i nstantly felt the effects of these actions. Larger-than­ usual crowds of spectators and speculators appeared downtown as a brisk trade ensued i n both Julian Petroleum stock and Julian's syndicate units. Los Angeles newspapers refused to carry Julian's June 29 ad sol iciting i nvestors , but the following day they allowed h i m to publish a Rudyard Kipling poem : If you can hold your head when all about you Are losing theirs, and blaming it on you; If you can trust yourself when all men doubt you, But make allowance for their doubting too; If you can wait and not be tired by wa iting, Or being lied about don't deal in l ies, Or being hated don't give way to hating, And yet don't look too good, nor talk too wise;

Yours is the earth and everyth ing that's in it, Ancl - wh at is more - you'll he a l\ la n , m ) son. '

"Mr. Daugherty appears to h;l\'e the Aoor just no\\'," concluded Julian. " ' RICI IT I S RI C I IT' and 'WRONG I S WRONG' I'll stand or fall on your verdict." That mornin g Julian, dressed in a "na tty Pal m Beach suit," appeared at the

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district attorney's office. Ii: formed that a complaint was being prepared, he waited to surrender himself and held an improm ptu press conference. Asked if he woul d plead guilty, Julian repl ied, " N o t very readily." He warned that he had a l o t o f high­ caliber ammunition to fire. "It will be ' 7 5 's," he noted lacon ically. The show moved to the courtroom . Bail was set at $7,000, $ 3 ,000 in cash . "We can furnish $ 3 ,000 cash, can't we Mr. Julian?" asked his attorney. "I th ink so," responded Julian. He then, reported the Times, "dipped his neatly man icured fin­ gers into his breast pocket and extracted a fat roll of currency. He l eisurely peeled three crisp $I 000 bills and tossed them to the c lerk. " Outside the court Julian accused Daugherty of a "grandstand play." "[ am at a loss to understand why he has singled me out and accorded me the treatment that has been my portion," exclaimed Julian. "I do not yet know what it is all about or wherein I have committed an offense . " Julian denied any atte mpt to defy th e com­ missioner. "As far as my books are concerned," he stated, "they are not only open to th e state corporation commissioner, but they are open to inspection by the whole world at a moment's notice." At his offices, Jul ian found three deputy sheriffs guarding the door. A del egation from the Corporations Department greeted him with i n . After a l engthy conference, the officials confiscated the records and books and removed them for investigation. "Come again - more often , " quipped Julian as they left. On Sunday, July I , Jul ian presented his case in ful l page ads in his favorite medium. "Friends, Foes and Countrymen" "Lend Me Your Ears" " I ' m Here to Criticize, Not to Praise" "The Corporation Department of This Golden State"

The state agency, charged Julian, "has endeavored to perpetrate on me, Folks, one of th e most severe inj ustices that \Vas ever dealt to a citizen of Californ i a . " H i s permit, he all eged, h a d been "written up a few days after m y appl ication went in and placed on [Daugherty's] desk for [his] approval ." Why, asked Julian, "was it not signed after being prepared by your deputies?" Th e "most extreme tactics imagin­ able" had been used to discred it him. "Why," he wondered, "should the State Corporation Department try to retard one of the very few operators that has come th rough \Yith flying colors?" Julian reproduced his lengthy June 1 5 letter to Daugh­ erty, so th e people could "Be My Judge and Jury." "Am I playing the game l ike a man?" he chall enged. Jul ian's plea stnK k a responsive chord. Supporti ng letters and telegrams flooded his offices. I n Sacramento, Governor Richardson reported, " [ am recei,·ing a barrage of tel egrams regarding one C. C. Jul ian of Los Angeles . . . . I know nothing about th is matter." Richardson expressed full confidence in Daugherty and refused to revie\\ his decision . Julian ceased h i s sales and adopted a conc iliatory stance . l i e submitted addi-

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tional data to the Corporations Department. "Patience Is a Virtue," he counseled h is publ ic. On July 5, his a d acknowledged that the large number of applications for refining projects had delayed procedures. Four days later, he reported, "The whole world looks bright and cheerful. Mr. Daugherty has four of his lieutenants working on my permit and unless someone drops a monkey wrench in the machin­ ery, I say we will soon get some action . " The permit process, however, continued t o drag o n . The financial respite pro­ vided by the one-day stock sale soon ended. Checks totaling over $200,000 had arrived i nstructing Julian to "use th em as [he] saw fit," but the commissioner's edict had rendered them worthless. "Hundreds of the kindest letters i maginable" from supporters arrived each day. In them, Julian discovered "the stroke that saved the bacon . . . and turned on the l ight when th ings were darkest. " Several correspondents asked J u l i a n why he didn't raise fu n d s n o t b y selling stock, but by borrowing against his personal notes. On July 1 0, Julian began quietly accepting money in exchange for his personal n ote at 10 percent interest. But Jul ian's ads made no mention of the borrowing campaign until July 1 7, when he wrote cryptically "I threw my arm out signing personal notes for subscriptions from people that stil l believe 'I will' . . . build one of the greatest refineries in the State of California. It all goes to prove there are more ways to kill a cat than choking it to death with hot butter." On July 22, Julian unveiled his campaign : "One Million Dollars in Cash" "IN 12 DAYS" That's the amount that has been advanced to me on my personal note up to last evening . . . Owing to my not having received any action on my application for a permit to offer my refinery security for sale . . . I have resorted to the only legal means I know to carry this project of ours through to a successful conclusion . . . . "I Need 4 Million Dollars More" But all I can offer you until my permit has been issued is my personal note, for any amount you feel inclined to advance me. This note will bear interest at the rate of I 03 per annum . . . My note is backed by every possible asset I possess, and on top of all this for each $ 100 you advance me I will put up as further security two shares of Preferred and one share of Common, which I n o w personally own , or will legally purchase in the Julian Petroleum Corporation.

Bolstered by the newspaper ads, money arrived at the rate of $ I 00,000 a day. "Time and Tide and C . C . Julian Wa it for No Man," he admonished h esitant investors. \Vith a ready cash flow, Jul ian finally completed th e purchase of his refinery site and stepped up work on the ta nk farm. Th is bold action enhanced Julian's reputation as ·the champion of the bureaucratically oppressed. A $ 1 ,000

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contest to name his ne�. gasol ine attracted 1 7,000 entries, and Jul ian grandly adopted the label he claimed was suggested by 30 percent of the respondents ­ " Defiance Gasol ine." In one swift master stroke, Julian had outflanked the Corporations Department. If Daugherty refused to issue a permit, Julian would raise his entire funding on personal notes. With i n days of his July 22 ad Julian and the corporation department began negotiations to end their stalemate. Rumors flowed that the permit would be issued only if Julian severed all connections with the company. "When I resign, you will see grass growing on Main Street," boasted Julian. On July 30, the Corporations Departm ent ended two months of contention and issued a perm it to Julian Petroleum authorizing th e sale of $5 million worth of stock. The action represented a compromise. All stock certificates would bear the message "TH I S I S S U E I S HIGHLY SPECULATIVE," and a l l funds would be placed in escrow until released by wri tten order of the comm issioner. Julian's per­ sonal broker's permit rema ined suspended, and criminal charges filed aga inst him rema ined pending. Four days later, in compl iance with another provision of the agreement, Julian resigned as president of Julian Petroleum. 0. S. Witherell , a longtime associate, replaced him. But Julian still received one share of common stock for each one sold, effectively retaining control of the company. Press accounts completely ignored Julian's resignation, and C . C. continued to personify his namesake company, which the public now affectionately dubbed "Jul­ ian Pete." To the people of Los Angeles there was l ittle doubt who had won round one in the Julian-Daugherty confli ct.

111 " 'Come On, Folks' 'Let's Go ! " crowed a gleeful C . C. Jul ian, on August 1 , 1 92 3 , permit i n hand. " Tm a bear' o n making hay wh ile the sun shines, and it's sure pretty weather now. " "What More Could You Ask?' " he queried in h i s new sales campaign, " 'Than to positivel y know' that you are investi ng in an enterprise th at is generally conceded to be one of the greatest money makers of the age, and to know on top of that, the man behind the gun knows th e oil industry from A to Z." The oil business, Julian assured investors, "can be carried on as safely as the grocery busi ness if one has l earned how." Julian Petrol eum, backed by thousands of investors, possessed a built­ in safeguard . "With 40,000 partn ers to buy my gasoline and motor oil," he predicted, the company would have "some ready market," for h i s projected sixty sen·ice stations sell ing Defiance gasol ine. " D id you ever hear of a Refining Company in the United States with ten mill ion dollars to carry on the i r business go ing broke ?" wondered Julian. "I never have . " General Petrol eum and Pan-Am erican Oil had ra ised m ill ions t o b u i l d n e w refin­ eries. "\Vh o puts up the money for them to do all th is? ' The smartest Money sharh off \Vall Street. ' " Julian predicted, that "in 24 months . . . \\ hen you talk of th e

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'Union Oil Company,' 'General Petroleum Corporati on,' and 'Associ ated Oil Com­ pany,' you will talk of the Julian Petroleum Corporation in the same breath ." Throughout August and September, orders for Julian Pete stock poured in at a rate of $ 5 0,000 to $ 7 5 ,000 a day. " Folks, I'm busier these days than a one-eyed man looking through a knot-h ole at the Ziegfield Follies,'' he protested. "HOLY SMOKE," he reported on September 1 8, " HOW YOU STAMPEDED ME YES­ TERDAY." Two days later Julian began his final countdown . "Crack Your Wh ip Now,'' he admonished. The stock sale ended at midnight, October 4. In fifty-six days, Julian had sold 1 00,000 shares of preferred stock for $ 5 million. Wh atever reseivations Commissioner Daugherty and others might have held about Julian and his venture, tens of thousands of investors had accepted his gospel. The stock sales completed, Julian Petroleum sprang into h igh gear. Hundreds of employees laid miles of pipeli nes, constructed thousands of gallons of storage facilities, and prepared the refinery and wharfage sites. Julian negotiated oil leases in both new and old fields, and drilling began on several wells. Corporate officials laid the groundwork for a vast chain of gas stations, procuring $2 ,000,000 worth of gasol ine from General Petroleum to tide th e company over until i ts own refinery was completed. An agreement to purchase more than 2,000 gas pumps over five years demonstrated the ambitious scope of future plans. Ads promised the first fifteen seivi ce stations would be dispensing Defiance gasoline by late November. But even as Julian envisioned the day when h is efforts would make him "to the masses of the people the best l oved man in the state," storm clouds were gathering. " 'I Wonder Who's Framing Me Now? ' " asked Julian on October 2 5 . "Folks, there's sure something in the air aga i n . . . but I'm curious to know what the new line of attack will be." Julian claimed that he had received "mysterious phone calls" and "anonymous l etters" warn ing of a plot against him. "I never l eave my office night or day that I'm not followed every place I go ,'' he all eged . But, Julian warned, "If they come at me too strong, they better come shooting, because I'm not so slow on the trigger myself." Julian might have been responding to rumors of a federal investigation, or he may have been bracing his followers for two upcoming hearings stemming from his earlier confrontation with Daugherty. On November I, a judge heard testimony to determ ine whether Julian had violated the Corporate Securities Act in June when he sold personally own ed stock. The following day, Daugherty convened a second, nonjudicial proceeding concerning th e revocation of Jul ian's broker's perm it. Daugherty's hearing had an inquisitional atmosphere. Corporations Depart­ ment deputies presented the evidence wh ile Daugherty presided and \\'ould render the verd ict. For three clays, state officials, a ided and abetted by Daugh erty from the bench , attempted to prove that Julian had m isled the public and collected excessive profits. At the open ing session an immaculately dressed Julian sat am idst three attorn eys and gazed "moodily" with the "air of a 'h urt man."' A deputy corporation com­ missioner testified that Julian had invested little of his m rn money in his syndicates. The chief engineer contested Julian's advertised claim that he was the "largest

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independent oil producer i n the state . " (Julian's attorneys responded somewhat ingenuously that th is re ±e;;ed to the number of stockholders, not the volume of oil . ) A state accountant chall enged Julian's assertion that a $ 1 00 investment i n Union Oil had earned $40,000, but admitted that an accurate profit figure was not avail­ able. None of these points seemed particularly damaging. On November 5, th e tempo accel erated. The Corporations Department went to great lengths to prove that the fleet of tankers loaded with oil and bound for the Orient, wh ich Julian had depicted in his ads, did not exist, making several "unkind insi nuations" about the phantom fleet and calling representatives from other oil companies to testify that n o such shipments had occurred. Julian's attorney objected. The advertisement, he argued, did not describe an actual shipment, "but a myth ical conversation on th e street," relating to future corporate activities. " I don't see any­ thing myth ical about the ad," concluded a hum orless Daugherty rul ing against the defense. Julian buried his face i n a newspaper, pretending not to hear or care. Suddenly, late in the morn ing session, he came to l ife . The oil promoter rose and requested perm ission to personally examine the witnesses . Daugherty, noting Julian's more than adequate legal representation, denied the request and ordered Julian to be seated. The oil man compl ied but moments later threatened to withdraw from th e hearing if h e could not question the witnesses. Daugherty said he could do as he pleased. Julian departed defiantly, ending th e morning session. That afternoon , Daugherty responded to Julian's challenge. H e announced that if Julian walked out again, he would be cited for contempt. Julian, however, was not so easily thwarted. His attorneys informed Daugherty that, in order to ava il h imself of his right to conduct his own defense, Julian would dismiss his counsel. The commissiontr relented. Julian, h e allowed, could question witnesses. Late in the afternoon, Julian took the floor, cross-examining witnesses, according to the ; Times, "with remarkable vigor and directness. ' H e chall enged Corporations Depart­ ment figures and cost estimates, attempting to demonstrate that he had not raised unreasonabl e amounts of money for his syndicates. The foll owing day, another Daugherty aide testified that an advertisement describing R. W. Cowan, whom Ju1ian had l ured from Union Oil to manage his refinery, had blatantly misled the publ i c . Cowa n , Julian had claimed, had invested $ 5 0,000 in Julian Petroleum "on the same basis as you have or will invest your s . " Th e Corporations Department could fi n d no record o f th is sale o n Julian's books. The transaction, protested defense attorneys, had transpired with no money chang­ ing hands. If so, countered the prosecution, \\"inning one of its few points, this violated the perm it, wh ich al lowed only cash exchanges. The hearing concluded with the appearance of the deputy comm issioner who had attempted to seize the Julian Petroleum books in July. The inabil ity to acquire th e records, he asserted, "seriously delayed" the functioning of h i s department. Julian's counsel chall enged this asserti on. Did three hours constitute an unreason­ able delay? they asked. \Vas the bookkeeping not exceptionally good? The deputy adm itted he could find no fault \\·ith the accounting.

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The outcome of the proceedings had never been in doubt. " Inasmuch as the C orporation Commissioner, some lhonths ago, saw fit to have a complaint issued against me for violation of our Corporate Securities Act," Julian had predicted on November 5, "it would be reasonable to bel ieve that he will undoubtedly feel jus­ tified in making the revocation of the broker's license permanent." Daugherty, despite the often trivial content of the prosecution's case, fulfilled th is prophecy. Even one month l ater, when a j udge dismissed all criminal charges aga inst Julian, Daugherty refused to reissue the permit. I n the publ ic mind the impression that remained was one of a persecuted, yet gallant, Julian striding forth into battle against arbitrary authority, outwitting and outclassing his opponents once again. Daugherty clearly recogn ized th is perception. On November 7, the day after the h earings ended, he contacted the United States Department of Justice and requested that the agency examine Jul ian's affairs. Jul ian's battl es with the corporation commissioner had elicited a groundswell of popular support. Had people paid more attention to the dwindling fortunes of his syndicates, however, they m ight have tempered th eir approval. Wells No. I, 3, and 4 continued heavy production despite the "pinch back." But Julian, unable to find a buyer for additional oil, kept Well No. 2 idle until September. No. 5 did not arrive until November and del ivered a far smal ler flow than its predecessors. The 6 through 9 syndicate wells, heralded in July as "monster producers," had all experienced difficulties. On August 26, Julian reported "flowers and soft music at 5 000 feet" for Well No. 8, his first dry hole at Santa Fe Springs, forcing him to abandon the adjoining site for No. 9. Disaster also struck Wel l No. 6. Drilling was completed in September with an in itial flow of 1 , 500 barrels a day. But three weeks later, Julian dolefully reported, "An outfit on an adjoining lease put so much pres­ sure on their cement job that they forced their dril l ing mud clear over into our well and killed number 6 deader than a doornai l . " When cleaned out and put back on production, No. 6 yielded only 3 50 barrels a day, a figure that declined steadily. Its run n i ng mate, No. 7, also proved d isappointing on del ivery. Julian's final three-well syndicate fared no better. Wells No. 1 1 and 1 2 , which adjoined his in itial Brunson properties, each produced a pal try few hundred gallons a day. The Pico wildcat i n the unproved Compton field encountered one difficulty after another. "Has a sick headache, with the stomach pump not doing so \\'ell," Julian revealed on October 26. "We may have to order in a coffin." Those not distracted by the more flamboyan t affairs of Julian Petrol eum began to question these failures. Julian had capitalized the later syndi cates more heavily than the first and rumors of excess sales continued to circulate. Had Julian del ib­ erately scuttled his wells to mask an oversubscription ? Had Daugherty's suspicions been justified? Am ple alternative explanations existed to allay th e fears of Julian's supporters. The Santa Fe Springs field, crippled by overdrilling and weakened by the "pinch back," had reached its peak i n September. A precipitous decl ine ensued. Ne" wells became fewer and, l ike Julian's, produced far less. With in a fc,,· months Oil Age would call Santa Fe Spri ngs "a pleasant mem ory for the fortunate investors and a

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n ightmare t o the unfortu nate ones." In Compton, optimism generated b y Union Oil's discovery well i n At1gust had turned to "considerable anxiety" in December. Like Julian, General Petroleum had failed to strike oil with its wildcat. Nor did dry holes automati cally doom Julian's syn d icates. "Th is is my funeral, not yours," he had promised on the Pico well , "because even if I lose the hole I'll skid the rig and drill the well without a dime of cost to a nyone but myself." If Julian could relocate wells 8 and 9 and the Compton wildcat to more productive soils, he might still redeem his promises. Meanwhile, Julian Pete cel ebrated the open ing of its first gas stations in Decem­ ber. Bright red, white, and green "Jul ian" signs bedecked the sites. On opening day, brass bands ch ristened each location, playing " For He's a Jolly Good Fellow" as Julian, clad in white overalls, toured the stations dispensing the first tankful of Defiance gasoline at each one. But these festive scenes played aga inst a backdrop of growing crisis. Comm issioner Daugherty had again set his sights on Julian and enl isted the powerful Los Angeles Times as his ally.

TH E TRU TH

For C . C. Jul ian, 1 924 began with the subtl ety of an avalanche. Within one week he had publ ished his own newspaper, incurred the wrath of the Los Angeles Times, sued the corporation commissioner, and dodged three bull ets aimed at his head. Th e origins of these turbulent events lay in Jul ian's 1 9 2 3 summer stock sale. C. C . had not distributed stock certificates, but had provi ded temporary receipts that could later be redeemed for stock. By l a �e 1 92 3, these recei pts flooded Spring Street. Their val ue fluctuated wildly as if some person or syndi cate was conspiring to drive down prices and buy shares at artificially low levels. Was Julian h imself manipulating the stock to absorb and cover up an overissu e? In l ater years Julian readily admitted that he had collected funds wel l in excess of the $5 mill ion allowed. S i nce all monies were to be placed in escrow and con­ trolled by Corporation Commissioner Daugherty, Julian explained that he wished to amass a h i dden reserve to cover i mmed iate expe nditures. He therefore oversub­ scribed the stock issue by $ 1 . 69 m illion, plann ing to redeem these funds as part of a second $5 mill ion offeri ng. Julian appl ied to the Corporations Departm ent for a second permit in September 1 9 2 3 , but when Daugherty only authorized an addi­ tional $ 1 . 5 mill ion sale and imposed several restrictive conditions, Jul ian angrily withdrew his appl ication. Thus Julian found h i mself in a financial ,·ise. Each time he desired access to his legally acquired funds, h e had to petition the corporation co1ll missioner. T\\'o or three \\'Ceks m ight pass before a hearing could he held. Jul ian claimed that state officials once took t\\'en ty-two clays to approve the release of $ 5 00,000 to purchase property in a new oil field. In the interi1ll his option expired, and the land \\·as sold twice at a $ 5 00,000 profit. "Th e publ i c," co1llplain ecl Jul ian, "\\'as clepcnding on

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[me] to make money for lt and the state was really running [my] business." Julian charged that Daugherty had become the "dictator" of Julian Petroleum. For several months Julian skirted these restrictions by tapping the oversubscrip­ tion. But by December 1 9 2 3 , th is reserve had dissolved . With l , 1 00 workers and a $ 1 5 , 000 monthly payroll , Julian had already advanced the company $ 1 mill ion dol lars of his personal funds and mortgaged his home to raise more money. Cred­ itors, acting as "pawns of some powerful opposition , " according to Julian, had begun to demand that Julian Pete be placed in rece ivership. The corporation commis­ sioner nonetheless refused to release the $ 1 . 8 million he held in escrow. Meanwh ile, Julian Petroleum had begun to issue stock certificates to replace the temporary receipts, but it still had to resolve the remaining oversubscription. While Julian never admitted manipulating his stock, he apparently took advantage of th e sinking prices to buy up the rece ipts and retire them from c i rculation . These activities did not escape the notice of Daugherty and his deputies. To resolve his financial dilemma, Julian again attempted to c i rcumvent Daugh­ erty's authority. At a December 1 0 meeting of the Julian Pete board of di rectors, Julian officially rec )aimed the company presidency and accepted $ 3. 5 mill ion worth of stock. One and a half million dollars represented money that the corporation owed to Julian. The remainder he hoped to resell to the publ ic as personally own ed shares. Five days later, on December 1 5 , the Los Angeles Times unexpectedly refused Julian's daily advertisement. The Examiner, Herald, and Express quickly foll owed suit. On the eve of a new stock-selling campaign, Julian had n o publ ic medium to peddle his wares or plead his case. On December 1 7, Julian formally applied for th e release of the $ 1 . 8 million still held i n escrow by the corporation comm issioner. Daugherty responded by demanding a complete exam ination and investigation of Jul ian Petroleum books and records. Jul ian Petroleum defiantly refused to cooperate . The Corporations Department had al ready audited these books and records "on a half a dozen occa­ sions," protested a company official. In addition, Julian Petroleum had provided a complete l ist of shareholders, "which in our opinion should be considered secret and confidential . . . not because we bel ieve you have a legal right to demand it" but because "we have at all times endeavored to cooperate with your department." The compilation of this l ist had entailed "unnecessary expense" and several weeks of work. S ince the Corporations Department would not issue a new perm it in California, added the official , Jul ian Petroleum had undertaken a nationwide sales effort and removed all stock certificates, subsc ription blanks, and other sales mate­ rials to its Delaware office. Daugherty vieweJ this as a declaration of war. He ordered Julian Petroleum to make all sales materials available and instructed t\\'enty Spring Street brokers to surrender their records of Julian Pete transactions. All but one, Roy West, a former Julian salesman who dealt excl usively in Julian issues, compl ied. On December 29, Daugherty attacked Julian in a lengthy statement to the Times. Th e Corporations Departm ent, he alleged , had recei\·ed information that

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Julian Petroleum had sold hundreds of thousands of dollars' worth of stock without its permission and was attempting fo determ ine which sales were l egal and wh ich violated the law. Julian Petroleum had stym ied these efforts by removing its books outside the state . As a result, Daugherty announced, he had impounded the $ 1 . 8 million remaining in escrow "pending the disclosure of the true facts." Daugherty charged that "a large amount of money has been used by certain persons in manipulating th e market for their own benefit by running up and down the market prices at different times." His agency wished to "find out who profited by such manipulations." The comm issioner warned against buying Julian's person­ ally owned stock, as additional financing "is not warranted until the officers of the corporation show sufficient evidence of putting the corporation on a businessl ike basis, instead of making the sale of stock [its] principal business." Two days later, pol ice arrested Roy \Vest on charges of violating the Corporate Securities Act. Julian ra ised his now-familiar cry of conspiracy. He denounced Daugherty's statement as "the most cruel attack ever perpetrated to my knowledge in the State of California" and threatened to sue th e commissioner and th e Times for $ 1 million dollars each. But with his ads barred from local newspapers, the bel eaguered oil man lacked a publ ic forum. Wi th "powerful unseen forces" refusing to print his repl ies or accept his advertisi ng, charged Julian, "the injustice . . . is practically th e same as tying my hands and fe et and then clubbing me over the head." If the existing dailies could d istort reality and deny him access to th e publ ic, who he was sure "resent( ed] these contemptible tactics as much as myself," the ever-resourceful Julian could find another way to convey his message . Julian vowed to publish his own newspaper. He entitled his journal The Truth. "I locked myself into my office on the Saturday n ight before New Year's and started to prepare the copy," Julian later recalled. "I didn't take my cl othes off or lie down in a bed until 10 a . m . the next Wednesday." Julian's lawyers attempted to temper his rhetoric and accusations, but Julian ultimately "sent them home and took the entire responsibility on his own shoulders." On Monday, December 3 1 , 1 9 2 3 , at 2:00 a . m . , Jul ian had compl eted enough copy and illustrations to fill a four-page newspaper, and arranged for d istribution. The Shopping News, an adver­ tising periodical owned by local department stores, rented him its presses. By Monday morning the printers had prepared the plates and started the machinery. Copies of The Truth began to roll off the presses, when suddenly the Shopping News manager ordered all work halted. The owners of the paper had changed th eir m inds and woul d not allow The Truth to be printed in their plant. Julian argu ed and pleaded and threatened lawsuits, all to no avail. Julian contacted another printing firm, which agreed to complete the job if Julian could supply workers. Julian hunted for printers, offering tri ple time in wages, but discovered that most were gone for the New Year's holiday. Julian finally located several journeymen at an offshore island resort and rented a launch to transport them in. The Shopping News had used rota ry presses; th e ne,,· printer ran flatbed presses. All forms thus had to be remade. By d i n nerti me all finally seemed ready. Julian and two assoc iates retu rned to his home and were preparing to eat when the

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telephone rang. Attornevs had i nformed the printing firm that The Truth might be libelous and advised against cooperating with Julian. When C . C . arrived at the shop, he found it locked and barred , with all gone save the n ight watchman. He sent for two Pi nkerton men, and he and his colleagues, "though ignorant of the printing business, removed the forms with our own hands and stacked th em on a tru ck under the Pinkerton's guard . " Julian hoped to rush the plates to San Francisco and have them printed th ere. Before departing, Julian played one last card in Los Angeles. H e sought out Cornelius Vanderbilt, Jr., the twenty-five-year old maverick publ isher of the city's newest periodical, the Illustrated Daily News. Vanderbilt, the great-great grandson of the famed railroad magnate , had been raised in one of America's wealthiest famil ies. He had fought in World War I and worked as a "mill ionaire reporter" for the New York Herald and the New York Times, before arriving i n Los Angeles i n the fall o f 1 9 2 3 t o start th e first newspaper o f a proj ected national chain. Vanderbilt saw the Daily News as a l iberal alternative to the conservative Los Angeles media ol igopoly. Whereas his famous forebear had once uttered "the publ ic be damned," Vanderbilt adopted the motto 'The Publ ic Be S erved." In the b itterly anti-union cl imate of southern California, Vanderbilt became a voice for the work­ ingman . He sold his tabl oid-styl e, picture-filled newspaper for an affordable one penny and repeatedly attacked th e Los Angeles power structure, symbol ized by Harry Chandler and the Times. To finance his fledgl i ng empire, Vanderbilt planned a public stock sale aimed at the same clientele as Julian's. Julian hoped that i n Vand erbilt h e had found a kindred spirit and ally. Julian located the young publisher at a New Year's Eve celebration. For Van­ derbilt, struggl ing to establ ish his newspaper, the Julian situation offered a unique opportunity. By siding with the popular, flamboyant oil man, he m ight increase circulation and attract investors. In addition, Vanderbilt, who had recently started a second paper in San Francisco, needed cash. Vanderbilt agreed to print The Tru th and to run Jul ian's advertisements in exchange for a $ 1 00,000 loan. Julian del ivered the printing forms to the Daily News plant, one of the few union shops i n Los Angel es, only to suffer another setback. The foreman balked at using plates prepared by non-union labor. After much debate and, according to Julian, money spent freely, the foreman all owed his men to redo the forms. The Truth finally won out. On the morn ing of January 2 the four-page newspaper rol led off the presses, and an army of 3 5 0 men and boys distributed copies through­ out southern Cal ifornia. Tru ckloads of papers, protected by armed guards, traveled north to San Franc isco and south to San D i ego. I n Los Angeles, Julian later recounted, obstacles continued to appear. Two armed men waylaid a delivery boy and stol e thousands of papers. At least ten of Julian's workers landed in jail. Jul ian's all egations of strong-arm tactics might be readily dism issed if it were not for a persistent pattern of intimidation in the Los Angeles newspaper wars. Harry Chandler had first gained influence on the Times in the 1 880s by acquiring a c irculation monopoly and using it as leverage with publisher Harrison Gray Otis. Chandler later m arried Otis's daughter and succeeded his father-in-law at the pa-

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per's helm. He never forgot the importance of distribution. In 1 9 1 2 , after voters had establ ished the city-subsidized Municipal News, its del iverymen were physically attacked in res idential ne ighborhoods, and, under pressure from the Times, the paper lost its subsidy and died. Well i nto the 1 920s, according to one form er employee, the Times employed "thugs" to protect and expand its newsstand sites and del ivery routes. Vanderbilt had received warni ngs from Chandler and others not to start the Daily News, and confronted efforts to sabotage his presses and cripple h i s distributi on. Copies of the tabloid were thrown into ditches and sprayed with oil. Del ivery boys faced "intim­ idation and bribery, then fists and clubs." To protect his trucks and newspaper boys, Vanderbilt maintained a fleet of Ford runabouts for his men to troubl eshoot the streets. Despite th e efforts of Julian's opponents, one million copies of The Tru th found th eir way into the publ ic's hands, according to Julian. In the newspaper, he denied all charges l evelled aga inst him and attacked Daugherty and oth ers for conspiring to destroy Julian Pete. The Tru th, he pledged, would become a "permanent feature, issued at regular intervals." But no subsequent issue appeared. Julian had worked nearly eighty continuous hours and spent thousands of dollars, leading h i m to the rueful conclusion that, "It was cheaper to let the Commissioner say anything he wished than to combat his statements with such expensive publicity. " With The Truth finally on the streets, Julian went home and slept for two days.

II

C . C . Julian returned to his offices on January 3 , 1 G24. News that a judge had dismissed Daugh erty's case aga inst Roy West buoyed his spirits but a death threat found among his messages tempered his mood. That n ight, at I 0 : 3 0, as Julian worked with Julian Petroleum vice-president Jack Roth , an anonymous caller warned he would be killed before m orning. Jul ian and Roth left the office and drove to Jul ian's Los Feliz mansion. His chauffeur detected a taxi following them. Shortly before 1 :00 a . m . , as Julian and Roth sat on a davenport, two . 38 caliber bullets pierced the screen and French windows at the front of the house, barely missing Jul ian's head. As Julian and Roth dove for cover, a th ird shot crashed into the wal l . The closely grouped bull ets, fired from th irty feet away, formed a small circle of holes in the window. Julian charged that the people who had tried to block publication of The Tru th had planned the shooting. "Th ey were trying to scare me, rather than kill me," he claimed years later. "I just failed to scare." Others speculated that Julian hi mself had arranged the incident to win sympathy for his cause. Pol ice investigators found the handgun used the next day, but could shed no further l ight on the attack. Throughout the week, Los Angeles newspapers accorded th e Julian saga banner treatment. The Record, which had never accepted Julian's advertisments, ran page-

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one editorials on the "Jul ian tangle" for three consecutive days. Since 40,000 people "with bended backs an cr c all oused hands," had handed over "their savings in response to his steam calliope advertising," argued the Record, the conflict between Daugherty and Julian concerned the entire community. "In justice to Julian," th e Record adm itted, "it must be conceded that h e has performed some astute gymnas­ tics . . . . Unfortunately, melodramatics will not straighten out the Julian promotional tangl e . " T h e Times responded t o Julian's onslaught with an editorial protesting Jul ian's "picturesque abuse," "petty malice," "trivial rumors," and "preposterous intima­ tions." It had ceased accepting Jul ian's ads wh en it rece ived information "indicating the possibil i ty, if not the probability, of some of the investments failing to devel op." As the publ isher of "a larger volume of advertising . . . than any other newspaper in the world," the Times printed "only advertising that can be relied upon , " shielding readers "from m isrepresentation, fraud, and irresponsibility," sparing "no effort or expense to protect itself and its family of readers." This sudden discovery of advertising scruples doubtless amused long-time Los Angeles residents. For decades the Times had amassed its vaunted vol ume of ads by soliciting and printing the blandishments of a wide variety of promoters and con artists. Patent medici nes and h ealth treatments shared the pages with countless opportunities in business, oil, and real estate speculation. The Record estimated that the Times had earned in excess of $ 1 mill ion from advertising i n each of the previous two years with "no small share of that profit [coming] from oil promoters." Julian alone had paid approxi mately $40,000 to the Times, and similar amounts to other newspapers that now refused to accept his copy. On January 5, attorneys for Julian filed a writ of mandamus i n Superior Court demanding release of the funds impounded by Corporation Commissioner Daugh­ erty. Julian appealed for moral and financial support in his first ad in Vanderbilt's Daily News: " RED BLOODED AMERICANS" I'M CALLING ON YOU TODAY "The Powers aligned against me," after months of vicious attack from e\·ery possible angle, have finally thrown every reserve power they control into the breach, i n a last desperate attempt to annihilate the J u lian Petroleum Corporation We have fought them toe to toe every inch of the way, always knowing that sooner or later the showdown must come and always betting all ours that in the final battle, "public opi nion" and the financial support of the California people would be the necessary \\eight swung into the balance to defeat one of the most diabolical political conspiracies that has ever been hatched in the State of California . . . I want you to know that at th is moment we a re "barely holding .. the "Powers" that arc assailing us, and that the "line" is swaying back and forth , and to win this battle we must have your further financial support now. "

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Julian offered $2 million of personally held stock for sale. " I am calling on every man and woman in this 'Golden S tate' who is a bel iever in seeing 'FAIR PLAY,' to lend me th eir financial assistance,'' he wrote , "and in return I will promise you you'll see the gamest bunch of fighters this side of the 'Mason-Dixon Line' go over the top and make an overwhelming success of our great enterprise." Julian's charges of "unseen powers" struck a resonant note. Many people in Los Angeles firmly bel ieved that a conspiracy, emanating from the offices of the Los Angeles Times, controlled th eir l ives. Harry Chandler, the Times publisher, reigned as southern Cal ifornia's wealthi est and most influential figure. He served on over fifty boards of d irectors, established countless dummy corporations and secret trusts, and d ispensed financial backing to numerous undertakings. " H e is m ixed up in so many ventures,'' commented the Saturday Evening Post, "that nobody, with the possible exception of h imself, has ever been able to count them." Speculative real estate syndicates involving the most influential people in the commun ity lay at the heart of Chandler's empire. "It's not what you go into," he once said, "it's whom you go into a venture with . " Leading bankers, businessmen, streetcar and utility owners, and political figures found their way into Chandler's i nvestment all iances. In the most famous and controversial of these syndicates, Chandler and other community leaders had acquired land in the arid San Fernando Valley in 1 904 with foreknowl edge of a secret plan to construct an aqueduct from the Owens Valley to provide water for Los Angel es. Using their considerable influ­ ence to make the aqueduct a real ity, the group garnered over $ 1 00 mill ion in profits. The belief in the existence of a "newspaper conspiracy" was an integral part of the local landscape. Many observers assailed what state official William G. Bonell i later called a "blackout on truth" i n southern Cal iforn i a . The political perspectives of the Express, Exam iner, and Herald, onc e-l iberal rivals of the Times, now differed l i ttle from that of Chandl er's journal. Publ ishers E. T. Earl of the Express and Max Imhsen of the Exam iner participated in Chandler real estate syndi cates. Critics charged that, to ensure continuous growth and drive labor costs down and real estate values up, the Times and its crony newspapers carefully controlled the i mages dis­ pensed to city and nation . Reports of traffic probl ems, labor un ions, and pol itical repression n ever appeared in the local print media. The fact that all four papers had simultan eously canceled Julian's ads, denying him an opportunity to present his version of the con troversy, and that Daughe rty had once worked for the Times, offered fu rther evidence for collusi on-minded observers. "Who and what is th is sinister and menacing power that controls newspapers a n d publ ic officials?" asked one citizen i n a letter to the Da ily News. Other corre­ spondents wa rned of "a sinister, subtle conspiracy, incapable perhaps of direct proof . . . to destroy an en terprise in the interest of old established pri,·ilege," and of "the seeming evil with which our very citizens ha,·e been tied hand ancl foot." "No man is free, evidently, from the influence of this crO\nl \\'ho strike i n the dark," wrote one Julian supporter. Julian and Va nderbilt had "stood up agaimt the cro\\'d that nms th e town ," b udcd an other. These sentiments .reflected the vast outpo uring of publ ic support for Julian.

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During the first two months of 1 924, the Da ily News published over 1 3 0 letters endorsing its stand on J lili'an, as many as thi rteen in a single day. "Mr. Julian may not be all that he claims," asserted one man, "but as a citizen of these United States he is at l east entitled to tell his side of the story." Julian Pete supporters expressed common fears about Progress ive-era regulations. "We are fast losing all the liberty that we have and that our fathers fought for," wrote one Jerem iah. Some challenged the rationale behind regulatory commissioners. "Who is this man who is tryi ng to put us in the cl ass of serfs of old?" wondered a l etter writer. "It will not be safe to invest if one man holds such power," argued another. "\Vhen we need protection we will ask for it," a Julian backer wrote ind ignantly. "Are we children not to be trusted with our money?" Increasingly, Julian appeared in these Daily News missives in an al most Christ­ l ike guise. "What faith they have in this wonderful man," observed one letter writer. Supporters described him as "a square man . . . who towers above the ordinary;" "a man of the fi rst water [who J has been sorely tried . . . honestly trying to help the poor and ordinary men and women to feed and clothe th eir children better and get a few luxuries for themselves. " One real estate promoter anointed h is subdivision adjoining the proposed refinery site "Jul ian City," a prom ised land of "rich, fertile, black loam soil." This deification reached new heights when the trial in the Julian-Daugherty mandamus suit began on January 1 7. With a new courthouse under construction , the tiny Sunday school room of the Broadway C hristian Church served as a make­ shift court chamber. The seventy-five seats filled rapidly with twice that number of people cwnming the rear of the courtroom - "old and middle aged men and women, working people many of them daguerrotypes . . . [standing] tirelessly through the slow, snailing m inutes . " They laughed and applauded when the j udge ruled in Julian's favor, th eir "blurry, lampl ess faces, transformed for a brief, subl ime moment." At the end of each day they surged forward to greet Julian, shake his hand, or j ust touch him. "God is on your side, Mr. Jul ian," proclaimed an aged women with "withered and fissured face," "for you know, I pray to Him for you every night." The Record reporter sensed the larger drama being played out: Strange . . . strange . . . somehow they seemed to be HIS people, people who bought H I S oil stock, people who beli eve in H I M with faith hard as granite. They seemed strangely attuned to H I M . . . . the romance of it all tingled in me . . . C. C. Julian, with his raucous, qu ixotic ads, has made h igh adventure out of the drabness of selling stock. I le has brought romance . . . to thousands . . . . He has made it appear that the C C. Julian corporation is fighting a gigantic desperate battle against immense, disgracefully im mense odds. And all these m i ddle-aged, tired, or old clerks, or laborers, or small merchants sec in him the embod iment of their h ighest dreams. Once th ey've bought C. C. Jul ian's oil stock, they're C. C . J ulian's soldiers, kindling to a great cause - great to them. .

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Julian played to the crowd, "with the amused inscrutability peculiar to matinee idols i n small cities." His colorful wardrobe dazzled the onlookers. "There is some­ thing of the fighter about him," concluded the Record, "someth ing of a bantam rooster . . . someth i ng peaked, yet doughty, and in profile there is a handsome greyhound quali ty to the oil genius visage." Comm issioner Daugherty, on the other hand, despite the judge's demand that h e appear, remained in San Francisco. Julian's attorneys argued that Julian Petrol eum had not violated the company perm it but i nstead was victim of a long history of m istreatment by Daugherty. Wit­ nesses revealed that the Corporations Department had had complete access to the Julian books for several months and had made repeated "test checks" before the company had transferred them to Delaware. A Julian Pete official confirmed that Julian had loaned the company $ 1 . 5 million, but had yet to receive any salary for his efforts. After two days of testimony, the Corporations Department offered terms for surrender. Julian Pete would immediately receive all impounded funds in exchange for a promise to return its books to Cal ifornia no later than April 1 8 . The crowded courtroom burst into c heers at the announcement. Julian's triumph offered his followers fu rth er evidence of a dark conspiracy to persecute h i m . "We'll show them Standard and Shell fell ows yet," crowed a Julian supporter. "Isn't it strange that Julian has won every case he has ever fought and yet they keep fighting him?" remarked anothei . For Daugherty the outcome was a humiliating defeat. H i s fail ure resulted, in part, from the novelty of his rol e . State regulatory agencies were still an experiment and lacked the resources, authority, and public acceptance to successfully chall enge a determined businessm an. In addition , Daugherty h i mself had often acted in h eavy-handed fash ion, nurturing th e rum ors of collusion and conspiracy. A Feb­ ruary 1 924 grand jury i nvestigation of his office, perhaps triggered by the Julian affair, supported these charges. "The department is under- and ineffic iently manned and its pol icy is vacillating and und ignified," reported the grand jury. While no specific i nstances of graft were proven , "favoritism was undoubtledly shown" and "conditions of perm its in some cases were unbusinesslike ." The Corporations Department would not easily overcome the publ ic damage done by the Julian affair.

1 11

The Corporations Departm ent released the impounded funds at 2 :40 on Friclav afternoon , January 1 8, 1 924, inspiring a weekend of wild celebration. The following even ing, as the clock approached m idnight, Jul i a n , his wife, and several u n i mited comrades including Jack Roth , Julian's right-hand man, appeared at a party hosted

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by fellow oil man Lewis B . Chase. Among the guests was Julian's physician, Dr. I ra Tower. Suffering from l um bago and l eaning heavily on a cane, Tower extended his hand to Roth , who inexpl icably spun angrily away. "I turned to talk to Jul ian," Tower later explained, "and the next moment, before I could gather myself together, saw Roth swing on me." Roth's punch broke Tower's nose and fractured his jaw. Julian made futile attempts to smooth matters over. Mrs. Chase, the hostess, pro­ nounced, "I am not willing to have them as guests in my home aga i n . " The following n ight the Julian caravan travel�d to Hollywood's posh Cafe Petroushka, the domai n of Russian emigre princess Dagmara Saricheva. In the kitchen, a former chef to Czar Nicholas II cooked borscht for a celebrity crowd . At one tabl e sat viol in ist Jascha Heifetz. Nearby, Prince and Princess Narichkin enter­ tained Russian author, actor, and strongman Nicholas Dunaev, who reputedly could bend a dime between his fingers. Across the dance floor, Charl i e Chapl in, Holly­ wood's biggest star, dined with prominent scenarist Carey Wilson and controversial actress Mary Miles Minter. M inter had reigned as one of the screen's leading ladies until she became impl icated i n the mysterious 1 92 2 murder of director William Desmond Tayl or. Since then her career had foundered. As these luminaries l istened to the music of a Moscow violinist, Julian and h is boisterous party arrived. Julian's group included his brother, C. A. Julian; and Roth . They were accompanied by an unidentified woman, possibly Julian's mistress Gladys Smith, described as "very attentive to [ C . C . ] , very pretty," with "beautiful clothes . . . and too many diamonds to be a poor working girl i n the movi es," and actresses Peggy Browne and Mildred Harris, Chapl in's former wife. Julian, obviously drunk, fla�hed a wad of thousand-dollar bills. He cursed loudly as he accidentally kicked over and b roke a floor spotl ight. At one point he attempted to take to the dance floor, ignm ing a Sunday n ight ban on dancing. Th e restaurant management forcibly restrained h i m . Julian approached Chapl in's table a n d brushed aga inst Mary M iles M inter. Peggy Browne later stated that Julian had prom ised Harris that he would "get" her former husband. Chaplin asked Julian to l eave his guests alone, but C. C. sneered and took a swing at Chapl i n . The "Littl e Tramp," demonstrating the dexterity he had displayed i n his movies, ducked the punch and then decked Julian. A general free-for-all ensued. C. A. Julian struck Chapl i n from behind before the n imble actor dispatched him as wel l. Nicolas Dunaev entered the fray to knock down C . C . a second time. "If Mr. Julian had been a dime, I'd have bent him in two," boasted Dunaev. Princess Saricheva rushed in to restra in Chapl i n . According to witnesses, Chapl in, his nose bloodied, retreated to the kitchen, and then returned to announce, "Here I am aga i n . Anybody who wants to fight me step up. Only one at a time will be accommodated ." The " Battl e of the Petroushka" made front-page headlines. Chapl in pied self­ defense. Mildred Harris expressed regret that Chaplin had "experienced humil ia­ tion ." The cafe management hastened to guarantee that they had not violated Pro­ hib ition l iquor laws, wh ile a local fight promoter offered to arrange a rematch on

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h i s Saturday nigh t boxing card. For his part, Julian adamantly denied the wh ole affair, claiming to have been hu.n dreds of miles away in San Francisco. Nonetheless, he instructed Roth to pay the Petroushka $ 5 9 5 to cover damages. Julian responded to the adverse publ icity in a statement addressed to "the people of California." Wil l i ngly accepting the mantle of a fighter, C. C. warned his fol­ l owers not to take reports of his nightlife too seriously: I only request that you bear in mind that the four Los Angeles daily newspapers that have been distorting the truth during the past few days have refused to accept my advertising . . . . They claim we are all fighters. But I'm here to tell you if we had not been, we would be in the d iscard now; Keep in mind that the truth distorted is the dish we are eating out of these days , but we all have strong stomachs.

C. C. reiterated his charges of biased reporting in his January 26 ad in the Daily News: "Time Is Money To Me" But evidently it docs not mean much to my good friends of the " Los Angeles Press," for I hear Mr. Chandler of the Los Angeles Times has issued orders to his staff of reporters to spare no pains or expense in digging up dope on all the fistic battles of my career, so that his paper may publish them to the world. "Harry, Dear," you don't need to waste your good elegant reporters' time, hunt­ ing up that information, because, "old kid," if you drop into my offices any day, I'll supply you all the dope on fifty different fistic encounters I have participated in. You know in the oil fields where I got my education we usually settle our differences that way . . . And by the way, " Harry," any time you are short of a "headline" for your "Sun­ day paper," I might obl ige you by staging a special bout to serve your purpose. Even though you refuse to accept my advertising in the "Times" you're doing pretty well on my publicity end.

The battl e royal with Charl i e C hapl i n added a new element to the Julian legend: the nightclub-hopping bon vivant, who cavorted with glamorous actresses, flashed thousand-dollar dollar bills, spent money lavishly, and bedecked his women in d ia­ monds. Although Julian vehemently rejected th is image, protesting that he could n ever have accomplished all he had wh ile leading a wild n ightl ife, the incident did l i ttl e to diminish his allure. Even as Julian's legal and nocturnal expl oits filled the news pages, the major dail ies still refused his ads and paid scant attention to Julian Pete activities. This proved unfortunate for Julian, as several developments seemed to be bearing out his optimistic predictions. The prolonged downswi ng in oil prices had abated, and crude oil prices had jumped 2 5 cents a barrel. Julian hailed this as "the forerunner of a series of price advances," justifying his program of storing low-priced oil for future sales. In addition, several new leases, which Daugherty had atta cked as spec­ ul ative, had already pa id off. In the Torrance field, Julian Pete brought in four wells in two weeks, all flowing 1 ,000 barrels a day. At Wh ittier a wildcat well adjoining the Julian properties del ivered a 3 ,000-barrcl gusher. Julian had also relocated the

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abortive No. 8 syndicate well to Huntington Beach, where a modest producer at least prom ised to bring sOl1i e return to investors. In early February the fi rst tanker loaded with oil at the new Julian Pete wharf headed for the East Coast. More visible to Los Angeles residents were the red , white, and green Julian Petrol eum service stations. Ten outlets had opened d ispensing Defiance gasol ine. " ' Smoke,' 'It doesn 't make any,"' boasted an ad in the Daily News. ' "Power,' noth ing else but." Al though his stations m ight be "a l ittl e hard to find today, it won't be long before they are as prominent as lamp posts," predicted Julian. Despite this undeniable progress, Julian found it impossible to sell his personally owned shares of Julian Pete stock. Uncerta inties about his venture had driven prices down on the open market. Investors could purchase previously issued stock more cheaply from brokers than they could new shares from Julian. As stock prices con­ tinued to plummet, Julian searched desperately for a way to stem the tide. At this moment Julian turned to an unl ikely ally, the Los Angeles Record. Part of the national Scripps-Howard chain, the Record was one of th e weaker entries in the city's journalistic wars. The iconoclastic Scripps had created a syndi cate "to serve the working class," denouncing capital ists and big advertisers as "the mortal foe[ s] of honest journalism . " The Record, according to reporter Rueben Borough , "was very progressive in its whole outlook, pro-l abor, which was someth ing in Los Angeles." Like all Scripps papers, the Record spec ialized in muckraking exposes, dramatized, in Borough 's words, with "big headl ines and short stories with short sentences." For several years the newspaper had waged a veh ement campa ign against all oil promoters, refusing to publish their advertisements and revealing their unscrupulous practices in front-page exclusives. In early January it had presented Julian in a less-than-favorabl e l ight. But the Record, perhaps impressed by c i rcula­ tion ga ins made by the Daily News after its pro-Julian stand, suddenly united with C. C. to rehabilitate his image and his enterprise. " STOP JULIAN PANIC TALK! SAVE 43 ,000 INVESTORS !" read th e ban­ ner headline to an editorial that occupied the Record's entire front page on February 9. "Vultures have been circling overhead for a chance to snatch Julian's assets at the expense of the stockh olders," warned the Record. "If they are victi mized, the whole community suffers with them." The n ewspaper, resusc itating a suggestion made a month earlier by both Julian and the Times, called for a group of "men of unquestioned business character and ability" to "review Julian's operations, analyze his status and help guide his future moves." The speed with which Julian and others responded to the Record's call suggests a carefully orchestrated scenario. "JULIAN ACCEPTS OFFER OF HELP ! " th e Record reported on February 1 1 . "Your newspaper has sounded the first constructive note that has sung out after a period of months," wrote Julian. "It will be entirely satisfactory and agreeable to m e to h ave a committee of leading, capabl e, disinter­ ested citizens come into th e affairs of the Julian Petroleum Corporation as coun­ sellors and reviewers." That afternoon Julian appeared at the offices of the Los Angeles Chamber of Commerce. Charles II . Treat, a former oil and real estate man ,,·ho had recently

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resigned as president of the Los Angeles Board of Public Works, accompanied Jul­ ian. Five prominent businessmen awa ited them inside. After one and a half hours, Julian em erged from the meeting and made a prepared statement. Denying any financial difficulties, but noting "an undercurrent of propaganda wel l spread," Jul­ ian announced that he had requested that a committee investigate h is affairs "from beginning to end." The panel members, stated Julian, "are prompted by the most unselfish motives and are men of unquestionable character for whom I have the highest respect " He called upon them to "make an impartial report to the world on my company and its affa irs as they find them," but predicted that they woul d discO\·er "the whole enterprise . . . [was] as clean as a hound's tooth ." No one in the Los Angeles business commun i ty could question the qual ifica­ tions of Jul ian's c itizens' committee. The six men ranked among the most respected figures in the city. In addition to Treat, the group included; William Lacy, a prom­ inent steel and metal manufacturer and the president of the Chamber of Com­ merce; William T. B ishop, a former Chamber president and head of B ishop and Company, makers of cookies and crackers; banker Irving H. Hellman, a former city engineer and member of one of the city's leading banking families; former Superior Court justice William Rhodes Hervey, a vice-president of the Pacific Southwest Trust and Savings Bank; and R. C . Gillis, president of both the Los Angeles Union Term inal and Iron C h ief Min ing Companies. Like most members of the Los Ange­ l es business establ ishment, these men served on the boards of di rectors of several l ocal companies, belonged to the city's l eading country cl ubs, and actively partici­ pated in Republ ican politics. The conventional wisdom held that one or more of these men would be named d i rectors of Julian Pete in the aftermath of the inves­ tigati on. The Record hailed the committee as the "Answer to The Julian Tangle." They "will not stand for any wh itewash of Julian if he is black," asserted the Record, or "any blackwash of him if h e is white." Taking full credit for this turn of events, the paper asked these "gentlemen," all of whom had been "successful in accumulating money," to "place yourselves for the moment in the position of these 4 3 ,000 people who have saved and skimped and finally handed th eir dollars to J ulian. YOU GEN­ TLEMEN HAVE BEEN HIGHLY HONORED. YOU HAVE BEEN ASKED TO PROTECT TH E S E PEOPLE . " Losing n o time, o n February 1 4, Julian gu ided the committee o n a well-pub­ licized tour of his facil ities. Led by Julian's large, gray Pierce Arrow, "a small cav­ alcade of automob iles" inspected the company's properti es. The parade stopped first at the planned site of a supply depot for fill ing stations. The group then Yisited a "wide expanse of orange groves" in \Vh itti er, \\·here Jul ian had leased 1 70 acres of prospective oil lands. Next Jul ian sho\\·ed off his famous Santa Fe Spri 11gs holdings, and then di rected the odyssey to his tank farm i11 Norwalk. Committee members cl imbed a l ong spiral stairway to the pinnacle of one of a doze11 steel tanks. Julian l i fted the cap to sh O\\. the oil beneath "glistening in the dark depths . ' ' From Norn·alk, the Acct of cars sped to I luntington Beach , ,, here Julian d isplayed three producing

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wells and the origins of a_vast pipeline system . Throughout the tour, Julian regaled his fellow travelers with statistical information about the corporation. The procession halted wh ile Julian distributed beef sandwiches, ginger ale, and milk. "Help yourselves, there's plenty," offered the congenial host, reasoning that mill ionaires, like "sucker tent" habitues, would be impressed by a free lunch. With the meal completed, Julian delivered his judges to the wharf at San Pedro. Four ste el tanks sat behind a h igh concrete firewall on four acres leased from the c ity. Large pipes led to a wooden dock where tankers could load. The afternoon pro­ gressed with stops at Julian wells in the Lom ita and Torrance fields, and then continued on to a barren 2 3 l -acre refinery site. Julian promised to have the refinery compl eted in l 20 days. The final stop was at the Compton oil fields, where Julian had sunk a wildcat well on a 400-acre lease. Treat, the oil man in the grou p, volunteered that i t looked l ike good territory. "The committee doesn't say much but it is evidently i mpressed," concluded the Record. Investigators and reporters, "hustl e [ d ] back" behind Julian's Pierce Arrow. "We do not hustle as fast as Julian," commented the Record reporter. "We can't keep up with h i m . " Meanwhile, The Record began another phase in the Julian defense. On Feb­ ruary l 3, the first installment of a week-l ong front-page biography of Julian com­ menced under a heading familiar to Julian foll owers, "The Truth . " Disguised as a hard-h itting muckraking expose, the l engthy articles, relying primarily on Jul ian's own recollections, presented an all-American rags-to-riches tale. Julian strode through these accounts as a hardworking, devoted family man, who, after years of failure in Canada, California, and Texas, had finally found well-earned success. With Julian Pete, he wished to share his good fortune with the people who had backed him so faithfully. At the conclusion of the series, the Record, while remind­ ing people of its stand against oil promoters, genially confessed, "The truth about Julian proved to be not so unfavorable as the Record expected it to be." For the next two months, as southern Cal ifornia awaited the report of the citi­ zens' comm ittee, the Julian saga temporarily faded from the headl ines. Even Julian's ads in the Daily News grew relatively infrequent. Behind the scenes, however, Julian found himself besieged by a horde of exam in ers clamoring for the corporation's books, including federal Justice Department agents invited into the fray by Daugh­ erty. "I have not used the general books, but a very few days," reported the federal agent in charge. 'The fact is C . C. Julian has had Internal Revenue Agents working on his books, a special accountant making up his 1 92 3 income tax return , and a Citizens Committee investigating his methods of doing business . . . with several Price-\Vaterhouse accountants who have had the books most of the time since January first." On March 2 1 , Julian informed the Justi ce Department that he would no longer cooperate with its efforts. Julian noted that his attorneys had ad,·ised him that th e federal agents "are not quite within th eir jurisdiction in th is matter." Nonethel ess, he expressed regret, perhaps \\ ith a trace of sarcasm , "that we ha,·e to part ,,·ith such

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congenial and gentl emanly compa r;y," assuring the government "that the only rea­ son of making this requ est" was to "facilitate the handling of the clerical work with a greater account of efficiency." The agent vacated Julian's offices but decided to continue his investigation "on some outside work," examining the books and records of stockbrokers to determine whether Julian had formed "some conspiracy to man ip­ ulate the market." These efforts fa iled to unveil conclusive evidence of illegal i ty, and the agent ultimately recommended discontinuing the Julian probe. On April 8, the citizens' committee issued its long awaited report on Julian Petrol eum . Bolstered by "a small a rmy of experts and auditors," the five-man panel (William Lacy had withdrawn earl ier) offered a stunning vind ication of Julian and his controversial enterprise. "The committee was i mpressed by the vast amount of work accomplished by the corporati on since its organization eight months ago," stated the report. It praised Julian for "devot[ ing] his best efforts in good faith to the servi ce of the corporation." Evaluations of Julian Pete's assets prepared for the committee painted a highly flattering portrait. A former president of the Los Angeles Realty Board appraised the corporation's property holdings at $888,000, exclusive of oil possibil ities and loca­ tional considerations. In reality, Julian Pete real estate was worth two to three times th is amount. A petroleum engineer valued the operational facil ities at almost $7 million. The committee, noting that this represented the current market value of these assets wh ile the company had recorded only the purchase price on its books, arbitrarily deducted $ 1 . 2 5 mill ion dollars from these estimates. Even so, they estab­ l ished a $49 . 8 3 value for each share of preferred stock, j ust pennies below its sale price. The h ighly respected accounting firm of Price-Waterhouse, in a report prepared by the director of its Los Angeles office, verified the inventory of crude oil, accounts rece ivable, and cash on hand. Wh ile noting that the corporation lacked the usual reserves aga inst taxes, bad accounts, and deprec iation, Price-\Vaterhouse found only modest l iabil ities and made no critic isms of bookkeeping methods or the values at wh ich properties were carried on the books. "Respecting Mr. Julian," the c itizens' committee concluded, "it is fair to state that he has served the corporation from its inception to this date \vithout salary or other compensation except the common stock issues. " Julian had advanced the company over $ 1 m i l l ion and had not collected an additional $970,000 in com­ m issions owed to h i m . He had charged the company no interest on these swns. For his services, Julian had received common stock, the value of which depended on th e fate of the corporation . Wh ile generally laudatory in its conclusions, the committee did express several reservations. It noted that, wh ile the company planned "a complete unit from pro­ duction th rough all the steps . . . to d i stribution," it still lacked a refi nery. The busi nessmen also expressed concern about adequate suppl ies of crude oil. Julian Pete \\·ells generated 2 3 ,000 barrels a day, but th is \\·as '\d101ly insuffic ient for the economic uti l i zation of the plant." C rude oil purc hased under contract represented "a source of supply [ that] may not always be dependabl e . " Final ly, to "round out"

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Julian Petroleum " into an earning business of value commensurate to its cost will re quire good management and considerable additional money." The committee recommended that Julian add several well known local business leaders to his board of directors. Julian welcomed the report with characteristic hyperbole, hailing it "as the great­ est vindication and approval ever extended by a group of hard-headed, conservative, capable, banking and business experts . " The committee members, he pointed out, were "not the type of men calculated to handle th e Julian Petrol eum Corporation gently. " The i r findings put "to an end all uncerta inty . . . and [clear] the track for completion of its program and the realization of the hopes of its stockholders." Julian noted the conservative nature of th e report. Had th e original assessments been accepted, the value of each share would stand at $ 5 8 . This, stated Jul ian, was even more remarkabl e when the usual 20 percent sales' commission was taken into account. A pair of preferred shares purchased for $ 1 00 "have no reason to h ave a book value of more than $80." The audit showed that since he personally had borne all sales expenses of the stock, these shares me rited a $ 1 1 6 val uation. Julian defended the current management of the firm but readily agreed to seek new directors and additional financing. As to th e source of these funds, Julian had few doubts. "I have every confidence of finding the rest of the money needed just \vhere the money al ready forthcoming was found," he pronounced; "among the people of Southern California." Commissioner Daugherty made no comment, but the Corporations Depart­ ment ceased its investigations and issued Julian Petroleum a new stock-selling per­ mit. The Times and other local papers gave Julian a green light to resume advertis­ ing. Julian Pete received additional l egitimacy when the Los Angeles Stock Exchange agreed to l ist its preferred and common stocks. Exchange president Frank Pettingell proclaimed it a "publ ic service" ai:id a "civic duty" to "provide an open and legitimate market . . . thereby rel ieving the stockholders of the burden of being subjected to the wide spreads so prevalent in deal ing \\'ith the shares on the street." Doubters and detractors remained, but for the moment Julian had routed his oppo­ nents, and his tri umph seemed complete .

WH E N A F E LLER N E E DS SOM E FRI E N DS

"\VELL, LOOK WHO'S HERE" " FOLKS" " IT'S NOBODY ELSE B UT" And whether that old saying "you can't keep a good man down" prevails or wh ether it is a case of "a bad penny being sure to always turn up again" is for you to decide. However, here I a m breaking back into print with that same old line of chatter that I've peddled to you so long.

With that cheeky greeting, C. C. Julian returned to the advertising columns of the Los Angeles Times and other newspapers on April 1 9, 1 924, after a five-month absence. I n the preceding ten days, Julian had moved decisively to capitalize o n t h e c itizens' committee report. On April 1 5 , Julian Petroleum h a d rece ived a new permit from th e Corporations Department to sell an additional $5 mill ion worth of stock. Julian also added three prestigious corporate vice-presidents to bolster his board of directors: Charles H . Treat, the erstwh ile Los Angeles Harbor Comm is­ sioner, who had headed the investigative panel; Parley M. Joh nson , recently resigned as Los Angeles Pol ice Comm issioner; and most impressively, \Villiam D. Stephens, former gove rnor of California. Julian hoped that the addition of a former governor and h rn oth er respected busin essmen would give greater legitimacy to his em battl ed firm. Stephens, Treat, and Johnson declared that, after personally inspecti ng Julian Pete properties and thoroughly studying th e citizens' committee report, they had confidence in Julian's leadership and \\"Cre ready to serve the 4 3 ,000 stockholders. Liter accounts by Julian attributed oth er rnotin.� to th eir participation. Upon their appointment, h e claimed,

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each man had demanded a salary of $ 1 ,000 a month. Wh en Julian informed them that the corporation could not afford this expenditure, Stephens and Johnson accepted a reduction to $ 5 00, but Treat held out for, and received, the full amount. One final slot re mained open on the Julian Pete board. On May 1 , Julian filled this position with Jacob Berger. Corporate press releases described Berger as a "pio­ neer Al aska banker," formerly the head of the Bank of Nome, and "one of the outstanding figures of the gold rush in Alaska ," who had also won fame as the owner of championship dog-sled teams. Now settled in San Francisco, Berger was associ­ ated in the oil business with that city's prominent financiers, according to these d ispatches. In reality, Jake Berger was none other than Jul ian's "l ittl e Yiddish friend" of Winnipeg newsboy days. Julian later admitted that by 1 924 Berger had "dumped off" whatever, if any, fortu ne he had made in Alaska "in fail ure after failure in the oil business." His last remaining stake was an unl ikely 4,000-acre lease at Half Moon Bay, just south of San Franc isco, where, concluded Julian, "there was no oil with i n a hundred miles." Nonetheless, Julian agreed t o drill two wells on t h e property and brought Berger into his firm. Julian spent the l atter part of April priming the publ ic for his new sal e. H i s advertisements recapitulated the citizens' committee findings and revealed t h e exis­ tence of a new 1 0,000-acre lease near Durango, Colorado, wh ich had not been included in their report. On Sunday, May 4, Julian sprang his offer: "When A Feller Needs Some Friends" " FOLKS" " IT'S JUST LIKE TH IS" Suppose you went tramping out through the hills and ran into a young mounta i n o f solid gold, but before you could pry o ff a n y o f t h e treasure you must secure enough money to purchase the necessary machinery and supposing you could not get the money, your mountain of gold would slumber on perhaps for another million years, regardless of the great wealth almost \\·ith i n your grasp. \Veil " People of California" that's just my position today . . . I'm barking at my door with a "mighty healthy baby" in my arms, that you will never make me believe is not going to develop into . . . the greatest di\·idend paying oil Company in the U S . "I ha\·en't weakened. I don't intend t o \\·eaken." " I want $ 5 million and I want it nO\\·. "

But Julian's hope that the citizens' committee report \\·otild stimulate demand for his stock proved false. In reality, as h e later realized, the report "was the beginning of the end for me." Wh ile wa iting for the committee to com plete its work, Julian stock had plum meted to l ess than $60 a unit. Julian blamed th i s on "the forces opposing the corporation's success" and local brokers '' ho had "b·erishly sold short." With stock a,·ailable so ch eaply on the open market, how could even Julian hope to persuade people to pay $ 1 00 for his issue? " 'Th is Wi ll Ne\·er Do' ' Folks,"' he compla ined on May 1 3 ; "Sh e's not rolling in l ike it should." Three clays later, Julian appealed to those \\'ho had pre\·iously

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found his terms prohibitive. He offered stock on the installment plan: $20 down and eight dollars a month for ten months. But his best efforts failed to move the stock at a suffic i ently brisk pace. I n addition, despite 1 09 stations now sel l i ng Defiance gasol ine, Julian Petroleum production efforts continued to falter. After a promising start, Julian Pete holdi ngs in the Torrance field had proved disappointing, and Oil Age reported that Julian had erected a "nine-foot b ird-proof board fence" around his Pico synd icate well to hide "everyth ing from stockholders and curious oil and paper scouts." Shortly there­ after he shut down the Pico wildcat. More ominously, Julian No. 5 at Santa Fe Springs became the fi rst of his famed early wells to be abandoned. Supplies had become so deficient that Julian had to purchase oil at a loss from other producers to fulfill his contracts. Increasi ngly Julian rel ied upon the Colorado l ease to reverse his declining for­ tunes. "The Biggest Th ing in the Worl d," he called it, predicting that a gusher on this plot "could easily make our holdings there worth 'twenty five million dollars . " ' By late May Julian had upped th e prize to "forty mill ion dollars . " These inducements now fel l largely on deaf ears, a n d on M a y 2 8 , Julian attempted to divert blame for h i s lagging sales and document his assertions of con­ spiracy by filing a $ 1 00,000 damage suit aga i nst federal officials. Julian charged that Post Office inspector W. I. Madeira, with the foreknowledge and approval of two spec ial assistants to the U . S . Attorney General , had sent a "false and defamatory letter . . . with expressed i ll-will and malice and hatred" in a "del iberate attempt to damage (Jul ian] personally and [his] business." The special assistants had arrived i n California one year earlier to spearhead a federal i nvestigation of oil industry fraud. Madeira, working in conj unction with them, had sent out letters to Julian Pete stockholders inquiring into their dealings with Julian. When a northern Cal­ iforn i a stockholder req uested additional information, Madeira, despite official pol­ icy to issue no statement regarding a pending i nvestigation, responded with a lengthy attack on Julian. Madeira claimed that the oil promoter had paid dividends on his first five wells "for a purpose . " Th e next seven wells had not returned money, "nor does it appear to be his intention to do so." Julian, said Madeira, had accepted thousands of dollars i n oversubscriptions, and "it is publ ic knowledge" that he had bought up stock receipts at lowered prices to avoid paying them back at full price. "He has cleaned up q uite a sum on this racket," charged Madeira. The inspector also asserted that Julian Petroleum, wh ich had collected $7 m i ll ion from the publ ic, had only $2 mill ion worth of assets and that Julian, who had watered th e stock, was now tryi ng to dispose of his interests. "There is n o large company which has in any way ham­ pered h i m , " concluded Madeira, "although he may use that as an excuse. You may judge for yourself in this. Al l of which I have personally verified." The Madeira correspondence infuriated Julian. Madeira's lette r, he stormed. "cannot by the widest stretch of th e imagination be considered part of an i m·esti­ gation in good faith . " Although this m issive, as federal officials pointed out, \1-cts never made publ ic until Julian h i m self exposed it, it nc\-crthel css constituted an

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extraordinary breach of i nvestigative ethics. Furthermore, since the citizens' com­ m ittee report had assess ecr the company's value in excess of $8 million and praised Julian's management, Madeira's charges seemed baseless. At last, Julian felt he had evidence of a campaign to mislead potential and actual stockholders, but the controversy did noth ing to rescue Julian's offer. On June 4, he announced that he would withdraw the issue in six days. One week later he advertised, with a show of bravado: She's Closed To You Forever

Miraculously, given the availability of cheaper shares, Julian had sold almost $ 1 mill ion worth of stock. But $ 4 million of the issue rema ined unclaimed. " I decided that a stock which woul d go that well here aga inst such odds," Julian later recounted, "ought to sell anywhere on the basis of the C itizens' Comm ittee report. I now decided to go (to New York City] , where there was the most money, in an attempt to clean up the issue quickly." En route to New York, Julian stopped at Col orado to be on hand when his wildcat '\vent over th e top . " On June 1 6, h e advertised, " Folks, I'm prom ising you all an 'interesting piece of news' real soon . . . . Hold everyth ing for it won't be long now. " Two days later, he published just two words : "SOON NOW . " But with that message the reports from Colorado ceased and after June 26, Julian's ads once aga i n disappeared from t h e newspapers. Something had gone terribly wrong i n Durango. In late June, Julian arrived in New York City for a last-gasp fund-ra ising cam­ paign . Accord ing to Julian's grandiose account, Jack Roth preceded him to Man­ hattan , where he opened corporate offices and arranged for several New York news­ papers, including the Hearst dail ies, to accept Julian Pete advertising. Hearst's business manager wired Jul ian "that they woul d keep my copy out of his paper only over his dead body." Julian sent ahead a week's worth of ads. Julian detrained in New York with a sales force of twenty men, or as he related, "you m ight say 2 2 men, only two of them were not empl oyed by me." Julian claimed that hvo Burns Agency detectives had accom panied him from Los Angeles: "I was never out of sight of both of them at once as long as I was in the East." Upon arrival, Julian l earned that only the Hearst papers had carried his first advertisement, and they had refused to print any additional ads, upon orders from William Randolph Hearst h i mself. Accusing his old enem ies of follm\ ing him to Manhatta n , Jul ian alleged that "I know personally, definitely, and am willing to make an affida\·it to the fact, that a prominent San Francisco representative of the po\\"crs that be \\·cnt to Ne\\ York to see an influential publ isher and block my ad\·ertising." Julian claimed to h ave "laid siege" to the Hearst offices and after b rn weeks ga ined an audience \\·ith th e po"·erful publ isher. Accord ing to Julian, after listening to him for an hour and a half, H earst assembled his subordinates to reach a final

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decision. For two more hours Julian pleaded with the newsmen. " I saw some of them in tears," he recalled, "for I knew I was talking of my financial life and I made them see the pitiful aspects of my case." In the end, however, they turned him down . B locked in New York City, Julian l ined up eighty-five newspapers in the rest of New York, Connecticut, Pennsylvania, and Massachusetts and began running his ads. "Th e copy of the first eight days was i ntroductory, telling th e h i story of my proposition," said Julian. "My n inth ad was the first selling ad." But, according to Julian, Burns agents had visited each of the home cities of the newspapers and mobilized the chambers of commerce, banks, and bond houses aga inst h i m . These forces influenced local publishers to drop his ads. On the ninth day Julian sat i n his N e w York offices, "opening telegrams as fa s t as I could s l i t the envelopes . . . . The telegrams were monotonously the same. They could not accept any more of my advertising." "The steam roller had rolled and I had been sitting right where it passed when it was rolling," he lamented. Effectively barred from advertising, Julian arranged a $ 1 . 5 million advance from an English syndicate for oil shipments over the next year, only to have oth er companies undersell his offer. He negotiated a $2.9 million bond issue, but it was revoked on the day papers were to be signed. According to one assessment, after two months in the East, Julian had sold $ 3 0,000 worth of stock at a cost of $ 1 00,000. Like most of Jul ian's tal es, his New York chronicle m ixes fact with gross hyper­ bole. Newspapers most l ikely accepted, then rej ected h i s ads, not necessarily due to concerted opposition but upon learning of his controversial Cal ifornia career. Detectives working for one of any number of people may well have dogged his path. Nonetheless, so vast a conspiracy seems difficult to believe. Reports filtered back to Los Angeles of a more flamboyant side to Julian's New York adventure. According to these accounts, Julian rented a $ 3 ,000-a-month Park Avenue apartment and purchased the m ost expensive Cadillac he could find. He toured New York's nightspots, lavishing $ 1 00 tips on cab drivers, waiters, and hat­ check girls. He qui ckly acquired new girlfriends. He gave the Cadillac to one of them; he gave another a $ 1 0,000 trinket from Tiffany's. Journal ist Carey Mc­ Will iams reported that one even ing Julian hailed a taxi, offered the driver $ 1 , 5 00, and told him, "You be the fare - I 'll drive." With Julian driving, "the cab careened around corners, shot through traffic signals, jumped o,·er curbs, and finally smashed into an automat." Damage estimates from this spree reportedly approached $2 ) ,000. Rumors c i rculated that Jul ian had fled to Egypt \\'ith the Julian Pete bankroll and that the company had ceased operations. Stock prices dropped as J m, as $ 1 1 for preferred and $7 for common. H is corporate managers urged Jul ian to return to California to dispel! the ru mors. In late August 1 924, Jul ian departed New York and headed for home.

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11

Upon arriving in Los Angeles, C . C . Julian confronted the monumental task of winning back investor confidence. Julian moved to reorganize Julian Petroleum, accepting the resignations of businessmen Treat, Johnson, and Stephens. "Th ese men proved to be of n o value whatever in the actual management of the corpora­ tion ," he reported. Th eir departure "cut a useless expense . . . from th e salary list." For the first time, Julian openly discussed the "tough luck" in Col orado that had hastened his disappearance. "(We) got down to 3600 feet and figured we had only another hundred feet to go . . . when \\'e got into a mean fishing job and lost the hole compl etely, " he explained. Nonetheless, Julian still offered to "pretty near stake my reputation" that th is l ease would some day be worth $20 mill ion dollars or more. "Cheer Up, Old Timers," he comforted; "one of these days our ship will sail into port and when it does she'll be l oaded to the guards." Daily ads attempted to counter "adverse propaganda" from "the same old sources," but Julian decided th at "the best means of nailing th e false rumors of my A ight" was to hold a mass meeting of shareholders. With tens of thousands of people needing to be accommodated, Jul ian reserved th e spectacular new Hollywood Bowl . "I am personally going to tell you folks stuff about the inner workings of th e oil industry that will make Tea Pot Dome look like an ant hill," he promised; "I will answer every imaginable question relating to 'Jul ian Pete' . . . and [show] h ow the ' Octopus' operates in restraint of trade." Julian offered free parking, special buses, and weather reports. "Don't forget your wraps," he warned, "because it may be chilly . . . . Everybody and his dog are welcome." On September 5 , an estimated 3 0 ,000 people overflowed th e Hollywood Bowl's vast outdoor seating capacity to attend a financial revival meeting \\'Orthy of Julian's evangelical contemporary, Aimee Semple MacPherson. Introduced by a thirty-five­ piece band, Julian reviewed the troubled history of his struggl ing corporation. Julian Pete, he charged, "had been investigated to death ." Stockbrokers had "hammered do\\'n " corporation stock. The large oil companies had del iberately attempted to misinform stockholders. Julian described his New York experiences and the obsta­ cles he had faced. He reminded the crowd that he had not taken any money for his efforts, and pledged, "I am not going to until every one of my stockholders has received 1 00 cents for every dollar invested ." Julian then unveiled his latest scheme to save the company. In order to brake skidding stock prices and stab ilize the market for Jul ian Pete securities, Julian pro­ posed removing the stock from the publ ic arena . Julian called upon his foll o\\'ers to place their stock in escrow under his control for hrn years. As he expl ained in an ad\·erti sement the following week: :-\ow here's what I'm doing. I'm getting the

"JU LIAN" sha reholders

to dcJ i,·er all of

the stock they hold i n to my hands i m m ed·iately. I take it and place i t i n a ,·a u l t in

the Bank and clc l i \"cr i t back to them j ust a s I recei\·ecl it, as soon as the Corpora tion i s on a di\'iclend paying basis ,,·hen our security cannot be h a m m ered dO\rn .

96

OIL

In addition Julian asked h i s supporters to send him \\·h ate,·er aYailable funds they had to establ ish a pool "t9 pick up all the cheap stock on the market." Here, he adYised inYestors, was an opportun i ty for "quick money." "Sometime within the next 3 0 days," he predi cted, "I expect to ha\·e enough money in th is pool to clean the market of 'Julian Pete' and the result must be a big jump i n the market price." As Jul ian later elaborated, his plan \\'ould restore the market \'alue of the stock and make possible additional sales to finance the refinery and put the corporation on a sound operating basis. 0Yer the next se\·eral weeks Julian ardently peddled his new panacea. H e ran daily buses from downtown Los Angeles to th e oil fields so stockholders could inspect corporate properties and presented nightly showings of a motion picture depicting his struggle . He promised to appear personally at these screeni ngs, to "tell my audience th i ngs that I cannot \Hite . . . because the papers would dare not print wh at I ha,·e to say." On opening n i ght, a fistfight bet\\'een Jack Roth and a heckler, allegedly armed \Yi th brass knuckl es, enli\'ened the festi\'ities. Jul ian charged that the i ntruder was one of more than a score of "gangsters" h i red to d isrupt the meet­ ing, leading Julian to h i re his O\\'n strong-arm team to safeguard his enterprises. "When they get too tough for everyone else," he boasted, "they're just getting right for m e . " Accord i ng t o J u l i a n , S 3 m i l l i o n worth o f stock certificates poured into his office following the Hollywood Bmd extravaganza, placing more than half of the $6. 5 m i l l i on issue i n esc ro\\'. Stock prices jumped sharply in heavy trading. But the burst prm·ed short-l ived . By the end of September the stocks dropped close to th eir earlier low. On October 1, Julian issued one final ad,·ertising blast: faery intelligent citizen realizes that I am fighting a ,·ery une,·en battle, but e\·en so I am going to win my fight, because the essence of it all is "RIGHT OVE R \\'RO:\G," and I'm a staunch beli e,·er that " Right" must prevail. I a m fighting 11·ith e\·ery ounce of energy I ha,·e to protect the im·estments of nearly ;Q,000 people, many of whom ha,·e trusted me 11·ith their life sa\·ings. I am fighting a powerful. merciless, and unscrupulous hidden force that has respect for nothing but their greed for money.

Julian's ads th en ceased . T\YO days later, the federal grand jury in Los Angeles subpoenaed Julian and th i rty of his employees, demanding that they appear i n court \\·ith th e corporate books and records. An exasperated Jul ian arriYed at the courthouse alongs ide empl oyees carryi ng armfuls of ledgers; Julian's car stood at the curb. a\\'ash \\'ith documents. Th e oil man was "as debonair as e\'er." His bright yello\\' shirt stood out boldly aga inst bis dark blue suit. ;\ red carnation adorned his buttonhole. Speak­ ing in a ,·oice rendered hoarse b� · add resses at stockholder meeti ngs. Julian chRCCO'o'Cr. 1r ' m 1

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