7Boycotts, Consumer Protection, and Private Detectives: Responses to the Boom, from Voluntary Associations to the Pinkertons

A provincial inspector should carefully scrutinize the capitalization and the initial assets of every company. He should formulate stringent regulations under which every company seeking a charter must operate and he should have no hesitation in cancelling a charter where these regulations have not been lived up to . . . . It is quite clear to the careful observer that, unless the government of Alberta comes forward and, by stringent regulations, places the stamp of governmental approval upon every legitimate company and assumes responsibility for the honest administration of organizations incorporated under the laws of this province, there will be legislation against Calgary oil stock in every province in the Dominion.

—Editorial
The Calgary News Telegram June 6, 1914¹

The Post-Intelligencer stands for all that is clean and decent and safe in financial affairs. Therefore it is opposed to all efforts to get Seattle money into stock-selling schemes, questionable on their face. To one experienced in financial matters a casual reading of the “literature” with which the United States mails hereabout are now being flooded is all that is necessary to reveal the real character of Calgary oil—that is, the part of Calgary oil that is getting into advertisements and circulars.

The Post-Intelligencer will not print Calgary oil advertising either on the financial page or in any other part of the paper.

—“Beware of Calgary oils”
The Seattle Post-Intelligencer
June 12, 1914²

By early July 1914, the underhanded tactics of promoters had already irreparably harmed the reputation of Calgary oil as a sound investment and the province as a good place to do business, with dramatic repercussions. As early as May 29, 1914, Canadian trade journal The Monetary Times bluntly stated that “the Calgary oil boom is a very good thing for the investor—to leave alone.”³ Another British geologist, Dr. T.O. Bosworth, who arrived in Alberta in May 1914 on a prearranged contract for two businessmen interested in the petroleum potential of northwest Alberta, also weighed in on the Calgary field and found it wanting.⁴ The subtitle of the May 1914 edition of The Petroleum World article called Bosworth’s assessment “an unqualified condemnation of the Calgary district.” While Bosworth found many positive and encouraging signs in the north around Fort McMurray, he remained unwavering in his belief that investors in Turner Valley would find nothing but grief. “Regarding the Calgary district—the Dingman or Black Diamond or Okotoks field—Dr. Bosworth’s opinion remains entirely unfavourable, as it has been from the first.” The Petroleum World noted that in every case where Bosworth was consulted “he has advised against the promotion of companies, against the acquisition of leases, and against the drilling of wells.”⁵ A few weeks later, The Monetary Times took notice of a story published by the London Daily Chronicle titled “Canadian Oil Dangers.” The London paper pulled no punches, calling the volume and frequency of misrepresentation and fraud in Alberta’s oil patch “appalling,” detailing one instance where a company drilled two wells a few hundred yards apart and invited the public to inspect the well. At the designated hour, the well gushed pure gasoline, impressing the assembled guests and undoubtedly convincing a few to invest in the company. Few bothered to notice that the gasoline gusher resulted from the fuel being pumped down one boring and forced up the other. While the correspondent noted there was little reason to doubt that oil lay underground in Alberta’s fields, not enough systematic prospecting had taken place to definitively conclude anything just yet. The article’s closing must have sent shudders down the backs of Calgary’s oil boosters: “It is dangerous to purchase shares in the present undeveloped stage.”⁶

Given all the stories circulating about underhanded activities by several oil companies in the spring and early summer of 1914, it is fair to wonder what steps law enforcement took to protect investors. The short answer is not much. Despite having operated in Ontario since the mid-nineteenth century, the petroleum industry remained “new,” small, and largely free from government oversight. Apart from generic provincial measures regarding the incorporation of new businesses via the Companies Ordinance, and the operation of US-based companies via the Foreign Companies Ordinance, regulation remained practically non-existent. No industry-specific laws existed regarding production quotas or health and safety, let alone conservation measures or environmental protection. Securities regulation was virtually non-existent. Meanwhile. lines of jurisdiction between the three levels of government were hazy at best. The Dominion government retained jurisdiction over the province’s natural resources and mineral rights leases, but the province and city regulated businesses. While the federal government could rely on the Royal North West Mounted Police to execute its laws and the City of Calgary could do the same with the Calgary Police Force (CPF), the province lacked an independent enforcement body and relied either on the RNWMP or the CPF.

At the peak of the boom, the Sifton government thus proved unable or unwilling to restrict issuing corporate charters to fraudulent ventures and lacked the ability to adequately monitor company activities and protect consumers like other jurisdictions. In 1912, Manitoba passed “blue-sky” laws and appointed a public utilities commissioner to enforce legislation; in 1914, Alberta neither passed “blue-sky” laws nor employed a public utilities commissioner. Arguments about moral hazard—that it was not the government’s responsibility to protect investors from the consequences of their foolish decisions because it could lead to even more reckless behaviour—ruled the day. However, with so many bad actors openly taking advantage of the lax regulatory environment, consumers could easily claim that moral hazard did not apply because government had abandoned its responsibility to ensure fair play by business. Instead, what investors found was a near-Hobbesian state of anarchy where no overriding authority governed relations between business and consumers and the only check on unruly behaviour was the conscience of individuals. For some, the newly emerging oil industry represented opportunity and the highest manifestation of the values and beliefs that made Alberta—conservative, entrepreneurial risk takers committed to freedom of opportunity—and therefore needed to be protected at all costs. For others, the process led them to distinguish between the characteristics of those in the oil industry and those who were not. For this latter group, while they agreed that the oil patch was conservative, wealthy, and entrepreneurial, they also saw those in it as arrogant, manipulative, dishonest, and “foreign.” In this dynamic and fluid environment, people both inside and outside the petroleum industry—as well as people inside and outside Alberta—reconciled themselves to the new reality of Alberta oil by improvising a series of responses to make sense out of developments and reimpose order and predictability.

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In the absence of pre-existing structures and institutions to provide protection to consumers, individuals and interest groups fashioned makeshift solutions from the creation of voluntary consumer associations to exercise oversight on the operations of companies and urge government investigations of rule breakers. In the meantime, despite the free market and laissez-faire ethos of the provincial government, both the provincial secretary and the attorney general’s office did what they could to enforce existing legislation. When the volume of complaints threatened to overwhelm the system at the start of July 1914, the province retained a private company, the Pinkerton National Detective Agency, to help provide a modicum of protection for consumers by preventing fraud, conducting ad hoc investigations of the activities of individual oil companies, and gathering intelligence on developments in the industry for the attorney general’s office. True to their corporate image of maintaining confidentiality, the role of the Pinkertons remained officially hidden even though information and intelligence gathered by Pinkerton operatives led to several criminal convictions of individuals as well as prosecutions of companies under the terms of the Companies Ordinance.

The enormous number of companies sprouting in spring 1914 raised alarm bells, particularly as stories circulated that some were selling shares before obtaining their provincial charters. “Such a procedure,” predicted Archibald Dingman on May 20, “infinitely repeated, will give the whole district a bad reputation and do the new industry the greatest possible damage.” A day later, the News Telegram reported preparations by provincial officials to target companies selling stock without provincial charters or leases as well as to enforce laws regarding the licensing of brokers. Brokers who did not deliver stock certificates risked criminal charges for obtaining money under false pretenses, but anecdotal evidence suggested enforcement of the law proved erratic and haphazard because it depended on the already strained resources of the Calgary Police Force.⁷

The proliferation of “wildcat” companies proved a greater concern to both provincial and municipal officials. Critically, however, an important distinction existed between the way the oil industry and governments defined “wildcats.” Heavily influenced by the recent real estate boom, both levels of government defined “wildcatters” as companies operating like real estate speculators, buying and holding property as it appreciated in value, and then selling at a handsome profit. The petroleum industry, on the other hand, regarded wildcatting as a speculative drilling program (i.e., drilling for oil where no other previous drilling took place). The biggest difference is that oil industry wildcatters intended to develop and drill oil and gas properties. Wildcats described by the city and province generally possessed no assets beyond mineral leases but sold shares to investors on the premise that development—in this case, drilling for oil—would take place. As sales of shares increased, the directors recouped their initial investment plus a healthy profit in the process, pulling development capital out of the company treasury to pay themselves first. The crucial difference for would-be government regulators was the belief that wildcatters never intended to drill for oil. The definition, however, remained highly subjective and made enforcement incredibly difficult, especially because of the self-conscious pursuit of an independent oil boom. Could provincial officials reasonably infer malevolent corporate intent when avarice, inexperience, or plain incompetence remained equally plausible explanations for the same behaviour and results? With a finite amount of drilling rigs, tools, and equipment in the province, could law enforcement reasonably distinguish between a rank speculator and a genuine developer experiencing supply chain issues? More importantly, did Albertans want the province making that determination on their behalf? As the newspaper feud over the previous winter had revealed, reasonable people could disagree in their opinions about what constituted speculation.

Nevertheless, on May 21, 1914, the province announced that an official would soon arrive in Calgary to deal with those violating the Companies Ordinance by selling stock despite lacking either a provincial charter or possessing leases. Initially, the province relied on the CPF to try and make life a little more uncomfortable for would-be confidence men. Plainclothes police detectives fanned out over the oil district to check up on the oil companies and find out who had licences and identify the wildcatters. But Police Chief Cuddy made it abundantly clear that his officers would only intervene if oil companies operated without provincial letters of incorporation. On May 22, with Mayor Sinnott out of the city on a trip to Quebec, Acting Mayor Michael C. Costello placed dealing with wildcatters on the city commissioners’ agenda for discussion. The most tangible result from municipal efforts was an appeal to the attorney-general’s department in Edmonton to do something. The police chief agreed, and suggested the province simply ban wildcat companies because they were more likely to target the small investor, as if declaring the problem over would solve it. Cuddy’s greater point, however, was that once companies obtained letters of incorporation from the province, the city had to let them operate. Ultimately, Cuddy believed wildcatters were “a matter for the provincial government and not for the city,” leaving investors in jurisdictional purgatory with no one quite sure who was in charge.⁸

In the meantime, officials tried their best to warn investors to be cautious with their money and provide enough information to educate the public. The Dominion government’s deputy minister of mines, R.W. Brock, suggested that, given the high production costs prevailing in Alberta, investors should only entrust their savings in companies with enough capital to sink several wells. This, Brock suggested, was one way to distinguish legitimate from illegitimate companies.⁹ But the greater problem was a severe lack of transparency provided by some companies and the dearth of reliable information. The Geological Survey of Canada hurried publication of a map and field notes by Donaldson Bogart Dowling of the anticline along the Sheep River and made it available free of charge at all Mines Branch offices. The field notes provided a brief overview of the formation, comparing it to oil fields in Wyoming and Colorado. “The Sheep River anticline would seem to be a favourable situation for the concentration of any oil or gas in the rocks beneath,” it stated, but warned of the need for deep drilling to access the producing horizons.¹⁰ Vernon Knowles, while still with The Saskatoon Daily Star, advised investors to make use of the map and accompanying field notes to determine where on the anticline the company’s property was but acknowledged that this information was difficult to come by. Companies used “inflated, robust, and florid wording” to hide precise locations, choosing instead to describe leases as being “near” some other location or well. “Unless locations are within the oil area, there is no chance of winning and every chance of losing,” concluded Knowles.¹¹ W.H. Berkinshaw, president of the Calgary Board of Trade, identified unfounded rumours caused by wildcatters to drive up share prices as another problem and feared they would inhibit the flow of investment capital to legitimate companies. Various ideas emerged from the discussion, including one that would adopt press censorship, but none proved practical in the short term.¹²

The provincial government moved slowly through the early stages of the growing oil boom in the province. More than ten days passed between the Dingman discovery and the arrival of provincial officials in Calgary to survey the situation. The promised investigation and elimination of wildcatters suffered from a sharply limited scope. Deputy Provincial Secretary E. Trowbridge arrived in Calgary and promptly consulted with Police Chief Cuddy. Created in 1906, the Provincial Secretary’s Office handled incorporation and registration of companies under the Companies Ordinance. “The chief’s man always checked on every company that opened for business,” announced Trowbridge. This simply meant that a company possessed both a provincial charter and some leases. Trowbridge then pronounced his satisfaction that “everything was in lawful shape before consent was given to operate.” However, despite the rapidly accelerated pace of development, specifically the formation of dozens of new companies on an hourly basis, the province refused to open a branch office in Calgary to expedite the incorporation of new companies. The interview concluded with Trowbridge declaring that there were no companies operating in Calgary “that had not complied with every letter of the law.” While the statement was unquestionably accurate, insofar as it applied to the registration of companies under provincial laws, it also reflected the reality that regulation of the newly emerging petroleum industry remained poorly developed. Only on May 29, 1914, did the Attorney General’s Office insist that companies issue a distinctive form of lithographed or printed receipt rather than a generic blank receipt form for stock purchases.¹³

Back in Edmonton, Trowbridge expressed his confidence in Cuddy’s ability to handle the crush of business due to the latter’s experience in previous mining booms, most notably as a member of the Toronto police. Realizing his role as the principal means of ensuring oil companies operated within the bounds of the law, Cuddy publicly, and politely, declined all attempts by oil interests to entice him to sit on various boards of directors. “I have no hankering either for oil honors or oil stock,” said Cuddy. “At the same time, I wish all the drillers every success and hope that the biggest oil field in the world will be found in this district.” The editorial page of the Herald marvelled that Cuddy managed to live “in the seething of the oil boom from its beginning, and still he declares he knows nothing about oil and has no opinions to offer on the subject. His is a position of splendid isolation.”¹⁴

Tales of underhanded dealings extended well beyond a few bad actors, and the Albertan became concerned at the crush of new promotions and companies vying for attention. One scheme reported by Bob Edwards involved a well-known woman claiming to be a clairvoyant who convinced many that she had the gift of foresight. During the oil boom, people naturally began seeking investment advice. Crowds gathered at her house and people had to make appointments days, if not weeks, in advance. She was so popular that Bob Edwards believed the only person in town who failed to call on her was Police Chief Cuddy. It did not take long for a certain oil company “which bears the name of the emblem of the Hudson’s Bay Company”—there are four beavers on the coat of arms for the Hudson’s Bay Company—to join forces with the woman to hatch a get-rich-quick scheme. “The clairvoyant, with a mysterious, mystic air, would then proceed to foretell a tremendous gushing of oil at the well in question, earnestly advising her clients to lose no time in buying up all the shares they could get.”¹⁵ Founded in 1914 and capitalized at a robust $1.25 million, Beaver Oil Limited proposed to drill one of the first rotary rig wells in Alberta. After the company spudded in at a location in the Jumping Pound Field west of Calgary and set its surface casing, the derrick toppled over in a windstorm. Dr. J.T. Cox, Beaver Oil’s managing partner, then announced the company would move the rig to a new location at Sweetgrass near Coutts along the international boundary, where it encountered some success in early 1915. But shortly thereafter, despite finding some oil traces in the well, the company abandoned the well and disappeared, presumably because investment capital dried up.¹⁶

Despite his roots in the city, the prevailing wisdom held that Premier Arthur Sifton was, at best, indifferent to Calgary’s good fortune. At an appearance in Calgary, Premier Sifton’s remarks made it clear that he remained informed about developments, expressing great delight at the flood of private sector investment in Alberta’s petroleum industry. Sifton also placed clearly defined limits on what his government would do to encourage and regulate the new industry. Private sector development would proceed apace with little additional oversight, as Sifton readily acknowledged that “despite the fact that oil may be found in large commercial quantities,” the boom would produce winners and losers. Obliquely referencing the concept of moral hazard, the premier reiterated that it was not his government’s job to do anything that might influence those decisions. “There will be many companies that may not be fortunate enough to strike [oil] and many people will lose money. But on the other hand, many will make money if the fields prove rich.” The province, however, would remain at arm’s length and allow the market to make decisions. From Sifton’s perspective, there was little Edmonton could or should do; investors already provided enough capital “to assure an absolute test of every field in the province.” A follow-up question touched on an area of clear provincial responsibility, the building of roads, that now loomed as particularly important to the development of the industry. Given the distance from navigable water, everything in western Canada depended on overland transportation to reach either processing facilities or markets. Since the costs were prohibitive to build railways everywhere, good roads loomed as essential for the development of provincial resources. The question put to Sifton was whether the machinery of government would directly or indirectly support development by embarking on a program of road building. Sifton issued a firm if somewhat circuitous statement that classified road building to the oil regions as speculative development.

The province is not speculating and neither is it encouraging speculation such as the present. When there is positive assurance of oil in large quantities and the undertaking taken on more stability than an exploration venture, the province might develop some of the road allowance property. If there is oil and the territories where it lies are properly defined, I cannot see why the province itself should not benefit generally by developing in the proven field. But there will be no speculation nor encouragement of it.

Evidently, the premier needed more proof of the petroleum industry’s sustainability before committing his government to undertake infrastructure projects.¹⁷

Sifton’s concern regarding the economic viability of the oil boom was well founded. In late July 1914, The Financial Post published a primer for would-be oil investors describing what they received, and could expect, from an investment in a speculative oil venture. “A company,” wrote the paper, “to be reasonably assured of seeing it through the expenses of exploitation, drilling a borehole, accidents, delays, etc., should have in its treasury $100,000.00 in cash.” This would see the company through many anticipated and unanticipated delays. The paper suggested investors begin with an examination of the company’s prospectus, particularly the ratio of share capital to the appraised value of the lease. “The lowest ratio at which a lease is usually turned into a company,” advised the Post, was $501,000 for a company capitalized at $1 million. Ideally, the company would hold $200,000 in its treasury while offering $299,000 equity in the company to the public. Share values set at fifty cents, less a 20 percent commission to brokers, would net a company $89,700 from the sale of shares. After paying expenses from incorporation and organization, the company capitalized for $1 million likely had $84,700 for drilling and operating expenses. With luck, after completing its sale of shares, the company would strike oil between three and six months later.¹⁸

But as Sifton remained all too aware, Alberta’s oil wealth remained unproven. After all, in the summer of 1914, eighteen months had passed since Dingman started drilling, and the most promising well in the field had yet to strike crude oil. Supporters claimed oil was worth nine dollars per barrel in Calgary (roughly $238.37 per barrel, adjusted for inflation), but it was doubtful that local market price would hold if the field produced oil in any paying quantity. “If oil is struck in one percent of the quantity the oil brokers would have us believe,” wrote The Financial Post, “the price would quickly drop to one dollar per barrel.” This is what happened in the Bakersfield and Kern County fields in California despite pre-existing transportation facilities existing to haul the excess away. Calgary, on the other hand, only could rely on railroad tankers. “If the railroads become clogged with business and the market temporarily glutted, the price of oil might easily drop to fifty cents, and perhaps twenty-five cents per barrel.” Assuming the average price of one dollar per barrel and assuming the company saved seventy-five cents per barrel for net earnings, to earn $120,000 the company would have to produce 160,000 barrels of oil for five years (438 barrels per day) simply to break even. The Post’s sobering assessment was that any company operating in the Calgary oil fields “must strike oil, and strike it in quantity, before it can get out its public shareholders even, and to make a profit out of operation for them, the company must make more than an ordinary strike.” The paper quickly added that it based its assumptions on “companies offering shares in good faith,” and left unanswered what would happen in instances “wherein fraud develops, or was there in its incipiency, where bad faith and incapacity are apparent.”¹⁹

The challenge confronting provincial authorities was that persistent, and credible, reports of underhanded behaviour by several brokers, companies, and individuals threw into sharp relief both the province’s inadequate regulatory regime and lack of an independent enforcement body. Section 92.14 of the British North America (BNA) Act authorized the provinces to create provincial police forces, but by 1914, such forces only existed in British Columbia, Ontario, and Quebec, while the prairie provinces relied on the Mounties to enforce provincial laws. Created by Prime Minister John A. Macdonald in 1873, the North West Mounted Police (NWMP) served as a cost-effective, but temporary, method for law enforcement in the West. But Macdonald and his successors found the NWMP both useful and effective. Even the Laurier government, which had planned to eliminate the NWMP after Alberta and Saskatchewan became provinces, reconsidered. Mounting public pressure in the West to retain the popular police force convinced Laurier to change his mind. Thus, a system emerged that enabled the provinces to “rent” a specific number of officers for an annual fee to circumvent the BNA Act’s designation of policing a provincial responsibility while the Mounties were a federal agency.²⁰

But the RNWMP (having been designated “Royal” by King Edward in 1904) only operated in the cities at the request of local police forces and, in 1914, sorely lacked an investigatory capacity capable of overseeing the boom. Given that Calgary served as the nexus of the oil boom, it meant that enforcement of what few provincial regulations there were fell on the already overstretched Calgary Police Force. Amid the rash of spurious oil strike reports in June 1914, Police Inspector William Nutt, who served as second in command to Chief Cuddy, joked to the Albertan that if someone were smart enough to salt a well using “unadulterated Calgary beer and announce a gusher” it would produce the biggest rush of investors in world history. “After we got them here, we could keep them till we struck oil which will only be a matter of a few days.” Nutt’s attempt at humour notwithstanding, the spate of unfounded rumours prompted the Calgary Board of Trade and the attorney general’s office to act. Assistant Crown Prosecutor Joseph T. Shaw placed companies, promoters, and salesmen on notice: making knowingly false statements, verbally or in advertisements, to sell stock was illegal. Shaw also promised to vigorously pursue unregistered companies.²¹

Instead of finding financial security, some investors found only frustration as hasty decisions to invest in May unnecessarily tied up funds when brokers failed to complete sales or deliver stock certificates in a timely fashion, prompting a warning to investors by Acting Deputy Attorney General John Hunt on June 2, 1914, to make sure they secured their share certificates “without delay.”²² For some, it was already too late. Hugh Anderson of Calgary complained to the attorney general’s office that they paid for 300 shares in British Canadian Oil Company on May 23, 1914, but only received 200 certificates. When Anderson contacted the company, he received assurances that the matter would be “straightened out” quickly. But when a month of back-and-forth between himself and the manager resulted in no action taken, Anderson contacted the attorney general. “I bought these shares in the first instances as a little investment against the present stagnation of trade,” wrote Anderson. “I am now very poor. If I had these shares, I could turn them over and get about and look for a job.” The involvement of the attorney general’s office initially produced little traction, as the manager of British-Canadian Oil continued to disavow responsibility, claiming it was a matter between Anderson and the sales agent in Swift Current. “We have twice written our agent at Swift Current asking him to trace same for us, but so far he has not answered our letters.” With a faint hint of condescension, the manager claimed, “We have explained all this to Mr. Anderson, & have assured him that he would receive his certificate in due course.” Tiring of the game quickly, the acting attorney general, George Paget Owen Fenwick, tersely suggested “the proper thing for you to do is to deliver the stock and take it up with your agent afterwards,” adding, “I should be glad if you would fix it up at once.”²³

As reports and complaints of criminal behaviour multiplied and with police forces in Edmonton and Calgary overwhelmed, the provincial government brought in Pinkerton detectives to serve as investigators and a security force preventing crime for the attorney general’s department. Established by Allan Pinkerton in 1850, the US-based Pinkerton National Detective Agency evolved over the course of the nineteenth century from a masterful detective agency solving crimes to the premier private law enforcement organization of its era. Indeed, historian David Williams writes that by the 1890s, the name “Pinkerton” became synonymous with crime prevention and by 1910 “momentum towards security work gathered an irresistible force.”²⁴ The attorney general’s office files in the Provincial Archives of Alberta hold a total of seven reports labelled “Wild Cat Oil Company” from two Pinkerton operatives (never identified by name, per Pinkerton rules), P7 and P26. Operative P7 filed one report on events in Edmonton; Operative P26 filed the remaining six from Calgary via the Pinkerton office in Winnipeg. Reports specify that operatives took instructions directly from officials in the attorney general’s office. In Edmonton, the Pinkertons reported to Arthur E. Popple, who served as the province’s legal adviser to the RNWMP, while in Calgary they worked with Assistant Crown Prosecutor Joseph T. Shaw.²⁵

Pinkerton operatives launched immediate investigations into several companies, brokers, and individuals with the intention of building criminal cases for provincial prosecutors when possible. Perhaps surprisingly, given its low reputation, no records exist of investigation into Black Diamond Oil Fields and George Buck, although one the Pinkertons’ greatest successes tangentially involved Vernon Knowles, the managing editor of The Black Diamond Press. Lured away from Saskatoon by Buck to the frenzy of boomtown Calgary, Knowles received a telegram from his brother on June 19, asking him to buy fifteen dollars worth of shares (approximately $400, adjusted for inflation) in “a likely proposition.” That evening, he sought confirmation of a rumoured oil strike at McDougall-Segur but his enquiries did not result in a definitive answer. Outside the People’s Stock Exchange, speculation buzzed, but details were scarce. On 8th Avenue, Knowles saw a crowd gathered at Marceau Brothers Jewelry store, where a blackboard announced, “It is officially announced that McDougall-Segur has struck oil.” Inside, Knowles questioned broker Frank Rose, determined to learn if the blackboard’s announcement was accurate. According to Knowles’s testimony, Rose allegedly responded, “You will see tomorrow when you are paying three dollars for Stokes-Stevens and two dollars for Piedmont,” two companies with leases adjacent to McDougall-Segur. Although the day’s trading saw both companies’ shares trading between twenty and twenty-five cents per share, Rose offered Piedmont Petroleum shares for sale at seventy-five cents, claiming once again that the rumoured strike at McDougall-Segur was confirmed. Reassured by a clerk, Knowles bought twenty shares of Piedmont. By morning, however, company officials denied the strike, and Piedmont remained at twenty cents per share.²⁶

Rather than report the incident to the police, Knowles published a piece in The Black Diamond Press detailing the incident, bringing himself to the attention of the Pinkerton investigation. Due to many brokers being willing to testify, the investigation soon identified Marceau Brothers as the origin of the rumour. Evidently, Rose was not particularly well liked by other brokers, who were only too eager to provide evidence against him. Within a week, the Pinkertons put Knowles in contact with Assistant Crown Prosecutor Joseph T. Shaw.²⁷ “We have a good strong case against [Rose],” noted Operative 26’s report, “and expect a conviction.” Publicly, credit for the investigation and the arrest went to CPF detective Tom Turner, as the News Telegram heaped praise on the provincial government in their efforts to “put to an end such rumors of oil strikes” rife in Calgary. The Spokane Daily Chronicle noted that despite numerous other examples of underhanded dealings, Rose was the first broker to have charges pressed against him. “The crown prosecutor declares this sort of thing will have to stop.”²⁸

The denouement of the Rose case, however, proved disappointing. At the preliminary hearing, Police Magistrate Colonel Sanders raised questions about the actions of the Albertan during Rose’s questioning, noting that the newspaper played a pivotal role in creating the frenzied environment by publishing unverified rumours to scoop its competition. Assistant Crown Prosecutor Shaw readily agreed after conducting his own investigation in connection with the Rose case, accompanying Vernon Knowles to the Marceau Brothers Jewelry store on June 26 to question and charge Rose and Roberts. Allegedly, during their conversation, Rose told Knowles and Shaw that the brokerage business “was all done on rumors and that it was all a gamble.”²⁹ Casting his net more broadly against the organizations and institutions that exploited the boom for their own purposes, Shaw urged newspapers to “keep within legitimate bounds in reporting the news of conditions at oil wells.” Shaw also warned advertisers that they opened themselves to penalties “if they made untrue statements” while coaxing investments in their properties. While Shaw promised to prosecute “every dishonest advertiser against whom I can establish a case,” he hoped he could count on the assistance of newspaper editors to keep oil advertising “clean and legitimate to the greatest possible extent.”³⁰

The rewards from spreading false rumours, however, far outweighed the potential punishment. At trial four months later in October, Rose estimated that on the night of June 19, the rumour led to between $7,000 and $8,000 (approximately $186,672 and $212,200, adjusted for inflation) worth of business at a time when the boom appeared dead on its feet. Indeed, examining bank clearings shows that the week prior to the wildcat rumour, Calgary bank clearings declined approximately 23 percent over the year before. But the week of the McDougall-Segur rumour, which also saw alleged strikes at Monarch and Black Diamond, enabled bank clearings to reach their highest total of the boom—nearly 38 percent larger than the year before (See Table 5-1). Assuming Rose took the standard 25 percent commission, stock sales alone netted him between $1,750 and $2,000 ($46,400–$53,000, adjusted for inflation). Although the court found him guilty, the punishment—a fifty-dollar fine plus court costs—still left him with a healthy profit and hardly served as a deterrent. Perhaps anticipating an outcry against his sentence, rendered in October 1914 after the collapse of the boom and the start of the Great War, Justice McCarthy observed that if he convicted everyone in Calgary who falsely claimed an oil strike there would be no one left to send to the Western Front.³¹ The Herald used the judgment to argue for the importance of always telling the truth. “Had this rule been religiously observed by everyone connected with the oil game from its commencement, there would have been much less criticism of the oil boomers today, and generally the oil business here would stand on a much better footing than it does.” For its part, The Natural Gas and Oil Record revelled in the irony that the Frank Rose case hinged on a connection to Black Diamond and stated that if the Crown prosecutor examined “the advertising of a certain company and compared promises and statements with results that he would find plenty to keep him busy.”³²

In addition to the Rose case, the Pinkertons pursued several other investigations, from companies working without a charter to further allegations of fraud. Investors who believed in the idea of an independent oil boom strenuously objected in July 1914 when seven companies proposed a merger to form Alberta Petroleum Consolidated—a conglomerate with an aggregate capital of $20 million ($606.7 million, adjusted for inflation) and approximately 100,000 acres of mineral rights.³³ Rallying other shareholders to oppose the move, the minority group belatedly realized the company’s directors retained the controlling interest in the company despite the sales of thousands of shares. In some cases, companies issued hundreds of thousands of dollars worth of vendor’s stock, diluting both the pool of shareholders and the influence of those holding treasury stock in the process. “We are informed,” began one complaint lodged by B.W. Collison with the attorney general’s office about Herron-Elder, “that this stock has been sold by the agents for the company’s treasury stock and in nearly every instance a prospectus has been given to the purchaser, of vendor’s stock, leading the purchaser to believe that the money paid by him was being paid into the treasury of the company for development purposes.” More frustrating was that some certificates were unnumbered, making it “almost impossible to tell what stock was purchased from the vendor’s stock and what stock was purchased from the treasury.” Mr. Collison then implored the attorney-general’s office to “send an Inspector to Calgary to investigate the affairs of the companies proposing to go into the merger.” Unbeknownst to Collison, Pinkerton Operative 26 was already doing so.³⁴

The Pinkertons’ report observed that the proposed merger kicked up a substantial protest, as the operative and Shaw learned first hand after attending a Herron-Elder shareholders’ meeting on July 22. The minority shareholders learned that their voting power in the company’s affairs was substantially less than what they imagined. Although 17,000 individuals held shares in the company, the company’s directors still retained the controlling interest and pushed forward with plans to bring about a merger of several smaller concerns into a larger conglomerate. Disgruntled minority shareholders banded together and retained lawyer M.B. Peacock to block the move and file a lawsuit against the directors for $450,000 (roughly $13.5 million, adjusted for inflation). The plaintiffs alleged the requirements of the Companies Ordinance, including statutory meetings, reports of stock sales, and the numbering of shares, had gone unfulfilled.³⁵ Operative 26’s investigation revealed the share certificates and books of the Herron-Elder company were “more or less in a muddled condition.” Shaw’s investigation found that vendors had returned 190,000 shares of vendor’s stock to the treasury. Thus, when the company sold vendor’s stock instead of treasury stock, the proceeds went to the vendor rather than to the treasury for development purposes. Shaw suspected that sloppy bookkeeping was far more common in 1914 than most investors realized. For most Herron-Elder shareholders, the issue only emerged as a source of friction in July 1914 when they found themselves dramatically outnumbered—200,000 voting shares versus 19,000 voting shares—and with little control over the direction of the company.³⁶

Use of the Pinkertons hid the extent to which the provincial government exercised some oversight on the boom and spurred the use of self-help measures by groups, institutions, and organizations inside and outside the province to curb the wildcatters. Winnipeg’s public utilities commissioner, Judge H.A. Robson, invoked his responsibility toward consumers as his justification for prohibiting Calgary stockbrokers from selling oil shares in Manitoba. Classifying petroleum stock as mining stock meant Alberta-based petroleum companies were subject to Manitoba’s Sale of Shares Act, exposing the companies to a modicum of oversight and preventing the advertisement of Calgary oil stocks in the province of Manitoba. Legislation required companies to keep current financial statements on file with the public utilities commissioner, demonstrating that businesses could carry out the operations they claimed to do. Robson also sent the federal postmaster general samples of circulars sent by oil companies to Manitobans. Not only did these circumvent Manitoba laws prohibiting the direct sale of stock, but many of the proposals they advertised were dodgy at best. Nova Scotia Conservative MP Fleming Blanchard McCurdy took up the issue in Parliament, asking the postmaster general to enforce more rigid standards “in view of the speculative excitement which is prevailing in the vicinity of these oil fields.”³⁷ While critics complained that government action was too paternalistic, supporters replied that government “should err on the safe side when it comes to a question of protecting the people from the wiles of the oily promoter of questionable company flotations.”³⁸

Word of Manitoba’s actions protecting consumers reached across the Atlantic, resulting in a renewed round of warnings from editors against investing in the Turner Valley boom, prompting one Canadian agency to urge that the Sifton government suspend the sale of shares “until development has proved or disproved the Calgary oil field.”³⁹ Elsewhere, individual newspapers—like The Victoria Colonist and The Regina Leader—refused to run advertisements of oil stocks sent from outside brokers, for a few reasons. First was the question of the legitimacy of some of the companies. “We have not the least wish to interfere with the legitimate business carried on by legitimate brokers,” announced the Colonist, “but it seems only right that we should advise readers to exercise great caution before buying oil stocks.”⁴⁰

Others questioned the legal status of Alberta-based petroleum companies selling stock within their jurisdictions. In Saskatchewan, no Alberta petroleum company filed incorporation papers with the provincial government, meaning that they were not subject to the terms of Saskatchewan’s Companies Act. This mattered because it then meant companies were subject to Saskatchewan’s Foreign Companies Act, section 3 of which dictated that “no foreign company having gain for its object or a part of its object shall carry on any part of its business unless it is duly registered under this Act.”⁴¹ The Montreal Journal of Commerce went even further in its criticism, calling Calgary’s oil boom a danger to Canada and the worst wildcat proposition ever offered in the country’s history. How did 400 companies raise so much money when scant evidence of oil existed? “The whole business smacks of quackery and fraud,” harrumphed the paper.⁴² Part of the answer to the Journal of Commerce’s question came from the fact that investors in the boom were able to mobilize capital from across the country. While the boom started in Alberta with Alberta-based companies, by the middle of June 1914, eight different provinces were responsible for incorporating the 168 different oil companies representing approximately $84 million in capital investment.⁴³

Campaigns against Calgary oil invited a series of ad hoc responses and retaliatory measures of varying sophistication, as Calgarians rallied to defend the city and its new industry. Some, like the Alberta Hotel’s proprietor Charles D. Taprell, chalked up the “curious indifference” shown by outsiders to the province’s good fortune to their jealousy and fears of what a strong and powerful Alberta would mean. Unable to “belittle the discovery of oil,” Taprell claimed “they ignored it altogether,” denying it existed in the process.⁴⁴ Others, like F. Leslie Sara, engaged in boosterism to hail the arrival of the industry. Sara’s new “oil”-phabet, published in the pages of the News Telegram, included celebrations of Calgary and key figures of the oil boom (“H is for Herron, the plus eight millionaire”), and offered pointed responses to the industry’s detractors: “O is for Opportunity, waiting for each; P is Possibilities, still within reach.” Some were more whimsical, like “F is the Fool without stock—whom we pity;” others possessed an unmistakable edge—“K is the ‘Knocker’ whom Winnipeggers love; L is for Liar the same as above.”⁴⁵

Perhaps the most organized occurred after a visiting delegation from Winnipeg concluded that the Dingman well could not have produced oil and that the discovery was the result of a “doctored” well. After the Albertan carried the story on June 1, Acting Mayor Michael Costello sent a telegram to newspapers in Winnipeg, Vancouver, and Montreal defending the honour of both the city and Calgary Petroleum Products. The company, wrote Costello, “has on its board of directors some of the most prominent citizens of Calgary, and the board have afforded the opportunity to all the citizens of Calgary and visitors to the city as well to visit the property . . . . Any report to the effect that the well has been ‘doctored’ was too ridiculous to be given any serious consideration.”⁴⁶

Nevertheless, the Calgary Board of Trade, bankrolled by Montreal millionaire Sidney P. Howard, launched a campaign to “educate” Winnipeg about the Dingman well. City Councillor “Tappy” Frost pieced together a delegation that included Acting Mayor Costello, both the president and manager of Calgary Petroleum Products—A.J. Sayer and Archibald Dingman, respectively—President of the Calgary Board of Trade W.H. Berkinshaw, and other luminaries. The group brought with them 200 gallons of oil in five barrels, thousands of glass vials to hand out with samples, testimonials from Calgary’s leading citizens, a traction engine, and a high-powered motor car with signs and banners reading “This auto is being run on Dingman’s oil” as it passed through the major thoroughfares of visited cities. Speaking with the Herald on the eve of his journey east, Frost said the campaign would not sell any stock or advertise for a particular company. His mission was “to prove beyond a shadow of a doubt that the first well to be sunk in Alberta oil fields is producing oil of a remarkable quality.”⁴⁷

Noting the zeal with which Frost threw himself into the mission, the Albertan’s editorial page commented dryly, “Not since the time of the Crusades, we wot, has there been such a chivalrous spectacle as will be seen in Winnipeg soon when our own Tap Frost, with the rich gasoline dripping from his locks, goes right into the heart of the city of gilded skeptics and beards the liars in their den.”⁴⁸ After two consecutive days of presentations at Winnipeg’s Royal Alexandra Hotel, Frost wired back to Calgary that he believed his mission a success. “Winnipeg people very nice. Simply suffering from too much lime in the bone and too little iron in the blood.” Frost’s tour of central and eastern Canada included stops in Winnipeg, Toronto, Ottawa, and Montreal.⁴⁹

Other responses invited self-help approaches. On June 5, 1914, The Calgary News Telegram reported the creation of the Oil Protective Association (also called the Oil Producers and Brokers’ Protective Association) designed to thoroughly investigate all oil companies. Becoming a certified member of the OPA required an entry fee and providing answers to over thirty questions. The Oil Protective Association would conduct its own investigation into the company and, based on the results of that investigation, would either certify the company or not. “In short,” noted the News Telegram, “the association is intended to perform the same function in the oil world as Bradstreets and Dun’s do in the commercial with the further object of advertising the names of such companies as can be relied upon to deal honestly with the public.” The association also planned an advertising campaign across Canada to highlight the trustworthy companies and avoid the wildcatters.⁵⁰ But under whose authority did the Oil Protective Association operate and what standards would they use to determine a good rating? After less than a month of operations, on July 10, 1914, Trowbridge suggested to Acting Attorney General G.P.O. Fenwick that the department launch an investigation into the association. Describing what seemed more like a shakedown than an attempt at self-regulation, Trowbridge reported, “I have been informed that they are asking $250.00 from companies to be labelled ‘Honest.’” After reviewing the file, Fenwick informed the provincial secretary that he turned the matter over to Popple in Calgary with instructions to “have some of your sleuths look into this matter and take whatever action you think necessary,” presumably meaning one of the Pinkertons.⁵¹

As industry attempts at self-regulation foundered, a consumer protection campaign labelling all Calgary oil companies “wildcat” operations unsafe for investors emerged among newspapers on the prairies and in the Pacific Northwest. As mentioned above, The Regina Leader refused to accept any advertising dollars from Calgary oil companies starting June 1, 1914. Meanwhile, the unofficial campaign in the Pacific Northwest started on June 12, 1914, when The Seattle Post-Intelligencer published a front page warning to small investors about investing in Calgary oil companies, before spreading to Tacoma, Spokane, and Portland. Participating newspapers pointed out that most companies, “probably 95 percent,” were wildcatters and suggested an organized campaign existed among unscrupulous promoters to unload stock in bogus companies on unwitting Americans. While some legitimate companies existed, to date the province had produced petroleum condensates rather than crude oil. In any case, not all legitimate companies selling stock were likely to produce and small investors needed to proceed cautiously. The Oregon Daily Journal went further and blasted both the oil companies and their sales agents for their “lurid” advertising targeting inexperienced investors “with wild tales of fortunes made overnight.” Ultimately, the Portland-based paper labelled all Calgary oil stocks as being “of the usual wild cat variety and akin to fake mining promotion schemes.”⁵²

Newspapers as far east as Minneapolis reported details of the consumer protection campaign, but questions regarding the sustainability of the Calgary boom garnered much wider critical commentary throughout the United States.⁵³ In Custer, South Dakota, The Custer Weekly Chronicle noted that there were almost as many oil companies incorporated in Calgary as traded in Cobalt silver. But the Cobalt mine produced $53 million in dividends while Calgary only boasted a single well producing modest volumes of wet gas. This “slended base,” the Weekly Chronicle noted, is “not for such a towering column of finance.” Pointing squarely at George Buck’s Black Diamond Oil Fields, the paper noted the incongruity of an oil company running its own newspaper “for the avowed purpose of keeping the public informed of the doings of a concern that today has not a speck of oil. They do not even pretend to have it.” The problem, the paper surmised, is that “oil is new to the present generation in Canada, and being novel it is therefore more attractive.” Bogus gold and silver schemes no longer fooled the public, but oil was a different matter.⁵⁴ By mid-July, the venerable Chicago Tribune tersely concluded that Calgary oil speculation “is based on a single producing well.” While several companies were drilling, many more were just selling stock, prompting the paper to conclude “at present it would be a hazardous speculation to buy these shares.”⁵⁵ Meanwhile, the Minneapolis Journal grumbled that “gambling is prohibited in Minnesota by state law. But the selling of Calgary oil and gas well shares does not come under the statute prohibiting gambling. There is no gamble about the purchase of them. The buyer doesn’t have a gambling chance. He just gives his money away.”⁵⁶

Surprisingly, given the Herald’s warnings to southern Alberta investors the previous autumn, the Calgary daily now dismissed similar complaints out of hand. On June 13, 1914, the editorial page declared Calgarians were perhaps too sensitive to outside criticism. After all, “it’s delivering the goods that counts, and if we keep ourselves busy on that end of the contract we will not need to worry about what the knockers are saying about us.”⁵⁷ Then, nearly ten days later, in reporting on the campaign in the Pacific Northwest, the paper concluded, “The Knockers’ club, the anvil chorus and all the hammer boys out on the Pacific Coast are having the time of their lives rapping Calgary oil fields.” Allan Clark, of Black Diamond Oil Fields fame, reported a frosty reception in Seattle and Portland upon return from a sales trip along the Pacific coast. “I never saw or heard the like of it in my life. They kidded me, tried to run me out of town, and eventually tried to get me in jail under the Oregon ‘blue sky’ law, but I was too smart for them and refused to sell them any of the stock I had.” Not only did Clark find it difficult to convince people to invest, but he accused the Seattle and Portland chambers of commerce of buying up and destroying all the Calgary papers “to prevent news of the strike from spreading.” In Oregon, Clark claimed the state’s “blue-sky” law was so strict that “they won’t even let you sell your own stock, let alone that of a company.” In his hotel room where he entertained prospective investors, he admitted to having stock certificates lying around the room where anyone could see them. When people offered to buy some shares, Clark accused them of being police decoys looking to entrap him. “We wouldn’t let you buy it, anyhow,” said Clark. “We are selling all we want down east.” Indeed, the Herald reported that Calgary oil companies were selling very well in Chicago, Minneapolis, and St. Paul.⁵⁸

Meanwhile, William Davidson’s growing concern about the boom’s excesses yielded references to the ongoing revolution in Mexico. Davidson grimly concluded that Mexico “would have been very much better off at the present time if oil had never been discovered in that territory.” More to the point, he concluded the Dominion government had failed to learn from the experience of other nations and ignored its own history. “The government should not have allowed the promiscuous development of the oil areas,” charged Davidson. “It should have prevented the excessive filing, the wildcat organizing, and it could have done so by taking over the work of development itself. Then the oil wealth would have been of some value to [the] people of Canada.” Even more striking is the public response to a letter sent by a Vancouver man to Acting Mayor Costello suggesting Calgarians set a day aside as thanksgiving to God for blessing the city with oil. The Herald editor summarily dismissed the suggestion out of hand, declaring, “What a farce it would be!” If the people of Calgary wanted to give thanks to the Almighty, the Herald suggested they do so “in deeds, not in empty word . . . . A few thousands in coin from the pockets of oil-enriched Calgarians for charity would indicate gratitude to Providence for favors bestowed much more effectively and acceptably than millions in meaningless words from their mouths.”⁵⁹

Ever sensitive to the shifts in public attitudes, especially following the week of false rumours at McDougall-Segur, Monarch, and Black Diamond, the June 27 edition of The Eye Opener turned toward pointed criticism, lampooning the proliferation of oil “experts” in the city, especially the geologists. “An oil geologist’s chief duty to his client is not so much to correctly locate an oil producing well as it is to prepare a Report that nobody can understand but which sounds devilish technical, don’t you know.”⁶⁰ Several civic leaders grew increasingly uneasy about the proliferation of fake oil rumours around Calgary. The Herald lamented that the rumours would persist “unless an example is made of someone.” The reality, however, was that misinformation “serves a very useful, if unworthy, purpose with some people.” Misinformation took on different forms, including misreporting the depth of wells, and inaccurate maps, particularly as drilling expanded south toward the Sweetgrass field near the international boundary. One geologist from California went so far as to propose that the provincial government should invite the US Geological Survey to the province to map the three buttes and adjacent territory.⁶¹

With so many people selling stock, bad actors gained an advantage, and generated larger profits, by inflating their stock prices. The problem, as the Herald expressed it, was that the practice harmed everyone, especially if investors lost trust in the honesty and integrity of the oil business in Alberta. “Individuals who are so poorly principled as to be willing to injure a legitimate enterprise of such possibilities as are to be found in oil investment deserve to be found out and punished severely when found” argued the Herald. Attuned to the growing concern, the Calgary Board of Trade’s oil committee moved to curb the growing numbers of “wildcat extras”—the name given to false reports of oil strikes in Calgary newspapers—designed to artificially inflate stock prices. At the Board of Trade’s June 24 meeting, officials suggested rumours would cease if companies made “immediate and direct reports of operations to the papers.” The Herald readily agreed but doubted every oil company wanted such levels of transparency; indeed, the paper pointed out that the problem was more insidious because some made more trouble “by their suggestive silence . . . than the loudest-mouthed circulator of fake oil strike rumors.” By early July, a private company, Baskins, Limited, brought greater transparency to the boom by installing wireless telegraph units to the main oil companies and maintaining a library of geological maps. The wireless service would always be at the disposal of the public and the newspapers, and a confident Baskins believed it would stop the spread of false rumours for stock manipulators. The company planned to have a floor operator on each of the stock exchanges operating in the city and promised to maintain a special department for women, “where the ladies may transact their business in absolute privacy.”⁶²

As speculating in stock grew more frenzied, the News Telegram continued advocating for greater government oversight in order to protect the public. Noting that “the oil game is a gamble at best,” in view of the skepticism of outsiders “it is absolutely essential, in the interests of the local oil industry and in order to secure the capital necessary for its development, that we in Calgary should provide the most stringent regulations to protect the purchasers of oil stock.” Failure to do so, the paper argued, would be a disaster, and continued reliance on the personal reputations and integrity of individual company owners was insufficient. Instead, the paper proposed that the province appoint an inspector given extraordinary powers to oversee the industry, from formulating “stringent regulations” to the enforcing them in order to ensure public trust. Absent government regulation, the News Telegram argued, “there will be legislation against Calgary oil stock in every province within the Dominion,” making it impossible for Alberta to “attract that outside capital which is essential.”⁶³ Colonel Woods’s Herald, having warned against this very development nearly a year before, took no pleasure in pointing out the incredible hubris now on display. Months of self-interested boosting had made Calgarians “hysterical in regard to the oil situation.” Hundreds of companies formed to offer stock to the public “which have not a scintilla of right to call themselves oil companies, and which have no reasonable prospect of ever striking a dollar’s worth of oil.” The editorial concluded by urging the public “to be slow and cautious in making alleged oil investments which are nothing but rank speculation.”⁶⁴

Inexorably, the wind fell out of the sails of the boom by mid-to-late June 1914, for several reasons. Public enthusiasm for oil stock perceptibly dipped as Albertans wearied of the constant state of heightened excitement and anticipation but unfulfilled expectations. Excitement soured into resentment as investors and Albertans gradually realized dreams of financial security did not immediately materialize from the first crush of investments made after the Dingman strike. Despite its omnipresence, the boom did not solve the problem of unemployment, nor did it transform the regional economy. Conspicuous by its absence were commercial quantities of crude oil. Instead, Calgarians encountered rogues, charlatans, and scoundrels in abundance. Letters to the editor complained that the boom brought immigrants, higher costs—for rent, taxes, groceries—but almost no new jobs. Unemployment remained mired in the doldrums of the previous winter, particularly amongst unskilled labor, artisans, and the skilled trades. Overall, the jobless rate increased from 9 percent of all adult males in January 1914 to more than 35 percent by autumn.⁶⁵

The incongruence of free-flowing cash spent on an unproven oil sector uncomfortably co-existing with the ongoing economic hard times created a bifurcated social system in the process. People in the petroleum industry were seen as wealthy, aggressive, and somewhat arrogant entrepreneurs/specialists/interlopers who descended on the city and raised the cost or living for “true” Calgarians. More humiliating was that many of those “true” Calgarians now found themselves relegated to secondary roles, serving the newly rich and made to feel like outcasts in their own city. The excesses of 1914 therefore created a sharp divide between those who were involved in the emerging oil patch and those who were not. Looking at the ads that appeared illustrates the sharp divide between the two groups. People in the petroleum industry were adventuresome, risk-taking, free-spending entrepreneurs while those who were not were depicted as suffering from some kind of defect. An ad by the Magnet Oil Company called oil “the millionaire maker,” and claimed that the opportunity existed for everyone to strike it rich, if only they had the courage to invest. “The discovery of crude oil in Alberta will revolutionize the world. You are in the midst of an opportunity such as comes once in a lifetime. Don’t stand idly by and watch your neighbor make money—big money—in oil!” ⁶⁶ A different Herron-Elder ad played on the same themes, arguing a “golden opportunity rests today in the hollow of your hand” and proclaiming, “Every man, woman and child who possesses Heron-Elder [sic] Oil Stock will have reason unqualified to feel proud of their discrimination.”⁶⁷

The result was the emergence of a sharp distinction between those who regarded themselves as “true” Calgarians and those who were not. Most interestingly, those who were identified primarily with the oil industry were increasingly regarded as being American immigrants. Surprisingly, one new Canadian oilman, Monarch Oil’s William Georgeson (who, admittedly, built his fortune as a grocer and wholesaler before venturing into natural gas distribution and petroleum in the 1910s), nonetheless blamed Americans for the frenzied environment in Calgary. In an interview published in the Spokane Chronicle, Georgeson told the reporter, “It is you [Americans] who are responsible for this all prevailing idea here now to get rich quick—at once—by speculation in stocks, for this impatience of the public to wait for development to proceed before going wild over the discovery of an oil field which is not yet discovered.” Georgeson reckoned he knew virtually every Calgarian by sight and charged that few familiar faces inhabited the broker’s pits at the local oil exchanges. Local investors and capital no longer sustained Calgary’s boom. “Our company was organized like a few others,” said Georgeson, “by Calgary people before the Americans flocked in to exploit the public with this boom.”⁶⁸

The conspicuous and sometimes ostentatious habits and behaviour of those involved in the petroleum industry summoned nativist impulses from the preponderantly white, Anglo-Saxon population. An ugly letter signed “F. Norris” on June 26, 1914, accused foreign-born workers of manifesting the worst kinds of racial stereotypes. Immigrants were “the laziest and most useless” workers he had ever encountered, who stole from their fellow workers, and only kept their jobs via graft and bribes. “There are foreigners working out there who have banking accounts and boast of them, and more than one of them, and yet there are Englishmen walking the streets practically starving, hundreds of them, and these foreigners . . . just laughing and thinking how easy the white man is.”⁶⁹

Norris’s letter unleashed a howl of grievances from other whites and self-proclaimed native-borns, touching off a prolonged discussion in the editorial pages. On July 7, John Moore vociferously agreed with Norris and added that, as “a single white man,” he could not find work but still needed to pay for the necessities of life but was constantly told to “get married[,] to get a job” and concluded his letter by stating, “It’s about time the single white men were given some show in the city of Calgary.”⁷⁰ Four days later, a Herald editorial pointed toward “a surplus of the wrong sort of population just now,” and proposed the immediate deportation of recent arrivals who became charges of the state. “In the time of crisis it is our business to first provide for our own,” wrote the paper. Immigrants would return to their place of origin “not because we didn’t love them, but rather because we were not in a position to longer entertain non-paying guests.”⁷¹ A few columns over, a letter signed “Eastern Canadian” took up the complaint levelled by John Moore’s letter about unemployed single men to point out that he was married but could not find a job as a carpenter because too many of them were already unemployed. “If a man can’t make a living here let him move on to where he can. From present prospects the writer will be one of those who will have to move.” Perhaps he would return when matters improved.⁷²

As the boom began winding down in the midsummer of 1914, perhaps transitioning to more orderly development, Calgarians prepared for the most important event of the year. On July 28, 1914, the Governor General of Canada and members of the royal family, Prince Arthur, the Duke of Connaught, his wife, the Duchess of Connaught, and their daughter, Princess Patricia, would vacation in Alberta’s mountain parks as part of the Duke’s farewell to Canada tour before returning to England. The stop in Calgary would also afford the Duke and the royal entourage the opportunity to inspect Dingman #1 in person. For the staunchly anglophile local community, the visit represented another opportunity to publicly manifest southern Alberta’s loyalty and affection for both the Crown and Empire. For most oil promoters, it offered the opportunity to secure the support of a member of the royal family and the possibility of securing investment capital from England.

July 28, 1914, also loomed as the deadline for Serbia’s response to the Austro-Hungarian ultimatum issued in the aftermath of Archduke Franz Ferdinand’s murder by Bosnian nationalists. Across Europe, many were slow to appreciate the gravity of the unfolding crisis. Few believed it to be any more serious than a half-dozen or so previous crises, prompting present-day historian Margaret MacMillan to lament people’s lack of imagination and the importance of contingency in human events.⁷³ Indeed, in early July, Calgary and Edmonton newspapers were more likely to predict a civil war in the United Kingdom over Irish Home Rule rather than the escalation of a regional conflict into a continental, and then global, war after the murder of the Archduke. Even as some papers declared the boom over before the Duke of Connaught’s visit, many Albertans remained obsessed with the boom to the exclusion of all other events. The Leduc Representative declared the boom over, “but it is hardly fair to the holders of stock to deny them the fun of watching the quotation fluctuate for a while yet. The chance of a strike now and again will tend to keep things a little interesting at any rate.”⁷⁴

Looking back on the events of July 1914, Eleanor Luxton describes how Europe’s problems barely penetrated people’s conscious thoughts amidst the search for oil:

The news went from day to day in the local field of oil and life of Calgary and its district. The people bought oil stocks recklessly and paid little heed to the headlines which told of unsettled conditions in Europe and of possibilities of war. Even David for once was quite unconscious of what was happening in the world at large. His whole time was taken by his beloved oil wells, and he and Annie spent much time at the field.⁷⁵

Perhaps Albertans could be forgiven for their inattentiveness, as the July crisis unfolded behind the scenes in several European capitals, making it difficult to see the whole picture. The first hint of the broader dimensions of the crisis came on July 14 when the Herald warned in a brief front page article that the situation in Europe was critical. The next spark showed on July 21 as the Edmonton Bulletin speculated the crisis could devolve into a regional war. Only on Friday, July 24, 1914, did Alberta newspapers grasp that the international implications of the crisis could devolve into a broader European war because of the involvement of at least three of the great powers.⁷⁶

Local newspapers fretted that the Duke and Duchess would forever associate their visit to Calgary with the climax of the July Crisis.⁷⁷ Perhaps they should not have worried, because for George Buck, the vice regal visit brought an opportunity to impress visiting investors from Vancouver—with a plot to hijack the Duke and Duchess of Connaught and their daughter, Princess Patricia, as their motorcade travelled from Okotoks to the Dingman well on a dusty unpaved country road. Evidence of the half-baked scheme (it remains too farcical to call a plan) remains in a few stories carried in Vancouver and Calgary newspapers. Just one day before the Governor General’s visit to Calgary, Buck took out an advertisement in the Albertan inviting Black Diamond #2 shareholders out to the well site to see the commencement of drilling on the site and planning for “about 20 motor cars” to ferry stockholders for lunch and entertainment. The ad ran again on the morning of July 28—one month to the day after the assassination of Archduke Franz Ferdinand.⁷⁸

The ad did the trick, as Buck assembled thirty-two cars decorated with Canadian and British flags alongside the road. The front page story in the Vancouver Daily World, obviously planted by George Buck or one of his acolytes, carried the headline “Royal party sees crude oil at Black Diamond.” When the royal party appeared, “motor horns and sirens, at a given signal, shrieked and honked, while the occupants of the cars vigorously cheered,” wrote the World. “Immediately the royal party’s cars had passed through the lines the Black Diamond cars took up the rear position, following to within a few hundred yards of Dingman well and, taking up a position on one of the hills overlooking the site, had a perfect view of the demonstration given at the Dingman well.” The World’s article proclaimed the Duke of Connaught was impressed by what he saw at Buck’s well, including “sufficient oil to encourage any pessimist” that oil existed in Alberta. The piece then concluded with statements that echoed any one of a half-dozen or so Black Diamond ads. “There is not the slightest question that there is more oil in Black Diamond No. 1 (that is black crude) than in any other well at present operating in the Albertan fields, and Black Diamond stock at present day prices should not be overlooked.” The piece concluded by praising both directors and shareholders of Black Diamond oil companies and singled out the “enterprising and energetic George Buck” for making the Duke’s visit such a smashing success.⁷⁹

The Natural Gas and Oil Record heaped well-deserved scorn on the World article after publishing it in full in its August 8 edition under the headline “Lies.”⁸⁰ No other paper across Canada besides the World reported that the Duke had visited the Black Diamond well; the flip side of the coin is that no other paper besides the Record claimed Buck had attempted to hijack or otherwise interfere with the vice regal party. Nevertheless, the World claimed that the procession arrived at Black Diamond #1 for luncheon, while every other paper reported that the party arrived at the Dingman well. The Natural Gas and Oil Record reported a dramatically different story about the escort provided by Buck’s improvised motorcade, depicting it in a much more aggressive light. While the Record did not identify Buck by name, and only referred to “another sightseeing party,” surrounding the Governor General’s car as it left Okotoks. “They were pocketed, in race horse parlance,” wrote the Record. Even more recklessly, one of the vehicles in Buck’s party manoeuvred at high speed so a photographer could capture an image of Buck’s prey. “‘Clear the way,’ someone shouted,” reported the Record, “and the big machines drove ahead—‘Damn.’” Evidently, the Governor General’s driver managed to steer the powerful 1914 Hudson touring car used especially for the royal party out of the pack and proceeded to the Dingman well site, where Tappy Frost drew a small glass of oil direct from the well.⁸¹

The looming war in Europe drove the final nails into the boom’s coffin and brought what developments remained to an end as interest rates rose and the money supply contracted. The Bank of England raised their rate to 10 percent, signalling tightening European credit markets. By early August, as Britain delivered an ultimatum to Germany about the consequences of violating Belgian neutrality, at the request of the Board of Trade, several stock exchanges, including the CSE and the Calgary Oil and Stock Exchange, shut down effective August 3 until further notice. The shock of war depressed the petroleum industry in Alberta and cleared away most of the pretenders. After all, oil remained one of the greatest needs for modern industrial warfare, so The Financial Post heaved a sigh of relief on August 22, 1914, when it noted that companies with the financial wherewithal could go ahead with drilling but that “the floatation of new companies for oil development has practically ceased, fortunately so.”⁸²

It is easy enough to blame the outbreak of the Great War in August 1914 for breaking the back of the speculative boom and wounding the petroleum industry’s development as the region shifted quickly to mobilize human and material resources for the war effort. This explanation, however, seems incomplete and counterintuitive given the important role played by petroleum for ships, airplanes, and motor vehicles in the coming struggle. As The Natural Gas and Oil Record pointed out in a full-page ad, the war presented both the circumstances and the opportunity for expansion of Canadian industry and trade, predicting “good times ahead.”⁸³ But this did not happen, and it is fair to wonder why.

Any worthwhile explanation must begin with the observation that Alberta’s petroleum production did not exceed that of Ontario until 1925. In the decade following the Dingman discovery, Tuner Valley produced approximately 66,000 barrels of oil in total—an average of less than twenty barrels per day. Compared to the mighty oil fields in Texas, where Spindletop blew in at 75,000 barrels per day in 1901, investing in Alberta oil was a much riskier proposition. In this and so many other ways, Alberta was not Texas and Turner Valley was not Spindletop, as other liabilities loomed. Circa 1914, Alberta lacked the transportation, refining, and distribution facilities to effectively exploit any petroleum find. While Texas could easily access the port facilities of the Gulf of Mexico, Alberta remained landlocked, far removed from tidewater and from major markets, refining, and transportation capacity. Britain and the Royal Navy turned to oil suppliers in Mexico, Venezuela, but above all Persia, to fuel their ships and motor cars. Starved of capital, the small independents soon closed as the oil boom petered out and companies struggled simply to hold on to their leaseholds.

A stronger case is that the boom burned hot and quick because several self-inflicted wounds and liabilities hindered the nascent Alberta oil patch. Few understood or appreciated the work and expense required to drill a hole sufficiently deep to prove or disprove the existence of an oil field in the province. Furthermore, a series of stock market manipulations and insider trading scandals plagued the Alberta industry and shocked outside investors. The lack of transparency or regulatory oversight made it difficult for investors to distinguish between legitimate operators and scam artists and resulted in very successful grassroots consumer protection campaigns against Calgary oil in nearby US and Canadian markets. Indeed, Edwin Selvin of The Seattle Post-Intelligencer later boasted that the paper’s campaign against Calgary oil “succeeded in killing it here in Seattle.”⁸⁴ Amid a growing economic depression that saw wages decline and skyrocketing unemployment, would-be investors grew increasingly cautious, less credulous, and more skeptical of the claims of oil promoters. The proliferation of self-help measures to protect consumer interests both in Canada and the United States also shrank the pool of investors enough to deny the Alberta the necessary capital to continue floating companies or sustain operations.

Perhaps the fatal flaw, however, resulted from attempts to keep large companies out of the field and favouring independents. At the outset of the boom, many small companies lacked development capital to meet the high drilling costs associated with Turner Valley, especially when drilling did not result in production to offset costs. Rotary rig technology, capable of drilling deeper, straighter holes more quickly and efficiently than standard cable tool rigs, were not widely used in Turner Valley in 1914 because of their higher costs and skill level required of crews. Other more mundane technological advances in the 1920s and 1930s would help improve the efficiency, lower production costs, and aid the search for oil in Turner Valley, in particular the introduction of trucks capable of transporting heavier drilling equipment and building better roads in the 1920s. During the boom, horses and wagons travelling across little more than dirt tracks of dubious durability placed limits on the quality of drilling equipment. Most entrepreneurs grew increasingly reluctant to shoulder the financial burden and uncertainty of drilling wells to depths of more than 3,000 feet with no guarantee that revenues could cover expenditures. Furthermore, the effusions of natural gas and scant amounts of naphtha were too modest to sustain the staggering volume of oil stocks on the market. Local investors, in the market for the short term, grew increasingly reluctant to advance any more capital. Indeed, financing for most companies came from private investors seeking quick returns. However, almost none of the companies broke even, let alone generated a profit.

J.L. Englehart, who made some of his fortune in Ontario’s Petrolia oil fields and, in 1914, served as the chair for the Transportation Board of Toronto, seemingly offered the most elegant eulogy on the first oil boom, declaring somewhat paradoxically that 1914 proved there was “undiscovered oil” in Alberta. But Englehart identified the Peace River region north of Edmonton as the likely site of a future discovery. As for Calgary, Englehart predicted it would never be an oil centre and Turner Valley would never produce oil. “The one great obstacle in the way of oil—not gas, but crude oil—ever being produced in paying quantities is the formation of the country.” For Englehart, the geology was all wrong. Fractured rock formations dominated southern Alberta along the foothills of the Rockies. “If the country were less fractured,” said Englehart, “I would have more faith in it.” Instead of oil, the field produced gas, and the people who invested in the Calgary oil boom became “excited about oil which has not been found.” Englehart feared that investors were placing their money in companies that had less than one chance in a hundred of striking oil. “It Is most unfortunate that there should be so much dreaming of the possibility of finding oil. It is bad for the country. These dreamers are apt to lose their money.”⁸⁵

The legacy of 1914’s frenzied orgy lingered and cast a long shadow. Many middle-class Calgarians who invested in oil stocks rather than paying off debt in June lost their savings and endured a very cold and grey winter. Real estate brokers who became stockbrokers during the boom found themselves unemployed once again. Some of the men who lined up to buy oil stock now did the same thing at the recruiting office, recalled Torchy Anderson on the fiftieth anniversary of the Dingman well. Women who emptied their sugar bowls that hid their savings to invest in oil stock now began to knit socks for soldiers. Anderson maintained that, while there were other oil booms, none of them could match the “whooping insanity” of May 1914.⁸⁶