Business & Finance: Oil Gets Together

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Back of the enterprise stood other figures besides cheerful, energetic Harry Sinclair. In all his schemes he has had the loyal backing of Blair & Co. and the succeeding firm, Bancamerica-Blair. Although other banks, notably Chase National of New York, have representatives on Sinclair's board, his company and the Prairie concerns are considered particularly the interest of Bancamerica-Blair. Tide Water Associated presents another aspect. On its board are two representatives of First National Bank of New York. Jackson Eli Reynolds, its president, and Henry S. Sturgis, a vice president. There is a Blair man too, but this company is First National territory and as such its stockholders have had much confidence that whenever a merger was accomplished their interests would be amply protected by the astute gentlemen who serve both them and First National Bank.

In 1928 this merger was first discussed with only Sinclair and the Prairie Companies mentioned. Rumors of consummation and official denials followed one another in bewildering succession. Then came Depression and each man looked to his own balance sheet, forgot about mergers. But in 1930 Harry Sinclair took a big step. He sold his half interest in Sinclair Pipe Line Co. and Sinclair Crude Oil Purchasing Co., to Standard Oil Co. of Indiana. A check was written for $72,500,000; Sinclair Consolidated's profit was $28,000,000, a welcome sight on any statement in 1930. It made the company's net $12,000,000 for the year, left it with $35,000,000 in cash on hand. It put Mr. Sinclair in a fine position to go mergermaking.

Publication of the Sinclair plan swiftly revealed its unfinished parts. Rio Grande stockholders were dissatisfied with the ratio offered them; they wanted one share of the new stock for two of Rio Grande common. Some stockholders of the Prairie companies were petitioning John Davison Rockefeller Jr., reputed one of Prairie's largest stockholders, to fight the merger. Unfair share exchange was their cry, too, plus a moralizing note, stubborn aftermath of the unhappy Teapot Dome affair.* These seemed to be matters which tact and patience could straighten out. But as the days went by something much more fundamental was happening to throw the great Sinclair merger out of gear. With Oklahoma and Texas getting out their militia to halt production (see p. 9), the price of crude oil started to rise. Prairie Oil & Gas Co., key to the Sinclair merger, has an inventory of about 55,000,000 barrels of crude. The company began to grow more valuable, by millions of dollars, than it was a week ago. New merger terms might be necessary, stockholders' consent more difficult to obtain.

When Harry Ford Sinclair was a druggist in Independence, Kan., he was not a success as a businessman. That was during the last years of the 19th Century when Sinclair was a youth and had taken over the store left him by his father. His store finally taken from him, the young man idled about the town and one day went rabbit hunting. He shot himself in the foot accidentally and was maimed for life, slightly. But this accident was really his first piece of luck for it provided him with $5,000 cash, the payment on an insurance policy. Brought up by his father on strict principles of economy, he paid his doctor's bills but departed forever from the narrow, commercial confines of Kansas.