In the early, rough-and-tumble days of Alberta’s oil industry, an army of promoters sought to raise capital needed to fuel the booms, often by promising quick riches from “black-gold rushes.”
This excerpt from Steward—a book published to mark 75 years of energy regulation in Alberta—gives an account of this practice, and the government’s response to keep the situation in check.
Promotional literature of the time promised drilling investors great personal gain. The Rocky Mountain Development Co., created in 1902 to exploit the first Alberta oil find near Waterton Lakes, predicted an astronomical annual return for a Canadian well flowing 300 barrels per day. American oil had averaged $1.15 a barrel the past five years while scarcer Canadian output fetched $10, the company noted. With production costs just a nickel a barrel, “You can easily figure out how Rockefeller became a billionaire. Few people realize the magnitude of the oil business. No wonder the phrase ‘struck oil’ is synonymous with suddenly acquired wealth.”
Alberta became notorious for black gold rushes ignited by small finds, fuelled by promoters, and liable to skin wishful thinkers. In November 1913, with drilling on the first Turner Valley discovery well progressing 50 kilometres to the south amid rumours of an imminent gusher, Calgary Herald editors wearied of the pattern and called for a respite: “For months the people of this city and country have been hard up. They have been busy trying to catch up on their debts. Nothing could be worse for them — and nothing worse for Calgary — than a boom in oil stocks such as seems to be starting. The Herald knows instances of clerks in stores, servant girls, office girls, wives of small tradesmen, mechanics and others having been canvassed within the past two months with every artifice and promise that scheming could invent.” …
Clerks in stores, servant girls, office girls, wives of small tradesmen, mechanics and others having been canvassed within the past two months with every artifice and promise that scheming could invent.Calgary Herald, November 1913
In the wake of the first Turner Valley discovery well in May 1914, more than 350 brokers and 500 sales agents took out Alberta licenses to peddle shares in 490 companies, most of them new. Besides the Calgary Stock Exchange, which operated under a charter enacted by the provincial legislature in 1913, at least five private trading floors opened. In the week ending May 30 alone, 80 firms launched with declared plans to raise $80 million for more drilling. The province created its first regulatory agency — the Alberta Board of Public Utility Commissioners, ancestor of the modern Alberta Utilities Commission — with a mandate to detect and prevent stock market abuses in addition to policing prices of consumer essentials, from electricity to milk.
By 1917, as expanding the Turner Valley bonanza turned out to take more time and money than expected, the corporate flock scattered. The private exchanges collapsed. The last eight members of the Calgary Stock Exchange suspended its operations.
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