Up & Off

Back in the 1920s when the tourist camp was burgeoning into a national eyesore, Pierce Petroleum Corp. launched in the Midwest a chain of pleasant-looking roadside hotels complete with Renaissance restrooms and Colonial halls hung with $20,000 worth of genuine Currier & Ives prints. Attractive though these small hotels were, they turned out to be a great financial flop, and in 1930 along with the rest of Pierce Petroleum's assets, were sold to what is now Harry Ford Sinclair's Consolidated Oil Corp. For its hotels, refineries, pipelines, filling stations, Pierce Petroleum received among other things 645,000 shares of Consolidated Oil Stock, which has long been its principal source of income. The company has been trying to wind up its affairs, distributing 500,000 shares of the Consolidated stock to its stockholders last fortnight. That left it with $375,000 in cash, about 125,000 shares of Consolidated stock, some current liabilities and various Government claims for unpaid taxes.

On the New York Stock Exchange the ticker symbol for Pierce Petroleum is PPX. One day last week PPX started to appear on the tape in blocks of 20,000 and 30,000 shares, and by the close was the most active issue on the Big Board with a total volume of 180,000 shares for the day. At $1.50 per share it was up 25-c-, a 20% rise in one session.

To the Stock Exchange, which views with growing alarm the public's voracious appetite for low-priced issues, the PPX performance looked positively fraudulent.

Consulting some Pierce Petroleum officials, it learned that the liquidating value of PPX "based on the present price of Consolidated Oil Corp. stock ($17) in all probability could not exceed $1 per share . . . and might be materially less." Forthwith the Governors ordered PPX suspended from trading. In subsequent over-the-country trading PPX promptly plummeted to 37-c- per share. It was one of the few times in the history of the Exchange that the Governors on their own initiative had stricken a stock from trading to save suckers from their own folly.*

*Noted with glee by Wall Street newshawks in the annual report of the New York Stock Exchange last week was an item relating to the Exchange's own investments: "Loss on sale of securities $13,452.70." That, however, was an improvement over the year before when the Ex change as an institution took a $19,254 loss on investments.

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