by Paul R. Spitzzeri
In the 9 April 1921 edition of its publication, The Market Forecast, which is the featured object from the Homestead’s collection for this post, stocks and bonds broker A.N. Sanford and Company of Los Angeles, noted that “big periodical movements in the stock market rise and fall like the tides of the ocean” and the firm’s principal, Albert N. Sanford had a long career in finance, though it appears to have ended abruptly with accusations of embezzlement before that year was out.
Sanford (1849-1922) was born in Akron, Ohio, where his father David was a cabinetmaker before establishing, in 1873, with his son and others, the Akron Furniture Company. Within a short time, Sanford moved to banking and was a cashier with Second National Bank and then the City National Bank. In the winter of 1891-1892, he spent the frigid season away from Ohio and in the sunny climes of Los Angeles, but moved to Denver for several years before finally relocating to the Angel City in the first years of the 20th century.
By 1902, he established his own stock, bond and realty business and later advertised his business as “The Pioneer House” in the stocks and bonds trade. Sanford was also an investor in several companies, including the Standard Fuel Burner Company and the Bakersfield and Ventura Railway, both formed in 1903. The latter planned to build a line from Port Hueneme, on the coast, through Saticoy, Santa Paula and Fillmore, and then north through the rugged mountains north to Bakersfield, although only local lines in the Oxnard area were ultimately completed.
In 1906, Sanford and partners formed the Investment Securities Company, which may have evolved into the firm that published The Market Forecast and, the next year, he was an incorporator of the Oil Creek Consolidated Oil Company. He advertised for the sale of gold mining and oil stocks as well as local real estate and, in some cases, property outside the area, such as 3,700 acres near Guaymas on the west coast of México.
Sanford was a member of the Los Angeles Nevada Mining Exchange, because of his extensive work selling stock in mining firms in the Silver State and, when that entity was absorbed into the Los Angeles Stock Exchange, formed a decade before, in 1909, Sanford was admitted as a member. He served as a director in 1913 and was also a member of committees for the organization in several years.
After World War I, a new oil boom burst forth in greater Los Angeles, including the discovery of enormous new fields at Huntington Beach, Santa Fe Springs and Signal Hill and Sanford, in his seventh decade of life, moved aggressively in selling oil stocks at the first and latter, including opening a branch office in Long Beach.
This leads us to a review of The Market Forecast and its front page news that “Congress Favors Progressive Legislation” and the claim that “the outlook is encouraging” and “the stock market is strong with an advancing tendency.” The publication noted that conservative financiers believed that Congress sought pass legislation that would “bring about a restoration of confidence among the people and in the business world generally, and at the same time provide incentive for speeding the wheels of progress.”
After the conclusion of the war, the United States, which went through significant economic growth during wartime because of military spending and the resulting boost to industrial production, experienced high inflation. The Federal Reserve, established only several years earlier, kept interest rates low to finance the wartime buildup. but as inflation increased, the Wilson Administration tried austerity measures, including slashing federal spending by an astounding 75%. while the Fed raised interest rates dramatically to about 7% by mid-1920.
While the result was that the federal government had a balanced budget, what was out of balance was a dangerous combination of closed or repurposed munitions factories, the influx of more than a million and half soldiers seeking employment to civilian life, weakened unions, lower wages and more. The result, inevitably, was technically a recession, because it lasted under two years (18 months) and because gross domestic product did not fall 10% per year as the definition of a depression dictated.
Yet, in 1920, production plummeted by well over 30%, a rate second only to the worst of the Great Depression, unemployment shot up to 12%, business failures increased by three times, surviving businesses had profits fall by about three-quarters, and the Dow Jones Industrial Average dropped by almost half. Some of what you’ve read above might sound awfully familiar!
After Warren Harding won the presidency in that fall’s election, his administration moved quickly to raise the tax base by lowering income levels for brackets on the federal income tax, which also was reintroduced (one existed for several years during the Civil War period) in 1913, while also lowering interest rates as a stimulus effort.
This, and the obvious detriment of austerity, was reflective of something of accidental intervention that relieved the pressure of recession/depression, although an economic recovery was likely already to have happened. In any case, there was a new boom as the Roaring Twenties progressed and unemployment, just as one indicator, was only 2.3% by 1923.
The context, then, was that the nation was just about emerging from its severe economic tailspin when Sanford’s firm noted that “big periodical movements in the stock market rise and fall like the tides of the ocean.” It continued,
If the stock market is now at its ebb, as professional traders seem convinced, the purchase of sound securities at existing low levels, should show very substantial profits in the near future. In 1919 many stocks advanced from 100% to 500%, culminating in new high records, since which time there has been a sheer decline and an opportunity is presented the shrewd investor today to purchase high grade, dividend paying issues at less than half the prices prevailing a little over a year ago.
Meantime, the publication trumpeted the imminent opening of the Los Angeles Stock Exchange’s seventh home, in a building completed in 1919 on Spring Street, between 6th and 7th streets. The Sanford company noted that the eleven-story, height-limit, structure “is almost entirely filled with tenants—stock brokers, bond brokers, companies and agencies who have business to transact with the operation of the stock exchange.”
With blackboards, telegraph systems “and all the paraphernalia required to install modern equipment” for the carrying out of up-to-date financial transactions. Exchange President Frank Hervey Pettingell felt that its new home would be the third-finest in the country, following those in Boston and the “massive marble edifice and annex” on Wall Street in New York City. Sanford publicized the fact that his offices were moving to a fourth-floor suite in the structure, which is now a City of Los Angeles Historic-Cultural Landmark and home to the Spring Street Lofts.
Other contents of the publication included a selection of issues on the NYSE including such major firms as General Motors, United States Steel, Studebaker, California Petroleum, Famous Players-Lasky and Loews’ Inc. As for “curb issues” that were traded away from the exchanges and at any hour, there was Standard Oil of California, the company that drilled for oil on Walter P. Temple’s lease near Montebello, and its plan to reduce the par value of its stock from $100 to $25.
At the Los Angeles exchange, it was reported that “the tone . . . is steady although trading has not been of large volume in the last few days.” Southern California Edison was trading at 94 and yielding 8 1/2%, while Goodyear Tire‘s preferred stock was at 52 1/2, and the Los Angeles Investment Company was at 83 cents a share. Also noted were several precious metal mining companies, as well as several oil companies, including Union Oil of California, the stock of which was at $155 a share with yields at 7 1/2%, while Associated Oil was at $102, with its yield at just shy of 6%.
The Sanford company highlighted its Partial Payment Plan, which “enables people with limited capital” to enter the stock market with a modest down payment and monthly installments so that they could purchase “any good investment or speculative stock.” Deferred payment interest was 6% annually and, once shares were fully paid, a certificate was duly to be issued. Also noted was that “we make liberal loans on stocks and bonds” for half a year or a year with the same terms of annual interest.
On the back page was “The Pulse of the Market Quotation Service” with major dividend-paying stocks from railroads, independent oil companies and other industrial firms listed including the present price, the highest price in 1919, and the annual dividend amount. Some of the stock price differentials were smaller, such as for the Union Pacific Railroad and, in fact, most of the railroad companies, along with many of the larger firms like National Biscuit (NABISCO), F.W. Woolworth, and Westinghouse Electric.
Others, however, had huge drops, including the Texas Company (Texaco), which had been at $345 in 1919 and was at $40 in 1921, the American Beet Sugar Company (101 3/4 to 41), and Central Leather (116 1/2 to 37 3/4). Prices were also provided for many New York Curb Stocks, including Aetna, Goldwyn, many oil and mining companies, as well as unlisted stocks, including Richfield (now ARCO) and other oil firms.
Having thrown its lot heavily in Huntington Beach Oil Field stocks, Sanford noted that there were 71 rigs in the field with three new derricks in the past week, while there were several wells ready to be brought into production, following the earliest drilled by Standard. Quite a few companies were mentioned including Republic, Guaranty, Paramount, Peerless, Vista del Mar and the Huntington Midway Crude Oil firm, said to be “one of the newest companies in the Huntington Beach gusher fields” and, with stock at just a dime a share, “we recommend its immediate purchase.”
An inserted flyer promoted Sanford and Company’s sales of stock in the company, which had four leases in the Wesley Park addition, twenty total acres in the field, and nearly 500 acres in Ventura County. The handout stated that “it is proposed to start operation immediately” with the stock sale proceeds “expended in the drilling of wells and carrying on a general oil business.” Half the net amount was to be for dividend distribution “so that the stockholders may be assured of their full share of the net earnings.” Potential buyers were, of course, encouraged to act quickly, as stock prices were expected to at least double.
Yet, on 10 September 1921, the Los Angeles Times reported that:
A.N. Sanford, an aged stock broker with offices in the Stock Exchange Building, was taken into custody at his apartments . . . on a charge of embezzlement. The complaint, issued by Dep. Dist. Atty. McClelland, accused Mr. Sanford of defrauding Mary E. Taylor . . . out of seven certificates of stock of the Texcal Oil and Refining Company, valued at $1440.
Sanford, after being taken into custody, stated the arrangement was handled by his Long Beach branch manager, who was out of town, and that the stock had been returned to Mrs. Taylor, and added that everything would be sorted out when the manager came back. He ended by declaring that he would have the unstated bail amount secured so that he would spend only one night in jail.
Unfortunately, nothing further could be located on this matter, but Sanford was dead within nine months, passing away in May 1922 at the age of 73. No obituary or any reference could be found, either, and Sanford’s body was taken to his hometown of Akron for burial, while his wife Nellie (there were no children) survived him by almost three decades, dying in Los Angeles in 1949 at age 97 with her burial at Forest Lawn.
This edition of The Market Forecast is notable for its discussion of the expected (and then realized) economic recovery, specifically in the stock market, major stock issues and prices, the promotion of the Huntington Beach Oil Field (where Walter P. Temple was then invested), and the story of Sanford and his two decades of selling stocks and bonds in the Angel City.