The Electric Sugar Refining Company was a company founded in 1884 in the United States to commercialize a sugar refining process supposedly invented by "Professor" Henry Friend.
The company collapsed in 1889, after it was revealed that "Professor" Friend's process was a complete fabrication. The hoax remained in the national media spotlight for years as the matter wound through the court system in Washtenaw County, Michigan and in New York.
Early scandals involving grapes and sugar Little is known about the early life of Henry Friend (or Freund, as he was sometimes known). He claimed to be a German chemist, although it is more likely he was American-born, and he appeared to be about 50 years old in the early 1880s. In 1881, Friend was getting experience in corporate fraud. He appeared in Chicago, with the claim that he had perfected the process of refining sugar from grapes. Friend attracted investors, and soon instigated investors to form the Chicago Grape and Cane Sugar Refining Company. However, one of his investors caught on to the scam and had him charged with obtaining money under false pretenses. The company collapsed. The investor later dropped the charges, and Friend was released.
Background The Electric Sugar Refining Machine story is centered in Milan, Michigan, since most of the participants were born and raised in Milan. In about 1882, Friend was in Chicago and happened to meet Rev. William Howard and Emma (Emily) Howard. (Emily and Howard were claiming to be married at the time, but they could not officially marry, since Rev. Howard had left his wife and children in Rhode Island without bothering to get a divorce.)
Then Emma's daughter, Olive VanNess Tibado, came to Chicago to visit, and apparently there was an attraction between her and Friend, ultimately leading to their marriage. According to the marriage records from Berrien County, Henry and Olive were married February 3, 1883, in Niles, Michigan. Henry was recorded as being age 41 and a resident of Chicago, born in New York, and his occupation listed as Chemist; Olive, as age 31 and also a resident of Chicago. The marriage was witnessed by Rev. and Emily Howard.
Around 1883, Friend, his wife, the Reverend, and Emily, went to New York City. The group was looking for investors willing to set up a company based on the "electric sugar refining machine," which used electricity to refine sugar at a cost of 80 cents per ton, less than 10% of the cost of current manufacturing processes. In reality, Friend did not have any machine, and his process was a complete hoax, so the group insisted that their machine was a "secret" so that others could not steal their idea.
Beginning He approached Theodore Havemeyer, whose family controlled much of the sugar refining industry, to secure backing for his invention. However, Havemeyer insisted that Friend reveal his process before providing any financial backing. Friend refused, since he had no machine to show. Friend turned to other potential investors, setting up "demonstrations" and telling investors they would become rich beyond their wildest dreams. Friend and Howard set up demonstrations at their home in New York, hoping to lure investors. The potential investors would bring in a barrel of dirty, unrefined sugar, along with a clean, empty barrel for the refined sugar. The potential investors had to leave the room while he used his so-called secret machine to turn raw sugar into refined sugar. In fact, Olive or someone else was upstairs with bags of pure white refined sugar. "Prof." Friend would empty the unrefined sugar into a pipe leading into the river. Olive poured the clean sugar through a hole in the floor, filling the clean barrel. After a couple hours or so, Friend invited the prospective investors into his room where they could admire the results of his wonderful machine—a clean barrel full of beautiful white refined sugar. Friend's supposed refining always took place in a secret room, where he simply switched a barrel of refined sugar for a barrel of raw sugar, and claimed that his machine had done the refining.
In December 1883, Friend finally met W. H. Cotterill, a former London solicitor, and convinced him of the utility of the sugar refining process. During the following year, Cotterill helped Friend set up the Electric Sugar Refining Company, with Robert N. Woodworth as president and Cotterill as vice-president. The company prospectus said, in part, Raw sugar of the lowest grade, either from beetroot or the sugar cane can be converted into refined sugar of the highest grade as easily as raw sugar of the highest grade; and it is said that the loss in weight will not exceed one percent of the whole saccharine matter. The time required is only four hours, and any description of refined sugar can be produced, from the finest powdered up to and including cut and pressed loaf. The principal agent employed in the process is electricity, and as it has been ascertained that the cost will not be more than 3s. 4d. per ton, the invention bids fair to work a complete revolution in sugar refining.
Friend maintained a 60% ownership in the company, while Cotterill and other American investors put up $100,000 for a 10% stake. The remaining 30% of the company shares were sold in England, bringing in another $300,000.
Skepticism Despite the enthusiasm from investors, knowledgeable people in the sugar industry were, like Havemeyer, skeptical of Friend's process. Some sugar refiners felt the whole thing could not possibly work, but bought stock anyway to hedge their bets. Members of the public wanted to believe that an electric process could dramatically cut the costs of sugar production, so they ignored possible warning signs along the way. One of the officers of the sugar company, James U. Robertson, was a member of the Christadelphians. Robertson honestly believed the company was about to establish a working electric sugar refinery. Due to his position with the company, Christadelphians in the US and England eagerly bought up stock in the company,Telegraphic Journal and Electrical Review -1889 - Volume 24 - Page 27 "THE credulous and unsuspecting Robert Roberts referred to as the largest English shareholder in the Electric Sugar Refining Company, is the leading spirit of an obscure and superstitious religious sect known as the Christadelphians. sometimes with the intention of building a temple for their religious group with the profits. As early as 1885, after one of the first larger demonstrations, a commentator wrote in The Sugar Cane, In February last the sugar world was startled by the announcement that a discovery had been made by which sugar could be refined by means of Electricity in a few hours — almost "while you wait" — at the trifling cost of 3s. 4d. per ton. A demonstration, at which no one was present but the inventor, took place in New York, when seven tons were, it was stated, refined in as many hours. Five gentlemen testified to its genuineness; none of them, however, were present, and some of them had a direct interest in promoting the company to be formed for working the invention on a large scale. Professor Friend, we were informed, was coming to Liverpool with his machine, for the purpose of making a series of demonstrations in the presence of witnesses. The Professor has been over, and has returned to New York — but there have been no demonstrations. The reason he gives for not carrying out his intentions may appear satisfactory to him and his friends, but not so to impartial outsiders. It is now ten months since we first heard of this "invention" and, excepting the "demonstration" in New York, we do not hear that anything has been done, except, of course, raising share capital for the avowed purpose of refining on a large scale. If there is any truth at all in what is stated of this invention, why have not the company been at work on a small scale, if only 10 tons per day? By this time they would have realized a small fortune. Those who have put any money into this venture, we fear, will not see it again.
Likewise, Bradstreet said in 1885 that "the process of Prof. Friend is as mysterious as ever. There is no known responsibility to the company, and its collapse at an early date is predicted."
At a meeting of the Society of Chemical Industry in Liverpool in late 1886, to which a representative of the company had been invited, one presenter noted that "I think you will all agree that the practical difficulties of sugar refining prevent any likelihood of electricity being advantageously in the process." After comments from the Electric Sugar Refining representative, the meeting chair made some pointed comments, summarized as "there was a very proper tendency to disbelieve anything that is absolutely secret... There was no piece of evidence that would cause people to invest money in it; and he could only express hope that the gentlemen who so generously and boldly risked their money might get it back some time.
By 1888, critics were becoming more vocal. Early that year, J.B. Wallace, a sugar-dealer from Liverpool, investigated the New York "refinery" of the Electric Sugar Refining Company. After being repeatedly rebuffed, he concluded that something was "very fishy" and cabled his friends in Liverpool to sell stock in the company. The company got wind of Wallace's charges, and demanded they be retracted; Wallace refused, and the company did not press the issue. Later in 1888, another industry expert wrote in The Sugar Beet: Very few sugar experts believe in the claims of the would-be company, viz: that thirteen barrels of raw sugar were refined; as raw, this quantity was emptied into an apparatus and run through several secret rooms containing the machinery. (?) It is maintained that in twenty-five minutes refined sugar was turned out at a rate of one barrel for every two minutes. (?)... We must admit that somehow there seems to be a paradox involved, since a current of electricity passing through a saccharine solution will invert the sucrose to glucose.
Riding high Despite the skepticism, the fortunes of the company remained high. Friend purchased a Brooklyn flour mill for $40,000 to continue experimenting with his process, and obtained another $180,000 to supposedly purchase equipment. (Later investigation suggested that little of this money was actually used for the purchase of machinery.)
Friend's wife Olive, her mother Emily Burnham Howard, and stepfather William Howard moved in with Friend and helped him stage demonstrations of his machine. He still refused to tell anyone else the secret of his process, explaining that it wasn't patentable, and he dare not reveal it until a full-scale refinery was built. However, he continued to give small-scale demonstrations in a heavily secured room in the factory, and the fortunes of the company boomed, with stock prices jumping from $100 per share in 1884 to a maximum of $625 per share in 1888.
Soon after the company started, President Woodworth bowed out of the company under some cloud. Cotterill took over the position of company president. As the company prospered, Friend began to spend lavishly and drink heavily, especially bourbon. He was given a large allowance for the cost of setting up the refinery, and used the money on fast horses and sporty carriages. He was seen speeding around New York streets and parks, riding his sleighs in winter and his carriages in summer, slugging down bourbon, as reported in The Philadelphia Inquirer. He died of alcoholism on March 10, 1888, a day before the Great Blizzard of 1888 hit the city. He was buried during the blizzard with little fanfare. It was later suggested that the officers of the Electric Sugar Refining Company had attempted to conceal his death so as to not scare investors. This seems likely; to this day, no death certificate can be found for Friend, and researchers can only guess where his burial took place.
Downfall