In 1872 John Keely, an inventor from Pennsylvania invited scientists and the press to attend
a demonstration of a machine which he explained was driven by a new and previously unknown
force.
Keeley explained that the machine ran using a new form of energy at an astonishingly low
cost.
Public interest was intense, and Keely’s grand ambitions and bold statements attracted
investments from around the country.
Within a few months of the initial demonstration Keely Motor Company was formed in New York,
with starting capital of five million dollars which is equivalent to around $100 million
dollars in today’s money.
Keely claimed that his motor could power a train journey from New York to San Francisco
and back using just a quarter of a gallon of water as fuel.
An entire gallon of water would power a steamship from the United States to England and back.
His idea would revolutionize transportation, it would be financially insane to buy anything
other than a Keely powered vehicle.
The only problem was that Keely Motor Company was – quite simply - an elaborate fraud,
a fraud that he managed to keep going for 26 years.
The extent of the fraud was only discovered after his death when investigators went through
his workshop and announced that Keely's inventions were "a deception" and the result of trickery.
Possibly the most remarkable thing about Keeley is that over the 26-year period between founding
his company and his death, Keely never brought a single product to market.
How did he get away with this?
Well, his main trick was that whenever investors became agitated about a product not being
delivered, he would dazzle them by announcing an even more exciting new product which was
always right around the corner - one year away from being delivered.
Keely was a master in dealing with the press and managed to convince people that he was
the greatest inventor to have ever lived.
The constant announcements of new products managed to distract attention from the shortcomings
of the Keely Motor Company.
The new inventions meant that all of Keelys time was consumed working on new and exciting
technologies that would change the world for the better.
To his believers – Keeley was a savior of sorts.
Shareholders were sometimes frustrated with Keelys failure to produce these world changing
inventions in a timely manner, and he did face a number of shareholder lawsuits over
the years, but these were big ideas he was dealing with, inventions that would revolutionize
transportation and energy.
Fortunately for Keely, most of his investors were believers in his genius.
They believed that the great engineer would lift all of humanity up with his wonderful
new ideas.
Ideas - almost drawn from the world of science fiction.
The critics would eventually be humiliated when he finally delivered this more efficient
and sustainable future.
In 1874 Keely demonstrated an etheric generator where he blew into a nozzle for 30 seconds,
then poured some water into the same nozzle.
After some tinkering with the machine, a pressure gauge indicated pressures of 10,000 psi which
Keely said was evidence that the water had been disintegrated and a mysterious vapor
had been liberated in the generator, capable of powering machinery.
This was reported as a new form of energy in the New York Times in 1875.
In 1884 Keely demonstrated a vaporic gun to a party of government officials.
It used a new form of energy to fire a five-ounce lead ball with no smoke and no recoil a distance
of 300 yards.
Keely explained at the unveiling that he had just used a quarter of the guns power.
He claimed that it was so powerful that it had broken all of his pressure gauges when
he tried to test it.
A skeptical army officer in the audience presented Keely with a pressure gauge and said that
he would like to see the gun break it.
Keely paused for a moment before saying “I don’t believe in pressure gauges anyhow.”
The day after the demonstration, Keely met with a reporter and said that his experimenting
days were over.
He announced that his motor would be ready in less than two months.
In 1885, Keely demonstrated his motor to reporters and investors in The Keely Motor Company.
He started it up by drawing a violin bow across a tuning fork.
(as was standard at the time) He opened a tap and people reported hearing a hiss of
escaping air.
He explained that the sound was etheric vapor – and definitely not compressed air.
The machine was then used to lift some weight, and an additional demonstration showed the
engine turn a saw blade which was used to saw a piece of wood in half.
Keeley told reporters that the machine could run for 40 days without stopping.
A reporter asked if he could let it run for half an hour while they were there.
Keeley left the motor running, and it ran slower and slower before coming to a complete
halt in less than fifteen minutes.
At the shareholder meeting held afterwards the shareholders expressed confidence in Keely’s
ultimate success.
After Keely’s death in 1898, investigators went through his workshop.
They found hidden mechanical belts in the walls, a compressed air tank concealed under
the flooring, high pressure tubes, wiring and switches.
The investigators concluded that nothing new had been invented.
Keeley had powered all of his inventions using conventional power sources.
These were all old ideas and old technologies that Keely had falsely taking credit for inventing.
At a meeting of the Keely Motor Company's board of directors, a week after the investigation,
the company’s president denied these reports.
He claimed that the equipment discovered during the investigation, was just old experimental
equipment that Keeley had kept around from before he had started work on his revolutionary
inventions.
A concealed electric wire in Keely's workshop was described as being just part of a burglar
alarm, and it was in no way connected with the force used by Keely's motor.
The board released a statement denying all claims that Keely was an imposter, and that
there was any trickery in any of the results that Keely had obtained.
Keely is a colorful example of a type of fraudster or fantasist who has been around forever.
The great inventor, who is on the cusp of a revolutionary breakthrough, but with no
really new ideas and the most exciting ones are never completed.
Over 100 years ago the US patent office was actually so overwhelmed with patent applications
for perpetual motion machines that in 1911 the US patent commissioner ruled that a patent
application for such a machine couldn’t be submitted to the patent office until one
year after an actual working model of the machine was submitted and set running at the
patent office.
If the machine was still running a year later, the application would be accepted.
Vaporware is a term from the computer industry for a product – either hardware or software
– which is announced to the public with great fanfare but then is never actually manufactured
nor is it even officially cancelled.
Companies have been known to announce vaporware to get a competitive advantage in industry,
as claiming that you are on the cusp of delivering a new product that is far superior to a product
that is currently being manufactured by one of your competitors might cause customers
not to buy your competitors product and wait for the soon to arrive better version.
This is of course very harmful to your competitor’s business.
Doing this sort of thing was actually made illegal via section two of the Sherman Antitrust
Act of 1890, but often not much can be done about it, as this sort of thing can be very
difficult to prove.
Investors of course must be careful of putting their money in vaporware companies, as while
people like John Keeley can possibly string investors along for – in his case - 26 years.
If the company never delivers any of the promised groundbreaking technologies, eventually the
investment disappears like vapor too.
While this story didn’t come from the book Voodoo Science by Robert Park – if you are
interested in some of the history of fraudulent scientific claims and want to learn how to
spot them, I’d really recommend that book – I read it many years ago and it’s one
of my favorites.
I’ll put a link to it in the description below.
If you enjoyed this video, you should watch my video on the top five corporate frauds
of the century next.
Have a great day and talk to you again soon.
Bye.