Bryan Burrough Read Online Free Page A

Spindletop was initially split between groups of powerful Texas businessmen and seasoned oilmen from back east. One Texas faction was an alliance of Austin politicians and Gulf Coast attorneys led by the former governor, Jim Hogg, who acquired a valuable lease on Spindletop hill for the bargain price of $180,000 in July 1901, six months after the first gusher. Other Texas syndicates formed around East Texas’s leading lumbermen, including John Henry Kirby. Dry-goods merchants from Dallas, cattlemen from Fort Worth—just about any Texas businessman with cash threw it at Spindletop.
    The Texans, unfortunately, knew next to nothing about oil. Time and again they were outmaneuvered by eastern oilmen with experience in Pennsylvania and other fields. The pivot on which everything turned, at least initially, was James Guffey, who struck “the deal of the century” when he sold much of Spindletop’s oil to a company he had never heard of—and whose executives needed a map to locate Beaumont—Royal Dutch Shell, Europe’s largest oil producer; the deal made Shell an international colossus. Guffey was backed by and later sold out to the Mellon family of Pittsburgh, who roared into the Gulf Coast fields with a new company it named, appropriately, Gulf Oil, which became one of America’s greatest oil companies. The Pew family of Philadelphia, founders of Sun Oil, swept into Spindletop in a blizzard of activity, laying pipelines, buying storage facilities and so much oil it had to build a new refinery at Marcus Hook, Pennsylvania. Another of the companies weaned at Spindletop was the Texas Company, later known as Texaco.
    In the face of such competition, many of the Texas groups wilted away, leaving the Spindletop fields largely in eastern hands. Still, the boom created the first Texas oilmen, and as the prospect for new fields around Beaumont ebbed, they fanned out in search of new salt domes to drill. They found them quickly, bringing in miniature Spindletops in an arc of new fields scattered around Houston, at Batson and Sour Lake and, in 1903, at Humble, eighteen miles northeast of downtown. And then . . . nothing. In 1904 and 1905 and into 1906, every discernible salt dome on the Texas coast was poked like a patient, but no new Spindletops turned up. The boom began to wane. When, in 1906, oil was discovered in Oklahoma, hundreds of men began streaming north.
    In their wake, Texas politicians confronted a troubling new reality. The state, in effect, found itself in the same position as Patillo Higgins: it had found oil, lost control over it to eastern businessmen, and had no guarantee the same thing wouldn’t happen the next time a gusher was struck. While groups led by native Texans still controlled a share of the new Gulf Coast reserves, almost all the strange new infrastructure of Texas Oil—the storage tanks, the pipelines, the refineries—was controlled by eastern interests. Ominously, easterners were in a position to dictate the terms and to some extent the price of the Texans’ oil; with that kind of power, it was only a matter of time before the hated Yankees used it to squeeze Texans out of the oil bonanza altogether.
    The state’s salvation, it turned out, lay in the fine print of its antitrust laws, which forbade the integration of oil companies, that is, companies that stored, transported, and refined oil weren’t allowed to produce it. There were exceptions galore, but between 1905 and 1910, politicians in Austin moved to ensure that native Texans retained their toehold in oil, defeating two measures that would have allowed integration amid the din of anti-eastern rhetoric. Integration, one legislator decried, would “enable the great capitalists of the North to seize complete control of the Texas oil industry.” Legislators put teeth in their words when the hated Standard Oil tried to creep into Texas, secretly funding a flamboyant empresario named George A. Burt, who built the world’s largest oil