by The Big Rich: The Rise;Fall of the Greatest Texas Oil Fortunes
What happened next would change the course of history.
II.
There is a legend in America, about Texas, about the fabulously wealthy oilmen there who turned gushers of sweet black crude into raw political power, who cruised their personal jets over ranches measured in Rhode Islands, who sipped bourbon-and-branch on their private islands as they plotted and schemed to corner entire international markets. In popular culture the Texas oilman tends to come in two guises, the overbearing, dim-witted high roller with a blonde on either arm, and his evil twin, the oilman of Oliver Stone and Mother Jones, the black-Stetsoned villain whose millions pull the levers of power in Washington. He can be young and conflicted and obscenely rich, as in James Dean’s portrayal of the wildcatter Jett Rink in Giant, or smooth and conniving and obscenely rich, like J. R. Ewing of television’s Dallas, but he is almost always crass and loud and a tad mysterious, a classic American other.
There is truth behind the legend, a surprising amount in fact. There really were poor Texas boys who discovered gushing oil wells and became overnight billionaries, patriarchs of squabbling families who owned private islands and colossal mansions and championship football teams, who slept with movie stars and jousted with presidents and tried to corner an international market or two. Back before television, before Lifestyles of the Rich and Famous, they were the original Beverly Hillbillies, counting their millions around the cement pond as they ogled themselves on the cover of Time. They helped make Texas Oil an economic and political powerhouse, a world whose contributions, large and small—from Enron and two George Bushes to the Super Bowl—shaped the America we know today.
This is their story, told through the lives of the four Texas families—and a few of their peers—who rose the highest and, in some cases, fell the hardest. Each of their patriarchs began in obscurity, and all, through a historic quirk of fate, laid the foundations of their fortunes in a single four-year span. They married, bore and lost children, and became the country’s first shirt-sleeve billionaires, transforming America’s idea of what it meant to be rich even as they played host to kings and queens and accumulated every toy of their age: mansions and ranches and castles, airplanes and yachts and limousines, skyscrapers, hotels, and cabinet members. As they reshuffled the deck of America’s most powerful families, eventually helping to propel three of their favorite sons into the Oval Office, the country was enthralled by them, then suspicious, then, after a fateful fusillade of gunfire, came to view them as nefarious caricatures.
In time their salad days dissolved into a sordid litany of debauchery, family feuds, scandals, and murder, until collapsing in a tangle of rancorous bankruptcies. Some survived, others didn’t. A few count their millions today. As the movies say about almost every story set in Texas, theirs is a big, sprawling American epic, marked by exhilarating highs and crashing lows, and it all began, sort of, with a queer character named Patillo Higgins and that odd hump of dirt they called the Big Hill. History would know it as Spindletop.
III.
For outsiders, it can be tough to wrap one’s mind around Texas. The first challenge is its sheer size: 801 miles from north to south, 777 miles across; if plopped down on the Eastern Seaboard it would subsume all of Maine, Vermont, New Hampshire, Massachusetts, Connecticut, Rhode Island, New York, Pennsylvania, and Ohio, with room left over for North Carolina. Its enormity encompasses every North American landscape short of glaciers: pine forests in East Texas, deserts and sand dunes in West Texas, marshland and moors along the coast, mountains as high as eight thousand feet, and enough flat scrubby plains, stretching from Dallas to El Paso, to sate a Mongol horde.
The second challenge is the Texas mind-set: proud, stubborn, and independent, perhaps unsurprising for a state that in 1901 was only fifty-six years removed from its previous status as an independent country. In the intervening years Texans had defeated the last Comanches and pushed the line of settlement out onto the plains. The state’s suffocating parochialism was a by-product of its isolation; while Europeans poured into Eastern cities, Texas experienced almost no immigration in the late 1800s. Old ways hardened. Change was resisted. Outside interests, especially commercial interests, were met with suspicion; a wave of progressivism swept the state in the 1890s, during which Texas attorneys general filed several antitrust suits against the monopolistic Standard Oil, even though the company had practically no presence in the state. Self-sufficient and inward-looking, people thought of themselves as Texans first, Americans second. By 1901, “the early 19th-century American values were in no way eroded in Texas,” the historian T. R. Fehrenbach has written. “There was no reason why they should have been. During a century of explosive conquest and settlement, the land changed very little, and the people not at all.”
Turn-of-the-century Texas was half Old South, half Old West, a rural frontier society that, for all its ballyhooed pride, had very little to preen about. As the rest of America industrialized, Texans still lived off the land. In the eastern half of the state cotton, still picked from the bush by Negro and poor white sharecroppers, was the cash crop. Vast ranches, one or two as large as Delaware, spread across West Texas and the Panhandle, where cowboys herded cattle and sheep onto new railroads for sale to meat-packers up north. The only industry to speak of was lumber, hewn in sawmills dotting the East Texas backwoods. Not until 1901 did the state boast a multimillion-dollar corporation, when the Houston lumberman John Henry Kirby, the fabled “Prince of the Pines,” formed the giant Kirby Lumber Company.
It was into this backward, agrarian world that Patillo “Bud” Higgins, the Johnny Appleseed of Texas Oil, emerged in the 1890s. Higgins was the dreamer every new era demands, a one-armed Beaumont eccentric who in a day when Texas was known for cattle and cowboys and not much else envisioned giant pools of oil beneath its dirt and giant cities that would sprout above them. Born a gunsmith’s son in 1863, confident, rail-thin, and peripatetic, Higgins had been a juvenile delinquent, losing his left arm during a drunken evening in which he and a pair of teenage pals wildly fired pistols into a Negro neighborhood. Confronted by a local deputy, Higgins shot and killed him, while the deputy’s return fire hit his arm, which later had to be amputated. A jury called it self-defense.
In his twenties Higgins became what is known today as a born-again Christian, emerging as a church deacon and throwing himself into a variety of money-making schemes. He worked on the railroad and carted dust at a sawmill before trying his hand as a cabinetmaker, fishmonger, and real estate agent. In 1886, noticing that all of Beaumont’s bricks were imported from Houston and New Orleans, he opened a brickyard, the area’s first. Three years later, determined to find ways to make his kiln more efficient, he embarked on a tour of northern brickyards, examining facilities in Indiana, Ohio, and Pennsylvania. In Dayton and Indianapolis he saw how a kiln burning over an oil fire burned more evenly than over a wood fire. Intrigued, he headed on to the oil fields of western Pennsylvania to see what this oil business was all about.
He found an industry in its infancy, barely thirty years old. A man named Edwin Drake had found the first oil there in 1859; most of it was refined into kerosene and various lubricants. In the ensuing years much of the industry had come under the control of John Rockefeller’s giant Standard Oil, which as Higgins made his rounds was under mounting attack for its monopolistic practices. What he learned in Pennsylvania fired Higgins’s imagination. Telltale signs of oil found there had come on the surface of the land, in seeps and sulfur springs any man could see. His father had been a Confederate soldier, and Higgins remembered stories he told of rebels around Beaumont lubricating their guns with some sort of oily substance they found south of town, at the Big Hill. He had played and bathed in the sulfur springs at its base as a child, and taken his Sunday school students on picnics nearby. Higgins returned to Texas certain there was oil under the Big Hill.
Believing the oil beneath Spindletop would transform Texas, Higgins worked out a Utopian scheme of development, complete wit
h pipelines, refineries, iron smelters, a deepwater port, and a metropolis he named Gladys City, after his favorite Sunday school student, Gladys Bingham. No one around Beaumont took any of this seriously, but in 1892 Higgins did manage to entice a member of his church, a lumberman named George W. Carroll, to cosign the five-thousand-dollar note he needed to lease a thousand-acre parcel that covered about half of Spindletop hill. Once Carroll became involved, several adjoining landowners signed over their lease rights. They founded a company, Gladys City Manufacturing.
A water-well driller was hired to sink a hole; he gave up upon hitting quicksand. A second attempt did no better. Higgins was already low on cash when a nationwide depression hit in 1893, scattering his investors. Still, he refused to give up. Hoping an official endorsement of Spindletop’s oil potential might lure new investors, Higgins invited a state geologist to assess his land; to his dismay, the geologist not only declared his venture hopeless, he published his opinion in the Beaumont newspaper, advising the town to avoid “frittering her money away upon the idle dreams or insane notions of irresponsible parties in the vain outlook for either oil or useful gas.”
It was at that point, as the specter of a local bailout evaporated, that Higgins got lucky—or so he thought. The discovery of minute amounts of oil at Corsicana, south of Dallas, had drawn a number of curious eastern oilmen to Texas, and one group, Savage Brothers of West Virginia, approached the Gladys City board about acquiring its lease rights in return for a royalty on any oil it might find. Higgins, fearful of losing control, objected, but other board members, desperate to recoup their money, overruled him. Savage Brothers, however, got nowhere. Like the previous two efforts, its driller used a cable-tool rig, which created a hole by repeatedly pounding downward, a strategy that time and again proved unable to defeat quicksand. When Higgins and his board members fell to squabbling, he quit the company; George Carroll sued and Higgins was eventually forced to sell back his stock. By 1898, while still determined to pursue his dream of oil on Spindletop, Higgins had returned to the real estate business.
Still, he couldn’t forget the Big Hill. In one final stab at seeing it drilled, Higgins placed an advertisement in a national magazine. He got precisely one answer, from a down-on-his-luck character named Anthony Lucas, a onetime captain in the Austro-Hungarian navy who had become fascinated with the possibilities of a geologic feature known as a salt dome, literally domes of salt that poked up, pimplelike, in mounds all along the American Gulf Coast. Lucas thought salt domes often harbored caches of sulfur or sometimes oil. After meeting with Higgins, he judged the Big Hill a classic salt dome.
Lucas drilled a well and found a thin shean of oil in the dirt he drew to the surface, but the hole soon collapsed. Neither Lucas nor Higgins had any more money to start again. Now it was Lucas who took up the banner of the Big Hill. He spent months canvassing the large oil companies back east, even gaining an audience at Standard Oil. But the professionals said he was crazy; any fool knew salt domes held only one thing—salt. Finally, in Pittsburgh, Lucas found a willing ear in James Guffey and James Galey, two of Pennsylvania’s best-known wildcatters. They took over the acreage Lucas had amassed, cutting him in for a share. It was Guffey and Galey who hired the Hamill brothers and dispatched them to drill the Big Hill. It was there four months later that the well appeared to explode and Al Hamill thought he saw the Earth breathe.
IV.
The Hamills had just started to pull debris off the derrick floor when a sudden roar emanated from the hole. Once again, mud bubbled to the surface. Once again came a blast of natural gas. Then, as the Hamills and Peck Byrd scrambled for cover, a geyser of greenish-black liquid erupted from the ground. As the crew stared in amazement, it grew and grew, until it reached its apex a hundred feet into the morning sky. Stultified, they sent Byrd running to fetch Captain Lucas, who appeared at a dead run a half hour later. “Al! Al!” Lucas shouted, pointing at the black spout. “What is it? What is it? ”
“Oil, captain!” Hamill yelled. “Oil! Every drop of it!”
Lucas had never seen anything like it. No human had. The Lucas No. 1 well changed the world forever. That first well produced at a greater rate than all other American oil wells in existence—combined. In a matter of days, in fact, the pastures around Spindletop would be producing more than the rest of the world’s oil wells—combined. Of those first six Texas oil wells, three produced at a higher rate than the entire country of Russia, then the world’s top producer.
Spindletop not only created the modern American oil industry, it changed the way the world used oil. Its dirty little secret was that the oil found around Beaumont was of such poor quality it could not be refined into kerosene. But it made fine fuel oil—and that’s what changed everything. So much black crude flowed from Beaumont that oil prices dropped to three cents a barrel—a cup of water cost five cents—making it economical for railroads and steamship companies to convert from coal to oil. The Santa Fe Railroad went from one oil-fired locomotive in 1901 to 227 in 1905.1 Others followed, as did the British, American, and German imperial navies. Everything that today runs on oil and its by-products, from automobiles to jet fighters to furnaces, barbecue grills, and lawn mowers—all of it began at Spindletop.
The rush to drill near Spindletop triggered the greatest speculative boom since the California Gold Rush. It took ten long days just to cap the Hamills’ first well, but within days more derricks began going up all around it—214 wells in all by the following summer. For a time the discovery of oil transformed Beaumont into a classic American boomtown, an orgy of mud and blood, oilmen, prostitutes, and thieves of every stripe, anyone and everyone who was willing to work for a quick buck. It was the beginning of Texas Oil.
But if Spindletop created an oil industry for Texas, little of it ended up controlled by Texans. The big money at 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 refinery, outside Beaumont. When Texas oil prices rose in 1906, Burt tried to drive them down by threatening to import cheaper oil from Oklahoma. The Texas attorney general, Robert Vance Davidson, responded by strafing Burt with a series of lawsuits and fines, eventually forcing Standard to dismantle its refinery and rebuild it in Baton Rouge, Louisiana. The message was clear: don’t mess with Texas.