Surgeon In Blue

by Scott McGaugh

  Jonathan Letterman thought about a life outside the military. About a new life whose path would return him to a remote stretch of Central California marked by expansive ranchos, Indian settlements, and rolling hills that might hold the promise of America’s industrial future: oil.

  10

  WILDCATTER

  “A good kind husband”

  This son of a physician had known only the military medical life. He had never practiced medicine outside the confines of a camp or military hospital, or practiced any other profession. However, as a senior Union officer of some note, who had married into one of Maryland’s prominent, landed families, Letterman had the opportunity during his job inspecting hospitals away from the battlefield to meet some of Philadelphia’s civic and business leaders. One was a bold, charming, and persuasive man, Thomas A. Scott.

  Scott was vice president of the Pennsylvania Railroad Corporation. Known as a workaholic with an ingratiating personality, Scott had played an indirect role in Letterman’s chain of battlefield evacuation. In 1861, Secretary of War Simon Cameron asked Scott to build a railroad from Philadelphia to Washington to carry the wounded to a rapidly expanding cadre of hospitals under construction. Scott became Assistant Secretary of War, responsible for all railroads and telegraphs, and served as acting Secretary of War for a brief period before returning to Pennsylvania Railroad in 1862.

  Scott and the company’s president, J. Edgar Thomson, built railroads for the government in the war’s western theater and explored for gold and silver along anticipated new railroad projects in the Far West. The war proved to be a boom period for aggressive railroad executives, who sought bright and accomplished army officers to their expanding corporate ranks to manage their growth plans. They envisioned a postwar expansionist era that would require thousands of miles of new railroads across land potentially rich in minerals and a natural resource quickly becoming an obsession: oil.

  Pennsylvania and Ohio oil wells produced commercially viable oil that was superior for illumination and lubrication to whaleand lard-based oils. Expanding railroads in the West were making likely looking oil fields viable. Rail transport was critical for getting oil from wells to seaports and major cities for distribution. The first well in the Rocky Mountains was drilled in Canon City, Colorado in 1862, and tar seeps in California appeared promising. As Scott and others turned their attention to the West, speculators in California canvassed the western part of the state for tar seepages that could indicate the presence of substantial oil reserves.

  Shortly after Letterman returned to the battlefield from his honeymoon in late 1863, three speculators acquired 100,000 acres in the Ojai Rancho area near Santa Barbara, California. Natural seepages of thick, tar-like oil that oozed out of the ground, dried, and formed large deposits that resembled asphalt proliferated in that part of the state. For generations, Native Americans had used the tar as a natural home-construction binding agent, as roof weatherproofing material, and to seal baskets and canoes. When the white man arrived, the natural resource became known as “Indian grease” and proved useful for lubricating wagon wheels.

  The speculators hired one of the nation’s foremost petroleum experts, Benjamin Silliman, Jr., to evaluate their holdings. They could not have selected a more widely respected expert at the time. In 1855, Silliman had demonstrated that Pennsylvania oil could be distilled into a kerosene of higher quality than whale oil. It was cheaper to produce at a time when the whaling industry was declining. Less than five years later, the nation’s first oil boom happened, in Pennsylvania. In 1863, Silliman became one of the nation’s fifty leading scientists to be included in the National Academy of Sciences established by Congress. Erudite and articulate, according to one contemporary, “[i]n society he was most genial, abounding with conversation based on a remarkable range of information on general topics and with an anecdote ready for the entertainment of the guests.”1

  As Letterman inspected hospitals in the spring of 1864, Silliman visited the Ojai property, guided by Santa Barbara County Surveyor, Thomas Sprague, who dreamed of becoming part of an oil boom in California. He collected handsome consulting fees from several oil speculators, and he could influence part of the tour by Silliman on their behalf. Silliman inspected the Ojai and nearby properties before writing his report in July. He concluded: “This property covers an area of eighteen thousand acres in one body, on which there are at present at least twenty natural oil-wells, some of them of the largest size. The oil is struggling to the surface at every available point, and is running away down the rivers for miles and miles.”2

  Apart from evoking rivers of oil, Silliman cited a report by Colonel James Williamson, who had surveyed the area twelve years earlier for a new railroad route. Williamson reported about one oil seep that it “is probably safe to estimate its contents on a mile square at one yard in depth, which would give over three million cubic yards of fuel.”3 Silliman in turn estimated that the mass would produce 144 million gallons of oil and, at a cost of $1,000 to $5,000 to drill a well, ten successful wells would produce annual profits of $1.365 million.4

  Silliman left Ojai and traveled to Arizona, where he met an exploration team that Scott had commissioned on behalf of Pennsylvania Railroad. When Silliman reported his California findings, the expedition abandoned its quest for gold and silver in Arizona and headed for the rivers of oil in California. Within six months after it was diverted from Arizona, Scott’s expedition resulted in the acquisition of 187,000 acres in California, acreage that included the Ojai Rancho where Silliman had focused most of his attention as well as the Simi, San Francisco, and Las Posas Ranchos. The Pennsylvania Railroad Corporation placed a massive bet on more than 290 square miles of California land at a time when the price of oil was rising from $3 to $14 a barrel.5

  The speculators needed to raise capital for each of two oil companies they were forming in California and began distributing glowing prospectuses to investors in search of 1 million shares at $40 each. According to them, “[t]here can be no reasonable doubt as to the fact of immense deposits of Petroleum, need only proper equipment.”The prospectus painted a picture of a vast oil reserve that connected oil outcroppings that “are very numerous in a direct line for nearly fifteen miles . . . there appears to be no reason why the oil may not be conducted through pipes from the wells to reservoirs near the shore (about six miles from the property), from which shipments might be directly made.”

  The prospectus claimed that oil could be produced in the foothills, transported to ships on the coast, and shipped to New York at a cost not exceeding $5 per barrel. Their market assumptions were equally optimistic. “To supply the present, and increasing trade in this article to California, Australia and other points on the Pacific Coast, oil can be furnished most profitably, and can be shipped from California to China and all other parts of Europe; it is perhaps not exaggerations to say that it can compete in the New York market with the product of the Eastern States, and realize large profits to the producer. . . . This Property, when measured by the value of Oil lands in our Eastern States, appears fabulous in wealth.”6

  They may not have known that Silliman had spent less than a week on two of the three properties they had bought and that he had viewed most of it from a stagecoach.7 But that had not stopped Silliman from describing nearly unbounded oil potential. “From what I have myself seen, and from all I can learn from the observation of others, I have reason to believe that, as an oil state, it is unsurpassed by any other in California. . . . Some of the natural wells of petroleum and tar are forty or more feet in diameter, troubled by the escape of gas, and surrounded sometimes by a quagmire of pitch in which wild and domestic animals become mired. . . . Hill-sides are covered often for hundreds of square acres, with hardened asphaltum, where in an earlier day oil springs, now no longer active, have found vent.”8 He also predicted that, based on his samples, the oil “proves itself to be of almost unequalled quality, and justifies the expectation that, when drawn fresh from the w
ells, it will rank among the very best samples of crude Petroleum produced in the world.”9

  Soon Thomson and Scott would need accomplished and well-regarded executives to run their two California ventures: the Philadelphia & California Petroleum Company to develop the Simi, San Francisco, and Las Posas Ranchos; and the California Petroleum Company to develop the Ojai Rancho. Armed with Silliman’s report, they traveled in Philadelphia social circles that likely would have included senior officers of the Union army stationed in the city. Philadelphia newspapers had carried reports of how Letterman’s organizational accomplishments had forged order out of battlefield chaos. His proven administrative acumen, his experience in living in rugged conditions, and as a bonus his familiarity with the region from his tour of duty at Fort Tejon and Camp Fitzgerald made him an ideal candidate to organize an oil-exploration operation in California. Letterman’s lack of oil exploration experience wasn’t a major factor in the embryonic oil industry. Newly trained petroleum chemists and experienced well-drilling teams from Pennsylvania would handle the technical and heavy field work.

  Jonathan Letterman had coped with more than 100,000 wounded men during his Army of the Potomac command and while with the Department of the Susquehanna. At forty years of age, he had been married one year, and the prospect of family life finally had arrived. After living his entire adult life on an army officer’s pay, he was offered a job by Scott that brought with it an opportunity to invest in a venture that could generate significant, if not astronomical, wealth.

  Letterman’s health concerns must have been a factor in his considerations. Along with hundreds of thousands of other soldiers, he suffered from gastrointestinal ailments. Diarrhea and dysentery had proven to be the scourges of the Civil War. Although the disease was poorly understood by doctors at its most basic bacterial level, Letterman instinctively had known that his pioneering camp hygiene standards were the first line of defense against it and similar diseases that sapped an army’s fighting strength. Yet despite standing at the forefront of protecting troop health, he drank the same water and ate the same food as those for whose health he held responsibility.

  Although incidence rates of nearly 1,400 per thousand men in 1861 had dropped to approximately 500 per thousand in 1865, armies generally remained malnourished, emaciated, and sometimes dehydrated. The Union army suffered more than 1.5 million cases of acute diarrhea and dysentery in the Civil War.10 Chronic diarrhea led to ulcerated intestines. Amebic and bacillary dysentery, which included the involuntary discharge of blood, could rupture intestinal walls, and produce abscesses that reduced liver, lung, and brain function.11 Many of those who survived the battlefield faced a lifetime of chronic dysentery and potential premature death. Both plagued military and civilian physicians.

  Letterman bought 400 shares of Philadelphia & California Petroleum stock and moved to California in February 1865, accompanied by Mary and their infant daughter, Mary Catherine (“Cassie”), who had been born in Philadelphia the year before. At a cost of $40 per share, the $16,000 investment represented nearly eight years of Letterman’s salary as an officer in the army.12 It’s likely the money came from his wife, Mary, whose family was wealthy. For at least three generations, her relatives had owned substantial property and successful business ventures in Maryland and elsewhere.

  Letterman reached San Francisco in the midst of a gold and silver mining frenzy. The Comstock lode discovered in Nevada more than five years earlier, just as California’s gold ore reserves showed signs of exhaustion, had fueled a transformation of the city. Much of the Comstock ore was exported through San Francisco, the closest city with seagoing access to the rest of the world. In 1861, 1,453 commercial and residential buildings were started or completed. That same year, the Pony Express reached Sacramento, a day’s ride to the east, linking San Francisco with the rest of the nation.13

  The Civil War had been good to San Francisco. Hostilities in the East had created opportunities for expanded manufacturing, mining, agriculture, and exporting businesses on the West Coast. Prosperity reigned in a city that had supported pro-slavery politicians in the 1850s but had backed President Lincoln throughout the war. San Franciscans enthusiastically supported the humanitarian efforts of the Sanitary Commission in the war, contributing $300,000 in gold in the second half of 1862 and accounting for one-fourth of all the cash donated to the commission by Californians.14

  Letterman bought drilling equipment in San Francisco, chartered a boat, and sailed to Port Hueneme near Santa Barbara. He and his family moved inland to the Camulos Rancho in the Santa Clara River Valley. The river, less than ninety miles long, drained California’s western foothills to the coast, between present-day Oxnard and Ventura. Located between Los Angeles and Ventura, the rolling hills, arid grazing pastures, and stands of oak resembled the terrain surrounding Fort Tejon, about fifty miles away, where he had served four years earlier.

  Letterman had been named the general superintendent of Philadelphia & California Petroleum. Not far away, Thomas Bard organized oil operations on the Ojai Rancho as general superintendent of California Petroleum. Only twenty-four years of age when he arrived in California, Bard had been a railroad businessman in Pennsylvania where he had met Scott. He had served as a volunteer militiaman at Antietam.

  Within a few weeks, an experienced, six-man oil-drilling team arrived from Pennsylvania and joined Letterman. In April, Letterman staked his future on a stretch of level ground, not far from the Santa Clara River. The site lay on an imaginary line between two oil seeps on opposite sides of the river drainage. They were among dozens of seeps on the property, and Letterman began his venture in high spirits. He told a reporter for the Daily Alta California newspaper that samples from some of the seeps produced extremely high-quality oil and that Letterman expected to strike an underground river of oil that connected the outflows.15

  As the days warmed, Letterman first built carpenter and blacksmith shops. Next his crew constructed a thick-timbered derrick fourteen feet square and more than forty feet tall. A boiler assembly followed, to feed a ten-horsepower engine that would drive the derrick’s bit into the earth. Crude living conditions at the drilling site forced Letterman’s family to reside several miles away in a ranch house. By May 18, Letterman had drilled sixty-five feet in search of California oil.

  Letterman had not been forgotten by the army. In April, he had become a founding member of the Military Order of the Loyal Legion of the United States, an association of noted Union army officers established to help preserve the Union in the aftermath of President Lincoln’s assassination on April 14. Others included Ulysses S. Grant, Philip Sheridan, and Letterman’s friend, George McClellan. The month before, his philosophy of battlefield evacuation and care had been institutionalized by an act of Congress.

  Letterman, though, remained intent of finding oil. On July 3, the Daily Alta California issued another glowing report as Letterman’s well passed 150 feet and had produced “an extraordinary discharge of gas. When we consider that the place selected for this well is nearly two miles distant from any outflow or outcrop of oil, and near the middle of the valley, the fact of striking oil so far from direction indications is of very high importance . . . we may now expect daily to hear that oil has risen to the surface and the well become a flowing one.”16

  Although the public relations campaign in newspapers crafted glowing prospects for the sixty venture companies now exploring for oil in California, a groundswell of skepticism developed. Others who had visited Letterman’s operation reported that at 117 feet he had hit a layer of maltha, material nearly as hard as asphalt that made drilling almost impossible.17 Seismic activity over eons of California history had uplifted and twisted subsurface layers of varying density, which made drilling more difficult than in Pennsylvania and Ohio oil fields.

  As Letterman’s operation struggled after a few months, it appeared that skeptics of California’s oil potential might prevail. For about a year, the California State geologist, Josiah Whitney
, and a colleague, William Brewer, had openly disputed Silliman’s claims of an untapped California oil bounty. Both had traveled the alleged oil fields and did not believe they held commercially viable oil. Just as Letterman had been getting started in March, Brewer had voiced his concerns publicly when he wrote, “I think that at the present state of our knowledge, good illuminating and lubricating oil cannot be profitably made in California.”18

  Then, in July, the refiner for California Petroleum, Stephen Peckham, joined the ranks of the skeptics after arriving at the Ojai Rancho following his discharge from the army on May 26, 1865. Peckham had studied to become a chemist before serving as a hospital steward in the Civil War. An oil venture in Rhode Island that promptly failed led him to sail for San Francisco to join the oil rush in early July. Neither he nor Letterman could find any oil that approached the quality of oil Silliman said he had collected in California the year before. Although Silliman steadfastly defended his samples and their analysis by citing the work of three independent laboratories, sales of stock in both companies plummeted.19

  As Letterman’s drilling slowly progressed, Mary fell ill. Living conditions in a remote ranch house in the California foothills were rugged at best. Conditions at Letterman’s drilling site were worse. What could Letterman do? He had to stay at the site, knowing that his wife and young daughter, miles away, suffered from illness and his absence. Yet duty called. Newspaper reporters frequently rode to the drill site in quest of promising news. His bosses in Philadelphia were anxious for news on progress and prospect. So Letterman made what had to be an agonizing decision. At the end of August he sent Mary and their daughter several miles west to Santa Barbara on the coast. Once again Letterman would have to live apart from the only love of his life. He likely took some comfort knowing that the Santa Barbara climate was much milder than the inland summer heat. Summer temperatures typically climbed at least one degree for every mile inland from the ocean.