Saturday, March 26, 2011

The Oil Boom and the Onset of the Great Depression in Texas

In 2010, the University of Texas Press published "The House Will Come to Order: How the Texas Speaker Became A Power in State and National Politics," a book I co-wrote with Dr. Patrick L. Cox. In this passage, we describe the dramatic impact of the oil boom and the collapse of the American economy in 1929-1930 on Texas politics.

Two events almost simultaneously marked the birth of a more complex economy in Texas. In October 1929, the stock market crashed, bringing mass unemployment and a widespread skepticism of the technical and economic experts so revered by Progressives but now blamed by some for the financial collapse.

Shortly afterward, in late 1930, Columbus Marion "Dad" Joiner discovered a major oil field near Kilgore, Texas, which soon accounted for one-third of the nation's then-known oil reserves. Independent oil producers quickly realized the potential of the Kilgore strike and rushed in, grabbing 80 percent of the field before major oil firms set up claims. By 1933, the chief year of production, the East Texas field produced an amount of oil equal to the total production in the rest of the state.

The Kilgore gusher affected oil prices nationally. Prices dropped from just over a dollar a barrel in 1930 to, briefly, as low as two cents a barrel in 1931. Major oil producers complained that Kilgore independents had depressed the world oil market. During the Populist era, the state had created the Texas Railroad Commission, and by the 1930s the Legislature had given the commission the power to prorate oil – to establish the maximum amount of oil that could be pumped from individual wells. The commission could act if excess production threatened future oil supplies or the environment. It was uncertain constitutionally whether the commission held the authority to slow oil production just to keep prices high for producers. Nevertheless, in 1931, the commission issued a proration order on Kilgore production, soon stalled by a court injunction. Many independents ignored the commission.

East Texas business elites pressured Governor Ross Sterling, a former Humble Oil executive, to intervene and on August 17, 1931, he issued an executive order commanding Kilgore producers to stop drilling, sending National Guard units to the field. As a result, workers and producers enjoying the benefits of the oil boom perceived Sterling as a tool of Humble, Standard Oil and other major producers.

Meanwhile, a simultaneous collapse of cotton prices from ten cents to five cents a pound, also due partly to overproduction, had a devastating impact on the state economy. Unemployment reached 23 percent in Houston and thousands of the unemployed tramped across the state by foot or rail in search of work. Officials turned off half the streetlights in Houston to save electricity. Beaumont turned off streetlights completely while slashing that city’s school budget by half and reducing the library appropriation to almost nothing. Across the state, the Depression severely hit those most economically vulnerable: women, Mexican Americans and African Americans. Afro-Texans suffered nearly twice the white rate of unemployment.

Buffeted by the simultaneous collapse of farm and oil prices, the state tried in vain to prop up the economy, with Speaker Fred Minor (who presided over the House from 1931 to 1933) assisting in passage of landmark legislation that gave the Railroad Commission the power to regulate oil production and stabilize prices. Again, conservative Democrats dramatically increased the power of the state government, but this time it was due to economic desperation rather than Progressive idealism.

By 1934, the state Legislature passed a law requiring refiners to disclose totals of petroleum refined and the sources of that petroleum. The Legislature also passed the Connally Act, named for Texas Senator Tom Connally, which made it illegal to transport “hot” oil, that pumped in excess of state-imposed limits. These laws greatly strengthened the ability of the Railroad Commission to enforce its orders, leading to a consolidation of production in the hands of major producers who gained control of 80 percent of the East Texas oil field.

This consolidation created a new class of Texas super-rich oilmen who moved their corporate offices from Tulsa, Oklahoma, which had been the center of the industry, to nearby Dallas, which became the capital of East Texas production. Texas oil tycoons became a political factor in the state after World War II and received national attention in the 1950s and 1960s as they began to fund far-right wing and rabidly anti-communist political organizations and radio and television broadcasts.

Conservatives regained power in the 1930s, a hold they have yet to relinquish. This, however, was not Bailey-style “Jeffersonian” conservatism. “The greatest effect [of the Progressives] . . . was on attitudes towards the power of government,” Gould asserts. “As legislation and bureaucratic action demonstrated the benefits the state could convey, the old Democratic faith in localism and obstruction perceptibly relaxed.”

Michael Phillips has authored the following:

White Metropolis: Race, Ethnicity and Religion in Dallas, Texas, 1841-2001 (Austin:  University of Texas Press, 2006)

(with Patrick L. Cox) The House Will Come to Order: How the Texas Speaker Became a Power in State and National Politics. (Austin: University of Texas Press, 2010)

“Why Is Big Tex Still a White Cowboy? Race, Gender, and the ‘Other Texans’” in Walter Buenger and Arnoldo de León, eds., Beyond Texas Through Time: Breaking Away From Past Interpretations (College Station: Texas A&M Press, 2011)

“The Current is Stronger’: Images of Racial Oppression and Resistance in North Texas Black Art During the 1920s and 1930s ”  in Bruce A. Glasrud and Cary D. Wintz, eds., The Harlem Renaissance in the West: The New Negroes’ Western Experience (New York: Routledge, Taylor and Francis Group, 2011)

“Dallas, 1989-2011,” in Richardson Dilworth, ed. Cities in American Political History (Washington, D.C.: CQ Press, 2011)

(With John Anthony Moretta, Keith J. Volonto, Austin Allen, Doug Cantrell and Norwood Andrews), Keith J. Volonto and Michael Phillips. eds., The American Challenge: A New History of the United States, Volume I.   (Wheaton, Il.: Abigail Press, 2012).

(With John Anthony Moretta and Keith J. Volanto), Keith J. Volonto and Michael Phillips, eds., The American Challenge: A New History of the United States, Volume II. (Wheaton, Il.: Abigail Press, 2012).

(With John Anthony Moretta and Carl J. Luna), Imperial Presidents: The Rise of Executive Power from Roosevelt to Obama  (Wheaton, Il.: Abigail Press, 2013). 

“Texan by Color: The Racialization of the Lone Star State,” in David Cullen and Kyle Wilkison, eds., The Radical Origins of the Texas Right (College Station: University of Texas Press, 2013).

He is currently collaborating, with longtime journalist Betsy Friauf, on a history of African American culture, politics and black intellectuals in the Lone Star State called God Carved in Night: Black Intellectuals in Texas and the World They Made.

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