USA > California > Kern County > History of Kern County, California, with biographical sketches of the leading men and women of the county who have been identified with its growth and development from the early days to the present > Part 18
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As Mr. Elwood says, by that time people were coming to Kern county from all parts of the state, and very soon after they were coming from all parts of the world. The boom resulted in development that soon proved the land over the great Kern river oil pool, and scattered derricks north along the low hills as far as Poso creek. It extended to the Sunset and McKittrick fields, and spread a line of prospectors all across the territory between, which soon took the name of Midway.
Sunset Railroad Built
In March, 1900, Solomon Jewett, H. A. Blodget, L. P. St. Clair, C. N. Beal and F. T. Whorff incorporated the Sunset Railroad Company, and Beal, who formerly had been in the employ of the Santa Fe railroad, undertook to in- terest President Ripley of the Santa Fe in the Sunset branch. This he suc- ceeded in doing, and arrangements were made to float a bond issue of $300,- 000, guaranteed by the Santa Fe. Before the plan was carried out, however, the Santa Fe and Southern Pacific entered into an agreement to build and operate jointly all branch or feeder roads terminating at common points. This agreement and the death of C. P. Huntington, president of the Southern Pacific, delayed the building of the Sunset road until 1902.
The Southern Pacific in December, 1899, began building the short branch from its main line west of the Kern river field into the lower part of the pro- ducing territory, where oil from all the leases higher up could be delivered by gravity or small pumping power to the loading racks. By these means all the producing fields of the county had rail transportation by the latter part of 1902 except Midway, which was then hardly in the producing class.
Begin Building Pipe Lines
In the spring of 1902, also, the Standard Oil Company began its eight-inch pipe line from the Kern river field to Point Richmond, and in October or November it was practically ready for use, thus affording a large additional means of handling the oil. But the production of oil and the means for handling it increased much faster than did the markets. In 1902 the Kern county fields produced 9,705,703 barrels of oil. In 1903 the amount had jumped to over 18.000,000 barrels. The production of the state was nearly 14,000,- 000 barrels in 1902, and in 1903 it was over 24,000,000 barrels. The result of
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this tremendous increase in the supply of a commodity which the state had been getting along without only a very few years before could have but one consequence-a rapid and steady decline in price. In spite of the decline the impetus that the industry had gained from the first excitement carried it to a production of 19,600,000 barrels in Kern county in 1904.
Then the prices went to complete ruin, and the Standard Oil Company built great carthen reservoirs-holding a half million to a million barrels each -and began filling them with oil at fifteen, twelve and a half, and finally at eleven and two-thirds cents per barrel. Bankruptcy stared the producers in the face.
Associated Oil Company Formed
With the first appearance of the Standard on the horizon of the Cali- fornia oil industry a number of producing companies in the Kern river and other fields joined in the organization of the Associated Oil Company, the avowed object of which was protection from the aggressions of larger con- cerns and economy and efficiency in the marketing of its oil. The Associated early effected an alliance with the Southern Pacific Railroad Company and at the time of the depression in 1904 it occupied a position of great strength as compared with the independent, unorganized producers. In fact the large factors in the oil situation in the state at that time were recognized to be the Standard, the Associated, the Union Oil Company, the Southern Pacific Rail- road and the Pacific Oil & Transportation Company.
It was early in August, 1904, that the Standard announced that it would pay eleven and two-thirds cents for oil in the Kern river field. Although the Associated and Standard were commonly supposed to have a working agree- ment by which each steered clear of competition with the other, officers of the former company gave out that for the sake of accommodating the pro- ducer it would pay fifteen cents. About the same time WV. S. Porter, general manager of the Associated, estimated the overproduction of oil in the state at 8,000,000 barrels per year. On August 15th the Standard, which was at that time completing storage reservoirs in the Kern river field at the rate of one half-million barrel reservoir per month, announced that it did not care to buy Kern river oil at any price.
Independent Agency Organized
Oil men estimated that under twenty-five cents per barrel they could not produce oil, pay expenses and set aside the sinking fund to meet the value of their investments against the time the wells went dry. The plan of shutting down the wells was generally discussed, but for many of the companies this was wholly out of the question, either because they had leases that required the operation of the property or because they had creditors who would not consent to wait for their money. On August 23d the Morning Echo of Bakersfield printed an interview with H. H. Blood, one of the best known of the early operators in the Kern river field, in which the organization of the producers was strongly urged, not for the purpose of fighting, as Blood pointed out, but for the purpose of facilitating the sale of oil and to prevent the indiscriminate, disorganized competition by means of which the pro- ducers were constantly opposing each others' interests.
Blood's suggestion formed a stable point around which the random discussion of the situation began to crystalize, and that evening, on the
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initiative of WV. D. Young, a meeting of oil men was called at the National Oil Supply Company's office to talk the matter over. The meeting was organ- ized by the election of W. S. Morton as chairman and W. D. Young as sec- retary, and the secretary was instructed to send out invitations to the inde- pendent producers of the state asking them to meet in Bakersfield on Sep- tember Ist for the purpose of forming a permanent organization. On the date named representatives of forty-four companies met at the Southern hotel parlor, elected Timothy Spellacy chairman and W. D. Young secretary and appointed a committee to name a committee of five on organization.
At that meeting it was stated that between 9,000,000 and 10,000,000 barrels of oil were stored in the Kern river field, mostly in the reservoirs of the Standard. The next day, however, the committee on organization decided that the job was too big for it, and another meeting was called for Sep- tember 5th to name a committee of ten to draft a plan for the new concern. This committee, duly appointed and consisting of T. Spellacy, T. Earley, M. V. McQuigg, W. B. Robb, A. H. Liscomb, C. H. Ritchie, W. W. Steven- son, F. W. McNear, I. E. Segur and H. U. Maxfield, met on September 10th, with all members present, and spent the whole day and until 10 o'clock at night in deliberating over the task. A further meeting was held next day, and lawyers were called in counsel, among them being George W. Lane, who remained with the organization as its attorney until the present day.
The result of all these serious and extended conferences was the formal organization of the Independent Oil Producers' Agency on November 3, 1904. On that date incorporation papers were filed in Sacramento having first been filed in Kern county, and the following officers were elected : President, M. V. McQuigg ; first vice president, Timothy Spellacy ; second vice president, F. F. Weed ; secretary, A. H. Liscomb ; treasurer, W. B. Robb; auditing committee, W. H. Hill, T. Turner and J. Benson Wrenn. The directors for the first year, each representing a producing oil company, were Timothy Spellacy, W. B. Robb, A. H. Liscomb, W. S. Morton, C. H. Ritchie, W. W. Stevenson, L. P. St. Clair, Jr., S. P. Wible, W. H. Hill, G. J. Planz, Lesser Hirshfeld, W. A. Ferguson, E. E. Jones, C. C. Bowles, J. F. Lucey, J. B. Batz, T. O. Turner, C. A. Barlow, H. A. Jastro, J. Benson Wrenn, W. D. Young, T. V. Doub, L. E. Doan, E. Dinkelspiel, Thomas Earley, J. F. Ker, F. F. Weed, L. Woodbury, E. Denicke, G. W. Lane, A. J. Wallace, M. V. McQuigg, T. M. Gardner, F. P. Fuller and F. N. Scofield.
The organization, which has had so large a part and influence in the making of subsequent history in Kern county as to require especial detail in its description, was organized on a plan conspicuous both for its strength and its democracy. Each constituent company signed a lease of its property to the Agency for a period of five years, and the Agency executed a license and agreement giving each company the right to operate its own property, the Agency, however, reserving the right to handle and dispose of all the oil produced. Each constituent company was given one share of stock in the Agency, entitling it to one vote in all stockholders' meetings. The unique feature of this arrangement was that no matter whether the Agency company owned a thousand acres of oil land and was producing 100,000 barrels per month or had a lease on two and a half acres and was producing 1000 barrels per month it had the same voice and vote in the management of the affairs of the Agency. It is a matter of history, also, that the Agency has been
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remarkable throughout almost its entire career so far for the free publicity which has been given to its affairs and its deliberations. A great percentage of its directors' meetings at which matters of vital importance have been discussed have been with open doors and with representatives of the press occupying seats about a table in the foreground. Whether or not it has been in any degree a result of this policy, it is a fact that the Agency, struggling at all times to increase the price of its product, has had the universal good- will of the people of the state, including the "ultimate consumer," who is usually supposed to be hostile to any movement for an advance in prices.
The first plan of the Agency was not to go into the business of marketing of oil, and its first sales contract was with the Associated. After two weeks of negotiations with the executive committee of the Agency, the Associated agreed, on December 23. 1904, to buy, at eighteen cents per barrel, sixty per cent of the Agency's total output for the year, estimated at 3,500,000 barrels, and to store the other forty per cent at a reasonable rate.
In view of the fact that the producers had been declaring that oil could not be produced under twenty five cents per barrel and meet all expenses and depreciation, this contract was not hailed with absolute satisfaction. It was agreed, however, that the executive committee had done as well as it could under the circumstances, and the situation was accepted with good grace.
The low price, hard as it bore on the individual producers, had two good effects on the market. It discouraged production and it encouraged consump- tion. The production in the Kern county fields fell off from 19,600,000 barrels in 1904 to 14,487,967 barrels in 1905. In 1906 the Kern county production was almost the same, and the production throughout the state increased only 3.600,000 barrels from 1904 to 1906, inclusive.
On the completion of the first year's contract with the Associated it was renewed at twenty-seven and a half cents per barrel. the half cent representing the cost of handling the oil by the Agency. The increase in price was very gratifying to the independents, but it did not result, as we have seen, in any great immediate increase in production. The prices for the two years, however, did permit the marketers to extend the use of oil to new fields, with the result that all the stock oil in the state except what was stored in the Standard's reservoirs, was well cleaned up by the spring of 1908, and L. P. St. Clair, then president of the Agency and charged with the sale of the independent oil, was able to close a contract with W. S. Porter of the Asso- ciated for two years on the basis of sixty and a half cents for the first year and sixty-three and a half cents for the second year.
The new prices gave the oil producer some of the rewards which his toil and waiting had justified, and they also excited the imaginations of oil producers, promoters and the investing public generally with visions of wealth to be taken from the Kern county oil fields. Pumps were started everywhere. Air compressors were installed on leases in the Kern river field where the wells had fallen off in their yield or had gone to water, and in many instances their oil productivity was revived. Drills began dropping everywhere, and Bakersfield felt the blood of a new boom quickening in her veins. In 1907 the oil production of the county was 15,600,000 barrels. In 1908 it had jumped to 17.800.000 barrels, and in 1910 it reached the tremendous total of 39.958,000 barrels.
Fortunately the increase throughout the state did not keep pace with
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the increase in Kern county. Elsewhere the fields were restricted or devel- opment expensive or both, and so it happened that of the entire gain in yield throughout the state in 1910, five-sixths was credited to Kern county. This great increase in output was due only in part to the activity in drilling which the higher prices for oil stimulated. Operators working farther out from the hills to the north of Maricopa and in the Midway valley north, northwest and east of Taft began reaching the great gusher sands and brought in the remarkable procession of flowing wells that made the year 1910 and the latter part of the year 1909 famous in the history of California oil. It is literally true that many producers got a great deal more oil than they expected to get which is saying much, indeed.
As early as the spring of 1909 the men close to the marketing end of the industry began to sound a note of warning against another period of over- production, but it always has been hard for producers to curb their native instinct to get more oil so long as they had money in the bank to pay the bills, and there is something about an oil gusher that fires the imagination of the most staid and commonplace of men and makes him a plunger for the time being. Two other circumstances lured the oil men on to greater and greater activity in drilling new land. The bringing in of the great flowing wells of the Midway valley and the development of great gas wells in the Buena Vista hills in the latter part of 1909 proved that the oil measures crossed the valley from the older portions of Midway and Sunset and rose in an anticline beneath the Buena Vista hills. This meant a great extension of the practically proven territory, and not only did operators rush in to hold all the land within the newly proven strip, but they located everything far out on the Elk hills, to the north of McKittrick and to the east of Sunset and Old Sunset. Then came the oil land withdrawal of September, 1909, which was interpreted as permitting the development of claims on which rights more or less shadowy had at that time been secured, but which plainly denied the right to any subsequent location of oil claims within the territory described in this order. This made it necessary to do something toward development in order to hold down the claims already entered, and most of the locators who were able to do so either began drilling themselves or leased their claims to someone who could proceed with development for them. Others who could do neither built cabins or derricks on their land or did some other work which they could swear was in line with and necessary to actual drilling.
The Boom of 1910
All these considerations and necessities brought about, on the night of December 31, 1909, a great rush of locators to the west side fields and especially to the Elk and Buena Vista hills. The rush was not heralded. but as dusk fell autos loaded with armed men and camping outfits began rolling out of Bakersfield and the west side towns, and on the morning of January 1. 1910. the desert hills were well sprinkled with tents, armed guards and stakes from which fluttered the little, white location notices. Nearly all this land had been located before in earlier booms, sometimes by the same parties and sometimes by others. and on some of the land were many conflicting claims. This conflict of interest caused many encounters and manv threats of violence. but for the most part actual hostilities were avoided or the rival forces lay on their arms behind their entrenchments while their principals got together and divided the land or effected a compromise on some other basis.
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HISTORY OF KERN COUNTY
The whole effect of the oil boom of the spring of 1910 was to bring a rush of people to Bakersfield and the oil fields that would have done justice to any gold excitement in the history of the state. In fact the Nevada mining camps gave up a large share of their population to swell the rush to Bakers- field. All the hotel accommodations of Bakersfield, Maricopa and McKittrick were swamped. Taft, in the Midway field, sprang into existence during the year 1909 and in 1910 claimed the supremacy from Maricopa and McKittrick, both of which had been small but prosperous little towns since the first oil boom. All the lumber yards of the county were exhausted and train loads of derrick timbers were hurried here from all points of supply on the coast. The oil well supply houses were almost equally depleted. Strings of big teams made new roads radiating fanwise to the northward of Maricopa, Taft and McKittrick, and autos kept perpetual clouds of dust hanging over the roads from Bakersfield to the west side. Bakersfield experienced the greatest building boom in its history, and the new houses were filled as soon as they were ready for occupancy.
Meantime important things were happening at the end of the industry where oil is turned into dollars. In June, 1909, an agreement was made be- tween the Union Oil Company, the Independent Oil Producers' Agency of Kern county and a similar agency which had been formed among the producers of Coalinga whereby the Union became a member of the agencies, putting its Kern county property into the Kern county Agency and its Coalinga properties into the Coalinga Agency, and also undertook to act as sales agent for the oil produced by both Agencies for a period of ten years beginning February 1, 1910. The agreement included also the formation of the Producers' Trans- portation Company, and bound the Agency for a period of ten years to deliver its oil to the latter for transportation at certain rates fixed in the agree- ment. The Union was allowed by the agreement a commission of ten per cent on all sales of oil made for the Agency. An arbitration committee pro- vided for in the agreement gave the representatives of the Agencies a direct voice in the making of contracts and as a matter of fact, L. P. St. Clair, pres- ident of the Kern county Agency (and later of the consolidated Agency, when the Kern county and Coalinga organizations were joined in one) has been the active selling agent so far in the life of the Union-Independent con- tract.
The Producers' Transportation Company, provided for in the Union- Independent agreement, built during the winter of 1909-10 a pipe line con- necting all the Kern county fields and Coalinga with the ocean at Port Har- ford. The Associated meantime had completed its Coalinga-Port Costa pipe line down the west side to McKittrick and Midway, the Standard had ex- tended its pine line from Kern river to Midway and McKittrick and was planning to duplicate the entire line from the west side fields through Kern river to Point Richmond.
All these pipe lines and the railroads reaching every field in the valley furnished the necessary transportation facilities, and the chief problem re- mained the expansion of the market to consume the oil produced. As a means of further organization of the marketing end of the industry the Agency, not long after the signing of the Union-Independent agreement, took into its fold the Doheny companies. the American Oilfields, the American Petroleum, the Nevada Petroleum and other big factors in the state's production, and
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late in 1910 an agreement was negotiated between L. P. St. Clair and the Associated Oil Company officials whereby the Associated became practically a partner with the Union-Independents in the marketing business.
Briefly, the Associated-Union-Independent agreement-which was made a month to month affair, revocable by either party on notice-makes the Asso- ciated the selling agent for the Union-Independents for all the latter's unsold oil. The Union-Independents were to retain all their present business, the Associated was to retain all its present business, and so fast as the Asso- ciated took new contracts (which were subject to approval by the Union- Independents) they were to be assigned to the Union-Independents until such time as the monthly sales of the Union-Independents should equal the monthly sales of the Associated. After that the new business taken was to be divided equally. Under a separate contract the Associated agreed to purchase from the Union-Independents (which is to say the Agency) all oil which it might need outside its own production and present contracts to supply its sales contracts.
The effect of all these agreements was to make but two large factors in the oil industry of the coast, the Agency-Union-Associated combination and the Standard Oil Company. It is stated unofficially that an effort was made to bring the Standard into a harmonious agreement with the others to pre- serve and regulate the oil market in the interest of stability of price and production, but while the Standard's Pacific Coast representatives were dis- posed to look favorably on the proposition it was turned down quickly and decidedly when submitted to 26 Broadway for approval.
Getting the Markets Organized
By this organization of the marketing arrangements it has been possible to effect a very great saving in the expense of handling the oil. Competition of the small. vexatious, mutually expensive sort has been eliminated to a very great extent, and by the ability to insure prompt and unfailing deliveries of oil in large quantities it has become possible to obtain contracts from large consumers of fuel who could not be reached by individual producing com- panies or even by smaller combinations of such companies. At the present time the larger fuel consumers of the entire state are practically all using California fuel oil, and the same is true of western Washington and Oregon except in the immediate vicinity of the coal mines or in the heavy timber districts. All the railroads having Pacific Coast terminals are burning oil in their engines. The northern railroads have installed but a comparatively few oil burners as yet. but the way is opened for a great extension of the market in this direction. Oil is used by the steamships plying between the Hawaiian islands and the mainland, and by coastwise vessels, and it is be- lieved to be but a matter of a short time before oil will constitute a large part, at least. of the fuel of the trans-Pacific liners. California oil has found markets in Arizona and the northern part of Mexico. and has reached down along the west coast of South America.
Efforts to Check Overproduction
But all these extensions of the field of consumption have not sufficed to utilize all the increase in the production and all during 1910 and the early part of 1911 the stocks in the hands of the Agency continued to increase. Oil produced outside the Agency companies, the Associated, and the Southern
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Pacific and Santa Fe railroads has been sold chiefly to the Standard in the last few years, and that company also has added greatly to its stocks on hand. Early in the present year the Agency adopted a resolution that in the future only so much oil should be received from the constituent companies each month as would equal in aggregate the sales of the preceding month. Companies producing more than their share of the deliveries on this basis have been obliged to store their own oil or shut down their wells to the required output. By this means a halt has been called in the increase of surplus oil, but the restriction of production is not wholly satisfactory, and the Agency is now working on the details of a plan for providing 10.000,000 barrels of storage for its excess oil and other plans which it is hoped may permit the companies to develop and pump their properties without restraint.
The oil land withdrawals already referred to have served, also, as a bar- rier against over-production, although their effect will be more apparent in the future than at the present time. Very briefly the history of the oil land withdrawals follows :
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