Business & Finance: March Madness

Last week in eastern Texas men woke in the night with dreams of leases, drilling, sudden wealth. In Rusk and Gregg Counties heaven had broken loose. The oil boom which had burgeoned there (TIME, Feb. 2) had budded and was flowering.

New wells by the hundred were going down; several had struck into the precious pay sand but that was merely a portion of the excitement. All day airplanes droned overhead making aerial surveys of the lands where derricks were rising. All day geologists pored over samples cored out from the wells, gathering in groups arguing heatedly about the size and the formation of the field. Most of them thought that the oil sand was the eastern shore of a geologically forgotten sea.

Leases to oil rights passed from hand to hand at fabulous figures. A lease for 2.500 acres near the discovery well was reported to have been sold for $3,500,000. Maps of the region, like crazy quilts, were marked with the names of lessors. For years the independents have not had the chance in a new oil field that they now enjoy. Men hugged themselves with the thought of owning a half, a 12th, a 20th interest in this property or that.

Other oil towns in Texas were almost deserted; so many men had gone to the new field. In Longview in Gregg County, a town of 5,000, the hotel and bank had builders busy hammering up buildings to double their available space. A project for an eight story office building to cost $400,000 was rushed to the ground-breaking point. An ice company prepared to establish a $50,000 factory, a dairy to build a $20,000 pasteurization plant. Carpenters worked all night rushing to completion a building to house the abstractors with their armies of stenographers.

At Henderson (pop. 2,932) 15 mi. to the south, construction was afoot on two oil refineries; four pipe lines had been already laid to the wells. Plans were drawn for a five-story hotel. Since the discovery of oil deposits in the two national banks had risen from $750,000 to $1,900,000.

All through the region crews of the South Western Bell Telephone Co. and of Western Union were stringing new wires. Railroads were building new sidings to take care of booming traffic. Even tax collectors were not spared from work —back taxes were paid up at unprecedented rates. In the neighboring counties —for it is not known yet how far the field may extend—derricks were going up, leases and land titles changing hands.

On the spot oil was being sold for 40¢ a, bbl. down (compared to prices 70¢ and up that have prevailed elsewhere in Texas). What may happen to oil prices, already depressed by overproduction, when the new field really comes into production, no one knows. How many million barrels might there be? How much money would it not yield even at 40¢ a bbl.? Why should eastern Texas care? The Goddess of Fortune had stepped into her pool and once more laved her soft white limbs in oil.