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The History of the Standard Oil Company

Dover Publications, Inc.

THE BIRTH OF AN INDUSTRY

Petroleum first a curiosity and then a medicine—Discovery of its real value—The story of how it came to be produced in large quantities—Great flow of oil—Swarm of problems to solve—Storage and transportation—Refining and marketing—Rapid extension of the field of operation—Workers in great numbers with plenty of capital—Costly blunders frequently made—But every difficulty being met and overcome—The normal unfolding of a new and wonderful opportunity for individual endeavour.

ONE of the busiest comers of the globe at the opening of the year 1872 was a strip of Northwestern Pennsylvania, not over fifty miles long, known the world over as the Oil Regions. Twelve years before this strip of land had been but little better than a wilderness; its chief inhabitants the lumbermen, who every season cut great swaths of primeval pine and hemlock from its hills, and in the spring floated them down the Allegheny River to Pittsburg. The great tides of Western emigration had shunned the spot for years as too rugged and unfriendly for settlement, and yet in twelve years this region avoided by men had been transformed into a bustling trade centre, where towns elbowed each other for place, into which three great trunk railroads had built branches, and every foot of whose soil was fought for by capitalists. It was the discovery and development of a new raw product, petroleum, which had made this change from wilderness to market-place. This product in twelve years had not only peopled a waste place on the earth, it had revolutionised the world's methods of illumination and added millions upon millions of dollars to the wealth of the United States.

Petroleum as a curiosity, and indeed in a small way as an article of commerce, was no new thing when its discovery in quantities called the attention of the world to this corner of Northwestern Pennsylvania. The journals of many an early explorer of the valleys of the Allegheny and its tributaries tell of springs and streams the surfaces of which were found covered with a thick oily substance which burned fiercely when ignited and which the Indians believed to have curative properties. As the country was opened, more and more was heard of these oil springs. Certain streams came to be named from the quantities of the substance found on the surface of the water, as "Oil Creek" in Northwestern Pennsylvania, "Old Greasy" or Kanawha in West Virginia. The belief in the substance as a cure-all increased as time went on and in various parts of the country it was regularly skimmed from the surface of the water as cream from a pan, or soaked up by woollen blankets, bottled, and peddled as a medicine for man and beast.

Up to the beginning of the 19th century no oil seems to have been obtained except from the surfaces of springs and streams. That it was to be found far below the surface of the earth was discovered independently at various points in Kentucky, West Virginia, Ohio and Pennsylvania by persons drilling for saltwater to be used in manufacturing salt. Not infrequently the water they found was mixed with a dark-green, evil-smelling substance which was recognised as identical with the well-known "rockoil." It was necessary to rid the water of this before it could be used for salt, and in many places cisterns were devised in which the brine was allowed to stand until the oil had risen to the surface. It was then run into the streams or on the ground. This practice was soon discovered to be dangerous, so easily did the oil ignite. In several places, particularly in Kentucky, so much oil was obtained with the salt-water that the wells had to be abandoned. Certain of these deserted salt wells were opened years after, when it was found that the troublesome substance which had made them useless was far more valuable than the brine the original drillers sought.

Naturally the first use made of the oil obtained in quantities from the salt wells was medicinal. By the middle of the century it was without doubt the great American medicine. "Seneca Oil" seems to have been the earliest name under which petroleum appeared in the East. It was followed by a large output of Kentucky petroleum sold under the name "American Medicinal Oil." Several hundred thousand bottles of this oil are said to have been put up in Burkesville, Kentucky, and to have been shipped to the East and to Europe. The point at which the business of bottling petroleum for medicine was carried on most systematically and extensively was Pittsburg. Near that town, at Tarentum in Alleghany County, were located salt wells owned and operated in the forties by Samuel M. Kier. The oil which came up with the salt-water was sufficient to be a nuisance, and Mr. Kier sought a way to use it. Believing it had curative qualities he began to bottle it. By 1850 he had worked up this business until "Kier's Petroleum, or Rock-Oil" was sold all over the United States. The crude petroleum was put up in eight-ounce bottles wrapped in a circular setting forth in good patent-medicine style its virtues as a cure-all, and giving directions about its use. While it was admitted to be chiefly a liniment it was recommended for cholera morbus, liver complaint, bronchitis and consumption, and the dose prescribed was three teaspoonfuls three times a day!.... Although his trade in this oil was so extensive he was not satisfied that petroleum was useful only as a medicine. He was interested in it as a lubricator and a luminant. That petroleum had the qualities of both had been discovered at more than one point before 1850. More than one mill-owner in the districts where petroleum had been found was using it in a crude way for oiling his machines or lighting his works, but though the qualities of both lubricator and luminant were present, the impurities of the natural oil were too great to make its use general. Mr. Kier seems to have been the first man to have attempted to secure an expert opinion as to the possibility of refining it. In 1849 he sent a bottle of oil to a chemist in Philadelphia, who advised him to try distilling it and burning it in a lamp. Mr. Kier followed the advice, and a five-barrel still which he used in the fifties for refining petroleum is still to be seen in Pittsburg....

Although Mr. Kier seems to have done a good business in rock-oil, neither he nor any one else up to this point had thought it worth while to seek petroleum for its own sake. They had all simply sought to utilise what rose before their eyes on springs and streams or came to them mixed with the salt-water for which they drilled. In 1854, however, a man was found who took rock-oil more seriously. This man was George H. Bissell, a graduate of Dartmouth College, who, worn out by an experience of ten years in the South as a journalist and teacher, had come North for a change. At his old college the latest curiosity of the laboratory was shown him—the bottle of rock-oil—and the professor contended that it was as good, or better, than coal for making illuminating oil. Bissell inquired into its origin, and was told that it came from oil springs located in Northwestern Pennsylvania....

Bissell seems to have been impressed with the commercial possibilities of the oil, for he at once organized a company, the Pennsylvania Rock-Oil Company, the first in the United States, and leased the lands on which these oil springs were located. He then sent a quantity of the oil to Professor Silliman of Yale College, and paid him for analysing it. The professor's report was published and received general attention. From the rock-oil might be made as good an illuminant as any the world knew. It also yielded gas, paraffine, lubricating oil. "In short," declared Professor Silliman, "your company have in their possession a raw material from which, by simple and not expensive process, they may manufacture very valuable products. It is worthy of note that my experiments prove that nearly the whole of the raw product may be manufactured without waste, and this solely by a well-directed process which is in practice in one of the most simple of all chemical processes."

The oil was valuable, but could it be obtained in quantities great enough to make the development of so remote a locality worth while? The only method of obtaining it known to Mr. Bissell and his associates in the new company was from the surface of oil springs. Could it be obtained in any other way? There has long been a story current in the Oil Regions that the Pennsylvania Rock-Oil Company received its first notion of drilling for oil from one of those trivial incidents which so often turn the course of human affairs. As the story goes, Mr. Bissell was one day walking down Broadway when he halted to rest in the shade of an awning before a drug store. In the window he saw on a bottle a curious label, "Kier's Petroleum, or Rock-Oil," it read, "Celebrated for its wonderful curative powers. A natural Remedy; Produced from a well in Allegheny Co., Pa., four hundred feet below the earth's surface," etc. On the label was the picture of an artesian well. It was from this well that Mr. Kier got his "Natural Remedy." Hundreds of men had seen the label before, for it went out on every one of Mr. Kier's circulars, but this was the first to look at it with a "seeing eye." As quickly as the bottle of rock-oil in the Dartmouth laboratory had awakened in Mr. Bissell's mind the determination to find out the real value of the strange substance, the label gave him the solution of the problem of getting oil in quantities—it was to bore down into the earth where it was stored, and pump it up.

Professor Silliman made his report to the Pennsylvania Rock-Oil Company in 1855, but it was not until the spring of 1858 that a representative of the organisation, which by this time had changed hands and was known as the Seneca Oil Company, was on the ground with orders to find oil. The man sent out was a small stockholder in the company, Edwin L. Drake, "Colonel" Drake as he was called. Drake had had no experience to fit him for his task. A man forty years of age, he had spent his life as a clerk, an express agent, and a railway conductor. His only qualifications were a dash of pioneer blood and a great persistency in undertakings which interested him....

The task before Drake was no light one. The spot to which he had been sent was Titusville, a lumberman's hamlet on Oil Creek, fourteen miles from where that stream joins the Allegheny River. Its chief connection with the outside world was by a stage to Erie, forty miles away. This remoteness from civilisation and Drake's own ignorance of artesian wells, added to the general scepticism of the community concerning the enterprise, caused great difficulty and long delays. It was months before Drake succeeded in getting together the tools, engine and rigging necessary to bore his well, and before he could get a driller who knew how to manipulate them, winter had come, and he had to suspend operations. People called him crazy for sticking to the enterprise, but that had no effect on him. As soon as spring opened he borrowed a horse and wagon and drove over a hundred miles to Tarentum, where Mr. Kier was still pumping his salt wells, and was either bottling or refining the oil which came up with the brine. Here Drake hoped to find a driller. He brought back a man, and after a few months more of experiments and accidents the drill was started. One day late in August, 1859, Titusville was electrified by the news that Drake's Folly, as many of the onlookers had come to consider it, had justified itself. The well was full of oil. The next day a pump was started, and twenty-five barrels of oil were gathered.

There was no doubt of the meaning of the Drake well in the minds of the people of the vicinity. They had long ago accepted all Professor Silliman had said of the possibilities of petroleum, and now that they knew how it could be obtained in quanity, the whole country-side rushed out to obtain leases....

On every rocky farm, in every poor settlement of the region, was some man whose ear was attuned to Fortune's call, and who had the daring and the energy to risk everything he possessed in an oil lease. It was well that he acted at once; for, as the news of the discovery of oil reached the open, the farms and towns of Ohio, New York, and Pennsylvania poured out a stream of ambitious and vigorous youths, eager to seize what might be there for them, while from the East came men with money and business experience, who formed great stock companies, took up lands in parcels of thousands of acres, and put down wells along every rocky run and creek, as well as over the steep hills. In answer to their drill, oil poured forth in floods. In many places pumping was out of the question; the wells flowed 2,000, 3,000, 4,000 barrels a day—such quantities of it that at the close of 1861 oil which in January of 1860 was twenty dollars a barrel had fallen to ten cents.

Here was the oil, and in unheard-of quantities, and with it came all the swarm of problems which a discovery brings. The methods Drake had used were crude and must be improved. The processes of refining were those of the laboratory and must be developed. Communication with the outside world must be secured. Markets must be built up. Indeed, a whole new commercial machine had to be created to meet the discovery. These problems were not realised before the region teemed with men to wrestle with them—men "alive to the instant need of things." They had to begin with so simple and elementary a matter as devising something to hold the oil. There were not barrels enough to be bought in America, although turpentine barrels, molasses barrels, whiskey barrels—every sort of barrel and cask—were added to new ones made especially for oil. Reservoirs excavated in the earth and faced with logs and cement, and box-like structures of planks or logs were tried at first but were not satisfactory. A young Iowa school teacher and farmer, visiting at his home in Erie County, went to the region. Immediately he saw his chance. It was to invent a receptacle which would hold oil in quantities. Certain large producers listened to his scheme and furnished money to make a trial tank. It was a success, and before many months the school-teacher was buying thousands of feet of lumber, employing scores of men, and working them and himself—day and night. For nearly ten years he built these wooden tanks. Then seeing that iron tanks—huge receptacles holding thousands of barrels where his held hundreds—were bound to supersede him, he turned, with the ready adaptability which characterised the men of the region, to producing oil for others to tank.

After the storing problem came that of transportation. There was one waterway leading out—Oil Creek, as it had been called for more than a hundred years,—an uncertain stream running the length of the narrow valley in which the oil was found, and uniting with the Allegheny River at what is now known as Oil City. From this junction it was 132 miles to Pittsburg and a railroad. Besides this waterway were rough country roads leading to the railroads at Union City, Corry, Erie and Meadville. There was but one way to get the oil to the bank of Oil Creek or to the railroads, and that was by putting it into barrels and hauling it. Teamsters equipped for this service seemed to fall from the sky. The farms for a hundred miles around gave up their boys and horses and wagons to supply the need. It paid. There were times when three and even four dollars a barrel were paid for hauling five or ten miles. It was not too much for the work. The best roads over which they travelled were narrow, rough, unmade highways, mere openings to the outer world, while the roads to the wells they themselves had to break across fields and through forests. These roads were made almost impassable by the great number of heavily freighted wagons travelling over them. From the big wells a constant procession of teams ran, and it was no uncommon thing for a visitor to the Oil Regions to meet oil caravans of a hundred or more wagons. Often these caravans were held up for hours by a dangerous mud-hole into which a wheel had sunk or a horse fallen. If there was a possible way to be made around the obstruction it was taken, even if it led through a farmer's field. Indeed, a sort of guerilla warfare went on constantly between the farmers and the teamsters. Often the roads became impassable, so that new ones had to be broken, and not even a shot-gun could keep the driver from going where the passage was least difficult....

With the wages paid him the teamster could easily become a kind of plutocrat.... Indispensable to the business they became the tyrants of the region—working and brawling as suited them, a genius not unlike the flatboat-men who once gave colour to life on the Mississippi, or the cowboys who make the plains picturesque to-day. Bad as their reputation was, many a man found in their ranks the start which led later to wealth and influence in the oil business....

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Excerpted from The History of the Standard Oil Company by Ida M. Tarbell, David M. Chalmers. Copyright © 1966 David M. Chalmers. Excerpted by permission of Dover Publications, Inc..
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