Episode 5: Transcript

Oil, The Big Boom, and Huntington’s Real Estate Empire

Last time on: The Story Los Angeles

The railroad connects Los Angeles to the rest of the country for the first time, San Pedro is selected as the city's official harbor, and boom and bust cycles create a tumultuous cycle of change as the city approaches the 1900s.

Opening

The year was 1892. A young Los Angeles and California were experiencing repeated cycles of boom and bust growth as the city struggled to find its footing. While the development of the San Pedro harbor and connection to the transcontinental railroad via San Francisco was impactful, the city's growth and potential for prosperity was at risk. LA County was not a gold-rich region but a mere stopping point for travelers headed to seek their fortunes elsewhere.

Black tarry oil seeped up from the ground all across the region making certain areas un-farmable and unlivable due to toxic fumes. Poor laborers who moved to the city to find their fortune were met with disappointment as tales of gold remained unattainable and their work & living conditions deteriorated.

This was Los Angeles… a small city with deflating hope and ambition.

This is The Story: Los Angeles.

Episode 5: Oil, The Big Boom, and Huntington’s Real Estate Empire

Part 1: Oil

Los Angeles in the mid-to-late 1800s was a town on the cusp of change. Cycles of heavy rain with drought had ruined much of the rancheros' profit from raising livestock. Influence from the gold rush and t grew where herds of cattle once roamed, trains lined the roads that once were rudimentary

Early on, the native Tongvas were aware of a black tar-like substance that seeped up from the ground in areas like the La Brea tar pits but weren't aware of the vast potential of the substance. Though they used the tar for waterproofing, its use as a fuel had not yet driven The Tongva to extract it for that purpose.

In the 1880s Edward Doheny and Charles Canfield met over a game of poker and forged what would become a lasting friendship. Both men had made their way across the country from the midwest to prospect for Silver in New Mexico. They both struggled to make ends meet in mining, and growing disillusioned with the hard life of a silver miner, Doheny and Canfield left for Los Angeles where they planned to make their fortunes instead on real estate.

Unfortunately, both quickly went bankrupt and again searched for new ways to realize their dreams of riches. The inspiration came one day when Doheny saw a young man hauling a cart filled with black tar. When he asked what it was, the man responded “brea” Spanish for Tar or Pitch. Doheny had heard about this substance and knew it could be used as a replacement for coal and wood.

In 1892, Doheney convinced Canfield to help him. At the time, black tarry oil bubbled up from the ground across the region making large swaths of LA County unusable for farming and land development. Digging near what is today’s Dodger Stadium, Doheney and Canfield labored for weeks first using a system of horses and pulleys, then once they hit bedrock, obtained a drill. And finally, on April 20th, 1893 they struck oil, setting the stage for LA’s first oil field.

Eventually, the duo built over 81 wells in the region, developed a massive network of pipes and refineries, and shipped their oil across the globe, rivaling John D. Rockefeller, owner of the largest oil company at the time: Standard Oil. Other former miners and prospectors also abandoned their pickaxes and began to build oil rigs of their own. A new boom was exploding across southern California.

Part 2: The Big Oil Boom

By the turn of the century over 200 competing companies had built 1150 oil rigs all pumping from the same underground reserves underneath the city. What looked like forests of oil rigs rose in backyards, in between homes, … anywhere a gambling prospector might think there was black gold to be had. Small lakes of oil appeared across the landscape as the frenzy took hold.

With no regulations or regulators environmental and safety concerns were of no importance. Rigs often caught fire, toxic fumes would blow across the city, and environmental destruction was evident in the region. A small price to pay for the immense wealth oil brought to the small but growing metropolis.

With their newfound wealth, lucky oil prospectors built hotels, laundry facilities, stores, power companies, and more all created from their gamble on oil. The city was exploding with oil fever.

One of those lucky prospectors was Emma Summers, a local piano teacher. Born in Kentucky, she was the daughter of a banker and moved to LA after receiving a musical education at the New England Conservatory of Music.

With savings from her teaching career, Summers began investing in Los Angeles real estate and when the city's oil boom struck in the 1890s, she astutely bought a half-interest in an oil well for just $700. Emma learned everything about oil, from working the equipment to bookkeeping, and almost overnight, became wealthy, hitting the jackpot as her rig gushed with oil.

Using loans and other smart investments, her oil production business expanded rapidly. At the height of her success, Summers owned numerous wells producing thousands of barrels of oil a month. Her control of the Los Angeles oil market garnered substantial wealth and significant media attention. Dubbed the “Oil Queen of California”, Emma built an empire of businesses across Southern California beyond oil including investing in early movie theaters and owning notable properties including a mansion on Wilshire Boulevard.

Although her fortune declined towards the end of her life, Emma Summers is remembered as a trailblazing businesswoman who defied expectations and made a mark in the history of Los Angeles and the oil industry.

While many stories exist of lucky oil Barons, the tale is quite different for the poor working class. Desperate for jobs amid continuous boom and bust cycles, oil field workers toiled in rough conditions risking life and limb for wages. With little to no regulations, accidents were common, often killing or permanently maiming rig workers. To this day, offshore oil workers face some of the most dangerous jobs in the country. But there was also an excitement, a camaraderie, and a sense of community among the workers, built out of shared danger. For those lucky enough to be employed by a productive rig, workers often managed to save enough to buy a tiny share of an oil lease. If it hit they could earn enough to leave the oil fields, buy a home, and start another business. Where there is risk, reward sometimes follows and Southern California was handsomely rewarded with explosive growth due to the early pioneers of its oil derricks.

Part 3: Oil Goes Bust

Unfortunately, luck temporarily ran out for the city, and by 1903 pressure in the oil field plummeted as did oil prices due to overproduction. In 1901 oil hit a high of $1.80 per barrel, but by 1903, that price had collapsed to just $0.15. Los Angeles had allowed too many oil derricks to extract the lucrative substance and pressure in the oil field itself dropped, turning many once-productive wells into useless towers looming over the city. That pressure drop paired with an overabundance of oil on the market destroyed many young oil companies hoping to make it rich. While many like Doheny and Canfield made their fortune, others lost everything … just one of the many boom and bust cycles that plagued the early city.

But the wealth oil brought, funded other new industries in the early 20th century: movies, aviation, and real estate development, all can be traced back to the early wealth created by the discovery of oil. Los Angeles may be known for celebrities and entertainment today, but its origins owe much to the feverish hunt for black gold.

Part 4: Huntington’s Real Estate Empire

With immense wealth exploding in the city, a young Henry Huntington saw other opportunities beyond oil to build their fortune.

Born the nephew of prominent railroad tycoon Collis P. Huntington, Henry had been groomed at an early age to take over the family business of the Central Pacific Railroad, one of the first to complete the transcontinental railroad connecting Los Angeles to the rest of the country. But when his Uncle, Collis Huntington died, the board of the company instead voted Henry out.

Instead of a company, he was given a 15 million dollar inheritance and all he saw was endless opportunity in the region.

While horses and steam locomotives linked parts of Southern California, streetcars running on electricity were a relatively new phenomenon. Early attempts had proven risky, with many trolley companies falling into bankruptcy. But Huntington saw potential where others saw risk. He began acquiring ailing streetcar systems like the Los Angeles Railway, injecting capital and a relentless drive for expansion.

Most railways of the day connected existing communities to the outside world plotting their paths to towns and commercial hubs that had already developed a need for transportation. But Huntington had a different idea: what if he brought electricity and electric trolleys to undeveloped areas, attracting citizens away from the busy city and into the peaceful suburbs?

The idea completely flipped the script on how railroads had developed. But Huntington proved to be a visionary. In 1901, Huntington formed the Pacific Electric Railway Company, with an audacious goal: connect downtown Los Angeles with far-flung communities he would build through a network of interurban electric railways. It would become the most extensive trolley system in the world, earning its iconic nickname "The Big Red Cars''. By owning the railroad, the electricity, and the land Huntington was poised to earn back his investments in multiple ways.

Huntington believed the system would drive development, opening up areas for new suburbs and providing a more efficient alternative to the bulky steam railroads. Spurred by the Southern California land boom, towns with names like Boyle Heights and Echo Park (his own developments) sprang up along Pacific Electric lines.

Through strategic acquisitions and relentless construction, the Pacific Electric grew with incredible speed. By 1910, it boasted over 1,000 miles of track, carrying millions of passengers every year. From Downtown Los Angeles, red cars radiated out to Pasadena, Long Beach, Santa Monica, even as far as San Bernardino. Huntington's empire connected diverse neighborhoods, fueling growth and changing the fabric of Los Angeles life.

Huntington also didn't limit himself to only urban lines. The Pacific Electric also acquired the Mount Lowe Railway, a breathtakingly scenic incline railway leading into the San Gabriel Mountains. With a series of cable cars and electric trolleys, passengers would navigate a twisting journey to mountain resorts, offering unparalleled views of the beautiful Southern California landscape.

As success grew, Huntington purchased more power and gas companies while expanding his developments to almost 500 subdivisions each year by 1913. And who would live in these regions far from Downtown? During the time Huntington partnered with LA Times Harry Chandler. The two went on a media tour of the midwest selling a vision of “lovely Los Angeles” and endless opportunities to those seeking to escape the cold and dirty cities of the East.

It worked. The city's population exploded doubling to 1.2 million by 1920 with much of the population growth in the new towns and suburbs owned, built, and connected by Huntington and his Raleway.

But Huntington's Pacific Electric began to run into issues. The railroad had been built on murky grounds. A sort of Ponzi scheme of Huntington’s own making.

Huntington had built a fast, efficient, and pleasant ride from his newly built suburbs, but the Pacific Electric company never turned a profit. Income from ticket sales alone was not enough to sustain the important but fledgling trolly system. Instead, Huntington was propping up the system with sales of real estate and electricity he provided to the new suburbs.

And By 1911, Huntington’s board on Pacific Electric decided to sell their interests to the Southern Pacific (the railroad built by his Uncle). He and the Pacific Electric board finally agreed to a massive payout for Huntington, who moved on to be one of the city's most notable philanthropists.

Huntington and Doheny were more than just railroad magnates and oil tycoons – they shaped the culture and society In Los Angeles for years to come. Huntington’s railway system was responsible for the iconic sprawl of Los Angeles County today. As his ambitious empire slowly dismantled, a new player was on the scene: The popularity of the automobile grew exponentially, along with political battles and the pressures of urban congestion partially caused by the Trolly System blocking cars on the roads. With a heavy heart, Huntington was forced to sell much of the Pacific Electric network in the 1940s. The tracks were torn up and Southern Pacific would soon replace those early trains with bus routes, uninhibited by the expense and limitations of trains on tracks.

Though the physical rail network dwindled with the last Red Car ceasing operations in 1961, Huntington's impact remains visible. Many modern light rail lines in Los Angeles follow routes similar to the old Pacific Electric system. Henry Huntington's vision was instrumental in creating and knitting together the patchwork of neighborhoods, laying a foundation that enabled Los Angeles to become a megacity.

And Doheny? His discovery of oil in the region would explode to fuel the growth of the automobile and Southern California's prosperity for decades to come.