While agribusiness and banking prospered, California’s petroleum industry registered spectacular growth. A second oil boom, the first having occurred in the 1890s (see Chapter 7), began in Huntington Beach and swept parts of the state in the 1920s. On November 13, 1920 Standard Oil began pumping operations in this Orange County seaside community with a well yielding 2,000 barrels a day. Within a few years Huntington Beach lots overlooking the Pacific were dotted with a forest of derricks. By June of the following year Signal Hill in Long Beach was similarly covered with oil rigs, only these belonged to Shell Oil Company and they tapped into the world’s richest reserves in terms of barrels per acre. Meanwhile, a third southern California oil bonanza occurred on land leased by George Franklin Getty on Telegraph Hill, Santa Fe Springs. By 1923 Telegraph Hill wells pumped 70 million barrels a year.
So productive were these and additional drilling operations, for example in the San Joaquin Valley, that the oil industry far surpassed all others in profitability, including agriculture and its related canning business, in the state in the 1920s. More than $2.5 billion-worth of this “black gold” was extracted from California’s oil fields during this prosperous decade.
Along with quick riches sometimes come major scandals. Such was the case involving Los Angeles oil mogul Edward L. Doheny, who was implicated in a scandal that made national headlines from 1924 to 1930. Doheny had arranged with his friend Albert B. Fall, secretary of the interior, to lease federal oil lands in Elk Hills, located in Kern County. Oil reserves at that site were to be used in the event that the United States should find itself at war in the Pacific. Doheny was to build and fill oil storage tanks on the West Coast and at Honolulu, Hawai’i. In 1924 the public learned that while Doheny had negotiated
The lease with Fall, the oilman had transferred $100,000 to the secretary of the interior. Was this a bribe, or a loan?
A federal investigation led to prosecutions. In October 1929, Fall was convicted of receiving the $100,000 as a bribe and went to prison. In a separate trial later that year, however, Doheny, who had insisted that the transferred money was an interest-free loan to a dear friend, was acquitted of bribery. The different outcomes hinged on criminal intent: Fall, as a federal cabinet official, was seen by a jury as having received tainted money while administering public lands; Doheny, on the other hand, was able to show a long-time practice of generously aiding friends and charities. While Doheny was acquitted in a courtroom in 1930, the scent of scandal followed him to his grave. As the result of a separate civil suit, the federal government cancelled the oil leases on the ground that they had been obtained by bribery.
By the time this scandal fizzled at the end of the 1920s, California’s oil boom had come and gone. The petroleum industry would remain important, but other business endeavors, some with longer histories in the Golden State, would prove more vital to the economy.
World History
