Wealth has often accompanied marginal product improvements. The story of oil lamps has been around for a long time partially because it illustrates how small improvements can be cumulative, with each step enlarging the market, and significant wealth accruing to the people who fit the last small upgrade.
Night Work – People have tried to work nights for ages. To do so, constructively, required adequate illumination of some sort. In the Before Time, a woman would quietly sigh each time her husband dragged a mastodon hide through the cave entrance. He’d shot the arrow that struck the mastodon, and the monster was now dead. In his mind, the hard labor was done. Thoughtfully, he would leave the easy bits for her. It was her job to flense it, beginning with a scraper. The final act of flensing was to remove the last particles of fat with an abrasive sort of clay. With the fat gone, the inside of the hide was then covered with an admixture of brain, liver, and salt. Then the skin was sewn into the shape of a cone-shaped tent and the hide was smoked over an open, but cool, fire. Hot fires from thoroughly dried wood have little smoke and are not helpful in curing hides. They scorch them. A cool fire, fed with not-quite fully seasoned wood, was required for brain-tanning the hide. The phenol from the burning wood smoked the hide, preserving it through both warm and cold seasons.
She knew curing the hide would be her job, and to accomplish it she’d have to work nights while the children were asleep. A light would be helpful.
Campfires – With daylight hours dedicated to gathering wild fruits, a few vegetables, and perhaps the occasional small prey animal, the women-of-the-cave did their hide preservation in the evenings, huddled around the common fire which served as their sole source of light.
There are several problems with open-fire illumination, the first of which was that it was fixed. Wherever the fire was made on any given night, that was where it stayed. The work (i.e., the hide) had to be dragged to the light. If it turned out that it would have been better to have had the fire in another location, it would have to wait until the next day. Basically, the major problem was that open fire lacked portability. That was the way it was, for a very, very long time.
Olive Oil Lamps – The first big improvement happened when oil lamps came about. At first perhaps as only a simple clay saucer or low bowl filled with olive oil. A lighted wick was twisted to float on top. The light was dim, and it flickered. Altogether it was not much better, and in some ways may have been worse, than a small campfire, but it was portable. An oil lamp could be brought very close to where the hide was, so detail work could be done at night. Detail work, done after sunset, was an inflectional improvement.
This small addition, portability, did not benefit the ceramicists very much because ceramic oil lamps last until they are broken. The people who made the lamps sold a few more, perhaps, but afterwards the sales returned to only replacement numbers.
The big bucks were made by the owners of olive groves, where owners could now sell low quality oil from the last pressings, something that previously would have only been discarded. With virgin olive oil (i.e., oil from the first pressing) paying the fixed expenses, whatever the low-quality oil brought was nearly all windfall profit. All this, just to have a portable light.
The next turning point in convenient lighting was whale oil. Olive oil lamps offered portability but retained (i) low candlepower and (ii) constant flickering.
Whale Oil Lamps – The incentive was always to make money, but that came with much risk. Some ships would not return to port. Nobody would know what happened to them, they just vanished over the horizon with the investor’s money. Other ships would return but have a disappointing voyage. The investor’s money would be at least partially lost. But grace would shine on a few, and those few could make their investors very rich.
How rich? Let’s glance at some numbers:
- The average whaling ship held 3,000 barrels of oil.
- A barrel contained 31.5 gallons.
- In 1855 whale oil sold for $35 a gallon, equivalent to $1,140 now
- Ship = 3,000 barrels x 31.5 gallons per barrel x $1,140 gallon equals about $107,000,000.
That was how valuable whale oil was: although undeniably risky, a handful of successful voyages more than offset the losses from many failed attempts. Some syndicates of the 1800s returned as much as 60% per year, decade after decade, for much of that century.
Whale oil offered portability and improved brightness, but still flickered. The profits were massively superior to owning a grove of olive trees.
Kerosene – What brought most of the whaling ships to redundancy was the discovery that commercial quantities of petroleum could be refined into kerosene, a fuel that quickly made the more expensive whale oil superfluous. Kerosene lamps remained portable, but now they were brighter than whale oil, and their flame could be contained within a light-chimney which shielded the flame from drafts and significantly reduced – almost eliminated – stuttering.
At that time most petroleum was skimmed from surface seeps. Surface seeps were not unusual, but they were not rich enough to rise to economic viability. Then in 1859 Edwin Drake and George Bissell took the risky step of sinking the first successful drilling rig just outside Titusville, Pennsylvania. They struck oil at 70 feet. There was now, at least from one source, a domestic source of petroleum in quantities sufficient for commercialization. At roughly the same time, a Polish pharmacist discovered a way to distill large quantities of kerosene from petroleum oil. There was now a way to provide a fuel that offered an inexpensive, bright, non-stuttering portable light. It was an Adam-finding-Eve moment.
Thirty-three years later, Edward Doheny stood over the asphalt seeps at what is now the La Brea Tar Pits, possibly reflecting on his past but almost certainly contemplating his future.
Edward Doheny and William Mulholland were of similar age but there is no reason to think they had ever met, although in 1892 they were working only ten miles apart. The 37-year-old Mulholland was doing his water utility thing from tasteful offices near Pershing Square. The insolvent Doheny, one year younger than Mulholland, was across town at the La Brea Tar Pits, considering his next steps.
Doheny may have been indigent, but he was a hard worker and no nincompoop. He completed high school at fifteen. At that time only 57% of children attended school. When they did, they were present for an average of 78 days of the year. Graduating from high school was, at the time, an impressive achievement, so when he applied to the U.S. Geological Survey in 1871, diploma in hand, he was immediately hired. Two years after hiring on, in 1873, Doheny was assigned to the party sent to Kansas to survey the disputed Kiowa-Comanche lands. A year later he left the Geological Survey to try his hand at prospecting in South Dakota.
The Black Hills were at that time Sioux lands, recognized as such by the U.S. Government when it signed the 1851 Treaty of Fort Laramie, which recognized the Black Hills to be part of the Great Sioux Reservation, set aside for the exclusive use of the Sioux people. But by 1868 illicit prospectors discovered gold in the Black Hills and, as everybody understands, gold is superior to treaties.
The initial discoveries were small, but promising. Larger deposits near Deadwood Gulch followed in 1875, resulting in swarms of prospectors by 1876. Doheny found no luck in gold mining and left for Prescott, Arizona, where the 1880 census listed him as a (house) painter. Later that year he moved to Kingston, New Mexico Territory, and interested himself in silver mining. He worked briefly at the famous Iron King mine before he returned to prospecting, mining, and trading in mining claims. Kingston is important because that is where Doheny met two men who later played significant roles in his life: Charles A. Canfield, who became his business partner, and Albert Fall, who was one day to become the Secretary of the Interior.
Doheny and Canfield briefly worked the Mount Chief Mine, but with only limited success. In 1886, Canfield left the Mount Chief to explore other promising sites in the Kingston area. He did a little leasing and developing before stumbling onto the Comstock Mine (unrelated to the famous Comstock Lode of Virginia City). Doheny declined to accompany Canfield in this venture, but Canfield endured and made a small fortune from it. Doheny, who chose to be left behind, was eventually reduced to doing odd jobs to support his family.
Doheny had met the woman who was to be his first wife, Carrie Louella Wilkins, three years earlier in Kingston. Their daughter, Eileen, was born in late 1885. When Eileen was six, in 1891, Doheny left his family in New Mexico and moved to Los Angeles where he had heard prospects were better. The attraction was flipping land. It was not too difficult to buy acreage just beyond the expanding irrigation ditches, subdivide it into housing sites, and flip it just before the zanjeros arrived. Canfield, who’d left New Mexico with $110,000 in then-money ($3,400,000 in now-money) from his Comstock Mine venture had multiplied the sum into extensive real estate holdings. He was not the only one trying his hand at land flips, but once the land boom collapsed, as booms are historically prone to do, Canfield lost everything. He was deeply in debt when Doheny arrived in Los Angeles in 1891.
It was back to prospecting for both men, this time in San Diego County. The search was unsuccessful, and they soon returned to Los Angeles. By 1892, Doheny was so poor he could not afford to pay for his boarding room. Carrie, still in New Mexico, apparently wrote to him of Eileen’s death. Doheny returned temporarily to New Mexico to succor Carrie. Their only son, Ned, was born less than a year later.
Edward Doheny took his wife and son back to Los Angeles, where he became interested in the pools of natural asphalt seeps at the La Brea Tar Pits. He sought out Charles Canfield, who by this time, had made a little money doing something in the mining industry and negotiated a $400 ($12,500 now-money) loan for explorative purposes.
There is a reason petroleum became suddenly the stuff of riches: Samuel Kier found a way, in 1851, to distil kerosene out of crude oil. Doheny turned the discovery to his benefit. His years of poverty were approaching their end. More, later.
Note to the Reader: This article is largely taken from the Wikipedia entry on Edward L. Doheny, which was in turn largely taken from the following three reference books: (i) The standard scholarly biography is by Martin R. Ansell, 1998, Dark Side of Fortune: Triumph and Scandal in the Life of Oil Tycoon Edward L. Doheny ISBN 0-520-22909-6; (ii) Margaret Leslie Davis, 1998, Oil Baron of the Southwest: Edward L. Doheny and the Development of the Petroleum Industry in California and Mexico ISBN 0-8142-0749-9; and (iii) Dan La Botz, 1991, Edward L. Doheny: Petroleum, Power and Politics in the United States and Mexico ISBN 0-275-93599-X. The La Botz book was “Poorly received by reviewers who noted many errors and oversights.”
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