Mr. Wright found some twenty refineries between Titusville and Oil City the year of his visit, 1865. In several factories that he visited they were making naphtha, gasoline, and benzine for export. Three grades of illuminating oils — "prime white," "standard white," and "straw colour" — were made everywhere; paraffine, refined to a pure white article like that of to-day, was manufactured in quantities by the Downer works; and lubricating oils were beginning to be made.
As men and means were found to put down wells, to devise and build tanks and boats and pipes and railroads for handling the oil, to adapt and improve processes for manufacturing, so men were found from the beginning of the oil business to wrestle with every problem raised. They came in shoals, young, vigorous, resourceful, indifferent to difficulties, greedy for a chance, and with each year they forced more light and wealth from the new product. By the opening of 1872 they had produced nearly 40,000,000 barrels of oil, and had raised their product to the fourth place among the exports of the United States, over 152,000,000 gallons going abroad in 1871, a percentage of the production which compares well with what goes to-day. 3 As for the market, they had developed it until it included almost every country of the earth — China, the East and West Indies, South America and Africa. Over forty different European ports received refined oil from the United States in 1871. Nearly a million gallons were sent to Syria, about a half million to Egypt, about as much to the British West Indies, and a quarter of a million to the Dutch East Indies. Not only were illuminating oils being exported. In 1871 nearly seven million gallons of naphtha, benzine, and gasoline were sent abroad, and it became evident now for the first time that a valuable trade in lubricants made from petroleum was possible. A discovery by Joshua Merrill of the Downer works opened this new source of wealth to the industry. Until 1869 the impossibility of deodorising petroleum had prevented its use largely as a lubricant, but in that year Mr. Merrill discovered a process by which a deodorised lubricating oil could be made. He had both the apparatus for producing the oil and the oil itself patented. The oil was so favourably received that the market sale by the Downer works was several hundred per cent. greater in a single year than the firm had ever sold before.
The oil field had been extended from the valley of Oil Creek and its tributaries down the Allegheny River for fifty miles and probably covered 2,000 square miles. The early theory that oil followed the streams had been exploded, and wells were now drilled on the hills. It was known, too, that if oil was found in the first sand struck in the drilling, it might be found still lower in a second or third sand. The Drake well had struck oil at 69-1/2 feet, but wells were now drilled as deep as 1,600 feet. The extension of the field, the discovery that oil was under the hills as well as under streams, and to be found in various sands, had cost enormously. It had been done by "wild-catting," as putting down experimental wells was called, by following superstitions in locating wells, such as the witch-hazel stick, or the spiritualistic medium, quite as much as by studying the position of wells in existence and calculating how oil belts probably ran. As the cost of a well was from $3,000 to $8,000, 4 according to its location, and as 4,374 of the 5,560 wells drilled in the first ten years of the business (1859 to 1869) were "dry-holes," or were abandoned as unprofitable, something of the daring it took to operate on small means, as most producers did in the beginning, is evident. But they loved the game, and every man of them would; stake his last dollar on the chance of striking oil.
With the extension of the field rapid strides had been made in tools, in rigs, in all of the various essentials of drilling a well. They had learned to use torpedoes to open up hard rocks, naphtha to cut the paraffine which coated the sand and stopped the flow of oil, seed bags to stop the inrush of a stream of water. They lost their tools less often, and knew better how to fish for them when they did. In short, they had learned how to put down and care for oil wells.
Equal advances had been made in other departments, fewer cars were loaded with barrels, tank cars for carrying in bulk had been invented. The wooden tank holding 200 to 1,200 barrels had been rapidly replaced by the great iron tank holding 20,000 or 30,000 barrels. The pipe-lines had begun to go directly to the wells instead of pumping from a general receiving station, or "dump," as it was called, thus saving the tedious and expensive operation of hauling. From beginning to end the business had been developed, systematised, simplified.
Most important was the simplification of the transportation problem by the development of pipe-lines. By 1872 they were the one oil gatherer. Several companies were carrying on the pipe-line business, and two of them had acquired great power in the Oil Regions because of their connection with trunk lines. These were the Empire Transportation Company and the Pennsylvania Transportation Company. The former, which had been the first business organisation to go into the pipe-line business on a large scale, was a concern which had appeared in the Oil Regions not over six months before Van Syckel began to pump oil. The Empire Transportation Company had been organised in 1865 to build up an east and west freight traffic via the Philadelphia and Erie Railroad, a new line which had just been leased by the Pennsylvania. Some ten railroads connected in one way or another with the Philadelphia and Erie, forming direct routes east and west. In spite of their evident community of interest these various roads were kept apart by their jealous fears of one another. Each insisted on its own time-table, its own rates, its own way of doing things. The shipper via this route must make a separate bargain with each road and often submit to having his freight changed at terminals from one car to another because of the difference of gauge. The Empire Transportation Company undertook to act as a mediator between the roads and the shipper, to make the route cheap, fast, and reliable. It proposed to solicit freight, furnish its own cars and terminal facilities, and collect money due. It did not make rates, however; it only harmonised those made by the various branches in the system. It was to receive a commission on the business secured, and a rental for the cars and other facilities it furnished.
It was a difficult task the new company undertook, but it had at its head a remarkable man to cope with difficulties. This man, Joseph D. Potts, was in 1865 thirty-six years old. He had come of a long and honourable line of iron-masters of the Schuylkill region of Pennsylvania, but had left the great forge towns with which his ancestors had been associated — Pottstown, Glasgow Forge, Valley Forge — to become a civil engineer. His profession had led him to the service of the Pennsylvania Railroad, where he had held important positions in connection with which he now undertook the organisation of the Empire Transportation Company. Colonel Potts — the title came from his service in the Civil War — possessed a clear and vigorous mind; he was far-seeing, forceful in execution, fair in his dealings. To marked ability and integrity he joined a gentle and courteous nature.
The first freight which the Empire Transportation Company attacked after its organisation was oil. The year was a great one for the Oil Regions, the year of Pithole. In January there had suddenly been struck on Pithole Creek in a wilderness six miles from the Allegheny River a well, located with a witch-hazel twig, which produced 250 barrels a day — and oil was selling at eight dollars a barrel! Wells followed in rapid succession. In less than ten months the field was doing over 10,000 barrels a day. This sudden flood of oil caused a tremendous excitement. Crowds of speculators and investors rushed to Pithole from all over the country. The Civil War had just closed, soldiers were disbanding, and hundreds of them found their way to the new oil field. In six weeks after the first well was struck Pithole was a town of 6,000 inhabitants. In less than a year it had fifty hotels and boarding-houses; five of these hotels cost $50,000 or more each. In six months after the first well the post-office of Pithole was receiving upwards of 10,000 letters per day and was