Texas’s political life grew out of which region?

In some ways state-level politics in Texas resembles national politics, but in other ways Texas’s political culture is quite distinctive.

3

W HY TEXAS’S POLITICAL CULTURE MATTERS In his Travels with Charley, John Steinbeck once described Texas as “a state of mind . . . a mystique closely approxi­ mating a religion.” Americans passionately loved or hated Texas. Steinbeck believed that Texas, de­ spite its vast space, its varying topography, its many cultures and ways of life, had a cohesiveness that may be stronger than in any other part of America. He wrote, “Rich, poor, Panhandle, Gulf, city,

country, Texas is the obsession, the proper study and the passionate possession of all Texans.” Certain myths define the obsession that is Texas—and Texans—in the popular imagination. The cow ­

boy who challenges both Native American and Mexican rule, the rancher and farmer who cherish their eco­ nomic independence, the wildcatter who is willing to risk everything for one more roll of the dice, and the independent entrepreneur who fears the needless intrusion of government into his life—such are the myths about Texans.

These myths extend far into the popular imagination when we think about various politicians who have led the state since its founding: the visionary Stephen F. Austin locked in a Mexican jail after presenting Texas’s grievances to the authorities, the military hero Sam Houston who wins the Battle of San Jacinto but is thrown out of office because of his rejection of secession, the irrepressible Ma and Pa Ferguson who both served as governors, and the larger­than­life Lyndon Baines Johnson who began his career as a schoolteacher in Cotulla, Texas, and completed it as a champion of civil rights and the poor.

The reality of Texas today, its people and its leaders, is much more complicated than the Texas of pop­ ular myths. Texas is not only the second­largest state in the Union, comprising more than 261,000 square miles; it is also the second most populous. In 2015, Texas is estimated to have a population of almost 27.5 million people, and that population is rapidly growing and becoming more and more diverse. Whites consti­ tute 43.5 percent of the population, while Latinos constitute more than 38.6 percent. Approximately 12.5 per ­ cent of the population are African American, and 4.5 percent are Asian. Eighty­five percent of Texans live in urban areas, with many involved in an economy driven by high­tech industry and globalization. More than 27 per ­ cent of the population has a bachelor’s degree. On the whole, Texans are young, with 26.4 percent under the age of 18 and 10.3 percent over the age of 65.

Throughout this text, we will examine how Texas is changing and creating new myths about the people, politics, and politicians found in the state. We should be careful before we fully accept

The Political Culture, People, and Economy of Texas

1

4 C H A P T E R 1 T H E P O L I T I C A L C U LT U R E , P E O P L E , A N D E C O N O M Y O F T E X A S

any of these myths. As in the past, the reality of Texas—its people and its poli ­ tics—is much more complex than the myths we spin about it. Conservative Re­ publicans may control today’s political agenda, but their long­term dominance in politics and government is not certain. Increasing racial and ethnic diversity points to a new Texas, one that looks sharply different from the one in the his ­ tory books and one that appears to favor Democrats (the party preferred today by most Latinos, African Americans, and recent immigrants). The future of the state and its people will be determined in large part by the strug gle be tween an assertive Republican majority and a Democratic minority trying to regain power as both parties try to address the various political, economic, and demographic challenges facing the state. Moving our understanding of governance and poli­ tics beyond the myths about Texas is the goal of this chapter and the book.

CHAPTERGOALS

• Describe the defining characteristics of political culture in Texas (pp. 5–7)

• Explain how Texas’s geography has influenced its political culture (pp. 7–10)

• Trace the evolution of Texas’s economy (pp. 11–22)

• Explain how the population of Texas has changed over time (pp. 22–30)

• Describe Texas’s shift from a rural society to an urban one (pp. 30–38)

political culture broadly shared values, beliefs, and attitudes about how the government should function and politics should operate; American political culture emphasizes the values of liberty, equality, and democracy

moralistic political culture the belief that government should be active in promoting the public good and that citizens should participate in politics and civic activities to ensure that good

individualistic political culture the belief that government should limit its role to provid ­ ing order in society, so that citizens can pursue their economic self­interest

traditionalistic political culture the belief that govern ­ ment should be dominated by political elites and guided by tradition

elite a small group of people that dominates the political process

Texas Political Culture

Studies of Texas politics often begin with a discussion of Texas’s political culture. Though the concept is somewhat open ended, states do often exhibit a distinctive cul- ture that is the “product of their entire history.” Presumably the political culture of a state has an effect on how people participate in politics and how individuals and insti- tutions interact.1 Political scientist Daniel Elazar has created a classification scheme for state political cultures that is used widely. He uses the concepts of moralistic, in- dividualistic, and traditionalistic to describe such cultures. These three state political cultures are contemporary manifestations of the ethnic, socioreligious, and socioeco- nomic differences that existed among America’s original thirteen colonies.2

According to Elazar, moralistic political cultures were rooted in New England, where Puritans and other religious groups sought to create the Good Society. In such a culture, politics is the concern of everyone, and government is expected to take ac- tion to promote the public good and advance the public welfare. Citizen participation in politics is viewed as positive; people are encouraged to pursue the public good in civic activities.

Individualistic political cultures, on the other hand, originated in the middle states, where Americans sought material wealth and personal freedom through com- mercial activities. A state with an individualistic political culture generally places a low value on citizen participation in politics. Politics is a matter for professionals rather than for citizens, and the role of government is strictly limited. Government’s role is to ensure stability so that individuals can pursue their own interests.

Traditionalistic political culture developed initially in the South, reflecting the values of the slave plantation economy (pre-1865) and its successor, the Jim Crow era (1876–1965). Rooted in preindustrial values that emphasize social hierarchy and close interpersonal, often familial, relations among people, traditional culture is con- cerned with the preservation of tradition and the existing social order. In such states, public participation is limited and government is run by an established elite. Public policies disproportionately benefit the interests of those elites.

States can, of course, have cultures that combine these concepts. One book classi- fied California as having a “moralistic individualistic” political culture and New York an “individualistic moralistic” culture. Often, Texas is categorized as having a “tradi- tionalistic individualistic” political culture.3 Taxes are kept low, and social services are minimized. Political elites, such as business leaders, have a major voice in how the state is run. In spite of the difficulty in measuring the concept of political culture in any empirical way, it is a concept widely regarded as useful in explaining fundamental beliefs about the state and the role of state government.

When considering the political culture of a state, one must recognize that it is not a stagnant thing. Political culture can change over time. Texas is undergoing dramatic changes, including some change in its political culture. It is also difficult to classify the political culture of a state as large and as diverse as Texas in any one category. The liberal cultural norms of urban areas like Houston, Dallas, and Austin often stand in sharp contrast to those found in the conservative suburban and exurban areas of

Describe the defining characteristics of political culture in Texas

5T E X A S P O L I T I C A L C U LT U R E

6 C H A P T E R 1 T H E P O L I T I C A L C U LT U R E , P E O P L E , A N D E C O N O M Y O F T E X A S

these cities. These, too, differ from the political cultures found in south Texas along the border or in the rural Panhandle of west Texas. In fact, Texas has many different political cultures or subcultures within its borders.4

To understand the complexity of political culture in Texas today, it is useful to consider three long-lasting patterns in Texas politics and the changes that they are undergoing: the one-party state, the idea of provincialism, and business dominance. We examine these elements of Texas political culture below.

The One-Party State Persists

For over 100 years, Texas was dominated by the Democratic Party. Winning the Demo- cratic Party primary was tantamount to winning the general election. As we will see in later chapters, this pattern no longer holds. During the 1990s substantial competi - tion emerged between the parties for control of the state legislature. Following re- districting in 2002 the Republicans secured a 7-vote majority in the state Senate and a 24-vote majority in the state House. Between 2002 and 2016 all major statewide elected offices were controlled by Republicans. One Court of Criminal Appeals justice switched to the Democratic Party in December 2013 after being elected as a Republi- can, but was defeated in the November 2016 general elections. The question today is not whether the political culture of Texas will continue to be defined by a powerful Democratic Party, but how that culture will be redefined by two forces: a powerful Republican Party in most suburban, exurban, and rural areas that is growing increas- ingly conservative and a Democratic Party that controls Texas’s most urban areas.

Provincialism Is Declining

A second pattern that once defined Texas political culture is provincialism, a narrow view of the world that is often associated with rural values and notions of limited gov- ernment. The result often was an intolerance of diversity and a notion of the public interest that dismissed social services and expenditures for education. Some of the more popular politicians in Texas have stressed cornpone—a rural rejection of modern urban lifestyles—intolerance, and a narrow worldview rather than policies that might

offer advantages to the state as it competes with other states and with other nations. Like the one-party Demo- cratic state, Texas provincialism has faded as a defining feature of the political culture. The growing influence of minorities, women, and gays in state politics, increasing urbanization, and Texas’s relevance in the global econ- omy have all undercut Texas’s traditional provincialism.

Business Dominance Continues

A third, continuing pattern that has helped define Texas’s political culture is its longtime dominance by business.

The seal of Texas reflects the state’s individualistic political culture.

PERSONAL RESPONSIBILITY: WHAT WOULD YOU DO?

• Do you agree with the popular myth that Texas is overly provincial—that is, intolerant, narrow minded, and overly critical of government? Why or why not?

• Do you think Texas needs to be more welcoming of outside interests and ideas? If so, what do you think government and the people could do to foster more open­mindedness in Texas?

provincialism a narrow, lim ­ ited, and self­interested view of the world often associated with rural values and notions of limited government

7T H E L A N D

Labor unions are rare in Texas except in the oil-refinery areas around Beaumont–Port Arthur. Other groups that might offer an alternative to a business perspective, such as consumer interests, are poorly organized and poorly funded. Business groups are major players in Texas politics, in terms of campaign contributions, organized inter- est groups, and lobbyists.

This chapter will investigate the economic, social, and demographic changes that transformed Texas’s political culture during the twentieth century. These changes shook Texas government and politics in the 1990s and have continued to shape them in the second decade of the twenty-first century.

The Land

Much of Texas’s history and political life has been shaped by the relationship forged between its people and the land. When Texas became a republic in 1836, it claimed 216,000,000 acres (approximately 350,000 square miles) of unappropriated land as its own. At its founding, Texas was land rich but money poor, having only $55.68 in its treasury. Texas was the only state, other than the original 13 colonies, to keep control of its public lands when it entered the Union in 1845. Privatizing these public lands was probably the most important ongoing public policy pursued by the state through the Land Office in the nineteenth century. Although Texas turned a large portion of its public lands over to private ownership, it retained ownership of the minerals under

Ties between business and politics have always been close in Texas. Here, Governor Greg Abbott signs a bill prohibiting local government attempts to ban fracking as a way to continue to get oil and natural gas out of the ground.

Explain how Texas’s geography has influenced its political culture

8 C H A P T E R 1 T H E P O L I T I C A L C U LT U R E , P E O P L E , A N D E C O N O M Y O F T E X A S

some of this land, including land containing oil and natural gas. Privatization of pub- lic property established the property rules and regulations under which economic de- velopment would take place in the state. It also gave the state an ownership of mineral rights that would provide funding for elementary and secondary education as well as higher education for the next 160 years.

Privatization was not the only political issue surrounding land in Texas in the nineteenth century. The exact boundaries of Texas were contentious throughout the 1840s and 1850s. Following the Mexican American War, the Treaty of Guadalupe Hi- dalgo in 1848 established the Rio Grande as the southern border of the state. Follow- ing a threat by Texas to use military force to reassert its land claims in the west, the Compromise of 1850 established Texas’s current western borders. In exchange for $10 million in federal bonds, Texas gave up claims to 67,000,000 acres of land in what are now New Mexico, Wyoming, Colorado, Kansas, and Oklahoma. The Compromise of 1850 enabled Texas to pay off the public debts incurred during the Republic and to retain 98,000,000 acres in public lands.5

Today, Texas is the second-largest state in size, next to Alaska. To understand the dynamics of political life and governance in Texas demands an appreciation of the vast spaces and topography that define the state.

Perhaps the most distinctive characteristic of Texas’s geography is its size. The longest straight-line distance across the state from north to south is 801 miles; the longest east–west distance is 773 miles. To put this into perspective, the north–south distance between New York City and Charleston, South Car olina, is 763 miles, cutting across six different states. The east–west distance from New York City to Chicago is 821 miles, cutting across five different states.

Distances alone do not tell the whole story of the diverse geography found in Texas. There are four distinct physical regions in Texas (Figure 1.1).6 Their distinctive features have shaped politics in Texas in a number of important ways.

The Gulf Coastal Plains

The Gulf Coastal Plains extend from the Louisiana border and the Gulf of Mexico, along the Rio Grande up to Del Rio, and northward to the line of the Balcones Fault and Escarpment. As one moves westward, the climate becomes increasingly dry. For- ests become less frequent as post oak trees dominate the landscape until they too are replaced by the prairies and brushlands of central Texas.

The eastern portion of the Gulf Coastal Plains—so-called east Texas—is charac- terized by hilly surfaces covered by forests of pine and hardwoods. Almost all of Tex- as’s timber production takes place here. It is also the home of some of Texas’s most famous oilfields. To the west is the Blackland Belt. A rolling prairie soil made the Blackland Belt a prime farming area during the late nineteenth and early twentieth centuries. It was a major center of cotton production in Texas. Today, it is the most densely populated area of the state and has a diversified manufacturing base.

The Coastal Prairies around Houston and Beaumont were the center for the post–World War II industrial boom, particularly in the petrochemical industry. Winter vegetable and fruit production plays a major role in the Lower Rio Grande Valley, while livestock is important in the Rio Grande Plain, an area that receives less than

privatization of public property the act(s) by which Texas gave public land owned by the state over to private individuals for cultivation and development

9T H E L A N D

24 inches of rainfall on average every year and during the summer months experi- ences rapid evaporation.

Texas’s political life grew out of the Gulf Coastal Plains. The land grants made available to Americans willing to come to Texas in the first half of the nineteenth cen- tury were located here. This region was the foundation of plantation life during the antebellum period when slavery flourished in the state. East Texas was the home of the first oil booms in Texas in the early decades of the twentieth century. The Dallas– Fort Worth area is located in the northwestern part of this region, once a bastion of a small Republican Party. A union movement grew out of the industrialized areas along the coast, providing support to a liberal wing of the Democratic Party. For the most part, though, the Gulf Coastal Plains were dominated by rural conservative values, be they located in the Democratic Party (from 1876 to the early 1990s) or in the Repub- lican Party (from the 1990s to today). Urbanization and suburbanization in Houston and Dallas–Fort Worth have added new dimensions to the political life of this region. Urban areas have become increasingly Democratic, while suburban areas have be- come more Republican.

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The Physical Regions of Texas SOURCE: Dallas Morning News, Texas Almanac 2000–2001 (Dallas: Dallas Morning News, 1999), p. 55.

FIGURE 1.1

10 C H A P T E R 1 T H E P O L I T I C A L C U LT U R E , P E O P L E , A N D E C O N O M Y O F T E X A S

The Interior Lowlands

The Interior Lowlands are an extension of the interior lowlands that run down from Canada. They are bordered by the Balcones Escarpment on the east and south and the Caprock Escarpment on the west. Beginning to the west of Fort Worth, the eastern edge of the Interior Lowlands has predominantly an agricultural economy and a rural population. The western portion, meanwhile, rises from 750 to 2,000 feet in elevation. The West Texas Rolling Plains contain much level, cultivable land and are home to a large cattle-raising industry. Many of the state’s largest ranches are located here. Like other rural areas of Texas today that have abandoned liberalism and the Democratic Party, this region is dominated by conservative politics and the Republican Party.

The Great Plains

Pushing down into northwest Texas from the Rocky Mountains to the Balcones Fault, the Great Plains define the terrain in much of   western Texas, rising from 2,700 feet in the east to more than 4,000 feet along the New Mexico border. The major city on the northern plains is Amarillo. Ranching and petroleum production dominate the econ- omy. The southern plains economy centers on agriculture and cotton production, with Lubbock as the major city. Large-scale irrigation from underwater reservoirs, particularly the Ogallala Aquifer, has played a major role in the economic develop- ment of this region. A major concern of policy makers is that pumping out of the aqui- fer exceeds replenishment, raising questions of the viability of basing future growth on the irrigation practices of the past. We will return to a discussion of the problem of aquifer depletion in Chapter 12.

As in east Texas, conservative political values have a home in the Interior Low- lands and the Great Plains. While representatives from this area have played a major role in the political life of the state over the last 100 years, their power has been ebbing in the face of the population pressures of Texas’s expanding urban areas elsewhere.

The Basin and Range Province

The fourth geographic region in Texas is the Basin and Range Province. Here one finds Texas’s mountains in the Guadalupe Range along the border with New Mexico, which includes Guadalupe Peak (8,749 feet) and El Capitan (8,085 feet). To the southeast is Big Bend country, so named because the Rio Grande surrounds it on three sides as the river makes its southward swing. Rainfall and population are sparse in this region.

The area running from the Basin and Range Province to the Lower Rio Grande has always had a distinctive political culture, heavily dominated by the fact that Texas and Mexico have been joined at the hip economically and demographically. The popu- lation in this region is overwhelmingly Latino. In the late twentieth and early twenty- first centuries, the Border region, including El Paso, McAllen, and Brownsville, has remained a Democratic Party bastion.

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Economic Change in Texas

The famous twentieth-century economist Joseph Schumpeter characterized the capi- talist economic system as being a process of “creative destruction.”7 By this he meant that capitalism was an economic system that underwent periodic waves of transfor- mation fueled by technological innovations in production and distribution. These waves of technological transformation were put into place by entrepreneurs who had visions of new ways to produce and distribute goods and services and who were willing to act on those visions. The capitalist process of creative destruction not only creates a new economic and social world; it destroys old ones. The world of railroads, steam, and steel transformed American economic and social life by nationalizing the market and making new opportunities available to businesses and individuals during the late nineteenth century. It also destroyed the local markets that had defined rural Ameri- can communities since the Founding. The technological innovation tied to gasoline combustion engines, electricity, and radio restructured the American economy again in the 1920s, leaving in its wake a society and an economy that would never be the same.

Schumpeter’s theory of creative destruction provides a useful way to think about the economic changes that have shaped and reshaped the Texas economy. Three great waves of technological change have helped define and redefine the Texas political economy over the last 150 years. The first centered on the production of cotton and cattle and their distribution by an extensive railroad system. The second grew out of the oil industry. The third and most recent is tied to the development of the high-tech digital economy.

Cotton

Cotton is one of the oldest crops grown in Texas.8 Missions in San Antonio in the eighteenth century are reported to have produced several thousand pounds of cotton annually, which were spun and woven by local artisans. Serious cultivation of cotton began in 1821 with the arrival of white Americans. Political independence, statehood, and the ongoing removal of the Native American “threat” in the years before the Civil War promoted the development of the cotton industry. By the mid-nineteenth cen- tury, cotton production in Texas soared, placing Texas eighth among the top cotton- producing states in the Union. Although production fell in the years following the Civil War, by 1869 it had begun to pick up again. By 1880, Texas led all states in the pro - duction of cotton in most years.

A number of technological breakthroughs further stimulated the cotton industry in Texas. First, in the 1870s barbed wire was introduced, enabling farmers to cordon off their lands and protect their cash crop from grazing cattle. Second, the building of railroads brought Texas farmers into a national market. Finally, a newly designed

Trace the evolution of Texas’s economy

12 C H A P T E R 1 T H E P O L I T I C A L C U LT U R E , P E O P L E , A N D E C O N O M Y O F T E X A S

plow made it easier to dig up the prairie soil and significantly in- crease farm productivity.

Throughout the 1870s immigrants from the Deep South and Europe flooded the prairies of Texas to farm cotton. Most of these newly arrived Texans became tenant farmers or sharecroppers. Tenants lived on farms owned by landowners, providing their own animals, tools, and seed. They generally received two-thirds of the final value of the cotton grown on the farm, while the landlords received the other third. Another form of tenant farming is share- cropping. Sharecroppers furnished only their labor but received only one-half of the value of the final product. Almost half of the state farmers were tenants by the turn of the century.9

Two important consequences resulted from the tenant and sharecropping sys tem. First, it condemned many rural Texans to lives of social and economic depen dency. The notorious “crop- lien” system was developed by land lords and merchants to extend credit to farmers who did not own their land. Under this system,

farmers profited from their work only after their debts had been paid or new loans had been made to pay off old debts. The result often was to trap farmers in a debt cycle from which they could not escape. Second, the tenant and sharecropping system helped fuel radical political discontent in rural areas, sparking both the Grange and Populist movements. These movements played a major role in de fining the style of Texas politics throughout much of the late nineteenth and early twentieth centuries.

Cotton production cycled up and down as farmers experienced a series of crises and opportunities during the late nineteenth and early twentieth centuries, ranging from destructive boll weevils to an increased demand brought on by World War I to a collapse in prices following the war. The general decline of the cotton culture con- tinued after World War II. The 1930 Census reported that 61 percent of all farmers in Texas were tenant farmers. One-third of these farmers were sharecroppers. These numbers fell throughout the Great Depression and beyond. By 1987 only 12 percent of all farmers were tenants.10

Cattle

The history of ranching and the cattle industry parallels that of cotton in many ways.11 The origins of ranching and the cattle industry extend back to the late seventeenth century, when the Spanish brought livestock to the region to feed their missionaries, soldiers, and civilians. Ranching offered immigrants an attractive alternative to farm- ing during the periods of Mexican and Republic of  Texas rule. In the 1830s traffic in cattle was limited to local areas. This began to change as cattle drives and railroads be - gan opening up new markets in the east.

Following the Civil War, the cattle industry took off, expanding throughout the state. As with cotton, the invention of barbed wire helped close off the lands used for grazing. By the end of the nineteenth century, ranch lands had been transformed from open range to fenced pasturing. As a result, conflicts over land often broke out be- tween large and small ranchers, as well as between ranchers and farmers. As cattle raising became a more specialized and efficient business, periodic conflicts broke

During the late nineteenth century, in most years Texas produced more cotton than any other state. But although one- quarter of the cotton produced in the United States still comes from Texas, the importance of the cotton industry to the state’s economy has declined since the 1920s. This photo shows land and machinery used to farm cotton.

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out between employers and employees. Throughout the twentieth century, ranching remained a cyclical industry, struggling when national and international prices col- lapsed and thriving during upturns in the economy.

Ranching and cotton production remain important industries in the state, al- though increasingly dominated by big agribusiness companies. Today, Texas normally leads the nation in livestock production. Similarly, it normally leads all other states in cotton production. About 40 percent of the total cotton production in the United States comes from Texas. In 2014 the annual cotton crop was over 6.2 million bales, valued at over $2.1 billion. Most of this production is exported to such places as China, Turkey, and Mexico. Production has fluctuated over the last decade because of the severe drought that plagued parts of the state.12

Today, neither cotton production nor ranching drives the Texas political econ- omy. The number of people making a living from agriculture has dropped signifi- cantly over the last 50 years as agribusiness has pushed out the family farm and ranch. In 1940, 23 percent of the population worked on farms and ranches. Another 17 per- cent were suppliers to farms and ranches or helped assemble, process, or distribute agricultural products. Currently, less than 2 percent of the population lives on farms and ranches, with an additional 15 percent of the population providing support, pro- cessing, or distribution services to agriculture in Texas.13

A new set of technological breakthroughs challenged the nineteenth-century dominance of cotton and cattle in the early twentieth century. These breakthroughs focused not on what grew on the land, but on what lay beneath it.

Oil

Oil was first sighted in the mid-seventeenth century by Spanish explorers.14 There was no market or demand for the product, and nothing was done to develop this natu- ral resource. Over a century later, encouraged by a growing demand for petroleum products following the Civil War, a scattering of entrepreneurs dug wells, although they were not commercially viable. The first economically significant oil discovery

Cattle ranching is another of Texas’s dominant industries. The most famous ranch in Texas is the King Ranch, shown here in 1950. Currently covering almost 1,300 square miles, it is larger than the state of  Rhode Island.

14 C H A P T E R 1 T H E P O L I T I C A L C U LT U R E , P E O P L E , A N D E C O N O M Y O F T E X A S

in Texas was in 1894 in Navarro County near Corsicana. By 1898 the state’s first oil re - finery was operating at the site. Oil production had become economically viable.

What catapulted Texas into the era of oil and gas was the discovery at Spindle- top on January 10, 1901. Located three miles south of Beaumont along the Gulf Coast, the Spindletop discovery produced Texas’s first oil boom. The success of Spindletop encouraged large numbers of speculators and entrepreneurs to try their luck in the new business. Within three years, three major oilfields had been discovered within 150 miles of Spindletop.

Oil fever spread throughout Texas over the next decade. In north central Texas, major discoveries took place at Brownwood, Petrolia, and Wichita Falls. In the teens major discoveries were made in Wichita County, Limestone County near Mexia, and once again in Navarro County. In 1921 oil was found in the Panhandle, and by the end of the decade major oilfields were being developed all across the state. The biggest oil- field in the state was found in October 1930 in east Texas. As journalist Mary G. Ramos notes, “By the time the East Texas field was developed, Texas’s economy was powered not by agriculture, but by petroleum.”15

The oil and gas industry transformed the social and economic fabric of Texas in a number of important ways. By providing cheap oil and gas, the industry made pos- sible a new industrial revolution in twentieth-century America that was fueled by hydrocarbons. Cheap oil provided a new fuel for transportation and manufacturing. Railroads and steamships were able to convert from coal to oil. Manufacturing plants and farms were able to operate more efficiently with a new, cheap source of energy, encouraging individuals to migrate to cities away from farms. Automobile production was encouraged, as was the building of roads. The Interstate Highway System that was built during the 1950s and 1960s changed fundamentally the transportation patterns that shaped the movements of people and goods in Texas. The triangle formed by I-35 from San Antonio to Dallas–Fort Worth, I-45 from Dallas–Fort Worth to Houston, and I-10 from Houston to San Antonio became the heartland of the Texas economy and the location of an increasing percentage of the state’s population.

The oil and gas industry also sparked a rapid industrialization of the Gulf Coast region. Among the companies developing the Gulf Coast oilfields were Gulf Oil, Sun Oil, Magnolia Petroleum, the Texas Company (then Texaco, now Chevron), and Hum- ble Oil (which later became Esso, then Exxon, and finally ExxonMobil). The refineries, pipelines, and export facilities laid the foundations for the large-scale industrial- ization that would take place along the Gulf Coast in the Houston–Beaumont–Port Arthur region. By 1929 in Harris County, for example, 27 percent of all manufactur- ing employees worked in refineries. By 1940 the capacity of all the refineries had in- creased fourfold.16 The petrochemical industry continued to flourish throughout the 1960s, when demand for its products grew at the rate of 10 percent a year.

One important effect of the oil and gas boom in Texas was the development of a new rhythm to economic life in the state. There had been a natural pace to the econ- omy when it was tied to the production of cotton and cattle. Prices of products could rise and fall, bringing prosperity or gloom to local economies. But there was a bond be- tween the land and the people and the communities that formed around them. Oil and gas, on the other hand, introduced a boom-and-bust mentality that carried over into the communities that sprang up around oil and gas discoveries. Rural areas were of- ten unprepared for the population explosion that followed the discovery of oil or gas. Housing was often inadequate or nonexistent. Schools quickly became overcrowded.

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General living conditions were poor as people sought to “make it big.” The irony of the oil and gas business was that a major discovery that brought large amounts of new oil and gas to market could lead to a sudden collapse in prices. Prosperous economic times could quickly turn into local depressions. And when particular fields were tapped out, boom towns could quickly become ghost towns.

The oil and gas industry also transformed government and the role that it played in the economy. Following the Civil War, a series of attempts to regulate the railroads had largely failed. In 1890, after considerable controversy fueled by Populist anti- railroad sentiment, a constitutional amendment was passed to create an agency to regulate the railroads, the Texas Railroad Commission. This regulatory agency’s pow- ers were extended in 1917 to regulate energy. The Railroad Commission was empow- ered to see that petroleum pipelines were “common carriers” (that they transported all producers’ oil and gas) and to promote well-spacing rules. In an attempt to bring stability to fluctuations in world oil prices brought on by the glut of oil on world mar- kets in the 1930s and to avoid wasteful oil production, the commission won the au- thority to prorate oil and determine how much every oil well in Texas might produce. Through the late 1960s the Texas Railroad Commission was one of the most impor- tant regulatory bodies in the nation. It was also one of the few democratically elected regulatory agencies.

Helping to expand the power of state government in the economy through the Railroad Commission was only one effect of the oil and gas industry in Texas. The oil and gas industry also had an important fiscal effect on state government. Beginning in 1905 the state collected oil production taxes. These rose from $101,403 in 1906 to over $1 million in 1919 and almost $6 million in 1929. For the 2016–17 biennium, it was estimated that oil production taxes, or severance taxes, would contribute $3.9 billion to the state budget, down from $6.75 billion in 2014–15, a decrease of 42.1 percent. Natural gas production taxes in 2016–17 added another $1.9 billion to the state bud- get, down from $3.18 billion or down 39.8 percent in 2014–15.17 These numbers have fluctuated in recent years as the price of oil and gasoline has collapsed and then re- covered. As we will see in Chapter 11 on public finance in Texas, oil and natural gas production has returned to play an increasingly important role in the state’s finances through the severance tax.

Much like the state coffers, higher education in Texas has benefited from the oil and gas industry. What many thought was worthless land at the time had been set aside by the state constitution of 1876 and the state legislature in 1883 to support higher education (the Permanent University Fund). As luck would have it, oil was discovered in the West Texas Permian Basin in 1923 on university land. Soon, 17 wells were pro- ducing oil on that land, sparking a building boom at the University of Texas. In 1931 the income of the Permanent University Fund was split between the University of Texas at Austin and Texas A&M University, with the former receiving two-thirds and the latter one-third. In 1984 the income was opened up to all University of Texas and Texas A&M schools. Along with the royalties from other natural resources on univer- sity land, oil and gas royalties created one of the largest university endowments in the world. Today, the Permanent University Fund holds title to 2.1 million acres located in 24 counties, primarily in west Texas. In August 2015 the market value of the Perma- nent University Fund was calculated to be $17.4 billion.18

The oil and gas industry had one other effect on life in Texas that is worth not- ing. Fortunes were made in the industry, and those fortunes paved the way for an

16 C H A P T E R 1 T H E P O L I T I C A L C U LT U R E , P E O P L E , A N D E C O N O M Y O F T E X A S

expansion of private philanthropy that would have a major influence in shaping Texas’s culture. Among the most famous examples of this private philanthropy were the Meadows Foundations, established in 1948 to promote programs in health, education, visual arts, social services, and historical preservation. The Sid W. Richardson Foun- dation was founded in 1947 and supported health and education programs, as well as the development of the arts in Fort Worth. The Bass Performance Hall, which opened in May 1998, was funded by the Bass brothers, grandnephews of the independent oil- man Sid Richardson.

The movement out of the era of oil and gas and into that of high tech was not an easy one. World oil prices rose in 1981 to almost $35 per barrel. At the time, oil-related businesses accounted for 26 percent of the gross state product. From 1971 to 1981 the average rate of economic growth was 4.4 percent. Fueled by a booming oil-based econ- omy and a rapidly increasing population, real estate prices shot up in urban areas such as Houston and Dallas. Projections were made that as oil prices rose, perhaps to $70 or $80 per barrel on the world market, future prosperity was inevitable. Indeed, there was some talk that Texas’s oil-driven economy had become recession-proof. Such talk proved to be premature, to say the least.

World oil prices began to collapse in 1982, bottoming out on March 31, 1986, at $10 per barrel. Other sectors of the economy began to suffer as the price of oil fell. Real estate deals fell through, and construction projects slowed and then shut down. Speculators defaulted on their loans, and banks began to fail. Throughout the 1980s, 370 banks went under in Texas. At the same time, the state went through two major recessions, one in 1982 and another in 1986–87. The average annual economic growth slowed to 1.7 percent, the worst since World War II.

Texas emerged from the economic malaise of the 1980s with a transformed state economy. Though remaining an important sector in the economy, the oil and gas busi- ness was no longer the primary driving force. By 1992 production of oil had fallen to 642 million barrels worth $11.8 billion. Production continued to fall until 2000 to just under 349 million barrels worth a little over $10 billion. Over 146,000 jobs had been lost in the oil industry throughout the 1980s. By the early 1990s oil accounted for only about 12 percent of the gross state product.

One can trace the rise and decline and rise again of the oil and gas industry in Texas through production figures (see Figure 1.2). Oil production in Texas seemed to peak in 1972, and there were decades of decline in the state’s production. New technologies such as horizontal drilling and fracking led to a new boom era of oil and gas production in Texas beginning in 2008 and carrying through 2016. Through March 2016, more than 1.39 million barrels of that daily production came from the Permian Basin region in west Texas. This oilfield may be the second largest in the world. The result of this new oil boom is that today oil (and gas) emerged again as a mainstay of the Texas economy, although it is an economy that is far more diversified than in any earlier era. With the new Texas oil boom came greater resources for the Texas budget. Additionally, with the boom came new demands for vast water supplies—an essential component of the new drilling technology—and new concerns over the effects that those new technolo- gies will have on the environment.19

By 2015 there were some dark clouds on the horizon of the oil industry. After hovering around $100 per barrel through mid-2014, the price of oil began a steady de- cline to around $50 per barrel in mid-2015 before falling below $28 per barrel in early 2016. Not surprising, as the price fell through the second half of 2015, production of oil in Texas went into decline as well. However, by late May 2016, prices began to re-

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cover, topping $50.00. Whether prices will rise or fall in 2016 and 2017 is uncertain at the time of publication. The long-term impact of the fluctuation of the price of oil and of oil production on the state’s economy and budget also is anyone’s guess.20

High-Tech Industries

By the last decade of the twentieth century, new industries and technologies not based in extraction from the land assumed significant roles in plotting the state’s economic future. Among the most important of these was the burgeoning high-tech industry. In contrast to the 1980s, the 1990s were a period of rapid growth. In the 1990s, unlike

Oil Production in Texas NOTE: Data refer to onshore production in Texas.

SOURCE: Texas Railroad Commission; “Historical Crude Oil Prices,” InflationData.com; Texas Almanac 2015.

FIGURE 1.2

0

150

300

450

600

750

900

1,050

1,200

0

10

20

30

40

50

60

70

80

90

$100

1915 1955 1972 1975 1995 2005 2008 2010 2011 2012 2013 2014 2015

Annual production (millions of barrels, left axis)

Average price per barrel ($, right axis)

PRICEPRODUCTION

1,350

1,500

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in early periods of speculative booms such as the 1970s, the economy’s growth was grounded in a rapidly diversifying economy. At the heart of this boom was a fast- growing manufacturing sector tied to high tech. In the 1990s,