History of Texas - Texas in Prosperity, Depression, and War

In the aftermath of the Galveston disaster, action proceeded on building the Houston Ship Channel to create a more protected inland port. Houston quickly grew once the Channel was completed, and rapidly became the primary port in Texas. Railroads were constructed in a radial pattern to link Houston with other major cities such as Dallas-Fort Worth, San Antonio, and Austin.

By 1900 the Dallas population reached 38,000 as banking and insurance became major activities in the increasingly white-collar city, which was now the world's leading cotton center. Businessmen took control of civic affairs; with little municipal patronage, there was only a small role for the Democratic party to play (and no role for the predominantly black Republican party.) A dramatic sign of progress was the towering 190-foot steel-frame skyscraper—the fourteen-story Praetorian Building, built in 1909 to house the Praetorian insurance company. Dallas became the regional headquarters of the Federal Reserve in 1914, strengthening its dominance of Texas banking. The city reached 260,000 population in 1929 when the Great Depression hit Texas, causing a sharp drop in the prices of oil, cotton and cattle, and growth came to a standstill.

Anthony F. Lucas, an experienced mining engineer drilled the first major oil well at Spindletop, on the morning of January 10, 1901 the little hill south of Beaumont, Texas. The East Texas Oil Field, discovered on October 5, 1930 is located in east central part of the state, and is the largest and most prolific oil reservoir in the contiguous United States. Other oil fields were later discovered in West Texas and under the Gulf of Mexico. The resulting Texas Oil Boom permanently transformed the economy of Texas, and led to the first significant economic expansion after the Civil War.

The creation of the New Mexico Territory in 1850 fixed the boundary with the state of Texas at the Rio Grande. Between then and 1912, when New Mexico became a state, the course of the river shifted. In what became known as the Country Club Dispute, a boundary dispute case was filed with the Supreme Court of the United States in 1913. The court settled the matter in 1927 by determining where the river had flowed in 1850, largely in agreement with the claims of Texas.

The economy, which had experienced significant recovery since the Civil War, was dealt a double blow by the Great Depression and the Dust Bowl. After the Stock Market Crash of 1929, the economy suffered significant reversals and thousands of city workers became unemployed, many of whom depended on federal relief programs such as FERA, WPA and CCC. Farmers and ranchers were especially hard hit, as prices for cotton and livestock fell sharply. Beginning in 1934 and lasting until 1939, an ecological disaster of severe wind and drought caused an exodus from Texas and Arkansas, the Oklahoma Panhandle region and the surrounding plains, in which over 500,000 Americans were homeless, hungry and jobless. Thousands left the region forever to seek economic opportunities along the West Coast.