YEARS OF READJUSTMENT (1945-1950)

Houston faced a new combination of economic conditions following World War II, and steps had to be taken to make adjustments to these changes and to take advantage of new industrial opportunities. Farm and ranch production would continue important in the creative wealth group, and there would be new uses for these products, but no substantial growth possibilities. The output of oil and gas wells, of sulphur and salt deposits, and of forests in the area offered broader possibilities but no great growth potential. Fish and other products of the seas would be an increasing part of the economy of the area, but expansion in this production would scarcely keep step in the foreseeable future with the growth in population. Thus it seemed rather evident that our continued economic growth would depend increasingly upon the application of research and development to our natural resources, and that industry was the segment of our creative wealth group offering the greatest expansion possibilities.

For a half century, this area had demonstrated the dynamics of growth, and the economic momentum had been accelerated under war-time needs. The ideology furnished by past leadership in Houston and Texas had provided a political and social climate favorable to business and industry. This favorable climate, combined with a rich endowment of natural resources, exceptional transportation facilities, competitive fuel and power prices, and a flexible labor market had created and sustained a thriving economy.

There were other trends that had to be taken into consideration in projecting our industrial-development program. The pattern of our economy was changing rapidly from rural to urban. Trends in population increase indicated that jobs would have to be created in the area at a faster rate than during the history of Houston up to that time. In 1940, more than 70 percent of the nation’s industrial production came from 14 percent of the land area north of the Ohio River and east of the Mississippi River; but by 1945, industry was decentralizing to a greater extent than ever before as the national market began to develop on a more uniform basis. The trend of industrial expansion was toward the South and West, and from the core areas of cities to the fringe areas. It also seemed evident that the competition for industry would be the most intense it had ever been—region against region, state against state, and city against city.

Our most immediate industrial potential seemed to lie in the field of petrochemicals. We had the basic raw materials that were most in demand for organic as well as inorganic chemicals. The market for chemicals and chemical products seemed wide open for growth. The accelerated rate of research and development during the war years had opened up whole new ranges of chemical uses and products. Germany had led in chemical industries prewar, and its production had been withdrawn for the most part from the world markets.

World War II had already given impetus to petrochemicals in the Gulf Coast, particularly in the production of synthetic rubber and aviation gasoline. By-product gases from the production of aviation gasoline had become the main source of raw materials for the petrochemical industry, and when greater quantities of hydrocarbons were needed, they were abundantly available from the natural gasoline and cycling plants in the area.

On the basis of this analysis, we projected our industrial development program in the main toward petrochemicals. We needed basic information, and to supply this we reorganized and expanded the work of the Research and Statistics Department of the Chamber of Commerce. This information needed to be in a form that would be useful to industrial prospects making a study of our area, and we sought to tell the Houston story, particularly in terms of petrochemicals. The subject was popular with editors of general as well as specialized periodicals, and we took advantage of this interest as best we could. Our companies interested most directly in industrial development were ill-equipped in this field, and we sought to encourage banks, utilities, transportation companies and industrial realtors to become more active in new-business promotion. Our own staff possibilities were limited, and we enlisted the cooperation of an increasing number of qualified experts in different fields available for conferences with industrial prospects. We encouraged the development of industrial districts, to keep industrial sites available and competitive in price.

In the years immediately following World War II, petrochemical industries were installed along the Houston Ship Channel in terms of hundreds of millions of dollars. These have steadily expanded, while new plants continue to be located throughout the Texas-Louisiana Gulf Coast area. Chemical experts have said that the chemical industry is its own best customer, and we sought to develop this in a way that the waste material of one plant could become the raw material of another, and the by-product of one plant might become the raw material for another. These intermediates, manufactured in abundance along the Gulf Coast, are still an important key to our industrial future, more especially as the fabrication of consumer products is expanded. The petrochemical business basically consists of upgrading hydrocarbons from petroleum and natural gas into a variety of increasingly important chemical products.

For many years, Texas has ranked first in the nation in new chemical plant construction, and "Time Magazine" has termed the Gulf Coast as the "Golden Crescent" where 75 percent of the nation’s chemical-producing facilities are located. In a scant quarter of a century, the industry has grown from little more than a whiff of waste gases in chemists’ test tubes to a multi-billion-dollar industry. Petrochemicals now reach into almost every phase of modern living and account for about 60 percent of all the sales of chemicals and allied products.

One of the reasons that the Gulf Coast surpassed other areas in petrochemical production is its location within easy pipeline reach of 60 percent of the nation’s petroleum reserves and 67 percent of the natural gas reserves. Evidence of this and of the close cooperation between competitors in the chemical industry is found in the vast network of pipelines in the Houston area carrying natural gas, crude oil, and petrochemicals between and among plants to such an extent that it has become known as the "Spaghetti Bowl." Through this maze of pipelines, multitudes of raw materials and products flow between wells, salt domes, refineries and chemical plants.

Petrochemicals continue to be an important growth factor for the Houston-area economy. While other areas have become more competitive in the production and transmission of raw materials, we have steadily increased the potential inherent in our human resources. Today all of our major banks, utilities, transportation companies, industrial realtors and industrial districts have specialists in industrial development and are active in prospect development and negotiations. Thus the Houston area is one of steadily expanding industrial payrolls and production, is becoming more diversified in its manufacturing, and is improving its national ranking in most of the major manufacturing groups.

Within a quarter of a century, Houston has moved from a position of deficiency in hospital facilities to that as one of the nation’s most vital and significant centers of medical accomplishment. The history of this achievement is an outstanding record of the teamwork of individuals and agencies in building for the public welfare. The Texas Medical Center is more than a symbol of medical progress. It is a community achievement that stands as a monument to the vision, hard work and generosity of many people. While it was designed for humanitarian purposes, it has also become an important factor in the economic life of Houston.

Since the Chamber of Commerce has worked very closely through the years with all those who have had major roles in the development of the Medical Center, I have had a very deep and continuing interest in this program. Credit for this achievement must be widely shared—the M. D. Anderson Foundation, the Hermann Estate, the University of Texas, Hugh Roy and Lillie Cullen, Baylor University College of Medicine, Jesse H. Jones, and the medical profession of Harris County. Even this only introduces the list. There have been many individuals who caught the vision of the Center and who devoted a great deal of time and talent in their dedication to this objective—Colonel W. B. Bates, Colonel George A. Hill, Jr., Dr. E. W. Bertner, Dr. Fred C. Elliott, Dr. Claud C. Cody II, W. S. Bellows, Dr. R. Lee Clark, Jr., W. Leeland Anderson, Leon Jaworski, and many, many others.

The development of the Texas Medical Center is a prime example of creating a community opportunity while working out a solution for a community problem. In 1903, when the Harris County Medical Society was formed, Houston had 65 doctors and one hospital to serve a population of 64,000. Some thirty years later, Houston had only a dozen hospitals, with 350 doctors caring for a population of 360,000. By 1965, 2,000 doctors were practicing in a metropolitan area of 1,750,000, while the investment in medical facilities had soared to approximately $200,000,000, with medical education, research and practice meeting the highest standards of the profession.

The need for expanded hospital facilities had been recognized so long that when plans for a medical center began to take tangible form in 1942, President W. S. Cochran of the Chamber of Commerce said: "This brings to a happy conclusion a project which has been very close to the heart of the Houston Chamber of Commerce for a number of years." During those days of ambitious but war-clouded planning, it could not be recognized that what had been projected was but a beginning and not a conclusion.