Even before Pearl Harbor, the United States government had begun to expand the production of gasoline, diesel fuel, motor oil, explosives, synthetic rubber, aviation fuel and tin in order to support the Allied powers and strengthen the defense capability of the United States. Unwilling to rely solely on private enterprise to build the necessary plants to refine these products or the transportation infrastructure to move them, Congress appropriated money in June 1940 to build industries that aided defense. Congress established the Defense Plant Corporation (DPC) as a subsidiary of the Reconstruction Finance Corporation (RFC) to push American industrial capacity forward.1 The changes needed to convert industry to wartime production took some time and led to a huge investment by the federal government in industries that could support the war effort.
Col. Hugh B. Moore and other Texas City business leaders recognized this opportunity and successfully lobbied to secure substantial funding from the DPC. Texas City businesses were awarded five major defense contracts to include styrene production, pipe production, tin smelting, and oil refining, as well as a number of smaller defense contracts. The physical facilities, constructed, remodeled or expanded with federal money, were initially owned by the federal government and leased to corporations who managed the operations. The DPC gave most of those corporations the option to buy the plant facilities they managed after the war ended.
Texas City had several advantages that contributed to its suitability for manufacturing defense materials. Before the war began, it already had four functioning refineries and a petrochemical plant, plus space for expansion. Its deep water port and railroad terminal meant easy access to transportation of products by train or ocean tanker. In addition to the city's existing stable workforce, Texas City's proximity to Houston and Galveston ensured access to a large pool of laborers as industry expanded in the city.
The ready supply of workers was a critical factor. In 1940, the four oil refineries — Pan American Refining, Southport Petroleum, Republic Oil Refining and Stone Oil — employed a thousand heads of families out of Texas City's population of about 5,700 people. A scant four years later, the town's petroleum-related industries employed 5,330 people, and all the Texas City petroleum refineries were operating at capacity.2 While management for the new plants was usually brought in from outside the area, other employees were hired locally. The war nearly eradicated unemployment in the area.
1Benham, Priscilla. (1987). Texas City: Port of industrial opportunity. Houston, TX: University of Houston, 240.