Weetman Pearson was probably the most powerful British businessman in the early twentieth century. He transformed a family firm into the largest public works contractor in the world, before going on to develop the Mexican oil industry.
S Pearson & Son was a public works contractor founded by Samuel Pearson in Yorkshire in 1844.
At the age of 16 Weetman Pearson (1856 – 1927) entered the business founded by his grandfather.
Weetman Pearson became a partner in the family firm from 1883. The headquarters of the firm were relocated to London.
Described as a “hard-headed Yorkshireman”, Weetman Pearson was credited with growing the family firm from a regional concern into an international player. Pearson modestly described himself as a “stolid, uninteresting slogger”.
Major public works contracts
S Pearson & Son won the contract to construct the Blackwall tunnel underneath the River Thames in 1892. Upon completion in 1897 it was the largest underwater tunnel in the world, and established the reputation of the firm.
Pearson embarked upon a £2 million project to provide a drainage canal for Mexico City, which had experienced seasonal flooding, in 1890. The Grand Canal in Mexico City was completed to schedule and on budget in 1896.
S Pearson & Son was registered as a private limited company with a capital of over £1 million in 1897.
Around the turn of the century, Pearson built three harbours, Vera Cruz, Salina Cruz and Puerto Mexico, as well as the Tehuantepec railway (completed 1905) which connected the Atlantic and Pacific coasts.
S Pearson & Son employed 30,000 men by 1901.
Pearson enters the oil industry in Mexico
Weetman Pearson began to acquire oil concessions in Mexico from 1901. He was encouraged by President Porfirio Diaz (1830 – 1915), who was keen to develop a rival to the Standard Oil, who controlled the Mexican oil industry.
Pearson soon found himself in conflict with Standard Oil. He refused to back down however, saying, “in a mild way I am going to be ruthless”.
S Pearson & Son won a contract to tunnel the Hudson River and the East River in Long Island, thus linking Brooklyn and New Jersey by rail, in 1904.
S Pearson & Son was the largest engineering firm in the world by 1905, employing 60,000 men. Weetman Pearson was one of the wealthiest men in England.
Pearson struck oil in Mexico in around 1905. He agreed to supply C T Bowring, the largest distributor of petrol in Great Britain, with oil at a fixed price. Unfortunately, his well ran dry, and he was forced to buy crude from his rival, Standard Oil, at inflated prices in order to fulfil the contract.
Pearson discovered the Dos Bocas oil reserves in 1908. With a daily output of 300,000 barrels, it was the largest deposit yet found in the world.
The Mexican Eagle Co, controlled by S Pearson & Son, was formed to exploit the Pearson oil assets.
Mexican Eagle went public in 1910, with a capital of £3 million. Its production output over the next two years was estimated at 750,000 tons.
Standard Oil and Royal Dutch Shell virtually controlled the global oil market at this time. Pearson was reluctant to rely on his competitors, and established the Eagle Oil Transport Co in 1912 to process and distribute his raw product.
The value of Mexican Eagle tripled between 1910 and 1913. Between 1912 and 1913, the company held an estimated 50 percent market share for fuel products in Great Britain. Production in 1913 was eleven million barrels. Mexican Eagle was the largest British company by 1913.
Mexico was the third largest oil producer in the world by 1914, after the United States and Russia, and Pearson controlled around 60 percent of the country’s output.
According to a contemporary quote from the Daily Mail, “oil is the new source of power that will govern the future industrial development of the world”.
Mexican Eagle produced nearly 19 million barrels of oil in 1919.
With a market capitalization of £79 million, the Pearson group of companies ranked as by far the largest business in Britain by 1919, with a valuation more than 25 percent higher than its nearest rival, Burmah Oil.*
Pearson sells Mexican Eagle to Shell
Pearson sold control of his oil interests, including 35 percent of the ordinary capital of Mexican Eagle, to the Shell Transport & Trading Co for a reported £10 million in 1919. Shell representatives were given a majority on both boards of directors.
The merger represented the takeover of the largest British company by the largest European company. The Shell companies had an output of oil in 1918 roughly double that of Mexican Eagle, at around 40 million barrels.
Shell invested heavily to increase production in Mexico. Mexican Eagle produced over 32 million barrels in 1920, accounting for more than 20 percent of Mexican production. An estimated 50 million barrels were shipped in 1921. The company had a daily capacity of well over 100,000 barrels.
Weetman Pearson exited the contracting business in 1926 following a mild heart attack. S Pearson & Son would instead concentrate on its assets in electricals, oil, land and finance.
Pearson died in 1927 with an estate valued at £4 million. According to his obituary in the Manchester Guardian, he “never lost his accent and pleasant Yorkshire ways”.
The Mexican oil industry was nationalised by the government in 1938.
* Bud Frierman, Lisa, Andrew C. Godley and Judith Wale, ‘Weetman Pearson in Mexico and the Emergence of a British Oil Major, 1901-1919’, Business History Review 81 (2007).