The Austin Chalk is a geologic formation running through the middle of Texas and into Louisiana. When drillers began producing oil and gas from this formation in Central Texas, some forty or so years ago, my aunt’s second husband, principal of the local elementary school and long-time farmer and rancher, told my mother and me of a conversation he had with another local landowner about oil & gas royalties. Landmen were signing up landowners as fast as they could, leasing access to oil & gas deposits on the owners’ lands.
The local landowner was a hard-worker whose farm had never supported him. For years, he had worked a full-time job to supplement his income and had, like many others, farmed and “run cattle” in his “leisure hours.” Truth be told, there was little leisure… he worked all the time. And, he and his family were probably just scraping by at that.
He had just received his first ever monthly royalty check. It was in the dizzying amount of $43,000… a very large amount of money in those days. It was probably the largest chunk of money the farmer had ever received at one time. And while he didn’t say it, he was no doubt aware that he could expect to receive a similar check each month, possibly for many years.
My “uncle” asked the farmer what he planned to do with the money. The farmer thought for a long minute and ticked off his responses on his finger tips. He would set aside money for taxes, pay off the last of his debt on his farm and buy a “good used pickup truck.” Mother and I joined “my uncle” in amusement at the gentleman’s frugality in the light of almost-certain coming riches.
I was surprised to learn later, that a few newly wealthy landowners somehow failed to realize they would owe a healthy tax bill, and after blowing through their riches, were forced to secure emergency bank loans to get straight with the IRS… no doubt, a bitter lesson in frugality.