Port Arthur is on State Highway 87 on the lower west bank of Sabine Lake, five miles east of the Neches River Rainbow Bridge and seventeen miles southeast of Beaumont in southeast Jefferson County. It was founded by Arthur E. Stilwell, a Kansas railroad promoter, who in 1894 launched the Kansas City, Pittsburg and Gulf Railroad. His intention was to link Kansas City to the Gulf of Mexico, and originally the Gulf Coast terminus was to be Sabine Pass. But Stilwell changed his mind, evidently because he could not reach an acceptable agreement with Luther and Herman Kountze, New York bankers who owned most of the land around Sabine Pass. By December 1895 Stilwell and his backers had acquired land on the western shore of Sabine Lake and begun platting a city, which the promoter named for himself and which became a municipality in 1895. Stilwell envisioned Port Arthur as a major tourist resort as well as an important seaport; proximity to the lake and a mild climate convinced him that visitors could be easily attracted to the area. But in his attempt to transform this marshy terrain into a tropical garden, Stilwell never lost sight of his primary endeavor. In June 1896 the Port Arthur Channel and Dock Company was established, and in April 1897 it began cutting a canal along the western edge of the lake to deep water at Sabine Pass. Legal hurdles thrown up by the Kountze bothers delayed the project, but Port Arthur finally became a port in fact as well as name in March 1899. Meanwhile, the city showed signs of steady progress. By the fall of 1897 it had 860 residents, and the following spring it was incorporated. A mayor-council government was established, but it gave way to the commission system in 1911. A city manager-commission system was implemented in 1932.
Despite his achievements, Stilwell was replaced as Port Arthur's chief financial backer in the early twentieth century by John W. (Bet-a Million) Gates, a noted Wall Street plunger. After the Kansas City, Pacific and Gulf went into receivership in the spring of 1899 Stilwell's role in Port Arthur ebbed quickly, coming to an end in January 1904. Gates arrived in Port Arthur in December 1899 and was in the city periodically thereafter until his death in August 1911. His major concerns, like Stilwell's, were the port and canal. Port Arthur became an official port of entry in 1906, and by 1908 the Sabine-Neches canal had been deepened and extended up the Neches River to Beaumont and Orange. Extension of the canal was not an unmixed blessing, though, for it cut Port Arthur off from Sabine Lake and thereby diminished the city's prospects as a tourist resort. Aside from business, Gates's legacy included Port Arthur College, a business and radio school founded in 1909 that became a branch of Lamar University in 1975, and Gates Memorial Library, funded by Mrs. Gates in 1918 as a memorial to her husband and son.
Stilwell and Gates may have started the city, but the eruption of Spindletop on January 10, 1901, secured its future. Major oil companies-Gulf, Magnolia, Humble, and Texaco-all emerged from the Spindletop oilfield boom. Gulf in 1901 and Texaco in 1902 built major refineries at Port Arthur. Pipelines tied the city to Spindletop, and petroleum products soon were shipped through the canal. By 1909 Port Arthur had become the twelfth largest port in the United States in value of exports, and by 1914 it was the second largest oil-refining point in the nation. Development as a major petrochemical center was reflected in population growth. From 900 residents in 1900, Port Arthur expanded to a population of 7,663 in 1910 and 50,902 in 1930. After the late 1960s, when the city had 69,000 residents, the population slightly declined; in 1990 it was 58,724.
By 1950 five refineries in the Port Arthur area employed some 12,000 workers, whose salaries accounted for 50 percent of the money spent in Port Arthur stores. Unionization of this work force was quite successful. In 1948 the Congress of Industrial Organization's Oil Workers International had some 8,000 Port Arthur members, while the various craft unions of the American Federation of Labor had 5,000. Beginning in the mid-1970s union influence declined somewhat. In the 1960s a new bridge called Gulfgate was built over the Sabine-Neches waterway in order to connect Port Arthur with Pleasure Island and offer access to the Sabine Lake Causeway leading into Louisiana. The Neches River Rainbow Bridge, one of the tallest bridges in the South (230 feet with a vertical clearance of 176 feet), crosses the Neches River on State Highway 87 between Port Arthur and neighboring Orange and was completed in 1931. See also SABINE-NECHES WATERWAY AND SABINE PASS SHIP CHANNEL.