Or perhaps the simpler explanation is that the specific risks and effects of TEL were unknown at the time.
The specific risks and effects of TEL were known as early as 1923, when the inventor took a prolonged vacation to cure lead poisoning. Here are excerpts from the wikipedia article for Thomas Midgley, Jr. http://en.wikipedia.org/wiki/Thomas_Midgley,_Jr [wikipedia.org].
[...] In December 1921, while working under the direction of Kettering at Dayton Research Laboratories, a subsidiary of General Motors, Midgley discovered that the addition of TEL to gasoline prevented "knocking" in internal combustion engines.
[...] In 1923, Midgley took a prolonged vacation to cure himself of lead poisoning. "After about a year's work in organic lead," he wrote in January 1923, "I find that my lungs have been affected and that it is necessary to drop all work and get a large supply of fresh air." He went to Miami, Florida for convalescence.
[...] However, after two deaths and several cases of lead poisoning at the TEL prototype plant in Dayton, Ohio, the staff at Dayton was said in 1924 to be "depressed to the point of considering giving up the whole tetraethyl lead program." Over the course of the next year, eight more people would die at DuPont's Deepwater, New Jersey plant.
[...] On October 30, 1924, Midgley participated in a press conference to demonstrate the apparent safety of TEL. In this demonstration, he poured TEL over his hands, then placed a bottle of the chemical under his nose and inhaled its vapor for sixty seconds, declaring that he could do this every day without succumbing to any problems whatsoever. However, the State of New Jersey ordered the Bayway plant to be closed a few days later, and Jersey Standard was forbidden to manufacture TEL there again without state permission. Midgley himself was careful to avoid mentioning to the press that he required nearly a year to recover from the lead poisoning brought on by his demonstration at the press conference.
Source: http://rss.slashdot.org/~r/Slashdot/slashdotScience/~3/MayhPjB8DIs/story01.htm
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