Feeling Cold in 1917? Don’t Blame Harry Garfield, Blame the Railroads

USFAI had the honor of contributing to the US World War I Centennial Commission’s Weekly Podcast today, where I tried to get folks up to speed on the state of the American coal industry in December 1917.  Whether or not I was successful in that venture is up for debate, but it did force me to review the fascinating story of the United States Fuel Administration, and its overwhelmed leader, Harry Garfield.

The USFA was created in September of 1917 and charged with a pretty monumental task: straightening out the nation’s byzantine fuel distribution network.  Americans had no problem raising coal in the World War I years–the industry opened up over 1,300 new mines from 1917-18. But getting it to industrial and residential consumers was an altogether different story.  As it turns out, railroads liked to turn a profit, and although many manufacturers signed contracts for coal delivery, the managers of coal-carrying railroads were more inclined to send full cars to the highest bidder.  In many cases, coal accumulated at the mine mouth for want of transportation, only for mine operators to learn their coal cars had been dispatched elsewhere.  By December 1917 this problem was chronic, and despite the USFA’s plea to consumers to purchase their winter’s supply of fuel in the warm months–hence their beautiful posters that demanded folks to “Order Coal Now” and that “Uncle Sam Needs that Extra Shovelful.”

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Harry Garfield, looking glum.  This is probably right after he issued the Closing Order

Into the breach stepped Harry Garfield, the president of Williams College and a rather naive believer in the ability of government agencies to effect positive change in the marketplace.  Garfield knew the law and academia, but he didn’t really know the coal trade, which became obvious when he engaged in a program of price fixing–never popular among consumers–and the Closing Order of 1918 that created “idle Mondays,” effectively shutting industry down for four days in January 1918 and then one day a week until March.  Harry was the son of  President James Garfield, who was tragically assassinated, so he was hardly a dewy eyed novice to politics, but he never anticipated how vicious consumers of coal could be when deprived of fuel.  “The order itself inflicts a profound mortification on the American people, which in my judgement, they will not forget for a long time,” Harvard’s president Charles W. Eliot declared.  “No one of the belligerent nations in Europe, except Russia, has been forced to admit such incompetence in public administration.”  Besides not adhering to the honor code among college presidents, Eliot summarized what many other Americans thought about the USFA’s “idle Mondays”:  the only thing worse could be a Bolshevik Revolution.

Luckily, the USFA closed its doors soon after the end of the war, and Garfield returned to the more calm halls of academia–although I suspect he and Eliot didn’t socialize much at the annual college president’s banquet.  The sad thing about this decision is that it wasn’t the miners, the managers, or the retailers in the coal industry that were to blame for the fuel shortages that Garfield tried to address; it was the railroads.  So once the United States Railway Administration effectively nationalized them, the shortages were mitigated.

I’ve written quite a bit in Home Fires about the suspicion, fear and loathing that American consumers had for the major actors in the coal trade, even as they found themselves utterly dependent upon them for fuel.  Sorry to say that Harry Garfield got himself mixed up in the hate; if only he knew what he was getting into in 1917!

 

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No Longer America’s Ace in the Hole?

During the energy crisis of the 1970s, American policymakers considered the nation’s massive coal reserves to be an important strategic card, or as President  Gerald Ford announced, coal was “America’s ace in the hole.”

Those coal reserves haven’t dwindled by great bounds since those days, although the methods used to extract it have changed.  In Appalachia, the advent of mountaintop removal has cut into traditional underground mining, so that now most “coal miners” work above the surface.  Well-paying union jobs have disappeared and in states like West Virginia–now America’s most recent “right to work” state–the political influence of organized labor has waned along with them.  Despite lowering the cost of coal extraction, though, the industry has suffered a prolonged slump in the face of competition from domestic sources of natural gas.

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Check that.  Uncle Sam can just replace that shovelful with some natural gas.

So when Donald Trump promised voters in Appalachia that he would revive the coal industry’s fortunes, he struck political gold.  “We’re going to get those miners back to work,” Candidate Trump announced, “the miners of West Virginia and Pennsylvania, which was so great to me last week, Ohio and all over are going to start to work again, believe me. They are going to be proud again to be miners.”  All of those states went red in the recent election, and while coal can’t explain the entire victory, Trump’s promise likely turned many blue collar voters in West Virginia, Pennsylvania, and Ohio into his camp.

Can President Trump deliver on Candidate Trump’s promise to coal country? The plan, as far as I can tell, is to roll back environmental regulations and restrictions, thus ending what many Appalachian voters considered to be the Obama Administrations’ “war” on coal.  The mere presence of hurdles to mountaintop removal culled resentment among many residents of coal country, many of whom dismissed job safety and environmental regulations as “job killers.”  Not all of them, of course, as a healthy indigenous resistance to surface mining remains active in Appalachia, despite being outnumbered in the polls and, perhaps most importantly, in policymaking circles.

Despite the heady promises, though, most energy analysts are not buying it.  In publications ranging from Time.com to the New York Times, and Fortune Magazine both before the election and afterwards, articles soundly dismiss the notion that a rollback of regulations can overcome the basic market forces that have weakened the outlook for American coal producers.   Most notably,  coal is no longer the only alternative to petroleum, as it was during the 1970s.  Certainly the industry has faced competition before, but as natural gas and renewable energy sources continue to grow–especially in Republican-heavy rural districts–it’s likely that coal will have a difficult time rebounding.  The culprit here is not a perceived “war” on coal, but instead a deepened and much more diverse energy market.  This benefits American consumers, of course, but will prolong the economic slump in coal country.

No more ace in the hole?  The Trump promise to bring back coal mining jobs appears doomed from the start.  From the perspective of the coal industry, it looks like the dealer is drawing cards from a completely different deck these days.

 

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Dropping Energy Costs in Historical Perspective

There is a fascinating article by W. Rocky Newman and John R. Bowblis that shows up in The Conversation; I hope that it gets picked up for wider distribution.  The piece, entitled, “Crash in oil prices will hurt the U.S. economy from Texas to Wall Street,” argues that drops in the price of energy, while good for consumers, also has unintended consequences for the wider economy: oil companies, banks, and other companies that work in energy markets will see an immediate downtown.  Even those firms that purchased oil and gas futures to hedge against lower energy prices will eventually suffer. So although consumers in the urban east might find lower energy prices to be a windfall for their disposable income, there could be a cascading negative effect on the portion of the American economy that has hard-wired high energy prices into their business model.

Image result for high gas prices in the 1970s

Good for America? 

I’ve written and lectured about the impact that cheap and abundant energy resources has had on American history; not all of the consequences are positive.  When the energy crisis hit the United States in the 1970s, Americans were absolutely unprepared for the rationing that resulted, either in terms of high prices,  or at the height of the crisis, actual rationing based on licence plate numbers determining whether you could fill up on odd or even calendar days.  If you go back further, Americans considered cheap coal such an entitlement that President Roosevelt led an unprecedented federal intervention in the Great Anthracite Strike of 1902 in order to restore the flow of inexpensive heating fuel into cities.  Once consumers become accustomed to cheap energy, a sudden change of fortune has an immediate economic, and perhaps more importantly, political, impact.

Those oil and gas producers in the West will find little comfort in the notion that they have reaped the benefits of relatively expensive energy for a few decades; nor will they relish the notion that cheap and abundant energy–the standard for the American economy for the vast majority of its history–might become the new normal.

 

 

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Somewhere Franklin Gowen is Smiling

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At any point in its history, you’d never really describe the American coal industry as stable. Cutthroat competition, evasion of safety regulations, union-busting campaigns, and byzantine ownership structures have all made the business of extracting mineral coal from the ground wildly profitable at times and nearly impossible at others.  The roller coaster that is the American coal trade is currently in a down cycle, as Slate’s Daniel Gross reports in a recent article, because of a spate of bankruptcies.

Gross’s piece aims to quell the enthusiasm of environmentalists, who might feel cheerful about the closures, by explaining that the failure of large mining companies like Patriot Coal does not necessarily mean that the extraction of fossil fuels will slow by a considerable amount. And plans to mine coal with an eye towards global warming aside, the impetus for companies purchasing the assets of bankrupt firms will be to revive mining operations as soon as possible.

1-2-1D5D-25-ExplorePAHistory-a0m8p4-a_349This trend, of course, has a long history.  In the 1870s, the president of the Philadelphia & Reading Railroad, Franklin Gowen, attempted to corner the market on anthracite coal through the acquisition of smaller firms.  The 19th century anthracite trade was notoriously competitive–more than one half of the 1,000 firms that operated in Schuylkilll County from 1833 to 1875, for example, lasted less than one year.  Gowen’s attempt to control the anthracite region begin in 1871 and ended in 1875.  By that time he controlled about one-third of the anthracite shipments to Philadelphia and attempted to create a cartel in order to stabilize the trade–the first attempt at a large-scale corporate cartel in American history.  The Philadelphia & Reading feasted on those small scale collieries who could not compete with the large, well-funded railroad and canal companies that controlled their own “captive” mines.  And so, bankruptcy did not result in less coal mined, but in fact increased and centralized production.

Gowen’s gambit to corner the anthracite trade failed, and so did his cartel.  But the lesson here is that coal companies going broke is not a signal that the trade is going away, but merely undergoing another reorganization.  Whether or not that new structure benefits the public or the environment is anyone’s guess.  But as the story of Franklin Gowen suggests, firms will never stop trying to use the coal industry’s inherent instability to their benefit.  And like Gowen, they will likely fail in the long term.

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Underwriting the Wind

The notion that wind or solar power are doomed to fail in the American economy has become a common point of discussion.  I’m not one to jump on the alternative energy bandwagon with both feet just yet–there’s quite a bit of work to be done before wind, solar, or thermal can seriously compete with fossil fuels.  In fact, I’m more and more convinced that fossil fuel technology will be with us for much longer than we might like.

HalladayStandard1885Windmill,ForRailroadWaterPumpingThat said, the conservative arguments about solar and wind’s reliance upon subsidies strikes me as wrongheaded.  Not only is it bad policy to insist that new energy technologies can somehow blossom without public support, but it is horrible history.  Both coal and oil drew upon a massive infrastructure underwritten by state and federal taxpayers.  Government agencies like geological surveys helped find fossil fuels, state-aided canals and railroads to transport it, and policymakers to smooth out labor differences (albeit at the expense of miners) to ensure that the supply of coal flowed uninterrupted.   So the use of coal at first, then oil, really depended upon the American public in both indirect and direct ways.

It’s always nice to see journalists draw historical parallels, especially when they are accurate.  So I was glad to see Daniel Gross’s recent piece in Slate, comparing the future of wind power to the 19th century railroad network.  Although we certainly don’t want to reconstruct the world of the Railroad Barons–any cursory reading of Richard White’s epic book on the Transcontinentals confirms this fact–a bit of historical perspective is welcome here.  We need to be comfortable with the idea of using public funds to help private actors get alternative energy markets up and running.  Will this process be smooth and without its share of wasted dollars?  Absolutely not.  But it is still a project worth supporting and a small price for Americans to pay for reducing their reliance upon fossil fuels.

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Using Energy’s Past to Predict the Future

warm the world on coal

One of the many reasons that historians reconstruct the past is so that we can understand our present, and perhaps even make some predictions about the future.  When I was writing my recent book, Home Fires: How Americans Kept Warm in the 19th Century, I hoped that readers would be able to make the connections between that story during the Industrial Revolution and the prolonged energy crisis that we face today. Of course, the circumstances are quite different, but it’s my opinion that we can use the experience of Americans during that earlier energy transition–particularly the ways in which consumers adopted fossil fuel technology in generating domestic heat–in order to guide us through the necessary weaning off those same fossil fuels.

So I was really pleased to read Ruth Graham’s recent article in the Boston Globe on energy transitions.  In an interview a few days ago, Graham posed some great questions that made me think about how Home Fires could relate to a wider audience.  I hope that I answered them well, although I can’t help but feel bad about the pessimistic note I offered at the article’s conclusion.

I really do hope that we can make the jump to solar, or wind, or some other type of renewable energy form soon, but the evidence suggests that it takes quite a long time to change consumer preferences in essential functions like home heating.  As it turns out, Americans were quite picky about how they stayed warm, and even though the United States had massive coal reserves, it took some time for fossil fuels to dominate the American hearth.

Is there any reason to believe that the future will be different?  I hope so, but the historian in me has some reservations.

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Got Coal? Now Would Be the Time To Buy

650x366_10131619_winter-14-15-hd[1]One of the many luxuries of contemporary life is the ability to heat homes at the flip of a switch or the turn of a dial.  Modern utilities allow us to draw instantly on gas, electricity, and in increasingly rare cases, heating oil, in order to soothe winter’s bite.  Various outlets from the modern forecasters at AccuWeather (map above) to the more traditional Farmer’s Almanac are predicting a repeat of last year’s brutally cold winter in 2014-15.  The editor of the Farmer’s Almanac warns us that there will be a “a frosty bite” in a few months, and that we might be living in a “refriger-nation.”

Although severe winters have always been a part of human history, the ability to survive them with minimal planning is a relatively recent development.  When Americans burned wood or coal a century or so ago, the laying up of fuel in late summer or autumn was not just a ritual of the season’s passing; it was a necessary survival strategy.  For poor families, though, the challenge was not only buying fuel, but storing it.  If you could afford to purchase a couple cords of wood or tons of coal, that was great.  Being able to have it on hand to feed your fireplace, stove, or furnace was even better. But, as American cities grew more densely packed, less affluent American found themselves squeezed to the margins.  Without the cash up front to buy fuel at lower prices in the “off” months of the summer or early fall, and without the space to store it conveniently, the working poor in 19th century American cities were forced to buy small parcels of fuel at the most expensive time to do so.  As early as 1850, the journalist George Foster described poor residents of New York City as “living literally from hand to mouth” as they “buy the food they eat and even the fire and whiskey that warms them, not only from day to day, but literally from hour to hour.”  Families scrounged for scraps of wood or small lumps of coal, feeding their small home fires in any way they could. When those methods failed, they sometimes relied upon charity.

Hard Coal for the Poor

Thankfully, the hard work of staying warm is only a distant memory for most of us. Nevertheless, if you’re cranking up the thermostat this winter, consider yourself lucky!

 

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