The Rise of the Billionaires Leaves the Middle Class Stranded
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Friday, May 21, 2010
CLEANING UP ON COAL
I know the recipe almost by heart. Coal, “…a readily combustible black or brownish-black sedimentary rock”, is simply captured carbon, concentrated out of the air by plants. Take a few hundred million tons of plant material and leave it buried under piles of other dead vegetation for 8 or 9 thousand years, and you get peat. Leave that buried for thirty to sixty million years and you get lignite coal; leave it buried for 200 million years and you get Bituminous coal; cook it for 300 millions years and you get Anthracite, the cleanest burning coal there is ("My gown stays white / From morn till night / Upon the road of Anthracite") - “cleanest” being a very relative term, of course. But once you have coal, it takes just a couple of centuries more to produce greed and monopolies. And that is when the real fun begins.
Humans adapted the best word they already had to describe the burning stone; charcoal. And since it was first recognized washed up on beaches near Durham along the Scottish boarder, they called it sea-coal. It was so rare that it was a prized New Years' gift long before there was a Christmas amongst the Saxon savages. Its fire was so smoky that thieves carried chunks of it with them to conceal their crimes. Other than as a smoke screen, it had little practical use. But as the forests of England were chopped down for palaces and fleets, and wood became expensive, the peasants turned to heating their miserable huts with sea-coal. And that is when things started to heat up.
Journalist Edwin Black described the early economics of coal in an article at "TheCuttingEdgeNews.com" (for May 18, 2009); “In the last four decades of the thirteenth century, the cost of wood increased about 70 percent, while (the price of ) sea coal increased only 23 percent… Londoners had no choice but to resort to sea coal, which was rapidly becoming known simply as "coal." By 1300, London's total annual wood fuel demand was 70,000 acres. By 1400, it was only 44,000 (acres), despite prodigious industrial, commercial and population growth.” The street in London where merchants sold their cargos still bears the name of “Seacoal Lane”. The price stabilization for coal was caused by two rules of economics; the first that a price increase produces an increase in supply - in this case when miners went looking for sea-coal on the land and under it – and the second rule is that an increase in profits produces an alteration in the tax codes - as merchants share their new wealth with government bureaucrats to protect that wealth.
In this case the merchants were a forgotten class of lobbyists called the “Hostmen”. Originally these were the medieval equivalent of modern day Marriot, Hilton and Motel 6 operators. On July 24th, 1567 Queen Elizabeth I granted a patent to a Mr. William Tipper as the sole provider of lodging and meals to “merchant strangers” or “merchant adventurers” (what we would call traveling salesmen) visiting London. For that privilege Mr. Tipper paid her Majesty 40 shillings for each traveling salesman who paid him, and that is the origin for the term “a big tipper”, as in an extra payment for service. But the Hostmen of Newcastle-on-Tyne had bigger plans.
In 1529, to make the tax collector’s job easier, the crown decreed that every commodity harvested or produced within the watershed of the small River Tyne and its tributaries (in the vernacular, the Tyneside), had to be trans-shipped through the port city of Newcastle-on-Tyne. That also made it easier for the hostmen of Newcastle to gain control, since “…once the coal was on a boat, it was in the hands of merchants and shippers.” (Ibid)
“By the fifteen hundred and fifties, the Hostmen (so) commanded the coal--from ground excavation to river distribution—that…in 1590, the Lord Mayor of London complained “…of the monopoly and extortion of the owners of Newcastle coals." (ibid) The tip left on the table for Elizabeth was one shilling paid to her for every 36 bushels of coal shipped out of Newcastle. And it was said that just 10 men - and the Queen - controlled the sale of coal throughout all of England and much of coastal Europe.
After the Virgin Queen’s death in 1603, Parliament moved to cancel the royal monopolies. But by then the Hostmen of Newcastle too rich to be interfered with, i.e. they were too big to fail. Their profit margins remained as high as 65%.
Not even the bloody English Civil War could break their control of coal. “The Hostmen always produced smart defenses, polished cost justifications and retained the best spokesmen to make their case.” (ibid). By 1661 Thomas Fuller could define the popular phrase ‘to carry coals to Newscastle’ as “…to busy one's self in a needless employment.”
The next step was described in “Extracts from the Company of Hostmen, Newcastle-Upon- Tyne (1901): “…(coal) miners soon drove shafts down to underground water levels, and mines had to be drained before production could be raised to meet the new demand…In 1712 Thomas Newcomen's first coal-fired, steam-operated pump was installed in a coal mine in the West Midlands. It pumped 600 liters of water (150 gallons) a minute from the bottom of a shaft 50 m (160 feet) deep…”
In less than a hundred years that steam engine, used as a pump to drain the coal mines, would be placed on wheels and fed coal from the same mines to produce a loco-motive. And it was that invention, intended to further strengthen the wealth and power of the Hostmen, which finally proved the death of their 400 year old monopoly. As Edwin Black observed, “With trains, coal mines far beyond Newcastle were finally able to free themselves from river transport….(and) That was how the Hostmen cartel was finally broken up.”
The final cost of the Hostmen’s monopoly was highlighted on Saturday, December 6, 1952, in the Great Fog of London, when, acerbated by thousands of coal fires heating homes and businesses, visibility fell to one foot and “smoke ran like water.” The next day 6,500 people died while walking to London hospitals, because the fog was so thick ambulances could not safely navigate city streets. On Monday, with most people locked in their homes and avoiding all physical effort, only 900 died. On Tuesday, December 9, the wind finally swept the fog away, leaving a final death toll of 12,000 killed in just four days while just breathing the air.