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Did Coal Miners “Owe Their Souls to the Company Store”? Theory and Evidence from the Early 1900s

  • Price V. Fishback (a1)

Abstract

Although coal companies may have tried to exploit a local-store monopoly, company-store prices in nonunion areas were appreciably limited by competition from other stores and mines in the same labor market. Company stores persisted in part by lowering transactions costs. Prices at company stores were generally similar to those at nearby independent stores, and higher wages may have compensated for higher store prices at isolated mines. Conditions varied, however, with labor-market tightness. Miners were generally not in debt to the store, nor paid entirely in scrip. Scrip was an advance on payday, when miners received cash.

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1 See Seltzer, Curtis, Fire in the Hole: Miners and Managers in the American Coal Industry (Lexington, 1985), p. 19;Corbin, David, Life, Work, and Rebellion in the Coal Fields: The Southern West Virginia Miners, 1880–1922 (Chicago, 1981); and Rochester, Anna, Labor and Coal (New York, 1931).

2 Corbin, Life, Work, and Rebellion, p. 10.

3 There is evidence that miners moved in response to nonwage aspects of the employment package, including stores, housing, schools and health care. For example, Jairus Collins, a nonunion operator, attracted workers during one upturn by cutting store prices “to the bone.” Letter from George Wolfe to Justus Collins, 9/20/16, Justin Collins Papers, West Virginia Regional and History Collection at the West Virginia University Library, Morgantown, West Virginia; Corbin, Life, Work, and Rebellion, p. 42;Laing, James T., “The Negro Miner in West Virginia” (Ph.D. diss., Ohio State University, 1933), pp. 146–51:Rikard, Marlene Hunt, “An Experiment in Welfare Capitalism: The Health Care Services of the Tennessee Coal, Iron, and Railroad Company” (Ph.D. diss., University of Alabama, 1983).

4 Fishback, Price, “Employment Conditions of Blacks in the Coal Industry, 1900–1930” (Ph.D. diss., University of Washington, 1983), pp. 6065;Corbin, Life, Work, and Rebellion, pp. 40–43; U.S. Senate, U.S. Immigration Commission,Report on Immigrants in Industries, Part I: Bituminous Coal Mining, 61st Cong., 2d sess., (Washington, D.C. 1911), vol. 2, p. 209. Corbin asserts that the mobility was limited to movements within the same coal region, but there was substantial movement in and out of coal mining as well. U.S. Senate, U.S. Coal Commission,“The Bituminous Mine Workers and Their Homes,” Report of the United States Coal Commission, part 3,68th Cong., 2d sess. (Washington, D.C., 1925), p. 1522; West Virginia Bureau of Negro Welfare and Statistics, Report, 1923–1924 (Charleston, 1924), p. 39;Wolfe, Margaret Ripley, “Aliens in Southern Appalachia: Catholics in Coal Camps, 1900–1940,” Appalachian Heritage, 6 (Winter 1978), pp. 4356.

5 Rosen, Sherwin, “Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition,” Journal of Political Economy, 82 (01 1974), pp. 3435.

6 Laing, James T., “Negro Miner,” pp. 39–52; West Virginia Department of Mines, Annual Report for the years 1901 (p. 2) and 1923 (p. 265).

7 Illiteracy rates for males of voting age in the five leading mining counties in West Virginia fell by more than one-third between 1900 and 1920. U.S. Bureau of the Census,Twelfth Census of the United States, Population, 1900 (Washington D.C., 1902) part 2, p. 487; U.S. Bureau of the Census, Fourteenth Census of the United States, Population, 1920 (Washington, D.C., 1922) vol. 3, part 2, pp. 1105–09. The percentage of miners who did not speak English in West Virginia fell from approximately 10 percent in 1908 to 2.9 percent in 1920.U.S. Coal Commission, “Bituminous Workers,” p. 1424 and U.S. Immigration Commission, Immigrants in Mining, vol. 2, pp. 249, 276.

8 Another way companies could take advantage of the higher information costs for store prices would be to raise store prices before lowering wages during downturns and raise wages before lowering store prices during upturns.

9 Coal demand fluctuations did not affect all mines equally. See Fishback, “Employment Conditions,” pp. 49–50.

10 U.S. Coal Commission, “Bituminous Workers,” p. 1513–14, 1531–32.

11 Hilton, George, “The British Truck System in the Nineteenth Century,” Journal of Political Economy, 65 (06 1957) pp. 237–56. For evidence on greater wage flexibility in nonunion than in union areas, see U.S. Coal Commission, “Wage Rates in the Bituminous Coal Industry,” Report of the U.S. Coal Commission (Washington, D.C., 1925), part 3, p. 1098.

12 U.S. Immigration Commission, Immigrants in Mining, vol. 1, pp. 225–28; Sullivan, Charles K., “Coal Men and Coal Towns: Development of the Smokeless Coalfields of Southern West Virginia, 1873–1921” (Ph.D. diss., University of Pittsburgh, 1979), pp. 195–96; Corbin, Life, Work, and Rebellion, pp. 35–38; Hinrichs, A. F., The United Mine Workers of America and the Non-Union Coal Fields (New York, 1923), pp. 4142.

13 U.S. Coal Commission, “Bituminous Workers,” p. 1514.

14 Williamson, Oliver, “The Modern Corporation: Origins, Evolution, Attributes,” Journal of Economic Literature, 19 (12 1981), pp. 1548–49.Klein, Benjamin, Crawford, Robert G., and Aichian, Armen, “Vertical Integration, Appropriable Rents, and the Competitive Contracting Process,” Journal of Law and Economics, 21 (10 1978), pp. 297326. Pennsylvania mine officials made statements consistent with this argument. U.S. Immigration Commission, Immigrants in Mining, vol. 1, p. 325.

15 U.S. Senate, Subcommittee of the Committee on Education and Labor, Hearings on Conditions in the Paint Creek District, West Virginia, 3 vols., 63rd Cong., 1st sess. (Washington, D.C. 1913);U.S. Senate, Committee on Education and Labor, Hearings on West Virginia Coal Fields, 2 vols., 67th Cong., 2d sess. (Washington, D.C., 1921–1922); U.S. Senate, Committee on Interstate Commerce, Hearings on Conditions in the Coalfields of Pennsylvania, West Virginia, and Ohio, 2 vols., 70th Cong., 1st sess. (Washington, D.C., 1928).

16 For evidence of conflicting testimony by miners, see Conditions in Paint Creek District, pp. 572, 998, 1013, 440, 442, 476. One analyst at the time suggested that the miners made far-reaching often based on negligible evidence. Hinrichs, The UMWA and the Non-Union Coal Fields, pp. 42–45.

17 According to the Coal Commission, the additional freight rates on flour from Charleston to Mount Hope in the New River district accounted for about 50 percent of the price differentials on flour, 22 percent on oats. U.S. Coal Commission, “Bituminous Workers and Homes,” p. 1518.

18 The relative wage rates in the two districts were the same in 1921 as they were in December 1922. The comparison was made for earnings per day listed rather than wage rates because wage rates for daymen, paid time rates, and tonnage men, who were paid piece rates, are not comparable. Calculations of earnings per day listed are based on tables of the average number of starts for each income category in U.S. Coal Commission, “Atlas of Statistical Tables,” Report (Washington, D.C., 1925), part 5, pp. 308, 457–58, 472–73. More detail on the calculations is available in Price Fishback, “Were Coal Company Stores Exploitative?” University of Georgia, College of Business Working Paper No. 85–188E (Jan. 1986).

19 U.S. Immigration Commission, Immigrants in Mining, vol. 2, p. 95. In part to determine the extent of exploitation of immigrants in industry, researchers were sent into the field to collect micro-level evidence on the earnings and living conditions of immigrants. Researchers in the coal regions recorded their impressions of store prices but reported no data.

20 Ibid., vol. 2, p. 199.

21 A similar description was given of the nearby Virginia field.Ibid., vol. 2, pp. 201, 213.

22 Ibid., vol. 1, p. 327.

23 Ibid., vol. 2, p. 204.

24 Morris, Homer Lawrence, The Plight of the Bituminous Miner (Philadelphia, 1934), pp. 166–69.

25 Net store profits at the Stonega mines were between 10 and 15 percent of sales from 1910 to 1915 and then averaged about 6 percent both from 1916 to 1929 and from 1937 to 1947. Compiled from Comparative Statements of Annual Store Reports, 1911–1947 in Boxes 253–5. Data on coal prices and production costs are from Annual Operating Statements, 1929–1933, Box 248 from the Stonega Coke and Coal Collection, Series II, within the Westmoreland Coal Collection at the Hagley Museum and Library, Wilmington, Delaware. The Stonega Coke and Coal operations, which employed about 1400 men in 1915, seem representative of the average coal community. In the Coal Commission's rankings of 349 company communities, the Stonega communities of Osaka and Dunbar were ranked 67th and 2 10th. U.S. Coal Commission, “Bituminous Workers,” pp. 1489–94; and individual Community Ratings Schedules for Osaka and Dunbar, Boxes 24–32, U.S. Coal Commission Records, Record Group 68, National Archives, Suitland, Maryland. More details about Stonega's reputation are available in Fishback, “Were Coal Company Stores Exploitative?”, pp. 36–37.

26 Corbin, Life, Work, and Rebellion, p. 32.

27 Simple correlations for 1918 to 1932 were calculated between the United States food CPI (Series E137 in U.S. Bureau of the Census, Historical Statistics of the United States: Colonial Times to 1970 [Washington, D.C., 1975]) and a retail price index constructed for foods at the Stonega stores. The retail price index is the product of a Stonega wholesale price index and an index of the average markup on goods at the Stonega stores from the Comparative Statements of the Store Department (Boxes 253–5). Using weights from the Coal Commission's store price study (see Table I), the wholesale price index was constructed from wholesale prices on 25 foods from 1918 to 1932 in the Annual Operating Reports of the Stonega Coke and Coal Company for 1925, 1926, 1928, 1930, and 1932 (Boxes 212–5). The 25 foods account for 77 percent of the food purchased by miners in the Coal Commission study of the New River district. More details are available in Fishback, “Were Company Stores Exploitative?, Appendix 1.” Simple correlations were also run between the Stonega food price index and two wages, the hourly rate paid machine miners and the piece rate paid loaders, also available in Stonega's Annual Operating Reports.

28 Morris, Plight of Bituminous Miner, p. 166; Hinrichs, The UMWA and Non-Union Fields, pp. 42–43.

29 U.S. Immigration Commission, Immigrants in Mining, vol. 1, pp. 95, 327; vol. 2, pp. 66, 199, 212, 213.

30 U.S. Coal Commission, “Bituminous Workers,” p. 1462.

31 U.S. Immigration Commission, Immigrants in Mining, vol. 1, p. 326; Letters between George wolfe and Justus Collings, 12/26/15, 12/27/15, 12/28/15, Justus Collins Papers; Sullivan, “Coal Men and Coal Towns,” pp. 182–83; Testimony of Cabell, Conditions in Paint Creek, pp. 1497–98.

32 U.S. Immigration Commission, Immigrants in Mining, vol. 1, p. 95; vol. 2, pp. 65, 199, 202, 212–13; U.S. Coal Commission, “Bituminous Workers,” pp. 1462–63. At some mines miners could get cash advances, but these were carefully doled out only to better workers. Testimony of Cabell, Conditions in Paint Creek, p. 1499. In West Virginia in 1908 some “individuals, saloons, and independent storekeepers buy the scrip at from 65 to 85 percent of its face value and use it in buying provisions from the company store.” A majority of companies disallowed the selling of scrip to stop such practices. U.S. Immigration Commission, Immigrants in Mining, vol. 2, p. 202. The discounts do not reflect differences between the company and independent store prices because the miners often sold scrip to obtain cash to buy services not available from the company.

33 Ibid., vol. 1, p. 95.

34 U.S. Coal Commission, “Bituminous Workers,” pp. 1462–63.

35 Ibid., U.S. Immigration Commission, Immigrants in Mining, vol. 1, pp. 95, 326; vol. 2, pp. 204, 212–13.

36 Comparative Statements of the Store Department (Boxes 253–5) and Store Files 5–7, Box 347, Stonega Records.

37 Ibid., U.S. Coal Commission, “Bituminous Workers,” pp. 1517–22, 1536–37, 1438; Laing, “Negro Miner,” pp. 297–98.

38 From 1910 to 1923, 16 to 37 percent of the men who came to the Stonega mines on transportation left, often for other mines, without working. Annual Operating Report, 1923, p. 6, Stonega Records.

39 U. S. Immigration Commission, Immigrants in Mining, vol. 1, p. 317; vol. 2, pp. 202–3.

40 The items in the budget considered as purchasable at the company store were food, clothing and dry goods, house furnishings, drugs and toiletries, hardware and mine supplies, and other miscellaneous items. U.S. Coal Commission, “Bituminous Workers and Homes,” p. 1456. Examination of the payrolls summarized in Tables 2 through 4 suggests similar breakdowns of expenditures in the early 1900s.

41 Since scrip prices were the same as cash prices, the miner had little incentive to buy goods with cash if he could draw scrip. Between 85 and 97 percent of the Stonega stores' business was paid for with coupons or on a charge account. The Stonega data overestimate deductions for store purchases by 3 to 15 percent in Tables 2 and 3, because the data were calculated as total store sales as a percentage of the payroll. Comparative Statements of Store Department, Box 253, Stonega Records.

42 West Virginia Bureau of Negro Welfare, Second Biennial Report, 1922–23, p. 39. Laing, “Negro Miner, pp. 292–300.

43 U.S. Coal Commission, “Bituminous Workers and Homes,” pp. 1454, 1456, 1534.

44 Morris, Plight of Bituminous Miner, pp. 169–72; U.S. Coal Commission, “Bituminous Workers, and Homes,” pp. 1454–58.

45 U.S. Immigration Commission, Immigrants in Mining, vol. 2, p. 202.

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Did Coal Miners “Owe Their Souls to the Company Store”? Theory and Evidence from the Early 1900s

  • Price V. Fishback (a1)

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