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

Published online by Cambridge University Press:  03 March 2009

Price V. Fishback
Price V. Fishback
Affiliation:
Assistant Professor of Economics at the University of Georgia in Athens, Georgia30602.
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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.

Type
Articles
Information
The Journal of Economic History , Volume 46 , Issue 4 , December 1986 , pp. 1011 - 1029
Copyright
Copyright © The Economic History Association 1986

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References

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

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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;Google ScholarLaing, James T., “The Negro Miner in West Virginia” (Ph.D. diss., Ohio State University, 1933), pp. 146–51:Google ScholarRikard, 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).Google Scholar

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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.Google Scholar

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

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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.Google Scholar

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.Google Scholar

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).Google Scholar

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.Google Scholar

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

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

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

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

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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.Google Scholar

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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.Google Scholar

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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.Google Scholar

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

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

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.Google Scholar

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.Google Scholar

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

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.Google Scholar

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.Google Scholar

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

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

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