From the library picked up a book about Coal. Most of us know that coal supplies us electricity but few of us know much about the mineral. In the book Coal – A Human History by Barbara Freese published by Penguin Books, NY, 2003 tells the readers about the history of coal.

From the design of the steam engine came factories, workforces and cities. By the early 1830’s Manchester have 7 cotton mills with more than a 1000 workers each and another 76 cotton mills that numbered their workers in the hundreds. The ample coal supply removed the bottleneck that reliance on waterwheels had produced. The factory workers were forming something new to the world: a large class of people whose lives were shaped, and in many ways reduced, by machines. The pace of daily work was set by the regular beat of the steam engine.

Each production task was broken into its most basic unites achieving much greater efficiencies but limiting many workers’ jobs to the most simple, repetitive, machine-like movements, all synchronized to the rhythm of the steam engine at the factory’s level.

The next step is linking the coal fields to the industrial towns with a railway.

In the US, the city which became the steam capital of the Western Hemisphere was Pittsburg, thanks to its cheap coal. Coal was found in the Appalachian Mountains however the problem was sending it to market in Philadelphia and New York. First came canals, later railways. Prior to the railways was solving the problem of industrialization -the lack of cheap coal and lack of cheap iron. With technical innovations, the anthracite coal secrets were unlocked and soon the cost of iron went downwards. The manufacturing age was upon the US.

The first coal pool or monopoly like conditions was organized by the Franklin Gowen President of Reading Railroad who ensured the mines owned by Reading had preferred rates and competitors had higher freight rates. The President of Reading believed this gave stability to the industry and kept coal prices low. When he decided to expand his railroad (he believed in monopoly for coal freight rate prices, but competition for the railroad); the other railroads including JP Morgan bought the Reading bonds and forced Mr. Gowen off the railroad. Mr. Morgan wanted to control what he thought was wasteful competition or Mr. Gowen was too competitive in the railroad business.

Linking to dividend paying stocks, much of the economy is based on alternatives and seeking alternatives when prices are too high. If prices are reasonable, people are not inclined to switch to the alternative and the balance remains. As you examine your dividend paying company, always ask what are the alternatives or the real competition.

There are more questions than answers, till the next time – to raising questions.