Historical Parallels in Industrial Economy

A Times piece a couple of days ago, “Michigan Works to Remake Itself Without King Auto," says that “About 800,000 jobs have been lost in the state—about one in every six—since 2000, and its unemployment rate has reached 12.7 percent, higher than any other state.


June 11, 2009

A Times piece a couple of days ago, “Michigan Works to Remake Itself Without King Auto," says that “About 800,000 jobs have been lost in the state—about one in every six—since 2000, and its unemployment rate has reached 12.7 percent, higher than any other state.

The state has authorized tax credits to support a new battery manufacturing plant for G.M., and similar assistance for three other proposed battery projects. The jobs created will number in the hundreds at first, but state officials are hopeful that Michigan will be at the center of battery development nationwide….

Michigan is also pursuing wind-power technology, solar-panel manufacturing, even production of railroad cars—any viable industry that might be interested in hiring the thousands of engineers who used to work in the auto industry.

'This community still has a lot of things going for it,’ said Senator Carl Levin, Democrat of Michigan. ‘This is the heart of the automotive research capital of the world, and there’s a strong structure to build on.’

One hopes the structure is strong, for all our sakes, and that that structure is the sort needed for the future. But who knows if that’s true, beyond wishful thinking, PR, and marketing of a region? And why can’t anyone know?

As I’ve been reading for my nonfiction book, I find that the easiest research questions to ask—why is Southern Illinois in such bad shape economically, when it had (and has) such enormous resources?—lead quickly down a rabbit’s hole of thorny explanations. After all, Shawneetown, on the Ohio River, had the first banks in the state of Illinois, and (self-excoriating) legend has it that when investors came, hats in hands, looking for capital to build a new town called Chicago, they were turned down as a bad risk because everyone knew that Southern Illinois would not only continue to grow and prosper, but would serve as the seat of government, money, and power. (The first Illinois capitol was in Kaskaskia, Illinois, a Mississippi River town founded by the French, in 1709, south of St. Louis.)

One of the most illuminating sources I’ve found on what happened to my hometown after Big Coal went bust is Seven Stranded Coal Towns: A Study of an American Depressed Area, by Malcolm Brown John N. Webb. (Washington, D.C.: U.S. Government Printing Office, 1941). This Works Progress Administration report on “derelict, economically wrecked” communities looks at three counties—Franklin, Saline, and Williamson—in Southern Illinois on the eve of America’s entry in WWII, and in the depths of the depression.

During the boom years of bituminous mining, from the turn of the century to the mid-1920s, there was a lot of money being made. The New Orient mine in Franklin County was for a time the largest mine in the world, and 99 others were shipping millions of tons of coal, first to Chicago and other Midwestern markets, then to the rest of the country and even internationally. The period has been called the “silk-shirt days,” an implicit criticism of workers who had and spent money.

(They were mostly buying homes, raising families, starting businesses, and building towns. You know, all-American stuff, not to exclude a few benders. They never earned overmuch for their dangerous, filthy work, and part of this story is what’s called “extractive wealth”: Money taken out of the community by absentee, wealthy investors from Boston, Chicago, and other urban centers, who surreptitiously bought up the most useful land and/or mineral rights before the locals knew what they had.)

Basically, “The working miners enjoyed a satisfying degree of economic independence. If a miner disliked his boss, or if he objected to lax safety practices, or if he found his earnings falling because of poor coal, he could always quit his job, knowing that in a week or so he could find another one.”

The report says that “every single year for a quarter of a century, from the discovery of coal on Herrin's Prairie [the original name for my hometown] in 1896 until the post-war depression in 1921, there was always some advance and never a backward step. [A]verage net increase in employment each year between 1900 and 1923 was 1,400 men. The average growth of coal output during the same period was 1 million tons, roughly equal to the total output of the field during the year 1900.”

Of course people were optimistic, made plans. Real estate boomed. Local papers made pronouncements that the coal would last until sometime after the year 9,000. But overproduction, new technologies, and failing markets—sound familiar?—brought it all tumbling down.

“Within less than a decade the whole structure of prosperity lay in utter ruin,” the report says. Fifteen of the 16 mines you could see from the top of Herrin City Hall were closed. “Out of every four coal diggers who had once worked in the mines, only one—who counted himself exceedingly lucky—still held his job; and even so his yearly income had shrunk from $1,350 to $700. [A] total of 34 coal-town banks…collapsed, and some seven million dollars in savings [were] swept away.”

The report states a maxim:

When 10 percent of a community’s labor force is unable to find a job, the community has begun to suffer appreciably. When unemployment climbs to 20 percent, a depression of serious consequences exists. And when unemployment reaches 30 percent—a figure rarely reached by most American communities and still more rarely maintained over any period of time—the community must be judged to be in extremely desperate circumstances. According to this scale, the predicament of southern Illinois will be clear; throughout the seven towns 41 percent of all available workers had no jobs at the time of the census.

The area never really recovered, and at the time of the WPA report, businessmen had been trying “for two generations” to get new industries to come in to replace the mine jobs lost. Subsidies and other money was raised locally to entice businesses, such as a piano factory, a glove factory, and a car factory, to move there, but none of them worked out, and some of them took the community’s cash and fled. (The auto factory made one car before it shut its doors.) Stated reasons for the inability to get things going in a new direction include unionization and poor location, but none of the pat answers hold up well.

The need for energy in WWII created a new spike in mine production that rivaled that in WWI, but mechanization kept employment numbers lower than they had been in the boom. And then it really was over: The “Quality Circle” of high-BTU, relatively low-sulfur coal in these three counties was mined out, gone. Factories did eventually come to town; the Norge plant made washers and driers for Borg-Warner and Magic Chef for four decades, providing a decent living wage for many line workers, but it’s gone now too.

The Times piece on Detroit refers to a former worker hoping for new opportunities. “Leaving the auto industry behind, after a total of 15 years in the business, was difficult, he said, but a fact of life in today’s Michigan. ‘You’ve got to work,’ said Mr. Cortis. ‘I don’t want to be on a two- or three-year unemployment extension.’”

Or more, god forbid.


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