Here’s a critical passage from John Alexander Williams’ Appalachia: A History which explains how Appalachia, regardless of whether its people fought for the Union or the Confederacy, suffered a crushing defeat in the War Between the States, which led to the subsequent impoverishment of the region and its colonization by Northern industrial and railroad interests. In the antebellum era, we have already seen that Appalachia had an economy on par with the rest of the South.
“Though there were other causes of the region’s impoverishment, the effects of the war were significant. The impoverishment of the defeated South generally hurt Appalachia in several ways. The plantation market for Appalachian livestock and foodstuffs was drastically reduced after the war, as were livestock herds in districts where the armies had forged. The state-owned or state-subsidized railroad systems were substantially wrecked. Railroad corporations in the North gradually gathered up the financial wreckage as the roads were rebuilt and thereafter operated most of the roads as subsidies of northern systems. Although mountain resorts emerged from the war largely intact, the upper-class southern patrons were damaged beyond the extent that even General Lee, who made a point of visiting White Sulphur Springs during the immediate postwar years, could repair.”
Appalachia’s economy in the antebellum era had been strongly tied to the economy of the plantation belt. The destruction of slavery in the lowlands landed an immediate blow to the tourism industry. Northern financiers took over and rebuilt the railroads and charged exorbitant rates that strangled commerce. The Union Army turned Appalachia into a war zone and destroyed its livestock.
“Wartime congressional initiatives that granted free land to western railroads and free homesteads to settlers of the trans-Mississippi West in effect subsidized competing producers of agricultural commodities that had underpinned Appalachia’s antebellum prosperity. Although the region’s relative prosperity had been compromised as farmers and herdsmen moved ever more deeply into the Appalachian Plateau, the profits of the antebellum era had borne fruit in the form of several promising local initiatives that were subsequently damaged or disrupted by the war. Two examples are offered in the Burning Springs oilfield near Parkersburg, West Virginia, and the emerging ironmaking districts around Chattanooga and in northern Alabama. When these institutions eventually did flourish, it would be as subsidiaries or junior partners of northern firms.”
By staying in the Union, the wrecked farm-and-forest economy of antebellum Appalachia was thrown into competition with subsidized agriculture in the Midwest and Great Plains. Appalachian industry was brought under the control of northern firms.
“With the impediment of southern congressmen and senators nullified, Congress enacted other legislation that placed the South generally and Appalachia in particular at a disadvantage vis-à-vis the North and West. The National Banking Act of 1863 created a banking system that dried up credit in the South and West and allowed regional developers to operate only on terms laid down by metropolitan financial interests. Added to lowland resentment at real or imagined mountain disloyalty during the war, the impoverishment of southern state governments meant that the public funding that had financed the canals, turnpikes, and railroads – not to mention the puny educational funding of the antebellum era – was no longer an option for needful mountain communities.”
The Union Army’s destruction of the slave-based economy of the lowlands dried up the resources for internal improvements and education in the mountains. The National Banking Act of 1863 sucked credit out of Appalachia and put the region at the mercy of the Eastern “Money Power.”
The following excerpts come from Richard B. Drake’s A History of Appalachia and explain the consequences of the arrival of the Northern capitalist and the carpetbagger in postwar Appalachia who bought up all the mineral rights and the timber at firesale prices:
“First came the explorers and “scholars” like Broanz, Anstead, and Hotchkiss, who discovered and precisely located the coalfields. Then came the buyers who secured title to the minerals when they were not able to deal directly with the absentee owners of vast tracts of mountain land. When small owners were involved, buyers gained control of mineral rights by outright purchase of the mountain lands or by purchase of the mineral rights only, leaving the surface to the original owners. After a careful search for title in the state capital or county seat, and into the legal chaos that has troubled Appalachia’s lands since the American Revolution, the mineral buyers came to the Appalachian farmer with gold, charm, legal maneuver, and sometimes fraud. They came into western Maryland, western Pennsylvania , northern West Virginia, and northern Alabama during the 1860s. During the 1870s, the buyers into central Tennessee, then into southern West Virginia in the 1880s, and finally into eastern Kentucky in the 1890s. …
Mayo went among his people on horseback and by buckboard wagon with his pockets full of gold dollars, buying thousands of acres of mineral rights. He had his farmer-customers sign a “Broadform Deed,” which gave the owner of the mineral the privilege of using the service, which the mountaineer retained, in any way necessary to get at the minerals beneath the surface. Of course, with his yeoman values, the mountaineer could see value only in the surface. Obviously the mountaineer had in mind only the deep mining methods used at that time, the kind of mining he had seen at Millers Fork on the Big Sandy or the few holes that were hacked into the coal seams then operative in the Kentucky River or the Big Sandy Valleys.
Mayo brought thousands of parcels of mineral rights, and then consolidated these titles into blocks of mineral rights, which he sold or leased to companies that might actually do the mining. These dealings made him a rich man and a respected “benefactor to his region.” His mansion in Paintsville, Kentucky, a huge Victorian structure, is still a showplace in the region. His funeral in 1914 was the largest ever held in eastern Kentucky.”
So, this is how it all gets started by buying up the mineral rights to vast coal deposits in Appalachia, consolidating them into huge blocks, and then selling the rights to Northern corporations:
“Historian Ronald Lewis has noted that the late-developing Central Coalfield of northeastern Tennessee, eastern Kentucky, southwestern Virginia and southern West Virginia, transformed a vast farming and virgin forest area in 1880 into an area covered with coal towns and small cities dedicated to coal. Population boomed as coal production “tripled by 1900 and multiplied fivefold by 1920.”
During the early 20th century, Central Appalachia – roughly the area corresponding to the Central Coalfield – developed the most intensely colonial, extractive economy in the United States:
“In almost every case of industrial paternalism – some called it “corporate feudalism” – it worked badly. In the Appalachian coalfields, the company towns – necessarily built by a company needing the workers in areas remote from regular urban services – often became centers of oppression. Appalachia, in fact, had a much higher concentration of company towns than any other area of the nation. Some towns quickly became fiefdoms run by the resident manager or mine manager, using the leverage of the company store, the company-financed church, and the school, or control of company housing, to strengthen the company’s control.”
Just so you know, the antebellum cotton plantation never penetrated this area. Instead, the free-market system led to this type of Northern corporate feudalism in Central Appalachia after 1900:
“These and scores of other coal towns, many constructed as shacks row on row, spread across the Cumberland-Allegheny portion of Appalachia. They became at best small cities of romance for those wishing to escape the confinement of the mountains and the poverty of mountain farming. For others they were a grim lure into a neo-feudal vassalage to some mining corporation.
In many of these towns, one company literally owned the whole. The coal company paid the preacher, owned the company store, the houses, the hotels, and the school. A wage check-off paid for the doctor, the teacher and other services. The very smallest towns – jerry built villages erected by get-rich-quick developers – provided only the barest housing and no services. In the large company-built towns, important amenities were provided, and a sense of permanence and community existed. Usually only company men could bring their families to live in the company houses. The company often paid its wages in scrip covertible only at the company store, where prices were often higher than in competing stores in the county. Miners frequently came to think of themselves as virtual vassals, working for the company in unsafe mines for low-wages, renting a company-owned house, and paid in scrip. In some communities, a reputation for being a “model town” was widely recognized by elite and worker alike, although in times of industrial trouble such “model” towns often suffered from particularly bitter divisions.”
By the 1920s, the ruthless exploitation of Central Appalachia was so bad that the region descended into warfare between striking miners and the puppet governments of West Virginia:
“West Virginia’s governor, Epharaim F. Morgan, called out the state police and the state militia and appealed to President Harding for help. On the last day of August 1921, the two armies met at Blair Mountain at the crest of the watershed between the Central Mine Fields and the fields of Mingo and Logan. Twelve hundred state police, militia, and sheriff’s deputies and mine guards met the three thousand UMW marchers in a pitched battle that probably had more sophisticated logistics across a twenty-five-mile front than was involved in the Battle of New Orleans in 1815. Both sides were supported by scouts, physicians, nurses, and even chaplains.
On the side of the State of West Virginia and the operators, airplanes dropped bombs on the miners’ army during the battle. The operators defending their domain suffered three deaths and about forty wounded. The “invading” miners’ casualties were not known. Neither side gained any particular advantage until a detachment from the U.S. Army arrived on September 4 to support the operators’ army. With the appearance of the U.S. Army contingent, the miners withdrew and the battle ceased.”
The extractive industries in Central Appalachia – coal and railroads – created a plutocracy which captured control of the state governments of West Virginia and Kentucky:
“The 1920s, though hard years for the coal industry generally, were also years in which control of the region seemed wholly within the hands of the region’s coal operators. Not only had the union been beaten back and the rising consciousness of labor frustrated, but the handles of power seemed to rest totally in the hands of the region’s coal and railroad barons. Perhaps the major manifestation of this kind of plutocratic power concentration was in the rise of the so-called “Fairmont Ring” during the early decades of the twentieth century. This was a small group of West Virginia politicians and coal-owners, including Peter H. Watson, Johnson N. Camden, Clarence Wayland Watson, and Aretas B. Fleming. These gentlemen sat atop a network that included such great corporations as the Standard Oil Company of Ohio, the Baltimore and Ohio Railway, the Fairmont Coal Company , Consolidation Coal Company, and the Monongah Coal and Coke Company. This combine openly bought U.S. senatorships for Johnson Camden in Kentucky and for Clarence Watson in West Virginia.”
Even U.S. Senate seats were bought and sold as commodities on the free-market. As the profits from coal mining were extracted and flowed out of Kentucky and West Virginia to Northern owners and investors in Ohio, Pennsylvania and New York, the Northern-owned timber companies invaded the area too and stripped the entire region of its virgin forest:
“Such companies as the Kentucky Coal and Timber Company of New York; the Chicago Lumber Company; the American Associates Ltd of London, England; Burt and Babb Lumber Company of Michigan; the Yellow Popular Lumber Company of Ohio; and W.M. Ritter of Pennsylvania”
Northern and British corporations made large fortunes by denuding huge swathes of the Appalachian Forest at firesale prices, one of the most biologically diverse regions in the world, between 1880 and 1920. They also laid waste to the longleaf pine along the Atlantic and Gulf Coasts.
Gov. Ellis G. Arnall, a progressive governor of Georgia in the 1940s, later led the fight against the discriminatory railroad rates that kept the South in colonial subjection:
“The belief that the South was an oppressed colony of the North was widespread for many decades after the War Between the States. Georgia’s governor in the mid-1940s, Ellis G. Arnall, for example, said that while growing up in Newnan, Georgia in the early 20th century, he “realized that the South was merely a colonial appendage of the imperial domain called the North; that the South was the economic doormat of the United States as Ireland was of the United Kingdom. Eastern and Northern writers,” he observed, “had field days in steady criticism of the South, its poverty and problems.” …
Arnall attributed the South’s relative poverty in part to discriminatory (railroad) freight rates. (Up until after World War II, railroads were the nation’s dominant carrier of freight; not only heavy, low-value freight, but of all freight than moved a substantial distance. Therefore, the level of their rates was very important.) Railroad freight rates were, he said, discriminatory to both the South and the nation’s other “colonial” economy, the Mountain States.
The fact that it was cheaper for northerners to ship manufactured goods South than it was for southerners to ship manufactured goods North, while it was cheaper for Southerners to ship raw materials North than for northerners to ship raw materials South, almost irremediably handicapped the South by limiting its industrial production to unfinished, heavy goods. Low rates for shipping raw materials to northern manufacturers and for shipping northern finished goods South , of course, profited northern manufacturers, and southern manufacturers of finished goods were harmed. (Both northerners and southerners wanted to produce finished goods because profit margins are higher on finished goods. Arnall claimed that the higher freight rates southern manufacturers had to pay precluded even the manufacture of fine cotton textiles in the South. Georgia, for example, despite its man cotton mills, had not a single fine-goods bleachery.
Rates on raw materials moving from the South were set so low that they amounted to a subsidy to manufacturers in the North, especially in parts of New England where obsolete plants might have to be refitted or junked if they did not enjoy an effective subsidy on their raw materials and a domestic tariff (the higher freight rates southern manufacturers paid to ship their goods to the North) that protected their goods from the competition from newer and more efficient …”
The libertarian dream of a privately-owned transportation network was also achieved in Central Appalachia. After around 1900, the railroads that crisscrossed the region – this was before the creation of the federal interstate network and long distance trucking put an end to the railroads having a monopoly on freight shipping – were also owned by private Northern corporations.
The railroads hired armies of lobbyists, bribed newspaper editors and politicians, and had so much power that they designed West Virginia’s constitution. Monopoly control of the American transportation system allowed them to price gouge Appalachian consumers and cripple domestic industries with an effective domestic tariff that plundered the South in that way as well.