The Limitation of the Vend was a historic price fixing cartel of coal mine owners of north east England. Its principal customers were ships' captains who purchased cargoes of coal and aimed to resell them in other parts of England; but above all in London which, by becoming the planet's first large mineral-fuelled city, had escaped a natural constraint on the growth of urban areas and was a voracious consumer of coal. Often dated 1771–1845, the Limitation of the Vend can be traced back much earlier. The cartel appears to have operated openly and without concealment, being administered by a well-organised secretariat which could usually detect any significant cheating. It seems participants thought their cartel was not strictly legal, but were convinced it was morally justified all the same. Never successfully prosecuted by the law, they were investigated at least five times by Parliament, twice at their own instigation. Some of its most powerful members were women. Despite their relatively high prices, the cartel's coals captured nearly the whole of the lucrative London market. Other prolific coalfields, some much closer to the capital, could rarely undercut. This was because the north east mines were near tidal rivers with excellent sea-transport links. Though their conveniently located coal deposits were soon exhausted, they kept up their competitive advantage by investing heavily in innovative deep mining, rail transportation and bulk material handling technologies. The region has been called the Florence of the Industrial Revolution, the Silicon Valley of its day, and the native land of railways. The Limitation of the Vend has left meticulous records; hence scholars can study the behaviour of a real cartel in cliometric detail. To what extent its members really enjoyed monopoly profits is still debated, however. Unlike most price-fixing business combinations, which soon collapse e.g. because members start cheating, the Limitation maintained itself for an exceptionally long time, albeit with occasional outbreaks of cut throat competition, being perhaps the most durable cartel that has ever existed. It has been described as one of the most fascinating problems in economic history.
Other names The cartel has also been referred to as the Limitation of the Vends, the Regulation of the Vend(s), the Restriction of Vends, the Committee of Coal Owners of the Rivers Tyne and Wear the Joint Durham and Northumberland Coal Owners Association, the Newcastle Vend, the United Committee of the Northern Coal Trade, and the Coal Trade Office in Newcastle.
The combination: preliminary outline
The Limitation of the Vend was an association of coal mine owners of County Durham and Northumberland. At yearly intervals its members negotiated an agreement. It laid down each mine's share of the market for the coming year and the lowest prices it was allowed to charge, arrived at by taking into account the mine's productive capacity and the qualities of its coals. A committee kept a close eye on the London coal market and decided the total sale ("issue") allowed for the coming month (later, fortnight). No mine was to load ships in excess of its allocation or sell below its list price. An efficient secretariat kept accounts and could usually tell if there was significant cheating. Members who delivered too much coal, or who charged less than the prescribed price, could be "fined". The fine was calculated by a method laid down in the agreement; the money was to be paid over for the benefit of members who had sold less than their quotas. Coals sold to local consumers, or for export to foreign countries, were free of the cartel, and cheap. The agreement applied to coals sold to ships in the coastwise trade only. Most of those vessels, typically moored in the rivers Tyne or Wear, or later, the Tees, were bound for London. Such was the volume of the London trade that a modest tax on it paid for the rebuilding of the public spaces after the 1666 Great Fire, including St Paul's Cathedral and the 51 Wren churches. The coastwise trade became proverbial in the English language. There was nothing to stop members from resigning and offering their coals to ships at keener prices in any amount. Moreover, mines had conflicting aims and interests. The most productive mines wanted large quotas and vends, and lenient fines for those who exceeded them. The least productive mines wanted higher prices, smaller vends for everybody, and tougher fines. Thus, possibly no mine was happy with the terms and conditions eventually agreed. Despite all this, the members did usually keep to the agreement, and negotiate next year's. This went on for nearly 75 years; arguably, for much longer. It may have been the most durable cartel that has existed. Since most cartels, even stable cartels, last only a small fraction of that time — most commonly, about 4 years — then collapse e.g. through cheating, the problem in economics is to explain the length and stability of the Limitation of the Vend. In 1941 Austin Robinson called it one of the most fascinating unsolved problems in economic history.
The north east coalfield and its geographical advantage Though histories of the coal industry tend to concentrate on mining, much of it had to do with transport. "The remarkable point [is] that it became economically feasible to move such large amounts of a heavy and bulky material over comparatively long distances. In this respect the coasting trade is of the utmost significance". There were rich coal deposits in several parts of Great Britain, some much nearer to London, but the north east coalfield of County Durham and Northumberland — often simply called the Great Northern Coalfield — had a competitive advantage. The advantage was the low cost of sea transport to the London consumer.
Sea transport Until modern road surfaces were developed it was much cheaper to send bulky cargoes by water. According to various estimates, the price of coal if taken by the roads of the era doubled within five or ten miles of the pit-head, hence soon became unaffordable. But the north east coalfield was intersected by navigable rivers that flowed into the North Sea, only 300 miles away from London's river Thames.
A recent estimate is that in 1750 it would have been about 65 times cheaper to send coal to London by sea than by road. Seasale collieries were near enough to the tideway (tidal rivers) to do so; landsale collieries had to be content with the local market. Other coalfields did send coal to London by sea, but the voyages were longer. Already in the 17th century small amounts of Pembrokeshire culm (good for hothouses) and Scotch great coal (for warming noblemen's mansions) were burnt in the neighbourhood of London, though they were expensive.
The coastal shipping trade
To London In general, the north east mines did not ship their coals to London themselves. They sold them to colliers — typically small sailing brigs, later snows and schooners— that loaded in the north east rivers and resold their cargoes in the river Thames or other ports. The sea voyage to London in fair weather typically took 5–6 days. This coastwise trade, in itself, was highly competitive, because participants were numerous and ships were easily switched into and out of the business. Thus though many ships plied in the coal trade, few specialised in it. East coast colliers have been described as "among the very best sailing vessels in operation anywhere". A ship might be owned by her captain, a syndicate of investors, or both; the same was true of her cargo. By 1800, there were 600 colliers in the London trade alone, shipping an annual 1.35 million tons. They caused severe congestion in the Pool of London and in 1829 it was decided that no more than 250 should be allowed there at the same time. In 1820 the Limehouse Basin was dug to allow some colliers to transship their cargoes to the new Regent's Canal, which conveniently skirted Regency London's built up area.
This coastal trade was the largest branch of the British shipping industry by volume; and it had some political leverage. The North Sea voyages were hazardous (in one extreme case, 200 ships were lost at the same time), especially on voyages to supply the winter coal market. In wartime, enemy privateers tried to seize them; hence they were armed, or painted with fake gun-ports. It was believed the trade bred tougher and more skilful seamen; it was called a "nursery" for the Royal Navy and was even said to account for England's naval supremacy.
Other destinations Although most ships in the coastwise trade sailed for London, a substantial proportion, particularly if departing from Sunderland, delivered to other places. Colliers were strongly built with flat bottoms, and small ones could trade from beaches for example.
Turn-around A collier's productivity depended on how many voyages a year she could achieve — eight was considered not bad — and was affected by her turn-around time in the ports. Explained Simon Ville:
Colliers arriving in the Tyne would drop anchor at Shields. The master travelled across land to Newcastle to order a cargo of coal. Coal was transported from the pit head to the river side and loaded into small keel boats. The keelmen sailed to Shields and discharged the cargo into the waiting ship. This process would be repeated using several keel boats until the vessel was fully loaded. This was expensive and time-consuming ... If the master wanted the best grades of coals e.g. Wallsend (which sold better in London, but were harder to procure) the delay was greater. This could happen because the best mines had used up their monthly quotas. "No more could be supplied till the commencement of the ensuing month; and detentions of this kind, as your Committee have reason to believe, frequently occurred", Parliament was told. It was hard for the master to make the right buying decision not least because prices in London fluctuated tremendously. Since ships lost money by being kept waiting — which might happen on purpose if they had offended the cartel — in 1811 the shipping industry procured an Act of Parliament (the Turn Act) by which colliers in the Tyne waiting for a load had to be served strictly in turn, no ship being allowed to jump the queue. Thus, refusing to sell a ship coal was a breach of the law. The cartel admitted they evaded the law by demanding steep prices instead of refusing point blank.
Sea versus rail
The London and Birmingham Railway, London's first inter-city line (1833), also connected the capital to the much nearer Midland coalfield; this was strongly opposed by the Limitation of the Vend, who regarded it as unfair competition, which in one sense it was. As it turned out, however, very little coal came to London by rail during the cartel's lifetime. Even in 1845 it carried a minuscule 8,377 tons. In that year coastal shipping conveyed 3,177,321 tons from the north east, and 163,994 tons from Scotland, Yorkshire or Wales. Even canals carried 60,310 tons. Textbooks on 19th-century national transport history devote little attention to coastal shipping; overwhelmingly, they concentrate on railways. Yet, until about 1910, more ton-miles of British goods were moved by coastal shipping than by all the railways combined. A long-distance railway required heavy investment in infrastructure; a coasting business, practically none. Steamships were much faster than bulk freight trains, which were given low priority and averaged 2 miles in an hour, if that. Sailers, even if at the mercy of the winds, were usefully conveyed by the tides, and consumed no fuel. There was even a type that could be crewed by two men and a boy.
The consumers
London was, by a long way, the best customer for the north east's coals. Already in the medieval era it was importing coal from Newcastle, there being a Sea-coal Lane in the city by 1228. During the early modern era London was England's leading manufacturing centre, and used coal for brewing, sugar refining, lime burning, glass-making, soap-making, blacksmithing, and brick-burning — building up London required an enormous number of bricks. But soon the main use was for domestic heating. As trees were cut down firewood became scarce and expensive. Though burning coal gave off noxious fumes, Londoners gradually evolved a new style of house that could burn it indoors, a thing that astonished foreign visitors. It was "a watershed moment in the environmental history of the world": the transition from organic wood to non-renewable coal. Early modern towns had been fuelled by firewood, but the amount available was what could be grown locally. (If more land was devoted to growing trees, there was less for food.) Thus these towns could not grow beyond a certain size. London, by pioneering the switch from organic firewood to mineral coal, managed to escape the law of diminishing returns altogether. From perhaps 65,000 people in 1550, it grew as no human settlement had done before, reaching eight million inhabitants by 1950. Coal imports enabled, and tracked, this increase.
Potential competitors Despite its advantage, the north east coalfield was exposed to potential competition. Robert C. Allen found that coal markets in Great Britain were highly integrated i.e. there were no opportunities for arbitrage between different regions. Though other coalfields did not send very much coal to the capital before 1860, that was partly because the cartel was careful not to push its prices too high.
For example, tramways and canals were built, eventually, that connected the South Wales coalfield to the sea; it was still sending coal to London by sea in the 1950s. So were the Scottish ports of Leith and Methil, as were Yorkshire's Goole and Hull. The Grand Junction Canal (1800) connected the midlands coalfield to London. That the Limitation opposed such canals shows they were a credible threat to its business. "Easy access to navigable water was an immense economic asset, and one fiercely defended".
The north east mine owners knew that, if they set their cartel prices too high, it would stimulate competition from other regions, and they behaved accordingly. Their chairman admitted it to the House of Lords in 1830:Q. The Price as now fixed at Newcastle is a high a Price as can be supported, without letting into the Market other Coals which compete with them? A. I feel perfectly confident of that. In 1828 they had made the mistake of fixing the prices too high, and as a result "we found a great Influx of Coals from other Parts of the Kingdom, from Wales, from Scotland, from Yorkshire and Stockton..." (At that time Stockton was not in the cartel.) "We endeavour to keep the Prices at a Point a little below what the Consumer can get the same Article for elsewhere". Elaine S. Tan found that these potential competitors, just by existing, set a cap on the prices the Limitation could safely impose. Many "fringe" mines in the potentially competing regions, being near the surface, required very little investment, and could be exploited opportunistically. There were rural workers who mined coal on a casual basis. Small traders in those regions — grocers and drapers — invested the small sums required.
The coal industry as a business investment
Mining Speculators were tempted to invest their capital in the north east coal-mining industry, attracted by the success of what was a fortunate minority.
Spectacular cases Some families made large fortunes in the north east coalfield: for example the Londonderrys who, unlike most owners of coal-bearing lands, were in the mining business themselves. The headstrong Charles Vane, 3rd Marquess of Londonderry, unable to touch his wife's vast capital without the consent of her trustees, borrowed riskily and founded Seaham Harbour, the coalfield's first sea port. After his death she, Frances Vane, Marchioness of Londonderry, managed the business herself. According to Benjamin Disraeli, she had been a society hostess who, having brains, sought excitement. She found it on the shores of the North Sea, "surrounded by her collieries and her blast furnaces and her railroads and the unceasing telegraphs, with a port hewn out of the solid rock, screw steamers and four thousand pitmen under her control". Disraeli said she had a regular office "and here she transacts, with innumerable agents, immense business". Perhaps the most dramatic example, however, was William Russell who bought the intractable Wallsend Colliery and, after many setbacks, including numerous fatal accidents, struck a bonanza. It was a large, six-foot thick seam of coal, so excellent that other collieries in Britain took to calling their products "Wallsend". Russell made at least £50 million in present-day money buying himself Brancepeth Castle and a parliamentary pocket borough.
While the high human cost of mining coal is not the topic of this article, this colliery was notorious for its frequent mining disasters, owing to its proximity to a gas field. "Fizzers" emitted large quantities of methane — much more than in ordinary fire damp — which had to be vented to the surface and flared, as in a modern oil well (see illustration, Fiery mine at night). The precaution was not always successful; in one explosion 102 men and boys were killed, leaving 73 widows and children without support.
The norm However, to invest in the industry was not necessarily a wise decision, or even a rational one. Chicago economic historian John U. Nef, in his The Rise of the British Coal Industry, said the business was, in Adam Smith's words, "a lottery, in which the prizes do not compensate the blanks". It could become a ruinous addiction, like treasure hunting.
History seems to show that coal mining almost invariably attracts more capital than can be profitably invested, and that this capital remains in the industry, in apparent defiance of the rules laid down by the classical economists, even when the return on it is lower than that received by adventurers in other industries. * * * Experience shows that mine owners continue to work their pits, even at a loss, when the market is already glutted with coal. Reliable quantitative accounts are not available before about 1850, when it appears the net return on capital in coal mining in Britain was about 5%, little more than could have been got by lending the money safely in mortgages. Yet the industry was so risky that until 1827 it was not possible to obtain fire insurance. A coal mine was not acceptable as collateral for a financial loan.
The town clerk of Newcastle told the House of Commons (1800) that although Wallsend colliery made "outrageous profit", and two or three others made "large" profits, on the whole it was not a sound investment.I have lived my whole life in a Coal Mine country. I have possessed the means, and have had frequent opportunities offered me, of adventuring in speculations of that nature; I have ever declined doing so upon this principle, that the average profits resulting from those adventures were inadequate to the employment of so much capital as they required, and to the risk attending them. To like effect wrote economist William Stanley Jevons: "That in some cases prodigious profits are made, as in the case of the original Wallsend mine, is well known. But this cannot usually be the case, otherwise the wide areas of land yet known to contain untouched seams of coal of the finest qualities, would at once be broken up by speculators, who are never wanting. That deep mines are so deliberately opened is a sufficient proof that the highest prices obtained are, taking all mining risks and charges into account, only an average equivalent for the capital invested."
Mineral leasing
In Britain, unlike other Western European countries, mineral deposits belonged, not to the State, but to the owner of the soil. With time, owners of coal-bearing land, instead of mining it themselves, tended to lease the mineral rights to entrepreneurs. These landowners were content to receive a fixed rent plus royalties on the tonnage. They avoided the risks, but got what was a modest return for the exploitation of a wasting asset. Clark and Jacks from a sample of 203 coal leases found that the average royalty on a ton of coal was only 10% of the pit-head price.
In contrast, in the modern world the mineral rent paid for some oil reserves in the Middle East is close to the whole of the wellhead price. That is why there were so few coal millionaires in eighteenth and nineteenth century England, in contrast to the oil billionaires of today.
The Church In County Durham the largest coal landholder was the Dean and Chapter of Durham Cathedral. The church's coal-bearing lands were let on increasingly businesslike terms. By 1819 they were asking £89,750 — more than £6 million in present-day money's worth — to renew the lease of Rainton Colliery, which Lord Londonderry's advisor John Buddle called "exorbitant in the highest degree". Londonderry called their bluff.
North east coalfield: investment in technology
The coalfield kept up its competitive advantage even after its easily accessible deposits had been exhausted. Although not the only one to innovate, by the eighteenth century the Northumberland and Durham coalfield was the largest and most technically advanced in the world. It has been said that Newcastle was "the Florence of the Industrial Revolution"; "the north-east was the Silicon Valley of its day".
Deep mining Already maybe by 1600 (but at the latest, 1700) not only had the surface outcrops of coal been worked out, but so had the shallower underground seams where a mine could be drained easily by opening an adit and letting the water run further downhill. Deep mining became necessary, which brought a host of problems. "In 1700 the deepest mines were already about 300 feet [100 m]. By the 1750s they reached 600 feet. By the 1820s some pits reached nearly 900 feet underground". In 1828 two thirds of the mines were more than 300 foot deep, one third more than 600.
Depth and winning
Winning coal is making it accessible for extraction, and in this district it required heavy investment with no guarantee of a return. In The Coal-Mines of the North of England (1846) David T. Ansted, professor of geology at King's College London, wrote:
The depth of the sinkings is enormous, being rarely less than 150 fathoms [275 m], and sometimes upwards of 300. The competition amongst the various proprietors is very great, and the expense of sinking such deep shafts, often through untried ground and with a vast body of water pouring from quicksands, is so enormous, that there seems no hope of adding very considerably to the number of shafts in each mine which made for severe ventilation problems. If the shaft-sinking struck water-bearing sands it could become a serious emergency. In sinking the shaft for Murton Colliery (1838) a torrent of nearly 10,000 gallons (45 tons) of water a minute rushed in, and had to be pumped up 540 feet (165 metres) to the surface, requiring the combined power of 39 steam-engine boilers, before workmen could safely tub off the shaft with cast iron.
Pumping and lifting The main problem was seepage water in the mines, however. In deep mines it was necessary to pump it up, which required a source of power. A common misunderstanding is that mines were pumped by horse power until steam engines were invented. They sometimes were, but hydraulic power was more effective than either. For this to work, though, a large catchment area was needed to collect enough run-off water to drive the wheels (called coal mills); the necessity favoured large landholdings. By 1800 mine ownership in the north east was much more concentrated than in other parts of England. Even so, the region was one of the first to adopt the Newcomen steam engine, and it installed many, some for pumping water to waterwheels.
Horse-driven cog and rung winding machine. Early machines could be built by local millwrights. "In the Walker colliery in 1765, the deepest mine at that point at 600 feet, coal was lifted from the mine by a gin powered by 8 horses". At that depth the rope weighed more than the load of coal. Coal mill. For driving mine pumps, these water-powered prime movers were more effective than early steam engines and much more so than horses (Beamish Colliery: T.H. Hair, 1844, Views of the Collieries of Northumberland and Durham ). Pumping engine at Friar's Goose Colliery, Gateshead (Hair, Views). Deep mining required heavy investment. John Smeaton's water gin, Long Benton Colliery, 1777. Early steam engines were too jerky to drive the winding gear, so they pumped water to overshot wheels, which turned it smoothly. (Wellcome Collection: J. Farey, eng. Lowry)
Ventilation
The mines being deep and the coal bituminous, explosive gas became a serious problem, and until 1815 had to be dealt with by improved ventilation alone since miners had no practical way of illuminating their work except by the light of a naked flame. The method of getting coal in this district was pillar and stall mining, in which the mineral is extracted by cutting a grid of intersecting passageways, leaving thick pillars of coal to support the roof. Besides yielding coal, those passageways were essential for ventilation because, if they were obstructed — even in abandoned sidings — explosive pockets of gas might accumulate and endanger the whole mine; this was appreciated by 1760. Thus, until safety lamps were introduced (see below), a third if not one half of the coal could not be extracted, but had to be left as part of the mine's structure. Ventilation was achieved by heating air in a furnace and letting it rise in the upcast shaft, thus creating a strong vertical current. A system of closing doors, called coursing, directed the airflow in a sinuous path through all parts of the mine; but since the pathway might easily be 30 miles long, sometimes as much as 50–70 miles, the current was sluggish, and became dangerously contaminated. An important breakthrough was to divide the air into many parallel currents. Called splitting, it was devised by John Buddle at the Hebburn colliery, and it greatly improved the air's freshness and intensity. A dumb drift allowed potentially explosive air to escape without dangerously feeding the furnace fire.
Illumination
The north east introduced the first practical safety lamps. Following the Felling mine disaster of 1812, the Society in Sunderland for Preventing Accidents in Coal Mines, in which John Buddle was influential, encouraged investigators to tackle the problem of explosions. Three of these, William Reid Clanny, George Stephenson and Humphry Davy, independently came up with safety lamps, converging on a solution where the flame was shielded by a gauze. They were in use by 1816. The term "safety" was relative, since the lamps were dangerous if incautiously used. Nevertheless, they produced "an entire revolution" in mining.
It was now no longer necessary [said Nicholas Wood] to preserve the ventilation so as to render all parts of the workings safe with naked lights. Pillars could be removed to any extent so far as ventilation was concerned... Collieries which had been partially worked and abandoned for years as unworkable to any further extent, and in which about one third of the coal was left, were then reopened, and the entire pillars removed. Millions of tons of 'lost' coal were recovered.
Panel working
The new methods brought new challenges. Removing some coal pillars put extra stress on the rest, which were gradually crushed by the weight of the roof; or the floor buckled. A condition called creep or crush developed, which slowly spread as a chain reaction through the district, damaging the coal and, once started, very difficult to stop. John Buddle, regarded as the greatest mining engineer of his day, solved the problem by inventing panel working, which is still used. The district is divided into panels, isolated by barrier pillars which are wide enough to support the roof and prevent creep. Interior pillars may then be robbed out.
Rail transport technology
The north east has been described as the native land of railways. "From about 1620 to 1820 the northern coal-field was the theatre of experiments which culminated in the formation of the Stockton and Darlington Railway". Even George Stephenson's standard gauge, now used from America to China, originated from the rail separation used at his employer the Killingworth Colliery, Northumberland. These early railways were used for carrying coal from mine to tideway, and most were less than five miles long. By 1800 there were perhaps 150 miles of line in Tyneside alone. They originated as follows. Each mine had a staith, a wooden staging projecting out in to the river where coal could be stored. As mines were sunk further and further from the rivers, they confronted the problem of getting their coals from the pit-head to the staith without incurring ruinous expense. A horse can pull much more on a very even surface. Mines invested in waggonways, at first nothing more than parallel wooden rails on sleepers upon which horses could draw trucks. Metal wheels, internally flanged as now, were in use by 1774. Later, and progressively, rails were surfaced with iron strips to reduce wear; cast solid; laid on edge instead of flat; made of malleable iron. Brakes were improved, hence waggons could be run together as trains. Sometimes gravity was substituted for horse power (self-acting inclined planes: the downward force of the loaded waggons pulled the "empties" up the hill again). Where need be, stationary steam engines pulled cables (1808). Eventually steam engines moved themselves. North-easterners discovered that locomotives could get enough traction from their friction against the rails. Not the world's first public railway, but the first commercially successful one, the 25-mile Stockton and Darlington, carried coals to a hitherto inaccessible river: the Tees.
A 1774 drawing by Gabriel Jars of the French Academy of Sciences shows that early Newcastle waggonways had many of the characteristics of modern railways, including metal wheels with internal flanges, rails laid across sleepers, braking, twin tracks and even turntables. (Detail: Notice unequal wheels to counter downhill tipping, back wheels of wood for better braking). By 1795 improvements in braking allowed multiple waggons to be taken downhill as a set — or train. Horse-traction was quite adequate for some of these waggonways, which on the outward journey ran chiefly downhill under gravity. The dandy waggon, an 1826 George Stephenson invention, rested and fed the horse during the gravity runs. The horse knew to trot after the train and jump aboard, which it did avidly. Horse railways continued until 1907. Whitwell Colliery (Hair, Views) The world's oldest railway embankment, 1726, built by the Grand Allies for their horse-drawn waggonway to the Tyne. The Tanfield Railway, a heritage operation, still uses much of this line. Coal waggons (right, in distance) descend an inclined plane by gravity to waiting keelboats on the River Wear. An endless cable (not visible) returns the empties.
Steam locomotives The high cost of horse fodder during the Napoleonic wars encouraged mine engineers to experiment with steam locomotion, though at first locomotives were not much stronger than the best horses. When the Stockton & Darlington Railway opened it was not obvious that steam was going to cost less than horse power; the directors therefore chose to use both. Visiting engineers from Prussia reported (1826 or 1827) that although the S & D's locomotives incurred half the running cost of horses, it was still not clear that they were cheaper once repairs to engines, rolling stock and rails were taken into account.
Blenkinsop's rack and pinion engine, described as the first actually useful locomotive. "Puffing Billy", designed by William Hedley at the Wylam Colliery in Northumberland, partly rebuilt 1813, shown in this photograph 1862 still at work, and now on view at the Science Museum, London. (Ironbridge Gorge Museum Trust.) Early locomotives with their weight and vibrations soon broke the rails. Stephenson realised that locomotive and track design had to be integrated. In one model his steam-filled cylinders were arranged to act as shock absorbers ("steam springs"). Notice the "fish belly" rail pattern. This was the locomotive used by the Hetton Colliery (below); its private railway was operative (1822) before the Stockton & Darlington. Locomotive No.1, Locomotion (R. Wake, 1883, oil on canvas, National Railway Museum/Science & Society Picture Library) Stockton and Darlington Railway 2–2–2 Locomotive No. 52 'Comet' (unknown artist, National Railway Museum) Steam locomotives revolutionised transportation everywhere, but they originated in efforts to carry coal cheaply from mine to first customer.
Bulk material handling and transshipment
The coal having arrived at the riverside, the next phase was to transship it to waiting colliers, the problem being to do it without incurring too much expense and breaking the product in transit (which lowered its market value). The traditional method was to employ keelboats. These were 21-ton barges, sometimes sailed, but mainly propelled by pushing large poles into the riverbed; the poles were bladed, and also served as steering oars. The four keelmen, having tied up alongside the waiting collier, raised up the lumps of coal with their hands — for which they were entitled to an extra cash payment — and passed them up into her portholes. Shovels, which might have broken the coals, were thus avoided, except for clearing out the residual dust. For every foot that the coal-port was above the gunwale they were entitled to another payment. All of this was physically demanding. Keelmen were easily the best paid manual workers in the coal industry, according to John Buddle. The mode was therefore expensive. The north east industry evolved three techniques for reducing labour costs and breakage:-
spouts drops tubbing (an early form of containerisation).
From a 1790 woodcut, British Museum. Coal was loaded directly into the collier through a rectangular tube called a spout. To reduce breakage the spout was inclined; later models could be adjusted to allow for the tide. There was a trick for minimising breakage. The spout method was of no use for loading colliers if the water was too shallow to admit them. Hence mines above bridge continued to use keelboats; the differential cost was to put a strain on the cartel. A machine lowered a coal waggon gently onto the collier's deck, restrained by a counterweight. A moveable flap released the coal, whereupon the waggon ascended again lifted by the counterweight. Once again this technique required deep enough water. The peculiar shaped housing is the coal store. Underneath there is a spout for loading keelboats. This was the shipping staith of the famous Wallsend Colliery. (From Hair, Views.) The coal was transferred in square tubs, which were waggons without wheels and held a standard, Customs-certified weight. Eight tubs exactly fitted into a keelboat. On arrival at the collier, which might be anchored in deep water, a crane lifted a tub from the keelboat (left) it and lowered it through the collier's hatchway (right) and into her hold. A moveable flap released the coal. This technique was preferred on the shallow river Wear, where keelboats were crewed by one man and a boy. (From William Chapman's patent drawing, 1822.) Introduced in 1817, it was calculated that this technique saved 45% in labour and breakage costs. It has been described as an early form of containerisation.
Know-how
Viewers Colliery viewers were responsible for applying the technologies of the day in the most efficient and effectual manner. They combined the skills of managers, engineers, surveyors, accountants and agents. A consultant viewer offered his services part-time and advised several collieries, often about specific problems. North east viewers had a reputation for technical excellence and were in demand in other coalfields as far away as Nova Scotia and Russia. The best known is John Buddle (above).
Discounted cash flow accounting It has been reported that viewers in the north east were applying discounted cash flow (DCF) analysis as early as 1801 in connection with the valuation of collieries. The technique, still unfamiliar to some accountants as recently as the 1960s, was called forth by a combination of circumstances, including the need for heavy investment in deep mining, the risky nature of the industry, the sharing of risk between multiple investors, and the delayed accrual of the benefit.
The cartel: justification, criticism and polemics
Rationale
For many Londoners the Limitation of the Vend was "an infamous combination for extorting exorbitant prices". The mine owners did not see it that way. They conducted the Limitation openly and without concealment (they printed their rules, for example, and mines had to swear their monthly reports before magistrates), were never successfully prosecuted by the law, and seem to have thought they were only defending themselves against an evil peculiar to their industry, namely irrational price slumps as will now be described. They told Parliament they were combining to keep up the price of their product like workmen combined to keep up the price of their labour, and were as justified. Paradoxically, in a heavily invested mining industry under free competition, a slackening in the demand for coal can cause production to rise instead of falling. American economist Francis Walker, describing the origins of the coal mining cartels of Imperial Germany (where cartels, far from being illegal, were upheld by the law), explained it thus:
The prosperous years attract new investments of capital when profits are tempting, owing to decreasing costs and advancing prices, and when the lean years come, and prices fall, the hard times instead leading to a reduction of a output (which would increase costs) lead to an increase of production which, of course, only aggravates the fall in prices and the general difficulty. The reason is that under a system of free competition no one mine can afford to limit its output — it would simply be playing into the hands of its rivals. Production must go on in order to pay some (even if an inadequate) return on the capital which is invested and which can not be withdrawn. Hence each mine tries to produce the greatest possible amount, hoping to gain something by increased cheapness of production, knowing it will depress the price further, but accepting it as the lesser evil. The resulting glut may instigate cutthroat competition ruinous to all.
The northeast coal mine owners themselves, asked why they did not compete, answered that coal-owners (unlike other industrial producers) could not be relied upon to stop producing when prices fell below the remunerative point.
Generally speaking, mines after they are once won must either continue to be wrought and kept a current-going colliery, or they must be forever abandoned. It is a work of the greatest difficulty, in many cases amounting to impossibility, to recover mines which have been abandoned. If there had been shallow seams of coal, they could have been accessed or left alone according to the demand. The problem was the deep measures. A decision had to be made whether to incur the cost of sinking deep shafts and installing pumping equipment, steam engines, etc. Once incurred, however, it was a sunk investment. An American economist explained:
Having the capacity, each producer naturally wishes to make use of it every month in the year; and it requires a high degree of self-denial or