Its Lordly trees were not the plateau's only wealth to attract the interest of different speculators. In fact, by the middle Nineties interest had become secondary and emphasis had shifted to the numerous thick seams of high-grade bituminous coal striating the hillsides and underlying mountain and valley floor alike.
The above passage and those below are taken from the book "Night Comes to the Cumberlands" by Harry M. Caudill.1 It tells the story of how important coal was to become to life on the Cumberland Plateau of Kentucky in the 1800s and beyond. The book continues:
Then, in the gigantic industrial growth which occurred throughout the western world in the last half of the nineteenth century, coal came to its throne and reigned with a despotism as black as its own dusty lumps. Ships, locomotives, factories and newly built electric power plants were driven by coal and millions of people warmed by its sooty flame. Steel and coal production were the yardsticks by which the Victorian world measured its increasing power and it was inevitable the confident overlord's of the nation's industrial empires should turn covetous eyes upon the mineral-rich highlands.
Coal was definitely becoming the fuel of choice in virtually every situation and would continue to grow in popularity. It was plentiful, cost effective, had a higher heat yield, and occupied a smaller footprint per BTU than burning timber.
The Rape of the Appalachians in the 1950s:
For nearly sixty years the greater part of the region's mineral wealth had lain in the iron clutch of absentee corporations. They had prospered and bankrupted and prospered again. But through their triumphs and tragedies, their successes and failures, the corporations had clung to all the old rights, privileges, immunities, powers and interests vested in them by their nineteenth century land and mineral deeds. These relics from a laissez-faire century were construed to authorize the physical destruction of the land and the abject impoverishment of its inhabitants. With strip mining and its companion, the auger mining process, the shades of darkness moved close indeed to the Cumberlands.
That was then
JPMorgan Chase announced recently that it would no longer finance new coal-fired power plants in the U.S. or other wealthy nations. The pull-back follows similar announcements by Bank of America, Citigroup, and Morgan Stanley that they are, in one way or another, backing away from coal. The trend is an ominous sign for the industry.
"There are always going to be periods of boom and bust," says Chiza Vitta, an analyst with the credit rating firm Standard & Poor's, "But what is happening with coal is a downward shift that is permanent."2
The word from banks is that they are trying to help curtail climate change. But bankers also say there is a more fundamental reason: Lending to coal companies is too risky and could ultimately prove unprofitable. Coal companies are being squeezed by competition from less expensive energy sources like natural gas and by stiffer regulations. These pressures show no signs of slowing down. As a result, even the most secure loans are increasingly off limits for many banks to even consider issuing. And it's not just banks. Hedge funds and private equity firms are also shying away from coal.
The coal industry still provides about a third of the United States' electricity, and industry officials say the business will bounce back once supplies burn off and demand rebounds in places like China. "Coal is part of our future, and I think the banks are taking a short-sighted view," said Mike Duncan, president of the American Coalition for Clean Coal Electricity. "They are ignoring the huge market."3
As big American Lenders retreat, a few foreign banks have been willing to step up to the plate. In its latest corporate report, Deutsche Bank said it was phasing out financing for projects that environmentalists say are particularly harmful. But the bank's policy statement did not commit to the type of broad reduction in coal exposure that many American lenders have made.
Even most American banks are not cutting off funding to the industry entirely saying coal remains a major source of energy, particularly outside of the United States. JPMorgan is halting financing of new coal-fired plants in wealthy nations like the U.S., but will continue to lend to plants in the developing world, where in some places the coal market is thriving.
Changes to the coal lending policy at Bank of America have created tension between senior leadership and rank-and-file bankers. Senior leaders wanted the bank's energy lending strategy to reflect "a transition from a high-carbon to a low-carbon economy," remarked James Mahoney, who worked on the bank's new coal policy.
But the shift has been uncomfortable for some of the bankers serving the coal industry. "It put them in a difficult position to say to the companies they have worked with for years, We are pulling back,'" Mr. Mahoney said. "It runs counter to everything we do as a client-focussed company."4
The coal miner's life, like those of his ancestors from the Piedmont and the Blue Ridge had been lived in fiercely free independence, and when the gangs of track layers first poked into the long valleys of the Kentucky, the Big Sandy, and the Cumberland, they found the essential physical environment of the plateau remarkably unaltered. Though millions of logs had been sent down the river and many coves were now growing corn instead of tulip poplars, the changes wrought by such labours were not large and thousands of acres of still virgin timber persisted on every land. But these outward appearances were deceptive. Now the trees that shaded him were no longer his property, and he was little more than a trespasser upon the soil beneath his feet.5
I must say that I'm pleased that the big lenders are, for the most part, pulling back for whatever reason. Because money speaks louder than words coal may actually be ringing its death knell.
1 Harry M. Caudill. Night Comes to the Cumberlands-A Biography of a Depressed Area. Little Brown and Company, Boston (1962, 1963):
2 Michael Corkery. "As Coal's Future Dims, Banks Curtail Financing." The New York Times International Weekly. (April 3, 2016): 8
3 Ibid
4 Ibid
5 Night Comes, Op, cit. 76
