Bourbon Barons, Tobacco Tycoons, & King Coal: Kentucky's Economy (1865-2015) PDF

Chapter Title: Bourbon Barons, Tobacco Tycoons, and King Coal: The Economy, 1865–2015 Book Title: A New History of Kentucky Book Author(s): JAMES C. KLOTTER and CRAIG THOMPSON FRIEND Published by: University Press of Kentucky Stable URL: https://www.jstor.org/stable/j.ctv5npjz4.18 JSTOR is a not-...

Chapter 1865–2015 Book Title: A New History of Kentucky Book Author(s): JAMES C. KLOTTER and Published by: University Press of Kentucky Stable URL: https://www.jstor.org/stable/j.ct JSTOR is a not-for-profit service that range of content in a trusted digital facilitate new forms of scholarship. Your use of the JSTOR archive indicates https://about.jstor.org/terms University Press of Kentucky access to A New History Bourbon Barons, Tobacco Tycoons, and King Coal The Economy, Agriculture Before the Civil War, agriculture had been the economic lifeblood not only of Kentucky but also, in large part, of the nation. At a time when farm products formed a major part of economic wealth, Kentucky was a wealthy state. It ranked high or led nationally in the production of hemp, tobacco, corn, wheat, and livestock. Yet in the decades after the Brothers’ War, Kentucky slowly lost its leadership position, in part because of decisions made within the commonwealth, in part because of events taking place in the United States. Overall, the country was becoming an in- dustrial nation, and agricultural wealth declined in importance. Kentucky did not match the na- tion’s pace of industrialization. But even in ag- riculture, problems arose. The opening of the great corn and wheat belt in the Midwest, for instance, introduced that region as a major pro- ducer that would soon eclipse Kentucky. Over- all, several trends characterize the state’s agrarian history between 1865 and 2015: Crop patterns changed and, for a time, were less diverse. Live- stock also played a greater role. The involvement of the federal government increased as well. Fi- nally, as agriculture, as a science and a business, professionalized, the agricultural workforce de- creased, and the family farm declined. Changing Crop Patterns Hemp had been the major cash crop for many antebellum central Kentucky farmers, with its 128.163.2.206 All A NEW HISTORY OF KENTUCKY was constructed near Winchester as well. The spurt proved brief, though. Buildings were sold as war surplus, and hemp effectively died as a Kentucky cash crop—or so it seemed. The use of another variety of hemp in the form of marijuana cigarettes had become known by the 1920s. A national tax was insti- tuted in 1937, and World War II hemp pro- duction had strict controls imposed on it. Af- terwards, it became illegal to grow the crop without a license, and none was issued. For sev- eral decades after that, the crop seemed forgot- ten. Yet James F. Hopkins, the author of A His- tory of the Hemp Industry in Kentucky, may have been more prophetic than he knew when he wrote in 1951 that “once more perhaps the dis- tinctive odor of growing hemp will hang heav- ily in the summer air, and the fields of emerald green may once again add beauty to the Ken- tucky landscape.” By the 1980s hemp was add- ing not only beauty but also green dollar bills to an underground economy. By then moon- shine production had nearly ceased, but the spirit behind it lived on through illegal hemp/ marijuana production. “Wars” between federal and state officials and some Kentuckians broke out once more. In 1988 officials estimated that they destroyed half a billion dollars’ worth of the potent “hillbilly pot” plants in Kentucky, but that half of the crop had been harvest- ed and sold, partly by what they termed the “Cornbread Mafia.” If so, then hemp may have again become the commonwealth’s chief cash crop, for tobacco brought in only $471 mil- lion that same year. In 1992 more than nine hundred thousand plants were exterminated. As a result, Kentucky ranked first in eradicat- ed plants in the US, and more than five hun- dred people were arrested. After that, howev- er, marijuana production generally declined. But by 2014, legal production of industrial hemp—“It’s rope not dope”—occurred for the first time in many decades. Despite all attempts to eradicate it, hemp persisted as a part of the state’s economy. The decline of the hemp industry after the Civil War and the growth of other production centers for certain crops helped make tobacco the undisputed ruler of Kentucky agriculture. 280 128.163.2.206 All use Tobacco and hemp grow side by side in Frankfort, KY) lion pounds by 1920. Cumberland County’s to- bacco crop increased fivefold between 1890 and 1940. The story repeated itself across Kentucky, as good prices made the switch attractive. In more difficult times, however, the increasing de- pendence on one crop and one price gave agrar- ians fewer options. For better or worse, Ken- tucky farmers had made their choice and had to accept the results. The raising of tobacco continued almost without change, decade after decade. In a dif- ficult, labor-intensive process, farmers plowed the land, sowed a protected seedbed, trans- planted the shoots to a larger field, and be- gan the endless weeding of the crop. They pe- riodically “topped” the blooms to stimulate leaf growth, they removed worms, and they watched the weather for floods, hailstorms, and high winds. In late summer the whole fam- ily helped cut the crop, bring it to a barn for curing, and then strip the stalks. If the weath- er held and if prices were high, bills could be paid and income saved. All too often the re- verse occurred, and suffering resulted. Yet even 128.163.2.206 All A NEW HISTORY OF KENTUCKY Increased demand during the war years brought a 1916 Kentucky crop of 462 million pounds. Prices continued to rise. Farmers grew more and more tobacco, and it all seemed good for the industry. Then peace brought resumed production overseas, and markets suddenly de- clined. Hope made the 1919 crop the largest the state ever grew. Reality, in the form of over- production, brought 1920 prices to 13.4 cents per pound, down from 34 cents per pound the previous year. Lower averages the next year shut down the market. Once more, planters lashed out at the invisible enemy of poor prices and formed another cooperative marketing or- ganization. Joint action resulted in higher pric- es for a time. As in the Black Patch War earlier, however, impatient farmers could not remain united, and the cooperative failed by 1926. Once again agrarians had to turn to auction- eers, whose final cries left them still searching for answers to their financial problems. Relative stability finally came to the tobac- co fields as a result of the governmental con- trols and supports initiated during the New Deal years of the 1930s. As a result, by 1960, Louisville produced one-half of all American- made cigarettes. Eleven years later, the feder- al program shifted from an acreage quota to a poundage system, but the premise remained the same—the government would guaran- tee a stable price in exchange for limiting the crop. Better production methods occurred as well. The University of Kentucky Experiment Station produced or introduced more disease- resistant tobacco plants and pesticides that helped control tobacco worms. In the 1960s, these chemicals, such as MH-30, killed the “suckers” that had to be removed by hand pre- viously. The experiment station also introduced baling rather than tying of the crop for sale in the 1980s. All that made the still-labor inten- sive crop easier to produce. Crops and prices steadied to a degree, but in 1964, the United States’ Surgeon General found tobacco injurious to health, and federal regulations soon required a warning on ciga- rette packs. All of which brought a Mt. Sterling paper to proclaim, “We don’t need someone to tell us what’s good for us. Pass the nicotine 282 128.163.2.206 All use and farmers’ preferences. Wheat production, for example, doubled between 1870 and 1900, but a decline followed. Only near the twentieth century’s end did wheat production in the state climb back to nineteenth-century levels. Oats never did. A crop that in the 1880s had been grown on twice as many acres as had tobacco, oats had become chiefly a cover crop a hundred years later. Most of the agricultural variety in twen- ty-first-century Kentucky came from the three now-major revenue crops—hay, corn, and soy- beans. Between 1889 and 1907 the acreage de- voted to hay increased 40 percent, and annual production approached a million tons by 1909. In 2014, over 2.2 million tons were harvested, ranking the state fourth nationally. Similar- ly, in 1900 nearly half of the state’s six million acres of cropland was planted in corn. This fig- ure would rise and peak in the wartime year of 1917. The widespread use of hybrid seed corn by the 1940s helped increase production from 63 million bushels in 1896 to over four times that figure by 2014—placing Kentucky four- teenth in the US. And the amount of labor re- quired to produce all crops dropped drastical- ly—the labor hours to grow a hundred bushels of corn, for example, fell from 147 in 1900 to only 3 hours by century’s end. The greatest change in the state’s agricul- tural mix of crops came in the growing of soy- beans. The crop was virtually ignored for much of the nineteenth and twentieth centuries; only 5,000 acres were harvested in 1928. By 2015, however, over 1.7 million acres produced near- ly 84 million bushels of soybeans, valued at over $1 billion. That made soybeans the state’s number one cash crop and Kentucky the na- tion’s fourteenth-leading producer. Capable of two crops in one growing season and used in various forms, soybeans appeared the most likely candidate of choice when farmers aban- don tobacco. Livestock Crops represent only one of the farmer’s sourc- es of income. By 2013, in fact, cash receipts from livestock overall, at $2.8 billion, almost 128.163.2.206 All A NEW HISTORY OF KENTUCKY ator cars that brought western beef to eastern processing centers, and new diseases in Ken- tucky herds all slowed relative growth. Cattle remained at the 1 million level for nearly four decades after 1886. Better animal feed, im- proved breeding methods, and increased popu- larity of Hereford and Angus herds were offset by agricultural depression and the drought of 1930. Major increases began after 1940, and production rose to over 3.7 million head in 1975. But declines followed, to 1 million cat- tle and calves in 2015. Still, the state had the most beef cattle of any state east of the Missis- sippi River, ranked eighth nationally, and cat- tle and calves overall stood fourth among the commonwealth’s cash receipts from commod- ities. In short, even though Kentucky farms and businesses had turned away from hogs and sheep, and more toward chickens and cattle, the livestock industry had experienced incon- sistent growth, and its role in Kentucky’s future remained uncertain. Then there were the horses. Almost from the time of statehood Kentucky had been known as a place for quality thoroughbreds and, later, standardbreds. Yet the Civil War had hit the commonwealth particularly hard in regard to horseflesh, quality or otherwise. The census of 1870 showed that the 350,000 horses then in Kentucky represented a decrease in numbers of more than 60,000 animals from a decade earlier, before the war. Mules, which had sur- vived military raids better, made the state a ma- jor market for that four-legged beast. Kentucky ranked third nationally in the number in 1870. Three decades later, the state still held an important place, with 190,000 mules with- in its borders. But by 2013, only 14,000 once-commonplace and hard-working mules existed in the state. With increased mechani- zation in the twentieth century, the need for horses and mules, either to work on farms or as methods of transportation, declined with each passing year. From 450,000 at the start of the twentieth century, the number of Kentucky horses fell to 240,000 over a century later. Throughout that time, however, thor- oughbred farms in Kentucky continued to pro- duce major racing champions. In 1926, 44 284 128.163.2.206 All use later poundage), plus the huge increase in de- mand during the war years—consumption went up 75 percent between 1939 and 1945— brought a boom to tobacco. Ironically, in the forty-year period from 1965 to 2005 the fed- eral government subsidized production while criticizing and limiting tobacco products in the marketplace. If for years federal policy aided certain parts of the agricultural community, virtual- ly all sectors felt the effects of broader changes in the agrarian world. Generally, farm homes lagged behind the rest of the commonwealth in receiving the advantages of “modern” Amer- ica—good roads, electricity, indoor plumbing, and the like. As late as 1940, for instance, four of every five rural dwellings in Kentucky had no electricity, no telephones, no refrigeration, and no access to hard-surfaced roads. Ninety- six percent had no running water. As technol- ogy and transportation bypassed much of rural Kentucky, particularly the Appalachian area, the ideal of agrarian life seemed unalterably tarnished. Kentucky could not keep its popula- tion down on the farm. In 1880 more than two-thirds of the state’s labor force worked on farms (versus a US aver- age of fewer than one in five workers). In 1940 slightly more than one-third of that force still worked in agriculture. But by 2015 less than 3 percent of the state’s labor force did. As a re- sult, the number of farms in Kentucky declined from a peak of 270,000 in 1920 to 76,000 ninety-five years later. Yet despite all that, Kentucky remained a significant agricultural state, if for no other rea- son than the fact that the mindset of rural ar- eas remained agrarian. After all, compared with the rest of the nation, numerous Kentuckians still farmed. In 2013, the state stood sixth na- tionally in the number of farms, chiefly because of the small size of average holdings. From the end of the Civil War until the start of World War II, state farm size declined, from an aver- age of 158 acres in 1870 to a low of 80 acres in 1940. But as people left the farms after that, larger farms became more commonplace, and the average farm size increased to over 100 acres in 1955 and some 170 acres sixty years 128.163.2.206 All A NEW HISTORY OF KENTUCKY tured small, family-operated farms, with mules or horses pulling plows through unfertilized fields, with acreages little improved by con- servation efforts. While a variety of livestock helped make such places more self-sufficient, already a dependence on one crop was the seed for future problems. Farmers lived a life gov- erned by daylight and the weather. A century and more later, much had trans- pired to change all that. Terms that had once seemed foreign to Kentucky farmers, such as “crop rotation” and “soil conservation,” were accepted without question. The beginning of the state fair in 1902 had helped showcase new agricultural successes. By the 1920s county ex- tension agents, operating under the aegis of the University of Kentucky College of Agriculture, began to have an effect, as they told farmers about new methods and different options. Hy- brid plant strains, chemical herbicides and pes- ticides, education about the values of fertiliz- er—all had an influence. By the 1980s some farmers did not plow their fields, using chemi- cals instead in the “no-till” method. While that made life easier for the farmer, production per acre also drastically increased. Tobacco poundage went up from 550 pounds per acre in 1874 to 1,100 pounds per acre in 1945, and two decades later the figure had doubled again. The average bushels of corn produced expanded from 27 bushels per acre in 1904, to 116 in 1989, and to a record 170 in 2013. Wheat’s yield of 4 bushels per acre in 1885 escalated to 71 bushels 130 years after- ward. As a result, the shrinking amount of land devoted to farming produced more and more, with less effort. For those who had struggled in the hot summer sun for meager returns, those changes seemed almost miraculous. In a sense, farming became more profes- sional and less personal. Other labor had re- placed that of children on larger farms; tractors had taken the place of mules; mechanization had displaced hand planting; machines, not people, milked cows or fed livestock. No longer could successful large farmers plant the same seeds in the same field, year after year, with little knowledge of outside events and forces. Kentucky farmers had to have global vision, 286 128.163.2.206 All use Commerce Even though Kentucky would long honor the agrarian ideal, residents would increasingly praise the goal of a more commercialized and industrialized commonwealth with each pass- ing decade after the Civil War. Slowly, more and more people in Kentucky accepted the idea that future progress was tied to industri- al growth. Few questioned exactly how that growth should occur, or at what price because the United States was developing industrial- ly and state government and business leaders feared being bypassed. City leaders fought to attract new industry to their locales. This ur- ban boosterism pushed the businessman as the new ideal. Yet Kentucky had great difficulty attain- ing the commercial success its leaders desired, as two examples indicate. The state’s timber, Many Kentuckians made money by cutting river. They lived in little shacks, versity, Bowling Green, KY) 128.163.2.206 All A NEW HISTORY OF KENTUCKY er places, and sell the logs. In 1890 a sizable raft would yield between $150 and $300. At that time those sums represented one or two years’ worth of wages for a laborer. If the log- gers could resist the temptation to spend their new cash on the worldly temptations near the mills, they could return home and pay off bills. If not, they at least could come back with new memories of an exciting time. That system presented many problems, however. Those in poverty needed money and cared little about renewable resources. As a re- sult, whole forests were stripped and never re- planted. As early as 1868, the Bowling Green Democrat warned that small forests in the area had already been exhausted and others would follow “unless a different system is adopted.” In 1887 the governor called on the legislature to reforest denuded land and preserve the re- maining timber. No one acted. The head of the Kentucky Bureau of Agriculture, Labor, and Statistics worried in 1905 that state forestlands were being devastated “without regard for the future.” Barren County, he reported, remained “nude of even firewood.” His successor in 1909 predicted that the “suicidal” cutting of timber resources would strip the state of all good trees within eighteen years. Not only lack of income but also soil erosion and flooding would result. The timber boom continued for a time. From 1870 to 1920 flush years brought large sales. In the peak year of 1909, over a billion board feet of lumber was sold, and some ten thousand worked in the industry. As predicted, however, the timber began to run out, and in 1927 production had fallen to less than one- third of the previous high. The glory days had passed, and timber rafts became rare sights in the rivers by the 1920s. The huge Mowbray- Robinson Company in Perry, Knott, and Brea- thitt Counties depleted fifteen thousand acres of timber. By 1922 the area industry that had employed five thousand workers had vanished. The deforested region and a million dollars were donated to the state university, the saw- mills were torn down, and the railroad lines were abandoned. But perhaps the greatest tragedy for Ken- tucky’s economy, other than the exhaustion of 288 128.163.2.206 All use “Marvelous City.” Steel mills were established, coal mines dug, railroads completed, and busi- nesses built. On a wide main street designed for future growth, ten blocks of stores sprang up; town lots sold at unheard-of prices of more than four hundred dollars per square foot. Im- pressive stone and brick Victorian homes were constructed on spacious lawns. In this “New Eldorado,” a massive hotel served by an electric railroad became the center of social life, while the state’s first golf course attracted attention. It was a heady time for investors. In 1890, though, a fire destroyed the core of the city. That same year a bank failure in England cost foreign investors heavily and left Arthur without the capital necessary to go forward. In the United States, a national busi- ness depression struck. Then it was discovered that the iron deposits so central to growth were of a mediocre quality. The boom ended with a thud, and land values fell nearly to nothing. The four banks all failed, and half the popula- tion left. Those who remained included people who were once wealthy but now were penniless or even insane as a result of their losses. Middlesborough’s experience in many ways represented the pattern of future devel- opment in the state. The capital for growth had come from outside the commonwealth, and that circumstance would characterize Ken- tucky’s economy after 1880. Saying that the state became part of a colonial economy, with control located outside of the commonwealth, may be an overstatement, but the analogy is not too inaccurate. Even though Kentucky- owned businesses continued and prospered, as time wore on the finances directing the state’s growth, as well as the stockholders and boards of directors of the major business institutions operating in the commonwealth, increasingly came from outside the state. The wealth went elsewhere, and Kentuckians lost more control of their economic destiny. What was attempted at Middlesborough took place on a smaller scale at other locales in eastern Kentucky, as new coal communities changed the face of the land. Some towns rose and fell with the fortunes of the minerals; oth- ers expanded and grew on their own. Similar- 128.163.2.206 All A NEW HISTORY OF KENTUCKY could never adjust from being a supplier to a surrounding agrarian world to being an in- dustrial place. Moreover, the residents of some towns may not have wanted such a change. In truth, Kentucky had only one truly in- dustrial and commercial city. After all, in 1890 only six cities in the commonwealth had more than ten thousand inhabitants, and commerce in those places concerned relatively small es- tablishments. For most of the nineteenth and much of the twentieth century the only siz- able manufacturing center in the state was Louisville. The Falls City and Urbanization Virtually untouched by the Civil War, Louis- ville, in fact, benefited from it economically. The Falls City emerged at war’s end as a center of trade for the still-devastated South. Travel- ing salesmen, called drummers, spread the gos- pel of trade to small stores and homes across the region, all the time preaching the virtues of Louisville’s goods. Those economic missionar- ies capitalized on Kentucky’s southernness and usually introduced themselves by a military title, obviously won in the Rebel cause. They told stories, entertained the locals, and made sales. In 1874, a year in which the Falls City sold 287,000 bales of southern cotton, one pa- per in Arkansas said that people there knew “no market but Louisville.” Louisville-based J. P. Morton and Com- pany had become “publishers to the Lost Cause,” and the Louisville Courier-Journal had for a time the largest circulation of any south- ern newspaper. Capitalizing on these connec- tions, the drummers rode the L&N Railroad, took orders, and sent them back to the Falls City to be filled. There stores such as Bamberg- er and Bloom, the largest in the region, did the rest. Louisville also had the largest plow facto- ry in the world, B. F. Avery’s, and near the end of the nineteenth century the city was the na- tion’s chief producer of cast-iron pipe, the larg- est banking capital in the South, the chief leaf tobacco market in the world, the second-larg- est tobacco manufacturing center in the Unit- ed States, and the home of the largest textile 290 128.163.2.206 All use decades of the twentieth century, and the city ranked twenty-second nationally in the value of manufactured products in 1920. At the end of the twenties, manufactories in or near Lou- isville provided over half of the value added by state industries. But by the late 1930s one author included the city in a group of five he studied in their “old age.” Calling it “a museum piece,” untouched by waves of immigrants or by new economic patterns, he concluded that the Falls City was approaching “an ossified dot- age.” At almost the same time as he wrote, the huge Ohio River flood of 1937 devastated the town. Yet those two events may have helped transform Louisville’s psyche, as leaders and the populace worked to rebuild from both a nat- ural and a public relations disaster. Stimulat- ed by World War II, and a new leadership that included Wilson W. Wyatt, Louisville began a rebirth, both culturally and economically. The 1950s became a Louisville decade in Kentucky: General Electric built Appliance Park, the larg- est such complex in the nation at the time, and the state constructed the Fair and Exposition Center, the largest indoor facility in the US. The city’s peaceful racial integration of schools won national praise, while activity in the arts brought further recognition. Yet Louisville’s dynamic spirit of the 1950s did not continue at the same level. That situ- ation was not surprising, for Kentucky cities generally have experienced periods in which businesses, or leaders, or a combination of other forces have for a time made them vigor- ous and progressive places, attracting energetic men and women. Lexington had experienced such vitality during the state’s first decade of statehood but had relinquished its position lat- er. In the 1970s and afterward it would again be revitalized. Northern Kentucky cities had been strong in the late nineteenth century, then had slowed in growth. Paducah, Owensboro, Hopkinsville, and other western Kentucky cit- ies had shown similar trends at different times. Louisville in the 1960s and beyond continued to develop, but at a different and more mixed pace. Older, individually and locally owned firms consolidated with larger, national ones, and at the same time a city whose fortunes had 128.163.2.206 All A NEW HISTORY OF KENTUCKY shipping products, and cork, label, and bot- tle makers lost a source of income—the effects were widespread. Towns dependent on near- by distilleries almost vanished: Tyrone in An- derson County declined from a place with one of the largest plants in the world and nearly a thousand inhabitants to an unincorporated vil- lage. The empty buildings became vulnerable to vandals and the weather. Ironically, out of another depression came the impetus to repeal Prohibition and provide more employment. In the 1930s the Kentucky distilleries once more filled the air with the aroma of sour mash. The 1937 open- ing of Seagram’s Distillery in Jefferson Coun- ty, billed as the world’s largest at the time, symbolized the new growth. By 1943 the state furnished 68 percent of US liquor pro- duction. In 1964, Congress declared bourbon the nation’s only native spirit. But a shift in national patterns of consumption soon after that hurt the industry for some decades. A lat- er rebirth of interest in bourbon, fueled by a “Bourbon Trail” in the state, helped the in- dustry rebound and prosper. In the last fifteen years, production has increased over 170 per- cent. The state distills over 95 percent of the world’s supply of bourbon. The shifting fortunes of the liquor in- dustry symbolized a trend that affected many mainstays of the state’s economy. Restrictions have beleaguered all three of the bedrock indus- tries—liquor, tobacco, and thoroughbreds—at one time or another. Prohibition stopped le- gal liquor production, the federal controls on tobacco increased from the 1960s on, and the racing industry almost ended in the 1920s and continued to face challenges. In addition, a once-strong lumber industry went into decline before later rebounding; certain major facto- ries, such as those that made carriages, disap- peared; and the commonwealth’s coal indus- try experienced a decline. The combination of such trends resulted in an uncertain economic future for the state by the late twentieth centu- ry. Change seemed a more likely and promising option. To Kentucky’s credit, the state econo- my did move into needed other areas, but often slowly and tardily. 292 128.163.2.206 All use Louisville, International Business Machines in Lexington, and Armco Steel in Ashland repre- sented the most visible aspects of the change. In 1980 the state’s largest employers were in the fields of electronics, machinery, textiles, food, metal industries, and chemicals, and by the 2010s Kentucky had about the same percent- ages of people employed in most work catego- ries as did the rest of the United States. Only in the financial and service areas did the state lag. Out of these changes came a state econ- omy that led the nation in few new fields, but one still very different from that of earli- er years. Kentucky continued to play a signifi- cant role in the liquor industry, but it also had become an important automotive center. Ken- tucky’s own attempts at building horseless car- riages, such as the Ames, the Dixie Flyer, the Lexington, and the Bowman, had failed. But a plant started assembling Model T’s in Lou- isville in 1913. Aided by better roads, and the improved traffic light—introduced in 1923 by black inventor Garrett A. Morgan (who grew up in Bourbon County and who also patent- ed the predecessor of the gas mask)—the de- mand for cars grew. By 1955 the Ford Assem- bly Plant opened, and fourteen years later the Truck Plant began operations in Louisville. To- gether, they had produced over eleven million heavy and light trucks and utility vehicles in the state by 1998. In 1980 a General Motors plant in Bowling Green became the only fac- Table 14.1. Gross State Production, Industry Manufacturing Services Government Financial and Real Estate Transportation/Communication Retail Trade Wholesale Trade Construction Mining Utilities Farms, Forestry, and Fisheries Arts, Entertainment, Recreation Total 128.163.2.206 All A NEW HISTORY OF KENTUCKY Under the name of Yum! Brands it now in- cludes Pizza Hut and other fast-food chains in its Louisville headquarters. Other companies, such as Jerrico (later Long John Silver’s), Tex- as Roadhouse, and Rafferty’s were the Kentucky economy. And the nation’s larg- est peanut butter production facility is in Lex- ington. By 2014, eight of the nation’s largest one thousand companies in terms of revenue were in Kentucky—in order: Humana, Yum! Brands, Ashland, General Cable of Highland Heights (wire and cable), Kindred Health- care of Louisville, Lexmark International of Lexington, Brown-Forman (distilled spirits), and Tempur-Sealy International (bedding) in Lexington. But the real story of Kentucky’s economy remains its global connections. By the 2010s, over four hundred foreign businesses oper- ated in the commonwealth, employing over 75,000 Kentuckians. Conversely, the state’s ex- ports reached over $28 billion—up from $10 billion in 2002—with the chief markets being Canada, the United Kingdom, Mexico, Chi- na, France, Brazil, and Japan. Overall, Ken- tucky ranked in the middle of the states in that regard. Yet those positive economic indicators could not obscure a trend that had perhaps increased in importance as the centuries have progressed: much of the state’s wealth still went to companies with headquarters out- side its borders. In the banking industry, for example, several sizable and independent state banks in the 1980s and 1990s became part of larger national financial institutions that had their corporate centers in Ohio, Pennsylva- nia, North Carolina, or elsewhere. Privately held newspapers, with the Louisville Courier- Journal and Herald-Leader being only the best- known examples, followed the same trend, as did other businesses. Kentucky remained pri- marily what one scholar has called a peripher- al region, where products are processed local- ly but where dollars flow out of communities rather than into them. Extractive rather than constructive actions more often result. That situation makes even more praiseworthy those Kentucky-based people and companies that 294 128.163.2.206 All use decision—they got rid of debt, secured their ownership to the land, and saw little imme- diate change to the landscape. Mayo and oth- ers thus acquired mining rights to hundreds of thousands of acres—and then sold those rights to mostly northern developers. Only several generations later did the full effect of the sales come home to haunt the mountain homeplac- es, in the form of strip-mining. As historian Robert S. Weise notes, “Farmers who sold min- eral rights may well have saved their farms, but the consequences... would be visited on their children and grandchildren.” Mayo symbolized the revolution taking place in eastern Kentucky, one that changed the face of an agrarian region. Railroads inched their way into formerly isolated areas—to Mid- dlesborough in 1889, to Harlan in 1911, to Hazard the next year—and as they did a trans- formation occurred, sometimes virtually over- night. In Perry County (Hazard), before the railroads, its total taxable property had been listed as some $80,000; a decade later, it had increased to $23 million. The county seat had grown from 250 to 8,000. In Letcher County, a valley containing a lone cabin became in a few 128.163.2.206 All A NEW HISTORY OF KENTUCKY Immigrants and African Americans moved to the mining areas and added an ethnic mix to a population that had previously been almost totally Anglo-Saxon. Still, as the boom times passed, only remnants of those new groups would remain. In the good times, though, most enjoyed the higher wages, the entertain- ment options, the goods to be purchased, the schools, the medical care, the higher hopes. For those men and their families, a long-established way of life had ended, for they now lived in dif- ferent homes, surrounded by different people speaking strange languages. They were working different jobs and adjusting to different family structures. Prosperity often came at a high price, however. The vaunted Appalachian indepen- dence, self-reliance, and self-sufficiency now had to be submerged to officials who ran com- pany towns like little kingdoms. In the worst cases, the companies controlled everything, with no debate. Miners were expected to vote as the company desired; they paid high pric- es at monopolist company-owned stores; they were treated by doctors paid by the company; they lived where they were told to live, in ar- eas segregated by race or ethnic origin; they of- ten suffered in silence if abuses arose. In short, their lives became socially, physically, and psy- chologically controlled by a corporate fiefdom. Some coal areas, on the other hand, con- tinued to be managed well. The companies dominated in these places, but at least more benevolence was involved. Many families ex- perienced prosperity for the first time; many children of miners now had the benefit of edu- cation and went on to success in other occupa- tions. Still, when hard times hit the coalfields and when profits declined, even the best of the company towns suffered. The physical infra- structure could not be kept up, and unpaint- ed houses gathered the ever-present coal dust hanging in the air and turned gray. Sanitation declined, as creeks filled with litter that remained uncollected. At those moments, the gulf separating the operators living on the hill from the miners in the valley suddenly seemed much broader. Over time, the miners and their families would not suffer in silence. 296 128.163.2.206 All use irony in the historical markers posted in Har- lan County, which show that far more people have died in the mines there than in military actions. Going into the mines was sometimes like going to war. But go the miners did, both with cour- age and fatalism, and their work resulted in the production of massive amounts of coal from both the western and eastern Kentucky fields. A million tons was produced in 1879, and that figure increased to more than 5 mil- lion two decades later. Between 1900 and 1907 production doubled, then nearly dou- bled again by 1914, and almost tripled be- tween 1914 and 1929. By 1920 Pike Coun- ty alone produced almost as much coal as the whole state had in 1900. High demand through World War I was followed by a slump in the early 1920s, and again during part of the 1930s. Then the industry experienced ad- equate demand in the 1940s, a bad market in the 1950s, and a large jump in prices per ton following the 1973 oil embargo. Kentucky coal prices, adjusted for inflation, increased 100 percent between 1973 and 1978—above the national average—and new fortunes were made before the 1978 peak year. The domi- nant pattern of coal production in Kentucky, however, continued to be one of boom and bust and increasingly the latter. Three other trends have characterized the coal industry since 1950: the mechanization of the mines and overall loss of jobs; the in- crease in strip/mountaintop removal mining; and the changing pattern of consumption. Be- tween 1885 and 1929, for example, the coal workforce increased from forty-five hundred to more than fifty thousand, then peaked in 1948 at sixty-six thousand. But changing fac- tors soon affected demand. By 1956, all L&N trains, for example, had switched from coal to diesel power, and the percentage of homes in Louisville heated by coal had declined from 90 percent in 1940 to 10 percent twenty years later. Mechanization also began to replace men in the mines. In 1950, machines load- ed almost 70 percent of the nation’s coal. That fact, coupled with the depressed 1950s mar- ket, drastically reduced the numbers of min- 128.163.2.206 All use A NEW HISTORY OF KENTUCKY Two miners work in an underground coal natural landscape and environment. Various writers compared the state’s coalfields to bat- tlegrounds. Once-scenic lands, unreclaimed from the ravages of the strippers, soon featured deep gashes on the hills and soil erosion in the valleys. Then in 2000 in Martin County, one of the worst environmental disasters in the southern United States occurred when some 300 million gallons of coal slurry burst out of a waste impoundment and killed aquatic life and polluted rivers and streams for hundreds of miles. While bringing jobs, salaries, and some economic wealth to Kentucky, King Coal also brought scars to the countryside. By the first decades of the twenty-first cen- tury almost all the state consumption of coal came from the use of utilities. As a result, coal’s future seemed as dark as the mineral itself. The state had gone from being ranked ninth in coal production in 1910 to third by 1929 and still held that rank by the start of the twenty- 298 128.163.2.206 All use Table 14.3. Kentucky Coal Production, 1870–2015 Year Amount mined (thousands of tons) 1870 150 1879 1,000 1892 3,025 1900 5,329 1907 10,753 1914 20,383 1920 38,892 1929 60,705 1947 88,695 1954 58,600 1974 136,800 1987 165,192 1990 173,322 2015 61,414 Source: Willard Rouse Jillson, “A History of the Coal Industry in Kentucky,” Register of the Kentucky His- torical Society 20 (1922): 21–45; Commonwealth of Kentucky, Report of the Inspector of Mines, later the Report of the Department of Mines and Minerals; data from the US Energy Information Administration. Note: When figures from different sources disagree for certain years, what seems to be the most official source is cited. Title: Bourbon Barons, Tobacco Tycoons, and King Coal: The Economy, CRAIG THOMPSON FRIEND v5npjz4.18 helps scholars, researchers, and students discover, use, and build upon a wide archive. We use information technology and tools to increase productivity and For more information about JSTOR, please contact [email protected]. your acceptance of the Terms & Conditions of Use, available at is collaborating with JSTOR to digitize, preserve and extend of Kentucky This content downloaded from 128.163.2.206 on Sat, 09 Nov 2024 19:26:37 UTC All use subject to https://about.jstor.org/terms 14 1865–2015 use in ships’ riggings and as bale rope and bag- ging for southern cotton. Kentucky’s economic isolation from the South during the Civil War, however, had forced cotton planters to look elsewhere for alternatives. That trend contin- ued after the conflict’s end, and jute bagging and iron bands for baling cotton gradually re- placed hemp. At the same time, ships began us- ing wire rigging, and another part of the hemp market declined. In 1860 the United States produced almost seventy-five thousand tons of hemp; a decade later the nation grew less than thirteen thousand tons. Kentucky’s crop had declined from nearly forty thousand tons to less than eight thousand. Farmers needed al- ternate crops. Some hemp growers did turn to other crops. A few held on. By 1890 the common- wealth grew 94 percent of all the hemp pro- duced in the United States, but only a thou- sand farmers still worked those fields. Their crops yielded a thousand pounds per acre, brought an average price of $96.82 per ton, and gave them earnings of $800 each—for a total value of nearly $1 million. When World War I halted foreign imports, the crop expe- rienced a brief revival, but by 1940 only four Kentucky farms still grew the fiber. The next year, however, another war brought further shortages as a result of the Japanese capture of Philippine jute fields. Encouraged by govern- mental supports, Kentucky farmers went back to hemp, and thousands of acres once more blossomed over the Bluegrass. A hemp factory 279 This content downloaded from on Sat, 09 Nov 2024 19:26:37 UTC use subject to https://about.jstor.org/terms Bringing in a sizable return on a small plot, to- bacco added dollars to farmers’ income, but it also had longer-term effects on the state that would be debated for decades. In 1869, for ex- ample, the Columbus (KY) Dispatch warned readers of the health hazards of tobacco and asked smokers to restrict their puffing to pri- vate smoking rooms. For all of the nineteenth century and much of the twentieth, however, few people serious- ly challenged tobacco’s place in American life. Through chewing tobacco, pipes, and cigars and then, after the 1880s, through the popu- larity of factory-produced cigarettes, tobacco consumption rose. By the Roaring Twenties, daring women increasingly smoked. As a brief inspection of almost any motion picture of the 1930s and 1940s indicates, smoking had by that time become accepted in the middle class. Kentucky farmers sought to fill the demand for tobacco. The work was not easy, and tobacco long proved resistant to labor-saving mechani- zation devices. But the major change affecting Kentucky tobacco cultivation came soon af- ter the Civil War, apparently by accident. State farmers grew a dark-fired tobacco, “cured” by hickory smoke in tightly enclosed barns. In the 1860s, however, some seeds were planted—first on either a Brown County, Ohio, or a Bracken County, Kentucky, farm—and they unexpect- edly matured into a lighter-colored leaf. White burley tobacco was born. From that beginning, the crop spread rapidly across the central Ken- tucky area, where hemp’s decline had left a void. The new variety also began to replace the dark- fired version, since it could be harvested earli- er and could be more safely air-cured in barns, where panels could be opened or closed to con- trol moisture. White burley seemed a godsend to farmers increasingly strapped for cash. Grad- ually, more and more Kentucky farms turned away from a variety of crops and focused on the golden tobacco leaf. In Scott County, for in- stance, burley tobacco production jumped from 43,000 pounds in 1880 to 3.3 million pounds nine years later. Tobacco fever in Washing- ton County brought an increase from 90,000 pounds in 1888 to nearly 2 million pounds by 1900; the county was producing almost 10 mil- This content downloaded from on Sat, 09 Nov 2024 19:26:37 UTC subject to https://about.jstor.org/terms Bourbon Barons, Tobacco Tycoons, and King Coal a Woodford County field, 1931. (Kentucky Historical Society Collections, then Kentucky could not bring itself to let go of a plant that held the state hostage and also paid the ransom. Tobacco production statewide increased steadily from over 105 million pounds in 1870 to 180 million pounds three decades later. From 1865 through 1928 Kentucky led the nation in tobacco production. Yet that posi- tion came at a very real cost to farmers. The large amount of tobacco brought prices down, from a high of 13.7¢ per pound to 6.6¢ per pound during a twenty-year period ending in 1894. That decrease in price of over 50 percent offset the advantages of the increased pound- age grown and brought angry farmers into the Grange, the Farmers’ Alliance, and the Popu- list movement. When the American Tobacco Company formed a virtual buying monopo- ly and prices went down even more, the an- ger spilled over into violence, in the Black Patch and in the burley region. Resolution of these problems proved difficult, but the market seemed to be on its way up by the time World War I began. 281 This content downloaded from on Sat, 09 Nov 2024 19:26:37 UTC use subject to https://about.jstor.org/terms please.” The warning label had limited effect on production, but smoking, which had once been a frequently copied and almost glorified social activity, continued to come under criti- cism and increasing restriction. In 2005, the federal government ended its price supports, while also ending its acre- age allotments. To aid Kentucky farmers in the transition to other crops, a $2.5 billion tobacco buyout program provided some support, un- til it concluded in 2014. With the end of the support system, farmers could grow as much tobacco as they desired, but without the se- curity of price supports. Instead of selling to many buyers at auction warehouses (which dis- appeared), now growers found themselves sell- ing directly to a single tobacco company at a predetermined cost through a contract system that harkened back to days past, when farmers found themselves at the whim of the manufac- turer for the grading and pricing of their crop. All that, coupled with labor shortages, higher costs, and competition from foreign growers, produced smaller crops, on fewer farms. Be- tween 1992 and 2012, farms growing tobacco declined from almost 60,000 to under 5,000, and acreage dropped from 268,000 to 88,000. Production in 2015 was under 150 million pounds—a far cry from the 366 million of 1990. Still, the state remained the second larg- est producer of the crop, after North Carolina. Tobacco, once a crucial and controversial part of Kentucky’s agricultural past, remains a part of its present, but a much less important as- pect. In 2015, tobacco ranked only fourth in Kentucky crop receipts, behind soybeans, hay, and corn. Even in the best of economic times, to- bacco had not reigned unchallenged. Various crops sprang up to dispute that dominance, but none offered a sustained value that would bring farmers to abandon tobacco. By 1870, howev- er, before burley’s great growth, Kentucky re- mained diversified, ranking not only first na- tionally in hemp production but also fifth in rye, sixth in corn, and eighth in wheat. In 1890 the state stood third nationally in apple pro- duction. All of those crops, however, faded rel- atively before tobacco, other states’ dominance, This content downloaded from on Sat, 09 Nov 2024 19:26:37 UTC subject to https://about.jstor.org/terms Bourbon Barons, Tobacco Tycoons, and King Coal matched the money generated from crop sales, $2.9 billion. Yet reaching this level of livestock production—chiefly of cattle, sheep and lambs, hogs, and poultry—had taken a long time and had required drastic changes in the production processes. Hogs and pigs were early mainstays of Kentucky agriculture, used both for home food purposes and for sale to nearby markets in Louisville and Cincinnati. Like other live- stock, swine for many years roamed free on open ranges, to be collected at the time of sale. Soon after the Civil War’s end, the state had more than 2.1 million hogs, but a decline fol- lowed, and the state had only 325,000 in 2014, down from nearly a million head just a quarter- century before. Sheep experienced even more drastic declines. In 1867 Kentucky had 1.1 million sheep, constituting an important part of self-sufficient farms, where families used the wool to produce homespun materials. As store- bought clothes filled that need more and more and as other markets opened, sheep produc- tion almost ceased. By 2015, Kentucky sheep and lambs numbered fewer than 50,000. By then Kentucky ranked twenty-first nationally in numbers of hogs, and twenty-ninth in sheep and lambs. It was a far cry from 1870, when Kentucky had stood fourth nationally in num- bers of swine and tenth in sheep. The new success industry replacing those was poultry. Particularly in rural areas, chick- ens had long furnished meat as well as eggs, not only for home use but also for barter at coun- try stores and for cash sales. Needs and markets changed, however, and from a high of more than 14 million chickens in 1944, the numbers dropped to 6 million in 1961 and 2 million in 1990. But as large-scale poultry production facilities moved into the commonwealth, pro- duction drastically increased, so that by 2015, poultry was the number one agricultural com- modity in the state, with a value of over $1 billion. The cattle industry in Kentucky did not suffer such drastic changes. Damaged by the Civil War, cattle production in the state re- quired almost two decades to attain its prewar level. Then western markets, railroad refriger- 283 This content downloaded from on Sat, 09 Nov 2024 19:26:37 UTC use subject to https://about.jstor.org/terms percent of the thoroughbred foals registered with the Jockey Club were from Kentucky. But changes soon affected the numbers. Competi- tion from other states, a more unfavorable na- tional tax structure, and other factors lessened the state’s dominance of the industry. But in the twenty-first century, the commonwealth regained that position, in part. That was sym- bolized when the World Equestrian Games made their first North American appearance in 2010 in Lexington. On the business side, by 2013 Kentucky still produced almost half of all the foals registered in North America and ranked first in horse sales and stud fees. Over- seas buyers drove up sale prices drastically in the 1980s, when one horse sold for $13.1 mil- lion, but those heady days passed. Nationally, fewer foals have been bred; track betting has declined; tracks have closed. The horse indus- try also competes with other entertainment op- tions that have emerged. And what was once “the privileged... primary form of gambling in the U.S.,” now faces competition from casi- nos, online sport betting, and other venues. Al- though the major tracks in the state have con- tinued to do well, overall, all that had an effect on the industry. In fact, by 2015 horse sales and stud fees stood only third in Kentucky’s livestock receipts, behind poultry production and cattle sales. While the state’s image na- tionally remained tied in part to the thorough- bred, some worried citizens grew concerned about the ability of the industry to persevere and grow. of mules “The Feds,” the Family Farm, and Agribusiness of the Those who formulated New Deal farm pol- icy in the 1930s recognized that overpro- duction had long plagued tobacco farmers. Through the Tobacco Control Act of 1934, to- bacco growers could vote for mandatory quo- tas, in exchange for a minimum price (parity) guaranteed by federal funding. State farmers agreed to that scheme, and in 1936, for ex- ample, they reduced their harvest by 28 per- cent while increasing overall income by sever- al million dollars. The limits on acreage (and This content downloaded from on Sat, 09 Nov 2024 19:26:37 UTC subject to https://about.jstor.org/terms Bourbon Barons, Tobacco Tycoons, and King Coal later. Still, the average farm in Kentucky was about one-third the size of the typical Ameri- can farm. In the half-century after the Civil War, Kentucky agriculture had three advantages. First of all, it had survived the Civil War bet- ter than agriculture in the South, and in 1870 Kentucky had more acres in agriculture than any southern state, save one. As late as 1900 the value of Kentucky’s farm products sur- passed that of all southern states except Texas. Kentucky also depended less on tenant labor, comparatively, than did other southern states. At a time when about one-half of most farms south of the Mason-Dixon Line were operat- ed by tenants, only between one-fourth and one-third of Kentucky ones were. Moreover, very few black Kentuckians were tenants— representing only 8 percent of all tenants in the state in 1900—and the chances for racial- ly unfair treatment therefore remained lower. Finally, Kentucky farms remained relatively mortgage free. In contrast to the images of the debt-ridden agrarian, an 1890 report indicat- ed that 96 percent of the state’s farmers had no debt on their property (72 percent of the nation’s farmers were mortgage free). Twenty years later, at the close of the era of the tobac- co wars, 85 percent of Kentucky farmers were without mortgages. Yet despite all that, the real statistics of im- portance show the relative poverty of Kentucky farmers, even when they formed the mainstay of the state’s economy. Rural Kentuckians did not live on valuable plots—the 1920 average value of state farms was not much beyond one- third of the national mean, and the common- wealth ranked forty-first of forty-eight states in that regard. While the state ranked high com- pared with the South in the value of farm pro- duction in 1900, the South was poor. Overall, Kentucky stood only fifteenth nationally that same year. By 2013 little had changed—the state ranked sixteenth in the United States in net farm income. But in those years, Kentucky had seen drastic agrarian modifications. In fact, the farmers of 1900 little resembled their coun- terparts a century later. The earlier era fea- 285 This content downloaded from on Sat, 09 Nov 2024 19:26:37 UTC use subject to https://about.jstor.org/terms for the markets for tobacco, live animals (in- cluding horses), and feed grains extended be- yond national boundaries. In 2013 the state sold nearly $2 billion in agricultural products abroad, representing over a third of state pro- duction. Instead of using a stubby pencil to write notes in a worn notebook, farmers now could use a computer tied in to a widespread communications network. They focused on in- terest rates, investments, and income potential and lived in air-conditioned homes that usu- ally featured all the conveniences of the city. The gap between farm and city had narrowed considerably. By the first decades of the twenty-first cen- tury, Kentucky agriculture had a twofold divi- sion. On the one hand, well under half of those who operated farms did so because farming was their primary occupation. They made their liv- ing from “agribusiness.” The toilers of the soil followed the latest agricultural bulletins, exper- imented with new hybrids and herbicides, and seemed far removed from the often-provincial agrarians of the century’s first decades—those who had trusted the weather and had waited. Chance played a much smaller role in their lives than in those of their ancestors. Others who identified themselves as farm- ers were very different. Some 57 percent of the commonwealth’s farms had sales of less than ten thousand dollars, and most of the laborers in those fields worked as part-time farmers. For them the agrarian way of life still had impor- tance, but farming was a secondary consider- ation, providing a supplementary income. The family farm of yesteryear had increasingly dis- appeared from Kentucky. An ideal of a nation of small, self-sufficient farms whose yeomen formed the backbone of the country seemed as far away as a distant star. Few Kentucky coun- ties depended on farming as the keystone of their economies, but many worried about de- velopers taking more and more of their farm- land. Yet those who continued to work a small plot, perhaps in the evening or on weekends, showed that the smell of the earth, the view of crops blowing in a breeze, the feel of the land itself, even yet remained an important part of the Kentucky psyche. This content downloaded from on Sat, 09 Nov 2024 19:26:37 UTC subject to https://about.jstor.org/terms Bourbon Barons, Tobacco Tycoons, and King Coal for instance, provided a vast resource, worth millions of dollars. Small subsistence farmers needed cash to pay taxes and bills, and often their only real source of money was the tim- ber around them. They would cut the trees and take them down aptly named “snake roads” to log dumps, where a “splash dam” had backed up enough water to float the logs. Tied togeth- er in great booms, which might typically be six- teen feet wide and fifty to a hundred feet long, the logs would be released into the waters of the Kentucky, the Licking, the Big Sandy, the Cumberland, or a few western Kentucky riv- ers when a high “tide” caused by rains final- ly occurred. Over the next several days, loggers would guide their rafts through treacherous waters, in a process that cost some loggers their lives. Finally they would reach a mill, at Be- attyville, Irvine, Frankfort, Catlettsburg, Ash- land, Clay City, Burnside, Paducah, or oth- trees. They tied them together in rafts and floated them down a like the one in the picture. (Library Special Collections, Western Kentucky Uni- 287 This content downloaded from on Sat, 09 Nov 2024 19:26:37 UTC use subject to https://about.jstor.org/terms the land and the partial devastation of timber as a resource, was the fact that those raw materi- als did not form the basis for some other home industry, such as furniture building. In a story that would be told and retold in the common- wealth’s economic history, many of the bene- fits of Kentucky’s sizable timber industry went outside the state. When by the 1990s the com- monwealth made its way back to become the nation’s fourth-largest producer of hardwood lumbers—furnishing 11 percent of American production—still three-fourths of that lumber was shipped, unprocessed, to other states. A second example of the problems fac- ing Kentucky’s commercial sector affected the area around Cumberland Gap. For years, Ken- tucky had been an important producer of iron, through furnaces scattered across the state. The Ashland Furnace, started by John Means, for instance, produced over thirty-five tons daily in 1869. But depletion of ore and timber re- sources, the middling quality of the local prod- uct, and the easier availability of iron to out-of- state buyers through better transportation all hurt the industry. The Boone Furnace in Cart- er County ceased production in 1871, the Es- till Furnace in Estill County stopped blasting in 1874, and the Raccoon Furnace in Greenup County did not operate after 1884. The sto- ry was repeated across the commonwealth, as the industry declined from the number three position nationally that it had held in 1830. The dream died hard, though, and in 1886 Al- exander A. Arthur looked out at the half doz- en houses in a valley near the Gap and saw visions of greatness. As president of the Brit- ish-owned American Association Limited, he bought huge tracts of untouched coal and iron reserves and started construction of a railroad tunnel under the Gap, to this new place called Middlesborough. By 1889 the area was being transformed into what was expected to be a major steel manufacturing center in the United States, much on the order of Birmingham, Alabama. In a violent and raucous boomtown atmo- sphere, Englishmen in silk hats, monocles, morning coats, and spats mixed with upper- class easterners and rough mountaineers in the This content downloaded from on Sat, 09 Nov 2024 19:26:37 UTC subject to https://about.jstor.org/terms Bourbon Barons, Tobacco Tycoons, and King Coal ly, towns all across the commonwealth might spring up and prosper for a time, because of their location along a new railroad line or be- cause of a sudden oil or timber boom in the area. Many of those places, some of which were sizable communities, fell back into quiet ob- scurity as the boom ended. More commonly, urban areas in Kentucky grew or declined in commercial activity at a slower pace. Most smaller cities might have an industry or two, but they generally gave the im- pression recorded by an 1881 traveler: “There are no manufactories in these towns; they make one think of villages in rural England.” Most of the growth took place in the larger urban areas. Towns expanding in the late nineteenth century and the early twentieth generally were located in the eastern or western regions of the state. In the east, Ashland’s strength in tim- ber, petroleum refining, and iron rolling mills brought a doubling of population to twenty- nine thousand during 1920–1930. In the west, Owensboro, the site of a major wagon compa- ny, tobacco factories, and, after 1900, a light bulb manufacturing plant, almost quadrupled in population between 1880 and 1920, reach- ing nearly twenty-three thousand. At the same time Paducah, then slightly larger than Owens- boro, almost tripled in size. Also west of Louis- ville, Henderson, whose woolen mill produced “Kentucky Jeans,” had municipally owned wa- ter, gas, and electric utilities. It also had the first electric streetcars in the area, which operated from 1889 to 1923. Cities in the central and northern parts of the commonwealth grew as well, but at a slow- er pace. Once at the forefront of commercial activity in what was the New West of the early nineteenth century, Lexington had languished since then, and an 1886 visitor accurately de- scribed it as “a pretty village,” living on “fre- quent memories of fugitive greatness,” a place whose dreams of glory had passed. By 1900 it had fallen to fourth in population among the state’s cities, behind the growing Covington and the static Newport, which both benefit- ed from the expansion of adjacent Cincinnati. Lexington’s economic fortunes would change within half a century, but some communities 289 This content downloaded from on Sat, 09 Nov 2024 19:26:37 UTC use subject to https://about.jstor.org/terms industry west of the Appalachians. The city at one time featured the largest leather mar- ket in the United States and served as one of the major paint and varnish centers, as well as a significant liquor headquarters, with thirty- five distilleries on the eve of World War I. It continued to be an important pork-processing center, though economic rivals Cincinnati and St. Louis made inroads there, as in other ar- eas. Still, Louisville’s prosperity brought its ex- uberant spokesman, editor Henry Watterson, to cry out that “a union of pork, tobacco, and whiskey will make us all wealthy, healthy, and frisky.” Notwithstanding the question of the Lou- isvillian’s frolicsome and robust nature, the people and the city certainly prospered. Be- tween 1870 and 1900, the population dou- bled to more than two hundred thousand, making Louisville the nation’s eighteenth larg- est city. Visitors to the urban metropolis saw a place that had the look and feel of a big and vibrant city. One observer in 1888 wrote that the “friendly” city “has the unmistakable air of confidence and buoyant prosperity.” The city celebrated that wealth with a popular South- ern Exposition that ran from 1883 to 1887 and included the newly introduced electric lights. Louisville also featured fine theaters, a grow- ing system of parks, designed in part by Freder- ick Law Olmsted; racing at Churchill Downs; and 175 miles of street railways by the first de- cade of the twentieth century. The second larg- est city in the South offered telephones, elec- tric lights, daily ice delivery, and much more, plus a strong literary tradition. In places such as St. James Court and nearby Central Park, a new elite and old families mixed. Later, sum- mer homes grew up away from the core of the city, and then permanent residences connected by street railways broke up the earlier unity to a degree, but the orientation remained toward downtown. Each generation, however, faced the problems of slums, violence, and racism. For better or worse, Louisville was the place where Kentucky first confronted the industri- alization of the new United States. Louisville’s growth continued at a less spectacular but still steady rate through the first This content downloaded from on Sat, 09 Nov 2024 19:26:37 UTC subject to https://about.jstor.org/terms Bourbon Barons, Tobacco Tycoons, and King Coal been tied to the assembly line began to lose jobs. Race-oriented violence in 1968 and 1975 hurt Louisville’s image. Labor strikes slowed pro- duction, and the growth of suburbs, each con- stituting its own little municipality, fragment- ed efforts toward unity and affected downtown trade. At the beginning of the twenty-first cen- tury, for example, there were 94 separate incor- porated areas in Jefferson County. A merger of many of those communities took place in 2003 and simplified governance. The thirtieth largest city in the nation, Louisville remains the finan- cial and economic core of Kentucky. Fragile Finances One of the mainstays of Louisville’s—and Ken- tucky’s—economy has been the liquor indus- try. Aided by habits developed by wartime imbibing and more accessible postwar trans- portation, whiskey production nearly tripled in the state between 1871 and 1880, and by 1882 thirsty Americans had doubled the 1880 fig- ure again, to more than thirty million gallons. Within the commonwealth, drinking prolifer- ated. By 1886 there was one saloon for every fifty-five adult males in Owensboro, for exam- ple. Five years later Kentucky’s 172 distilleries had the largest daily mashing capacity in the nation and produced 34 percent of the distilled spirits manufactured in the United States—at a time when the tax on liquor represented the greatest source of income for the federal gov- ernment. Little uniformity in production ex- isted, however, until acts in 1897 and 1936 de- fined standards to be followed. At the same time, the industry faced huge challenges. A national business depression in 1893 drastically curtailed production, while the growing temperance movement added to liquor’s problems. National Prohibition in the 1920s and beyond seriously injured the state’s manufacturing standing, particularly in rela- tion to southern states not so tied to the spir- its industry. Louisville alone lost an estimated eight thousand positions when its distilleries closed, and the state lost 5 percent of its jobs. Farmers lost a market for their grain, newspa- pers lost advertisers, railroads lost the cost of 291 This content downloaded from on Sat, 09 Nov 2024 19:26:37 UTC use subject to https://about.jstor.org/terms Toward a Twenty-First-Century Economy By the twenty-first century, some observers ar- gued that Kentucky had always been in a sec- ond-class status on economic matters and lagged behind both the nation and the region. Yet the picture they painted did not exact- ly reflect the reality of the not-so-distant past. Even though post–Civil War Kentucky never stood at the forefront of the nation’s industri- al states, neither did it always trail. In 1870, for instance, the commonwealth’s manufactur- ing worth placed it first in the South and six- teenth in the United States. Thirty years later it stood in almost the same position. Generally, then, Kentucky entered the twentieth century in a role as a regional leader. Between 1900 and 1930, however, the state fell further and further behind. During the first decade of the new century, which saw violence in the Black Patch, feuds, and guber- natorial assassination, only two southern states grew slower than Kentucky. Other southern states continued to grow at a faster rate than Kentucky during the World War I years. In that time the commonwealth suffered an abso- lute drop in manufacturing. The decline of the lumber and liquor industries by the 1920s only added to the industrial decline, and one study showed that by 1930 the southern manufactur- ing base had expanded three times more rapid- ly than had Kentucky’s. Only Ohio River cities had experienced much prosperity, and between 1920 and 1930 interior counties had actually suffered a decrease in the number of wage earn- ers. The national depression of the 1930s kept Kentucky from falling further behind. How- ever, the increased prosperity growing out of World War II did not benefit the common- wealth as much as it did most of the South. By the mid-twentieth century Kentucky’s eco- nomic future had dimmed considerably com- pared with the bright promise of 1900. Slowly, the state’s economy diversified and began to reflect overall national patterns to a greater degree. Kentucky made a largely suc- cessful shift from agricultural employment to other sectors. By the 1960s General Electric in This content downloaded from on Sat, 09 Nov 2024 19:26:37 UTC subject to https://about.jstor.org/terms Bourbon Barons, Tobacco Tycoons, and King Coal tory building Corvette sports cars, and Toyota Motor Company opened its Georgetown fac- tory. In the late 1980s, the new Toyota plant started turning out Camrys, and then Lex- us models. Such activity made Kentucky the third-leading producer of motor vehicles na- tionally in 2013, with over 1.2 million vehi- cles produced annually by state workers. When coupled with DHL’s hub at the Northern Ken- tucky Airport and with United Parcel Service’s use of the Louisville airport as its main air hub—with UPS’s Worldport hub employing over twenty thousand employees—then clearly Kentucky has become an important part of the nation’s transportation network. Similarly, the commonwealth advanced as a health care center, particularly with the growth of a new company that started as a simple nursing home, born out of the entre- preneurship of Louisvillians David A. Jones and Wendell Cherry. The enterprise that be- came the multifaceted Humana Corporation had 2014 revenues of over $41 billion dollars and employed some twelve thousand full-time workers. When coupled with Kindred health- care in Louisville, that gave the state a signifi- cant role in the field. In the food products line, young business- man John Y. Brown Jr. capitalized on Colonel Harland D. Sanders’s product, co-purchased Kentucky Fried Chicken in 1960, and made the company’s name an international byword. 2005, 2015 Amount (millions of dollars) 2005 2015 38,790 37,274 30,008 43,963 21,451 27,982 20,123 29,702 11,173 13,701 9,639 11,599 9,385 13,124 6,770 8,479 4,357 3,043 2,338 2,744 2,223 2,388 720 942 $146,968 $194,942 293 This content downloaded from on Sat, 09 Nov 2024 19:26:37 UTC use subject to https://about.jstor.org/terms have returned some of their funds to better the quality of life of Kentucky. King Coal and the Mineral World also born in When young mountaineer John C. C. Mayo rode across his native eastern Kentucky moun- tains in the late nineteenth century, he repre- sented, in one sense at least, the future of Ken- tucky’s coal industry. At the time, most coal was produced in small community mines, for local use. As one observer noted on her trip to Appalachia, “We saw coal-mines all along the road, just sticking out of the mountains.” Some thirteen hundred of those shaky affairs dotted the region. Only slowly had Kentucky sold coal for shipment outside its borders: in 1870 the state produced just 150,000 tons of coal, but a decade later it had passed the million-ton mark. As late as 1900 some 60 percent of the coal dug in the commonwealth was still used in Kentucky. Early mines generally remained in local hands, and talented immigrants who had had experience with mines overseas were usual- ly involved. The largest operation in Kentucky in 1900, for example, had as its superintendent a man born and educated in Germany, who brought his mining engineering degree to the United States after the Civil War and settled in Kentucky by 1886. The center of coal pro- duced for sale was western Kentucky. In 1884, for instance, 57 percent of all coal mined in the commonwealth came from the Western Coal- field. This area would continue to lead in coal production until 1912. Mayo sought to change all that. From the end of the Civil War on, people knew about the vast coal reserves in eastern Kentucky, but poor transportation, feud violence, and other factors had slowed development of those resources. But locals like Mayo of Johnson County and Walter S. Harkins of Floyd County saw that many mountain residents were mired in debt “in a permanent state of crisis” and sought ways to change their status. They thus used the so- called broad form deed, which gave the pur- chaser rights to the minerals on the land in ex- change for a set fee. For the sellers, in the short term, their decision to sell seemed a rational This content downloaded from on Sat, 09 Nov 2024 19:26:37 UTC subject to https://about.jstor.org/terms Bourbon Barons, Tobacco Tycoons, and King Coal Miners’ houses and a coal tipple near Hazard, 1928. (Bobby Davis Museum and Park, Hazard, KY) days the booming coal town of Jenkins. That coal camp town featured more than a thou- sand buildings, including a school, a library, a hospital, an electric plant, and several church- es. Tennis courts, playgrounds, motion-picture theaters, and shops added to its appeal. Nearby in Harlan County, the town of Lynch brought forth similar promise: it had ten miles of paved streets for some sixty-five hundred people by 1920. By 1924 nearly two-thirds of the state’s miners lived in company housing. The urban world thus came to parts of rural Kentucky with little time for adjustments or evaluation. To people eking out a subsistence on a farm without electricity, far distant from stores and communities, the new life offered by the coal boom held great appeal. Those who came to the coal camps in the first generation most- ly did so eagerly, for they gambled that mining could give them a better life, new opportuni- ties, and a more promising future. As one re- called: “I didn’t have any choice. I had a fam- ily. They had to eat. There wasn’t anything else to do.... You couldn’t make a living on the farm.” And so they came from within the state, as well as from across the region and overseas. 295 This content downloaded from on Sat, 09 Nov 2024 19:26:37 UTC use subject to https://about.jstor.org/terms Protests and strikes would be an ever-present part of the reign of King Coal. Those who entered the mines to dig coal risked much every day. Changes took place over the years, as the oil lamp on the hat be- came a carbide one, as the tracks of the car that took workers into the mines turned from wood to steel, as the power that moved those cars evolved from mule to motor, as the tools for digging the mineral converted from hand tools to cutting machines. But certain things varied little. The Kentucky Office of State In- spector of Mines was created in 1884, but it more often chronicled the problems rather than solved them. In the half century after that date, seventy-three dust and gas explosions oc- curred in the state’s mines. Collapsing roofs remained a danger, and ventilation problems persisted. One miner remembered that he and others in the coal mining communities “not only knew the pain of broken bones, but also the pain of broken hearts.” As more and more mines opened, and as larger numbers of work- ers ventured underground, deaths rose (see ta- ble 14.2). A 1903 report found most mines in a “deplorably bad condition,” and it meant little to the forty-two people who died in Kentucky mines in 1912 that the number of deaths com- pared with the number employed in Kentucky was lower than the US average. There is little still Table 14.2. Kentucky Mine Deaths, 1890–2014 Period Deaths 1890–1899 95 1900–1909 274 1910–1919 754 1920–1929 1,614 1930–1939 1,203 1940–1949 1,328 1950–1959 689 1960–1969 451 1970–1979 379 1980–1989 242 2006–2014 49 and garbage Source: Claude E. Pickard, “The Western Kentucky Coal Fields” (PhD diss., University of Nebraska, 1969), 97; Kentucky Department of Mines and Miner- als, Mines and Minerals Report (1991); Kentucky Divi- sion of Mine Safety, 2015. This content downloaded from on Sat, 09 Nov 2024 19:26:37 UTC subject to https://about.jstor.org/terms Bourbon Barons, Tobacco Tycoons, and King Coal ers to twenty-seven thousand by 1972. Size- able out-migrations followed, particularly from the eastern Kentucky coalfields, where, as one person remarked, “The three R’s they teach in Kentucky schools are... readin’ and writin’ and Route 23 North.” In the decade of the 1950s alone, over a third of the region’s people had migrated elsewhere. During the oil embargo of the 1970s, employment rose with an increase in production, only to fall again from 1979 to 2002, under both Republican and Democratic presidential administrations, to a little over one-third the previous number. Then the higher costs to produce coal in Ap- palachia, the expanded coalfields of the west- ern United States, with their “cleaner” coal and better shipping rates, the cheap price of natu- ral gas, and the environmental concerns about burning coal all added to the woes, particu- larly in the eastern coalfields. The good-paying coal jobs grew scarcer. By 2015 only some ten thousand miners worked in the coal industry, and just five thousand in the eastern fields. The industry accounted for under 1 percent of the commonwealth’s employment numbers. Coal increasingly was becoming a minor part of the state’s economy. A second major change in coal production took place. In the decades after 1940, more Kentucky coal was mined above ground. Al- though some surface mining occurred as early as 1919, by 1940 only 2 percent of the state’s “black gold” was mined by that method. By 1960 a third of the state’s coal came from the so-called strip-mining method, and in 1974 over half did. The state’s courts in cases in 1921, 1956, and other times had basically sup- ported the owners of such mineral rights as the “dominant” owners of the land. Only a con- stitutional amendment in 1988 changed that interpretation. Stronger standards governing reclamation of the land were also adopted after 1966, and the number of surface mines slowly declined in relation to underground mines. By 2012, some 36 percent of the total state coal production came from above-ground mining. Although a safer method—only two miners died in 2014—strip mining and mountain- top removal took a terrible toll on Kentucky’s 297 This content downloaded from on Sat, 09 Nov 2024 19:26:37 UTC subject to https://about.jstor.org/terms mine, 1920s. (Kentucky Historical Society Collections, Frankfort, KY) first century. But only 11 percent of US coal came from Kentucky by 2002. Although coal is a nonrenewable resource, large reserves still remained. With all its benefits and all its debits, King Coal still lived in the psyche of the people, al- though it ruled on a nonexistent throne. Other extractive industries in Kentucky took a secondary place to coal. In 1865 the leg- islature granted charters to some 140 oil or oil and mining companies, and the first of many postwar oil booms was on. In county after county at various times during the following century, a boom would bring “wildcatters” to a town, and some profits would be followed by a return to normalcy. Overall state production fluctuated greatly, with 63,000 barrels in 1900 being followed by 1.2 million six years later and 9.2 million in 1919. The peak was reached in 1959, at 27.3 million barrels, but another decline followed. At no time did the common- This content downloaded from on Sat, 09 Nov 2024 19:26:37 UTC subject to https://about.jstor.org/terms Bourbon Barons, Tobacco Tycoons, and King Coal the 1920s. On the eve of World War II the state still ranked first in its production. A half cen- tury later, however, foreign imports and a de- clining market had almost ended production of the mineral in the commonwealth. By then Kentucky ranked second in the production of ball clay (used in ceramics) and fourth in lime. Still, crushed stone, natural gas, and all the rest never threatened to topple the throne of King Coal. Rivers, Rails, and Roads Transportation was a key element of Kentucky’s commercial and agricultural development. At the end of the Civil War, the state’s rail system was damaged in some places and consisted of relatively few miles of track anyway. A boom would soon prompt municipal leaders in town after town to seek out iron rails, but rail ex- pansion would take time. With the exception of a few roads of worth, the commonwealth’s system for horses and carriages was either poor or virtually nonexistent. As had been the case for nearly half a century, then, the state’s most

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