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Men, money, machines : studies comparing colliery operations and factors of production in British Columbia’s… Gallacher, Daniel Thomas 1979

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MEN, MONEY, MACHINES STUDIES COMPARING COLLIERY OPERATIONS AND FACTORS OF PRODUCTION IN, BRITISH COLUMBIA'S COAL INDUSTRY TO 1891' by DANIEL THOMAS GALLACHER M.A., University of Victoria, 1970 A DISSERTATION SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY xn THE FACULTY OF GRADUATE STUDIES Department of History We accept this dissertation as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA May, 1979 Daniel Thomas Gallacher, 1979 In p r e s e n t i n g t h i s t h e s i s in p a r t i a l f u l f i l m e n t o f the r e q u i r e m e n t s f o r an advanced degree at the U n i v e r s i t y o f B r i t i s h C o l u m b i a , I ag ree tha t the L i b r a r y s h a l l make i t f r e e l y a v a i l a b l e f o r r e f e r e n c e and s t u d y . I f u r t h e r agree t h a t p e r m i s s i o n f o r e x t e n s i v e c o p y i n g o f t h i s t h e s i s f o r s c h o l a r l y p u r p o s e s may be g r a n t e d by the Head o f my Department o r by h i s r e p r e s e n t a t i v e s . I t i s u n d e r s t o o d t h a t c o p y i n g o r p u b l i c a t i o n o f t h i s t h e s i s f o r f i n a n c i a l g a i n s h a l l not be a l l o w e d w i t h o u t my w r i t t e n p e r m i s s i o n . Department o f The U n i v e r s i t y o f B r i t i s h C o l u m b i a 2075 Wesbrobk Place Vancouver, Canada V6T 1W5 i i Research Supervisor: Professor John M. Norris ABSTRACT of * Men, Money, Machines Studies Comparing Colliery Operations and Factors of Production in British Columbia's Coal Industry to 1891 by Daniel T. Gallacher Coal mining in nineteenth century British Columbia was con-fined almost exclusively to the tidewater coal measures of Vancouver Island where i t was expanded rapidly from 1871 to 1891. This dissertation's purposes are to describe the coal industry's rise, account for i t s fast growth in the seventies .and eighties, and assess the coal trade's general impact upon the region's economy. The approach is thematic, focusing in turn upon coal lands, capital, management,.labour, technology, markets, production, and product-i v i t y . Standard research, organization, and interpretation methods for economic history are followed, including thorough descriptive use of s t a t i s t i c a l data. Comparisons are intensive and far-reaching, resulting in a close-knit framewrk. upon which important conclusions are based. No effort has been made, however, to offer extensive biographical information on the coal trade's leading personalities. These studies confirm the coal .industry's rapid expansion, and determine that a l l factors of production can explain that phenomenon i i i with a high degree of certainty, though market demand and management technique do so more readily than other agents. It is shown that manage-ment methods and styles evolved quickly, the most effective being the owner-manager type as practiced by Robert Dunsmuir, the industry's most successful proprietor. Risk capital was drawn from various sources, including mainly British direct investments, local savings, partnerships (often involving foreign investors), and ploughed-back profits. Entrep preneurs and promoters were active in attempting to develop coal^properties from 1864 on, though only those highly experienced in mining and manage-ment succeeded. Chronic worker shortages, coupled with the physical problems associated with coal mining in mountainous terrain, forced coal operators to opt early for labour saving technology imported almost exclusively from Britain. The introduction of large numbers of Oriental colliers by Dunsmuir after 1870, (who were willing to work at half the wages whites would), slowed the technological advance of the industry, but not annual rates of production increases. Considerable fr i c t i o n between white workers and management resulted from the latter's initiatives with Oriental labour, while the owners' policy of severely restricting wage-rates caused further serious labour problems, including a high number of work stoppages. Mine safety, job security, and general working conditions also were contentious issues. B.C. 's early c o l l i e r i e s relied heavily upon the California .market which often was unsteady, but which accounted for approximately seventy-five percent of a l l sales during the years 1849-91. Domestic i v users were mainly shipping companies, ligh t industry, and households. Much of the local market was handled at the pithead. The major coal companies streamlined their channels of distribution by opening their own sales offices i n Victoria and San Francisco, and. i n the case of Dunsmuir, by also building a c o l l i e r f l e e t and a railway of his own. The coal industry had a major influence upon southern Vancouver Island's economy, but not a large impact upon the remainder of the province. No determined "attempts were made by coal proprietors or other capitalists to create secondary industries linked to coal production, though co l l i e r y owners did invest i n land, transport, and retail-wholesale ventures designed either to service their mining act-i v i t i e s or to diversify their personal holdings. Such moves occurred later-on, however, as the main thrust of their i n i t i a l efforts was to establish and maintain the coal trade with California. V CONTENTS TABLES v i ILLUSTRATIONS v i i i ACKNOWLEDGEMENTS x ABBREVIATIONS USED x i INTRODUCTION x i i i Chapter 1 MINES and MINERALS 1 2 SERVANTS: COMPANY and CIVIL 42 3 RESIDENT MANAGERS 84 4 PROMOTERS and SPECULATORS 134 5 OWNER-MANAGERS 169 6 MINERS 196 7 MACHINES 235 8 MARKETS and SALES 263 9 CONCLUSIONS 300 BIBLIOGRAPHY 309 VITA V v i Table T i t l e Page 1-1 Average Analysis of Various Fuels 7 1-2 Hydrogen and Oxygen in Various Fuels 7 1-3 Estimate of World Coal Reserves (1913) 8 1-4 Estimate of World Coal Reserves (1974) 9 1- 5 Ultimate Analysis of Some Vancouver Island Coals 14 2- 1 Columbia District Profit Balance (selected years) 44 2-2 Bore-hole Results of John Muir and Party (1850) 51 2-3 Coal Shafts and Pits at Beaver Harbour (1852) 58 2-4 Comparative Coal Prices (1862) , 74 2-5 Coal Imports by Source at San Francisco 75 2-6 Nanaimo Coal Co. Exports (1852-62) 75 2- 7 Coal Production on Vancouver Island (1849-62) 77 3- 1 VCMLC Coal Production and Sales, 1863-69 101 3- 2 VCMLC Coal Production and Sales, 1874-91 117 4- 1 East Wellington Colliery Statistics, 1883-91 161 5- 1 Composition of Douglas, Newcastle, and Wellington 175 Seams. 5-2 Results of HMS Boxev'RtiLals 'on Van. Is. Coals, 1870 176 5-3 Dunsmuir, Diggle Coal Production and Sales, 1874-83 179 5-4 R. Dunsmuir & Sons Coal Production and Sales, 186 1884-89 v i i Table T i t l e Page 5-5 Wellington Colliery Production and Sales, 1888-91 188 5- 6 Union Colliery Production and Sales, 1888-91 190 6- 1 HBC Colliery Statistics, 1849-62 204 6-2 BC Collieries: Workforce by Employee Groups, 1874-90 213 6-3 B.C. Collieries: Major Accident Statistics, 1877-90 218 6-4 B.C. Collieries: Wage Rate and Payroll Statistics, 228 1874-91 6- 5 B.C. Collieries: Labour Productivity Statistics, 229 1874-91 7- 1 B.C. Collieries: Plant Value Statistics, 1874-91 256? 7- 2 B.C. Collieries: Large Steam Machines in Operations 259 and Machine Productivity, 1874-91 8- 1 Prices of Nanaimo and Other Coal at San Francisco 275 8-2 Nanaimo Coal Co.: Coal Production and Sales, 1849-62 277 8-3 Coal Entering at San Francisco, 1862-76 283 8-4 B.C. Coal Exports, 1874-91 285 8-5 Exports as Percent of Own Colliery Output and of 287 the Provincial Total 8-6 VCMLC Coal Sales, 1863-69 289 8-7 Vessels Loading Coalaat Nanaimo, March 1863 290 8-8 Coal Imports.by Source at San Francisco, 1887-89 294 8-9 B.C. Coal Sold for Home Consumption, 1862-91 296 v i i i a . . . S j ILEUS.TRATIONS.'. ^ S Figure. T i t l e Page 1-1 ; British Columbia: Coal Formations, 1970's (map) 3 1-2 British Columbia: Annual Coal Production, 1860-1960 4 1-3 Vancouver Island: Early Coal Finds (map) 11 1-4/ Nanaimo Coal Mined to Present (map) 16 1-5 Major Seams Nanaimo series 17 1-6 East Wellington mine: cross-section 17 1- 7 Comox Coal Mined to Present (map) 19 2- 1 HBC Coal Mining Hierarchy, 1849 48 2-2 Vancouver Island: Earliest Coal Pits (map) 57 2-3 HBC Coal Mining Hierarchy, 1853 66 2- 4 HBC Coal Output, 1849-62 76 3- 1 VCMLC Land Purchase, 1862 (map) 88 3-2 VCMLC Corporate Hierarchy, 1862-89 93 3- 3 VCMLC Coal Production, 1863-91 119 4- 1 British Columbia: Early Coal Licence Locations (map) 145 5- 1 Dunsmuir, Diggle Co. Hierarchy, 1874 185 5-2 R. Dunsmuir & Sons Hierarchy, 1884 185 5- 3 Dunsmuirs' Collieries' Output, 1871-91 189 6- 1 Adult Whites: Percent of Colliery Labour, 1874-90 214 6-2 Colliery Accidents: Percent of Workforce Injured 219 I X Figure T i t l e Page 6-3 Coal Output Rate per Injury, 1877-90 220 6-4 Colliery Payrolls, 1874-90 230 6-5 Payroll Cost per Ton of Output, 1874-90 231 6- 6 Coal Output per Employee, 1874-91 232 7- 1 B.C. Collieries: No. of Steam Machines 252 7-2 B.C. Collieries: Declared Plant Values 257 7- 3 Coal Output per Steam Machine 260 8- 1 B B.C. Coal: Channels of Distribution, 1859-91 265 8-2 B.C. Coal Exports, 1874-91 286 8-3 Exports as Percent of Coal Output 288 X ACKNOWLEDGEMENTS I am indebted to my supervisor, Professor John Norris, whose insights, advice, and insistance upon high standards developed within me a totally new approach to economic history. I alsomam grateful to the director of the British Columbia Provincial Museum, R. Yorke Edwards, who consistantly supported my research, and to the assistant director, William Barkley, who granted me a much needed study leave. I thank my associates in the modern history division for their patience and interest, though none more so than Ms. Terry Hanna, who, in addition to being a splendid typist, never missed a deadline. The staffs of the Provincial Archives of both British Columbia and Manitoba (including the Hudson's Bay Company Archives in Winnipeg) were most helpful, and thanks is due, too, to the Public Archives of Canada. Dr. Alex Fraser Buckham, his wife Dora, and William Johnstone brought forth a remarkable collection of documents and other materials now located mainly in the Provincial Archives of British Columbia. Keith Ralston greatly assisted my research by suggesting highly important lines oifii inquiry. Provincial government agencies lik e the Department of Mines, the Graphics Reproductions Service of the Environment Ministry, and the Central Statistics Bureau responded immediately and generously to my requests for technical assistance. There' are many others to whom I owe heartfelt thanks, particu-larly my wife, Joan, without whose forebearance and support these past years the preparation of this dissertation would not have been possible. Whatever errors or omriissions exist are solely my own. x i ABBREVIATIONS•USED AR : Annual Report BCCSB British Columbia Central Statistics Bureau (Victoria, 1979) BCHQ British Columbia Historical Quarterly BCPMmh British Columbia Provincial Museum, modern history division BSC Baynes Sound Co. BSCMC Baynes Sound Coal Mining Co.. BU A.F. Buckham collection (PABC MSS) CAJ Canadian Army Journal CCLW Chief Commissioner of Lands and Works (B.C.) CHR Canadian Historical Review CIMM Canadian Institute of Mining and Metallurgy CPR Canadian Pacific Railway DCB Dictionary of Canadian Biography DDD Dunsmuir, Diggle Ltd. correspondence-. EHR Economic History Review E & N RR Esquimalt and Nanaimo Railway GSC Geological Survey of Canada HBC Hudson's Bay Company HBCA (PAM) Hudson's Bay Company Archives (Provincial Archives of Manitoba) HBRS Hudson's Bay Record Society HMS Her Majesty's §hip HOC House of Commons JESS Journal of the- Royal Society of Scotland NCC Nanaimo Coal Co. x i i n.d. no date NP C.S. Nicol papers (PABC MSS) n. p. no page NPACC North Pacific Anthracite Coal Co. NVCMLC New Vancouver Coal Mining and Land Co. PABC Provincial Archives of British Columbia md map division MSS Manuscripts division vf vertical f i l e s PAC PUblic Archives of Canada QCCMC Queen Charlotte Coal Mining Co. QP Queen's jJCingss]] Printer RN Royal Navy SBC Statutes of British Columbia SPBC Sessional Papers of.British Columbia UBC University of British Columbia VCMLC Vancouver Coal Mining and Land Co. x i i i INTRODUCTION British Columbia has been a coal producer since 1849 when the Hudson's Bay Company began mining the Susquash coal measures on northern Vancouver Island. Within twenty years of start-up, the province's coal trade was attracting scores of local and foreign investors eager to enter the new industry and profit from what then appeared to be a fast-growing California market. Yet only a few coal entrepreneurs succeeded in erecting working c o l l i e r i e s , and only two firms - the Vancouver Coal Mining and Land Co. and R; Dunsmuir & Sons - rose to a level of prominence.-The main purpose of this study is to account for the rapid expansion of the province's coal industry between 1871-91. During that period annual coal output rose from 34,866 tons to 1,029,097- an increase of approxi-mately 3,000 percent."*" It is argued in the pages to follow that although a l l factors of production can explain with a high degree .of certainty the industry's fast growth in that period, market demand and managerial technique most readily account for i t s progress. Essentially, this dissertation is a combined study making two kinds of comparisons: coal company performances to one another, and the relative influence of production agents - coal lands, capital, labour, technology, markets, management - upon both output and each other. It begins by describing the geology and minerology of those coal measures, 1 Annual value of a l l coal.sales for the same period climbed from $493,836 to $3,087,291. British Columbia, Economic Council Research Dep't, "Statistics of Industry in B.C. 1871 to 1934", Table M2, unpub. report, Victoria (1935). Fully three quarters of the province's aggregate coal production from 1849-91 was exported to California. xiv worked to 1891. Subsequent themes explored are the reasons why coal mininggwas begun on Vancouver Island, the various types of labour and technology used, the pursuit, development, and maintenance of markets, the sources and employment of capital, and, f i n a l l y , the specific causes of production and productivity increases over time. While this dissertation's boundaries are carefully set to exclude a l l matters not directly related to the coal industry, i t has considerable relewance for the wider study of Canadals economy. Those interested in finding further evidence to support the "staple theory" of Canadian history.will have much;in this thesis to-consider, as w i l l those who seek to confirm the argument that British Columbia's economy has been what one scholar has termed "primarily £a case ofJ extraction • 2 and processing of a few natural resources". In another vein, I had hoped that my research would have brought-forth important evidence either to support or deny the view that investments in staples - in this instance B.C.'s coal industry - by Canadian and foreign capitalists drained funds fihat otherwise could have been used to develop a significant manufacturing sector. I did not uncover such proof, mainly, I believe, because British Columbians of the time did not place a high priority on secondary industry. Their emphasis instead was.on quickly improving 2 Ronald A. Shearer.. "The Economy of British Columbia", Trade Liberalization and a Regional Economy: Studies of the Impact of Free Trade on British Columbia, Toronto (1971), p. 3. Equally emphatic upon, the importance to B.C. of staple products, (i.e. marketable commodities with "a large natural resource content'-) , is R.E. Caves and R.H. Holton, The Canadian Economy. Prospect and Retrospect, Cambridge, Mass. (1959), pp. 30-9 and 218-22.Note, too, J.E. Peters and R.A. Shearer, "The Structure of ..British Columbia's External Trade, 1939 and 1963", B.C. Studies 8:34-46 (1970). Chapters.2, 8 and 9 of this thesis a l l touch further on this theme. X V the region's balance of trade by increasing exports of raw materials on one hand, and on rapidly enlarging the population through immigration both to offset chronic labour shortages and to build a bigger domestic 3 market for native products on the other. There is some confirmation here, however, of the argument recently put forth by Donald.Paterson that British direct investments in Canadian minigghventures were aimed at purchasing well-established mines rather -than at exploring and developing unproven.claims. This view is borne-out by the coal industry's experience, especially in the,cases of the Vancouver Coal Mining and Land Company, (which was among the oldest of British direct :investments in Canada), and the majority of speculative coal mining ventures in B.C.'s coastal areas, (which failed, largely because of their promoters' 4 failure to raise sufficient development and working capital). Although ..various coal personalities are examined in some detail, no attempt has been made to offer a definitive biography of any figure. 3 Leading the current debate in this f i e l d is R.T-. Naylor who argues forcefully the Canadian capitalism after Confederation was dominated by merchants and financiers whose investments overwhelmingly favoured com-mercial rather than industrial (i.e. manufacturing) ac t i v i t i e s which in turn perpetuated Canada's reliance upon staples wherein capital needs are more for land, transport, and services than for technology. The History of Canadian Business,.1867-1914, Toronto (1975), 2 vols. (See bibliography for other works by Naylor). Full discussion on B.C. coal entrepreneurs is fourid in chapters 2-5 below. Brief note is made later in this thesis of those who have published either in support of or in opposition to Naylor's view. 4 Donald Paterson, British Direct Investment in Canada 1890-1914. Estimates and Determinants, Toronto (1976). See mainly chaps. 3 and 4 for treatment of this theme. For a clear indication of American (and some Canadian) direct investment in B.C. mining see F.W.•Howay.et at,. British Columbia and the United States, Toronto (1942), chap. 11; W.J. Trimble, The Mining Advance into the Inland Empire, Madison (1914), pp. 11T2, 58-9, 246-7 is useful as background. xvi Instead, i t is their attitudes, aims, and actions as pertaining to the coal trade that are described and analyzed, for to do otherwise would carry this thesis far beyond i t s main purpose. I'have made my focus both narrow and sharp as these comparative studies are in an area very weak in historiography. It is hoped, therefore, that among i t s effects, this dissertation w i l l lay a strong foundation upon which further scholarly histories on,British Columbia's coal industry can proceed. Since these studies are written as much from the museum curator's point of view as that of an economic historian, there is considerable emphasis given to the physical features of coal mining, though every effort has been made to avoid unnecessary detail. The technical descriptions add credibility to the arguments, and possibly make for more interesting reading.• There are some terms that bear watching: Management, for-example, has both specific and general meanings. In the precise sense of the term i t denotes senior colliery and other coal o f f i c i a l s appointed directly by the owners to carry-out the latters' policies. Hence i t is the executive level of the industry. When used in the general sense, however, management encompasses administrators (owners, mainly), managers, and supervisors (who wereain charge of actual operations). Technology is another term commonly found in these pages that requires definition. Here i t should be taken to mean machinery (modern for i t s time) that was installed with the aim either of decreasing management's reliance.on hand labour, or of increasing productivity, or both. In practice, such machinery tended to be large steampowered equip-ment that became part of the c o l l i e r i e s ' fixed assets. Finally, the terms production agents and factors of production are synonymous. Chapter One MINES and MINERALS COAL IN BRITISH COLUMBIA In terms of,total value to date, coal is among British Columbia's highest ranking minerals. The base metals copper, zinc, and lead each have brought more income to the province, though the historically significant precious metals, gold and silver, rate far below coal on the scale of total value mined. With regard to current production, coal is second only to copper as the province's most valuable mineral while a combination of factors, including coal's importance as a prime energy source and the continued existence of vast reserves of coal in British Columbia, li k e l y w i l l make coal,the province's leading mineral sometime before the year 2000."^  In fact coal, held the lead annually from 1884 to 1905 and might well have continued to do so had i t not been for the roads made by petroleum and natural gas and even nuclear power into markets at one time held exclusively- by coal. The rise of the coal industry to such importance in British Columbia's economy is a story of many separate parts. From i t s origins on Vancouver Island in 1849 to the,early 1880's the coal industry was located exclusively on the coast and characterized chiefly by innovations, fast-rising production, and rapidly expanding markets. Between 1885-95 there was a marked shift towards consolidating c o l l i e r y operations, .  1 British Columbia, Department of Mines and Petroleum Resources, Annual Report, 1976, Victoria, B.C. Queen's Printer, pp. A67-9. Total values as of Jan 1976.(latest available figures) are: Cu $2,908,691,281; Zn $1,689,523,810; Pb $1,489,809,560; Coal $1,033,135,354; Au $681,556,815; Ag $455,201,762. - 2 -particularly by the larger firms whose main emphasis then was being l a i d upon efficiency and modernization. After 1898, when the east Kootenay coalfields came into production, increasing attention was paid to metal-urgical uses for B.C. coal, though the Island deposits continued to be mined primarily as sources of thermal coal. With the discovery of petroleum in California in 1905 and oil ' s subsequent impact on the shipping, railroad, industrial, and domestic markets traditionally dominated by British Columbia coal, both the Island and the Kootenay co l l i e r i e s were forced to cut-back on production. Brief surges in coal output occurred during World War I and in the latter years of the Depression, though these upswings did l i t t l e to arrest the industry's generally sharp decline. Mining ceased altogether on the Island in 1968, but the Kootenay c o l l i e r i e s , resurgent in 19#0 with Japanese orders for coking 2 coal, began a dramatic climb to new ^ eights. Today a variety of B.C. coal measures are.being either surveyed or worked, the most significant of which are the "Crowsnest Coalfield" (Kootenays) for the Japanese steel industry, the "Hat Creek Coalfield" (Cariboo) for an upcoming thermal electric plant, the "Peace River Coalfield" for probable use in both industry and transport, and the "Groundhog Coal Deposits" (Skeena) for similar purposes. There is no current mining on Vancouver Island, though explorations both in newly discovered formation and in those fields not fu l l y exhausted are being conducted by Weldwood Canada 2 British Columbia, Coal Task Force, Coal in British Columbia: A Technical Appraisal, Victoria, Q.P. Feb. 1976, pp. 17-21. - 4 -Fig. 1 - 2 BRITISH COLUMBIA: ANNUAL COAL PRODUCTION, 1 8 6 0 - 1 9 7 0 (thousands of short tons) 3000 2800 2600 2400 2200 2000 1800 1600 1400 1200 1000 800 600 400 200 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 DTG78 - 5 -Ltd., present holder of the coal rights once held by the last of the 3 large coal companies, Canadian Collieries (Dunsmuir) Ltd. I MINEROLOGY OF COAL I found research of the coal industry confusing without f i r s t having a fa i r understanding of i t s technical side, and thus have made an effort to describe for the reader important but not generally appreciated physical characteristics of coal mining. Writers of coal histories in.British Columbia have tended to ignore such features, thinking, perhaps, that extensive technical details are bound to be either irrelevant or boring or both. While that danger can exist, there is also a serious risk to one's understanding i f the subgiect is pursued at too high a plane. In the case of Vancouver Island's coal industry, both the geology and minerology of the deposits v i t a l l y affect the nature, extent, value, and ultimately, the workability of coal lands. To have l i t t l e or no grasp of the physical parts, (and the same applies to coal mining technology), is to greatly lessen one's appreciation of the problems owners and miners faced in developing the industry as well as the scale of their accomplishment. Indeed, few of the world's coalfields are as dangerous and as d i f f i c u l t to mine as are those of Vancouver Island. A A raw mineral.resource, coal varies widely as to i t s properties, origins, classifications, and sources. One authority has described i t as: 3 Ibid. 3 pp. 79-83 and B.C. Mines Aff, 1975, pp. A 16-18, 21-22. See Fig. 1-1. ' - 6 -. . . an organically derived rock, largely composed of f o s s i l pieces of branches, tree trunks, leaves, spores, and pollen together with charcoal and'clays that at some time were present in a swamp or peat bog. The organic constituents can s t i l l be recognized microscopically and even without this aid they cause the coal to be banded. The thin, jet-black, vitreous glass-like bands of coal are a variety called vitrian, which are the f o s s i l remains of wood tissue. The dull, matte-black, irregular-shaped areas are fusion or charcoal believed to have formed in forest or peat fires millions of years ago. -The lead-grey areas of coal are duvain derived from spores, pollen leaves, and plant debris.^ Chemically, coals are compouiids that vary considerably in their molecular structures. A l l coals, however, are made-up of carbon, hydrogen, and oxygen and almost a l l coals contain both nitrogen and sulfur in one amount or another. Also present are ash-producing materials,,including water and impurities like dirt whmch are deposited climatically ddring periods of peat formation."' It is the relative percentages of these elements that determine the quality of a coal. As one suspects, the higher the percentage of carbon, the better the coal. Another way of seeing this point i s to know that coal advances in rank as i t ages: As active elements, both hydrogen and oxygen react easily with other substances. Hydrogen, for instance, combines with carbon to become methane (CH^) which in turn escapes into the surrounding air. Hydrogen further combines with oxygen to form water w&ibheevaporafcesoout. 4 From a copy panel in a geology exhibit (1978), B.C. Ministry of Mines' headquarters, Victoria, B.C. 5 Otto Stutzer, Geology of Coal (trans. A.C. Noe), Univ. of Chicago Press (1940), pp. 3-4 and CO. Dunbar, Historical Geology, New York (1960), pp. 224-42. Oxygen escapes, too, as a component of carbon dioxide (CO^)• A l l this has the double effect over time of decreasing the mass of the coal deposit while : increasing both the relative amount of carbon and the actual quality of the coal - a fact illustrated by the tables below: Table 1-1. Average Analyses of Various Fuels Fuel carbon Hydrogen oxygen nitrogen Wood Fibres 50% 6% 43% 1% Peat 59 6 33 2 Brown-coal (lignite) 69 5.5 33 0.8 Bituminous coal 82 5 13 0.8 Anthracite coal 95 2.5 2.5 trace Table. 1-2. Hydrogen and Oxygen in Various Fuels' (calculated on the basis of carbon as unity) Fuel carbon hydrogen oxygen & nitrogen Wood Fibres 100 12 88 Beafcii- 100 10.2 f59.2 Buown-coal 100 8 37.4 Bituminous coal ,100 6 16.8 Anthracite coal 100 2.6 8.6 SjilfuSnMrslrso &§f§a±fMa&€ SlfeifieSi' found in most coals. If the content is high then the sulfur is regarded as an impurity, primarily due to the acidic gases formed by sulfur combining with other elements during the coal-burning or coke manufacturing processes. The percentage 6 Stutzer, op. cit.3 pp. 4-6. 7 Ibid. 3 p. 6. 8 Bee. oit. - 8 -of sulfur in a given coal sample i s directly influenced by the amount of sulfur present in the original vegetation and in the conditions under 9 which the plants decayed. Further on in this chapter i t is explained why Vancouver Island's coal measures were particularly heavy in sulfur content, a circumstance that severely limited i t s industrial applications. OCCURANCE OF COAL Coal is a worldwide phenomenon having i t s main occurance in the northern hemisphere where i t is in plentiful supply. Indeed, i t is interesting to note how much greater today's estimate of the world's reserves i s than one made on the eve of World War I when Vancouver Island's co l l i e r i e s reached the peak of their production: Table 1-3. Estimate of World Coal Reserves (1913) (millions of tons) Region Class A Classes B & C Class D Totals Asia 407,637 760,098 111,851 1,279,586 Europe 54,346 693,162 36,682 784,190 America 22,542 2,271,080 2,811,906 5,105,528 Africa 11,662 45,123 1,054 57,839 Oceania' 659 133,481 36,270 170,410 Totals 496,846 3,902,944 2,997,763 7,397,553 9 Ibid.3 pp. 7-11. 10 Mclnnes, Wm. and others, eds., The Coal Resources of the World3 Toronto (1913), vol. 1, p. x v i i i . Use of this source seemed appropriate as the 3 vol. world coal resources summary of 1913 was the f i r s t major international co-operative effort on the subject, and although i t post-dates the thesis period by a generation, i t is the most accurate and comprehensive survey approximating the time-period studied. - 9 -Table 1-4. Estimate of World Coal Reserves (1974) (millions of short tons) Region Coking Reserves (%) Recoverable Reserves Total Resources U.S.S.R. 22 150,000 6,300,000 U.S.A. x 33 200,000 3,200,000 Shina 40 90,000 1,100,000 Europe 21 140,000 670,000 Australia 35 27,000 220,000 Canada 35 6,000 120,000 Others - 39,000 240,000 Total World 31 652,000 11,856,000 Canada in 1913 was estimated to have reserves of 1,234,769 million tons, 16.7 percent of the world's total. It was claimed that British Columbia held 52,205 million tons or .007 percent of the world's probable coal reserves. Vancouver Island's share was believed to be 4,807 million tons, less than one-tenth of the provincial total and only .0006 percent of the world's deposits. Yet to that date more than 30,000,000 metric tons of coal had been raised on the Island and while this areals portion of even the Canadian total seemed tiny, obviously 12 i t was a significant and valuable coalfield for the time. 11 Most of the increase from the 1913 estimates stems from dis-coveries in Russia and China. Canadian reserve estimates have fallen from 1.2 t r i l l i o n to 120 b i l l i o n tons, however, and only 5% of this amount is seen now to be recoverable. British Columbia is believed today to have 2.3 b i l l i o n tons of "measured" (or proven) reserves, and of this about 750 million tons can be mined with present-day techniques. B.C. Coal Task Force (1976) Coal in B.C., pp. 73-79. 12 D.B. Dowling, "The Coal Fields and Coal Resources of Canada" Coal Resources of the World, ed. W. Mclnnes et al,1913, vol. 2, pp. 439-42 and pp. 491-508; C.H. Clapp, "Coal Fields of Vancouver Island" and "The Coal Fields of Queen Charlotte Islands", pp. 509-15. in ibid. - 10 -GEOLOGY AND MINER0LOGY OF VANCOUVER ISLAND COAL - The coal-bearing lands of Vancouver Island are found in the Nanaimo series, a group of sedimentary rocks of Upper Cretaceous age underlying the eastern shore 13 of Vancouver Island and the nearby Gulf Islands. The Nanaimo series is approximately 1,800 square miles in size, and is comprised of five main basins':' Quatsino Sound (49 sq. mi.), Susquash (164 sq. mi.), 14 Comox (789 sq. mi.), Nanaimo (513 sq. mi.), and Cowichan (256 sq. mi.). Of these only the Nanaimo and Comox basins have been significant coal-producing regions. The Nanaimo coalfield extends over a fifty-s^qaaEe-mile area located at the north end of the Nanaimo basin which, in turn, li e s along the southern half of the Gulf of Georgia's western side. The basin i t s e l f i s a roughly shaped elipse eighty miles long by an average of nine miles wide. Its northern border reaches Nanoose Bay and i t s southern face touches Orcas Island in present-day Washington State. The Comox coalfield l i e s under a ninety-square-mile area in a broad strip seven miles along the Island's east coast with the town of Cumberland . ., . . 1 5 approxxmately at xts centre point., the Nanaimo basin is underlaid by a "basement" of metamorphosed volcanic rock interspersed with sedimentary and intrusive igneous rocks. 13 J.D. MacKenzie "Coal Resources of Southern Vancouver Island", unpub. ms. issued by the Geological Survey of Canada; Ottawa, 1 Jun 1923 (copy in Modern History division, Br. Col. Prov. Museum, Herein-after BCPMmh), pp. 2-6. 14 Clapp, "Coal Fields of Vancouver Island", Coal Resources of the World, p. 509. See Fig. 1-3. 15 Ibid. y pp. 509-11 - 12 -This basement, comprised chiefly of lava-type material, took form about 200 million years ago. The intrusion of granite, upheaved during the late Jurassic and lower Cretaceous ages, having the effect of uplifting the area now occupied by Vancouver Island. At approximately the same time, the mainland Coast Range was formed by similar upheavals while the Strait of Georgia area deepened. Generally, on the eve of the Upper Cretaceous, the southern coastal area of the region we c a l l British Columbia had a land profile characterized by sharp peakssandd deep troughs in close proximity to the sea, broken only by a coastal lowland on the Island mountain's southeastern face and by numerous minor peaks known commonly today as the Gulf Islands. A prolonged period of rapid erosion followed during which both the lowland and depression were covered by sedimentary materials. Meanwhile the depression was sinking steadily, thereby allowing more and more of the sea to enter the area. Indeed, so pronounced were these sea and earth movements that the vast bulk of sedimentary deposits -up to 7,600 feet thick in the northern area - were rocks, so i l s , plants, and animals mainly of a marine nature. From time to time sinking stopped, and sand bridges formed to block the sea. Periods of relative s t a b i l i t y occurred during such times, allowing for the growth and decay of plant l i f e in swamp-like settings. Under these conditions coal deposits ultimately formed, but in seams that often would be unworkable millions of years later because the combinations of erosion and sea action had not created a uniform coal-building stratum. Consequently, coal beds tended to form quickly; they also tended to be shallow in depth, narrow in width, and short in length. When sinking again occurred, the sand bridges broke - 13 -apart, which in turn brought the sea in to overwhelm the basins, causing conditions for yet another period of sedimentary build-up to begin. According to the.geological literature, this cycle happened no less than five times during the Cretaceous age, and there exist five major coal , 16 measures as proof. A l l this also had the effect of creating many small coal beds at varying intervals within3 the basins. To make matters worse for future miners, the very presence of such vast quantities of sea water, and the sulfur-depositing bacteria therein, determined from the onset that Vancouver Island's coal would be bituminous of mid-grade quality. In fact, only the best of i t ranks as a "B2" coal which translates as burning with a luminous flame, as having a cacbon content of 75-90%, as yielding from 12-26% volatile matter, as. being generally suitable for coking, and as offering 7,700-8,800 calories per gram (or 14,000 -16 The most noteworthy geological studies to date are: James Richardson, "Coalfields of the East Coast of Vancouver Island", Geological Survey of Canada (hereinafter GSC) Report of Progress, 1871-72, pp. 73-97 and Richardson's "Coal Fields of Nanaimo, Comox, Cowichen ( s i c ) , Burrard. Inlet and Sooke., British Columbia", GSC Report of Progress, 18'76'-77, pp. 160-92; C.H. Clapp "The Geology of The Nanaimo Coal District", Trans actions of the Canadian Institute -of Mining and Metallurgy (hereinafter CIMM), vol. 15, 1912, pp. 334-53; J.D. MacKenzie, "The Coal Measures of Cumberland and Vicinity, Vancouver Island", ibid., vol. 25, 1922, pp. 382-411; C. Graham, "Coal Mining in Comox District, Vancouver Island", op. cit., pp. 412-20; A.F. Buckham, "The Nanaimo Coal Field", Transactions CIMM, vol. 50, 1947, pp. 460-72; A.R.C. James, "The Coal Fields of. Vancouver Island", unpub. report prepared for B.C. Deptt of Mines, Victoria, 1969 (copy in BCPMmh); J.E. Muller and M.E. Atchison, Geology, History, and Potential of Vancouver Island Coal Deposits, Ottawa, GSC, 1971; also Clapp (1913) and MacKenzie (1923) as cited in fn. 12 and 13 above. - 14 -16,000 B.T.U. per pound)."'"'7 A comparison of coal samples taken from various Island mines i s shown below: Table 1-5. Ultimate Analysis of Some Vancouver Island Coals Wellington ComoK Douglas Newcastle Susquash carbon 75.5% 72.6% 71.0% 67.7% 60.7% hydrogen 5.1 4.5 4.9 4.7 4.7 nitrogen 1.2 1.0 1.2 1.2 1.2 oxygen 9.8 9.1 11.9 13.4 18.4 sulfur 0.5 0.9 0.9 1.3 1.9 ash 7.8 11.9 10.1 11.7 13.9 Had the geology of the Island coal measures rested on these factors alone, working the seams would have been d i f f i c u l t enough. But there occurred a further series of dislocations which f a l l s under the general term of faulting. In the view of A.F. Buckham (1947), onetime chief geologist for Canadian Collieries, the presence of "numerous, strong faults" dominates the Nanaimo coal f i e l d , crossing the entire area. Additionally, the shapes of these faults vary dramatically from south to north. In the s^ufcheinApSrt, for example, the faulting has created sharp, clean breaks in the coal seams causing vertical^displace-ments as much as 390 feet - workable seams end abruptly, only to be found hundreds of feet below. Further north in the f i e l d , faulting tends to take the form of "very sharp overturned folds" in which the seams remain. intact, but offer exceptionally d i f f i c u l t conditions for both cutting 17 Reference to "B2'< coal characteristics i s found in "Preface" to Coal Resources of the World, 1913, vol. 1, pp. i x - x i i i . 18 Clapp, "Coal Fields of Vancouver Island", ibid., vol. 2, pp. 511-13. - 15 -and hauling the coal. According to.Buckham, the faults were caused mainly by "thrusts" which can be described as essentially vertical move-ments of large-size basement rocks set in motion by stresses caused in mountain-building. The folding phenomenon i s explained by zonal rather than point application of stress, inasmuch as the pressures are ab-sorbed over.distance by slippage between the rockbeds. Moreover, there were major economic consequences associated with this particular type of varied faulting, in that the places having distinct breaks had l i t t l e slippage between the beds, thereby reducing substantially any shearing of the coal seams. Conversely, locations of sharp r o l l s were associated with both slippage and shearing, movements sure to prevent any uniform build-up of coal deposits. Equally important, r o l l s and the rocks they contain often had considerable unrelieved stress which in turn could be extremely hazardous once the adjacent constramming rock (or coal) was cleared away. Such dangers manifested themselves as "blowouts", of which more i s said later in this study. Buckham also referred to "broad, open folds" that covered the entire area. Unlike the faulting which was vertical in nature, the folding was horizontal, creating variation in a third dimension, but lik e the faulting, folding had the same 19 mountainous origins. Thus the Nanaimo coalfield can be described generally as having been both limited in scope and complex in i t s geology. Arid as one would expect, the more accessible and uniform seams were the f i r s t to be worked. 19 Buckham, "Nanaimo Coal Field", pp. 463-69. See Figs. 1-4 to 1-6. - 16 -Fig. 1 - 4 NANAIMO COAL MINED TO PRESENT Fig. 1 - 5 Major Seams Nanaimo series: columnar section 5700-6900H Douglas Newcastle Wellington F i g . 1 - 6 East Wellington mine: cross-section i DTG-78 J - 18 -The Comox formation had coal.measures of more Regular uniformity than Nanaimo's. There were five major seams laying at varying depths down to 1,085 feet in what government geologist, J.D. MacKenzie (1922), called a "massive, homogeneous white and light 20 grey sandstone deposit". There are some significant flaws i n the f i e l d , however, for as C.H. Clapp (1913) revealed, the "basement" was very uneven, causing the lowest seam especially to be cut by "knobs of the metamorphic volcanics". Additionally, several small folds and a few faults existed, along with "many small, sharp r o l l s , pinches, and swells in the coal seams". Otherwise the coal deposits are generally uniform, dipping about ten degrees in a "simple monocline" to the northeast. The seams 21 themselves vary in thickness from a few inches to twenty-five feet. Plainly, there were substantive differences between the Nanaimo and Comox coalfields. By a l l engineering standards - quality, extent, workability - the Comox formation was superior. Yet the Nanaimo fi e l d had i t s advantages, too, not the least of which were i t s location at tidewater and i t s closer proximity to Fort Victoria. Ironically, neither of these major coalfields were the f i r s t to be mined on Vancouver Island; that honour f e l l to the worst deposit of a l l , Susquash, the working of which i s examined in the next chapter. 20 MacKenzie "Coal Measures of Cumberland", p. 384. 21 Clapp, "Coal Fields of Vancouver Island", Coal Resources of the World, p. 510. See Fig. 1-7 for area of Comox coalfield mined to present. - 20 -II IMPORTANCE OF COAL LANDS For colliery operations no factor of production is more.vital than the coal lands available to developers. Generally "land" i s interpreted by economists as resources supplied by nature, not by man. Air, water, timber, and wild l i f e are thus included as are 22 mineral deposits. For this study, land is seen mainly as the coal measures per se, though notice is taken of assets s'uelj -asrs,tEeams;~Ptrees, and rocks located on colliery property ut i l i z e d to f a c i l i t a t e mining and transport. During the period in question, coal companies preferred to own the surface areas overburdening the coal seams they hoped to work, rather than merely acquire mining rights to someone else's property. In some cases, however, such lands were either under t i t l e to settlers or held by speculators, forcing coal promoters and colliery owners to bargain for access to the coal. Since the region was sparsely populated and land usually cheap, coal companies normally had l i t t l e d i f f i c u l t y in acquiring the rights they sought. Moreover, as later chapters reveal, successive colonial administrations and provincial governments further eased the way for coal developers with legislation and regulations (designed to promote coal mining) that gave ready adcess to coal lands 23 on Crown property. As discussed i n the f i r s t section, Vancouver Island's coal measures varied widely in their quantity and quality. By 1869 a l l 22 H.S. Sloan and A.J. Zurcher, A Dictionary of 'Femcnme§JNNewiYor.k• (1964), p. 192. 23 See chaps. 2-5. - 21 -significant seams had been discovered, although not a l l had been put into production. Those then being mined - Douglas, Newcastle, Wellington -a l l lay in the Nanaimo-Departure Bay area. Yet there the similarities ended since these seams differed markedly in size, shape, and value. The Wellington seam was generally less accessible, but considerably better in quality and somewhat greater in extent than the others combined; the Douglas seam was^  shallower, broader, thicker (and therefore superior) 24 to the Newcastle. As one would expect, these variations in physical characteristics had important cost and policy implications for management. More v i t a l yet for owners was.the fact that coal measures are both a retreating and a diminishing asset. Over time the coal-face moves deeper into the earth while the amount of coal riemaining in the f i e l d reduces in size. If in time the colliery proprietor did not materially and significantly add to his coal land holdings, then the actual value of his mines would f a l l as more coal was extracted. Paradoxically, he could be profiting (from sales), and losing (from declining potential), simultaneously.* Ironically, this state of affairs would occur even i f coal prices rose or his productivity increased. In short, owners periodically had to increase their coal land holdings to survive, though not necessarily 24 A.F. Buckham, "The Nanaimo Coal Field", CIMM Transactions3. 50:460-72 (1947). See also section I of this chapter for details of these seams. * Historically, colli e r i e s always have extracted the most easily gained coal deposits f i r s t - partly because i t is more economical to do so, partly because i t is i l l o g i c a l to reach for coal that l i e s beyond 1 that which is closest at hand. - 22 -to profit. Consequently, for the operator committed to remaining in the industry, no factor of production was more v i t a l than land. COAL MINING FRONTIER TO 1891 From the available evidence, i t is certain that no less than forty-six coal claims were registered in the area of 25 British Columbia between 1848-89. WMle this i s a small number com-pared to claims made for placer gold, one must bear in mind that a committment to mine coal was a much greater undertaking than the kinds of activity needed to l i f t gold from creekbeds. Few minerals have less value in relation to their mass than coal, whereas gold is close to the other extreme. Indeed, i t i s not farfetched to say that the annual earnings of one lucky goldminer easily could outstrip those of a colliery owner employing one hundred men. Such comparisons can be misleading, however, for while there are many parallels between the two types of mining, the differences far outweigh any similarities. Perhaps the most striking difference in the case of B.C. was the speed with which their respective frontiers advanced. Coal was discovered in 1835 and mined for the ten years preceding the Fraser River gold rush of 1858. By 1860, the gold frontier reached the Cariboo, pressing both north into the Cassiar District and east into the Kootenays by the early 1870's. With the exception of a brief attempt at mining on the Queen Char'lbittee, Islands in the mid-Sixties, B.C.'s coal industry remained on the south coast, chiefly.at Nanaimo. Only in the 1880's did the 25 See chap. 4 for details on the lesser known claims to 1889. See also Figs. 1-3 and 4-1 for geographical locations. 23 -coal,frontier move into the province's interior when claims were established near Lillooet, Kamloops, and the Crow's Nest Pass. An easy explanation of why coal mining activity spread so slowly throughout British Columbia rests on the assumption that gold rushes consumed by far the largest portion of available resources, thereby interrupting and forestalling growth in other sectors like 2 6 coal. Undoubtedly this was.true for awhile, but as w i l l be argued in this thesis, such effects were brief, because coal mining, on balance, rose steadily even through the years 1858-64, the period of greatest gold fever. A more r e a l i s t i c assessment for the relative slowness of coal development surely i s found in the nature of the coal trade i t s e l f . Among i t s chief needs were large fixed capital investment, large, skilled workforces, large-scale transport f a c i l i t i e s , and large markets - a l l of which took considerable time and money to create. In other words, i t is arguable that the relative slowness of the coal frontier's advance was attributable to several causes, though none more c r i t i c a l than the large amounts of capital and other resources required to actually begin f u l l -scale operations. Even the inexperienced HBC o f f i c i a l s soon realized coal mining would spread slowly due to the committment needed. The Susquash coalfield-~m6o7e familiarly known today as either the Beaver Harbour deposit or the Fort Rupert mines - was composed of thin and parted seams occurringimn "grey siliceous sandstone, 26 The best.general study of the gold rushes' impact is M.A. Ormsby, British Columbia: A History, Toronto (1958), pp. 134-63. See, too, P.A. Phillips, "Confederation and the Economy of British Columbia", W.G. Shelton, ed., British Columbia and Con federation, Victoria (1967), pp. -43-66. with several thick interbeds of shale".^' During the period of coal formation, the Susquash basin experienced less mountain-building and more sea-flooding than the areas of southern Vancouver Island; con-sequently the northern coal measures tended to have a high water and low carbon content which, of course, made for a poorer quality coal. Recognition of i t s limited value came soon after mining began in 1849, (and a 1912 sc i e n t i f i c assessment grading i t as "B3", meaning lign i t e 28 or sub-bituminous, must have come as l i t t l e surprise). Yet for more than a decade after i t s discovery the Susquash coalfield was believed by the Hudson's Bay Company and the Royal Navy to be a valuable and timely find, one that both were anxious and determined to control for their own purposes. I l l STRATEGIC FACTORS AND NAVAL GOALS The Royal Navy's interest in the Susquash deposit stemmed as much from i t s desire to prevent the rise of a bilateral coal trade between the HBC and the Americans as from any need to fuel i t s own ships. The Company's interest in turn was based upon two considerations: First, by using coal mined from Vancouver Island, the HBC would no longer need either to import fuel for forging or to continue expensive experiments at charcoal-making. Second, by developing the deposit and selling the coal to whomever would purchase i t , the HBC trould expect to create another profitable commodity trade 27 Clapp, "Coal Fields of Vancouver,Island", p. 510. 28 Ibid., pp. 511-12. - 25 -for i t s Columbia District. As events proved, the Company ultimately had i t s way, mainly because i t worked i t s e l f into a position to convince the government of the day that i t should, while the Admiralty found i t s e l f with l i t t l e room in the argument to manoeuvre: a l l navies were far behind their merchant cousins in converting to steamships, and the trend in international commerce was towards more free trade, not less, even MtfetrafegictniateeTsM^iJfettsefe^iBJ-S• l i k e coal. The increase i n the number of commercial steam vessels during the f i r s t half of the nineteenth century was a major stimulus to world trade. In .1825 Britain possessed 168 steamships, ten years later i t 29 had 538, and by 1855 the total had risen to 2,310. In contrast, the Royal Navy by 1850 had in commission only 76 steamers, most of which 30 were small auxiliary vessels used in towing and hauling duties. Yet in this circumstance i t was no different from other navies. Until mid-century the British Admiralty was given no cause to believe i t s naval supremacy on the world's oceans would be upset by changes in maritime technology since warship design and construction methods had not materially advanced for more than two centuries. The world's navies were s t i l l comprised almost totally of ships built of wood, powered by 31 s a i l , steered by rudder, and armed with muzzle-loading cannon. ( 29 J. Croil, Steam Navigation and its Relation to the Commerce of Canada and the United States, Toronto (1898), p. 41. 30 C.J. Bartlett, Great Britain and Sea Power, 1815-53, Oxford, (1963), App. II & III. Also of note is Chap. 5, "Steampower and National Defence", pp. 196-248. 31 .A.J. Marder, The Anatomy of British Seapower; a history of British Naval Policy in the pre-dreadnought era, 1880-1905, Hamden^ , (1940), pp. 3-9. - 26 -Moreover, admirals and successive British governments had convinced themselves that as long as other nations continued to show no signs of developing fleets to r i v a l their own, no new warship construction pro-grammes were needed, and the f a l l i n g trend in naval estimates from 1815 32 onward reflected that view. Undoubtedly much money was saved by allowing the Royal Navy to languish in such fashion, but among the consequences was an. almost total lack of experimentation with steampower, an innovation taken much more seriously in the commercial sector. Merchant shipping entered the steam age in three steps: First, as one writer has i t , there was a time of "practical experiment", from 1775-1820 in which steam-powered vessels advanced from small, wooden, inland-waterway boats to moderately large coasters driven by paddle wheels connected below decks to a walking beam engine. Second came the "paddle wheel era" between 1820-45 that witnessed innumerable minor refinements,.mainly to hull and paddlewheel design. Then, too, steam-ships were growing both in size and complexity and were being used in a wider variety of roles, including that of coal carriers. Third among the steps was the introduction of."screw-driven" ships, an innovation 32 The matter of naval expenditures between 1815-65 has been a sub-ject of debate for decades, and although i t is a fascinating issue for historians to ponder, i t goes well beyond the scope of this thesis. Those interested in pursuing the subject further might begin by con-sulting the Hamilton Committee on Navy Estimates, Report, Gt. Br. HOC 182 (1859) XIV, pp. 703-999 and the Handly Committee on Administration, Report, Gt. Br. HOC 438 (1861) V, pp. 1-187. Also useful are B. Brodie, Seapower in the Machine Age, 1814-1940, Princeton (1941), Chaps. 2, 5, and especially'7 in pp. 105-26; H.W. Richmond, Statesmen and Seapower, Oxford (1947); two studies by Gerald S. Graham, SeapBmjeraand British North America, 1783-1820, Oxford (1941), and Politics of Naval Superiority, Studies in British Maritime Ascendency, Cambridge (1965). See also Marder, Anatomy of British Seapower, 1940, and Bartlett, Great Britain and Sea Power, 1963. - 27 -made possible after 1843 when the f i r s t triple-expansion compound engines, coupled by shafts to stern-mounted propellors, were made available for 33 use at sea. Despite a resurgence of the sailing ship as a.bulk cargo carrier on world trade routes in the latter half of the century, develop-ment and uti l i z a t i o n of steamships for ocean commerce continued without 34 break. One by one the major trade routes were conquered by steamers. India was reached in the 1830's, a regular trans-Atlantic service was started in 1832, steamships had become common on both coasts of the Americas in the 1840's, the Orient was well-served by steam vessels later 33 "Steps" mentioned in text are described by P.W. Brock and Basil Greenhill, Steam and Sail: In Britain and North America, Newton Abbot; (1973), pp. 9-23. Reference to steam coal carriers i s made in R. Finch, Coals from Newcastle, the Story of the North East Coal Trade in the Days of Sail, Lavenham (1973) in which i t is claimed that the " f i r s t successful sea-going, iron-built, screw-pfopellor c o l l i e r " was launched in 1852. Two years later 36 steampowered iron-hulled colliers were employed in the London coal trade, (pp. 167-70). Facts on "screw-driven" ships and triple-expansion compound engines are to be found in D.A. Wells "Recent Economic Changes" (B. Rand, Economic History Since 1763,,pp. 30§-08); Marder, Anatomy of British Seapower, pp. 7-9; Brock and Greenhill, Steam and Sail, pp. 20-23; Croil, .Steam Navigation, pp. 166-69; H.P. Spratt, "The Marine Steam Engine" and A.M. Robb, "Ship Building", A History of Technology, vol. 5, Oxford (1958), pp. 141-56, 350-9.0.. Triple expansion engines could deliver 150 lbs. per sq. in. by passing a given quantity of steam successively through a series of progressively smaller cylinders. 34 For details and interpretations on the use of sailing vessels in commodity trade during the latter half of the nineteenth century see G.S. Graham, "The Ascendency of the Sailing Ship',1 1850-85", Econ. Hist. Rev., 9:74-88 (1956) also worth noting are Douglass C. North, "Ocean Freight Rates and Economic Development, 1750-1913", Journal of Econ. Hist., 18:537-55 (1958) and K. Maywald, "The Construction Costs and the Value of the British Merchant Fleet, 1850-1938", Scottish Jour, of Pol. Econ., 3:44-66 (1956), Of interest, too, is H.A. Innis, "Unused Capacity as. a Factor in Canadian Economic History", Cndn. Jour, of Econ. and Pol. Sci., 2:1-15,(1936). - 28 -in that decade, and by the mid-1850's steamers were making scheduled runs 35 from Britain to Australia and New Zealand. It bears stressing that the rapid rise in the use of steamships for overseas trade was part of a much larger economic trend, and that such details, as given here are offered only as background to both the HBC's and the Admiralty's interest in Vancouver Island coal; What was occuring in the widest sense was a revolution in world commerce, brought on to a large degree by Britain's own move towards freer trade that had begun as early as the 1820's, and which was given major impetus by the successive repeals of the Corn Laws and the Navigation Acts in 36 the 1840's. The number of merchant ships was rising rapidly, steam vessels being only a part of the general increase. S t i l l , i t was obvious that steamships had special needs of their own, particularly in regard to fuel which had to be made available at many points along each of the main trade routes. Providing for coal to be stored throughout the world soon became a highly profitable venture for both the suppliers and the British nation which then was the leading producer of coal. In 1850, for instance, i t had raised 60.5 million tons, 74.8% of the world's « 35 H. Morpe-Bartlett, A History of the Merchant Navy, London (1937), pp. 222-52. 36 The literature on Britain's shift towards free-trade i s extensive; one might start by reading CR. Pay, Huskisson and his Age, London (1951), and A.-H. Imlah, Economic Elements in the Pax Britannica, New York (1958). - 29 -37 total. Much of the coal was used by railroads and manufacturers which naturally gave the nation an enormous advantage in the industrial sector, but so high a level of coal production usually meant an oversupply. Domestic heating absorbed some of the excess coal, as did local shipping, but not a l l . It did not take long, therefore, for British shippers to begin ballasting outbound ships with coal for sale to coaling depots being erected overseas. In doidoing, the shippers created a highly profitable backhaul trade as well as ensuring adequate fuel supplies 38 for their own steamships,. The Royal Navy was drawn into these events by government actions designed to ensure there were sufficient numbers of strategically-located, British-controlled coaling stations in each ocean. According to one historian, the "strategic-economic triangle" of the mercantile era, (whose three sides were colonies, commercial protection, and naval hegemony), had been distorted by free trade, forcing a restructuring of both colonial and naval policy. From the 1840's onward, colonies were valued generally more as entry^points for trade than as the closed markets they once were, and their harbours as well as' their coal depots needed greater naval protection. This shift in colonial trade patterns forced the Admiralty to alter the direc-" tion of foreign activities from guarding sea lanes to protecting coastlines -37 Sam-H. Schurr.and others, Energy in the American Economy, 1850-1975; an economic study 'of its history and prospects, Baltimore (1960), p. 97.. According to this source, American coal production was almost totally absorbed by home markets during the years to 1890; "net exports were insignificant" the authors claim. 38 Brodie, Steampower in the MachineAAge,pp. 115-16. - 30 -a task much better suited to steamships than sailing vessels. Con-sequently, the Royal Navy in the latter half of the nineteenth century enjoyed a technical revolution of i t s own, for the emphasis in new warship construction was now on steel hulls, steam engines, screw-propellors, and breech-loading guns. Thanks to the growing network of commercial coaling stations, the navy had the further advantage in most (but not a l l ) regions of being close to abundant supplies of inexpensive 40 British coal. In this context i t is easy.to see why new discoveries of coal in the more.remote British colonies would be of special interest to naval officers. Word of the Hudson's Bay Company's coal discovery on Vancouver Island eventually reahhed the headquarters of the Royal Navy's Pacific Squadron then located at Valparaiso, Chile. The. squadron's commander-in-chief, Rear Admiral Sir George Seymour, planned to have the Island coal tested for i t s suitability as fueih for his own growing fleet of steamers, and in 1846 he instructed Commander G.T. Gordon, master of 39 • Paul M. Kennedy, The Sise and Fall of British Naval Mastery, London (1976). This work is an excellent synthesis of the debate on the subject. Chap. 6 (pp. 149-76), "Pax Britannica, 1815-59" is especially noteworthy, and is the basis for the above comments on "strategic triangles". Kennedy claims British seapower, at i t s height between 1815-59, was "an immense, virtually unchallenged influence". This naval power, coupled with Britain's pre-eminence as an industrial nation, allowed her to dominate world trade. Another source worth noting can this theme is R. Tames, The Transport Revolution in the 19th Century, vol. 2, (1971) pp. 1-2 which claims Britain enjoyed much of her trading success due to a lack of rivals. European nations tended to be concerned with rebuilding their home economies while the Americans were distracted by westward expansion. 40 Kennedy, op. cit. The problem of defending coaling stations after the Russian war scares of 1878 and 1885 i s outlined in G. Clarke, "Coaling Stations" Encyclopeadia Britannica, 10th ed., 1902, vol. 27, pp. 122-24, and Lord Brassey, The Naval Annual, 1886, Portsmouth (1886), PP. 96-100. -31 -the Cormorant, to investigate the deposit and burn the coal in his ship's 41 boilers during an upcoming voyage to the Island. Gordon reported upon his return that the Beaver Harbour coal was both "abundant" and of high, quality, whereupon Seymour then urged the Admiralty to prevail upon the government to reserve the Island's coal measures for "the public interest", a step he believed could best be taken by having the Crown determine how 42 and by whom the coal would be exploited. An earlier analysis of the coal as made for the HBC by the Museum of Practical Geology in London appeared to confirm the view held by Gordon and.other ship's captains, 4 3 in saying that the Island coal was "suitable.for steam propulsion". -By now the navy was determined to prevent a.commercial squandering of the resource, and the Admiralty was supported in i t s argument by a statement from Samuel Cunard in .1848 who also demanded the coal be reserved for 44 the Crown. One officer of the Pacific Squadron had gone so far as too "claim" the site in the Queen's name, though both the Company and the 45 Admiralty subsequently agreed he had had no legal right to do so. While the naval officers continued to build their case, the Hudson's Bay company was negotiating with the Colonial Office for a 41 Seymour to Gordon, 14 Jan. 1846 - cited in Barry M. Gough, The Royal Navy and the Northwest Coast of North America, Jb8l0-I9l4, Vancouver (1971), p. 100. 42 Gough, loc. cit. 43 Loc. cit. 44 Cunard to H.G. Ward of the.Admiralty, 3 Jan 1848 (cited in Gough, ibid. pp. 100-01). 45 Ibid., pp. 101-02. - 32 -royal grant of Vancouver Island which would include exclusive trade rights on.all resources including coal. The government and the Company. eventually agreed on terms granting in part coal mining rights to the 46 HBC. For the Royal Navy this arrangement became a double blow since the admirals had failed to prevent the Company from exploiting the deposits solely for the latter's own commercial ends. While the cost of the coal once mining started reached what Rear Admiral Phipps Hornby in. 47 1850 called an "exorbitant price of 50 shillings per ton". For the moment, however, Moresby and his officers could take solace in the fact that:their coal needs were being supplied at a much lower rate through 48 the backhaul system of ballasting ships with British coal. But i t seemed that for the time being at least the Company had gained the upper hand in the conflict over who should benefit most from exploitation of Vancouver Island's coal deposits. BUSINESS ASPECTS AND COMMERCIAL OBJECTIVES. Coal exploitation on Vancouver Island by the Hudson's Bay Company for commercial purposes was a main activity in a series of economic experiments conducted after 1821 by the officers of the Company's Columbia District. In that year the HBC 46 Details on the terms agreed to by the HBC and the Colonial Office re: establishing Vancouver Island as a company colony in ?1849 are found in E.E. Rich, The • Hudson's Bay Company, 1670-1870, London,- Hud songs'-Bay Record Society (-hereinafter HBRS) (1959), vol. 2, pp. 749-86. 47 Hornby to R Adm. Fairfax Moresby, 12 Feb. 1851 (cited in Gough, Royal Navy, p. 103). 48 Gough, ibid., p. 102, and Cmdr.C.R. Johnson to Hornby 21 Jun. 1850 in "Correspondence, Johnson.to Hornby, 1850", Colonial Papers, Provincial Archives of British Columbia (hereinafter PABC). - 33 -had absorbed i t s main r i v a l , the Northwest Company, which meant that the fur-trading regions west of the Rocky Mountains became part of the Hudson' Bay Company's exclusive trading area. For two decades, the HBC strength-ened i t s trading apparatus in the Pacific Northwest by establishing several forts along the coast and in the interior; i t further consoli-dated i t s hold on the region by increasing the numbers of officers and men.- By the mid-Forties the costs of maintaining the Columbia District had grown large, chiefly because so much of the goods needed to sustain operations had to be imported from Britain. Considerable effort was made to provision the District with locally-produced crops and l i v e -stock, while additional r e l i e f came through the exploitation of the • District's abundant sea and timber resources. S t i l l , such i n i t i a t i v e s by the Company's servants f i l l e d only part of their needs; trade goods in the forms of hardware and textiles, for example, were almost exclu-sively imported, as were scores of items v i t a l for operations, including equipments needed in blacksmithing, coopering, boatbuilding, carpentry, and other trades. Another product in short supply was coal, the fuel preferred in forgmsgg and domestic heating, though very l i t t l e could be 49 earmarked for the latter. To overcome the problem of short.coal supply, District o f f i c i a l s channeled their efforts in three directions: Company servants were instructed to investigate every report of coal deposits received from the f i e l d , work was commended to produce charcoal from local woods, 49 The best accounts of HBC activities in the Columbia District are Rich, Hudson's Bay Company, 1959 and Ormsby, British Columbia: A History, pp. 50-133. - 34 -and pressure was put upon HBC headquarters in London for more shipments of British coal to Vancouver Island. The Columbia District's chief factor, Drr.John McLoughlin, made at least one plea in.1840 to London for a larger quota of the British product, but o f f i c i a l s at headquarters did not give-in easily on the i s s u e . I n a reply dated 8 September, 1841, London said i t was sending forty tons "as requested", with a possiblity of more to come, though they expected the District would renew i t s attempts to "make good charcoal". Nor did HBC headquarters let the matter Best there. On 21 December, 1842, McLoughlin received word that Governor George Simpson had arranged with Russian Alaska to have a charcoal expert from Sitka v i s i t Fort Vancouver. McLoughlin was further informed that charcoal was the only fuel used at Sitka, that English coal simply "occupied too much space" over and above the amount used as ships' ballast, and that there were adequate resources at Fort 52 Vancouver to produce charcoal at a "very moderate cost". McLoughlin must have been exasperated at receiving such adviee, because two months earlier he had written London saying the Russian, (who had since come and gone), had failed due to the general unsuitability of looal wood-types. Furthermore, the chief factor claimed the costs of attempting 53 to make charcoal had proved to be as great as importing coal. By 50 McLoughlin to Governor and Committee in London, 20 Nov. 1840 -cited in E.E. Rich, ed. McLoughlin Letters, 1839-44, HBRS, vol. VI, (1943)m pp. 22-3. 51 Gov. and Cmttee to McLoughlin, 8 Sep 1841, ibid., fn. p. 22. 52 Gov. and Cmttee to McLoughlin, 21 Dec 1842, ibid., pp. 302-03. 53 McLoughlin to Gov. and Cmttee, 31 Oct 1842, ibid., pp. '94-5. . - 35 -and large this response quieted London on the matter of charcoal pro-duction, but i t did l i t t l e to all i e v i a t e the Columbia District's growing coal supply problem. With charcoal out of the question, and without a promise of relie f forthcoming from London, McLoughlin and his colleagues focused their attention on the possibility of finding and developing a domestic coal supply. Up to 1846 the District had been encouraged by the discovery of coal outcrops in two locations - Cowlitz near the Columbia River estuary and Beaver Harbour (Susquash) on northern. Vancouver Island. As early as May 1833 William Fraser Tolmie had surveyed the Cowlitz River, sending back reports to Fort Vancouver t h a t . i n i t i a l l y caused some excite-ment. Within weeks, however, Tolmie,conceded there was nothing more in the area than; small creekbed deposits, none of which were worth the trouble 54 to mine. Two years later at Fort McLoughlin, Tolmie heard Indians speak of a "mountain of coal" on the northeastern shore of Vancouver Island. He pursued the matter by writing to McLoughlin in Fort Vancouver who in turn ordered the Company's newly arrived steamer, S.S. Beaver, to v i s i t the area in question and report back to him i t s findings. Within weeks, Duncan Finlayson, chief trader in-charge of the mission, informed McLoughlin that a "coal mine" existed at 50° 30' N :126° 35' W on Vancouver Island. According to Finlayson, the shipjs company Had examined the coal "as time.and means would permit", and he said the Mmine" stretched along the beach "for some distance". Moreover, the 54 R.G. Large, ed. The Journals of William Fraser Tolmie': Physician-anal Fur Trader, Vancouver (1963), pp. 186-88. 55 From""My Father: William Fraser TolmieV, an address by Dr. S.F. Tolmie to the B.C.r Hist. Society, Nov 1934 - cited in ibid., pp. 394-95. ship's engineer "prounounced |^the coalj^ to be of a very good quality". Equally encouraging in the chief trader's view, was the sailor's dis-covery of a three-quarter-mile-long creekbed composed of "pure coal". Spot digging to depths of two feet had produced sufficient coal and sandstone for analysis, and Finlayson already had shipped these materials to England for study. From this enthusiastic description, the chief trader went on to suggest that a fort would have to be erected nearby to protect any miners, though he suggested, too, that such thoughts might be premature, insofar as the local natives insisted the coal was theirs' and that only they should mine i t . Apparently this prospect troubled Finlayson as he believed the Indians would prove "indolent" and non-56 productxve. During the next eight years various tests were made with the coal from Beaver Harbour, each of which seemed to contradict Finlayson's original assessment. Biames Douglas claimed in 1839 that 100 tons of surface coal purchased from the Indians at Beaver Harbour recently had been used at Fort Vancouver by a blacksmith who found i t "slatey" and "incombustible"."^ The Beaver's engineer was also c r i t i c a l 58 of the Island coal, saying i t "will not answer for steam". Douglas remained convinced, however, that the coalfield was valuable: on one 56 Finlayson to McLoughlin, 29 Sep 1836 - cited in E.E. Rich, McLoughlin Letters, 1825-38, HBRS, vol. IV (1941), pp. 334-34. 57 Douglas to McLoughlin, 14 Oct 1839 in McLoughlin Letters, 1839-44, p. 215. 58 McLoughlin to Robert C. Wyllie at Fort Vancouver, 6 Jan 1845 -cited in E.E. Rich, ed.,• McLoughlin Letters, 1844-46, HBRS, vol. VII, (1944), p. 258. - 37 -occasion he wrote that quality coal surely lay below the surface, and would be valuable ifggood economic reasons for mining i t occurred; at another time he stated "the [[surface^] coal is good", though the underground 59 beds "are bound to be.better". Possibly Douglas was.being overly-optimistic, believing his instincts more than the experts' negative reports; more lik e l y he was attempting to place the best face possible on the matter i f only to convince potential customers that Vancouver Island was the location from which to buy coal. The Hudson's Bay Company s t i l l hoped to persuade the Royal Navy that despite i t s high price, Vancouver Island coal could go far towards meeting the Pacific Squadron's fuel requirements. The Company's goal seemed to be as much ammatter of perseverance as anything, and James Douglas, whose relations with the squadron's officers generally were excellent in a l l other regards, expected the admirals soon would come to accept the Company'.s. position. ^  Meanwhile the HBC was attempting to lure another important customer, the Pacific Mail Steamship Company, formed at New York in 1848 by William H. Aspinwall for the purposes of carrying mail, passengers, and light cargoes between Panama and Oregon on behalf of the United States Navy Department. Aspinwall had purchased three 1,000-ton sidepaddlers which he planned to fuel with Welsh coal carried from Britain as ships' ballast around Cape Horn to various coal 59 Douglas to McLoughlin, 14 Oct 1839, op, ait. and Douglas to Capt. John Sheppard, 28 May 1849 - cited in W. Sage, Sir James Douglas and British Columbia, Toronto (1930), p. 137. 60 For details on Douglas' relations generally with the Royal Navy see Sage, Sir James Douglas, pp. 120-234 passim. - 38 -61 depots located on the west coasts of the Americas. When learning of Vancouver Island's coalfields, Aspinwall wrote directly to George Simpson, governor of the HBC at Lachine,, inquiring as to what terms would be available to the PMSC should the latter decide to contract for a 62 reliable supply of the Island coal. From their correspondence.it is obvious that Simpson was eager to secure and develop a west coast coal 63 trade by co-operating with Aspinwall. A further indication of Simpson's enthusiasm was his letter to Fort Vancouver's board of Management on 13 October, 1848 in which he urged the Columbia District traders to have the Indians at Beaver Harbour quickly gather between 500 and 1,000 tons of coal for an upcoming s a l e . ^ In the meantime, Aspinwall asked his own Pacific coast agent, Alfred Robinson of San Francisco, to keep him fu l l y informed of a l l developments respecting the Hudson's Bay Company's new mining venture, including how well suited the coal was for producing steam.^ By 24 September, 1849, the District's officers were able to inform.Simpson that they had 750 tons ready for sale or shipment at the governor's earlier stipulated price of 20 shillings per ton - only forty percent of 61 John H. Kemble, "Coal From the Northwest Coast, 1848-50", B.C. Hist. Quarterly (hereinafter BSMX 2:123-30 (1938). 62 Aspinwall to Simpson, 30 Aug 1848 (from letters published in Kemble, ibid. ). 63 For an overview of Simpson's efforts on behalf of the Columbia-District, see Ormsby, British. Columbia, pp. 53-89. 64 Simpson to Ft. Vancouver management, 13 Oct 1848 in Kemble, pp. 125-26. 65 Aspinwall to Robinson, 15 May 1850, ibid., p. 129. 6 6 the price Admiral Moresby claimed i t would cost the Royal Navy. S t i l l , Aspinwall was not yet ready to sign a contract, for as he mentioned on 15 May,1850 to his agent, Robinson, he found i t "strange" that the HBC could not provide even.2,000 tons when i t was f a i r to expect tha.fctupwards of 5,000 tons should £y now be available. Nor was Aspinwall ceassured by letters from Simpson claiming technical though resolvable d i f f i c u l t i e s in 6 7 amassing a sizeable coal supply at San Francisco for the PMSC. Towards midsummer, Aspinwall openly showed his concern in a letter to Robinson by stating he was anxious to receive a report comparing Vancouver Island 68 coal to a Welsh variety. On 28 September:Aspinwall backed-out of the HBC arrangement when he instructed his agent to s e l l a l l "on hand sup-plies" of the Island coal, even without "bothering to take the balance", 69 since the comparative reports were "altogether unsatisfactory". Aspinwall then shifted his attention to Australian coal entering the San-Francisco market, though in this instance, too^ he was determined to wait for a careful analysis of the new product.^ Thus did Aspinwall prove himself the proverbial shrewd Yankee trader, and with both, his support and the navy's interest gone, the HBC soon realized that by attempting to entice customers with, promises of dependable coal supplies before i t had stockpiled sufficient inventories to make good i t s 66 Ft. Van. mgt. to Simpson, 24 Sep 1849, Kefc&le,p.iblWi p. 128. 67 Aspinwall to Robinson, op. cit. 68 Aspinwall to Robinson, 13 Jun1850, ibid.3 p. 130. 69 Aspinwall to Robinson, 28 Sep 1850, Loc. cit. 70 Loc. cit. - 4 0-assurances, the Company had overplayed i t s hand. As a result, the HBC was now forced to develop the Susquash coalfield solely from i t s own resources with no guarantee of future sales - hardly an auspicious beginning for a new commodity trade. Both Aspinwall and the admirals had been wise in their reluctance to trust the Hudson's Bay Company. The Company's self-serving .policies regarding profit and monopoly are well-known to serious students of Canadian history, and the activities outlined above reflect this image. Familiar, too,iisttihe Company' s. reputation for lobbying hard with government whenever i t perceived i t s commercial position or privileges were threatened. Its reaction to pressures for settlement in i t s exclusive trading areas was to arrogate unto i t s e l f the role of colonizer; i t s response to finding marketable resources (such as coal) in i t s territories was to cajole government into giving the HBC exclusive developer's wights.''"'" Above a l l , the Company was determined to have i t s general position remain secure and profitable, even i f on occasion i t meant defiance of powerful institutions such as the Admiralty, or in ignoring the wider public interest as the HBC was doing when i t presumed that the Company should share with the Crown equal control over strategic natural resources. The Hudson's Bay Company's handling of i t s affairs with respect to Vancouver Island from 1846-49 reflected 71 The best-known treatment of HBC commercial and colonizing pol-icies i s J.S. Galbraith, The Hudson's Bay Company as an Imperial Factor, 1821-1869, Toronto (1957); for details closest to the subject of this thesis, see chap. 14 of that study entitled, "Company control of Vancouver Island". - 41 -each of these points in turn. And for i t s trouble, i t found i t s e l f committed to, among other things, developing without outside financial assistance the unproven coal measures at Beaver Harbour. Chapter Two SERVANTS: COMPANY AND CIVIL INTRODUCTION Most striking of a l l changes in British Columbia's coal industry to 1870 was the rapid evolution M both management structures and the methods used to conduct operations. The Hudson's Bay Company subordinateddcolliery operations to the fur trade, forcing i t s coal-masters and miners to work within a r i g i d local bureaucracy. Its successor^, the Vancouver Coal Mining and Land Company, directed i t s own affairs by attempting to combine the aims of absentee owners with the actions of a resident manager. During the late sixties, coal promoters and speculators offered a third approach in that they hoped to compen-sate for their own ignorance in industrial matters by hiring teams of practical miners to survey and hopefully extract coal from their newly purchased lands. Finally there was the owner-manager system as intro-duced and worked to great advantage by Robert Dunsmuir.. ESchhofff theseemanaggment methods was accompanied by i t s own kind of financing. The HBC drew i t s coal mining funds directly from the Columbia District's annual budget. As a corporate entity, theVCMLC generated i t s start-up capital through contributing partners and pro-vided working capital through cash appropriations. which the resident manager "was empowered to spend with considerable discretion."'" Specu-lative ventures, conducted mainly by local merchants, professionals, 1 The VCMLC was a joint-stock company which soon was forced to expand i t s financial base by issuing shares and selling bonds. In timeijdserious administrative and policy problems occurred over the issue of s p l i t management. See chap. 3 for details and interpretation. - 43 -and c i v i l servants, were financed through modest savings and some borrowings. Invariably the speculators believed that a rich strike of coal would both justify the expense of surveying and provide suf-ficient collateral for any further borrowing needed to begin production. Few of these speculative ventures went beyond the surveying stage and fewer survived for more than two years. Dunsmuir found the required start-up capital for his coal mines by attracting outside partners who were willing to let him own half the operation and to manage i t completely. For operating funds, Dunsmuir used most of the profits he made in coal sales, thereby avoiding the need to either s e l l additional.shares of borrow money in financial markets. Since a f u l l understanding of the coal industry to 1891 depends largely upon knowing the details and comparative merits of each of these approaches, this chapter and the next three in turn are concerned chiefly with capitalization and colliery management, factors of production equally important £ 0 3 the coal lands themselves. The f i r s t case examined, the Hudson's Bay Company's experience with coal mining, is especially interesting for i t shows how easily colliery operations and coal sales were alternately expanded and constrained by the bureaucratic mind. WORKINGS OF THE COLUMBIA DISTRICT Affe.ril82l2,l (when i t assumed control over a l l trade in the British territories of the Pacific northwest)),, the Hudson's Bay Company's overriding purpose for the Columbia District was to make i t profitable and thus add to the general wealth of the Company. Assessing the p r o f i t a b i l i t y of this and a l l other dis t r i c t s was accomplished by the simple method of comparing the costs of outfitting the operation - 44 -against the value of i t s exports which then was expressed either as a 2 "gain" or a "loss". It was natural, therefore, that the governors in London should expect each d i s t r i c t to strive for self-sufficiency wherever possible since supplying anything but trade goods over so vast a distance could only harm the Company's overall profit balance. For a while i t appeared that the Columbia District was proving to be an excellent acquisition. Its gain in 1828 was ,£31,739, and as d i s t r i c t o f f i c i a l s were continually expanding the Indian .trade, i t was generally accepted 3 that the di s t r i c t would prove consistantly more profitable. Yet as the table below reveals, profits soon declined, causing London to press for more emphasis upon both exports and self-sufficiency. Table 2-1. Columbia District Profit Balance (selecged years) Year Gain Loss 1828 j£ 31,739 — 1833 20,000 - • 1839 10,000 -1841 1,474 -1842 - 4,003 1843 - 3,136 1848 6,914 - . To offset this downward trend, d i s t r i c t officers experimented with a variety of measures designed to increase exports. Several 2 Harold A. Innis' The Fur Trade in Canada, Newl<Ha^ ien3C(:i,930i) jSlrsLstill the best introduction to the trading and financial activities of the HBC; see pp. 332-37 of this source for more details on commerce in the Columbia District. 3 Ibid.} p. 335. -'4 LOG. ait. - 45 -substantial farms were established, including four i n and about Fort Victoria under t i t l e to the Puget Sound Agricultural Company, subsidiary to the HBC. A wide variety of livestock and crops were raised annually, much of which was exported to Russian American Company posts in Alaska. Hawaii became a market for Columbia District lumber and fish, and included in the traditional fur shipments to England were locally produced hides and wool. As for supplying i t s own domestic needs, the d i s t r i c t operated grist mills, sawmills, tanneries, fisheries, and, of course, farms with considerable success.^ S t i l l , i t was plain by the early Forties that costs had overtaken profits, and in this light i t i s easy to understand why-both John McLoughlin and James Douglas, senior officers of the d i s t r i c t , were anxious to exploit the newly discovered coalfields of Vancouver Island. And i t further.reveals why on one hand they hoped to have outsiders pay (however indirectly) the costs of developing those mines; while on the other, why the HBC was prepared to charge such "exorbitant" prices for Island coal. COLUMBIA DISTRICT HIERARCHY Notwithstanding their failure to secure suf-ficient sales to offset start-up and production costs for coal, the o f f i c i a l s at Fort Victoria convinced London of the need to begin mining 5 J.W.. McKay, "The Fur Trading System", The Year Book of British Columbia, 1897 to 1901, ed. R.E. Gosnell, Victoria, B.C., K.P., (1901), pp. 21-25. This is probably Joseph W. McKay, onetime chief trader and builder of Fort Nanaimo. According to James Douglas the Columbia District exports for 1848 were:10,000 to Alaska,^8,000 to Hawaii, and^60,000 to Britain - a total of78,000'which compared very favour-ably to imports of^30,000. James Douglas to Capt. Sheppard, R.N., 28 May 1849; cited in Walter N. Sage, Sir James Douglas and British Columbia, Toronto (1930), p. 138. 6 See pp. 37-41 above. - 46 -at Beaver Harbour. Douglas, for example, argued a case of the Company producing coal for a naval depot which, i f erected, would in turn provide protection for the colony that Sir John Pelley believed soon must be established. Moreover, in Douglas' view, royalties from coal sales would help pay the c i v i l l i s t salaries.^ Meanwhile, arrangements were made by the governor and council to recruit a small party of Scottish coal miners under contract to the HBC for three years. John Muir, an Ayrshire coalmaster then l i v i n g in Manchester, signed-on as "oversman" on 9 November, 1848. Within three weeks a group composed of Muir, his wife Anne, their four sons (Andrew, Robert, John, Michael), their nephews Archibald Muir and John McGregor, and their widowed daughter Marion Turner with her two infant children proceeded to Gravesend, England where g they boarded the barque Harpooner bound for Vancouver Island. Prior to their arrival, thirty-seven company men, mostly labourers, were sent north from Fort Victoria to Beaver Harbour where, under the direction of chief trader Charles Beardmore, they constructed a typical HBC trading 9 post named Fort Rupert. The Muir party was greeted upon their arrival on 27 September, 1849 by, Captain William McNeill and Thomas Blenkinsop, 7 J. Douglas to Governor and Committee, 5 Dec 1848. Hudson's Bay Company Archives (Provincial Archives of Manitoba) All/72 "Fort Victoria Correspondence" folios 59d & 60d - hereinafter HBCA (PAM) . 8 Private Diary of Andrew Muir, 9 Nov 1848 - 5 Aug 1850, PABC MS division, and Patricia M. Johnson, "Fort Rupert", The Beaver, 302:4:4-15 (1972). Pelly was governor of the HBC. 9 For details on HBC fort styles, construction, and routines see McKay, "Fur Trading System", 1901, pp. 22-23. - 47 -respectively manager and chief clerk of Fort Rupert, who revealed to the newcomers the primitive means by which the miners were expected to extract i 10 coal. Until Murr&s arrival, coal production had been l e f t to local natives who restricted their efforts to gathering and piling coal along the beach. Very l i t t l e use was made of tools by the Indians, and no serious attempts to follow the outcropping seams with underground digging had been made. Transferring coal to the small number of vessels that occasionally stopped at Beaver Harbour to take-on coal was achieved by sending coal-laden Indian canoes to the ships where coal was.hauled onboard in buckets.^ John Muir sought a better extraction method, moving at once to survey inland for evidence of the main.seams as promised by the 12 shoreline outcrops. He soon realized, however, that the dist r i c t ' s management structure and procedures were as great an obstacle.to coal mining as was the absence of adequate equipment or the lack of workable, seams. Despite their unique qualifications, Muir and his men found themselves very close to the bottom in long and complex politico-commercial hierarchy. Like a l l major HBC departments, the Columbia District was commanded by a chief factor assisted by chief traders, men who were concerned primarily with administration, finance, and general 10 Andrew Muir diary, passim. 11 H.H. Bancroft, History of British Columbia .1792-1887, San Francisco, (1887), pp. 190-91. Bancroft claimed his informant on Fort Rupert mining operations was Michael Muir. 12 Andrew Muir diary, passim. 48 -F i g . 2 - 1 H.B.C. COAL MINING HIERARCHY, 1 8 4 9 H.B.C. H.Q. (London) COLUMBIA DISTRICT H.Q. (Fort Victoria) CHIEF FACTOR J. Douglas FORT RUPERT CHIEF TRADER Wm. McNeill CHIEF CLERK Th. Blenkinsop MINES OVERSMAN Jn. Muir NATIVE INDIAN LABOUR COAL MINERS TRADESMEN APPRENTICE | LABOURERS DTG-78 - 49 -discipline. Next in line came the clerks — chiefs and otherwise - who ran a variety of lesser establishments, including trading posts, flying posts, depots, trading, parties, and the transport.service. Reporting to one clerk or another were a number of interpreters, mechanics, guides, steers-13 men, bowmen, middlemen, and apprentices. It was at this lowest level that Muir and his miners found themselves, a circumstance that gave them l i t t l e say in forming the Company's coal mining policies when they should have been among the f i r s t to be consulted.-II OPERATIONS AT FORT RUPERT Despite a serious lack of mining equipment, the Muirs began their survey with enthusiasm. A test-hole two feet deep was hand-drilled into promising sandstone deposits as far inland as natural obstacles would permit, but the i n i t i a l results were poor, tending to make the oversman suspicious that the coalfield was composed of narrow seams widely separated by sandstone layers. Muir continued with the survey, saying l i t t l e at that time of his doubts. Soon, however, the miners were obliged to bore deeper in spdieeodiftheedifficulty of having to do so by hand. In his October report to the District's board of management, Muir requested a "double-ppwered wrench" and a set of f i f t y fathom boring rods be shipped-out from Mr. Cowan at the Portland Iron Works of 14 Ayrshire. Three months later the oversman asked for much more equip-ment, including a "high performance engine winch cylinder with 2 boilers, 13 See Figure 2-1; see also McKay, "Fur Trading System", p. 22 14 Muir to Board of Mgt., 2 Oct.49, HBCA (PAM) All/72 fo 153. - 50 -2 wheels 5%' diameter for pithead frame, 8" pumps with 4 working barrels (to 60 fathoms), 4 clamp seats, 8 clamps, 8 buckets, 2 f l a t ropes, a 4 fathom chain" - and an engineer to be sent with the engine - a l l of which he expected was available from.MMac'Don'ald, Engineer, Johnston, Renfrewshire, Scotland"."^ Plainly, Muir had plans for both a deep pit and a substantial upperworks, *he materials for which he believed would best be supplied by firms well-known to him. James Douglas forwarded this request, noting the engine (rated at forty horsepower) "would draw coals from.40 fathoms", and thus worth a projected outlay ofjf330 as well as the engineer's ^ 1 weekly s a l a r y . ^ Table 2-2 shows the miners did not penetrate very far beneath the surface in their early months of operation, though Muir claimed that he remained "optimistic", believing the "metals" would improve with depth, and that the "grey freestone" should prove to be the roof of the major 17 seam. 15 Muir to Board of Mgt., 28 Jan 50, HBCA (PAM) All/72 fo 197. 16 Minute by Douglas to loo. cit. 17 Andrew Muir diary, passim, and Eden Colvile to Pelly, 6 Feb 1850, cited in E.E. Rich, ed. London Correspondence Inward from Eden Colvile, 1849-1852, London (1956), HBRS vol. 19, p. 5. Colvile, acting governor of Rupert's Land in Simpson's absence, visited Fort Rupert in Oct 1849 to inspect the coal mines. - 51 -Table 2-2. Bore-hole Results of John Muir and Party (Fort Rupert, 6 January 1850) 18 Material , Thickness gravel sand & quick mud freestone "fakes" with 5 seams of coal varying 6' 9' 12' from 1 to 4% inches "fake" with fireclay blue t i l l e . grey freestone 6' 1' 3' 6 4' I I Total depth reached 41' 6 I I In addition to their survey, the miners took to digging a 19 pit mine near coal outcrops located a half mile from the fort. Within days they were running into trouble with flooding, and harrassment by local Indians who had been claiming a l l along that the coal was theirs' alone to mine. Up to this point the natives had stockpiled and covered-over approximately 1,100 tons of coal. The HBC had not interfered with; these a c t i v i t i e s , and indeed had encouraged them, allowing the Indians to be the sole suppliers for those few ships that'came to Beaver Harbour for coal. Nor did the Company argue with the captains who, in the strictest sense, were violating the HBC trade monopoly by paying the natives four 20 shillings per ton plus "a few trinkets" and "presents" for the chiefs. With the erection of Fort Rupert and the subsequent arrival.of white 18 Colvile, itde. cit. 19 Loc- cit. See Fig. 2-2 and Table 2-3 below. 20 Bancroft, British Columbia, pp. 190-91. 52 -miners, i t did not take long for the Indians to realize that the Company was encroaching on their coal claim, and as a result began.to harrass the miners. Making matters worse, at least four Kwakiutl tribes had converged upon the fort, settling there, which in turn attracted Haida raiding 21 parties. Repeated appeals by the miners for men to guard the surface while they worked below in the pit largely were ignored by the other Company servants. Moreover, the fort's officers refused Muir's requests for additional labour which he claimed was needed to speed digging, secure the pit-sides, and thus allow the miners to concentrate solely.on . • ,22 extracting coal. S^uchsSia.tt&ysw&erebseSiousssifi>rthe growing inability of miners and traders to resolve their mutual differences led eventually to what Douglas called "great disorder",culminating in work stoppages and insub-23 ordination followed by arrests, imprisonments, and desertions. Both Company and c i v i l o f f i c i a l s at Fort Victoria acted quickly to regain control, (apparently as much to impress the Indians as to restore; 21 Wilson Duff, The Indian History of British Columbia, Victoria (1964), p. 54. This source is excellent as an overview of native society at the time of contact with Europeans; also, of note is Tom McFeat, ed., Indians of 'the North Pacific Coast, Toronto (1966). Although mention is made about Indian activity in the coal trade, authors tend to omit details. For the purposes of this study the writer had focused mainly upon contemporary views, a l l of which are l i s t e d in the bibliography. A good example i s Cmdr. CR. Johnson to RAdm. P; Hornby, 21 Jun 1850 in "Correspondence; Johnson to Hornby, 1850", Colonial Papers, PABC MSS, which states the HBC paid the Indians one shirt for every ton of coal piled on the beach. 22 Andrew Muir diary, especially entries for October, 1-849. 23 Douglas to A. Barclay (HBC Sec'y), 17 Aug 1850, HBCA (PAM) All/72 fo 295-96. See pp. 59-61 below for a description and the immediate out-come of these events. - 53 -discipline), but this in i t s e l f did l i t t l e to improve coal production. Douglas duly informed London of the recent troubles at Fort Rupert, adding that while the Indians were "more and more productive", the loss of most miners had made i t impossible to conduct proper coal operations, 24 and consequently more trained men were needed. John Muir had remained loyal, but was refusing to mine without helpers. London's response, based upon the governor and committee being "much concerned", (presumably about their agreement with Aspinwall), was to forward immediately a l l the materials requested earlier by the oversman and to assure the District 25 that the latter should " c a l l without delay" for anything else i t needed. Furthermore, HBC headquarters said i t was despatching another party of 26 miners which had been selected With "great care". ! Before this news reached Vancouver Island, Douglas had re-assessed, the whole.coal mining venture, concluding the coal trade was not in the Company's best interests. In .his year-end summary of District a c t i v i t i e s , the chief trader devoted several pages to coal mining, gq.ug*^  la^ aWa.de ^mej^ ttriojia of John Muir's employment in surveying other reported discoveries, none of which looked promising. Disappointing, too, had 24 Loc. cit. 25 HBC Sec'y to Douglas, 15 Nov 1850, "London Correspondence Outward", HBCA (PAM) A6/29 fo 9d. HBC H.Q. "suspected" the attraction of California had motivated the miners' behaviour, and while Douglas might "induce more coal production" by raising wages, H.Q. insisted the miners' agree-ment did not entitle them to the extra 2/6 per day they demanded, (ibid.). 26 HBC Sec'y to Douglas, 6 Dec 1850, HBCA (PAM) A6/29 fo 23d. - 54 -been the summer season's output. Apparently, 800 Indians had produced only 1,700 tons at Beaver Harbour, an average of 2.25 tons per man over a five month period. Douglas stressed, however, that "the industry and perseverance ^he Indians] exhibited in that pursuit £was] truly wonderful and has astonished every person who has visited the spot". S t i l l , he saw l i t t l e overall cause for optimism, summing-up his view with: There are no doubt extensive beds of coal on this Island, but they are far below the surface, and cannot be reached without gomgg to a great expense in mining. The surface beds at Fort Rupert w i l l never give a large yield, and contain a.great proportion of slate. If worked by White labourers, the expense would far exceed the returns . . . . It is now clear that reports reaching England {jare} highly exaggerated as to the worth and extent of the coalfield . . . . £l] am now convinced that the expense of mining is too great since the coal is too deep. Q l t is] the worst pos-sible time . . . . [Jtrie] price of labour is extremely high in the North Pacific fand thej expense of procuring tools and equipment is (very much] higher than [in] England . . . . Therefore L"l~] recommend a joint stock company be formed to extract tj:he Vancouver Island] coal. ^ Having despatched large quantities of equipment and a second group <5f miners to Fort Rupert, HBC headquarters had no intention of abandoning the venture. Moreover, London believed i t s t i l l had a, committment to supply Aspinwall with the coal he had asked for, and thus instructed Douglas not to "waste time" surveying for coal on the southern parts of the Island but to continue the search at Beaver Harbour "since 28 the main seam of coal is bound to be found at Fort Rupert". Perhaps this now groundless view was merely the Columbia District's early enthusiasms returning to haunt i t s officers, but i t nonetheless was a 27 Douglas to Barclay, 22 Dec 1850, HBCA (PAM).All/72 fo 362-63d. 28 HBC Sec'y to Douglas, 16 Apl 1851, HBCA (PAM)_ A6/29 fo 56. - 55 -clear directive to resume f u l l operation. In May the Tory arrived at Fort Victoria with the steam engine and other machinery. John Muir agreed to re-open the coal pits and i n s t a l l the upperworks on condition that his kinfolk be re-hired to assist him at wages Douglas considered to 29 be;-"extravagant". Consequently, resumption of coal mining was delayed until June when Hunter, the recently arrived engineer, and eight 30 "Orkneymen" led by Boyd Gilmour, began clearing the pit. Within weeks of his landing, Gilmour openly cr i t i c i z e d Muir"s earlier efforts, claiming coal would be found instead at Susquash, seven miles to the 31 southeast of Fort Rupert. Since there was no possibility of discovering a rich seam in the Susquash coalfield, Gilmour's party did no moire than sink a series of all, but barren holes. The oversman at f i r s t attempted to excuse their failure by arguing faulty and insufficient equipment, but 29 Douglas' "Journal", 21 May and 3 Jun 1851, HBCA (PAM) All/73 fo 50d-51. John Muir, i t was, noted had leased Capt. Grant's sawmill at Sooke (a site of earlier coal surveys by Muir) for^70 per year, (fo 51). 30 LOG. cit. On 4 Aug Douglas informed Barclay that Hunter and others had "surrounded the mine shaft with stockades", built "good dwelling houses" for the miners, and expected to resume operations by 31 July. Ibid, j fo„55,. ' The reference to "Orkneymen" is unique; a l l other sources cite the miners either as "Scots" or "Ayrshiremen". 31 Douglas' "Journal", 3 Sep.1851. Here i t was also noted that Thos. Blenkinsop, chief clerk at Fort Rupert,hhad reported the new party of miners were "far superior to the previous body of men!1, and that Gilmour had recruited 20 Indians to assist him at Susquash. Ibid., fo 59 & 62. he soon was forced to admit "not the least prospect of finding coals". In a private correspondence, he said the Hudson's Bay Company would not like his latest report of no coal as the Company had been "led blinde. folded into so much expense" - undoubtedly a criticism meant for his predecessors. 32 Boyd Gilmour's "Journals, Reports, and Letters" - entries for 21 Aug, 29 Aug, 12 Sep 1851, HBCA (PAM^ All/73 fo 15-16; "Report" c Jan 1852, ibid., fo 19-20. Also, Gilmour to Board of Mgt 3 Mar 1852, ibid. 3 fo 33. Gilmour further' complained in January that " l i t t l e equip-ment was le f t from Muir's time", that " a l l else [wasj gone", and that he was. misinformed in London as to this state of affairs. Having earlier f i l l e d Muir's long l i s t of demands, HBC H.Q. undoubtedly believed the new group of miners would be welliequipped. Presumably some of the worn-out. machinery had been discarded, but in light of repeated Company accusations of coal' pilferage by local natives, i t is entirely possible that many of the even more valuable iron goods were stolen by Indians. See for example, Douglas to G. Meredith, PMSSC agent, 15 July 1850 in which i t was claimed that Indian thefts had reduced coal inventories by 300 tons, HBCA (PAM) All/72 fo 280, and HBC Sec'y to Douglas 1 Jan 1851 a warning to "watch more carefully weight of Indian coal", ibid., A6/29 fo 28d. John Muir also had a low regard for native integrity, saying the Indians "could do nothing in a pit". Ibid., All/72 fo 340. Contrast these views on native worth to Douglas' as found on ppv54 aboveVi'^- "• 33 Gilmour to D. Lansdale (engineer, Edinburgh), 2 Mar 1852, HBCA (PAM) All/73 fo 31. - 58 -Table 2-3. Coal Shafts and Pits at Beaver Harbour (1852) Type Location Depth shaft (Muir) half mile from Fort Rupert 90 feet shaft (Gilmour) near Muir shaft 120 11 I I I I rear of Fort.Rupert 285 " I I I I 4 miles N.W. of fort 180 " n I I 2 miles S.W. of fort 240 " I I I I 10 miles S.E. along coast from fort 283 " II I I I I I I . 285 " pit (Gilmour) near Fort Rupert 102 " I I I I on shore,near fort. 180 " FAILURE: REASONS AND IMPLICATIONS Clearly the vain attempts by both mining groups to find a major workable seam in the Susquash deposit was the primary cause of the Company's failure to create a viable coal mine in the area of Beaver Harbour. No matter how many miners nor how much money the HBC was prepared to commit to the venture - one estimate has i t at ^ 25,000 - the coal simply did not exist in sufficient quantities to justify further coal mining activity at.the level the HBC then could manage. S t i l l , the Company had committed i t s e l f to developing a coal trade, and the arrival of the Gilmour party of twenty-five "practical men" for a time offered new hope. But as has been seen, the efforts of the second workforce merely served to confirm the. insufficiency of the Susquash coalfield. In the months to January, 1851 only 12,822 tons 34 Bancroft, British Columbia, p. 195. Although much of what Bancroft wrote has been proven inaccurate, his works nonetheless contain extensive accounts of economic activities and thus contain clues for more research. This table (as well as Fig. 2-2), for instance, form an interpolation from his description of the HBC's Susquash operation. Additional clues are to be found in "Robert Dunsmuir", PABC's "Vertical.Files" (hereinafter PABCvf) and in Colvile to Gov. & Cttee., 21 Jul 1852, Colvile's Letters, p. 145. See, too, W. Kaye Lamb, ed., "Four Letters relating to the Cruise of the Thetis, 1852-53", BCHQ 6:189-206 (1942). - 59 -of coal were exported from Fort Rupert, an amount so small that i t made for royalties of only $1,489.50 - hardly enough for the governor's salary, . .-. . 3 5 tar less an entire c i v i l service. Because the Susquash coalfield eventually was made to. produce profitably for a few years in a later decade thanks to the use of higher coal mining technology, a second cause of the HBC's failure must be l a i d 36 upon i t s paucity of skilled labour and power machinery. By the mid-ninteenth century, British coll i e r i e s of any consequence employed at least 150 miners supported by a wide array of steampowered machinery, including d r i l l s , pumps, and winches. At Beaver Harbour no such apparatus existed, . and the white miners, working mainly with hand tools, produced only marginally better results than the Indians who gathered coal from visible outcrops. A fu l l y operational British colliery of the time could produce 6,000 tons of coal per month; Fort Rupert caihld not match that amount in 37 a year. Ineffective management at a l l levels was the third major reason the venture failed. To begin with, senior company and c i v i l o f f i c i a l s normally were cut off by distance and poor communications from the mining 35 McKay, "Fur Trading System", p. 23 for estimate of expenditure; Douglas to Barclay, 29 Jan 1851, HBCA (PAM) All/73 fo 38 for estimate of royalties. 36 See chap.4 for remarks on later Susquash coalfield activity. 37 For discussion on British colliery size and operation see Sidney Pollard, The Genesis of Modern Management, London (1965), pp. 9-24; for details on production see J.U. Nef, Bjiitvslrf.'•'@ha%Bl^dustr^o^Qv^iov^^ (1932), and A.J. Taylor, "Labour Productivity and.Technological Innovation in the British Coal Industry, 1850-1914V, EHR 1:48-66 (1961). operation, and when they did travel to Fort Rupert for inspections, i t u usually was in response to trouble. In 1850, for example, Governor Richard Blanchard made two v i s i t s , the last mainly to strengthen the hand of the. local magistrate, Dr. J.S. Helmcken, in the latter's attempts to bring peace between the fur traders, the miners, and the Indians, a l l of whom had borne some responsibility for a recent breakdown in law and 38 order at the fort. During the previous winter and spring, McNeill had expected the miners tosshare in labouring work to maintain the establish-ment, an attitude that the Muir party believed violated the terms of their contract. When McNeill l e f t for a voyage to the Queen Charlottes in April, his lieutenant, Thomas Blenkinsop, mishandled various incidents 39 of insubordination by placing two miners in irons. Eventually Blenkinsop was censured by even Sir John Pelly, governor of the HBC, for feMs action, but at the time i t merely served to infuriate the miners. A wave of desertions by miners, labourers, and sailors from the Norman Morrison for California then occurred with disasterous consequences since 40 three of the fleeing sailors were murdered by Indians. Eventually Blanchard brought peace to the fort, but l i t t l e enthusiasm to carry on mining then existed at any level. The most important lesson learned by 38 Richard Blanchard to Lord Grey, 9 Apl 1850 in "Vancouver Island Despatches to the Secretary of State, 1849-51", Colonial Papers, PABC. Also, A.N. Mouat, "Notes on the Norman Morrison", BCHQ 3:203-14 (1939), and G. Akrigg, British Columbia Chronicle, 1847-1871, Vancouver (1977), p. 29. 39 Andrew Muir diary,entries for May 1850. 40 Pelly to Douglas (private), 25 Oct 1850, cited in W. Kaye Lamb, "The Governorship of Richard Blanchard", BCHQ 14:1-40 (1950), and op. ait. for the miners' reaction. - 61 -Company servants from this labour s t r i f e was that fur trading and coal mining were distinctly separate act i v i t i e s , a point sharply driven home by Pelly himself who reminded Douglas of the miners' "special status" and 41 their need to be treated with more respect. As w i l l be seen, a wide range of reforms were initiated by Douglas in the financing, administration, and management of mining activities after the Company's coal operation , was transferred to Nanaimo. Meanwhile, however, the HBC's reputation as a coal supplier continuedcto suffer. ORIGINS OF THE NANAIMO COAL.COMPANY Reports of a coal discovery on the Island's east coast approximately seventy miles north of Fort.Victoria reached senior Company servants as early as 1849. Joseph McKay, chief trader at Victoria, investigated the site in May 1850, passing his findings to Douglas who chose not to exploit the new find as the HBC's main effort was s t i l l being directed towards making the Beaver Harbour 42 coalfield a success. Again the Indians were allowed i n i t i a l l y to exploit the new-found deposits, extracting and piling about 200 tons 43 by mid-September. :' Later that month Boyd Gilmour and ten miners were 41 Kaye Lamb, "Governorship of Blanchard". Pelly's 25 Oct 1850 corres-pondence to Douglas stated outright that Muir should have been in-charge of the miners, not the traders. See also Dorothy Blakey Smith, ed,,The Reminiscences of Doctor John Sebastion Helmcken, Vancouver (1975), pp. 105-08 for further details and impressions of the clash between the miners and the Fort Rupert management.' 42 T.A. Rickard, "A History of Coal Mining in British Columbia", The Miner 15:6:30-34 (1942); also B.'A. McKelvie'y/, "The Founding of Nanaimo", BCHQ 8:169-88 (1944). 43 Bancroft, British Columbia, p. 195.- Bancroft.claimed he obtained his facts on Nanaimo's early production from personal interviews with McKay. sent to the new location (now known as Nanaimo) where they began at once 44 to dig a pit on the harbour's northwest corner. Production rose qumekly, reaching 120 tons per week from a seven foot thick measure which they, called the "Douglas Seam". Once spring came, Gilmour's group was replaced by another party of miners {Idd by John Muir) who moved south from Fort Rupert. Within a short time, coal mining at Nanaimo was proceeding in four separate pits, but with very low production due to the small 45 numbers of men and machines. As months passed, i t became obvious to Douglas that the Nanaimo find held greater promise than the Susquash deposits, and to confirm this impression, he made an extensive inspection of the Nanaimo operations in 46 early August 1852. Upon his return to Victoria, Douglas wrote to McKay, instructing the chief trader to "formally take possession of the coal 47 beds" for the HBC. McKay responded immediately, beginning what was to become a three-year task of supervising the erection and i n i t i a l operations 44 This was a temporary duty for Gilmour. He returned to Fort Rupert after a short time, and did not become part of Nanaimo's permanent estab-lishment until Dec 1852. Douglas' "Journal" HBCA (PAM) All/73 fo 296. 45 Bancroft, op. cit., p. 196. Also, Kaye Lamb, "Cruise of the Thetis", pp. 199-200. 46 Douglas to A. Barclay, 23 Jun 1852, Van. Is. Colonial Correspondence "Letter Book", PABC MSS. Douglas became not an infrequent v i s i t o r to Nanaimo, staying usually for several days. Often during these stopovers, his enthusiasm for the new industry led him to join surveying parties and work crews.,. And upon seeing him depart for Fort Victoria, McKay knew correspondence f i l l e d with suggestions, urgings, and instructions was sure to follow. See Sage, Sir James Douglas, for detailed accounts of these v i s i t s . 47 Douglas to McKay, 24 Aug 1852, "Nanaimo Correspondence: James Douglas - Joseph McKay, August 1852 - September 1853", PABC MSS. of British Columbia's f i r s t genuine colliery, the Nanaimo Coal Company, a subsidiary of the HBC. With McKay's reports forming an increasingly . . clear picture of the new coalfield's huge potential, Douglas' own excite-ment mounted, causing him to claim that f i r s t winter that their efforts were "crowned with success", adding he f e l t "the greatest possible anxiety 48 to see this important discovery turned to good account". His plan was to s e l l "as muchaas possible" for ten dollars per ton at the pithead, though he also stressed the District was eager to have more than American clients. He further said a "substantial San Francisco mercantile house" had offered to lease the mines and finance their development" by means 49 of a Joint Stock Association"! Various California buyers apparently had offered to purchase a l l the coal that couOld be raised, but the chief factor wanted London's guidance before signing any contracts. He mentioned Nanaimo coal currently was selling in.San Francisco at $15-$16 per ton, but believed this price would rise when the coal's quality became better known. His other main concern was to increase the size of the workforce, saying the "boundless supply" of coal meant "miners are much wanted" and then quoted Muir as wanting 30-40 coal mining families at Nanaimo. 48 Douglas to Barclay, 3 Dec 1852, HBCA (PAM)_ All/73 fo 642. 49 Ibid. 3 fo 643. Worth noting is the.chief factor's sundry requisition at the time for the miners. For provisions: 200 bbl mess pork, 200 bbl sound flour, 50 firkins Irish butter, 30 cwt raisens for puddings -clearly foodstuffs for a strength- and energy-giving diet. For tools: 100 3% lb. miner's picks, 40 coal mells ("a kind of hammer"), 6 doz. "round-mouthed" shovels. Ibid. 3 fo 648. See chap. 7 for range and descriptions of miner's tools. 50 From Muir to Douglas, 6 Dec 1852, HBCA (PAM) All/73 fo 650. COLLIERY MANAGEMENT REFORMS Among the policies Douglas laid down from the outset for Nanaimo was an insistence that coal mining be handled as much as possible as a separate commercial and industrial activity. The Nanaimo Coal Company was given i t s own accountant, budget, and instructions for conducting both operations and sales. John Muir, whom Douglas had prevailed upon to return from recent retirement, was assured by the chief factor that as "oversman" (or supervisor), Muir would have complete control over a l l mining matters, even to the extent that any dealings the Company 52 might have with the miners would have to be cleared f i r s t through Muir. Reluctantly, Muir agreed to sign a two-year contract and soon found him-self in direct conflict with Gilmour, oversman for a second contingent, who claimed the former was incompetent. Gilmour eventually assumed command of a l l miners, but he never exhibited the same qualities of leadership or loyalty the original oversman had shown. By 1855 Gilmour had returned to Scotland, and his duties were assumed by George Robinson, leader of a recently arrived party of miners recruited by the HBC at the Brierly H i l l Colliery in Staffordshire, England. Robinson was given the new t i t l e of 51 See a l l Douglas - McKay letters in "Nanaimo Correspondence, 1852-53" for a general view of policy formation re: the Nanaimo Coal Co., and see especially Douglas to McKay, 5 Jul 1853 where Douglas stressed that the chief trader maintain separate ledgers for the coal company. Earlier Douglas received instructions from HBC HQ to this effect. HBC Secyy.to Douglas 14 Jan 1853, HBCA (PAM) A6/30 fo 57d. 52 Douglas to McKay, 26 Aug 1852. . Nanaimo Coal Company manager which he kept until the mines were sold 53 in 1862. From the beginning, operational control of the Nanaimo Coal Company was shared by James Douglas who administered appropriations and sales, Joseph McKay (and later Charles ;Stewart) who developed Fort Nanaimo and managed the port, and the oversmen who supervised.actual 54 mining operations. Of these men, McKay had the most d i f f i c u l t task during the i n i t i a l years of operations. His appeals to Douglas for sup-plies usually had l i t t l e effect since the chief factor insisted upon self-sufficiency and more attention towards surveys and production. With so few miners available, McKay was forced to rely heavily upon native labour, a circumstance that increased inter-tribal f r i c t i o n and made l i f e for trhe white population hazardous. At the same time, Douglas expected 53 More facts on Gilmour may be found in James Audain, From Coalmine to Castle, The Story of the Dunsmuirs of Vancouver Island, New York (1955), pp. 7-12. Robinson's appointment is discussed briefly in B. Goult, "First and Last Days of the Princess Royal", BCHQ 3:15-24 (1939). 54 See Fig. 2-3 for Douglas' revised management structure. 55 Again see "Nanaimo Correspondence" for a f u l l account of events at Nanaimo during the start-up period. 56 Ibid., The Indian issue remained complex, ranging from the HBC's legitimate concern that natives employed in industrial activities like coal mining, construction and even farming would be unavailable for the fur trade, to the need for maintaining a high level of law and order without undue interference in t r i b a l matters. E.E. Rich's two volume study The History of the Hudson's Bay Company 1670-1870, HBRS (1959), emphasizes these issues throughout the work, and is well worth consulting on the matter of Company-Indian relations. According to a l l - biographers of Douglas, the chief factor was particularly sensitive to native needs and their treatment at the hands of the Whites, Company servants or other-wise. Rich, Sage, Ormsby, and Derek Pethick (see Bibliography) a l l give this feature considerable attention. - 66 -F i g . 2 - 3 H.B.C. COAL MINING HIERARCHY, 1 8 5 3 H.B.C. H.Q. (London) COLUMBIA DISTRICT H.Q. (Fort Victoria) CHIEF FACTOR Ja. Douglas NANAIMO COAL CO. MANAGER Jo. McKay OVERSMAN Bd. Gilmour OVERSMAN Jn. Muir MINERS LABOURERS MINERS LABOURERS DTG78 - 67 -McKay to adhere s t r i c t l y to instructions regarding payments by Saptains of vi s i t i n g ships, particularly the Americans.^ Nor was Douglas sympathetic to McKay's complaints of technical d i f f i c u l t i e s such as 58 machinery breakdowns or flooding. 1 Yet this seemingly tough approach by the chief factor did force the Nanaimo Coal Company management to come to terms with i t s d i f f i c u l t i e s , and, by 1856, the mining operation had evolved into a modest but viable colliery capable of sustained production. For Douglas i t was well that i t had, for he was becoming increasingly distracted by events on the Mainland, several of which could have ..consider-able impact upon future coal production. RECRUITING POLICY AND EMPLOYMENT PRACTICES By mid-decade the main work-force was'comprised chiefly of White miners drawn from the Ayrshiremen who had worked earlier at Fort Rupert and the Staffordshire miners who arrived in November, 1854. Thcough time, miners in the f i r s t group had achieved some minor improvements to the terms of their original agreements, most of which were incorporated into.the contracts of the English miners. These newcomers each signed an.indenture binding hmmmto the Hudson's Bay Company as a "working c o l l i e r or labourer" for a term of five years from the time of arrival on Vancouver.Island. As Company servants, a l l were obliged to work their passage, build their families' homes, and pay one pound per annum rent for one acre of land on which to erect their dwellings. Once at work, their indenture assured them a ten hour day during which 57 Douglas to McKay, 12 Sep 1853. 58 McKay's letters almost always contained reports of technical prob-lems, usually with a request for understanding, sympathy, and assistance. they would either construct upperwbrks, sink shafts and.pits, cut stone, or mine coal. If engaged as miners, they were expected to produce forty-five long tons of "clean round coal" per month for which they would be paid an annual wage of seventy-eight pounds sterling. For every additional 59 ton extracted, the miners would receive six shillings, ten pence. Those men not mining, but working at other tasks in the colliery, were to receive comparable compensation as determined by the "overseers" (oversmen). Another s h i l l i n g per day was earned in lieu of rations, and before departing England the men were given a fifteen-pound-sterling repayable travel advance. Should a miner die in the Company's service, his family would be returned to England, passage and rations provided. A fifty-pound-sterling penalty clause for either party - Company or servant - also was written into the contract, as was a clause - generous for the time - stating " a l l tools and implements necessary for labour" 60 would be provided at the HBC's expense. While such terms were not markedly different from those afforded, other Companymen on Vancouver Island, they nonetheless helped define more clearly the essential d i f -ferences between the work of coal miners and that of labourers or traders. Despite the administrative value i n making this distinction, and the real benefits that f e l l to the miners as a result, li v i n g conditions at Fort Nanaimo were primitive and at times hazardous. 59 "Indenture" of Edwin Gough to the HBC, 1 May 1854, PABC MSS. The wage rate of 1852 was,/50 per year plus board and room for producing 30 tons per month. 2s 6d was paid for every additional ton raised. As oversmanj Muir received £ 100 per year. Douglas' "Journal" kll/13 fo 291d. 60 "Indenture", op. oit. California* by comparison, seemed to offer much more, including greater economic opportunity and a better climate. Such circumstances had i t s effects, for in September 1855 eight men struck, leaving immediately for 61 Fort Victoria with an ultimate destination of San Francisco in mind. Ostensibly their complaint had been low wages, but more li k e l y they had tired b£ being both bound to the Company and isolated on Vancouver Island. Douglas intercepted and severely reprimanded them for breach of contract, using threats of imprisonment that forced a l l to return to the coal mines. Trouble flared again during the summer of 1856, culminating in scattered desertions to recently opened American coal mines at nearby Bellingham Bay and the sending of a six man delegation to Fort Victoria on the anniversary of the 1855 strike to confront Douglas with demands for more 63 wages and better working conditions. The miners' delegation returned to Nanaimo with what Captain Charles Stewart (McKay's replacement) termed "some concessions", and apart from another two-man desertion the following January, the labour situation at the mines settled-down until 1858 when the Mainland gold-rush began and another series of desertions followed.^ 61 "Nanaimo Journalr' August 1855-March 1857 - Capt. Chas. E. Stewart", PABC MSS. For details on the 1855 strike see entries for 11 Sep-6 Oct. See also chaps. 5 & 6 of this thesis for some longer term • implicat ions. 62 Ibid., 6 Oct 1855. 63 Ibid., 11 Sep.1856. 64 Ibid., 22 Sep 1856 and 27 Jan 1857. MARKETS, PRODUCTION, AND SALES While the District's room to manoeuvre in labour relations was limited largely by structural constraints inherent in the Company's recruiting and employment practices, local o f f i c i a l s did enjoy considerable freedom in the spheres of management and marketing. The most significant reform achieved at the administrative level had been to separate coal mining operations and sales from other branches of trade? As for sales, Douglas i n i t i a l l y pursued an aggressive approach to building markets, emphasizing the need to service both v i s i t i n g ships and the growing California market. By early 1853, he engaged a group of ex-HBC servants, (who earlier had become resident commission merchants in San Francisco), to act as the Company's agents for coal sales in that city. Led by Thomas Lowe, the agents managed to s e l l an impressive'first consignment of 4,500 long tons, though only at sixteen dollars per ton and not the forty that Douglas had hoped f o r . ^ Lowe explained the. market was "glutted", and in an attempt to head-off any retreat by the HBC, he quoted an issue of Prices Current which stated experiments conducted with the Island's f i r s t coal shipment had proven "very satisfactory". Lowe was further worried during a deep recession that hit California in 1855, realizing at that time that his surest source of income would be dealing in HBC coal as long as he and his associates could keep the supply flowing. 65 The chief factor's high expectations were based upon recent California quotes of $21 per ton with coal prices at San Franciso "gradually rising 1'. Douglas to Barclay, 15 Jun 1853, HBCA (PAM) All/74 fo 13. Douglas was disappointed that year when forced to reduce the pithead price from $12 to $11. Douglas to Barclay, 21 Sep 1853, op. ait., fo 18. S t i l l a weekly production increase from 70 to 110 tons was encouraging. Loo. ait. By November weekly output had grown a further 10 tons while "good demand was keeping (island coal) prices high" at SanfFsandisco./2>IMbidty fo.22. - 7 1 -Douglas, meanwhile, was showing preference for local sales to naval and merchant ships, chiefly because transport costs were negligible and profits thereby greater. Lowe viewed this attitude as short-sighted, complaining that so timid an approach would never result in a large-scale 66 San Francisco market for Vancouver Island coal. In view of the HBC's d i f f i c u l t i e s in stockpiling sufficient coal to meet the Royal Navy's demand for fuel during 1854=56, i t is hard to imagine how Douglas or any of his subordinates could have made the Nanaimo Coal Company more active in the southern market at that time. The f i r s t coal shipment out of Nanaimo had occurred in September 1852 when the Cadboro sailed with .480 tons gathered by Indians and loaded in ba r r e l s . ^ By the end of 1853, only 2,000 tons had.been shipped-out of Nanaimo, and half of this amount was produced by native labour working 68 without picks or shovels. Production the following year was also very low, despite the influx of more White miners, and when Douglas received 66 "Thomas Lowe" Letters Outward, 1852-59" PABC MSS,. passim; also J.M.S. Careless, "The Lowe Brothers, 1852-70: A Study in Business Relations on the North Pacific Coast", B.C. Studies 2:1-18 (1969). 67 McKay to Douglas, 16 Sep 1852. Apparently the cost of loaded coal at Nanaimo in 1852 was $10 per ton for mention was made by the chief trader in this letter, that the Honolulu Packet recently purchased 32 tons for $320. The HBC initiated a backhaul trade of i t s own at this time due to Lowe's suggestion of ballasting the Mary Bare for i t s return voyage with "sufficient quantities of molasses, bar iron, nails, etc. which w i l l s e l l at a profit". Douglas' "Journal" 11 Oct 1852, HBCA (PAM) All/73 fo 293. 68 Bancroft, British Columbia, p. 199. Bancroft also stated that in May 1853 a ton of coal at Nanaimo cost $11 per ton, at San Francisco the same product was selling for $28 per ton while Bellingham Bay coal cost $23 per ton i n that city. Also worth noting on the subject of Douglas' 1853 v i s i t is Sage, Sir James Douglas, p. 173. - 7-2 -a request for 1,000 tons to be ready for a navy squadron due at Vancouver Island in July 1855, he personally visited Nanaimo in June to ensure 69 McKay and Robinson were having the workforce stockpile accordingly. By November nine miners working round-the-clock in three.shifts were ex-tracting up to thirty tons of coal daily from Number One mine?, and an equal amount could be loaded onboard v i s i t i n g ships in a single day.^ S t i l l , technical problems like flooding, and mechanical breakdowns were common, precluding any hope for the time being that this level of production could be sustained, far less increased.^ Equally worrisome for management was' the low level of colliery morale. Just prior to the strike in September, Douglas visited Nanaimo and agreed to Robinson's urging that the miners be paid by the ton since-the annual wage system held l i t t l e inducement, causing "idleness" instead. New rates of 4 shillings 2 penee per ton plus 1 s h i l l i n g 4 pence per day in l i e u of rations were set - but not to be effective before year's end. Further prodding by the oversman secured for the miners a concession of free tools and medical services. Douglas kept to his wordl about salary changes despite the strike and 69 D.C. Davidson, "The War Scare of 1854: The Pacific Coast and the Crimean War", BCHQ 5:243-54 (1941). In February 1855 the Pacific Squadron commander, RAdm. H.W. Bruce, had written Douglas from Valparaiso asking that provisions, hospital f a c i l i t i e s , and coal be made available for a v i s i t by navy ships in July. For details on naval events and policies in the 1850's see "Correspondence Relating to the Establishment of a Naval Base at Esquimalt", BCHQ 6:277-96 (1942); F.V. Longstaff and W. Kaye Lamb, "The Royal Navy on the Northwest Coast, 1813-1850", BCHQ 9:1-24, 113-128 (1945); Gough, The Royal Navy . . . North America (1971), pp. 84-149. 70 Bancroft, British Columbia, p. 200. 71 See "Nanaimo Correspondence" and "Nanaimo Journal", passim.-- 73 -a f a l l - o f f in production from 30-40 tons daily in early September to 72 only 24 tons by, mid-October. The wage reform of 1856 was welcomed by a l l , and within the year most of the Nanaimo Coal Company's technical and labour problems associated with start-up had been overcome. Production climbed steadily 73 until i t reached nearly 20,000 pons per year in 1862. Considerable progress was made, too, in reducing costs to the consumer. The average price charged for coal in 1853 was eleven dollars per ton at Nanaimo., 74 twenty-eight dollars per ton at San Francisco. But by 1861, on-hand supplies were large enough and production high enough for the Nanaimo Coal Company to s e l l i t s coal at the pithead for seven dollars perrton and in San Francisco at an average Of twenty dollars per ton, prices that allowed the tCompany to remain competitive while managing to turn a reasonable p r o f i t . ^ A year later Vancouver Island coal had become ful l y 72 Douglas to W.J. Smith (HBC Sec'y), 24 Jul 1855, HBCA (PAM) All/75 fo 664-67. 73 B.C. Min. of Mines, Annual Report, 1975, p. A 87. Actual figure listed for 1862 production is 18,409 tons for a value of $72,472. The value of gold exported from the Mainland in 1861 was estimated at $2,666,188. B.CJ Min. of Mines, Report, 1875. See Fig. 2-4 below.' 74 See fn 69 above for reference to sources describing negotiations re: local coal sales. Attempts to trace the San Francisco prices of Nanaimo coal for the 1850's have been frustrating insofar as no two sources appear to agree. Moreover, the California market fluctuated widely in that decade (see chap. 8 of this study), making i t d i f f i c u l t even to detect trends. Finally, prices are quoted in either British or American currency depending upon the source, and without a f u l l knowledge of exchange rates, the overall picture becomes approximate at best. 75 The HBC did not admit to having benefited from i t s coal operations, however, for in i t s demands for compensation from the government at the time i t was forced to relinquish control of the Island'colonyj the Company claimed i t was owedj(131,455, much of. which had been spent in developing the coal mines. E.E. Rich, Hudson's Bay Company, pp. 777-78. - 74 -competitive in the California market, despite an American "drawback" 76 duty of twenty percent on a l l foreign fuel. Table 2-4. Comparative Coal Prices (1862). Source Pithead Victoria San Francisco Nanaimo $6 to $7 $11 $12 to $15 Chile - - $12 to $15 England - - $12 to $20 Australia — — ' $12 to $13 With an annual coal consumption of 168,000 tons by 1860, San Francisco had become the most important coal market in the eastern Pacific, and a l l suppliers were eager to gain as strong a foothold as 78 possible. By 1862, the Hudson's Bay Company fin a l l y appeared to achieve the breakthrough i t had hoped for when returns for the f i r s t quarter of the year showed the Nanaimo Coal Company product had climbed from sixth to third place in sales. 76 .Br i t ish Colonist, Victoria, 23 May 1859, p. 1. ' This newspaper article also mentioned that the American t a r i f f had caused 10,000 tons of coal to be l e f t unsold at Nanaimo. 77 Mathew Macfie, Vancouver Island and British Columbia, London, (1865), p. 144. 78 Ibid., pp. 141-50. -.75 -Table 2-5. Coal.Imports by Source at San Francisco Source 1 Jan - 16 Dec 1861 1 Jan - 15 Mar 1862 New York (anthracite) 26,291 tons 5,176 tons England 24,895 tons 5,036 tons Bellingham Bay 16,183 tons 2,535 tons Australia 12,304 tons 3,942 tons Chile 12,254 tons -Vancouver Island 5,204 tons 4,235 tons When projected for a f u l l year, the f i r s t quarter sales of Island coal to San Francisco in 1862 amounts to approximately 16,940 tons. But such was not the case as only 7,860 tons or 42.2% of the Nanaimo Coal Company's total output for 1862 reached California. The large f i r s t quarter sales simply mean that the San Francisco market was seasonal. Table 2-6. Nanaimo Coal Co. Exports (1852-62) Period Coal Exported Oct Dec 1852— Nov 1859 1859 - Dec 1862 25,398 tons 48,128 tons Total 73,526 tons Yet i t is obvious from the figures in Tables 2-6 and 2-7 that the rate of production by 1860 was increasingly rapidly, and that despite the seasonal nature of foreign sales, exports were becoming more and more important. Domestic sales also moved ahead, buoyed by 79 Macfie, op. cit. 3 p. 143 80 Macfie, op. cit. } p. 146. - 76 -77 -larger purchases made by Victoria merchants for the local market and by the Royal Navy at Esquimalt where a small coal depot was being constructed. Withingaashort peniod, however, export sales surged ahead of domestic sales, remaining there until 1912 when the local market became the more valuable of the two.^ "*" " Table 2-7. Coal Production on Vancouver Island (1849-62) Period Coal Produced Value 1849 - 59 37,985 tons $149,548 1860 -.62 46,879 tons 182,556 Totals 84,864 $33221044 III END OF THE HBC's COAL MONOPOLY Few issues in British Columbia's early history are as significant or as complex as the changeover from Company 83 control to Crown rule. Among the most important long-term effects of this shift was the displacement of Indian trade by extractive industries as the region'g main economic base. The HBC had been experimenting with coal, lumber, fishing, and farming before.its monopoly was f i n a l l y broken in 1859, but not with sufficient speed to satisfy i t s c r i t i c s who 81 B.C. Minister of Mines, AS,. 1912. 82 Ibid., 1975, p. A 87. 83 The historiography on this subject is extensive; the more important recent studies are: Innis, The Fur Trade (1930); Sage, Sir James'Douglas (1930); J.S. Galbraith, Hudson's•Bay Company as an Imperial Factor (1957); Ormsby, British Columbia: A History (1958); Rich, Hudson's Bay Company (1959). - 78 -believed the Company's politico-commercial hegemony was an anachronism, an obstacle to f u l l economic development rather than a primary means of opening the country. Merging the Northwest Company and the Hudson's Bay Company in 1821 under the name and trading charter of the latter made the HBC dominant in the Pacific northwest. In May, 1838 the Hudson's Bay Company was granted exclusive trade rights for twenty-one years in those continental territories not belonging either to British Provinces, the United States, or other European powers. The Oregon Boundary Settlement of 1846 removed the lands sough of the forty-ninth parallel from this grant, but i t also served to consolidate Company operations and control in the areas the HBC s t i l l occupied. Vancouver Island, however, had not been included, in the original grant. Hence, after lengthy negotiations between the HBC and the Colonial Office, the Island became a Company Colony in 1849 on the understanding that the HBC would settle the Island with British immi-grants and use proceeds from the exploitation of natural resources to build the bolony. Despite objections from the HBC's c r i t i c s , the British government saw an opportunity for colonizing the Island w i t h . l i t t l e cost to i t s e l f and thereby accepted the Company's assurances of an orderly and rapid settlement. Coal lands and their potential development was an. especially sensitive issue,f<5orthe Admiralty in particular was eager to 84 Those studies imnfn 83, and for more on the general significance of this theme see P. Knaplund, "Letters from James Edward Fitzgerald to W.E. Gladstone concerning Vancouver Island and the Hudson's Bay Company, 1848-1850", BCHQ 13:1-22 (1949) and two studies by Barry Gough,- "The Hudson's Bay Company and the Imperialism of Monopoly: A Review Article", B.C. Studies 18:70-78 (1973) and "The Character of the British Columbia Frontier", B.C. Studies 32:28-40 (1976). - 79 -85 have this resource reserved for the Crown. Nonetheless, the,colonial secretary, Lord Grey, believed the government had struck a good bargain when the Company agreed to keep for i t s e l f only one tenth of the profits on a l l coal sales, depositing the remaining ninety percent in a general 86 colonization and improvement fund. By 1856 agitation both in the colony and at home for removal of the grant had grown intense, and the colonial office made i t plain to the Company that a. renewal of i t s trade monopoly 87 l i k e l y would be,denied. When gold discoveries on the Mainland brought-on the mining rush of 1858, the HBC found i t s e l f hard-pressed to defend its exclusive trading rights, a circumstance made more d i f f i c u l t by the fact that several senior District officers - Douglas among them - held both by c i v i l and Company positions which put them in conflicts of interest. Fortunately for these o f f i c i a l s , coal mining was far enoggh out of the new mainstream of the colonial economy that operations,in Nanaimo could proceed more or less routine, and thus not burden them further. Douglas' original policy of levelling coal royalties for the Nanaimo Coal Company at 2s'6d: on each ton of coal loaded at the Pithead 88 had prevented the rise of an i l l i c i t coal trade. Additionally, the HBC owned just upwards of 6,000 acres of land at Nanaimo (with attendant • 85 See discussion in chapter one of this thesis pp. 31^2.. 86 Lord Grey to H. Labouchere, 19 Jan 1858, "Duke of York and Albany Papers", pp. 54-57, Public Archives of Canada MSS. 87 See fns 83 & 84 above. 88 Douglas to McKay, 24 Aug 1852. - 80 -coal rights) thanks to Douglas' foresight two years earlier in purchasing 89 the land a t / 1 per acre. This i n i t i a t i v e was c r i t i c i z e d by hlsssuper-iors at the time, but i t soon proved a wise move, for a House of Commons Select Committee formed by Grey's successor in the colonial office, Henry Labouchere, Co study the Company's record as a colonizing agent, had by 90 now recommended the grant of Vancouver Island not be renewed. In sub-sequent aftrimon^ Qlusitn^ eg'ofeiiaitetQris/,, the government's f i n a l offer of compensation to the HBC for the latter's effort on behalf of the colony amounted to.^46,524, of which onlyX^12,500 was allotted for coal prospecting and development - ahsum the .Company reluctantly accepted in 1860, thus marking the end to i t s trade monopoly, and the beginning of the end for 91 i t s coal mining activity. THE POSITION OF COAL MINING ON VANCOUVER ISLAND IN 1862 Although events were forcing the Hudson's Bay Company aside to make room for the new p o l i t i c a l economy that was emerging in the colonies of Vancouver Island and British Columbia, few could have faulted Douglas and his associates 92 for the effort they had made over the years to create a coal industry. By 1862, the HBC's.mining apparatus at.Nanaimo, (which is described in detail in the following chapter), was comparable in size, sophistication, and productivity to those British coll i e r i e s having a similar number of 89 Rich, Hudson's Bay Company, pp. 761-73; see, too, J.S. Galbraith "The Hudson'sBBay Company Under Fire, 1847-62" CHR 30:322-35 (1949);. 90 Ormsby, British :Columbia,- p. 125 for a concise account of the Select Committee's recommendations. See also "Duke of York and Albany Papers", PAC MSS, for correspondence between Grey and Labouchere on the matter. 91 Figures supplied by Rich, Hudson's Bay Co., pp. 777-78. 92 Constrained as they were by their loyalty to the HBC, these o f f i c i a l s clearly had entrepreneurial instincts of their own. During 1852-53, for working miners.^ J Much of the operation had been mechanized, and a large body of skilled miners were employed. Competition from the Cariboo gold mines for equipment and unskilled labour remained intense for the Nanaimo Coal Company, but as long as the coal industry continued to be monopolized by the HBC with i t s considerable resources, sufficient men,mmoney, and machines normally were available whenever they were needed to maintain 94 coal mining at an acceptable level of production. Administration and management of the coal trade in 1862 tended to be more closely linked now that Douglas and several of his subordi-nates had le f t the Company's employ to devote themselves to c i v i l matters, example, Douglas, Pemberton, Tolmie, McKay, and McNeill formed a joint-stock sawmill company totally outside the HBC's charter. Shares were subscribed ata^70 each; Douglas was made managing chairman, McKay named one of the managing committee. Ostensibly the company was estab-lished "in response, to rising demand for sawn timber fjln the Pacific] ". Apparently HBC headquarters sanctioned this step, in that i t approved the hiring of an engineer in London and assisted in locating a "good and servicable high pressure steam engine without unnecessary ornament". By Jan 1854 this venture was in trouble due to the "original cap i t a l f j * 1 ,8001 inadequate". Despite a further investment of1,600, the company folded without profit. Vancouver Island Steam Sawing M i l l Co., "Various Documents' HBCA (PAM) F32/1. Possibly this early failure in risking their personal savings caused these senior bureaucrats to avoid or ignore other investment oppor-tunities as none appear to have done so during the remainder of their respective tenures with the HBC. S t i l l , i t i s obvious that in their handling of the HBC coal mines, Douglas and McKay, at least, exhibited strong entrepreneurial abilities,•even i f the HBC was the«ehief beneficiary of their capitalist drives. 93 For an assessment of British 6olliery efficiency, see Taylor, "Labour Productivity . . . British Coal Industry", pp.' 48T~51, See also Chap. 6 below for detailed examination of the workforces in B1.C. CQI^ l i e r i e s , 1850's-80's. 1 94 It is worth noting that the provincial minister of mines estimated there were 4,100 gold miners in B.C. during 1862, whereas'the Nanaimo Coal Company never had more than 200 men handle.all i t s operations.. • B.C. Min. of Mines, Report, 1875, p..29. , More emphasis to the matter of competition between gold mining and coalmining for capital, lablour, and equipment is given in following chapters of this thesis. - 82 -with the result that industrial, and not bureaucratic or commercial, attitudes now dominated the coal mining operation. Virtually a l l levels of management in the Nanaimo Coal Company were f i l l e d with experienced miners who had proven themselves capable either as administrators, supervisors, engineers, surveyors, or salesmen. Indeed, many of these men would continue to dominate the province's coal industry for most of the remainder of the century. Yet except for a very small number amongst them, these miners had few thoughts of-beginning co l l i e r i e s of their own, apparently preferring to continue as employees of the Nanaimo Coal Company and later, i t s successor the Vancouver Coal Mining and Land Company. Markets and.sales in 1862 were s t i l l heavily weighted in favour of exports for the obvious reason that only California could absorb the ever-growing supply of coal being produced at Nanaimo. Moreover, enough experience had been gained by the Hudson's Bay.Company employees in the San Francisco coal market to make the Islanders confident that they would continue to export their product whether or not the HBC decided to s e l l i t s coal operation. Consequently, those involved in the new industry in 1862 generally were optimistic about the future of coal mining on Vancouver Island, and looked forward to ever-increasing sales, including 95 more at home where demand was rising steadily though not dramatically. A'srf.dr the Hudson's Bay • Company i t s e l f , the success i t had achieved with coal mining was mixed in i t s effects. It is not possible for us to determine i f the Company profited much by i t s coal mining 95 For a clear impression of the relevance of the coal industry at this stage of i t s development to the trend of, B.C.'s reliance upon staple pro-ducts see R.E. Caves and R.H. Holton, The Canadian Economy-, Cambridge, Mass (1959) pp. 30-9 and 218-20. See also R.A. Shearer, Trade 'liberalization and a Regional Economy, Toronto (1971) pp. 3-42. Both argue the early B.C. economy was almost totally dominated by efforts to-export natural resources and import finished goods. - 83 -venture; certainly in the i n i t i a l years i t lost money through inefficiency, waste, and the financial drain Gaused by colliery-building. Possibly sales between 1856-62 were sufficiently large to greatly offset the . 96 Company's original losses, but this i s not.likely. While there were quickly gained side benefits to the HBC from i t s coal operations such as reaching self-sufficiency in fuel and ensuring i t retained i t s monopoly in this trade, too, the Company's main objective of creating a new commodity trade.could not be so readily achieved despite the fast-growing demand for coal. Such a view could explain both the HBC's willingness to divert large sums of money from other District activities and the caution with which Douglas came to approach foreign markets. In any case, the colonists were fortunate to have as a main legacy of the Company's rule a viable colliery which, i f properly developed from that point on, could be used to help create an industrial economy for the region.. 96 It is interesting from the available data to speculate just how profitable the HBC's coal mining venture was. As noted in Table 2-7, the B.C. Min. of Mines (1912) reported total value 1849-62 was $332,104; according to E.E. Rich (fn. 75 above), the HBC claimed itsscosts for a l l colonial development were J£131, 455 (including coal); .the gov't awarded /f46,524 of which*i 12,500 was for coal. (lo,c cit.). Now,aarithmetic has i t that the gov't's proportion for coal (27%), when applied to the HBC's original claim, meant the Company could argue i t had expended about j£35,000 in colliery development. Taking an exchange rate of jtl = $5, HBC expenditures then would have totalled $175,000 or just over half of i t s sales. When seen in terms&of mean annual profit, however, we have only $13,000 per year. S t i l l , as w i l l be seen in chap. 3, the HBC was able to realize a further ^ 40,000 through sale of the colliery to the VCMLC. Hence, i t is reasonable to say that while the HBC's coal operations were major financial drains in the early years, both overall and in their last years especially the mines were profitable. Chapter Three RESIDENT MANAGERS INTRODUCTION In this second of four chapters aimed mainly at describing the administration and management of British Columbia's coal industry to 1891, emphasis is placed on the resident manager system as developed by the Vancouver Coal Mining and Land Company, purchaser of the Hudson's Bay Company's coal operation at Nanaimo. The HBC organization and approach to mining had l e f t no room for entrepreneurial activity and very l i t t l e scope for managerial i n i t i a t i v e . Although formation of the Nanaimo Coal Company had removed many constraints on mining i t s e l f , matters of broad policy s t i l l were handled by fur trader-civil servants increasingly distractedeby a wide range of circumstances and events. The new owners' approach did much to corrdct entrepreneurial deficiencies in the coal trade, but the functional and geographical spli t s between administrative and managerial elements of the VCMLC created obstacles that ultimately did much to prevent the company from dominating British Columbia's coal industry. NANAIMO COAL COMPANY SALE With i t s exclusive trade monopoly revoked and many of i t s experienced servants•departed either to full-time c i v i l appointments or business ventures, the Hudson's Bay Company chose to retrench i t s Columbia District operation by divesting i t s e l f of i t s industrial, agricultural, and transportation subsidiaries while retaining its wholesale and r e t a i l trade a c t i v i t i e s . In the case of coal mining, several parties appeared eager to purchase a l l or part of the Nanaimo Coal Company's land and equipment, but only one concern appeared to have - 85 -resources sufficient for a firm offer. Acting on behalf of a group of English investors, James Nicol approached the HBC in London with a proposal to buy the. Nanaimo Coal Company f o r ^ 4 0 , 0 0 0 . A s reported in the. Island press, a new enterprise, the Vancouver Coal Mining and Land Company, (incorporated in London during August, 1862), had been formed expressly to purchase, operate, and develop the original HBC coal holdings at Nanaimo. Start-up capital was listed as>f1Q0Q000 in ten thousand shares of^10 each, obtainable by deposits ofjifl per share. on application^10/1 on allottment. Banking services for the new coal mining firm were to be shared by Roberts, Lubbock and Company of London and the Victoria based Bank of British Columbia and Vancouver Island. The directors appointed Dickson, Campbell & Company, commission merchants in Victoria, as business agents for local sales of stock, while Charles S. Nicol, brother of James and mines' manager of the Nanaimo Coal Company, was retained to head operations on the Island. Six directors were elected, including George Campbell, a partner in Dickson Campbell, the Hon. C.W. Wentworth Fitzwilliam, a British M.P., Joseph Fry and Prideau Selby of the Canada Agency Association, and James V. Irwin, F.R.G.S., London. The chair went to the Hon. Justice Richard Halihurton, one-time Conservative MpP. and current chairman of 2 the Canadian Land and Emigration Company. 1 "Article of Conveyance", HBC to VCMLC, 30 Sep 1862. Copy in A.E; Buckham Collection,series A, vol. 52, PABC. (Buckham Collection herein-after referred to as BU). For more comprehensive accounts on the theme of HBC retrenchment see Rich, Hudson's Bay Company, pp. 749-86; Ormsby, British Columbia, pp. 153-95; Paul A. Phi l l i p s , "Confederation and the Economy of British Columbia" British Columbia and Confederation; J.M.S. • Careless, "The Business Community in the Early Development of Victoria, British Columbia", Canadian Business History, D.S. Macmillan, ed., Toronto (1972), pp. 104-23. 2 "Notice of Incorporation", Daily British Colonist, Victoria, B.C., 2 Apl 1863, p. 2. - 86 -After several months of negotiation, James Nicol secured a contract transferring " a l l HBC lands in the Nanaimo District", including Newcastle, Cameron, and Douglas Islands. Involved were 6,193 acres, the amount of land purchased by James Douglas for the Nanaimo Coal Company from the Crown on 7 May, 1855 at a price ofV6,193. Additionally, the VCMLC was given a l l mines, machinery, buildings, barges, horses, cattle, rights, easements, privileges, and t i t l e to the colliery. Held back were the shop and trade goods stored in the HBC warehouse, the coal and other minerals raised before the date of sale, ahd> miscellaneous small items. Moreover, the previous owners were assured of f u l l access to the property to remove what then remained as theirs'. Finally the VCMLC was not bound by any previous debts or l i a b i l i t i e s incurred by the Nanaimo Coal Company, and had clear t i t l e to a l l "rents, issues, profits" for. 3 i t s e l f , i t s assigns, and i t s successors. Plainly, the HBC was not in a great hurry to unload i t s coal operation, and the VCMLC was willing to be patient i f i t meant striking a deal that would leave themselves as new owners with a f u l l y operational colliery. Once the terms were agreed upon, an immediate payment of j[ 25,000 was made with the remaining ^ 15,000 - taken as mortgage. For his own part, James Nicol receivedj^l,000 cash and 400 shares valued a t J ^ l O 4 each. On 28 August, 1863 a reconveyance of land was signed, giving to the VCMLC at a price of ,^100 a further forty-five acres comprised of unsold property in Colville Town proper plus a small parcel to the south. ~* 3 "Article of Conveyance", HBC to VCMLC, 30 Sep 1862. 4 Loo. oit. and "Reconveyance of Land", HBC to VCMLC, 28 Aug 1863. Copy in BU A52. 5 Ibid., ("Reconveyance"). This transaction was followed by another reconveyance dated 2.8 September^ 1867 which noted that while the mortgage interest was being paid regularly, >?13,891/4/9 was.still owing ongthe principle. For a lump payment of JL3,891/4/9 on.that amount, a further seventy acres - almost a l l the HBC's remaining property in the d i s t r i c t - would be transferred to the new owners. This l e f t a debt ofJ^10,000 outstanding which was settled within a year. These transactions served to place the whole of Nanaimo under the ownership of the Vancouver Coal Mining and Land Company and meant.in turn that the VCMLC had virtual hegemony on the harbour, thereby providing the new company with a significant advantage over speculators who within a short time were attempting to open coal lands behind the original HBC land tract, and who then were faced with a need to negotiate passage for their product across the VCMLC property in order to reach tidewater.^ INITIAL CORPORATE OBJECTIVES Since.most.of the supervisory and working personnel of the Vancouver Coal Company, (as i t soon was commonly referred to), had been recruited from the ranks of the Nanaimo Coal Company, the 6 "Reconveyance of Land", HBC to VCMLC, 28 Sep 1867; also "Declaration", HBC to VCMLC, 13 Sep 1868. Copies in BU A52. 7 See figure 3-1 for a map of the VCMLC's original properties. The Harewood Coal Co. (see next chapter) approached Nicol in 1864 for per-mission to run an "aerial tramway" (see chap. 6)>through VCMLC property. At least one shareholder believed such a concession would work to the VCMLC's advantage by raising the property's value. The Mining, Journal, Railway and Commercial Gazette, London, 3 Jun 1865, p. 352. (Hereinafter Mining Journal). I am indebted to KeitheRalston (UBC, Vancouver) for identifying this source as one containing VCMLC directors' reports. Microfilmed copies of vol.s 31-55 (1861-85) are now inBCEMmh. - 89 -new owners expected few d i f f i c u l t i e s in maintaining production at current levels. Similarly, no one expected a radical change in sales policy, indicating no immediate market problems were l i k e l y either. What did con-cern both the owners and those on site, though, was the generally underdeveloped state of the colliery. From 1856-62 the Hudson's Bay Company had invested l i t t l e to upgrade i t s coal operation, preferring instead to erect an apparatus that would extract the most easily gained coal for the lowest possible cost. L i t t l e attention had been given to the need for power machinery, coal sheds, or loading equipment, with the. consequence that the VCMLC had among i t s f i r s t p r i o r i t i e s a requirement to overhaul and strengthen existing f a c i l i t i e s . At the same time, i t needed, as a new corporate body, to establish an administrative structure g and working organization. Principally, the Vancouver Coal Company was a concern designed to profit from the development and exploitation of Vancouver Island's natural resources. While i t s f i r s t goal was to maintain and improve the Nanaimo colliery, the VCMLC's longer-range objectives included invest-ments in land holdings, agriculture, settlement of immigrants, and other commercial opportunities as they might arise. As the directors saw i t , coal mining would be the basic industry upon which a wide range of economic activity ultimately would rest, and they were prepared to provide capital for land purchases before achieving significant returns from the mines. In other words, like the HBC, the Vancouver Coal Company was.interested in exploiting much more than the Island's minerals, but unlike i t s 8 VCMLC "Prospectus", n.d., copy in HBCA (PAM) F33/1. - 90 -predecessor, the VCMLC opted for an industry rather than trading activ-9 i t i e s as i t s main economic base. Moreover, the colliery's new owners were not adverse to pouring large sums of risk capital into coal mining, a step the Hudson's Bay Company had avoided since the mid-fifties. CORPORATE STRUCTURE AND ADMINISTRATION Organizing the Vancouver Coal Mining and Land Company was a task performed mainly by James Nicol on his own in i t i a t i v e . In addition to negotiating the purchase of the HBC operation, he had taken the responsibility for recruiting the capital, registeringgthe VCMLC under the Joint Stook Acts of 1856-57, establishing a board of directors, preparing the office and banking services, and generally promoting investments during the start-up period. Having accomplished these, he then stepped aside, though he maintained some interest in the firm through minor holdings of stock. From this point, the Vancouver Coal Company was a partnership i n which the members were issued shares of transferable stock up to the amount of their respective investments. The Joint Stook Acts had made limited l i a b i l i t y an option, but apparently not one of concern to the partners who believed the venture showed every change for success. A reasonable amount of fixed capital was already in place, and,^ 100,000 was not an unusual sum to aim at when attempting an overseas colliery takeover. Nor did the legislation's "management and administration of companies" features cause problems for the partners easily met the registration and capital requirements, 9 Loo. ait. - a l -and i t is not li k e l y that they dwelt much on the provisions for "winding-, up . Once matters were settled in London with both the HBC and the Registrar of Companies, steps were taken immediately to establish a working structure. At the head were the six directors who had a London office led by a company secretary. This was the VCMLC's main adminis-trative unit, a headquarters where general policy was formed, working capital raised, and major legal matters handled. Next in line was the resident manager at Nanaimo, Charles Nicol, who was given wide-ranging powers and responsibilities, certainly much more than had been the case with HBC bureaucracy. Nicol, for example, had f u l l control over miners' contracts, he along determined coal prices, he made a l l decisions as to improvements in the colliery, and i t was l e f t to him to deal directly with both commercial and governmental leaders on Vancouver Island. Nicol duly reported the results of his actions to the secretary at headquarters who normally noted Nicol's observations, f i l l e d his requests, f i l e d his reports, and liaised upon his behalf with the directors. As w i l l shortly be seen, London soon was eager to press i t s own initiatives on Nicol, but rarely to the point where the resident manager's position was undermined by the owners. In.giving Nicol large powers and generous support, the directors avoided many of the administrative problems experienced by the Nanaimo Coal Company. But the resident manager s t i l l lacked authority to take major financial risks on his own i n i t i a t i v e . 10 Gt. Br. House of Commons, Joint Stock Acts of 1856-57. - -92 -and this constraint tended to make the VCMLC slow to seize other commercial opportunities on Vancouver Island. To assist him i n operating the mines, Nicol formed an office with a small staff consisting of secretaries, clerks, and accountants who were given a wide range of duties including inventories, payrolls, purchasing, record keeping and correspondence. Eventually this part of the colliery operation became more and more the responsibility of the senior secretary, but throughout the 1860's a l l the Nanaimo office staff were closely supervised by the resident manager. A second branch of the colliery operation was headed by the mines' superintendent. Under this o f f i c i a l were the foremen, miners, surveyors, tradesmen, and labourers who produced the coal and maintained the site. The mines' superintendent assigned men into working teams, planned the shift times, organized main-tenance schedules, decided upon areas for surveying, and generally directed the work flow. Reporting to him were foremen either of shifts or teams. The hardest worked senior employees appear to have been the mines' superintendents, who soon prevailed upon Nicol to upgrade this - level to mines' manager and appoint a series of supervisors for certain major min-ing, construction, and transport duties.''""'" A third branch of colliery activity was sea transport. The small HBC fleet of co l l i e r s had been duly transferred along with other equipment at the time of purchase, and the Vancouver Coal Company chose to continue operating these vessels under i t s own flag. Finally, Nicol could count as his own a score of minor tasks to perform that ranged from the purely ceremonial, (as head 11 See figure 3-2 for VCMLC organization in 1863. 9 3 -Fig.3-2 V C M L C CORPORATE HIERARCHY, 1 8 6 2 - 8 9 HEAD OFFICE (London) DIRECTORS I AGENTS h SECRETARY Sa. Robins 1 8 6 2 - 8 4 — — — H SHAREHOLDERS \ COLLIERY OFFICE (Nanaimo) RESIDENT MANAGER Ch. NiCOl 1862 -68 Mk.Bate 1 8 6 8 - 8 4 Sa.Robins 1 8 8 4 - 8 9 CHIEF CLERK Mk.Bate 1 8 6 2 - 6 9 MINES SUPERINTENDENT Rt. Dunsmuir 1 8 6 4 - 6 9 Jn.Bryden 1 8 7 0 - 8 2 FOREMAN COLLIERY RAILWAY & WHARVES FOREMAN | MINERS] | LABOURERS] I MINERS] \LABOURERS] APPRENTICES & ASSISTANTS APPRENTICES & ASSISTANTS DTG-78 J - 94 -of the Island's main industry), to managing subsidiary operations such as 12 the stone quarry on Newcastle Island. To further increase his burden, Nicol soon would be expected to pay increasing attention to the Vancouver Coal Company's aspirations in the areas of real estate and settlement. FIRST YEAR OF OPERATION On 20 September, 1863 at Gresham House, London, the investors were informed that most,shares had been sold. There were no outstanding l i a b i l i t i e s either for the materials and equipment recently shipped to Nanaimo or for the considerable improvements made since the purchase to wharves, buildings, and other structures. Interest due on the mortgage had been met on time, while a total ofj£2,103 had been paid to the Hudson's Bay Company for goods anddservices not included in the original agreement but found necessary for operations during the past months. Current expenditures for labour, materials, transport, and other needs totalled-^8,000/13/1, while^2,601/16 had been set aside for machinery purchases. Furthermore,8,000 was required for expenditures on stores and merchandise in the coming year. Funds for a l l these i t was claimed could be provided without calling upon the shareholders as profits from coal sales at Nanaimo were more than off-setting capital expenditures. Finally, moves were being made to purchase a small iron screw steamer, the S.S. Fideliter, at a cost ofJ£12,060. If a mail subsidy for communications between Nanaimo and Victoria were, awarded by the Colony, the vessel easily could pay i t s way transporting coal southbound from the mines to the Victoria and Esquimalt markets, 12 The quarry was eventually leased to a contractor supplying stone for the San Francisco mint. Mining Journal, 7 May 1870, p. 376. - 95 -returning north with freight and passengers. Barge towing by the Fidetiter was also mentioned as a potential revenue source. Other good news included information on coal contracts between the VCMLC and the gas companies of San Francisco, Sacramento, and Portland, a l l oif whom i t was hoped could be "enticed" to draw their future supplies of fuel from Vancouver Island. Finally, i t was reported that Dickson, DeWolf and Co., another Victoria-based agent, had convinced several steamer captains travelling between San Francisco and the Island to use Nanaimo 6©al. Con-sequently, sales were up despite a general drop in the California coal market, and in the directors' view, this was cause for considerable 13 optimism. In fact the whole of their report generated much confidence* among the investors, and i t s'.ug'gesifcsiscl-earfyyby i t s contents that the resident manager was exercising a great deal of i n i t i a t i v e on site, for apart from the efforts at reducing the mortgage, selling the outstanding shares, and negotiating with ships' captains in Victoria, vi r t u a l l y a l l else had been accomplished by Charles Nicol and his associates at Nanaimo. 13 Colonist, 19 Nov 1863 for director's f i r s t annual report. By. Autumn, 1864 the VCMLC had secured a mail subsidy for the Fideliter, mainly by proving the vessel more reliable than the regular carrier, the Emily Harris. For $194 monthly, the Fidetiter departed Victoria on Tuesdays to c a l l at Cowichan, Maple Bay and Saltspring Island; she l e f t Nanaimo for New Westminster each Wednesday,,returning to Nanaimo the following day. A once per month trip to Comox was also included. Later, the VCMLC ran a mail-passenger-freight service between Victoria and San Francisco for which i t received a $1,000 per month subsidy from the Colony of British Columbia. C. Nicol to W. Wakeford,CCol. Sec. Vis., 25 Oct. and 1 Nov 1864; Wakeford to C. Nicol, 29 Oct 1864;"j. Nicol to Col. Sec. B.C., 26 Jan 1865; Col. Sec. B.C. to J. Nicol, Jan 1865 in "C.S. Nicol Papers", B.C. Colonial Papers, PABC MSS, (hereinafter NP). - 96 -COAL MARKETS AND SALES IN THE 1860's Before studying details of the Vancouver Coal Company's operations and the lasting impact of i t s man-agerial approach upon the province's coal industry, i t i s useful to review the VCMLC's experience with markets and sales during the period when i t had no serious competition in the Island coal trade. Coal loaded at Nanaimo in 1862 totalled 18,177 tons 1^ .4 cwt. During the next year, the amount of coal entering ships holds reached 21,550 tons 12 cwt, an increase of eighteen.percent. Shipments to Victoria and Esquimalt s t i l l dominated the trade, accounting for 13,205 Cons 7 cwt or 61.2% of 1863's total tonnage. Exports were directed chiefly to two American ports, San Francisco and Portland, which received 5,671 tons and 490 tons respectively. Slightly less than 200 tons were forwarded to New Westminster, while a further 1,994 tons 10 cwt was sold at 14 Nanaimo to Royal Navy and other steamers for their own use. The types of vessels calling for coal at the Vancouver Coal Company, wharf varied widely, too. Of the 353 v i s i t s in 1863, only one was made by a ship; the others by two brigs, ten barques, fifty-eight sloops, 211 schooners, and seventy-one steamers.^ The larger vessels were in the foreign trade, moving as much as 596 tons of coal in a barque, 280 tons in a brig/ The coasting trade was handled by sloops and schooners. The sloops carried no more than thirty tons, though as much as seventy-five tons 14 Colonist, •8 Jan 1864, p. 3. Comprehensive trade st a t i s t i c s for Vancouver Island's economy in the 1860's are available in P. Ph i l l i p s , "B.C. and Confederation" and H.A. Innis and A.R.M. Lower, Select Documents in Canadian Economic History, Toronto, 1933. 15 Colonist, op. cit. of coal could be loaded onboard the larger schooners."""" Naval steamers normally loaded amounts to f i l l their holds, as was the case of H.M.S. Devestation which took onboard 155 tons on 31 March."^ In June, thirty-niHe vessels called at Nanaimo, taking away a total of 1,608 tons 15 cwt for a new record. Thirty of these were bound for Victoria, six for 18 Esquimalt, and three were steamers buying coal for their own use. In mid-September, five American vessels were waiting in the harbour to load, and the VCMLC, having only 500 tons of coal on hand, was hard-pressed to 19 f i l l their holds. Turn around in such instances could take weeks, a technical problem that would worry resident managers and dock supervisors for several yy.earsyy.et. Finding buyers presented few problems during Ibhe 1860's, for Victoria customers lik e R. Brodrick, the Victoria Coal & Lumber Company, and Kavanagh & Company, a l l onetime regular dealers in HBC coal, con-tinued to purchase the Nanaimo product. A l l three were wholesaler-retailer firms supplying the Island's domestic market with a standard 20 price of $11.00 per ton to their customers. Deliveries from wharf to home were free. By and-large these prices remained in force throughout the sixties, and were willingly paid by local residents whose only real 16 Loo. oit. . 17 Colonisty 6 Apl 1863, p. 3. 18 Ibid., 4 Jul 1863, p. 3. 19 Ibid., 19 & 21 Sep 1863, p. 3. 20 Colonist, Dec 1862 and Jan 1863, passim. Kavanagh & Co. also advertised "Bellingham Bay" coal, an American import,from across the Georgia Straits ( 2 Mar 1863). - 98 -option was,"Cannel" or British coal which retailed in Victoria at $18.00 21 per ton. The VCMLC pithead price was.equally stable, moving only 22 slightly ahead from $6.00 per ton in 1862 to $6.50 in 1867. No record of the cost to Victoria dealers i s available, but the colonial secretary of British Columbia was informed on 6 October, 1864 that the Vancouver Coal Company would make i t s product available at New Westminster for $8.50 23 per ton on the wharf, $8.00 i f unloaded from the ship. Assuming trans-port and handling charges applied equally to both ports, i t is l i k e l y that the Victoria Coal dealers were profiting by at least $2.00 per ton. For Michael Wallace, a newcomer to Victoria's r e t a i l coal.trade in March 1867, this might have meant he was,netting as much as $6,000 each month since his advertisements claimed demand for coal was so great 24 that he was selling 130 tons daily. It must be pointed out, however, that.this example reflected activity during the winter months, and that the general trade statistics for the capital city confirm coal sales always declined markedly as the climate warmed. Similar seasonal v a r i -ations prevailed in the American.markets, forcing the Vancouver Coal 2b -Colonist, .5 Feb 1863, p. 2 and 20 Oct 1865, p. 2. A brief but worrisome r e t a i l price war erupted in Victoria during the last months of 1870. A retailer named Kriemer, recently arrived in the city, attempted to break-into the market by drastically undercutting coal prices.' Within weeks, however, Kriemer disappeared from the scene and coal prices rose to their usual level. Colonist,.Nov 1870 - Jan 1871, passim. 22 Ibid., r e t a i l coal advertisements, 1862-67. 23 Nicol to Col. Sec. (B.C.), 19 Dec 1864, NP, This offeropresupposed a "direct l i n e of steamers running to New Westminster from San Francisco or Panama"; the VCMLC would supply coal "in any quantities" in shipments of between 300-1000 tons per month. The Nanaimo wharf coal price re-mained at $6.00 per ton. 24 Colonist, 5 Mar 1867, p. 2. - 99 -Company to accept fluxuations there'as a condition of the coal trade. But unlike their predecessors, VCMLC'officials at Nanaimo did not attempt to match production to sales; instead management kept the mines going at the same speed in summer, intending to stockpile coal.for months of higher demand. 1864 was a good year. Exports to the United States topped 11,000 tons, most of which reached San Francisco. Total load.production 2 5 rose to 29,042 tons 10 cwt, a f u l l 7,697 tons over 1863. The following year's output was higher yet, reaching 32,818 tons 13 cwt. Equally encouraging, San-Francisco had become the major market for Vancouver 26 Island coal, absorbing more than f i f t y percent of the Nanaimo product. Despite a deepening recession in California at mid-decade, the VCMLC managed in 1866 to maintain at least seventy-one percent of i t s previous year's trade with San Francisco, rebounding in 1867 to the earlier high level by exporting to that city 16,907 tons of coal. 1868 was better s t i l l , for of the 43,778 tons produced, almost 23,000 were sent to San Francisco while the more distant centres of Sitka and Acapulco bought 2,295 and 1,805 tons respectively. 7,967 tons went to Victoria and Esquimalt, Portland imported 3,124 tons, and steamers calling into Nanaimo ZdlGatenis^, , 5 Jan 1865, p. 3 26 Ibid. 3 6 Jan 1866, p. 3. - 100 -27 for their own fuel took on 5,287 tons. Another dip in sales occurred in 1869-71 when total annual production f e l l as low as 29,699 tons because the San Francisco market had fallen dramatically, buying in 1871 only 28 3819 percent of a l l Island coal sold. The Vancouver Coal Company was forced in this second period of recession to cut back on production as coal inventories were becoming too large to adequately store. By 1872, however, demand for.coal again had risen sharply, and a new peak in VCMLC production was reached with 46,148 tons extracted from the mines. Additionally, the San California market accounted for 52.6 percent of a l l the Vancouver Coal Company's sales that year, and i t was.the source for 54.1 percent in 1873 when other firms siiete 3snBunism"uiiPj-gIitggM.d 29 E&miifeed were becoming active in the San Francisco coal trade. 27 Ibid., 13 Jan 1868 and 12 Jan 1869. The VCMLC experienced several d i f f i c u l t i e s in 1865-66. The directors' annual meeting (30 Jan 1866) noted: no dividends would be paid due to "outlays oh the Nanaimo works"; during the f i r s t !6 months of 1865 profits had fallen, though a steady rise in sales had'occurred since then; the .F ide l i t ev had been sunkkaccidently, Biitt since she hadi been insured for 41,000, i t was not considered a disaster, and because the small steamer had proven "unprofitable", no immediate replacement was planned; f i n a l l y , "a source of considerable anxiety" - the original HBC inventory of trade goods acquired at the time of transfer - was now removed due to sales of onhand stocks. Ibid., 5 Feb 1866. 28 Colonist, p. 2 for 12 Jan 1869, 16 Jan 1870, 4 Jan 1871, and 13 Jan 1872. 29 Ibid., p. 2. below. for 5 Jan 1873 and 16 Jan 1874. See also chap. 5 - 101 -Table 3-1.. VCMLC Coal Production and Sales, 1863-69 Year Production Domestic Sales Foreign Sales 1863 21,550 tons 15,390 tons 6,161 tons 1864 29,043 17,280 11,789 1865 32,819 15,733 17,086 1866 25,213 12,693 12,520 1867 31,174 11,902 1 19,272 1868 43,778 13,254 31,024 1869 35,577 15,006 19,971 Totals 219,154 101,258 117,823 Whilettfa number of factors contributed to the generally upward trend of both production and sales, none probably was more important than the resident manager's leadership. To best assess Charles Nicol's con-tribution, the following section examines his background, his approach to colliery operations, his relations with workers and government, and his personal influences upon the growing community of Vancouver Island. RESIDENT MANAGER'S GOALS, TECHNIQUE, AND IMPACT TO 1869 L i t t l e i s known of Charles Nicol's early years. His father was colonel of the Madras Light Infantry and onetime adjundant, general of India. Likely Charles Nicol was trained either as a surveyor or engineer, probably both. He arrived in British Columbia during the last days of the Lower Fraser River gold . rush, and on 1 March, 1859 was appointed by Governor Douglas to be high 31 sheriff and justice of the peace for that colony. Nicol, reporting mainly to Colonel R.C. Moody, commander of the Royal Engineers' detachment, 30 "Coal Statistics" for years 1863-69, Colonist. 31 J. Douglas to C. Nicol, 1 Mar 1859, NP. - 102 -had a wide variety of assignments, including licencing, Indian agent duties, criminal arrests, and recruiting constables. Within weeks he was given the additional burdens of building inspections, townsite surveys (Fort Hope and Port Douglas), road maintenance, land leases, and industrial 32 safety (in sawmills). Nicol resigned his post in August, but as no 33 replacement was available, he remained on the job for several months. In early 1859 he arrived in Nanaimo to replace the retiring colliery manager, George Robinson. For the next two years Nicol performed as he was expected to, making him the new owners' obvious choice for resident manager of the VCMLC. Until 1869, (when Nicol moved to head the company's newly established San Francisco office), he devoted himself to increasing the coal trade and to the orderly development of both the colliery and the emerging town of Nanaimo. No one.for the time had more power or influence in either the.industry or the community in that he chose to exercise his considerable'authority from the outset. Nicol's f i r s t priority was to have repairs and improvements made to existing f a c i l i t i e s . Understandably the HBC had spent few funds other than for emergencies in the months of negotiations, and Nicol was faced with upgrading and modern-izing the operation as best he and his workforce could. The Nanaimo Coal Company's railroad had been a horse-drawn affair running on wooden r a i l s covered by metal straps. Nicol placed an order through the.London office for steel r a i l s , a locomotive, and 32 "Nicol Papers", passim, and particularly items therein for Mar-Jun 1859. 33 Nicol to Douglas, 23 Aug 1859, NP. See Dorothy Blakey Smith, "The Journal of A.T. Bushby, 1858-59", BCHQ 21:83-198 (1957-58) for a brief biographical note on C.S. Nicol. - 103 -new pumping machinery. As the railway did not yet reach to a l l pits, he replaced the existing inefficient aerial tramway system with a similar 35 but improved f a c i l i t y of greater capacity and speed. By 1865 Nicol had elevators installed in the vertical shafts, and had extended the railway half-way from the harbour to the coal deposits located several miles 36 inland. He was also progressing with a plan to eliminate major delays at wharfside. From his arrival in Nanaimo, Nicol had been aware of the inadequacies of the harbour and i t s wharfage. The Nanaimo Coal Company jetty extended less than 200 feet from shore thus allowing for only one ship (or two sloops) to lay along either side for loading. No chutes or ramps had been built, so that a l l coal had to be shovelled into thehholds of ships by dockside labour. Another d i f f i c u l t y causing innumerable delays lay i n vessels approaching and departing the jetty, especially during low tides. Captains invariably called for a tow - a task usually 37 performed with rowboats manned by VCMLC labourers. Nicol decided upon a 34 Colonist, p. 3 for 24 Apl and 16 Jun 1863. This source also noted on,14 Jan 1864, p. 3, that the locomotive was "in f u l l working order"; source of information re: r a i l improvements courtesy of John Cass, Nanaimo, 28 Nov 1976. Mr. Cass is a local historian who has written extensively on the mid-Island area. The VCMLC Director's Fourth Report, London, 29 Nov 1864, noted "2 iron barges, r a i l s , one more (6 hp] loco-motive, and ironwork for 40 additional waggons" had been supplied at Nicol's request - copy in HBCA,(PAM) F33/1. 35 Ibid., 16 Jun 1863, p. 3. The Colonist also reported that both No. 3 Pit and the Newcastle mines were "exhausted and closed" as of this date; a l l available machinery was.to be transferred to the Douglas Pit. No. 3 Pit had had a history of boiler and engine breakdowns. 36 Ibid., p. 3 for 17 Jul and 21.Aug 1865. 37 AhVCMLC o f f i c i a l was quoted as.saying there were "vexations and serious delays in loadlngkships of large burden [for San Francisco] ". Colonist, 9 Jan 1865, p. 3. - 104 -major reshaping of the harbour. He began by requesting the governor's permission to f i l l the space between the colliery and a small wharf 38 leading shoreward from Cameron Island. Next, on 14 April, 1864, Nicol asked the colonial secretary in-Victoria for permission to construct a 200 by 500 foot wharf extending along the harbour's southwestern shore. Since considerable amounts of ballast were needed as underfill, Nicol proposed to drive parallel lines of "iron and coppered" piles joingddby "grid Iron" to prevent the l a n d f i l l from slipping into and contaminating 39 the harbour. Such an undertaking was massive for the time, implying a high degree of engineering imagination and s k i l l . The colonial administration was not favourably impressed, however, indicating instead that i t had considerable misgivings regarding the scheme. The surveyor.general, Joseph Pemberton, urged that the wharf be extended out only as far as the twelve foot low tide mark, and expressed anxiety in claiming the "unstable" clay and stone mixture ho be used as underfill would eventually s p i l l into the harbour unless.Nicol ensured the grid was installed. More-over, Pemberton wanted the governor's permission withheld until a time for completion of the whole project was guaranteed by the VCMLC. Nicol complied with this demand, then patiently awaited word from Governor Kennedy who approved the request i n late April, allowing work on the new 40 wharf to begin. This was the new resident manager's f i r s t significant dealing with the colonial government, and while Nicol could be encouraged 38 Nicol to Young (Vis. col. sec'y), 15 Aug 1863 and 9 Jan 1864, NP. 39 Nicol to Young, 14 Apl 1864, NP. 40 Gov. Kennedy's minute to Nicol's 14 Apl letter.-- 105 -with the result, i t soon became plain that he had alienated Pemberton, a circumstance which in the near future would serve to create considerable frustration and diffaieulties for the Vancouver Coal Mining and Land Company. For subsequent harbour improvement schemes, the VCMLC needed to purchase parcels of Crown land,uusually waterfront, and the government always was loathe to agree. On 5 October, 1862, for instance, Nicol requested five acres of seafront land.be granted the Vancouver Coal Company to build a small wharf and storehouse on behalf of settlers who 41 were shipping their produce to Victoria. The colonial secretary responded 42 by saying the lots would have to be auctioned. Two years later Nicol asked for ten acres at Maple Bay, ostensibly for the same purposes. Pemberton, by now Nicol's nemesis, balked at the proposal, claiming Nicol was trying to "monopolize" the shoreline, and recommended the VCMLC be sold only one acre, providing Nicol started construction of the 43 wharf immediately. These terms were unacceptable to the resident manager, and he countered with an offer to lease five acres together with five chains of waterfront at a price of one s h i l l i n g per acre per annum 44 for 25 years. Pemberton again refused, stating that a town site was planned for Maple Bay, and the government needed the land schught by Nicol for a wharf of i t s own because deep water frontage was "very 41 From Nanaimo Harbour ill u s t r a t i o n i n "Nicol Papers". See Fig. 6-. below. 42 Nicol to Young, 5 Oct 1862 (including minute by col. s e c ) , NP. 43 Nicol to Young, 11 Apl 1864 (and mmnutes), NP. 44 Nicol to Young, 2 Jun 1864, NP. - 106 -45 limited". Nicol had some satisfaction, though, for by 31 October, 1864, permission was given the Vancouver Coal Company to both purchase one lot in the newly surveyed townsite, and to construct a wharf i f Nicol guaranteed the latter would be worth at least $100 and built 46 withxn three months. Knowing of the resident manager's d i f f i c u l t i e s in dealing with the colonial o f f i c i a l s in such matters is important to us for several reasons: First, i t is clear that Nicol normally was an astute businessman capable of paying close attention to detail even in minor projects. Second, i t shows that the resident manager's powers were sufficiently strong for Nicol to act directly with the colonial administration. Third, the colonial land policy appears to have been taken very seriously by o f f i c i a l s in Victoria. Fourth, and most important for this study, the Vancouver Coal Company was receiving no favours or special treatment by the colonial administration, at least with regard to land sales. More-over, the Vancouver Coal Company's experience in this regard becomes especially noteworthy when compared to some of the dealings between various provincial governments and the colliery owners as occurred later 47 in the nineteenth century. It i s possible that Nicol had done much to damage the VCMLC's-name in Victoria when he inquired in 1862 as to what terms could be given the company for i t s scheme to bring a "regular succession" of 45 Pemberton's minute to Nicol's 2 Jun letter. 46 Nicol to Wakeford, 31 Oct 1864 (and minutes), N P T 47 See some indication of this later trend in chaps. 1 and 5. - 107 -immigrants to Vancouver Island. There was good reason for him to expect a favourable response given the enthusiasm of Islanders for a greater population. Yet i t was not to be simply a matter of this company or that receiving generous compensation for recruiting large number of settlers. Nicol's submission indicated a need for outright grants of land to make a fai r bargain, including Gabriola and Valdes Islands as well as- a l l un-occupied lands in both Cedar and Mountain d i s t r i c t . According to Nicol, this was the amount of property needed to situate each settler on 300 acres of §good agricultural land". Dealing in land and- promoting settlement , had been, of course, among the VCMLC's.primary objectives. This proposal, as presented by Nicol on behalf of the directors, was the company's f i r s t (and only)attempt to develop beyond the coal industry. Nicol proposed to spend£ 1 5 on improvements to VCMLC property for every acre of farmland ,48 granted. The colonial secretary s reply was,short and to the point: "the Government r_is] not prepared at present to alienate land in any other manner than according to the present system", that is public 49 auction. Clearly, the VCMLC through i t s resident manager had overplayed itshhand on this occasion, and the company never attempted again to deal on a large scale either in lands or settlers. No doubt the Vancouver Coal Company had hoped for both short and long term benefits in i t s immigration scheme, for among other p o s s i b i l i t i e s , more settlers would mean more coal-buying customers. But these gains would be minor compared to acquiring mineral rights on such a vast acreage, and i t is not l i k e l y that the.company would have passed those on to the newcomers. 48 Nicol to Young, 4 Sep 1862, NP. 49 YSung to Nicol, 15 Nov 1862. NP. - 108 -Automatically forwarding the administrators' request was a blunder out of character for Nicol; he should have recognized Victoria's growing concern With the VCMLC's apparent haste in acquiring Crown lands, and altered his approach accordingly.. The fact that the VCMLC never again pursued a like proposal indicates a lesson was learned, and by November 1864 relations between the company and colonial o f f i c i a l s were sufficiently repaired for Nicol to attempt another harbour improvement. A request for permission to build a 250 foot wharf on VCMLC property at Departure Bay was speedily approved, with Pemberton's only comment being that he had no objection since no public lands were involved. With the issues of land and settlement shelved for the foreseeable future, the Vancouver Coal Company stepped-up i t s efforts to increase production and sales, the details of which are outlined in the next section. As for Charles Nicol, the latter half of the 1860's were" f i l l e d with community and p o l i t i c a l matters that drew him increasingly away from direct manage-ment of the colliery, forcing him to leave more and more of the operation in the hands of his chief lieutenants, Mark Bate, John Bryden, and Robert Dunsmuir, Nicol himself was named justice of the peace for Nanaimo in 1864, and appointed by the governor to the Island's legislative council on 15 January.1865, a duty that required him to spend considerable.time in Victoria."^ Additionally, he served as electoral return officer, a 50 James Nicol to Col. Sec. (Victoria), 26 Nov 1864 (and minutes), NP. For a short time in the winter of 1864-65, James Nicol, presumably Charles Nicol,'.s brother, signed for the resident manager. Charles was absent on sick .leave. It is highly li k e l y , though, that Charles Nicol initiated the Departure Bay improvements proposal. 51 Nicol to Wakeford, 7 Jul 1864 (acknowledging appointment as J.P.), NP; Colonist, 4 Nov 1864 (notice of appointment as councillor). - 109 -posse member, and f i r s t president of the Nanaimo Literary Society. He became a land owner, purchasing a 160 acre farm (the di s t r i c t ' s largest) 53 where he employed several labourers to raise crops and livestock. At one point he speculated in a copper mine venture near Lake Cowichan, and just before his departure to San Francisco, (where he was to head British Columbia's coal industry's f i r s t foreign sales office), Nicol applied 54 for a.licence to open his own coal mine located north of Nanoose Harbour. Both mining ventures folded before production started, and he l e f t for California almost immediately. Within months of arriving in San Francisco, Nicol resigned from the VCMLC, travelling to Russia where he worked as a mining engineer. Later, he moved to,Spain as the general manager of a privately-owned copper mine. It is said that he worked for awhile in 52 "Election Notice - Nanaimo District'.', 14 Jan 1860 (signed by C.S. Nicol," returning officer); Lt. Robson to RAdm. T. Maitland, 20 May 1861 (reported on a posse chasing Haida raiders); Nicol to Wakeford, 25 Jul 1864, NP, and Colonist, 4 Nov 1864 (re: Nan; L i t . Soc. grant of land by VCMLC and Nicol's election). 53 Nanaimo Gazette, 31 Jul 1865, p. 2. L i t t l e i s known of Nicol's personal wealth, though as his holdings and investments for the period 1865-69 imply,•he had become a man of considerable means. 54 Nicol to Col. Sec. (Victoria),18 Jul 1865, NP: Nicol was granted permission ,to re-open an abandoned-copper mine in partnership with four unnamed persons. Nicol to Trutch, 22 Oct 1868 (and minutes), NP: Nicol's application for the coal mining licence was duly processed by the col-onial surveyor who added that the developer must employ at least four men, remain within the mineral land law, and show good progress eight months from starting. Wm. Pearse, ass't surveyor general, agreed, mentioning Nicol was associated.with "certain San Francisco capitalists", and that this would be an opportunity of "introducing capital from that city to open our coal mines"'. Trutch, chief commissioner of lands and works, refused Nicol's application for an extension of time, and the venture folded. - 110 -Nicaragua, too. In 1872 he was back in San Francisco, retiring ultimately to nearby M i l l Valley where he died in his eighty-first year."'"' POLICY FORMATION AND ADMINISTRATIVE PRACTICES TO 1870 Above Charles Nicol and his successors as resident manager stood the board of directors whose chief responsibilities lay in forming policies aimed at.promoting orderly development of the company and in ensuring profits at levels acceptable to the shareholders. Although Nicol enjoyed a great deal of autonomy in organizing and operating the colliery, as well as in marketing and distributing the coal, he regularly was held to account by the dir-ectors, who, as individuals, had l i t t l e or no f i r s t hand experience with coal mining. Such circumstances were the norm for foreign mining ventures headquartered in London during the nineteenth century, and the administrat-ive practices employed'by the VCMLC varied l i t t l e from other companies engaged in similar activities. Like the governors of the Hudson's Bay Company, the Vancouver Coal Company directors rarely had close contact with the colliery manage-ment. Communications over the vast distance separating headquarters from the mines were extremely slow, imposing significant limits equally upon usefulness of the information received from the resident manager and the impact of board policy on operations. Indeed, within three years of purchasing the Nanaimo Coal Company, the VCMLC directors confessed to the 55 Nanaimo Free Press, 9 Jul 1975, p. 10. Like most of B.C.'s early industrial figures, Nicol has received l i t t l e attention from historians. The brief summary of his activities contained in D. Blakey' Smith, ed., "Bushby Journal" (1957-58) is typical of the size of those few refer-ences made.to C.S. Nicol. - I l l -shareholders that capital improvements had been made with "more rapidity 56 than the Board have authorized". In other words, Nicol's actions in upgrading the old HBC colliery were proving costly, much more so than company hdadquarters had either anticipated or sanctioned. And to cause further concern, coal prices at San Francisco were their lowest in years, a situation unless improved l i k e l y would have a negative effect on future dividends."''' There were several implications to be drawn from these revelations: First, i t wassclear that Nicol was to bear the brunt of the blame.for the apparent runaway expenditures. He was. accused of not "correctly" estimating the costs of "additional plant necessary" to in-crease productivity while at the same time c r i t i c i z e d for not reducing 58 the "cost of out-put". Second, the venture obviously had been under-financed to date, and this could only mean either a call-up of additional share capital, a reduction in dividends, or a lessening of reserve funds. Finally, the likelihood of more expansion (like land deals) would have to wait until p r o f i t a b i l i t y improved. From this point until Nicol's 56 VCMLC Directors' Fifth Report, London, 29 May 1865; sighted copy is HBCA (PAM) F33/1 fo 104-108d. 57 Ibid., fo 105. The board claimed both Vancouver Island and British Columbia were in depression, and that a major influx of Australian and other foreign coal on the California market gave.the VCMLC "great d i f -ficulty in contending with low prices" at San Francisco. 58 Ibid, j fo 105d-106d. According to the chairman, "outlay on Works, Wharves, Roads, and Houses f_had3 been a constant drain on the Company's finances;. and the chief cause assigned by fthe treasurer] for his ina b i l i t y to make remittances, Chad] been the large demands made upon him by Mr. Nicol whilst the sums received from the sale of coals were wholly inade-quate to meet them". The board did admit, however, that Nicol's actions had greatly increased the property value. ' 59 Loo. cit. - 112 -departure in 1869, the company administration found i t s e l f increasingly at odds both with the rea l i t i e s of controlling i t s far distant frontier industry and with i t s own management which obviously had i t s own share of financial and operational problems. As the sixties wore on, directors and shareholders alike focused attention in three directions: Their primary concern appears to havebbeen a combination of p r o f i t a b i l i t y , dividend-size, and the state of the reserve fund. These they f e l t were.linked directly to coal and land sales on one hand and the unyielding costs of colliery development on the other. Believing nothing could be done about the continuing depressed condition of the California market, the administration sought to achieve major economies by restricting further capital improvements. When this policy proved unrealistic primarily due to technical factors, the colliery manage-ment was blamed for making extravagant changes - an accusation that merely drove dedeeper wedge between Nicol and his superiors. Lastly, the directors and shareholders debated a variety, of minor issues, including workforce 6 0 salaries, the use of agents, and the size of the board. In short, the owners were coming to grips with as much of the operation as they could, but were increasingly frustrated by the inherent d i f f i c u l t i e s caused by delays in communications and by the organizational division be.twe.en administration and management. A main reason why profits were so much, a concern to VCMLC headquarters ducing the 1860's is perhaps blest found in the fact that despite the company's virtual monopoly in the Island coal trade, and an 60 Summaries of VCMLC semi-annual meetings in Mining Journal, 1865-69., passim. -- 113 -expectation of£±2,000 per annum net profit l i s t e d in i t s "Prospectu^V. of 1861, the company's net earnings consistently fell-short of i t s i n i t i a l hopes by a considerable sum.^ At no time did profits reach seventy-five percent of the original goal, and there were some years in which no dividend was paid. S t i l l , there was no serious cause for alarm since the mines showed no sign of exhaustion; land sales from the original HBC holdings brought-in upwards of,/10,000 during the decade; and in no year did the profit f a l l belowj£4,500. From time to time efforts were made to increase p r o f i t a b i l i t y by adjusting figures for depreciation, by low-ering the reserve fund, by l i s t i n g higher prices for on-hand coal, and by 62 re-negotiating agents' fees, but a l l these had l i t t l e lasting effect. More significant, of course, were the generally poor levels of coal sales in San Francisco and the ever-costly improvements to the colliery. .In 1865 a shareholder asked the board i f steps had been taken "to more rigourously control the expenditure in the colony.". Another claimed the potential for growth was there,>and that he had "most implicit con-fidence in the st a b i l i t y of the undertaking, but.none.whatever in the management". A third shareholder suggested a "committee of enquiry be 61 VCMLC "Prospectus" c.1861, HBCA (PAM) F33/1 fo 97-97d. In this document, the directors predicted a 20% profit for an i n i t i a l outlay of^50,000 - the amount believed necessary to modernize the colliery. Nicol was cited as the "present energetic manager" who had increased output to 1,000 tons per week selling for 25 shillings per ton. . Since Nicol's experience had shown costs per ton of 10 shillings for raising the coal, 5 shillings for shipping and agents' overhead, and 1 s h i l l i n g for taxes, the pro f i t a b i l i t y would amount to 9 shillings. Assuming 500 tons per week were sold, then the annual profit would reach approximately ^12,000. 62 Op. oit. - 114 -appointed to investigate the company's a f f a i r s " , to which the chairman r e p l i e d , "such a course would most ma t e r i a l l y strengthen the hands of 63 the d i r e c t o r s " . In 1866, Captain Edward Stamp, a Vancouver Island saw-m i l l operator, was appointed to investigate the c o l l i e r y operation, which he did, and upon which he forwarded a serie s of recommendations to London that the direc t o r s expected would "reduce the expenditure for the coming year", though they chose not to divulge p r e c i s e l y how such was to be 64 achieved. One year l a t e r , Mr. John Wild, a shareholder, was "deputed" to v i s i t Nanaimo and report upon the "present condition and management" of the p r o p e r t y . A s we know, N i c o l was moved to San Francisco.to open a sales o f f i c e i n that c i t y shortly a f t e r t h i s time, and.it i s obvious that a change i n management l i k e l y had been planned by the board, probably with Wild's report as f i n a l confirmation that a replacement f o r N i c o l was needed. In November 1869, C.W. F i t z w i l l i a m , now chairman, stated that Charles N i c o l had r e t i r e d from the, company with^300 as compensation for loss of*" salary, and that "the d i r e c t o r s wished i t to be d i s t i n c t l y under-stood that Mr. NicolL's (sic) services had been dispensed with s o l e l y with 66 the view to economy". N i c o l , then, was f i n a l l y out. And i t remained for the administration to t r y to f i n d a new resident manager who would have less of a tendency to spend large sums on improvementsaand who would be more w i l l i n g to follow the board's p o l i c i e s . 63 "VCMLC", Mining Journal, 3 Jun 1865, p. 352. 64 Ibidl, 2 Jun 1866, p. 344. 65 Ibid., 25 May 1867, p. 345. 66 Ibid., 6 Nov 1869, p. 828. - 115 -Was Charles Nicol an effective manager, or was he the failure the administration apparently believed? Undoubtedly Nicol's efforts to upgrade the colliery at the,expense'of larger profits is the central issue upon which he should be judged. By emphasizing capital improvements as he did in the early- to mid-sixties, Nicol provided the VCMLC with a much stronger potential for future earnings than would have been possible i f substantially more dividends had been paid-out. Moreover, the inexperience of the Londoners in mining matters, coupled with the d i f f i c u l t i e s inherent in long-distance communications, forced Nicol to act largely upon his own i n i t i a t i v e , and he cannot be faulted for this. S t i l l , i t is probable that as the VCMLC's power.and influence increased on Vancouver Island, the resident manager's confidence and arrogance grew apace. Nicol's p o l i t i c a l and personal business activities in the late-sixties can be seen as evi- 1 dence of his growing detachment with the company's affairs, th}$s ii mP_l-y -in'gratpre#:efene$f ofe hirsifpartd: to ignore the widening s p l i t between admin-67 : istration and management. If such was the case,.it was well for the directors to replace him since there were s t i l l major obstacles to,overcome in establishing a modern, highly profitable colliery, and a l l those responsible, especially at the most senior levels, had tp pull-?together to achieve this goal. 67 There exists some controversy re: Nicol's integrity; some have claimed he was dismissed for corruption and graft, but no evidence.to this effect has' been fourid by the writer^ Until such proof is available, the directors avowed reason for his departure (as one of economy - see fn 66 above) should indicate that Nicol's honesty was not then in question. - 116 -III VCMLC PRODUCTION AND SALES, 1874-91 One reason why Charles Nicol may have survived so long as the head of the company's management was the fact that the Vancouver Coal Company had no significant competitors u n t i l 1873. Nicol's successors, Mark Bate and Samuel Robins, whose actions are.dis-cussed shortly, were not so fortunate. As w i l l be argued, Bates' failure to keep the VCMLC ahead of i t s chief r i v a l , Dunsmuir, Diggle and Company, was.due as much to his own shortcomings as a.leader as to either the deficiencies, of the resident manager system or the talents of.his compet-itors. But, Robins, a much stronger character, fared not much better,. for by the seventies, coal mining was a highly regarded f i e l d of oppor-tunity that attracted a wide .range of investors, the more successful of which cut deeply into the VCMLC's position of primary coal supplier to the Pacific northwest. Just how badly the Vancouver Coal Company was affected is plainly, revealed in the following brief examination of .the VCMLC's returns from 1874 to 1891.-Vancouver Island's c o l l i e r i e s produced 81,000 tons of coal in 1874. Of this amount, the VCMLC contributed' 63.9 percent - meaning i t s share of the market had fallen in the space of five years by more than 68 one-third. This occurred despite a one-third rise in i t s own. output. As Table 3-2 below indicates, coal production climbed steadily for the VCMLC until 1880, (when a six weeK: strike occurred), forcing output down 69 to three quarters of that of the previous year. • 68 B.C. Min. of Mines, Annual Report, 1869-74,passim. 69 Ibid., 1880, p. 436-37. - 117 -The drop in 1881 was caused chiefly by another strike, though a major underground f i r e also had effect. Serious flooding of No. 1'mine in 1883 slowed output again, and extensive repair work to another shaft in 1886 caused closure of one third of the mining activity., The decline of 1889 was.explained by a total lack of shipping in the last two months of the year. Table 3-2. VCMLC Coal Production and Sales, 1874-1891. Year Plant Production Exports Home Sales Unsold % of Total B( Value (tons) (tons) (tons) (tons) Production 1874 . $ 93,657 51,728 32,319 18,878 5,065 63.9 1875 102,398 59,603 2279045 22,376 15,246 54.2 1876 118,000 73,798 61,871:, 16,665 10,509 53.1 1878 123,000 94,809 68,780 16,869 19,670 61.6 1878 120,000 82,133 81,600 14,729 5,377 48.0 1879 112,000 104,288 78,187 20,678 10,800 43.3 1880 110,000 77,734 663,181 19,641 5,712 29.0 1881 115,000 47,308 ' 36,467 9,665 6,887 20. 7 1882 140,000 51,529 43,842 14,032 442 18.2 1883 150,000 35,665 19,631 16,371 442 16.7 1884 350,000 133,858 104,813 28,103 1,048 33.9 1885 i t 138,352 111,670 26,710 1,019 37.9 1886 i t • 112,761 79,637 33,260 882 34.5 1887 I I 138,712 114,815 23,491 1,288 33.6 1888 I I 258,817 215,252 39,731 5,121 52.9 1889 I I 223,870 179,286 40,113 9,593 38.6 1890 I I 389,505 292,809 98,340 6,072 57.4 1891 I I 527,457 383,886 140,761. 8,883 51.2 Worth noting above is the marked increase in plant value recorded for 1883-. Apparently a continual decline in fixed assets necessitated a major influx of capital for improvements which in turn had a large 70 B.C. Min. of Mines, Annual Report, 1889, p. 304. 71 Ibid., 1874-89,.passim. - 118 -72 impact upon subsequent production. It is also worth mentioning that the dramatic drop in unsold coal for 1878 resulted from a production cut-73 back due to a "dullness.of trade" in the San Francisco market. Finally, i t i s plain that the.Vancouver Coal Company's share of coal sales, both domestic and foreign, f e l l both steadily and alarmingly during the period 1880-83 when Mark Bake was,,theoretically at least, well experienced as resident manager. The VCMLC recovery in 1877 was due chiefly to a major strike in Dunsmuir's colliery, an event that for a time threatened to 74 spread to Nanaimo. Apart from a sharpfalling-off in output in 1889 when a major mine disaster occurred at i t s main colliery, the Vancouver Coal Company, under Samuel Robin's management, tended to climb slowly but steadily from approximately one-third of the province's annual coal trade to slightly more than one-half, But this was s t i l l a major drop from the 1860's and early 1870's when i t monopolized the industry. LOSS AND RECOVERY OF MANAGERIAL INITIATIVE, 1869-91 While i t is argued below that the VCMLC's failure to maintain the lead i n coal production was due in large part to i t s own failings as a compapy,it is further argued that Robert Dunsmuir'.s master-stroke in developing the Wellington seam created serious competition for the Vancouver Coil Company. Moreover, the Douglas and Newcastle seams,.(upon which the VCMLC's fortunes lay), pre-sented more technical d i f f i c u l t i e s in the 1870's and 1880's than did the Wellington, insofar as reaching faults in the coalface were common 72 B.C. Min. of Mines, Annual Report, 1883, p. 423. 73 Ibid., 1878, p.' 408. 74 See chapters.5 and 7. 0 DTG-78 - 120 -occurrences for the VCMLC and i t s coal measures were also proving then to be less t h i c k . Y e t these were not insurmountable hurdles, for in the 1890's the Island's two major c o l l i e r i e s by and large matched each other's output. The principal cause of the VCMLC decline to 1884 i s to be found elsewhere. And from the evidence, i t appears that the blame lay chiefly with management.' Charles Nicol's successor, Mark Bate, youngest soneof an English iron manufacturer and nephew of.George Robinson,last manager of the Nanaimo Coal Company, arrived on Vancouver Island in 1857 to take a clerk' position at the HBC mines. Subsequent promotions carried him from cashier 76 to accountant, the job from which he stepped to succeed Nicol. Having mainly a c l e r i c a l and financial background, Bate was.poorly prepared to pass judgment upon technical matters, and he chose to leave such issues to his chief assistants, John Bryden and Robert Dunsmuir. Dunsmuir l e f t early in Bate's tenure to start his own coal operation, but Bryden re-mained, becoming mines' manager in late 1869. Another important person in the VCMLC management structure was the Company's agent in Victoria, John Rosenfield, a shipping and commission merchant who had been responsible fo much of the coal sales since.1863.^ Samuel M. Robins, secretary and principal administrative officer in the London headquarters, was gradually becoming a fourth major figure, in that he attempted increasingly to 75 See chapter 1 for description of these seams. 76 For more information on Mark Bate's l i f e see. Biographical Dictionary of Well Known British Columbians, Vancouver (1890), pp. 96-7 and R.E. Gosnell, A History, of British. Columbia, Victoria (1906), pp. 335=36. 77 Colonist, 24 Jun 1887, p. 2. - 121 -influence the minds of the directors with his own opinions on colliery 78 operations. From the start of their relationship, Bate and Bryden disagreed on how the workforce should be handled. Bryden was a hard-liner, 1 willing to dismiss miners and tradesmen who complained about wages or working con-ditions. He believed concessions led to greater demands, and that consist-79 antly firm treatment of the men would best serve the VCMLC's interest. Bate, however, was ready at any time to receive delegations and redress 80 grievances, though his tendency was to decide i n the workers' favour. The new resident manager's apparent openness helped cool many disputes, but i t also had the effects of undermining Bryden's position,as mines supervisor. Bryden must have.been frustrated further by Bate's increasing interest i n pol i t i c s and civic affairs. The resident manager l i t e r a l l y inherited Nicol's offices, including president of the literary society and justice of the peace. In 1875, Bate was elected as Nanaimo's f i r s t mayor, holding that office eleven times until 1890. He also was a Mason, an 81 Oddfellow, and an investor in sever&llchocal business ventures. Bryden, whose diaries and reports revealed him to be a dedicated, knowledgable mines' manager devoted to recording at length details of mining techniques and equipment repairs, was hard-pressed to maintain operations in the face 78 "VCMLC", Mining Journal, 1870-83,passim. 79 John Bryden, "Diary and Letter Book, 1878-1880", PABC MSS, passim; also revealing i n this regard is VCMLC "Director's Diary, 1 Jul 1880 -30 Sep. 1881" (as kept by Mark Bate) which often mentions Bryden's actions and attitudes - see entry for 13 Jul 1880 especially. 80 Loo. ,cit. (director's diary) and passim. 81 Bibliographical Dictionary, 1890, pp. 96-7. - 122 -of Bate's growing indifference. By 1878 operations at the VCMLC colliery were being badly affected by flooding, f i r e s , and scores, of minor accidents involving power machinery. The threat of exhausting certain key coal deposits forced Bryden to step-up exploration at the expense of production, which, in turn, caused many miners to resign for lack of opportunity to 82 earn sufficient wages. Those who stayed stepped-up their arguments that they needed a per-ton wage increase to offset declines in their daily 83 production. Meanwhile the directors in London,' alarmed by f a l l i n g pro-f i t s , insisted that a general wage reduction be made - a move.that Bate would not attempt for fear of a strike like the lengthy work stoppage that 84 had occurred in 1871 when,the directors had ordered a similar wage cut. Bryden likewise was anxious, but he was willing to approach small sections of the workforce in the hope that he could contain dissent and thereby avoid a labour-management confrontation. Behind this action, too, was his conviction that the workers were in-danger of being dominated and led into'a wowki'kstoppage by a small group of agitators whom ,he was determined to 85 root-out and dismiss. This suspicion of a conspiracy was so strong.in Bryden that on one occasion he,recommended that no "white" miners be 82 Bryden, "Diary and Letter Book" to 30 Mar 1878; B.C. Min..of Mines• AR, 1878, pp. 380-85; on the subject of coal deposits exhaustion in the VCMLC mines, see James Dickson, "Submarine Coal Mining at Nanaimo, Vancouver Island, British Columbia",' CIMM .Transactions, pp. 465-72 (1935). 83 Bryden to Robins, 17 Oct 1878 (in "Diary.and Letterbook"). 84 See next section for details on 1871 strike. 85 Bryden to Robins, 17 Octl878; 7 Aug & 27 Nov 1879; 26 Feb & 18 Mar 1880 in op. oit., - 123 -hired, and that "independent-minded" Italians from San Francisco be brought-86 in to work the colliery. On 27 November, 1879, Bryden on his own i n i t i a t i v e wrote to Robins admitting management's failures to date in negotiating the expected re-duction. He implied a lack of firmness on Bate's part had enboldened the 87 miners, causing the latter to proclaim they were "masters of the f i e l d " . Backed by a telegram from the directors to the resident manager demanding action, Bryden put the long-awaited wage reductions into effect. Predict-88 ably, the miners struck almost immediately. The mines' supervisor determined to hold firm, but another telegram, this time from Rosenfield in Victoria, saying, "directors leave decision to me, I advise you to resume work immediately, on best terms", destroyed the mines' supervisor's 89 position, pushing him to resign from the VCMLC on 9 April, 1880. Bryden believed the only aims were to break the strike, restore colliery d i s c i p -line, and resume production, He suspected Rosenfield of f i r s t panicking, then intervening on his own behalf with the directors without considering alternative sources of coal supply such as Dunsmuir, Diggle - at least un t i l management had won the dispute. In Bryden's view, the director's demand for a reduction, followed closely by their capitulation to Rosenfield (and thus the v^orckers) , made for the worst kind of leadership. In his 86 Bryden to Robins, 7 Aug 1879, "Diary and Letterbook". 87 Bryden to Robins, 27 Nov 1879, ibid. 88 Bryden to Robini, 18 Mar 1880, ibid. 89 Bryden to Robins, 9 Apl 1880, ibid. - 124 -parting statements, Bryden remarked the company should have "but one 90 head ... as the f u l l management". With Bryden gone and Bate a l l but ineffectual, the Vancouver Coal Mining and Land Company's decline accelerated. By 1883 production 91 had fallen to 35,665 tons, only 16.7 percent of the Island total. Realizing their investment was in serious trouble due to what they "then claimed was "incompetent management", the directors despatched Robins the following year to Nanaimo as Bate's replacement. Robins' instructions were to "put the mines on a paying basis",' and i t is clear from the statistics that he did so within a relatively' short time. A Cqrnishman born in 1834, Samuel Robins had gained considerable experience1 working for his father's mining and manufacturing enterprises before joingmggtheeVCMLC 92 as principal secretary in 1869. Both Bate and.Bryden had forwarded monthly reports to Robins which served to make the latter f u l l y familiar with a l l facets of the colliery operation years before he arrived in Nanaimo. Tackling one major problem after another, Robins soon re-established both labour and community confidence in the VCMLC, making i t obvious to most that the change in management was a primary cause f or the upswing in efficiency, production, and sales. Among Robins' most significant achievements were the improvements he fostered in mines' 93 safety, a move acknowledged and welcomed by the minister of mines. Additionally, Robins helped the directors to rationalize the Vancouver 90 Bryden to Robins, 15 Apl 1880, "Diary and Letterbook". See p. 18.0, fn92i8BforLesom& p^er-sonallBaebgrouMi jon'Dj.Qhff BEy.derEtterbook". 91 See Table 3-2 above. 92 Bibliographical Dictionary, 1890, p. 278. 93 B.C. Min. of Mines. A9, 1885, pp. 506-09. - 125 -Coal Company's coal.lands' acquisitions policies and procedures in the' course of clearing away indentures', .mortgages, and. liens on a variety of adjacent lands (some major) that had long been the interest but never the 94 property of the VCMLC. Typical of the land deals under Robins' management was the purchase of the Bank of British Columbia's interest in the Harewood Estate, a coal-bearing property comprising 8,89.5 acres located immediately west of the original VCMLC acreage. In a carefully, planned arrangement with the bank, the resident manager secured'on behalf of the directors a contract to purchase Harewood with Vancouver Coal Company debentures'. A total of 250 shares valued at ^ flOO each were issued, 120 of which were made in payment for the property which, contained a dormant colliery apparatus consisting of mine, shafts, a railway, a tramway,, and wharves at Departure Bay. Financing was done through debentures fixed at,a dividend rate of six percent per annum, and the remainingJ£13,000 realized in their sale went directly to colliery improvements. This then l e f t untappedj£ 15,000. of thej<100,000 the directors were able by law to raise.through the sale of debentures. Robins convinced them in 1887 to meet their, limit, 9 5 and place the resulting capital towards further improvements at Nanaimo. By 1889, the new resident manager had been instrumental in b.riaging in 94 "Western Fuel Company, 1862-1928", BU A52 for originals and.copies of many such legal documents. -95 "Contract for Sale of Bank of British Columbia's Interest in the Harewood Estate, Vancouver Island 27 Apl 1884. Copy in too. ait. Also, VCMLC "Articles of Association,,1862" as cited therein. - 126 -96 through increased allotments and investor capital approximately $300,000. This amounii he. turned almost exclusively into equity - a main reason why. the VCMLC was able to modernize the Nanaimo colliery and.soon.raise i t s share of the coal trade to one third of the provincial total. A re-organization of the firm occurred on 2 March, 1889,.increasing again the amount Oi share capital i t could raise and creating an opportunity to strengthen the board of directors. Operating now under the name of the • New Vancouver Coal.Mining and Land Company,.the board retained Robins as . . 97 resident manager. ADMINISTRATION IN. THE TIME OF TROUBLE Directors and shareholders alike learned in their f i r s t decade of handling the Vancouver Coal Company's affairs that establishing and administering a profitable overseas mining operation was,a d i f f i c u l t and often precarious undertaking. And like other nineteenth century investors, the VCMLC administrators soon discovered the second decade could be an even greater time of trouble. In entering the 1870's,tthe owners believed their recent change of resident managers had proved sound, insofar as both production and profits climbed at steady and encouraging rates, thereby making i t easy for the' board to declare half-98 yearly dividends of at least ten percent. Between 1871-76, however, the VCMLC experienced a series of setbacks that shook the shareholders' 96 British Columbia Directory, .1884-85, Victoria.(1885), pp. 117-18. This source claims upwards of $250,000 had been recently invested by the • VCMLC into "works and property". 97 A.F. Buckham, "History of Vancouver Island's Coal Industry", unpub. typescript - copy in.BCPM mh. 98 "VCMLC", Mining Journal, 14 May 1870, p. 400 and 12 Nov 1870, p. 948. 10% was the average dividend figure for 1870. See.Appendix for available-profit and dividend stat i s t i c s , 1870-85. - 127 -confidence in the administration, and set the stage for a long and sometimes bitter debate among the owners as to how the company should best be run. The f i r s t sign of trouble,appeared late in 1870 when the colliery was forced to cut-back on production .to avoid overstocking unsold coal. A backhaul trade involving California wheat and Australian coal had developed^ glutting the San Francisco market with the latter. Ironically, in the VCMLC's ongoing attempts to improve profits, board policy had been shifting towards increasing output while reducing prices. One director explained the aim 99 was to change from 40,000 tons at twelve shillings to 60,000 at eight. This the board was prepared to do i f and when i t became clear.to the admin-istration that coal prices would f a l l no further. Meanwhile, the directors planned to curtail production and pay a dividend of only three shillings. In November 1871, several shareholders pressed for a five percent dividend, but the board refused claiming such a concession would require use of reserve funds which at that time were invested in "Russian Stock", and which li k e l y would be needed to develop new coal discoveries on Newcastle Island.• This argument was accepted, for apart from expressing a "general wish" to re-invest the reserve in "more profitable securities", the share-holders were content to leave the matter of dividends re.st.^"^ With a revival of the California market in 1873, VCMLC coal sales jumped and the investors were awarded a return of ten percent. Had the board not held firm at that point to i t s policy of balancing dividends as equally as possible over the long-term, the administrators' capacity to 99 IQ6\ oit. Income in either case would be 480,000 shillings-, but the low,er. price&G'leariy; would be of advantage in competing with Australian cut-rate coal. 100 Ibid., 11 Nov 1871, p. 988, 101 Loo. oit. - 128 -102 control future earning undoubtedly would nave been greatly diminished. Almost immediately the wisdom of this course became apparent since in 1874 serious flooding occurred at No. 4 level of the Douglas mine, forcing a 103 major slowdown in production and a corresponding reduction of profits. Additionally, i t was reported in November that new technical problems were cutting further into productivity, making another period of low earnings inevitable. Fitzwilliam, now chairman; misjudged the investors' temper and delivered a superficial account of operations, implying that matters were well in hand. Notwithstanding Fitzwilliam's assurances that a ten percent dividend was f><5rtheoming, Tendron, an elderly, shareholder charged the chairman with giving a "more sanguine" view than that contained.in the written report. Likely stung by Fitzwilliam's patronizing attitude, Tendron warned the board against offering overly optimistic predictions. In the course of subsequent discussion, Galsworthy made the unfortunate remark that the Nanaimo coalfield was "chopped—up by i t faults", a statement Tendron claimed would cause "an immense'amount of harm" to. the company's "prospects" i f made public. Stung in turn,.Galsworthy protested Tendron's accusation, adding the shareholder was no more able than he to judge what kind of statements were in the VCMLC's best interests. H i l l , another shareholder, cooled matters by gently rebuking both men for their intemp-erate remarks, but i t was obvious to a l l present that an element of mistrust between the directors and various shareholders was now in the open, and nor 104 was i t li k e l y to disappear for some time to come. 102 "VCMLC", Mining Journal. 103 Ibid. 3 .9 May 1874, p. 511b. 104 Ibid., 7 Nov 1874, pp. 1226a-b. There is no evidence to suggest suchi' differences were caused by anything other than interpretations of the resident manager's report. - 129 -By 1876 the Vancouver Coal Company realized i t had yet another major concern on i t s hands. As i t had been board policy not to attempt a monopoly of the.Island's coal industry, the rise of competing col l i e r i e s to that juncture had not been cause for alarm. Indeed the board openly admitted i t could not have hoped to raise the capital to "acquire mine after mine", and that i t was satisfied with i t s present holdings. S t i l l , there could be no doubting now that:Dunsmuir, Diggle was aggressively pursuing sales in markets the VCMLC believed i t had well-secured for i t s e l f , and with the San Francisco trade again slowing-down due to low demand,; further competition in any form could not be taken lightly. Yet the directors feLti they could do.no more than warn their r i v a l that should.the latter attempt to"engross ,the,whole Jcoal] trade of Vancouver Island",.it was bound to lead the latter to "ruin". . What was the outlook for the VCMLC in view of these events? So far in the seventies the company had been hit by a series of major technical and labour d i f f i c u l t i e s (of which the owners knew), and had had i t s colliery operation poorly managed (a.fact i t yet did not know). These factors were those mainly responsible for a general decline i n the rate of production increases, and this in turn meant profit margins tended to be more narrow 106 each year. The continued weakness of the California market, coupled with the rivalry of Dunsmuir, Diggle, further'diminished the VCMLC's profita b i l i t y , making i t awkward (and at times impossible) for the board to continue declaring dividends at.levels acceptable to the shareholders. 105 "VCMLC", Mining Journal, 25 Nov 1876, p. 1305a. See chap 5 for an account of Dunsmuir, Diggle's operations. 106 See fn 98 this chapter. - 130 -Such failings created f r i c t i o n between the board and the other investors, and to overcome this problem, attention was focused upon finding more ways to economize and better methods to improve sales. Tendron led the way in the attempts to cut-back costs by urging reduction in administration overhead. Boardmembers claimed instead that greatly increased production, price cuts, and a forcing of more VCMLC coal into foreign markets was the only logical course to'take. Tendron, openly admitting his desire for more immediate returns, (as well as his wish to have a profitable investment to pass on to his heirs), demanded that fewer funds be placed annually into reserve, that dividends deserved greater priority. And since investor return had fallen to two shillings six pence per share, several others supported his v i e w . A g a i n , the board pre-vailed, and Nanaimoij 'not London, was forced to bear the greatest burden in a l l attempts to increase profits. Finally, in 1883,.when,the VCMLC's production had fallen to only 16.3 percent of the provincial total., the board could no longer hope that i t s present policies would serve to. reverse the company's swiftly declining fortunes. And i t was plain that a.new. approach was needed not only at headquarters, but on Vancouver Island, too. For several years the administrators had been observing Bate's performance with growing concern. Bryden's resignation had not immediately caused, a full-scale review of the colliery management, though i t was clear at.the time to the Londoners, especially Robins,.that some action in this regard was v i t a l i f the company was to survive. Thus in 1883 he volunteered to. 107 "VCMLC", Mining Journal, 25 Nov 1876, p. 1305b. The' Mining Jo.urnal'e -coverage of the VCMLC's meetings is extensive. While there are several gaps in ths coverage from 1870-91, readers anxious to amass details w i l l not be disappointed by this source. . - 131 -v i s i t Nanaimo in a desperate attempt to correct the d i f f i c u l t i e s there. Determining in short course that Bate was both overextended and incompetent, Robins recommended to the board that he himself be given the resident. manager's position, and upon the directors' approval of this step, he moved 108 in to take charge. As had been seen, Robins both restored the influence of the resident manager's position amongst the workforce and reshaped the relation-ship between administration and management. When more experienced in colliery operations, Robins sought to provide the investors with greater insight on a wide range of issues. His long tenure as secretary had convinced him of the boardps need to be free from becomingbbogged-down by minor details, and consequently spared them the incidentals, providing instead only those facts and recommendations needed for making broad policy decisions. In this he was correct, and since there could be nothing but praise for the speed with which he was increasing both production and profits, the administrators wisely allowed him sufficient room to manage.. 109 their affairs on the Pacific coast to his own satisfaction. In short, the resident manager system was beginning to work in the manner originally planned. Under Robin's leadership, the colliery management in i t s third decade gmeatiirydimproved the levels of expertise, specialization;and 108 See pp. 124-26. 109 "VCMLC", Mining Journal, 29 Nov 1884, p. 1371. - The ehairman, Galsworthy, said one year after Robin's appointment tihat that he had "great sense" of the new resident manager's contribution; even Tendron was satisfied, saying the investors "were a l l very much led by Mr. Robins". - 132 -110 mechanization - a l l of which added materially to output. At itssbest, this management approach was superior in almost every way to the bureaucratic methods employed by the Hudson's Bay Company. During Nicol's early years as resident manager and throughout Robin's tenure in the position, the Nanaimo side of the VCMLC made consistently good decisions in operating the mines. The large emphasis placed by management in these periods upon colliery development did more to strengthen the company's long-term position than any other activity. Moreover, with such well-qualified men in senior management positions, the system proved' i t s e l f capable of matching the production, productivity, and sales of any other form of colliery leadership. Yet because the owners reserved for themselves a l l decisions on further coal lands acquisitions and the opening of new, major markets, managment had l i t t l e opportunity to exercise within the bounds of the company any entrepreneurial impulses they themselves may have had. Nicol, i t w i l l be remembered, speculated in a variety of local ven-tures, but these were s t r i c t l y his own undertakings. Bate had similar aspirations, as did Robins eventually. But these men, too, had to move outside the confines of the VCMLC to satisfy their urge for wider invest-ments. As w i l l be seen, the entrepreneurial activities amongst lower levels of management took i t s own forms, but never within the framework 111 of the Vancouver Coal Company. Finally, i t should be noted that while 110 See chaps. 6 & 7 for discussion on the impacts of specialization and mechanization. 111 Recalling from the Introduction those comments re: the pattern of foreign capital affecting B.C.'s (and other Canadian) mining companies, and noting from chapters 2 and 4 above the caution with which both the HBC and VCMLC administrators (in London) approached the development of their coal properties despite opportunities to rapidly expand their land - 133 -the resident managers were not trained coal miners, and varied greatly in their technical knowledge of colliery operations, their lieutenants, the supervisors and foremen, were highly skilled and experienced col-l i e r s . Since many were also ambitious, the VCMLC soon became the main, reservoir of mining talent and leadership from which coal speculators drew managers for their own ventures. holdings whenever other coal ventures failed, i t is plain that the experience of these two companies strongly supporteD.G. Paterson's (British Direct Investment in Canada, 1976) arguments re: the forms in which British capital entered Canadian industry. Chapter Four PROMOTERS AND SPECULATORS INTRODUCTION Nineteenth century coal promoters in British Columbia added a l i v e l y and at times exciting dimension to mining activity, though their individual contributions rarely had a.major impact upon the course of the province's coal industry. Possibly as many as forty coal mining ventures were started in the coastal region during the period 1864-89, but only a few reached the production stage. The record of B.C. interior coal enter-prises in those years was-less impressive yet, since none of the twelve mining licences awarded resulted in the erection of a working colliery.''" Notwithstanding these poor showings, the story of promotion and speculation in the coal trade is important for the light i t casts upon capital form-ation methods and the evolution of management technique. It also helps to explain why the entrepreneur so often played a role of minor significance, during the rise of British Columbia's coal trade. I ENTREPRENEURSHIP AND COAL MINING Several factors contributed towards British Columbians' early enthusiasm for coal.mining enterprises, of which the following l i k e l y were most pressing: The gold economy's col-., lapse in the mid-sixties released local investor capital and skilled labour, both of which could be applied to the infant coal industry. 1 See Fig. 4-1 for general locations of a l l coal mining activities as proven by records now available i n the PABC MSS division. As gaps exist in these' holdings, i t is lik e l y that several more mines were established, hence the above estimate of 40 ventures. - 135 -Second, despite the two colonies' economic woes, coal demand:along North 2 America's west coast remained strong. Moreover, shipping and settlement were growing steadily in the region, a firm indication that coal was the fuel of the future. Third, repeated discoveries of coal deposits on Vancouver Island and on the mainland, both immediately above and below the American border, were taken as proof that the area was underlaid by vast coal measures, a circumstance that undoubtedly would result in the area becoming the manufacturing centre for the Pacific coast. Such consider-ations spurred speculators towards forming coal partnerships, but as events showed, making a success of coal mining was far too complex an activity for a l l but the most adept and dedicated entrepreneurs. To those outside the industry coal mining seemed to be a simple matter of surveying, extraction, distribution, and sales. Neither the HBC nor the VCMLC had needed huge capital expenditures to build a working colliery, and i t further seemed obvious to non-operators that both skilled labour and modern coal mining technology could be imported at reasonable,cost. In short, there arose in the case of coal mining what could be called a "growth perspective", a concensus amongst local investors that this industry was.on the verge of rapid expansion and that the success of the operating c o l l i e r i e s could be 3 easily imitated i f not surpassed. 2 See chap. 8. 3.The term "growth perspective" is A.O. Hirschman's whose work The Strata '%ma®£gEcQ#oMonMveV&p^^ deals at length, with this theme. See especially his section "The Importance of Being a Latecomer", ch. 1, pp. 7-11 where he argues in part that $a <a.l:<^ li@>t<ef c^gj^fcgfch,' newcomers w i l l feel compelled to participate, thereby adding themselves to the trend. See also chap. 5 of this thesis for more examples of the relevancy of Hirschman's ideas to B.C.'s early coal industry. - 136 -Once a coal mining licence was secured, the coal promoter's foremost task was to quickly gather sufficient funds and expertise to "prove the claim", for without.some.evidence of a good coal find, investor capital would not follow. Since in most cases those who were promoting the venture intended to carry-on to the colliery-building stage, there appears to have been a large number of men willing to become coal.entrepreneurs, the general role of whom i s worth pausing for a moment to examine. Organizing new industrial concerns involves risk-taking, goal-setting, marshalling resources, and directing operations - tasks normally s p l i t today between the levelssof administration, management, and super-vision. During the nineteenth century, such responsibilities often were handled either by one man or by a small group of partners whose i n i t i a l contribution could be capital or expertise or both. The HBC's and VCMLC's. experiences apart, this kind of approach to colliery management character-ized British Columbia's coal industry to 1891. Why was this so? Plainly, not only was i t seen as desirable to retain control of a new coal enterprise in as few hands as possible, but easy, too. For start-up only a few basic resources.were necessary: a coal claim.and mining licence; a small force of skilled miners accompanied by a not much larger number of labourers; a rudimentary means to move the coal to tidewater; and no more equipment than that required to bring coal to the surface. Subsequent financing, including payments for improvements, operations, dividends, and debts would be met with profits on coal sales. This strategy was designed as much as anything to both maintain production and create further growth. In other words, the venture soon was to become a self-sustaining enterprise needing neither future borrowings nor additional investors. A l l this, of course, assumed - 137 -adequate coal reserves, access to markets, and no shor.tagessof either 4 labour or equipment. Equally affecting the size of partnerships was the tendency of coal prices at San Francisco to fluctuate widely within the space of a single year. If a stable market was beyond the partners' grasp, the opportunity to easily constrain dividends even over the long term was not. Had they had a large number of investors to satisfy, their firm's chances of surviving extended periods of l i t t l e or not profits would be low indeed. Consequently, small partnerships made-up of speculators willing to purchase transferable shares issued in large denominations were the norm. Finally, there.appears to have been in some instances at least a clear urge to pursue coal mining for the wealth, power, and prestige i t could bring to the colliery proprietors and their families. Very few ultimately realized this aim, for success in the forms of huge personal fortune and vast p o l i t i c a l influence came only to those promoters who became genuine entrepreneurs, risking everything at the start and continuing their effort by channelling virtually a l l their profits and energies for many years to come, back into their mining operation."' OPPORTUNITIES IN COAL Until the Hudson's Bay.Company's trade monopoly on Vancouver Island was broken by the Company's failure in 1859 to secure an extension of i t s grant, i t was impossible for outsiders to enter the 4 See chaps. 6 & 7 for details on labour and technology respectively. For extensive examinations of the motives, workings, and influences of entrepreneurs in modern business history, see S. Pollard, The Genesis •of Modern Management, London (1965); P.L. Payne, .British Entrepreneurship in the Nineteenth Century, London (1974); A.D. Chandler, The Visible Hand:• The Managerial Revolution in American Business, Gamb^ sfrd%e(^ :Ma'%2- @E9.17"74> '•'- a l l which are referred to again in chap. 5 below. 5 See next chapter for the most renowned case of a successful B.C. colliery proprietor. - 138 -coal trade as independent producers. Even after a l l legal constraints surrounding the monopoly were removed, only ex-officials of the Nanaimo Coal Company were advantageously placed to capture the HBC coal rights and mining apparatus, but to do so they required substantial financial support which at that time was available only in Britain. For anyone else the obstacles appeared too great. Much of the d i f f i c u l t y facing entrepreneurs lay in the way the colonial economy developed after 1858. Before the summer of that year less than two thousand whites occupied the British territories north of Oregon and west of the Rocky Mountains. By far the largest number of these were in the employ of the HBC or one of it s subsidiaries.^ Thus vitually a l l capital, labour, and equipment at work in the region was tied to the Company's objectives, and apart from those resources needed for coal mining and agriculture, very few were available for other industrial development. S'fil l , Columbia. District officers experimented in a variety of other pro-jects, including stoneworks, saltworks, fisheries, sawmills, tanneries, and other processing schemes in the hope that more than furs, coal, and farm produceticould be gained from.the region's natural resources.^ Despite generally slow progress in these ventures, the HBC experiments stimulated the region's more enterprising inhabitants towards thinking of a new kind 6 For details on the HBC experience to 1858 see E.E. Rich?.Hudson's Bay Company (1959), chaps. 9, 19, 23, 26=7. Also useful are H. Ihnis, The Fur Trade (1930), J.S. Galbraith, Hudson's Bay Company as an Imperial Factor (1957) and M.A. Ormsby, British Columbia- (1958). 7 See John McLoughlin's and Eden Colvile's correspondence as published by the HBRS, London; vols. 4, 6, 7, 19; see, too, J. Mackay's description of Columbia District economic activities in R.E. Gosnell, ed., Year Book of B.C., 1897-1901, pp. 21-25. - 139 -of economy, one based upon large committments to resource extraction, manufacturing, and trade. Between 1858-62 a series of gold discoveries on the mainland accelerated both settlement and investment in the two colonies, though the ultimate economic results tended to be as harmful in some sectors as they were positive in others. Thanks to the swiftly expanding gold frontier, transport, commerce, finance, and other services (including g government) grew rapidly after 1858. Equally impressive at times were the gains in construction and agriculture, while other advances were being made in lumbering, sawmilling, boatbuilding,, and to a lesser degree, in manufacturing. S t i l l , the nature of the gold economy was such that i t funnelled almost a l l available resources into a pyramid-like structure of supply and demand having the gold miners at the apex. For Island industries like lumbering and coal mining, which were caught outside of this network, i t became for the time all.but impossible to attract local capital or skilled labour. Moreover, once the gold seekers were forced to shift from placer to pit mining, v i t a l machinery became both scarce and prohibitively expen-9 sive for the colliery operators. From 1858 to 1864 the value of gold shipments out of the Interior totalled $15,012,234.''"^  For the same period 8 For a comprehensive view of Vancouver Island's economy up to 1889, see Paul A. P h i l l i p s , "Confederation and the Economy of British Columbia", .(1967), pp. 43-66; J.M.S. Careless, "The Business Community of Victoria, British Columbia", Canadian 'Business History, • D.Si Macmillan, ed., Toronto (1972), pp. 104-23; Ormsby,,British Columbia* pp. 134-231. 9 See chap. 7. 10 B.C. Min. of Mines, Annual Report, 1875, "Table" on gold mining sta t i s t i c s , 1858-75, n.p. - 140 -coal returns were less than $350,000."'""'" As for working miners, the gold fields were estimated in 1862 to have 4,200 earning an annual.average of $634, whereas we know the VCMLC in that year employed no more than 100 12 men averaging $150 apiece. Scores of firms in Victoria and on the Mainland dealt directly i n gold-related a c t i v i t i e s , but fewers than half,a 13 dozen had dealings in coal. The gold economy, however, had definite limits as to the amount of resources i t could'absorb. By 1865 gold exports were f a l l i n g : compared to either California or Australia, British Columbia's easily accessible gold deposits were relatively small, a circumstance which forced mariyrminers and merchants to re-examine their current committments. One year later the colonial economies were in recession, and i t was obvious that funds invested in gold-related activities were not l i k e l y to show reasonable returns. The impending exhaustion of the Mainland gold fields was a serious threat to the Victoria business community, though at f i r s t no concerted effort was made to shift towards a new economic base. As "the c r i s i s worsened, voices increasingly were raised once again i n praise of the Island's own natural resources. Newspaper articles and editorials urged investments in local enterprises and increases in immigration. Coal mining was singled-out by journalists as the best opportunity the colony had for a prosperous future. One writer went so far as to predict the area would become the "Newcastle 11 B.C. Dep't of Mines, Annual Report, 1973, Table 8A, "Coal Production, 1836-1973", p. A47. For years 1858-59, data must be sought.from colliery returns published by the Colonist in January <§f those years. 12 See AR's mentioned in fns 10 and 11 above. 13 See chap. 3 above for the names of agents and merchants dealing in Island coal. of the Dominion", so convinced was he of the value of the Island coal 14 measures. The Board of Trade was active in promoting coal lands speculation, and the government was urged to assist the development of coal mining by a combination of measures, including surveys and legislation designed to stimulate further exploration and.exploitation. THE GOVERNMENT'S HAND Laws and regulations with respect to coal mining in British Columbia evolved much slower than those prepared for exploiting the gold fields. Up to April 1877, when the province's.coal industry received i t s f i r s t comprehensive regulatory act, twelve major pieces of legislation had been passed to control golS mining activity. Indeed, as early as 1859, a new bureaucracy headed by a commissioner was formed to handle licencing, claims, partnerships, disputes, and other matters common to gold mining."'""' Until an order-in-council dated 11 JuneXuiB866n6MMned procedures to be taken in making a coal claim, coal mining received com-paratively l i t t l e attention from government o f f i c i a l s . It w i l l be recalled that during the early 1860's, the colonial-surveyor, Joseph Pemberton, app peared concerned more with land policy than mining act i v i t i e s , while successive governors tended mainly to be interested in preventing an i l l i c i t 16 foreign coal trade. While the government's seeming lack of interest in coal mining activities may or may not have had an effect upon the rate of 14 "Nanaimo and her Coal", Colonist, 4 Oct 1865, p. 2. The term " "Dominion" is an accurate quote, but a curious reference for 1865. 15 The literature on this subject is extensive; most useful perhaps is Sage, James Douglas, (1930), chaps. 7 & 9. 16 Loo. oit. and snap. 2 of this thesis. - 142 -the industry's development before 1864, earlier passage of joint-stock- . company, acts in both B.C.'s and Vancouver Island's colonial assemblies provided promoters with the opportunity .to form locally-registered coal companies.^ The federal government,.incidently, played only a small• role.after confederation, confining i t s e l f in the seventies and eighties to a series of mineral surveys along the Island's east coast conductedcby 18 the Geological Survey of Canada. In 1874, the Province created a ministry of mines which, among i t s limited responsibilities, required colliery operators.to submit annual reports giving details of production, sales, 19 work force size, and equipments used, The prolonged strike at Wellington in 1877 forced the provincial government to increase i t s own role in coal 20 mining, and a permanent inspector of .mines, Edward Prior, was appointed. From that point on, the Province found itself-committed not only to the general improvement of colliery operations, but increasingly to the pro-motion of coal mining, too. As mentioned above, an act to regulate.all facets of coal.mining was passed in that year, and this was.followed by'a series of amendments, based upon experience, that went far towards - strength-ening the industry's safety record, i t s management, and i t s a b i l i t y to 17 Gov. J. Douglas, "Proclamation" of "B.C. Joint-Stock-Companies Act, 1859";. Van. Is. Leg. Assb'y, "Act to Extend the Provisions of the Joint-Stock-Companies Act of 1856-58 to Vancouver Island and i t s Dependencies" -both held in PABC MSS div. 18 See James Richardson, Report on the Coal Fields of the East Coast of Vancouver Island (1872), Report on Geological Explorations in British Columbia (1874), and Report on the Coal Fields of Nanaimo, Comox, Cowichen (sic) , Burrard Inlet and Sooke British Columbia, (1877), Ottawa, Geological Survey of Canada, passim. Copies in BCPM mh. 19 B.C. Legislature, "Minister of Mines Act, 1874", SBC 1874. 20 B.C. Min. of Mines AR, 1877. - 143 -21 adapt to new technologies. More is discussed on.these subjects in later, chapters, but i t is important to note,here that the 1877 legislation placed a major obstacle in the way of speculative coal ventures, so explicit and demanding were i t s clauses pertaining to colliery management and operation. Despite the provincial government's insistance on high operating standards, both o f f i c i a l s and politicians f e l t themselves bound to promote further exploration and development. In May 1883, the Legislature passed a "Coal Prospecting" act which was designed -Co encourage coal mining" anywhere in the province. Accordingly, those eager to begin explorations on Crown.land.need only apply for a prospecting licence, submit a written plan, stake-out the boundaries, and pay the commissioner - of lands and works a twenty-five dollar feeei Restrictions were few: every liceric.ee was given access to 480 acres an each land block; although no stone or timber could be removed from.the property other than for purposes of erecting buildings and conducting mining operations. Licences were valid for twelve months, with a year's extension available to those who could show bona fide proof of thorough surveys. Should the prospector want to purchase coal-bearing properties, the land price was fixed at ten dollars per acre west of the Cascade Mountains, five dollars an acre east. For purchase of coal mining rights on.Crown lands already granted to another, prices were fixed at nine dollars per acre, though the present occupants were to have f i r s t refusal. (In such cases, should the mines become exhausted, ..all .rights • and properties were to return to the original owners, a.stipulation that 21 B.C. Leg. "Coal Mines Regulation Act, 1877",> SBC 1877 15:33-63. - 144 -would have meant l i t t l e by that time to any coal speculator)." Seemingly, the act created a tremendous opportunity for small investors, but in practice.it did not. By the time this legislation was passed, the markets for British Columbia coal could absorb only small annual increases. Additionally, the two largest c o l l i e r i e s , the Vancouver Coal Company and Dunsmuir, Diggle, almost completely dominated the coal industry, drawing most of the available labour and equipment to their works. Indeed, the 22 B.C. Leg. "Coal Prospecting Act, 1883". SBC 1883 3:5-8. In reviewing the effects of these coal mingng laws, i t is interesting to note the rate at which coal companies were formed in relation to the times of new legis-lation. Two years after the 1864 order-in-council, Vancouver Island's colonial secretary noted 29 "prospecting leases or permits" were held on land "bordering on Baynes Sound". In July 1866, the Black Diamond Coal Company (B.C. registered^was granted "lease No. 33" by the Island's surveyor general to work in the same area. Regretably, insufficient records now exist to trade the f u l l number of coal.enterprises, or the degrees to which most were pursued, but i t is clear that a great deal of coal lands speculation occurred on the coast in the 1860's. Apparently, this was less so for the seventies, in that only eight coal licences were issued under the provision of the "Mineral Ordinance, 1869", the last four of which occurred-iri?1872. Upon passage of the "Coal Prospecting Act, 1883", ten new companies were formed within ayyear, but the numbers of additional licences.dropped sharply un t i l 1885-87 when, in that period, a total of eighteen new claims were made. Equally noteworthy are the results of this writer's attempts.to find both the amountis of acreage granted to promoters and the number of individuals who invested in B.C. coal ventures to 1891. Here, too,'spotty records have been an obstacle, but some approximations are possible: Probably no more than 1000800 acres of Crown land were involved in eOal mining leases, and possibly.no more than 300 persons made direct investments in B.C^'s coal industry. A count of actual names has resulted in a figure of 218 investors, while the sum of acreage li s t e d on available o f f i c i a l documents totals only 71,857**; - obviously too low, butinot-exceedingly so. See Bibliography for references to records employed in above review. See also R.E. Cail, Land, Man, and the Law. TheyBd.sposal of Crown Lands in B.C., 1871-1913, Vancouver (1974), p. 8CTand App. B, Tables 6 & 7, pp. 270-72 for further data. Cail notes coal companies could acquire up to 1,000 acres at $5 per acre until 1873; this was then changed to a rate of $1 apiece for 640 acres until the act of 1883. . . - 146 -government's hand in promoting coal mining tended to have the opposite effect of what was expected, because almost as soon as a new colliery began operations, i t s owners discovered the competition was.so great that they were forced either to close-down or sell-out to the larger firms. Robert Dunsmuir,whbee activites are discussed at length in the 23 next chapter, was the main beneficiary of this trend. II If governmental initiatives to promote and regulate the coal industry by and large resulted in gains for the large . concerns at the expense of the small, i t remains to be asked i f there were other factors that worked against entrepreneurs attempting to find footholds in the coa trade. Other questions worth considering are, how far were the most successful of the smaller companies able to advance before being forced to withdraw from the industry?. And to what purposes were their former assets put? The following survey of various coal partnerships considered prominant at the time providerssomeaansweEs. HAREWOOD COAL COMPANY On 1 March, 1864 a schooner delivered a work party complete with surveying and boring equipment to Departure Bay, three mile north of Nanaimo. This was the Harewood Coal Company's advance group for a new mining enterprise with an output goal of 600 tons daily. Promoting this venture was Cmdr. the Hon. Horace.Douglas Lascelles, R.N., a naval 23 Canadian Collieries (Dunsmuir); Ltd.,achieved a virtual monopoly of Vancouver Island's coal industry in 1928 when i t purchased the Western. Fuel Company's colliery operations. The latter was .the successor of the VCMLC. (Note the licenced lands granted in 1883 alone were approx 35m000 acres - from extant.copies of B.C. "Mining Licences", PABC MSS) . - 147 -officer stationed at Esquimalt. Aware that the Admiralty's policy to convert i t s fleet to steampower would ensure at least one steady domestic market for Vancouver Island coal, and being caught by the local enthusiasm for such investments, Lascelles moved into an industry of which he knew l i t t l e . He first.purchased a freehold of 8,962 acres bordering the VCMLC property: to the south and west. Next, he hired Robert Dunsmuir to be coalmaster and resident manager. By the spring of 1866 Lascelles and several silent partners had invested approximately $30,000 of their own funds in buying the lands,.constructing works, and performing surveys. A small r a i l line was piuoj ected for the run to Departure Bay, and a regular though modest labour force was,kept busy preparing for actual mining 24 operations. Signs of weakness.soon began to show, however, Lascelles and other shareholders were forced to return to England in an attempt to raise sufficient capital to begin extracting the coal at a time when the Island's coal sales were falling-off and the market value of Vancouver 25 Coal Company shares were depreciating. Worse s t i l l , Dunsmuir kept sub-mitting negative coal suuvey reports, while an earlier dispute with the VCMLC over r a i l access rights to Departure Bay was as yet,unresolved. Any one of these obstacles could in i t s e l f have been sufficient cause for failure, but i t appears that Lascelles' lack of success ih raising funds was what actually finished the venture. He claimed high interest rates together with a shortage of investment capital.had prevented him from 24 Colonist, 27 Mar 1866, p. 3. -25 See Mining Journal, vols. 34-36 (1864-66) passim for the climate in mining investments. 148 -securing the^£ 100,000 he believed was. needed. By 1867 Lascelles and his partners were through. With debts mounting and.no hope for additional funds, they had l i t t l e choice but to s e l l the company and a l l i t s assets to the VCMLC. The latter in turn manipulated the Harewood operations to hedge against the current'recession in coal•sales by closing i t s newly acquired pits and offering the Harewood miners land for farming. Dunsmuir was retained as caretaker manager, an undemanding task that l e f t him much f . 2 7 time tor surveying. QUEEN CHARLOTTE COAL MINING COMPANY Among.khe better promoted speculative ventures of.the 1860's was the Queen Charlotte Coal Mining Company whose operations, as the name implies, were planned for the large islands laying sixty miles off the north coast.of B.C. A survey party had discovered what i t called a "rich seam of anthracite coal" located a half mile inland from 28 the southern shore.of Graham Island. On the basis of .this report, six Victoria merchants sought and were granted the mineral rights.to twenty . 26 Colonist, loo. cit. 27 Some details on the d i f f i c u l t i e s faced by the Harewood Coal Co. in starting operations are found in the Nanaimo Gazette, 29 Jan 1866, p. 3 (two articles). See also Alex D. Macdonald to Harewood Coal Co. Proprietors,. 28 Feb 1864 (in "A.D. Macdonald Correspondence", PABC) which was a comprehensive engineering and market report on the company's coal, timber/and land assets. Because Macdonald's viewsson the Harewood property had more of an impact upon RoberttDunsmuir in the latter's later business dealings than upon Lascelles and his partners, this report is given greater emphasis in the,following chapter. The breakup and sub-sequent disposal of Harewood's assets i s discussed in an unpub. letter to the editor of the Victoria Daily Standard dated 4 Nov 1882 held in "Robert Brown Collection" PABC. (No reference found re: the price paid by the VCMLC for the Harewood Coal Co.). 28 A technical description of the QCCMC site published in the Colonist on 30 Sep 1865 was the f i r s t public notice of activity. - 149 -thousand acres surrounding the find. This unprecedented concession was secured by a forty-two year lease on five thousand acres rented at $100 annually. A further $1000 was paid to purchase one thousand acres for a 29 townsite. On 20 October, 1865, the directors, led by the chaircman, Thomas Trounce± published a prospectus offering shares to the public. Capital was li s t e d at $30,000 in 15,000 shares of two dollars each. George Robinsons, a former Nanaimo Coal Company;manager, was named as mining superintendent, while William-P. Sayward, a Vancouver Island sawmill operator, was given the treasurer.^ post. The QCCMC had been incorporated under the "British Columbia Joint-Stock-Companies Act, .1859", with the partners' assurance that $50,000 had been earmarked for improvements, several of which, including a tramway and wharf, were claimed to.be under 30 construction. Actual production, originally planned for April, did no*--begin u n t i l much later. By July 1868 only forty tons of coal had been shipped out, which should have worried the partners, though they claimed they remained optimistic. At the heart of the trouble was a lack of ade- ... quate transport to move the coal south to market. Despite glowing reports on the quality of Queen Charlotte coal, the mine was considered too far distant for regular trade. 1 Occasionally vessels enroiite to northern waters stopped-by, and occasionally, too, the QCCMC shipped small cargoes, of coal 31 to Victoria in rented bottoms. Building a c o l l i e r fleet of i t s own.was 29 "Prospectus of the QCCMC" as published in the Colonist, 20 Oct 1865, p. 2. 30 Loo. oit. 31 Some measure of the d i f f i c u l t i e s faced by the QCCMC in transporting i t s coal to market is seen in a Colonist, 27 Nov 1865 report that said the schooner Alpha had taken 21 days to transit from the Charlottes to Victoria - she arrived with 1% tons of.coal. - 150 -out of the question for the new company, however, for the volume of trade needed to at once remain price-competitive and offset ships,' operating costs, simply did not exist. Thus i t became a case of either attracting vessels to the mines or shutting-down. The c r i s i s came in 1870. On 11 October the directors announced the QCCMC was forced into voluntary,liquidation, citing "want of means 32 to move the fo s s i l to a market" as the cause. Upwards of $100,000 had been spent in developing the coal f i e l d , and now the mine had to be abandoned. The company's various assets were soon disposed of in an auction eagerly attended by other coal companies apparently desperate at the time 33 for equipment. The departure of the QCCMC from the coal trade had almost no effect upon the industry's output and l i t t l e influence upon the con-fidence of other entrepreneurs. The directors' claim that transport problems were solely to blame for their company's failure was.not questioned by others, an oversight that undoubtedly misled many speculators who had no idea of how expensive i t was.to develop and supply a colliery operation in an isolated location like the northern island group. Other companies were formed to exploit the Queen Charlotte coalfields, and i f anything, ' 34 collapsed even more rapidly than the QCCMC had. Eventually the message 32 Colonist* 11 Oct 1870, p. 3. 33 Ibid., 20 Jan 1871, p. 3. 34 Ibid., 8 & 13 Sep 1866, p. 3. The Seymour Coal Co. had a 5,000 acrew claim located S.E. of Skidegate Bay on a "bituminous" seam allegedly 1 mile long and 10 feet thick. C.E. Stephens, a c i v i l engineer from Victoria, assured the partners that the coal was "good for steaming", contained "no sulphur", and would produce"very f a i r coke". A report entitled "Coal Fields of British Columbia" by F.G. Claudet (New Westminster, 13 Jul 1866) claimed this "coal bed was of incalcuable advantage" to the colony, given the "almost unlimited demand" for coal. (PABC MSS). - 151 -got through to investors who now believed any coal venture on those islands was bound to f a i l . Only in the late 1880's when coal demand was high and sufficient shipping available, were entrepreneurs willing to resume coal mining on the Queen Charlottes. Two attempts were made to re-open abandoned mine sites, but for various reasons, including insufficient capital, labour shortages, and the failure to discover rich coal seams, both companies quit within a short timeoof starting, closing the chapter on coal mining on B.C.'s north coast. BAYNES SOUND COAL MINING COMPANY A speculative coal enterprise much better located on the shipping lanes was the Baynes Sound Coal Mining Company. In June 1864 a survey party led by Dr. Robert Brown reported coal outcrops had been found, i n Comox d i s t r i c t . No attempts were made to develop these deposits until_September 1866 when the Victoria Daily Colonist noted California interests had purchased the "Comox coal seam". This action was disputed b^ya party of Vancouver Islanders who claimed prior rights of discovery, though their objections did not prevent a team of four "practical miners" led by C.E. Lansdale of San Francisco from examining the area The North Pacific Anthracite Coal Co. also held a lease on the Queen Charlottes in 1866, and i t , too, hired C.E. Stephens to prepare a reports The terms of his contract with the NPACC promoters was to survey a tramway line, produce a detailed map, estimate equipment and construction costs, and "trace the coal seam". Details of his instructions are found in "Agreement", NPACC with C.E. Stephens, 27 Feb 1866, PABC MSS. Neither of these two coal companies appears tohhave reached the production stage. - 152 -35 surrounding the outcrops. A l l was quiet again until September 1867 when the Colonist reported the start-up of the "Baynes Sound Coal Company". According to a newspaper account M November 1868, surveyors in this company's employ were pleased with their progress, but nine months later the same source stated that Mr. Birmingham, a "San Francisco capitalist", 36 had l e f t Victoria after refraining from investing $200,000 in -the mine. There are no available records to show who exactly Birmingham was, how he had becomeeinvolved, or why he chose to withdraw. Indeed, the appearance of his name in the story serves to distort the picture one has of the company's earliest years, for a l l other sources point towards i t being a purely local enterprise, at least u n t i l 1870. In March 1869, for example, the partners claimed expenditures to date of $7,936 which 35 Colonist, 12 & 22 Sep 1866 and 18 Mar 1867, p. 3. It seems many Americans were eager to invest in Vancouver Island coal mines at this time. Sixty-one Californians petitioned Victoria in July 1866 for a lease of 5,000 acres at Baynes Sound which they hoped would "furnish a coal suitable for the manufacture of gas". By Nov 1866, this group had secured 29 "prospecting leases or permits" for land "bordering on Baynes Sound", and urged the B.C. gov't to expedite granting of the lease as per the provisions in the order-in-council of 1864. Calling i t s e l f the Black Diamond Coal Co.. (registered in B.C.), the American partnership appointed J. Robertson Stewart of Victoria as i t s local agent. Stewart.explained to colonial, o f f i c i a l s that no purchase of the land would be asked for until the seam was proven by engineers recently engaged for the task. Victoria eventually did approve the lease, but i t appears that the company did not move beyond this stage since there is no record of either a colliery or any production. "Petitioners" to Young (col. s e c , Van. Is.), 6 Jul 1866; W.C. Ralston et al to Young,\24 Nov 1866; J.W. Trutch to Stewart, 26 Mar 1867 - a l l in "Black Diamond Coal Co."Papers"; PABC MSS. According to one gov't source, Black Diamond had prospecting licences on 18,560 acres (Comox alone) in July 1866. "Licences and Grants for Coal Mining Purposes", (Wm. Pearse memo of 6 Mar 1866) in "Perserverance Coal Co., 1873 Papers", PABC MSS. , 86 Ibid., 30 Sep 1 8 6 7 , 10 Nov 1 8 6 8 , and 29 Aug 1869 - a l l p. 3 . - 153 -they implied came directly from their own funds. Rather than approaching Californians for capital, they were asking "Wm. Mather aft'd others of Salford Iron Works" in Manchester, England to finance development and operations. Apparently nothing came of this attempt, and by November the partners, 37 without additional capital,vwere unable to proceed further. Ceasing activity for any reason on a coal claim i n the late sixties carried considerable risks for -a partnership; the chief commissioner of lands and works, Joseph Trutch, and his assistant, Wm. Pearse, who were determined to prevent speculators from tyjmg-up mineral lands, demanded the promoters adhere s t r i c t l y to the licencing conditions. As anxious as anyone in British Columbia to have the ailing economy improved, these o f f i c i a l s were eager to see foreign money enter the colony, but were willing to take no chances merely upon assurances that such was forthcoming. Instead, Trutch and Pearse wanted tangible evidence of capital at work — be i t from outside or otherwise - before approving any coal lands' lease or purchase. In their view, a.company acting "in good faith" would not complain as to the government's " l i b e r a l " terms, which, in the case of the Baynes Sound enterprise, meant incorporation as a company, "continuous" prospecting and mining, steady employment of at least four "white miners", and payment of a ten cent per ton royalty. Nonetheless, Trutch did give the partners approval to close-down their activities for the winter of 37 The "Baynes Sound Coal Co." of 1866-69 should not be confused with the Black Diamond Coal Co. that sought land in the same location during 1866-67. Nor must i t be confused with the Baynes Sound Coal Mining Co. of 1870-75, though i t is clear that the same group of investors were involved in the two "Baynes Sound" ventures. For details on expenditures and attempts at capitalization before 1870, see "Baynes Sound Coal Co. Correspondence from 1868" (hereinafter BSC), PABC MSS, entries from 3 Mar - 5 Nov 1869. -154 -1869-70, 'but with, the understanding that this concession was j u s t i f i e d solely.by the time that the surveyors needed to prepare a detailed - 3 8 report. On 7 May, 1870 seven Victorians signed a memorandum of association calling for $50,000 in capital to be raised by selling '500 shares at one 39 hundred dollars apiece. For their time and money already spent in pro-moting and surveying the earlier, claim, each associate member received a small block of f u l l y paid-up shares. A l l were expected, moreover, 40 to surrender their prior rights of ownership. During the next four years, these men; (and others who subsequently joined the association of shareholders), traded shares back and.forth u n t i l , as in the case of David Lenevau, originator of the scheme,' some had amassed four times their 41 i n i t i a l holdings. None of the members could have been considered expert 38 Ibid., 8 Apl 1870 - 30 May 1871, passim. 39 "Memorandum of Association",.Baynes Sound Coal Mining Co., Victoria 7 May 1870 in "Baynes Sound Coal Mine" f i l e BU vol. 87, PABC. The "object" of the association is noteworthy: ". . . coal mining on Vancouver Island, boring for and making coal, o i l , and erection-of smelting works and saw-mills, and trading generally on lands held by the Company, also the construction and purchase of vessels to be used in connection with the foregoing objects". Compare this to.the VCMLC's actual operation as outlined in chap. 3. 40 BSCMC, "Memorandum of Association". 41 From unpub. research notes in BU vol. 87 derived from Buckham's private research and from B.C. "Register of Companies". ( Leveneu was perhaps the most active of the B.C. coal speculators. In addition to his efforts on behalf.of the BSCMC, Leveneu in the early 1870's was one of 11 partners in a scheme to promote coal mining on 2,500 acres in the Comox dis t r i c t (B.C. "Coal MMining Licence" No. l a , 1871, PABC MSS).•• He led essentially the same group in acquiring an adjacent 2,500 acre parcel in 1872 ("Licence" No. 6). Earlier, in 1864, Leveneu and 17 others had formed the North Pacific Coal Co. with the intention of re-opening the Susquash.coalfield. This venture was doomed from the start due to the paucity of coal reserves in the area, but such was not the reason - 155 -in colliery operations; most were either merchants or agents for larger concerns. James F e l l , for example, had been in the tea trade at Liverpool u n t i l 1858 when he sailed for Vancouver Island. On arriving in Victoria, F e l l entered a partnership with John.Finlayson, retailer in coffee, spices, 42 and groceries. Typical, too, was.Henry Heisterman, a native of Bremen, Germany, who had become a naturalized British subject when he worked in Liverpool, and who,came.to Victoria in.1862 where he eventually settled into the real estate business after some dealings in paints and glassworks. The only criterion for membership in the shareholders', association appears therefore to have been a willingness to purchase shares; the main objective of the members, to profit by their investments. Having f i n a l l y become a legal entity with what the partners claimed was "more than enough" capital to "construct works and ship coal (earl^TJ in 1871", the Baynes Sound Coal Mining Company appeared to have given by the partners for i t s collapse. . Instead, they blamed the colonial government for i t s failure to. either grant or lease the 5,000 acres they hoped to acquire after their expenditures of "several thousand dollars". "North Pacific Coal Co. Papers", PABC MSS,.passim and B.C. "Coal Licences", 1870-72, passim. 42 Ibid. , (Buckham's notes). 43 Loo. cit. Heisterman later promoted a major speculative coal venture planned for the Sayward d i s t r i c t . In 1883, he and 29 other investors obtained a licence to mine on 14,400 acres. No colliery was erected, and there is no record of production. B.C. "Mining Licence" No. 9 (1883). Large partnerships were not common in the province's coal industry; the next largest had 20 shareholders (another 1883 Sayward dis t r i c t licence on 10,080 acres - l i e . no..11) while a few numbered between 10 and 12, especially in the seventies, But from 1884 on, coal companies with more than 4 partners were rare. - 156 -excellent chances for success. For the moment, at least, colonial land o f f i c i a l s adopted a "wait-and-see" attitude, content perhaps with evidence of $11,000 expended in the surveying phase and the fact! of recent incorp-oration which they took to mean a serious committment by the speculators 44 to the mining venture. Further progress was made in May 1870 when Edward Alston, a California speculator acting on behalf of himself and other San Franciscans who lately had acquired more than half of the BSCMC shares, informed Trutch of their intent to join the partnership, and work 45 together with the Islanders to open the mine. Within weeks, however, Heisterman.complained to Pearse that the conditions of their lease were too restrictive to attract further capital. It is not clear, but i t seems that the present investors hoped to finance the enterprise without calling-up the f u l l share value. Instead, they "canvassed" not only London and San Francisco for additional financing, but "certain leading capitalists in Montreal" - a l l of whom allegedly refused to support the 44 Heisterman to Trutch, 8 Apl 1870, BSC. 45 Alston to Trutch, 4 May 1870, BSC. Less than a month earlier, Victoria had alerted the BSCMC to the California shareholders' demand that no lease be given the as yet unincorporated partnership, adding that the gov't would in no way become involved in this dispute, but warned the Islanders nevertheless that their own permit would be "terminated" unless incorporation followed within a month. (Trutch to. Heisterman, 18 Apl 1870, BSC). Two days later Heisterman informed the lands' commissioner that the "Company was duly incorporated on 18 March, 1870", that the BSCMC suspected the "San Francisco interests" (led by. Alston) evidently had "ulterior purposes of their O W K" by refusing to joing the partnership, probably to delay incorporation and thus defeat the Islanders' attempt to secure a lease. (Heisterman to Trutch, 20 Apl 1870, BSC). There is no record of a reply by Victoria. - 157 -BSCMC unless the government allowed better terms, including removal of the royalty, adjustments to the "continuous work" requirement, and assurance that the property could be purchased. Pointing-out that the Beaufort Coal Company, a neighbouring venture, was satisfied with similar conditions in i t s own lease, and stressing the BSCMC had acquired mining rights for one dollar an acre under the 1864 order-in^couhcil provisions whereas under the newly-passed mineral ordinance the cost would be five 1 times that amount, Victoria stated i t was prepared only to re-negotiate royalty payments. Worse s t i l l for the company, a l l hope for purchasing the property was now precluded by the B.C. government's agreement with, the Dominion to prevent further alienation of Crown land (excepting 46 pre-emptors) pending the "location of the Canadian Pacific Railway". In June 1871 the Colonist reported the Baynes Sound Coal Mining Company had been sold to an English firm for $60,000 though, i t was also noted most 47 of the stock remained in,the hands of Vancouver Islanders.. While there may have been some coal produced by the BSCMC in the years before 1875, (when Dunsmuir, Diggle purchased.it outfight as a source of future coal reserves), the company never was a significant element in the industry's 48 rise. It may, however, have been a worthwhile speculative venture for local investors who obviously.profited from the 1871 sale. • 46 Heisterman.to Pearse, 25 May 1871; Pearse to BSCMC, 25 May 1871; Pearse to Heisterman, 30 May 1871 - a l l in BSC. 47 Colonist, 17 Jun 1871, p. 3. 48 See chap. 5 for Dunsmuir's handling of these lands. - 158 -SOUTH WELLINGTON COLLIERY Another coal company absorbed by Dunsmuir, Diggle in this period was the South Wellington Colliery which lasted in the original owners' hands for less than one year; At some point in the late seventies, a.group Sfsspeculators represented by R. Wingate, a Victoria accountant, secured coal lands north of Nanaimo where they sank two shafts into the Wellington seam. They then bargained with the VCMLC for a right-of=way to build threemmiles of railway which they then lai d to tidewater, erecting a large loading pier at the end of track. Two horizontal steam engines and two large boilers were located at the shaft, and a workforce of twenty whites and ten Chinese were employed during the winter of 1878-79. The owners valued their operation at $60,000, but notrecord Of who they, were or how they raised this capital 49 is now available. It must be noted that their choice of time to begin operations was most-"unfortunate, for as the provincial inspector of mines said: The coal mines of Vancouver Island have, during the year 1878, , passed through a period of unprecedented discouragement; the prices at San Francisco, the chief foreign market for these coals, having reached the lowest rate yet attained; indeed, while subjected to so much depression., only the most able commercial management, and the utmost economy in carrying on the works, have saved this important industry from entire cessation.^ In fact, B.C.'s coal trade had been depressed due to poor markets since mid-decade, a circumstance that had weighed heavily upon the BSCMC's chances for success, as well as being the primary cause of the new Harewood 49 B.C. Min. of Mines, AR3 1879, pp. 382 & 387. 50 Ibid.3 ,pv 382. - 159 -Colliery's collapse in 1 8 7 8 . T h e South Wellington Colliery survived into 1879, but i t s position was seriously threatened due to a severe shortage of operating capital. During the f i n a l weeks of 1878, South Wellington raised 320 tons of coal, but in the new year the proprietors faced another c r i s i s when warned by the mines' inspector that the company 52 had "totally disregarded" the mining actss safety regulation. Steps were taken immediately to comply with the rules and although upwards of 20,000 tons of coal were mined in the next eight months, coal prices were so low that the owners opted for liquidation, selling the colliery in the late autumn at a public auction. Both the Vancouver Coal Company and Dunsmuir, Diggle were in a mood to expand their operations, and the latter purchased the South Wellington Colliery by aggressively outbidding ^ . 5 3 it s chief competitor. EAST WELLINGTON COLLIERY :No new speculative coal ventures were attempted until 1882 when a San Francisco entrepreneur, R.D. Chandler, purchased coal lands near Nanaimo. Calling his company the East Wellington Colliery, Chandler hired George Hawxhurst as manager and installed a relative l i v i n g on Vancouver Island, W.S. Chandler, as accountant. In the mines ministry's opinion, the "large amount of capital invested", coupled with i t s location in the Wellington area, placed Chandler's mine in an excellent position 51 Loo. ait. Apparently the Harewood mine properties were re-opened in the mid •1870's, but no details re: ownership, capital, etc. are currently available. 52 B.C. Min. of Mines, AR3 1878, p. 249. 53 See also ehap. 5. W.S. Chandler later became a partner in a large speculative coal enterprise planned for the Sayward d i s t r i c t . See reference to H.J. Heisterman in fn 43 above. - 160 -to become a "good and extensive colliery". It was.further noted by Victoria that lumbering would be another l i k e l y enterprise of the new 54 • company. Despite new Dominion export taxes and prevailing American duties on coal, the East Wellington Colliery managed to ship 83.4 percent of i t s f i r s t year's production to the United S t a t e s . C h a n d l e r also was able to secure a sizeable workforce to which he paid competitive wages. The chief d i f f i c u l t y seemed to be finding profitable coal deposits. Located in the Millstone Valley, the East Wellington Colliery was on the periphery of the main Wellington seam.• Consequently, the resident manager found i t , necessary to sink a series of parallel shafts perpendicular to the main axis of the claim, none of which ever encountered a coal seam more than three feet thick laying within the boundaries of the colliery'property. Nonetheless, Chandler continued to invest money in the mine, achieving hard-won.annual increases in output. Moreover, his sawmill soon attained a steady daily outflow of 12,000 board feetm most of which was exported. A determined coal entrepreneur, Chandler was one of few who stayed with his investment, building and operating his colliery until the mid-1890's when 56 he sold his holdings to James Dunsmuir. 54 B.C. Min. of Mines, AR3 1883, pp. 419-20. 55 Ibid. 3 p. 428. See.chap. 8 for details on U.S. t a r i f f s . 56 Ibid. 3 1884-96, passim. - 161 -Table 4-1. East Wellington Colliery Statistics, 1883-91. Year Plant. Value Workforce MaxiWage Production Exports % of Total BC Production 1883 $10,000 74 _ 6,270 tons 5,188 tons 2.9% 1884 100,000 31 $5 daily 5,672 •'-4,734 1.4 1885 100,000 84 $3 " 7,244 5,568 1.9 1886 100,000 1-61.. $5 " 28,029- 25,042 8.6 1887 119,000 130 $5 " 35,431 32,831 8.5 1888 140,000 132 $5 " 30,092 25,813 6.2 1889 140,000 190 $5 " 51,372 43,089 8.9 1890 100,000 170 $5 " 44,602 35,132 6.5 1891 140,000 188 $3 " 41,666 36,181 4.0 Totals 250,378 213,578 OTHER COAL VENTURES In addition to the Vancouver Coal Company and the col l i e r i e s discussed above, there were Six more coal ventures on Vancouver Island that went at least as far as the stages of incorporation and exploration. The most important of this latter group was, of course, Dunsmuir, Diggle & Company which began operations in 1871. Since the next chapter of this thesis is devoted mainly to both that firm's record and i t s approach to management, i t need not be examined further here. Between 1871-72 extensive coal surveys were again carried out in the Comox di s t r i c t by advance parties working either as or for specu-lators. Three enterprises were listed as a result of these explorations with the B.C. Registrar of Companies. Included were the Beaufort Coal Company, the Perseryerance Coal Company, and the Union Coal Company - none of which reached production. During the late 1870's and early 1880's, Dunsmuir, Diggle acquired each of these in turn by straight purchase, thereby ensuring for i t s e l f almost complete ownership of the Comox. 57 B.C. Min. of Mines, AR3 1883-91. - 162 -58 coalfield. Yet no attempt at further developing coal mines in the area occurred un t i l 1888 when James•Dunsmuir formed the.Union Collieries for the purposes of consolidating a l l of the northern area's coal lands on one hand, and beginning coal extraction in that location on the other. In.1889 two more speculative attempts at starting coal mines occurred on the Island. A small.group of investors with l i t t l e apparent financing sunk a series of exploratory shafts near Victoria. Called the Tumbo Island Coal Mining Company, this venture never progressed beyond the prospecting stage. A similar fate was in store for the Oyster Harbour Coal Company which tried to survey.lands near Ch.emainus Bay, but soon abandoned i t s efforts. The reasons for this failure are not clear,. though, i t i s probable that the sparse coal measure•,of that area soon discouraged the. surveyors and their backers.^ 58 B.C. Att'y Gen., Companies Branch, "Register of Companies, 1862-72", passim. (Registers held in "Companys Office", Victoria, B.C.). So similar were the Perserverance and Beaufort coal companies' experiences to those of the BSCMC that extensive treatment of their origins and developments would be redundant here. Worth noting, however, are some details: Both companies were small partnerships promoted chiefly by Dr. J. Ash of Victoria; both sought and failed to receive start-up capital from English financiers; neither appears to have spent more than $3,000 in surveys or other work. Perserverance once sought to trade i t s claim for another property closer to tidewater, and kept-alive for 7 years i t s hope to purchase the coal lands. Both appeared more willing than most to comply with the gov't's coal lands' policies, but argued often for minor concessions. Beaufort listed i t s capital at $50,000. "Beaufort Coal Company, 1871, Papers" and "Perserverance Coal Mining Company,.1873, Papers", PABC MSS, passim. 59 See chap. 5 for details on.Union Collieries' operations. 60 B.C; Min. of Mines, AR, 1889, p. 301. Another venture of the time worthhnoting is the Alexandria Colliery, a subsidiary of the Esquimalt and Nanaimo Railway. . Considered i n i t i a l l y as a promising enterprise, for reasons unexplained i t never progressed beyond the surveying stage. Some additional information on the Alexandria effort i s available in the next chapter. Two American firms in close proximity to B.C. were the Bellingham 163 -Discussion of speculation in coal lands for the period 1864-91 can be completed with mention of the British Columbia Coal Mining Company. Surveys of Burrard Inlet by H.M.S. Plumper 1 in 1859 revealed a number of coal outcrops which the master, Captain Richards, reported to both his naval superiors and the colonial o f f i c i a l s . No-immediate action to develop the deposits was taken, however, for as one observer put i t , demand for coal was not yet strong enough to attract "speculators", particularly in view of the sales competition they would face from the Nanaimo Coal Company. Five years later, George Dietz and Hugh Nelson, owners of a local transport . firm, together with Sewell P. Moody, a.mainland sawmill operator, submitted at New Westminster a coal mine proposal requesting 640 .acres, of Crown land at one dollar per acre. Governor Seymour agreed, stipulating a • 6.25 • percent royalty on a l l coal raised. On 22 July* 1865, the partners, now joined by J.P. Cranford, formed,the British Columbia Coal Mining Company under the B.C. '"Joint-Stock-Companies Act,.,1859", with listed capital of. $100,000 i n 2,000 shares of f i f t y dollars each. Application for a much larger tract of land was refused by the governor who believed such a con-cession was premature. Seymour was willing, though, to loan.government tools and d r i l l i n g equipment which were used to start operations in October. By February 1866, $3,000 had been spent without finding a workable seam. Further disputes with the government over lands, and arguments with a neighbour about coal rights, added to the owners' frustrations, forcing 61 them to close down later in the year. As ti&faeM£c6&l%MevefcWEies.r-• Bay Coal Co. and the Fuca Straits Coal Co. Both were small scale due to lim-ited deposits and neither offered much competition (see also chap. 8). 61 A f u l l account of this company's activities i s found i n F.W. Howay, "Coal Mining on Burrard Inlet, 1865-66", BCHQ 4:1-20 (1940). D r i l l i n g details are given in Richardson's G.S.C. Report, 1877, pp. 188-90. - 164 -opened in the area, the chapter on coal mining in the Lower Mainland was closed early. I l l What answers to our earlier questions does this survey give? Plainly, there were several factors in addition to governmental initi a t i v e s that obstructed most coal entrepreneurs. Their own eagerness to attract capital and secure licences before the coal deposits were "proven" led many to early failure. Market conditions during much of the period were poor, which meant that partnerships expecting to finance their coal operations solely through the use,of profits had l i t t l e chance for success. Nor did those Vancouver Islanders seeking to build c o l l i e r i e s with foreign capital fare any better. Harewood, Baynes Sound, Beaufort, and Perserverance were only the more significant failures in this reggrd. Perhaps.equally import-ant was the promoters general lack of coal mining experience, though this possibility cannot be confirmed. The answer to how far they advanced is straightforward, though: survival of a purely speculative coal venture beyond two years was unusual. What other features did these speculative enterprises have in common? Did their aims and act i v i t i e s form a pattern of management that we would recognize as being separate and distinct from others in the coal industry? What impact did these ventures have upon the province's coal trade to 1891. Generally the tendency was for promoters to invite small groups of local speculators to form mining partnerships aimed at.developing recently discovered coal deposits. Usually with l i t t l e or no mining experience behind any of them, the partners would recruit a small workforce -.165 -of mine surveyors and labourers which was expected to explore the property, prove,the coal, and prepare a colliery apparatus. (Occasionally, the original partners attempted to gather more funds by issuing a prospectus calling for a new round of investors - often foreign - to purchase common shares.). Normally the amount of declared capital ranged between $50,000 -$100,000 in these speculative enterprises, though only a portion of each share was called-up at any given time. In cases where subsequent surveys indicated the coal measures were either too meagre or too d i f f i c u l t to mine, the proprietors were eager to sell-out quickly rather than sink more funds into the business. In this way,they avoided serious loss, particu-la r l y i f they could unload the company intact to another firm anxious to obtain the coal lands as a future reserve. Another common.feature of the speculative coal ventures was, of course, the d i f f i c u l t y each firm experienced in.equipping i t s operation with machinery and transport. (Evidence for this point i s found by reading details of the auctions held to dispose of company assets whenever one colliery or another closed-down.). Recruitment and handling of the work-force apparently varied l i t t l e from firm to firm. Most often a resident manager system was adopted whereby an experienced foremen, drawn from a. larger company by promise of promotion, (and often a share of the profits), was placed in-charge of operations. He in turn hired a body of miners, labourers, and tradesmen at prevailing wage rates. After 1870 i t became customary in producing collieries to employ a mixed force of whites and 62 Orientals on different pay:scales. There were other features common 62 Colliery returns as liste d in B.C. Min. of,Mines, AR3 , 1874-89, passim. See. also chap. 6 below. - 166 -to these early ventures, (iricuding the.problems brought-on.by government . Intransigence), but the main ones at least have been outlined here. Given the high degrees of similarity amongst the speculative coal enterprises, we may now ask: Was there a distinct pattern of either administration or management? And, i f so, was i t significant for the coal.industry? The answer to both questions is yes. It must be recognized that in face of the competition coming from the larger c o l l i e r i e s in a limited market situation, none of these companies except Chandler's East Wellington Colliery were sufficiently funded to conduct sustained, large-scale operations that could survive through long periods of. recession. Furthermore, with few exceptions, the owners were personally deficient in either technical knowledge, administrative s k i l l s , or entrepreneurial drive. In the unsteady west coast.economy between 1865-85, i t is likely, that no industrial enterprise was safe unless i t was strong i n a l l three of these areas. Perhaps the most serious shortcoming common almost to a l l was a lack of foresight with regard to both government land policy and capital-, ization. Furthermore, very few appear to have projected ahead to the marketing phase. . Only the VCMLC and Dunsmuir took; steps to secure firm footholds in the San Francisco trade by establishing sales offices in that 63 city. In truth, then, a distinct management pattern did exist amongst the coal speculators, though finding a t i t l e for i t is d i f f i c u l t . The main trends aEe obvious enough - amateurism, absenteeism, ignorance, timidity - but they merely describe, not defind the usual approach of the 63 B.C. Min. of Mines, AR3 1884, p. 429. Prior, the mines inspector, viewed Chandler as an "enterprising proprietor" despite the d i f f i c u l t i e s the latter was facing. Chandler, a resident of San Francisco, maintained a sales office in that city. - 167 -speculator in British .Columbia coal. Perhaps there is no need to place a name on their administrative or managerial techniques, but to concentrate instead on understanding the impact the speculator's activities had upon the coal industry. Unquestionably their collected efforts stimulated public interest and government action in the coal trade. Newspapers invariably published accounts of one exploration or another, and the general tone of editorials on the subject of coal mining was more than encouraging. Moreover, without the pressure generated by investors on government for more concessions in the use of Crown lands for coal mining, much of the legis-lation creating wider opportunities for the dominant firms might not have been passed. Nor can the speculators' efforts in opening new coal fields • (like Comox), or their accumulation of mining equipment and other fixed assets, be treated lightly. Over time their investments in capital goods added substantially to the province's industrial capacity, while their enterprises provided for a major increase in the numbers of skilled 64 • workers. In the long-run .these resources :were of more benefit to the larger operators than the speculators themselves, but was that so bad? It i s not l i k e l y that either of the major collieri e s could have developed as fast as they did during the thirty years after 1880 had i t not been for the speculators' earlier investments and the assets "the latter had amassed. It is f a i r to say that the industry's growth was accelerated by their a c t i v i t i e s , for one. one hand they materially.yincreased the 64 See chaps. 5-7. - 168 -resources available for coal mining, while on the other, they did not significantly interfere with the growth of the two largest c o l l i e r i e s which were the real generators of wealth. Chapter Five OWNER-MANAGERS INTRODUCTION In the complex and often unstable world of British Columbia's early coal speculators, only the Dunsmuirs cleared a l l obstacles la i d in the path of local entrepreneurs seeking to enter and flourish in the province's coal trade. One.finds in the history of the Dunsmuir operations the best balance between colliery administration and management, the closest harmony of production agents, and the highest levels of efficiency as achieved by anyycoal company before the.1890's.^ Robert Dunsmuir, founder of the family coal enterprise, was the f i r s t owner-manager in B.C.'s coal.industry and by far the coal trade's most impressive entrepreneur. In the words of one historian he became 2 the province's "wealthiest and most controversial figure". Today he personifies for many the unbridled capitalism of the nineteenth century, which is a severe.judgment in that no definitive biography of Robert Dunsmuir exists, making him as poorly known or understood as any major 3 figure in British Columbia's past. Nor does the following account of the 1 For extensive examination of the s t a t i s t i c a l relationships between . production agents see research notes, "Coal Mining", BCPMmh. 2 Ormsby, British Columbia, pp. 304-06. 3 A legendary family in B.C. the Dunsmuirs - especially Robert and his son, James - have been favourite subjects of Canadian writers. Largely depending upon their own world view, authors have tended either to eulogize or v i l i f y these two men in.particular. Until the publication of Gustavus Myer's muckraking A History of Canadian Wealth, Chicago (1914), criticism in print of any family member.was rare. Rather, nineteenth century accounts of their exploits were exceedingly high in praise. Wm..Bennett's, Builders of British Columbia, Vancouver (1937), Paul Ph i l l i p s ' , No Power Greater. A Century of Labour in B.C., Vancouver (1967), and Martin Robin's, The Company Province, Toronto (1972) are l e f t i s t views, unequivocal in their condemnation of the Dunsmuir business philosophies and practices. At the - 170 -Dunsmuir collieri e s give a detailed portrait of him, for as fascinating a subject as Robert Dunsmuir might be, the primary purpose of this chapter is to describe and compare factors of production under Dunsmuir control, with the further objective of assessing the owner-managers' approach to colliery development and operations vis-a-vis the methods employed by other operators. I GENERAL CHARACTERISTICS OF OWNER-MANAGERS As,shortly w i l l be seen, the owner-managers were highly motivated towards business enterprise. A l l had a large capacity to perceive opportunity, a determination to create working collier i e s from mere coal claims, and an eagerness to risk their personal wealth in acquiring additional coal lands. In short, they were business administrators who made and carried-out company policy, a position of power denied both the Nanaimo Coal Company bureaucrats and the Vancouver Coal Company resident managers. The owner-managers' advantage over the promoter-speculators was no less absolute; while many of the latter were willing to risk substantial sums in developing coal lands, in British Columbia none appearsto have had any significant experience i n either exploration or mining. Consequently, the speculators had to rely upon the other extreme is James Audain's Coalmine to Castle, New York (1955), a third generation Dunsmuir obviously proud of his lineage. Perhaps the most balanced (though cursory) impression of the colliery owners themselves is Ormsby's, which says in part that Robert Dunsmuir was in the front rank of "acquisitive merchants, lawyers, industrialists, and landed proprietors" who controlled B.C.'s economy and politics i n the latter half of the 19th century. (Loo. ait.) A 3,000 word summary of Robert Dunsmuir's l i f e , written by the author of this study, is to be published in the Dictionary of Canadian Biography} vol. 4 (in press). 171 -technical expertise of others, and thus were precluded from effectively managing day-to-day operations. In other words, speculators might have been owners, but rarely could they hope to become managers and certainly not supervisors whereas the most effective coal proprietors, like Robert Dunsmuir, combined a l l three roles in one. ROBERT DUNSMUIR1S MINING BACKGROUND TO 1869 Born the son and grandson of Scottish coalmasters, Robert Dunsmuir apprenticed as a miner in Ayrshire to his uncle and guardian, Boyd Gilmour, who, i t w i l l be recalled, re— 4 placed John Muir as oversman at Fort Rupert. Dunsmuir arrived on Vancouver Island in 1851 under a coal miner's indenture to the Hudson's Bay.Company.^ Like a l l others who surveyed and worked the Susquash coalfield, he soon was convinced the deposit was worthless, and welcomed his transfer to the Nanaimo Coal Company's No. 1 pit. Having decided by early 1855 to petit-ion Governor Douglas for a "free miners licence" to re-open a shaft earlier abandoned by Gilmour, Dunsmuir refused to join a dissident miners' strike 4 See chap..2, pp. 55-8 above. Robert Dunsmuir was married, to Joanne . Olive White of Kilmarnock, Scotland. She bore Robert 10 children, the third of which, James, was born at Fort Vancouver eriroute to Fort Rupert. See Audain's Coalmine to:Castle and Alexander Dunsmuir's Dilemma, Victoria (1964) for information re: family members. See also "Hon.'R. Dunsmuir Dead" (obit.) Vancouver Weekly World, 18 Apl 1889 and "Death of Hon. James Dunsmuir", Colonist, 10 May 1920, p. 8. Also to note are Dunsmuir biographies l i s t e d in the Bibliography of this thesis. 5 Weekly World, Loc. cit. 6 "Nanaimo Correspondence", J. Douglas to J. McKay, Aug 1852 r-Sep 1853, passim; also Audain, Coalmine to Castle, pp. 8-10 and "Douglas1 Journal", 14 Dec 1852, HBCA (PAM) All/73 fo 296. that summer. Grateful for Dunsmuir's loyalty, Douglas gave him per-mission to undertake "at [Dunsmuir's] own.risk and expense" the venture he sought. Additionally, Dunsmuir was granted a long-term coal supply contract with the NCC as, in Douglas' words, " i t is [in the] HBC's interest to openly encourage such enterprises . . . whereby a steady miner might by honest industry improve his condition and make a moderate provision for his mamily [to the) mutual advantage of [both] miner and g Company". With his new position secured, Dunsmuir over the next seven years f i l l e d the terms of his contract and conducted extensive coal surveys of the lands surrounding Nanaimo. For a brief period following the changeover from HBC to VCMLC control, Dunsmuir busiedrihimself with more surveys, but in time agreed to 9 an oversman's contract with the new company. In 1864 he accepted Lascelle's offer of the resident manager's position at the Harewood Coal Company, which, i t w i l l be remembered,ffailed chiefly due to the owner's inability to raise sufficient capital, as well as the VCMLC's unwillingness to co-operate with Lascelle's request for a,transport corridor to tidewater. 7 See chap. 2 for details of this strike; see, too, Audain, op. cit., pp. 23-5. 8 Douglas to Smith (HBC Sec'y), 5 Nov 1855, HBCA (PAM) All/75 fo 805-06. 9 Weekly World, 18 Apl 1889. " 10 Colonist, 21 Mar 1866 and Nanaimo Gazette, 29 Jan 1866, p. 3 (two articles); see also chap. 4 above and Alex D. Macdonald to Harewood Coal Co. Proprietors, 28 Feb 1864 (in "A.D. Macdonald Correspondence", PABC MSS). Macdonald, a contract surveyor, explained much of Dunsmuir's d i f -f i c u l t i e s in attempting to find a workable.coal seam. Additional minor details upon the company's breakup and the subsequent disposal of Harewood's assets is" found in an unsigned, unpub. letter to the Victoria Daily Standard dated 4 Nov 1866 (in "Robert Brown Collection", PABC MSS). - 173 -Dunsmuir was only marginally aware of these issues, being preoccupied with property surveys and proving the coal. When Harewood folded, Dunsmuir moved back to the Vancouver Coal Company, this time as a "mines' supervisor", and shortly thereafter as "mines' superintendent", thereby becoming Nicol's chief lieutenant for operations. Despite his added responsibilities, Dunsmuir spent much of his time on clandestine surveys for a coal deposit he hoped he caiild claim as his own."'""'' THE WELLINGTON SEAM DISCOVERY AND CLAIM As explained i n the f i r s t chapter, the Nanaimo area contained three major coal seams. Until the late 1860's, however, there was knowledge only of the Douglas and the Newcastle, both of which had been discovered in HBC days. Since these seams outcropped on and near the shores of Nanaimo Harbour, and since the Nanaimo and Vancouver coal companies in turn channelled virtually a l l their labour and equipment onto the tasks of colliery building and mingng, very few of their respective resources were l e f t for further exploration. Unfettered by either compet-ition or scrupple, Dunsmuir was thus free to roam the surrounding lands for new evidence of coal.deposits. In October 1869, three miles inland from Departure Bay, he discovered ..>outcroppings of what he rightly believed to be a hitherto undiscovered coal seam. His i n i t i a l probes re-vealed a 3.5 foot thick deposit five fathoms depp sloping gently to the 12 southeast. In November he applied for a coal prospecting licence on 1,000 acres behind Departure Bay. The colonial governor, advised by. 11 Weekly World, 18 Apl 1889. 12 R. Dunsmuir to H.L. Langevin (B.C. min. of public works), 20 Sep 1871 (copy in BCPMmh). - 174 -Trutch that the.lands department had considerable regard for the applicant's experience and a b i l i t i e s , and consequently had "no hesitation" in recom-mending the licence, immediately approved Dunsmuir's request, granting terms'"similar" to those given the Baynes Sound promoters. In truth, there was a substantive difference to Dunsmuir's award; among a l l coal speculators of the time he alone was permitted to f i l e claim as a one man 13 operation, a circumstance that caused him trouble, later. A further and better coal find on the property's easternmost side in April 1870 prompted Dunsmuir to erect his main works on this new site. This time his surveyors had placed him squarely above the main seam. When a l l bore hole results were in, the coalfield appeared as large as one half mile wide with an average thickness of eight feet. Moreover, a chance outcrop sighting at the eastern extremity repealed a lengthy six foot wide, nine foot thick deposit overburdened bnlynby four feet of s o i l and clay, a "remarkable discovery" in Dunsmuir's view for i t meant mining could proceed by hand, thereby eliminating the need Sfirlarge machinery "for some time to come".^ Conservatively estimating a coal yield of at least 7,000 tons per acre, he stressed that should the seam continue to prove an average of nine feet thickness, production would be "much more"."'"'' 13 Dunsmuir to Trutch, Nov 1869; Trutch to Governor (B.C.) - and governor's minute - 8 Nov 1869; Trutch to Dunsmuir, 8 Dec 1869, a l l in "Dunsmuir, Diggle Correspondence with B.C. Lands Dep't", (hereinafter BD6^,plABC MSS. Also, "Prospecting Licence" for Robert Dunsmuir, 6 Dec 1869 per Mineral Ordinance, 1869 (copy in BCPMmh). 14 Dunsmuir to Langevin, op. cit. 15 Ibid. -;175 Hence, in spite of a lack, of output to' date, he, had reason to ,,fee highly optimistic, informing Victoria of his - eagerness "to get another colliery 16 in operation on the Island". By September Dunsmuir had managed to extract about 500 tons, some of which was placed upon H.M.S. Boxer for comparative tests against coals from the Douglas and Newcastle seams. In every respect, the Wellington coal proved superior, though not dramatically so. In a sense he was fortunate, for had there been a marked difference in his. favour, other speculators might have attempted to stake claims of their own on adjacent properties. As i t was, the main attention of promoters in that period appears to have been focused upon coal discoveries in the Comox di s t r i c t . Nor did a Canadian Geological Survey report published in 1872 on the coal measures of Nanaimo that in part described Dunsmuir's claim pose any threat since James Richardson, i t s author, gave no indication that Dunsmuir,had discovered an altogether new seam."^ Table 5-1. Composition of Douglas, Newcastle, and Wellington Seams 18 Douglas Newcastle Wellington carbon 71.0% 67.7% 75.5% hydrogen 4.9 4.7 5.1 oxygen 11.9 13.4 9.8 16 Dunsmuir to Chief Commissioner, Lands and Works (Trutch), 28 1870, DDC. 17 J. Richardson, Report on the Coalfields of the East Coast of Vancouver Island, G.S.C., Ottawa,,Q.P., 1 May 1872, pp. 80-2. 18 From Table 1-5 on p. 14 above. - 176 -Table,5-2. Results of H.M.S. Boxer Trials on Vancouver Island Coals, 1870. Tri a l Douglas Newcastle "Dunsmuir" Hours Steaming 7:40 . 7:30 7:30 . Height of Steam Guage 34 lbs. 34 lbs. 34 lbs. Quantity of Coal Burned 15,778 lbs. 13,869 lbs. 13,632 lbs. R.P.M. 143 144 151 Horsepower 292.9 276.2 296.1 Coals per Mile 225.4 lbs.• 231.2 lbs. 209.7 lbs. With his coal lands "proven" and the product through a crucial test, Dunsmuir, like any other coal promoter, needed a source of start-up capital. At f i r s t he relied upon short-term financing supplied by 20 Bermingham and Rosenfeldt of San Francisco. But, as Dunsmuir's operation was as yet very small, he was caught between having to service his mounting debts and wanting to build a cash reserve for additional expansion. He then approached a group of naval officers led by Lieut. W.N. Diggle at Esquimalt who together paid-in a total of^32,000 to become partners in the enterprise. Diggle's own investment was • at least J£ 10,000, making his. the largest financial contribution, some regognition for which is found in the new company's name, Dunsmuir, Diggle Ltd. For his own part, Dunsmuir agreed to put forth his claim to the coal deposit, his expertise,, and his willingness to build and operate the colliery. In return, he received from his partners an agreement giving half the shares and f u l l 19 A. Watt (Boxer engineer), " T r i a l of . . . Coal . . . Sep 1870", DDC. 20 T.A. Rickhard, "A History of Coal Mining in British Columbia", The Miner, 15:6:30-34 (1942), p. 32. Rickhard claims Bermingham and Rosenfeldt were prepared to carry Dunsmuir only as long as he could clear the principal as well as meet the interest of his short-term loans. - 177 -control over a l l operations, a manoeuvre at once establishing Robert 21 Dunsmuir as manager and an owner of the new coal mining company. J.I II OBJECTIVES AND RISE OF DUNSMUIR, DIGGLE The coal partnership between Robert Dunsmuir and the naval officers led by Diggle originated in 1871, was duly incorporated in 1873 at Victoria with a paid-up capital of $160,000<? and lasted until 1883 when the Dunsmuir family gained control of a l l 22 shares- Dunsmuir, Diggle's sole purpose was the coal trade, and in this i t came to surpass a l l local competitors, including the Vancouver 21 Rickhard, "Coal Mining in B.C.", pp. 31-33.and "Wellington Mine", 0olonist3 12 Dec 1883, p. 3. 22 Colonist, loo. cit., "Dunsmuir, Diggle Ltd.1,1 in 1862-71 "Companies Register", B. C Companies Office, Victoria; B.C. CCLW "Mining 1-Licence No. 3", 21 Nov 1871. In addition to Wadham Nestor Diggle, Robert Dunsmuir's original partners were: .(RAdm) Arthur Farquhar, James Harvey, S.H. Rickman, F.A. Heme (?), R. Williams, John Tweedie, and Dunsmuir's sons, James and Alexander. Additional funds appear to have been forthcoming from Capt. F.W. Egerton. By forming a 10 man partnership Dunsmuir had f i l l e d the prevailing letter of the law, and was no different in this respect from other promoters. His company differed from most? though, in having i t s capital f u l l y paid-up (see previous chapter for comparisons). B.C. appears to have followed English legal and investment practices in this period; Dunsmuir's approach notwithstanding, partly paid-up shares (e.g. the VCMLC) were a common feature of the limited l i a b i l i t y companies prior to the 1880's. Moreover, only a small percentage of a l l new companies issued shares below4 5, with 52% of a l l new shares ranging in value betweenJ610-^100. The largest coal company shares in English c o l l i e r i e s during the 1860's reached /£1,000, incidently, implying both the large capital needs of coal mining and a tendency to keep the number of partners in each coal enterprise as small as possible. Generally, new partnerships tended to call-up capital by installments, but this could be a troublespme'e practice in .coal mining since i n i t i a l development costs usually were high. In any event, the sub-stitution in Britain (and in B.C.) of the "law of corporations" for the "law of partnerships" in the late 1850's shifted responsibility for losses from individual partners to the company, making mining ventures much more attractive as speculative investments. For more background on these events see H.A. Shannon, "The Coming of General Limited r'Liability", Economic History - 178 -Coal Mining and Land Company. Although coal continuously.was extracted from Dunsmuir's pits on the Wellington seam from as early as 1870,. British Columbia's minister of mines did not acknowledge the operation as a f u l l y working colliery u n t i l 1874. In that year, Dunsmuir submitted a return claiming 29,818 tons 12 cwt of coal raised, 23,719 tons'of which was exported?. In comparison, the Vancouver Coal Company produced 51,728 tons 23 16 cwt, selling 32,319 tons.in foreign markets. The following year, Dunsmuir, Diggle's output came within 10,000 tons of the VCMLC's total production, but f e l l further behind in 1876-77 when the latter increased 24 it s activity. By 1878, however, Dunsmuir, Diggle had overtaken i t s chief r i v a l , raising 88,361 tons of coal to the VCMLC's 82,135.25 Mainly due to poor management, coupled with a series -of technical setbacks, the Vancouver Coal Company's output then declined steadily u n t i l 1883 when i t f e l l to 35,665 tons. In contrast, Dunsmuir, Diggle's annual production 26 had climbed, reaching a total of 171,364 tons. (1931), and J.B. Jefferies, "The Denomination and Character of Shares, 1855-1885, Economic History Review (1946). 23 B.C.' Min. of Mines, AR3 1874, pp. 16-17. 24 Ibid., 1875, p. 18; 1876, p. 425; 1877, p. 407. 25 Ibid.3 1878, pp. 382-86. 26 Ibid.3 1883, pp. 422-23. - 179 -Table 5-3. Dunsmuir, Diggle Coal Production and Sales, 1874-83. Year Plant Value Production Exports Home Sales Unsold % of B.C. (tons) (tons) (tons) (tons) Production 1874 — 29,818 23,719 6,144 2,429 36.6% 1875 $110,000 50,542 39,347 8,876 2,384 45.9 1876 - 52,935 - • - - 38.0 • 1877 140,000 48,743 37,486 6,342 •: 6,795 31.6 1878 88,361 82,983 11,237 6,795 51.7 1879 235,000 137,013 110,708 18,416 936 52.4' 1880 245,000 189,862 162,668 26,872 4,764 70.9 1881 245,000 181,049 152,856 30,526 2,430 79.3 1882 245,000 230,710 188,569 42,129 2,443 81.8 1883 250,000 171,364 124,748 47,333 2,443 80.3 The speed with which Dunsmuir, Diggle overtook the VCMLC is explained in large part by the latter's failure to properly manage i t s affairs, thus creating the double effect of allowing i t s own output to decline.while leaving a market vacuum which other suppliers, particularly Dunsmuir, Diggle, quickly moved in.to f i l l . S t i l l , profiting at the expense of i t s r i v a l accounts only.partially for Dunsmuir, Diggle's success. As important was the manner in which Robert Dunsmuir had developed his own coal mines. Compared with other coal entrepreneurs of the seventies and eighties, Robert Dunsmuir should not be considered either extremely lucky or especially ruthless despite the legend to this effect that has grown around his name. It is f a i r to say, however, that Dunsmuir was a shrewd, opportunistic coal proprietor who made the most of certain.important advantages he had over his competitors. First, Dunsmuir had been a 27 B.C. Min. of Mines, Aff, 1874-83. Source of 1876 figure i s Nanaimo Free Press; i-low production levels in 1877 and 1883 were due mainly to lengthy labour disputes; 1879 figure includes amounts raised by South Wellington Colliery prior to i t s purchase by Dunsmuir, Diggle. - 180 -thoroughly knowledgable coal mineraand a highly experienced mines' super-visor prior to starting his own colliery. Second, by, Being the sole claimant on the Island's richest coal seam at the time 'when he.began his f i r s t venture as a coal proprietor, Dunsmuir's potential as a producer was higher than anyone's. Next, by being a relative latecomer to the province's coal trade, his entry occurred at a time when speculative coal, enterprises were at their peak. What separated him most from those pro-moters who failed to secure sufficient start-up capital was his astute move in turning for support to naval officers with both a heightened awareness of the region's coalfields' value and the financial means to make sub-stantial investments in anew coal enterprise. Fourth, ,as Dunsmuir's usual residence was Nanaimohe was welJtplaced to li v e on the colliery site, meaning, in essence, that nothing to do with operations escaped his attention, and his day-to-day management decisions were made that much easier. Further-more, as w i l l be seen, Robert Dunsmuir was-both dedicated to the new coal industry and determined to-dominate i f not monopolize i t . Finally,' he had at his disposal two sons and a son-in-law whom he was able to recruit and train as his chief subordinates and whom, in the case of his sons, at 28 -least, were included in the original partnership. Not only did he f i x 2828 James Dunsmuir (1851-1920) was Robert's first-born son. Educated in Nanaimo, he was trained as a coal miner and oversman at his father's hand from 1869-c72. After attending a Virginia military academy where he gained engineering experience, he re-joined Dunsmuir, Diggle, becoming mines' superintendent in 1876. In 1883 he was made a "managing partner", and stepped-into the presidency of R. Dunsmuir and Sons when,his father died in 1889. He was both B.C.'s premier (1900-02) and Lt. Gov. (1906-08). He sold his coal interests to Mackenzie and Mann of Canadian Northern fame in 1910.* Alexander Dunsmuir (1853-1900) also apprenticed as a miner under his father, but soon worked as the company's "liaison" with business and po l i t i c a l interests in Victoria. He opened Dunsmuir, Diggle's San Francisco - 181 -the colliery management in the family's grip, but he also ensured that as the company prospered, the financial position of the family was corres-pondingly strengthened. Thus i t was that most of Dunsmuir, Diggle's power and wealth came to be concentrated in the Dunsmuir family's hands. During the late 1870's the Dunsmuirs made a step-by-step buying-out of their partners' holdings un t i l , In 1880, only Diggle's share was as yet out-standing. On 14 September, 1883, the Victoria Daily Colonist announced that Diggle recently had sold his share of the Wellington Colliery (as i t was commonly called) to Robert Dunsmuir for $600,000, and from that date on, the firm would conduct business "under the name and style of R. Dunsmuir and Sons". COAL LANDS AND. PRODUCTION STRATEGIES Once Robert Dunsmuir had his colliery in f u l l operation, comparisons between he and other coal entrepreneurs made l i t t l e sense, for Dunsmuir clearly had reached a new plateau that no one else among local coal promoters was even close to approaching. Orily the Vancouver Coal Mining and Land Company provided any competition for Dunsmuir, Diggle after 1874, and as has been seen, the former colliery at that time was i n a period of serious decline. Perhaps the best that can be said of Dunsmuir's business mehifcsi' from 1869-74 is that he openly and regularly revealed his land acquisitions and production strategies. office in 1874, and although he appears to have done a reasonable job there, was considered the family's "black Sheep", dying an alcoholic in that city. John Bryden married Elizabeth Dunsmuir, eldest daughter of Robert in 1867, and later transferred his loyalty from the VCMLC to Dunsmuir when he joined the, latter's firm as a.managing partner. Bryden generally was effective as an owner-manager, focusing his main efforts on mines' management and supervision, particularly in the newlyQopened operations at Comox. See Bibliography for a f u l l l i s t of readings on these men. - 182 -To Trutch he accused the VCMLC of holding-back the coal trade's progress by overpricing i t s product, claiming his own experience with that company had revealed the VCMLC's production costs were no more than $3.25 per 29 ton, less than half what i t charged in the market. Frustrated by a neighbour's unwillingness to negotiate a transport corridor from his own property to tidewater on terms highly favourable to himself, Dunsmuir wrote directly to the governor saying the other's position was "out of 30 a l l question". Pearse, to whom Dunsmuir. ?s appeal was referred to, argued the neighbour's demands were "not outrageous", and that Dunsmuir had been told repeatedly to reorganize his claim by opting for a new licence under the Mineral Ordinance, 1869, which in turn would automatically 31 qualify him for an access to the sea. Such a move further meant, however, that Dunsmuir would be required to establish ,a partnership, something he had been resisting, arguing he "could bring the undertaking out more 32 successfully hot having too many voices in the matter". In the event Dunsmuir was forced to create a partnership and accept a new lease on 29 Dunsmuir to CCLW, 28 Apl 1870, DDC. Dunsmuir further said he was "anxious and doing a l l pie could] to get another colliery in operation on the Island", and un t i l that happened, coal demand would not increase since the VCMLC's price was "far too high" to compete in San Francisco. Loo. cit. 30 Dunsmuir to Governor, 28 Sep 1871, DDC. 31 Pearse's minute on ibid. 32 Dunsmuir to Governor, op. cit. Admitting he had "anticipated possible trouble" by having a one man claim, Dunsmuir nonetheless argued the 1869 ordinance was "unfair towards one person prepared to invest more [money] than 10 men" - a farfetched statement considering his current need for outside capital. - 183 -Crown land under terms similar to those given the Baynes Sound enter-33 prise. To his credit, he did ghrow his total resources into the venture, giving Pearse occasion to say later that Dunsmuir had "done a good work [and] spent a large sum of money in building a tramway and a most substantial 34 structure". When R. Dunsmuir and Sons began i t s f i r s t year of operation, the family already had acquired the majority of Vancouver Island's good coal lands. It w i l l be recalled that almost a l l the speculative coal ventures in the Comox di s t r i c t had fallen into the hands of Dunsmuir, Diggle before 35 1880. Additionally, Robert Dunsmuir had been quick to purchase several small parcels of coal lands i n the Nanaimo-Departure Bay area during the mid-seventies. A more significant acquisition was the South Wellington Colliery which Dunsmuir bought on behalfi of himself and his partners in 1879. Wftih'ithis purchase, he almost doubled the lands and equipment of Dunsmuir, Diggle. To his company's current plant of 4.75 miles of railway, 4 locomotives, 100 coal cars, 4 hauling engines, 2 steam pumps, and three wharves, Robert Dunsmuir had added in buying South Wellington a further 4.5 miles of track,another locomotive, 50 more coal cars, a steam pump, and three engines. In combination, these adjacent coal 33 Trutch to Governor, 8 Nov 1869, DDC. 34 Pearse's minute of 29 Nov 1871 on Wm. Hughes' letter to [ V i c t o r i a ] , 5 Dec 1871, DDC. Hughes was .the neighbour who would not easily succumb to Dunsmuir's pressure. His arguments pointed-out the proposed tramway would cut his property in two, and the vessels loading coal at the wharf already "erected without [his} permission" would attract vessels that were bound to cut the fishnets from which he gained his main source of income. LOG. oit. 35 See previous chapter. - 184 -properties provided underground access through one pit (160' deep), and two shafts (one reaching 310' depth). 310 men.were employed at themmain colliery and 106 at the new property. Total coal output from the two in that year amounted to 137,013 tons, (approximately 20,000 tons of whichchad been raised and sold by South Wellington's previous owners). Dunsmuir valued his new holding at $90,000, but the greatest importance associated with i t s acquisition was the effect i t had in thrusting Dunsmuir, Diggle 36 far ahead of the VCMLC. In other words, Robert Dunsmuir (and his partners) were then owners of B.C.'s largest colliery, and because i t s chief competitor, beset by serious technical and managerial problems, could not sustain even a constant rate of production, Dunsmuir, Diggle then had a b r i l l i a n t opportunity to greatly increase i t s share of the coal market. Between 1879-83, the Dunsmuir c o l l i e r i e s ' annual output more than doubled while that of the VCMLC dropped by two-thirds. The period 1884-91 was not as dramatic a period of growth for R. Dunsmuir and Sons, (and the VCMLC, i t w i l l be remembered, recovered steadily under Robin's leadership in those years), but i t is clear the elder Dunsmuir's bold moves in coal lands acquisitions after 1874 were a major innovation in the industry's expansion. 36 B.C. Min. of Mines, AR3 1879, pp. 259-60. - 185 -Fig.5-1 DUNSMUIR, DIGGLE Co. HIERARCHY, 1874 \AGENTS\ — —I \MINERS\ COMPANY OFFICE (Departure Bay) MANAGING PARTNER Rt. Dunsmuir MINES SUPERVISOR Ja. Dunsmuir -{PARTNERS] |LABOURERS] Fig. 5 -2 R. DUNSMUIR & SONS HIERARCHY, 1884 WlCTORIA AGENT] RAILWAY OPERATION \HELPERS\ COMPANY OFFICE (Wellington) PRESIDENT Rt. Dunsmuir COLLIERY MANAGERS Ja. Dunsmuir Jn. Bryden MINES SUPERVISORS \MINERS\ SAN FRANCISCO OFFICE Alex. Dunsmuir COLLIER FLEET LABOURERS 1 | APPRENTICES] DTG-78 - 186 -Table 5-4. R. Dunsmuir & Sons Coal Production and Sales, 1884-89. Year Plant Value Production (tons) Exports (tons) Homes Sales (tons) Unsold (tons) % of Island's total pro-duction 1884 $250,000 254,538 196,931 58,756 586 64.6% 1885 I I 220,000 120,559 68,340 31,691 660.3 1886 I I 185,846 144,526 52,300 20,711 56.9 1887 I I 239,217 187,193 72,464 721 57.9 1888 I I 198,392 124,649 70,041 3,701 39.8 1889 150,000 273,383 197,510 76,524 3,050 47.1 As mentioned in the previous chapter; Dunsmuir, Diggle purchased several f a i l i n g coal companies during the period 1874-79. Although some had amassed to the time of their sale both a skilled workforce and a f a i r l y large inventory of equipment, Dunsmuir's chief reason for acquiring such properties undoubtedly was to add to his coal reserves, for more than any other coal proprietor, he appears to have recognized the need to con-tinually expand his holdings of coal lands. Obviously this policy paid-off in another way, because by the later 1870's, Dunsmuir, Diggle not only controlled most of the land on the Wellington seam, but completely monopol-ized the Comox coalfield, too. Having bought-up the Perserverance and Baynes Sound ventures, he then purchased the Union Coal Company which had been registered in Victoria as a Comox di s t r i c t enterprise in 1872, but with only $22,000 in declared capital, had failed to enter sustained pro-ductxon. 37 B.C. Min. of Mines, AR3 1884-89. 38 "Companies' Register, 1862-71" (Victoria, B.C.) The Union Coal Co. appears as a unique case of workers' enterprise. Of the 8 partners who divided 110 shares valued at $200 apiece (hence $22,000 capital), 4 were miners from Nanaimo, 2 were farmers from that town, and the remaining 2 were a "master mariner" and a "merchant" from Victoria. - 187 -Although Robert Dunsmuir was content to let such lands l i e idle, preserving their coal deposits for the time when his current mines were exhausted, both James Dunsmuir and John Bryden were anxious to bring the Comox f i e l d into f u l l production. It was not, however, u n t i l the mid-1880's, when the elder Dunsmuir had passed essentially all.control of the family's colliery operations to these younger men that work was begun on opening the northern coalfield. At least $25,000 was invested i n pre-paring a modern mining apparatus on the old "Union" site before production began, an outlay resulting in a four level, three tunnel, two shaft, one slope mine headed by a substantial upperworks. Next the-owner-managers installed several steam pumps, erected a steam sawmill nearby, built two wharves at Union Bay, and connected the latter to the new colliery with. 39 a ten mile r a i l link. By 1890 the Union Colliery, (as :it. was now called), employed 150 Whites and 200 Chinese who produced 69,537 tons of .coal in that 4 0 year, only 1,481 tons of which were sold.for home consumption. In short, these two men had developed a f u l l y operational colliery comparable in complexity d>f not yet in size to any at Nanaimo totally from their own resources in less than three years. Robert Dunsmuir had not participated in their effort; indeed he had resisted for years a l l urging^ '.'fcod'open-new co l l i e r i e s . The younger generation obviously was more aggressive, and proved themselves with the successful opening of the Comox f i e l d to be owner-managers as capable as the founder once had been. When the elder died in 1889, the surviving partners s p l i t the main coal operations into 39 B.C. Min. of Mines, ARr$. 1888, pp. 336-37 and 342. 40 Ibid., 1890, p. 394. 188 -two separate firms; the Departure Bay activity: becoming, the. Wellington 41 Colliery, the Comox property retaining i t s name of Union Colliery. Table 5-5. Wellington Colliery Production and Sales, 1888-91. Year Plant Value Production (tons) Exports (tons) Home Sales (tons) Unsold (tons) % of B.C. Output 1888 1889 1890 1891 250,000 150,000 150,000 150,000 198,392 273,383 174,469 345,182 124,649 197,510 106,281 282,452 70,041 86,524 68,769 54,724 3,701 3,050 2,495 10,500 40.5% 47.1 25.7 33.5 41 Difference in coal lands' strategy, (between the two Dunsmuir genere ations), taken from interview with A.F. Buckham, Victoria, September 1976. Robert Dunsmuir was deeply involved in other business activities during the eighties, including: president and principal shareholder of Albion Iron Works (capital $500,000 in 1882); president of the Victoria Theatre Co. (capital $50,000 in 1884); magior shareholder in the Matsqui Land Co. (capital $100,000 in 1885); major shareholder i n the Pacific Navigation Co.; owner of extensive farm lands in the Comox d i s t r i c t (and land holdings elsewhere); owner and president of the Esquimalt and Nanaimo Railway (for the building of which he received from government $750,000 and a land grant of 1,900,000 acres - almost 1/5 of Vancouver Island). See "Companies Registers", 1872-89 (Victoria); "E & N RR Contract", SPBC, 1884, pp. P183-91; R. Turner, Vancouver Island Railroads, San Marino (1973) pp. 39-46; Vancouver Weekly World, 18 Apl 1889; R. Cail, Land, Man, and the Law, Vancouver (1974), pp. 138-42; SBC, 1882, 45 Vict., c. 15, s. 18; W. Kaye Lamb, Canadian Pacific-Railway, New York (1977), p. 235. Robert Dunsmuir also entered p o l i t i c s , becoming M.P.P. for Nanaimo in 1882 and again in 1886. He served as president of the council during his latter term, but i s not known especially for his role in government. Like the HBC bureaucrats and the VCMLC resident managers, the Dunsmuirs gravitateddnaturally towards positions of community and p o l i t i c a l influence given their strong financial powers. British Columbians were very much in a mind for rapid economic expansion i n that period, openly encouraging and applauding aggressive entrepreneurs, particularly those in the industrial sector. No record of Robert Dunsmuir's actual worth between 1883-89 i s available, but considering the extent of his equity holdings, he likely, amassed a personal fortune of five million dollars, possibly six - virtually a l l of which was inherited by his wife. "Last Will and Testament of Robert Dunsmuir", in Probate Records' Office, Victoria. See also-Bibliography of this thesis and."Robert Dunsmuir", PABCvf. 42 B.C. Min. of Mines, AR's, 1888-91. -190 -Table 5-6. Union Colliery Product-ion and Sales, 1888-91. Year Plant Value Production (tons) Exports (tons) HomesSSles (tons) Unsold (tons) % of B.C. Output 1888 $25,000 2,000 _ _ , 2,000 0.4% 1889 25,000 31,204 23,790 100 9,314 5.4 1890 25,000 69,537 74,048 1,481 3,322 10.3 1891 * 114,792 . 103,960 * * 11.2 * no available data H i LABOUR, TECHNOLOGY, AND MARKETS Before•closing this f i n a l chapter on colliery management, i t remains to be asked how much emphasis did the Dunsmuirs place upon other production agents. So far discussions have shown that they were superior to a l l other colliery administrators in attracting capital and acquiring coal lands. But what was their record with regard to employing labour, handling new technologies, and securing sales? in the f i r s t place i t must be recognized that despite the greater availability of minigg equipment and other colliery machinery during the • two decades following 1869, British Columbia's coal mines were s t i l l of sufficiently small scale to function effectively as essentially manual operations. Where Dunsmuir appears to have gained another advantage over his competitors was not in outpacing other co l l i e r i e s with technical, innovations, (for'collieries of comparable size had similar physical assets), but in making his operations more labour intensive than his rivals. This he achieved by recruiting a large workforce and by hiring proportion-ately higher numbers of Oriental workers, (whom were paid only half the 43 Loo. oit. - 191 -rates of Whites), than did any of his peers. Moreover, by installing Chinese workers in positions no higher than miners' assistants, Dunsmuir avoided a potential source of serious confrontation with the workers of British and European origins. While these b r i l l i a n t hiring -jraeticsv. . placed Dunsmuir, Diggle in an even better competitive position, i t was later offset by Robert Dunsmuir's determination to hold-down wages. As w i l l be seen later in this study, the owner-mangers' greatest shortcoming as colliery operators was their unwillingnesstto recognize labour's legitimate needs. Made arrogant by their fast-growing power, the Dunsmuirs came to believe they could withstand a l l demands for higher wages, job security, and major improvements in mine safety. This attitude was a main cause of several strikes, including a severe one in 1877, and served as much as anything else to drive a ,deep wedge between management and labour in British Columbia's coal industry. Both Bryden and James Dunsmuir tended to be hard-liners on workers' rewards, but not as determinedly so as the elder Dunsmuir. Again as w i l l be seen, there were many.contentious issues between owners and workers, but in,the early years of Dunsmuir, 44 Diggle's operations, wage rates were.most apt to cause confrontations. In regard to seeking new sales' outlets, the owner-managers' per-formance was impressive, though not particularly outstanding. I n i t i a l l y they relied upon those domestic and foreign markets originally established by the HBC and maintained since 1862 by the VCMLC. Opening sales offices in Victoria and.San Francisco were,logical steps for a.large colliery like Dunsmuir, Diggle.to take, as was i t s bolder move in creating the company's 44 See following chapter for details on the Dunsmuirs handling of colliery "labour. See chap. 7 for the owner-managers' use of technology. - 192 -• own fleet of colliers which eventually reduced substantially i t s trans-port overhead. The building of the Esquimalt and, Nanaimo Railway by Robert Dunsmuir in 1884-86 may be seen in a similar light. For as well as the gains he received i n land grants and revenues, Dunsmuir then owned another bulk carrier to transport at no cost to himself much of his coal output from the Wellington mines to Victoria and places in between. The Dunsmuirs tended to be more aggressive than the VCMLC in pursuing naval contracts, and were more active advertisers of their product. Perhaps most importantly, they relied extensively upon nur-turing personal contacts with business and government leaders throughout California and the Pacific Northwest. Indeed, the Dunsmuirs' chief backers for their E & N railway venture were owners of the Southern Pacific Railway, a group whose interest in the family colliery had long been 45 cultivated by both Alexander and James Dunsmuir. Generally, then, the owner-managers, (a category which really applies to the Dunsmuirs alone), appears.at this stage of our study to have been innovative in both their large-scale employment of Oriental workers and their aggressive pursuit of coal sales. As for the Dunsmuir's use of technology to achieve more coal output and bigger markets, only their large investments in r a i l and sea transport seem out of the ordin-r ary. In order to test these and other tentative conclusions so far reached in this thesis, the next four chapters are devoted in turn to examining labour, technology, markets, and colliery productivity. But before proceeding i n those directions, i t is useful to summarize very briefly our main findings so far on coal lands', capital, and management. 45 See p.rl88 fn 41 above for brief discussion on the E & N venture. - 193 -SUMMARY OF COLLIERY MANAGEMENT GOALS AND STRATEGIES Foremost amongst the resources needed for colliery-building-, and operation are, of course, the coal lands themselves. As has been seen, Vancouver Island was.fairly well endowed with coal measures and reasonably well located in relation to growing markets for a coal industry to develop and take-hold during the period 1849-91. Successive government policies with .regard to exploiting these deposits by and large had the effect of stimulating the industry, though usually to the benefit of the large operator at the expense of the small. Those companies that survived for lengthy periods placed a great deal of emphasis upon securing and proving large coal-bearing land tracts on one.hand, and upon attracting sufficient capital to begin operations on.the other. Financing, both for start-up and continuous operation, often was very d i f f i c u l t to obtain, especially in the sixties and seventies. The Hudson's Bay Company's coal administrators ultimately were forced to rely extensively upon the Columbia District's annual budget allotment to enlarge and maintain ' the. Nanaimo Coal Company. The•Vancouver Coal Mining and Land Company'ssorrginal promoters were fortunate in that they had a better financial climate than those who followed in the province's coal trade in which to raise capital, but even the VCMLC was led eventually into selling debentures and.making drastic economies, (including on occasion heroic reductionsMnddlvideild payments), in order to have ade-quate amounts of working capital. Speculative ventures for the most part were extremely hacd-pressed to raise sufficient funds even* for start-up. While much of their d i f f i c u l t y lay i n the generally depressed economic climate of the time, more to the point probably was the almost total lack - 19.4 -of entrepreneurial drive and s k i l l among the mining promoters. In this regard, only Robert Dunsmuir appears to have.been well enough equipped and strongly enough dedicated to take his venture from.coal claim to f u l l y working colliery. Dunsmuir's unique position as both owner and manager was possibly his biggest advantage over his competitors.. By being able to both set policy and enforce i t , he avoided much of the inefficiency and mistrust that characterized the relationships between administrators and managers in both the HBCTs and the VCMLC's c o l l i e r i e s . Being on-site also worked greatly to Dunsmuir's benefit, as did his discovery ofi.the Wellington seam. It appears, too, that being a latecomer assisted his progress, for he had no d i f f i c u l t y in raising sufficient capital once he approached the group of well-to-do naval officers at Esquimalt who realized the Island's coal industry's potential and,the significance of Dunsmuir's own technical expertise. In the longer term, both the decline of the VCMLC and. Dunsmuir's tactic of making his sons partners in.Dunsmuir, Diggle and i t s successor, R. Dunsmuir and Sons, had highly important, effects upon the rate of growth of the holdings he controlled. Dunsmuir, Diggle's share of the market rose in direct proportion to the amount that 1 the VCMLC's dropped. By increasing the family's grip on the firm,,the Dunsmuirs' power to mobilize both working and investment capital was that much strength-ened. Finally, the owner-managers appear to have been eager .to dominate 46 the province's coal trade, a goal they actually achieved between .1880-87. . A l l evidence to this point in our study appears, therefore, to show the 46 See Fig. 5-3a. - 195 -owner-managers as being superior in technique and more r e a l i s t i c in outlook than any other form of colliery leadership. Further arguments in support of this hypothesis are contained in the following chapters, as are descriptions of how labour, technology, and markets affected the rise of British Columbia's coal industry to 1891. Chapter Six MINERS INTRODUCTION In twenty years following the arrival of John Muir and his party at Fort Rupert much of the activity required to find, prove, extract, prepare, and ship Vancouver Island coal was a task exclusively for hand labour. No colliery administrator or manager favoured this state of affairs, because in addition to being utterly incapable of handling many technical problems, manpower by i t s e l f was a high-cost and often inefficient factor of production. Mainly i t was a matter of having l i t t l e or no power equip-ment, which then meant that only through corresponding increases in the number of workers could output be raised. And a large labour force meant large payrolls. Equally troublesome for colliery owners was the chronic shortage of skilled labour i n those earliest years; laying-off workers in periods of slack demand usually meant losing them to other employers or other lands.^ It is l i t t l e wonder, therefore, that both the HBC and the VCMLC managements in turn placed great emphasis upon acquiring and installing machinery, in the hope of reducing their overwhelming depend-ence upon labour. Once purchased and installed, machines normally required small sums for maintenance, repair, and operation. It was not, of course, a simple matter of replacing men with equipment since manpower was needed 1 No definitive study of labour supply is available, but the record contains innumerable references to the problem of worker shortages. M. Macfie, Vancouver Island and British Columbia (1865), for example made a typical colonial period plea for newcomers, claiming immigration was the "most important question" (pp. 423-92); during the 1870s-80s the Victoria Daily Colonist published several editorials on the issues of labour shortages and immigration; Paul P h i l l i p s , No Bower^Greater (1967), mentions the problem in describing B.C.'s labour supplyuduring construction of the CPR (pp. 9-10). - 197 -to both handle each new apparatus and to perform a wide variety of tasks that no machinery could. Rather, i t was a case of integrating power equipment into as many phases of the mining operation as could be absorbed in the cause of increasing both efficiency and productivity while reducing overhead costs. This heavy reliance upon manpower also created problems of labour discipline. During the nineteenth century British Columbia's coal industry was generally peaceful in terms of labour - management relations, but there were sufficient incidents of insubordination and work stoppage to make owners determined not to lose the upper hand. Proprietors adopted several methods to control their employees, four of which appeared to work best: First , emphasis was laid upon upgrading the workforce. Normally this was achieved by seeking recruits from the ranks of skilled miners elsewhere, by choosing strong leaders for super-visory positions, and by establishing in-house training. Next, proprietors sought out large bodies of already-disciplined workers who could function as team members either under contractors QE as regular colliery employees. The introduction of Chinese labourers as early as the 1860's, (and their continued use throughout the century), was an obvious example of this tactic. Third, the owners rarely hesitated to use the law to protect their property from dissident workers, and took every opportunity to influence the drafting of land and labour legislation feci their own 2 interests*.- Finally, colliery proprietors continuously sought celief in technological change, for such advances tended to reduce proportionately 2 See chaps. 3-5 for examples. - 198 -3 the need for manpower. As It happened, a l l these steps had the overall effect of improving the workforce, reducing i t s size relative to pro-ductivity, encouraging labour discipline, cutting unit costs, increasing pr o f i t a b i l i t y , and making labour an increasingly expendable factor of coal production. I COLLIERY LABOUR TO 1862 Only in the last years of the 1870's did the physical layout and work flow of Vancouver Island's mines come to resemble those then operating in Britain. It w i l l be recalleddthat the HBC's Fort Rupert operation was an outright failure. The coal resource was severely limited both i n quantity and quality while the apparatus used to extract and ship the coal depended wholly upon manual labour. The Muirs did no more than sink a 40 foot.pit and prospect adjacent lands, while those miners i n i t i a l l y led by Boyd Gilmour removed only 10,000 4 tons duringgthe two years following their arrival in 1851. These dismal performances could be attributed in large part to insufficient coal measures and the absence of power machinery, but equal blame must be placed upon the HBC's inept attempts at organizing work. Even in the absence of modern technology, a l l activities undoubtedly would have bene-fit t e d from an approach that f u l l y integrated the available labour s k i l l s . Yet for several years this was not done in the HBC's mines. Instead, 3 As w i l l be seen below, Robert Dunsmuir was a notable exception in this regard. 4 J.E. Muller and M.E. Atchison, Geology3 History and Potential of Vancouver Island Coal Deposits, Ottawa, GSC Paper 70-53, 1971, p. 16. - 199 -/ there was' an unsystematic division of work, causing both inefficiency and continual f r i c t i o n between management andtthe miners. Coal production could have risen had the miners been able to devote their whole attention to exploration and extraction, rather than carrying the added burdens of timbering, hauling, and even cleaning latrines inside the fort. It was as i f the miners were employed as a support group to the fur traders rather than vice-versa. The i n i t i a l plan had held that the miners would mine, the regular Company servants - axemen, blacksmiths, labourers -would construct and maintain the upperworks while native Indians would transport the coal to ships.^ In practice the Companymen ignored their part of this arrangement, ultimately causing serious disruption of the mining operation and contributing much to the f i r s t venture's ultimate collapse. Although the miners (and eventually the HBC bureaucrats) realized the v i t a l need to integrate a l l available labour s k i l l s , there were sufficient other technical problems s t i l l to overcome that even the best possible organization of the workforce isould not be a solution expected to resolve them a l l . Central to exploration and mining i t s e l f was the need for more speed in proving the coal and more power to extract i t . From his earliest days at Fort Rupert John Muir was eager to acquire and i n s t a l l a forty horsepower engine for pumping arid hoisting because he knew manual labour alone was inadequate for deeper pitwork. Meanwhile he and his party were forced to rely solely upon hand tools and mechanical 5 Private Diary of Andrew Muir, 9 Nov 1848 - 5 Aug 1850, passim, PABC MSS. - 200 -devices to work the coal deposits. Their successors, as led by Gilmour, then Dunsmuir, fared no better, though a steam engine did arrive on Vancouver Island prior to the latters' transfer to Nanaimo.^ Essentially, the Fort Rupert operation had been a hand labour af f a i r and therefore not dissimilar to an early eighteenth century English colliery. It w i l l be remembered that by separating coal mining from the fur trade during the shift from Beaver Harbour to Nanaimo, Douglas and Mackay did much to start the new venture on a sound management footing. The recruitment and subsequent arrival of a large party of Staffordshire miners in 1854 to join the dozen or so miners since moved down from Fort Rupert gave the NCC leaders a small but viable workforce of skilled 9 colliers for the new f i e l d . Despite occasional labour unrest, most notably in the 1855 strike over wages, the miners tended to be increasingly productive, raising acceptable amountsoof coal each year."*"^ Additional numbers of men were recruited between 1859-62 from the ranks of gold miners returning from the mainland, bringing the total skilled workforce more into line with that in a British colliery having comparable holdings 6 Loc. cit. and Eden Colvile to J.H. Pelly, 6 Feb 1850, Colvile Correspondence Inward, 1849-52, HBRS vol. 19, p. 5. • 7 Audain, Coalmine to Castle, pp. 8-9 and H.H. Bancroft, History of British Columbia, pp. 195-96. 8 See next chapter for a cursory description of such a colliery. 9 Bancroft (ibid., p. 195) claims 25 "practical men" arrived at Fort Rupert from Scotland in May 1851 - a group that included Robert Dunsmuir. The 21 miners who came to Nanaimo in 1854 were recruited in England by HBC agents. B.H. Goult, "First and Lagit.Days of the 'Princess Royal'", BCHQ, 3:15-24 (1939). 10 See Table 6-1. - 201 -of coal lands. Additionally, i t was now possible to expand the number of specialized jobs in which men could be employed. The term "miners" hitherto had included a l l those employed in exploration, ex-traction, and grading. Now i t was common to speak of miners as only those who actually worked below ground cutting and loading the coal onto sleds. Other workers had begun specializing as prospectors (or d r i l l e r s ) , while the term labourer was being applied less often in favour of specific t i t l e s like pusher, packer, picker, loader, and hauler. The wood handlers were divided into trades called timbermen, cutters, axemen, and carpenters and placed in a slightly higher wage category than those who merely transported coal. In many cases assistant miners were hired in the apprentice role, and the occasional upperworks tradesman like enginemen, mechanics, blacksmiths, teamsters, and carpenters had apprentices of their 12 own. This trend towards increasingly specialized jobs both below and above ground continued for as long as new techniques and equipment were being introduced, a phase lasting weHlinto the 1870's. It i s work noting, too, that pay scales reflecting varying degrees of required s k i l l s were 13 in force as early as 1853. Such refinements helped management in i t s 11 Mark Bate, "Reminiscences of Early Days in Nanaimo", Nanaimo Free Press, 16 Feb - 13 Apl 1907, passim; S. Poliatfd, The Genesis of lfoa%rn Management, p. 10 (arguing that a "large" colliery for 1850 would have been 120-150 workers); A.J. Taylor, "Labour Productivity and Technological Innovation in the British Coal Industry, 1850-1914". 12 Bate, "Reminiscences"; also "Nanaimo Correspondence, James Douglas -Joseph McKay, Aug 1852 - Sep 1853", PABC MSS; "Nanaimo Journal, Aug 1855 -Mar 1857", PABC MSS. 13 Douglas refused to pay assistant miners, the same yearly rate as. the. miners who were receiving^50 for 310 working days. He claimed they were not as skilled, hence not as productive. He also said they were frenefit-ting from their training, and i f an assistant produced more than 3/4 ton per day, he would receive a small premium on a l l coal over that. Douglas to McKay, 20 May 1853, op, cit. - 202 -attempts to organize and discipline the workforce, but they further served to give the miners and upper works journeymen a sense of being elites amongst the labour force. In cultivating this self-given image, the miners in particular became highly protective of their position and i t s privileges. And this in turn soon made i t exceedingly d i f f i c u l t for management to make any major changes in the sub-surface work flow. Unlike the coalfields near Fort Rupert, those at Nanaimo proved to be extensive. Yet the mid-Island deposits presented greater challenges for even the most skilled miners. Foremost was their need to follow the seams into hillsides surrounding Nanaimo harbour. On the most prominant outcrops, two adits were driven southward into the Douglas seam as gently sloping cuts to take advantage of the thin ground cover which then made i t easy enough to strip the overburden by hand and to drain the adit by gravity. Within months, however, i t was necessary to sink shafts into the seams because the covering had become too thick to "economically 14 remove". Adding to their, d i f f i c u l t y , the miners encountered consider-able faulting that they termed "pitches", the existance of which necessi-tated more exploration to discover where the seams took-up again. Although, steam pumps had been installed as early as 1855 to drain the water that accummulated at these greater depths, a l l else had to be performed by men and animals. D r i l l i n g was. s t i l l a task for two men, one holding and rotating the bore while the other hammered i t down through the rock. Hewing the coal was done with picks and wedges, cutting i t down in slabs. Indians "pushers" moved the fallen coal,onto sleds which were hauled by 14 Bate, "Reminiscences": - 203 -"stiff-kneed" horses to the pit mouth. Once on the surface, the coal was piled into "skiveys" -wwoven cedar baskets attached to fir-framed, wheeled carts that the Indians hauled to tidewater. There.the natives piled and ultimately loaded i t in canoes for transport to ships at anchor in the harbour where a laborious procedure of hoisting the coal onboard began.^ These methods for prospecting, extraction, and handling con-tinued throughout the Nanaimo Coal Company's brief history. S t i l l , at the time of i t s sale in 1862, the HBC's colliery had grown rapidly in size from what i t had been in 1855, and with the applic-ation of some steam machinery, had become considerably more sophisticated, too. During those years the HBC had increased the number of operating mines from one to three, and i t had enlarged the workforce from the original number of seven.miners to more than 100 men, half of whom worked below ground. Additionally, there were three sizable coal wharves in place, one water-driven sawmill, a series of wagon roads between the mines and. wharves, about ninety-five buildings of a l l types, and two steam engines putting-out approximately sixty horsepower each for pumping and hoisting. A l l this had had the effect of raising annual output from 2,500 tons to 18,178 tons during the decade 1852-62."'"^  But when i t is considered that England's Newcastle-on-Tyne coal d i s t r i c t had produced almost twice this amount using similar mining methods (save steampower) in the year 1564,.and within a century from that date was shipping twenty times that tonnage - 200 years before Nanaimo - we have a clearer picture of how 15 Loc. cit. 16 "Nanaimo Harbour", Admiralty Chart No. 573 by Capt. G.H. Richards, H.M.S. Hecate, 1862. Also, Daily Colonist, 4 Jan 1863, p. 3. - 204 -truly small and primitive the HBC operation was. What, then, was accomplished by the HBC on the labour front in the years before 1863? Tabel 6-1 shows steady and significant advances had been made in tech-nology, productivity, and the size of the workforce. (The incompleteness of this data, incidently, should not prevent us from accepting as fact the general and f a i r l y impressive rise i n the colliery's productive capacity prior to i t s purchase by the Vancouver Coal Mining and Land Company). Table 6-1. HBC Colliery Statistics, 1849-62. Year Production Miners Mines Steam Productivity (tons) Machines (annual to nnage) per miner per machine 1849 1,100 6 1 0 183 _ 1850 3,300 10 1 0 330 -1851 3,300 8 2 1 413 3,300 1852 3,300 - 1 - 3,300 1853 5,000 - - 1 - -1854 5,000 30 3 1 167 1,667 1855 5,500 3 1 - 1,833 1856 - - 4 1 - -1857 - 4 1 - -1858 - - 4 : 1 - -1859 - k 1 -1860 14,247 - 4 2 - 7,124 1861 13;774 - 4 2 - 6:, 887 1862 18,178 50 5 2 364 9i 089 Plainly, the more rapid advance in annual production towards the end of this period, and the more than doubling of labour productivity 17 J.U. Nef, "Coal Mining and Utilization", A History of Technology3 Oxford (1958), vol. 3, pp. 72-88. 18 Data gathered'from a wide range of sources including HBCA (PAM) All/72-76; see also Bibliography. - 205 -between 1854-62, implies a significant breakthrough was made in the attempt to create a modern operation. The introduction of steam power and the steady increase in the workforce size undoubtedly combined to improve productivity, but the level of production was s t i l l so low, and the gaps in.available data so pronounced, that i t is impossible to assess either the actual impact of these machines, the real gains achieved in coal output by labour alone, or the true effects of management reforms. The same can be said of the values achieved in increasing the number of operating mines or of opening new markets like that of California. Gen-erally, i t appears that both production and productivity climbed during the HBC years more directly in proportion to amount of manpower than the number of either mines in operation or machines employed. Perhaps the only other conclusion about labour as a significant factor of production that can be drawn for this earliest period is to say that the employment of skilled miners paid much greater benefits to the HBC than relying solely upon untrained natives as had been the case during the beginnings at Beaver Harbour. Happily, much more complete stati s t i c s on land, labour, and machinery are available for later periods of this study, and shortly i t w i l l be possible to draw some satisfactory conclusions regarding the values and relative importance of these agents. II VCML.S AND LABOUR SHORTAGES TO 1874 Like a l l west coast economic a c t i v i -ties for the period, coal mining suffered from the general lack of available labour. Although the problem of scarcity in B.C.'s labour supply during the nineteenth century is not well documented, enough - 206 -evidence exists to strongly suggest that many of the d i f f i c u l t i e s experi-enced by resourcesproducers before 1890 resulted from their i n a b i l i t y to 19 attract and retain sufficient numbers of skilled workers. Insofar as colliery managers aggressively pursued technological improvements, intro-ducing power machinery whenever i t was available and affordable, they perhaps suffered less from labour shortages than their counterparts in other industries. Nonetheless, up to 1874 especially, coal mine operators had to be both aggressive and inventive in competing for workers. There were five pools from which colliery workers were recruited before 1890 - British coal miners, native Indians, gold miners, Orientals, and local youths. The paucity of skilled miners and other tradesmen at Fort Rupert and Nanaimo during the HBC days made the employment of Indians essential. No natives worked underground as miners for the HBC, however, and no record exists of Indians being employed below the surface after 1862 in any role other than that of coal transporter. By 1874, only six percent of the VCMLC's total labour force were natives, a portion that was reduced to zero by 1889. Other c o l l i e r i e s tended to 20 employ even fewer Indians. Youth, or "boys" as they were known, became a significant element of the surface workforce in the mid-1870's; mainly on the picking tables. The comprehensive Coal Mines Regulation Act, 1877 was at once explicit and highly restrictive on the use of child labour, and i t appears that management saw only limited opportunities in i t s use 19 Refer to fn 1 above. 20 B.C. Min. of Mines AR, 1874,passim. See tables this chapter for details of workforce compositions. - 207 -21 despite the ever-growing local population of adolescents. One local source of experienced men always worth pursuing were the more experienced gold miners. By 1864 the Cariboo mines had evolved to the point where both underground work and steam machinery were common-place. Yet the goldfields were becoming exhausted, forcing many miners 22 to leave the Interior. VCMLC o f f i c i a l s aimed newspaper advertisements at these men, offering free passage and good wages to those who considered themselves qualified miners. Similar appeals were directed to "returning 23 Ominecans" early in the next decade. As late as 1882 no more than 250 men were employed as miners in B.C.'s coal industry and of this number, only about twenty percent were local inhabitants. Another large proportion were Orientals who worked as miners' assistants, making i t f a i r to say that the total number of imported miners i n a l l B.C. c o l l i e r i e s was some-24 where between 125-150. One reason why British colliers were in demand by Vancouver Island coal producers was the strong tendency shown by such mentto remain in the coal trade, making for a low turnover amongst the industry's most valued tradesmen. Consequently, B.C.'s coal proprietors 21 Coal Mines Regulation Act, 1877, Revised SBC, 1877, No. 15, pp. 33-63. 22 A well-documented fact; see, for example, Ormsby, British Columbia, chap, 7, :..;23 Daily Colonist, 5 Oct 1872, p. 3., viz "Miners who know anything about coal working w i l l find steady and renumerative employment at Nanaimo. To men out of work an opportunity is offered to secure work for the winter. Returning Ominecans, instead of leaving the country, should try what they can do at Nanaimo." 24 Min. of Mines, AR, 1882 gives a reasonably clear picture of the labour force's composition. As for the reference to 1874, this i s an inference based upon the rates of growth in the workforce and the tendency to hire more Orientals.after 1871. - 208 -could hope to develop with these recruits a stable, experienced, and disciplined force at the coalface. Had the industry's need for skilled miners been substantially greater, i t l i k e l y would have been denied this opportunity since Britain's coal owners' own demand for labour was great at that time. Serious coal shortages.there in the late sixties followed by a "coal famine" in the winter of 1872 occasioned the sinking of 1,401 25 new pits between 1871-75. Migration within coal dis t r i c t s and even from one region to another by miners and their families had been.growing annually from as early as 1800. Sometimes the cause was exhaustion of a particular mine, but more often i t was due to high labour demand. Staffordshire especially became notorious as a region plagued by transient coal miners as more and more landowners brought mines into production. Indeed so fl u i d was the workforce, and so desperate the mine owners for reliable labour, that new systems of contracting and sub-contracting sprang up in that d i s t r i c t , making labour's influence on the British. 26 coal industry stronger than ever before. The opposite had occurred in Scotland where owners had managed i n the seventeenth century to place miners and their families virtually i n bondage and thus ensure for 25 W.W. Rostow, British Economy of the Nineteenth Century, Oxford (1948), pp. 74-75 and 85-90. 26 A.J. Taylor, "The Sub-contract System in the British Coal Industry", Studies in the Industrial Revolution, L.S. Presnell, ed., pp. 215-35 is essential reading for anyone attempting to grasp the nature of mid-nineteenth century labour relations in the English mines. One is urged to also consult Taylor's "Labour Productivity, 1850-1914" and Redford's Labour Migration in England. - 209 themselves a steady labour supply. Despite such wide variations in working conditions, mine labour of that time must be considered as a vast proletariat with extremely low social status and l i t t l e hope for escape, either for themselves or their children who l i t e r a l l y were bred into coalmmining. As yet there is no way of knowing precisely why British coal miners chose to emigrate to Vancouver Island before 1890; the number involved was small and no one appears to have done much at the time to record their reasons. Harsh working conditions and limited opportunity' in Scottish coal di s t r i c t s like Ayrshire suggest escape was a strong motive amongst the HBC's f i r s t recruits. Boyd Gilmour might have been a case in point. Moreover, kinship undoubtedly played i t s part for Robert Dunsmuir and possibly others were attracted by their relatives' urgings. The Muirs came as a family of miners, and the Princess Royal's manifest listed several family groups amongst the Staffordshire men when that ship arrived at Nanaimo in 1854. S t i l l , kinship ties alone cannot explain either their move or the arrival of later groups. From 1850 to 1900 coal miners' real income rose by more than one-third in the English coal d i s t r i c t s , and legislation passed duringtthe 1870's-80's 27 J.U. Nef, The Sise of the British Coal Industry, London (1966), vol. 2, pp. 157-64 and. T.S. Ashton and J. Sykesj The Coal Industry of the Eighteenth Century, Manchester (1929), pp. 30-33. According to Nef, the Scottish owners' proprietory attitude towards their mines extended to their workers. Using their p o l i t i c a l influence, the owners forced a "legal slavery" upon colliers and their families since the law forbade workers to leave their employemnt. Living conditions for these people was abysmal: a hovel residence, meals to keep them from starving, fuel to keep them from freezing. This condition of bondage was mostly con-fined to eastern Scotland, though circumstances were not much better in western dis t r i c t s l i k e Ayrshire. By 1799, the laws confining workers had been overturned, but the sharp divisions between owners and workers remained. - 210 -materially Improved working conditions, giving much greater mine safety 28 and job protection. Nor do economic conditions alone appear as suffi c -ient reason, since demand for coal and coal miners climbed sharply over • this period. Exhaustion of Cornish t i n and lead mines forced thousands of metal miners to emigrate to United States, but as shown above, no such 29' upheaval had occurred in coal mining. Probably adventure and wider opportunity seeking were the primary motives behind English miner emigration to Vancouver Island both before and after 1874 - but this remains as yet unproven. Vigourous recruiting by HBC o f f i c i a l s wouldhhelp explain why the original Staffordshire miners came, but no such campaign appears to have been mounted later on. Although they welccamed the British miners, British Columbia's coal producers do not appear to have advertised overseas for labour, possibly because by the late 1860's they had another, less costly supply at hand. Putting Orientals to work in Vancouver Island's co l l i e r i e s had both positive and negative effects upon production, though the benefits far outweighed any losses. As early as April 1867 the Vancouver Coal Company placed twelve "chinamen" in above-ground labouring jobs, and 28 Despite over expansion of the coal industry's labour supply between 1869-79 when 150,00.0'new workers were added and upwards of 2,000 new mines opened, (Rostow, pp. 80-92), the rewards of British colliery work generally advanced during the latter half of the 19fih century. G.H. Woods "Real Wages and the Standard of Comfort iince 1850", JESS vol. 73 (1909) reveals that coal workers' wages rose by 38% in this f i f t y year period, an increase that compared favourably with gains by workers in other sectors. Many important reforms were achieved i n mine safety and hours of work, highlighted perhaps by the Mines and Colliery Act of 1872 which severely limited the exploitation of women and children and which lik e l y served as a model for B.C.'s 1877 legislation. 29 O.E. Young, Black Powder and Band Steel,Miners and Machines on the Old Western Frontier, Oklahoma (1975), pp. 3-7. -•211 -other small groups of Orientals were hired from time to time during the 30 next decade. I n i t i a l l y the VCMLC's policy was to severely restrict the numbers of Orientals i t employed. Had the company maintained this stance, and kept their numbers within tight bounds, white miners and labourers probably would have raised few complaints. But in the winter of 1870-71, during a wage strike, the VCMLC made moves to renew production, by employing a large body of Orientals below ground. A swift and hostile reaction by the striking miners occurred immediately. What management had not predicted, however, was a similar response from the community at large. Even Victorians voiced strong opposition to the scheme, claiming outright that the fabric of colonial society would be at stake.if Orientals were allowed to replace whites in the labour force. Having thus lost public support, the VCMLC relented, settled the strike and 31 resumed production within days. From that point on, colliery owners 30 Colonist, 27 Apl 1867, p. 3. Orientals were to be paid $1.00 per day for their work as labourers. A strong hint of trouble to come was published in the Colonist on 8 May: "THE CHINESE COLLIERS - Considerable excitement, we hear, exists at Nanaimo in consequence of the introduction of Chinese labourers. The colliers threaten with violence the f i r s t Chinaman who forgets his Celestial origin so far as to descend to the 'bottomless p i t ' of a coal mine . . . . We hope that an arrangement w i l l be effected by which the white population of Nanaimo - which i s numerous and th r i f t y - may be retained. A community of Chinamen would scarcely be the thing." Despite this concern, the threat of violence passed, mainly because the VCMLC confined the Orientals to menial-surface tasks. S t i l l , labour's temper had been raised and a brief strike, osten-sibly for higher wages, lasting about two weeks occurred. Management closed-down a l l operations, insisting the "miners come to their senses". (ibid., p. 2). In this instance the Company prevailed. 31 According to Paul Ph i l l i p s , No Power Greater, p. 5, the 1870-71 dispute at Nanaimo was the coal industry's f i r s t "protracted strike". In the sense that the walkout lasted 5 months, this certainly was true; most work stoppages to that time were over within days or at most 3 weeks. Phil l i p s also notes that no formal union ^activity was present, though delegations of miners did appeal to Victorians, including govern-ment members, for assistance. On 6 Jan 1871, miners named Gough, Wall, and Tranfield were quoted in the newspaper as appealing to the citizenry i - 212 -were cautious in their practice and timing when hiring Orientals. Experience had shown them resistance was minimal i f small groups of Chinese were employed in haulage and other s t r i c t l y manual tasks. Further-more the owners found that for prospecting and hewing, white miners slowly could be won over to the idea of using Chinese as their assistants. Init-i a l l y in this case, the colliery paid the Orientals' wagesfbut by the mid-1870's the trend was for miners to pay their own assistants, white or Chinese. ; In this way* the miners could expect greater gains since the Orientals were willing to.work for half the salary a white worker would accept. Such practices served to improve mine productivity, insofar as 32 the. total labour force rose accordingly. Furthermore, by employing large numbers of Orientals in.surface operations, the problem of labour short-ages largely was overcome as early as 1874, and at an attractively low cost. Unquestionably this reliance on a large, relatively inexpensive, disciplined labour force had significant implications for the industry in its movement towards replacing men with machines. If Oriental manpower was reasonably cost-competitive with power equipment, and as effective as whites in i t s own areas of employment (as i t appears to have been), then for aid to "suffering families" in Nanaimo claiming "much distress" (Colonist, p. 2.). Six weeks earlier, the Provincial Executive had pro-c l a i m e d anyone using force to interrupt the VCMLC's operations, (which were being run by strikebreakers and small groups of men who had refused to strike), would be "prosecuted with the utmost rigor of the law51i: <4Colonists 16 Nov 1870, p. 3.). This action had effectively isolated the strikers and their dependents, but when the Colonist reported on 20 Jan that 100 Chinese were about to embark from Victoria to Nanaimo, the tide turned. Public opinion was already sympathetic to the miners' condition, and a series of published letters and editorials urging settlement of the strike followed. 32 See Table 6-2 and Fig. 6-1. Table 6-2. B.C. Colli e r i e s : Workforce by Employee Groups, 1874-90. VCMLC DUNSMUIR BRITISH COLUMBIA* Year Whites Orientals Natives "Boys" Whites Orientals Natives "Boys" Whites Orientals Natives "Boys" •:,.nov % no. % no. J> no. % no. % no. % no. % no. % no. % no. % no. % no. % 1874 204 64.9 •91 29.0 19 6600 0 0 73 41.7 90 51.4 12 6.9 0 0 277 56.6 IS 81 37.0 31 6.3 0 Q0 1875 272 65.7 99 24.0 43 10.4 0 0 124 41.8 165 57.1 8 6.5 0 0 396 55.7 264 37.1 51 7.2 0 00 1876** 304 63.6 109 22.8 47 9.8 18 4.3 140 48.3 140 48.3 10 4.6 0 0 538 63.1 249 29.9 47 5.5 18 2.1 1877 301 63.9 130 27.6 23 4.9 17. 3.6 162 55.5 120 41.1 10 3.4 0 0 543 60.1 310 34.3 33 3. 7 17 1.9 1878 237 56.8 136. 31.9 25 6.0 20 4.8 165 45.9 194 54.0 0 0 0 0 419 51.7 345 42.6 25 3.1 20 2.5 1879 233 67.9 87 25.4 6 117 17 4.9 189 50.7 184 49.3 0 0 0 0 573 63.4 308 34.1 6 0.7 17 1.9 1880 229 66.9 91 26.6 7 2.0 15 4.4 259 39.7 399 60.6 0 0 0 0 488 48.8 490 49.0 7 0.7 15 1.5 1881 190 62.5 97 31.9 17 5.6 0 0 261 37.8 429 62.2 0 0 0 0 451 45.4 526 52.9 17 1.7 00 0 1882 187 60.9 102 33.2 18 5.9 0 0 316 42.5 427 57.5 0 0 0 0 503 47.9 529 47.9 18 1.7 0 0 1883 293 65.7 145 32.5 8 1.8 0 0 283 40.6 414 59.4 0 0 0 0 618 50.0 607 49^ .9 8 0.1 0 0 1884 348 54.7 286 45.0 0 0 2 0.3 361 44.0 448 54.6 0 0 12 1.5 649 45.8 753 53.2 0 0 14 0.1 1885 327 50.0 312 47.7 8 U.2 7 1.0 284 59.2 196 40.8 0 0 o ; 0 699 54.5 568 44.3 8 01.1 7 0.1 1886 304 52.9 255 44.3 8 1.4 8 1.4 351 63.9 198 36.1 0 0 0 0 803 56.9 592 42.0 8 0.1 8 0.1 1887 386 53.0 330 45.3 2 0.3 10 1.3 308 44.4 386 55.5 0 0 0 0 777 49.3 786 49.9 2 0 10 0.1 1888 819 83.1 120 12.2 16 1.6 30 3.0 675 63.7 375 34.4 0 0 10 .01 1634 74.3 510 23.2 .16 0.1 40 0.2 1889 697 73.1 241 30.4 0 0 16 1. 7 882 67.0 423 32.1 0 0 12 .01 1754 71.2 682 27.7 0 0 28 0.1 1890 1296 86.8 170 11.4 2 0 25 1.9 664 68.1 306 31.9 0 0 5 .01 2110 8.0.0 491 18.6 2 0 35 0.1 Mean 390 66.2 165 28.0 15 2.5 19 3.2 323 52.5 288 46.8 2 0 2 0 778 60.3 482 37.4 16 0.1 13 0.1 includes a l l collieries reporting to B.C. Min. of Mines, data lacking for Dunsmuir; amounts approximate. 33 B.C. Min. of Mines, AR's 1874-91; see also Bibliography. - 214 -- 215 -l i t t l e incentive would have existed after 1875 to replace men with, machinery, especially in most surface operations. I l l LABOUR - MANAGEMENT RELATIONS AFFECTING PRODUCTIVITY Generally - B.;C.'s collierie s were free from serious labour-management problems before 1890, though a few sensational incidents have helped create an image of a strife-torn industry led by ruthless, heartless capitalists deter-mined to plunder the coalfields without regard for worker comfort of safety. According to some writers, Vancouver Island-s coal miners were ' amongst the worst-treated labour 'forces in Canada, and considering the record of severe measures taken from time to time by management in the latter's attempts to maintain discipline and hold down costs, i t is hard 34 to argue that this i s a false view. We know, for example, of the HBC's ineptitude and occasional severity in dealing with miners' demands, and we have seen how poor management under Mark. Bate at the VCMLC served to break down labour discipline, often allowing minor complaints to become major issues. Repeated mine disasters, some of which included large losses of l i f e , were taken as proof that management placed economy far above safety, while the prolonged strikes of 1877 and 1912-13, in which owners demanded and received m i l i t i a projection for their interests, have been cited time and again by organized Labour as amongst the most high-handed, anti-workersactions on the part of business and government in 34 See Myers, Bennett, Phi l l i p s , and Robin as mentioned in chap. 5 fn 3. To a lesser degree, J.T. Saywell, "Labour and Socialism in B r i t i s h Columbia: A Survey of Historical Development Before 1903", BCEQ 15:129-50 (1951) can be considered in this light. - 216 -35 British Columbia's history. Robert Dunsmuir's refusals to negotiate wage increases,.coupled with his use of Orientals as strikebreakers, has strengthened the view that coal mining became a battleguomnd for labour against management, and has aided those who have sought to portray the 36 coal industry as the cradle of labour radicalism and solidarity in B.C. From earlier chapters we know that managers did not always agree as to what was most needed from the; workforce. A l l l a i d their f i r s t priority on production naturally, but the similarities in their views appear to have ended there. Robert Dunsmuir and Samuel Robins emphasized economy, discipline, f l e x i b i l i t y , and inventiveness in that order. Charles Nicol's priorities seem to have been the reverse. Appar-ently, Mark Bate and the speculators had l i t t l e idea of what qualities were most important, or how to make the best of them. Determining labour's expectations of management i s not d i f f i c u l t : judging by the numbers of strikes and the reasons for them, income levels appear to have been the workers' chief concern, followed by job security, then mine safety. During the period 1849-89, ten strikes involving a majority of the colliery work-force occurred on Vancouver Island. In a l l but two cases, the primary cause was wage rates, though miners' delegations often cited job protection 35 Writer's interviews with Ray Haines, Larry Ryan, et al of B.C. Federation of Labour, Victoria and Vancouver, 1970-71. See, too, Ph i l l i p s , No Power Greater, -pp. 6-10. 36 See references in fn 34. As revealed in the "Select Bibliography" of J. Friesen and H.K. Ralston, Historical Essays on British Columbia, Ottawa,(1976)^ pp. 288-92, the province's commercial and industrial leaders (after Confederation) have largely been ignored by historians and other scholars. Until this i s changed, and many more business studies are available, the pro-labour (or more precisely, anti-capitalist) viewpoint is l i k e l y to dominate much of B.C.'s historio-graphy. - 217 -37 and income maintenance as important issues. Colliery accidents were frequent, occurrences both below and above ground, but neither management nor labour regularly accused the other ofnnegligence or indifference in regard to safety. A l l parties, including government, eventually recog-nized their own responsibilities for improving safety conditions, and ea put-forth considerable effort to minimize hazards.. Coal mining was-dangerous everywhere, and probably more so: on the Island than most locations due to extreme geological faulting and the coal's high_gas 38 content. Language barriers between whites and Chinese occasionally caused accidents, but this feature does not appear to have been a serious p e r i l . Indeed, the Orientals' safety record as best as can be determined from the times they were involved in serious incidents is better than their white co-wOrkers. In the Dunsmuir mines after 1879 where there were often more Chinese employed than whites, an average of only..1.7 percent of the Chinese workforce was injured per year compared to 2.5 percent for the whole staff. The Vancouver Coal Company's experience was similar, .though i t s accident rate generally was much 39 higher. Several important conclusions can be drawn about mine safety and colliery productivity from the dkta*~b.elow: Fi r s t , only a small per-cent of the workforce were seriously.injured in most years. Second, the Dunsmuir co l l i e r i e s generally had a better ton raised per accident 37 See Bibliography. 38 See chap. 1 for geological and minerological hazards of these mines 39 See Table 6-3. Table 6-3. B.C. Collieries: Major Accident Statistics, 1877-90. Vancouver Coal Mining and Land Company- Dunsmuir Cal l mines) Year Orientals Total Workforce Orientals Total Workforce inj ured % of inj ured % of output rate inj ured % of injured % of output rate Oriental Qwockers per injury Oriental workers per injury workers (tons): workers (tons) 1877 * * 10 2.1 9,481 * * 13 4.5 3,749 1878 * A 12 218 6,845 * * 14 3.9 6,311 1879 * * 10 2.9 10,429 * * 25 6.7 9,482 1880 1 l.flj 3 0.9 25,911 1 0.3 5 0.8 37,972 1881 0 0 10 3.3 4,731 0 0 11 0.1 181,048 1882 4 3.9 8 2.6 5,914 3 0.7 20 2.7 11,536 1883 1 0.7 55 1.1 7,133 8 1.9 17 2.5 10,080 1884 7 2.4 29 4.6 4,616 6 0.9 46 1.9 5,533 1885 6 1.9 13 . 2.0 10,643 4 2.0 16 3.3 13,750 1886 4 1.6 15 2.6 7,517 3 2.5 8 1.5 23,231 1887 56 17.0 ' 166 22.8 837 5 1.3 20 2.9 11,961 1888 0 0 13 1.3 19,909 29 7.7 92 8.7 2,178 1889 0 0 13 1.6 17,221 3 0.7 22 1.7 13,845 1890 0 0 12 0.8 32,459 3 0.9 15 1.5 16,268 Mean 7 2.6 26 4.0 12,445 6 1.7 24 2.5 29,764 (1880-90) * no data available 40 B.C. Inspector of Mines "Reports" 1877-91 (in Min. of Mines AR's). A l l major accidents are shown in Table 6-3; the accuracy of these figures i s believed by the writer to be within 5%. - 219 -- 220 -- 221 -record than the VCMLC - a fact which appears more impressive when i t is remembered that the former usually out-produced the latter during the 41 period 1878-87. Next, Orientals cannot be considered the most inherently dangerous part of the workforce despite a legend that has grown,to this 42 effect. Fourth, the Dunsmuir mines were generally safer than their main competitor's. Both companies had at least one major disaster, taking a great many lives. The appointment of a provincial coal mines' inspector in 1874 did much to encourage more concern formmine safety among workers since i n addition to regular government inspections, each colliery accident resulting in serious injury had to be reported to Victoria. This in turn meant some kind of medical attention, a circumstance bound eventually to impress workers of the seriousness with which inspectors .bpokumine: safety. For managment, a bad injury meant at the least the temporary loss of a working hand, while in cases where several men were hurt, or where major damage was done to either shafts or equipment, there coMd be a significant i f riot severe loss of output. Hence, i t was i n the owners' best interests to maintain as safe a colliery as possible. It took years, however, for 43 this lesson to sink-in. While disasters l i k e those in 1884, 1887, and 1888 crippled production, i t is also clear that during the four decades after 1849, both labour and management had no wish to make safety an issue 41 See Tables 3-2,- 5i3,-andb5-4. 42 PABCvf for a considerable number of writers who have claimed Oriental workers were particularly hazardous in the coal Mines. Chinese labour employed in building the CPR had a similar reputation. 43 S. Issacson, vice president of finance, Canadian Collieries (Dunsmuir) Ltd., Nanaimo. Interview with the writer, Feb 1978, transcript in PABC Aural History division. - 222 -between them, for invariably the mines were put back into operation as soon as possible. In other words, despite their attempts at reducing hazards, a l l parties appeared to have had a f a t a l i s t i c view of coal mining, 44 expecting accidents - some disasterous - to happen often. If mine safety was not a significant issue between labour and management during the period of this study, what then of job security? Because the coal industry was in a process of expansion throughout the years 1849-91, mine closures inevitably were offset by the opening of new shafts. Consequently, the workforce rarely had to fear job losses stem-ming from the shutdown of a single pit. Even repeated failures in speculative ventures during the 1860's-70's meant l i t t l e in this, regard, as there was sufficient mining activity always going on for skilled colliery workers to remain optimistic. S t i l l , there were occasions of prolonged unemployment for some worker groups. ^Native Indians, for example, had fewer and fewer opportunities for colliery employment as more and more manual tasks were taken-over fey machinery. Orientals and whites who per-formed such work were similarly affected. The Chinese had one important advantage in that they constituted a large block of workers willing to perform a l l tasks at low wages. Management therefore tended to replace unskilled Indians' and whites with Orientals whenever the owners believed 45 they could do so without opposition from the white community. The largest threat to jobs, however, came from depressions in the coal trade. As w i l l be seen in a later chapter the state of the San Francisco market had a direct and powerful influence (after 1874 especially) on employment 44 BQM. TMSimv:-JOf>- -Mines 1874-91, passim. 45 See Tables 6-2 and 6T4. - 223 -in.British Columbia's c o l l i e r i e s . Major and recurring recessions in the California economy from the mid-1860's to mid-1880's suppressed demand 46 for a l l coal, including Vancouver Island's. Competition from other suppliers was growirjg during this period, and B.C.'s colliery owners often were forced to cut-back on production as they could not afford to reduce prices substantially. Given the labour-intensive character of their c o l l i e r i e s , i t followed that management would have to overcome i t s own fear of layoffs, (which i t had by the early 1870's thanks to a better supply of skilled labour), and periodically reduce i t s workforce in order to cut costs in the face of lower profits. With no collective agreements to protect jobs, labour suffered considerably over the short run. Owners sometimes relieved the pressure by allowing production to continue at regular levels, thereby increasing the inventories of unsold coal with hopes of a market upswing the following year. Often this worked, though i f two bad years in a row occurred, men had to be la i d off. Job security became a serious issue between workers and owners only on thosecoccasions when i t was clear that management clearly was indifferent to the impact on labour of f a l l i n g markets, or when owners forced Oriental labour into the picture. As for labour productivity, there is no evidence to suggest that i t was affected in the years to 1891 by unemployment or i t s threat. Income levels appear to have had a significant effectuupon productivity, though to what extent is not yet f u l l y clear. During the four decades in question here, B.C.'s co l l i e r i e s were struck by large numbers of workers (often the majority) eleven times - eight strikes of which were wage-rate inspired. Sometimes months of production were lost, 46 See chap. 8 for marketing trends and details. - 224 - . though a more important consequence was.the growing division between labour and management caused by their joint i n a b i l i t y to find a formula for establishing mutually acceptable salary.levels linked to either pro-ductivity or some other index. Although wage-rates in the province's coal mines generally moved upwards between 1849—91, providing increases that compared favourably with those paid colliery labour elsewhere, workers' rewards were a source of labour agitation from the beginning of coal mining 47 on Vancouver Island. And worker dissatisfaction with their incomes, coupled with management's intransigence in the matter, probably dampened over time the rate of increase in labour productivity. Gathering evidence' for this view is d i f f i c u l t , insofar as i t is. believed that quantitative analysis would show productivity gains can be accounted for - with high 48 degrees of certainty - by a l l factors of production. Hence i t has been impossible through the use of this and'other available methods to.signify wage-rates along as a major determining agent i n long—term productivity increases. S t i l l , certain inferences can be drawn from various trends and. events. By hiring large numbers of Orientals, colliery owners avoided the need to mechanize much of their operations: As we know this practice made for labour-intensive industry. In having to rely chiefly upon British colliers and ex-gold miners to work the coal, owners introduced articulate, 49 sometimes radical elements into their workforces. Notwithstanding any hosti l i t y these imported workers had towards Orientals, circumstances - 5 47 See chaps. 2 and 3. 48 See .BCPMmh research notes on "Coal Mining". 49 P. Phillips, No Power Greater (1967), pp. 4-65. - 225. ^  soon drew the' Chinese and whites together as parts of a single working group so thay by the early 1880's whenever the miners chose to strike over wages the Orientals (along with non-mining whites) invariably f o l -lowed suit.*^ AAccorollory of the new link between the main labouring elements was. the growing d i f f i c u l t y owners were having in attracting strikebreakers. Since the Chinese could no longer be relied upon to work independently of the whites, management's options for maintaining production in a strikfe situation were severely limited. In fact, their owners' only defence became the lockout, which they often used. Finally i n this attempt to infer from events the effects wage-rates had upon productivity, i t is argued below that the trend in labour-management disputes was more and more focused upon worker incomes alone. Low wages had been only one.of several complaints raised by employees in the HBC's mines. Isolation, poor management and even diet had received equal attention."'''' Nanaimo Coal Company o f f i c i a l s indirectly cut-into miners' incomes by placing a three pence duty on clay-bearing coal during October 1861. This action prompted a 100-man walkout lasting 52 five days. By 1865, the VCMLC was-paying miners $1.32 per ton maximum -a rate resulting i n about $2.50 per day for twelve hours work. Since the pithead price per ton was $6.00 the miners f e l t j u s t i f i e d in demanding 50 John Bryden "Letterbook", 1878-80, PABC MSS, passim. The breakdown of colliery proprietor control that effectively had separated the Orientals from white workers may well have been a main cause for the steady re-duction in the numbers of Chinese employed after 1887. See Table 6-2. 51 Andrew Muir "Diary"; "Nanaimo Correspondence" (1852-53); "Nanaimo Journal" (1855-57) - a l l passim. 52 Colonist, 4 Oct 1861, p. 3. - 226 -raises of ten percent on the ton or fifteen percent per day, claiming their "grievances arise chiefly from not being able to -make reasonable wages". When the company refused, the miners struck, adding demands for 53 better accommodation and cheaper rents. In May 1867 the Vancouver Coal Company was struck again for higher wages, but i t was plain that several 54 minor issues were at stake, too. A prolonged strike over wage rates occurred at the VCMLC in the winter of 1870-71. Almost five months was lost with a production decrease close to twenty-five percent in each of the two years. It was a bitter dispute, requiring government action to cur t a i l strikers from vandalizing property and intimidating company o f f i c -i a l s . Towards the end, appeals were.made as far south as Victoria by Nanaimoites to assist destitute strikers and their families. Similar troubles accompanied the strike-lockout at Dunsmuir, Diggle in 1877. Again the dispute was over wages, though the extremly hadd line taken by Robert Dunsmuir from the outset, together with the provincial governmentls apparent willingness to support his demands for police^protection,turned the matter into a class-conflict.' One of the periodic market recessions had held wages at $1.00 per ton, an amount hardly worth, working for. Re-peated requests for a=twenty-five cent increase were refused, and as talk of a strike mounted, Dunsmuir reacted by closing his mines. Ultimately he broke the strike by outlasting his workers, and the miners returned for the 53 Letter from "A Miner" to editor, ibid.3 28 Jan 65, p. 3. 54 Ibid.3 8 May 1867, p. 3; see also fn 30. 55 Ibid., 6 Jan 1871, p. 3; see also fn 31. . - 227 -old rate."" L i t t l e improvement in wages was f e l t during tile next six years, and another strike over incomes occurred at the Dunsmuir colliery in 1883. Again.management held firm, and though three months production was lost, the workforce could not prevail upon the owner-^managers for an increase. Even as late as 1889 the Dunsmuirs were able to withstand worker pressure for better rewards. No increases i n wages had been granted by the Wellington Collieries .since 1874. When the miners demanded a meeting with James Dunsmuir during January to negotiate wage-rates,' he acted swiftly, doing "what was natural" according to the Daily Colonist which further claimed that Dunsmuir "anticipated them, and closed the works". In the editor's view, " i f the men suffer they w i l l have only to blame themselves and the agitators who have for some timefebeen fbrmanting discontent among them','. SUMMARY OF LABOUR UTILIZATION AND PRODUCTIVITY In the period covered by this study, British Columbia's coal industry by and large was labour intensive. Up to the early 1870's a main aim of management was to reduce i t s large dependence upon labour by substituting technology for manual 56 As discussed i n chap. 5, this strike i s among the two most referred-to i n writings on B.C.'s coal industry. It's effect on Robert Dunsmuir's • reputation as an employer has so far been devastating. For the fullest available account of the event, refer to J.N.G. -Barlett, "The 1877 Wellington Miners' Strike", UBC, unpub. B.A. hons essay, 1975. A fascinating and important feature of this strike was the use of m i l i t i a troops in support of the sheriff responsible for evicting miners from company housing. For an assessment of the militia's involvement and actions, see R.H. Roy, " ' . . . i n Aid of a C i v i l Power', 1877", Cndn. Army Jour 7:3:61-9 (1953); for further details see "Report of the Dep. Adj. Gen - Mil. Dist. No. 11 - re: Wellington, 4 May 1877", PABC MSS. 57 Colonist, 4 Jan 1889, p. 2. Table 6-4. B.C. Collieries: Wage Rate and Payroll Statistics, 1874-91. VCMLC DUNSMUIR Wage-Rates Payroll* Wage-Rates Payroll* (average dollars daily) (dollars) (average dollars daily) (dollars^ Year Whites Orientals Indians Boys weekly annual . cost per Whites Orientals Indians Boys weekly annual cost per ton of ton of output output 1874 2.75 1.19 1.38 — 3,959 205,861 3.98 3.00 1.25 1.25 1,854 96,408 3.23 1875 3.50 1.19 1.25 - 6,490 337,494 5.66 2.75 1.25 1.25 - 2,931 152,412 3.02 1876 3.00 1.13 1.25 - 6,448 335,278 4.54 • 2.80 1.13 1.13 - 3,164 164,528 3.10 1877 3.00 1.13 1.25 6,308 328,009 3.46 2.88 1.13 1.13 - 3,410 177,297 3.64 1878 2.75 1.13 1.25 — 4,864 252,953 3.08 2.25 1.13 — - 3,100 161,206 1.82 „ 1879 2.88 1.13 1.25 - 4,692 243,983 2.34 2.88 1.13 — 4,100 213,193 1.87 £ 1880 2.88 1.13 1.25> - , 4,536 235,856 3.03 2.88 1.13 - - 6,279 326,508 1.80 1881 2.88 1.13 1.25 • 3,851 200,273 4.23 2.88 1.13 - - ' 6,449 335,356 1.85 1882 3. 00 1.25 1.25 - 4,079 212,110 4.12 2.88 1.13 - - 7,393 384,425 1.67 1883 3.00 1.25 1.88 - 6,092 316,770 8.88 2.88 1.13 - - • 6,861 356,766 2.08 1884 3.00 1.13 1.88 1.25 7,574 393,847 1 2.94 2.88 1.13 - 1.38 8,265 429,796 1.69 1885 2.88 1.13 1.69 1.50 7,196 .374,182 2.70 2.88 1.13 - - 5,796 301,376 1.37 1886 2.88 1.13 1.50 2.00 6,598 343,081 3.04 , 2.88 1.13 - • - 6,960 361,932 1.95 1887 2.88 1.13 2.00 2.00 8,306 431,895 3.11 2.88 1.13 - 7,071 367,717 1.54 1888 3.00 1.13 2.00 2.00 15,836 823,493 3.18 2.88 1.38 - - 13,359 694,668 3.47 1889 3.00 1.13 2.00 1.00 15,654 814,008 3.67 2.88 1.13 - 1.38 17,252 897,119 2.95 1890 3.00 1.13 2.50 1.38 28?837 1499,534 3.85 4.38 1.25 - 1.75 23,780 1236,560 5.52 Mean 2.78 1.15 1.58 1.59 8,312 432,224 3.87 2.75 1.17 1.19 1.50 7,638 397,182 2.50 * determined from o f f i c i a l colliery returns to B.C. Min. of Mines only. 58 B.C. Min. of Mines Ms, 1874-90. Table 6-5. B.C. Collieries: Labour Productivity Statistics, 1874-91. VCMLC DUNSMUIR BRITISH COLUMBIA Year output employees tons raised output employees •.tons isaised output employees tpnsrraised (tons) (no.) per employee (tons) (no.) per employee (tons) (no.). p_er employee 1874 51,728 314 164.7 29,819 175 170.4 81,000 489 188.9 1875 59,603 414 144.0 50,542 289 174.9 110,000 711 176.6 1876 73,799 478 154.4 52,935 290 170.2 139,000 834 163.0 1877 94,809 471 201.3 48,743 292 167.0 154,000 903 173.9 1878 82,135 427 251.2 88,361. 359 246.1 171,000 809 243.6 1879 104,233 343 304.0 113,787 373 305.1 241,000 904 251.8 1880 77,734 342 227.3 189,861 658 289.0 268,000 1,000 320.2 1881 47,308 304 155.6 181,048 690 262.4 228,000 . 994 .278.4 1882 51,429 307 . 167.5 . 230,711 743 311.0 282,000 1,050 322.7 1883 35,665 446 80.0 171,364 697 245.9 213,000 1,233 203.4 -1884 133,859 636 210.5 254,538 821 310.0 394,070 1,416 396.8 1885 138,353 654 211.5 220,000 480 458.3 365,000 1,282 338.9 1886 112,761 575 196.1 185,846 549 338.5 326,636 1,411 249.7 1887 138,713 728 190.5 239,217 695 344.2 413,360 1,575 308.9 1888 258,817 985 262.8 200,392 1,060 189.0 489,300 2,200 236.5 1889 223,870 794 ' 282.10 304,587 1,317 231.3 579.830 2,464 258.0 1890 389,505 1,493 260.9 244,033 996 224.9 678,140 2,659 255.0 1891 527,457 1,464 360.3 459,974 1,342 342.8 1,029,097 2,995 343.6 Mean 144,571 621 208.0 181,431 657 265.6 342,913 1,385 261.7 59 B.C. Min. of Mines ARs3 1874-90. - 230 -Fig. 6 - 4 COLLIERY PAYROLLS, 1 8 7 4 - 9 0 DAILY WAGE-RATES 1875 1880 1885 1890 2 5 o T3 white adults VCMLC Orientals t ^ t u r m - ^ ANNUAL PAYROLLS 1,600 DTG-78 J - 231 -- 232 -- 233 -work wherever possible. To a degree, the HBC was successful in this regard, and both machine and labour productivity climbed in the years 11 that the Company controlled the Vancouver Island coalfields. Proportion-ately greater emphasis by the Nanaimo Coal Company and Charles Nicol of the VCMLC upon technology appears to have had the effects of cutting output-per-worker costs, increasing the value of fixed colliery capital, speeding the trend towards worker specialization, and reducing tensions associated with labour discipline. Despite chronic labour shortages throughout most of theyyears 1849-91, coal proprietors managed to find sufficient numbers of skilled and unskilled hands to generally increase annual production. Colliery labour in the seventies and eighties was comprised mainly of B r i t i s h -trained coal miners, experienced gold miners leaving the B.C. mainland, and Chinese immigrants. Robert Dunsmuir's extensive use of Oriental labour, at rock-bottom wage-rates, had a major impact upon the industry, in that he showed both greater profits and productivity were possible in a labour intensive colliery than owners had been led' to believe. Other proprietors followed suit, and the industry settled-in to being labour dominated for production purposes. With more workers came more demands for wage increases, more injuries through colliery accidents, and more dangers to job security. Each of these had an effect upon productivity, especially wage-rates which were the greatest cause of labour-management disputes, and which period-i c a l l y resulted i n strikes and lockouts. Management appears to have understood partially the mechanism and value of wage incentives vis-a-vis production, as i t early-on followed the advice of the oversmen in placing - 234 -miners on tonnage rather than daily r a t e s . ^ It did not, however, grasp the idea that by allowing workers to share in the profits,from greater output through correspondingly larger wages, production i t s e l f l i k e l y would increase. Over the long-term, both annual gross output and the tonnage-raised-per-worker-employed climbed, but wage-rates advanced very l i t t l e . A variety of factors, including improved techniques, better coal deposits, and a greater concentration of workers at the coalface could explain the generally steady increases in both production and productivity, but i t is worth wondering how much better these might have been had wage levels moved ahead in tandem,with profits. Finally,from the s t a t i s t i c s , ,it is clear that the Dunsmuir col-l i e r i e s were, on balance, at once more productive and more efficient than i t s chief competitor's. In each labour index studied to this point -gross output, tonnage-raised-per-colliery-employee, workforce composition, output-rate-per-serious-injury, wage-rates, annual payrolls — every one shows i t s e l f to have been a favourable advantage for the owner-managers. In short, the Dunsmuirs, despite their lasting reputation as harsh employ-ers, were unquestionably the most adept at labour u t i l i z a t i o n . In the next two chapters i t is revealed that they were also slightly superior to the VCMLC management in their handling of technology and markets. 60 HBCA (PAM) All/72-74, passim; "Nanaimo Correspondence", 1852-53, PABC MSS. Chapter Seven MACHINES INTRODUCTION At the time coal mining was begun at Nanaimo, colliery technology elsewhere had reached high levels of efficiency and sophis-tication. Steampower, introduced to coal exploitation in the eighteenth century, had done much more than complement manual labour - i t revolution-ized coal mining. In the earliest colli e r i e s coal was surveyed, extracted, and handled by manpower alone. Horses and other livestock were often used to transport coal (both below and above ground), but this innovation had only limited impact upon productivity, insofar as animals merely hauled what man already had raised. As surface coal deposits became exhausted, and deeper mining was attempted, colliery owners sought means to overcome many seemingly insurmountable physical obstacles, including flooding, shortages of fresh air , 'rock barriers, and the increasingly greater depth from which coal was to be removed. Primitive steam engines working as pumps were the f i r s t power machines installed i n c o l l i e r i e s , though they did l i t t l e more than hint at future solutions. Of more consequence were the advances being made in railway technology. Land transport by r a i l had i t s genesis as much in the desire to link inland c o l l i e r i e s with tidewater as for any other purpose.''" Coal owners adapted designs orig-inally prepared for constructing steam locomotives in order to build stationary engines suitable for a wide variety of sub-surface and upper-works roles. Hence colliery and railway requirements to extract and 1 J.U. Nef, "Coal Mining and Utilization", History of Technology, Oxford,(1958) vol. 3, pp. 72-88. - 236 -transport coal respectively made for a mutual coincidence of needs that resulted in a completely new colliery technology, the existence of which eventually was of great benefit to British Columbia's infant coal industry. In this chapter discussion centres upon both the nature of colliery machinery (as used on Vancouver Island to 1891) and i t s effects upon coal production. Descriptions of the most important equipments are given, and the application of machines to achieve new output levels i s outlined. Further, i t is argued that among the benefits realized by those Island coal proprietors who.successfully introduced and maintained modern colliery machinery were the removal of major physical bottlenecks, a significant countering of the effects of labour shortages, substantial gains in the rate of proving new. coal discoveries, large increases in the amount of fixed colliery capital, and important gains in production and productivity. It i s not a purpose of this chapter to produce a definitive treatment of colliery technology in B.C. from.1849-91. Such a study would be extensive, highly detailed, and surely would distract from the main goal of comparing the relative impact of technology as.a production agent vis-a-vis other factors of production. Thus only those descriptions of machines, methods,, and other technical data believed essential for a basic understanding of how technology was acquired and how i t was inte-grated with other elements to speed coal production and transport are given. This constraint should in no way give the impression that tech-nology was a minor factor in colliery operations as the opposite was true. Rather i t i s imposed simply to keep this thesis within reasonable bounds. - 237 -I COAL MINING IN THE MID-NINETEENTH CENTURY ^  Steampowered machinery and the techniques needed to maximize i t s use; were a v i t a l part of colliery operations long before coal mining began in British Columbia. Britain's coal industry in particular had come to rely greatly upon steampower during the last two decades of the eighteenth century. And since Vancouver Island's coal mining operations throughout the years 1849-91 were conducted almost wholly by British-trained managers and miners, i t was natural that British colliery technology would be the kind used in B.C. Specifically, technology is defined here as the factor of production consisting of the manual- and machine-powered efforts used in coal exploration, extraction, and preparation for distribution and ultimate sale. More generally, coal mining technology is a combination of many different equipments and techniques linked together in greater or lesser degrees to become v i t a l processes. (Thus we nsould speak, for example, of exploration technology, mining technology, transport technology). For colliery operators intent, upon improving the overall coal mining process, a sound grasp of many types of technology was needed, as was a clear understanding of the c r i t i c a l relationships the various technologies had to one another. Owners could create bottlenecks simply by improving their extraction technology while ignoring the need to upgrade their techniques in, say, sorting and grading. Hence, a seemingly obvious advance could turn out to be a retrograde step i f i t burdened down other parts of the operation. An example of this, phenomenon was the introduction of blasting powder to hewing in the 1850's whereby much more coal than could be produced at - 238 -2 the face by the same number of men. Yet until means were found to boost the rate at which the coal was hauled, then hoisted, the amount of coal reaching the surface could not increase, the underground stockpile of coal would grow, the'need for cutting lessened, miners were idle, and actual productivity remained constant. In truth no technological advance had been made due to this dramatic advance in cutting technique - other steps were required to take f u l l advantage of this innovation. S t i l l , in the long run i t tended to be good management to increase the amount and sophistication of technology in use. It i s , after a l l , axiomatic that for heavy industry, (including resource ex-ploitation) , employing power machinery combined with skilled operators normally is more productive-;..(once installed) and less costly than manual 3 labour alone. This fact had long been known in the British coal industry, and a l l those who had planning responsibilities in even modest-sized c o l l i e r i e s , (which included thoseaon Vancouver Island), showed a marked tendency to opt-for power -equipment whenever i t became available. More-over, as implied above, the very act of introducing a new technology to one process became a major incentive to find similar means that would fore-s t a l l the creation of bottlenecks elsewhere in the colliery operation. 2 J.A.S. Ritson, "Metal and Coal Mining, 1750-1875", ibid.3 vol. 4, pp. 64-98. Blasting powder was not in common use in B.C. collier i e s u n t i l the late 1860's. 3 For Verification of this theme consult H.J. Habakkuk, American and British Technology in the Nineteenth Century. The Search for Laboicr-Saving Inventions3 Cambridge-C 1962,) chap. 6, pp. 189-220. Also worth, noting i s C. Wilson, "Technology and Industrial Organization", History of Tech.3 vol. 5, pp. 799-813. - 239 -There was another good reason for owners to emphasize technology: If thanks to technical advances a neighbour colliery dramatically increased i t s productivity, i t s competitive position l i k e l y improved, too. Con-sequently, owners always had to be alert to technological changes elsewhere or face the danger of f a l l i n g behind, their colliery becoming a backward and increasingly vulnerable operation. By responding to such pressures, (in that the larger firms did imitate each other in acquiring and adapting new machinery and methods), She coal mining technology of B.C. never stopped moving steadily ahead. Finally, i t must be remembered that our interest in coal mining technology is well-placed also because the coal trade's survival depended largely upon advancing technology to combat the retreating nature of the resource. Technology, then, lik e land acquisitions, was a v i t a l factor of production, though i t s application tended to have a more immediate impact upon productivity and profits than new.ccoalefi'ndsTo understand more clearly why machine technology wase so much preferred over manual labour in B.C.'s coal industry (at least to the mid-1870's), and to know why they were so c r i t i c a l to colliery survival, i t i s necessary to realize how far coal mining technology had evolved by 1850. From ancient times coal regularly had been taken by "stripping", a method that removed overb