Geography and Industry

Continuing on the theme of environment significantly shaping development and history, here we see how the uneven distribution, quality and accessibility of coal reserves determined the course of the industrial revolution, and how geography also had a major impact on the newer alternative energy source of hydroelectricity, determining which countries (or parts of countries) would be able to play catch up.

The objective of this article is to analyse the importance of one of the new energy sources, electricity, since the end of the nineteenth century until 1945, from the point of view of natural resource endowments. Not all countries had good or equivalent endowments of coal, the energy-producing mineral of the nineteenth century, and for this reason not all of them had the same opportunities to use it, given that the transport cost was very high due to its weight in relation to its caloric power. Electricity reduced the dependence on coal resources as it could be produced not only from coal but also from water.

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The accessible coal endowments available at that time can be proxied by the reserve estimates elaborated by the Geological Survey of Canada in a monograph prepared for the Twelfth International Geological Congress, which was held in Canada in 1913. These estimations are presented in Table 1, both in the form of total coal reserves and coal reserves per capita in each country. Well endowed in coal were Canada and the US in North America and Germany, the UK, Austria and — in an intermediate position — France in Europe. The Northern European countries Denmark and Sweden and the Southern European countries Italy, Greece and Portugal all had poor coal endowments. Looking at coal quality, Spain and especially Italy lacked good quality coal; as for the cost of extraction, this was particularly high in France and Spain, due to the characteristics of its seams.

The differences of national coal endowments are reflected by the levels of coal prices at colliery (see Table 2). We find lower coal prices in the USA, the UK and Germany than in France and Spain, and these differences were substantial. We can see how in the case of France and Spain, where extraction costs were significantly higher, the prices at colliery were too. However, in France, contrary to Spain, the coal reserves were closer to the industrial centres, and these centres were also closer to other coal producing countries. Italy, due to her scarcity of coal, imported coal from the UK through Genoa, with the resulting difference in prices with respect to the other above mentioned countries (see Table 2).

Despite the reduction in transport cost at the end of the nineteenth century, resort to imported coal significantly increased its price. Coal is heavy and bulky in relation to its unit value. Moreover, the differences in transport costs between countries close to and far away from coal production centres persisted over time. In Table 3 the average freight rates from Cardiff to different ports in 1909-1911 are shown. The freight rates to the closest continental harbours were about 4.5 shillings (s.) per tonne on average, but they ranked from 5.5 s. to 7 s. per tonne to the Mediterranean. For example, in the case of Barcelona, the industrial centre of Spain, the rate was 7.42 s. per tonne, and in Genoa it was 7.08 s., both of them being amongst the highest.

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Natural resources also had effects on the type of electricity being produced in these countries when electricity eventually arrived. In the case of the USA, the main thermoelectric power plants were located in the regions along the Mid-Atlantic coast and in the North-East-Central industrial belt. In 1932, they represented 57 per cent of total installed power, 65 per cent of the electricity production in the USA, and 70 per cent and 75 per cent of the installed power and production, respectively, of thermoelectricity. The main hydroelectricity power plants clustered in the coastal regions of the Atlantic (New York State, Pennsylvania, Maryland, North and South Carolina, Georgia and Alabama) and along the Pacific (in California). In 1932, the former regions represented 45 per cent of the hydroelectricity production, and California 30 per cent.

In the UK, as mentioned above, the coal resources were extensive and of good quality. This country had less access to waterpower with the exception of the Highlands in Scotland. Even the locations of coal seams were favourable, as they were distributed all over the country. This created a great advantage in terms of low coal prices for the country as a whole. In the advent of electricity, the main primary energy source became steam to produce thermoelectricity, and small local plants were established close to the location of coal mines.

In France, however, the coal fields were located in the regions of Pas de Calais, the North, Lorraine (Moselle), the Central Massif (Saint-Etienne, Creusot, Gard, etc.) and the Saar (between 1925 and 1935). National production represented around two-thirds of the needs of the country, and the rest was imported from countries near to centres of production and consumption. The coal mining districts mentioned above were important industrial centres, which, time passing, became users of thermoelectricity. Water resources were substantial in the regions of the Alps and the Pyrenees, both well endowed with high falls of little flow, and in the Central Massif, where there were wide rivers. These regions, situated far from the important coal seams, used hydroelectric energy and were centres of the electrochemical and the electrometallurgical industries, which require cheap and abundant supplies of electric energy. The proportion of thermoelectricity was 57.3 per cent, the remainder being hydroelectricity.

The situation was worst in Italy because of the scarcity of coal and its low caloric power. As a result, coal had to be imported. For that reason, electricity was generated by hydraulic power, once the problem of long distance transmission was solved by means of the alternating current. The most important hydraulic resources were concentrated in the Alps and the Po Valley, between the Alps and the Apennines in the North of the country. The regions endowed with the most important sources of waterpower were the Piedmont and Lombardy, the Po Valley (Adda, Adige, Ticino, Tevere, etc.), the Venetia region and that of Umbria.

The situation was different in Spain. As we have seen in Table 1, the coal resources were better than those of Sweden and Italy, worse than those in the United Kingdom and Germany, and similar — in per capita terms — to the case of France. The problem was the quality of Spanish coal as well as its difficult extraction and, hence, its high cost of production. Moreover, the most important coal resources were located in the Asturias region, in the North of Spain, close to the sea side but difficult to transport out because of the mountains that enclose the region. Given its inaccessibility, a substantial part of coal consumption was supplied through foreign trade with the inconvenience of high transport costs. Spain's hydraulic resources were better than its coal resources, but not as abundant as in Italy, Sweden, Norway or Switzerland. Falls were located in the Pyrenees and the Penibetic range. The rivers had small flows, but they did occupy high grounds, which represented an advantage for electricity production. The rivers with the best flow conditions were the Ebro, the Douro and the Tagus. The disadvantage of a low flow is that this makes it very much dependent on year over weather conditions, making a substantial investment in dams necessary to stock water.

We have calculated the proportion of hydroelectricity and thermoelectricity in the total electricity production of each country. As shown in Figure 1, at the top of the countries using hydroelectricity were Canada, Italy and Spain. Hydroelectricity accounted for over 80 per cent of their electricity production. At the bottom, using less than 60 per cent, as already commented, were the coal intensive countries, i.e. the UK, the USA, and France, although, France had a lesser proportion of thermoelectricity.

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In short, an advanced electrification process is observed in the countries less endowed with coal, such as in Spain, Italy and the Northern European countries, in spite of their different levels of economic development. On the other hand, the countries that were the last ones in electrifying their industries were the countries blessed with better coal endowments, such as the UK, Germany and France. The exception among them corresponds to the USA, which had good endowments of both resources.

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The degree of electrification advanced substantially from the end of the nineteenth century until WWII, the height of the process being 1925, after WWI, when real electricity prices fell considerably. The behaviour of the relative prices electricity-coal, coupled with the new technical opportunities for electrification in the manufacturing sector where electricity competed with steam, produced important possibilities for economic growth. There was also a relationship between the accumulation of physical capital and electrification process and the increase in labour productivity, manufacturing and income per capita, especially in the countries that were badly endowed with coal deposits, but enjoyed better opportunities for the production of electricity.

Concha Betrán. "Natural Resources, Electrification and Economic Growth from the End of the Nineteenth Century until World War II". Revista de Historia Económica, 2005.