The Lehigh Coal and Navigation Company
Gianni Simplicio
Department of Economics
College of Arts and Sciences
Abstract
An analysis of the economic development of a region allows a researcher to explain the path of historical development in quantitative rather than qualitative terms and often lends insight which might be hidden or counterintuitive. For the Lehigh Valley, few factors have had more of an impact on the region's evolution than the Lehigh Canal, due to both its antecedence and fortuitous circumstances of geography and geology. Since the Lehigh Canal cannot in itself be analyzed as an economic entity, this study examined the economic and historical development of the controlling corporation; the Lehigh Coal and Navigation Company. Data examined came primarily from stockholder reports produced by LCNC over the years 1826-1856, but also from concurrently and subsequently published third party reports on the region and the company.
The research and technical analysis indicated that LCNC was inherently an unprofitable company. For its first decade, the company consistently failed to meet its sales goals and expenses outpaced revenue. However, once the canal was fully developed and opened to public use, other companies found it profitable to exist upstream and ship their product to market using LCNC's facilities. Beginning in 1836, these companies accounted for approximately half the total coal shipped on the canal and a huge spike in revenue due to tolls. As a result, the company became profitable due to unintentional and unanticipated consequences of its existence rather than a solid business model. The end result of these events is what led the Lehigh Valley region to become a superpower in coal and steel production.
Bio: Gianni Simplicio completed this research as a fifth year undergraduate student in a wonderful class taught by Dr. Stephen Snyder. His academic interests include economics, political philosophy, and literature. He moved to New York last week.
