What 300 Years of Firewood Prices Reveal About America's Economic Evolution

A Carnegie Mellon economist's comprehensive study of firewood pricing from 1700-2010 reveals hidden patterns in GDP growth, energy transitions, and how economies adapt during social upheaval.

Key Takeaways

• Firewood powered the entire American economy before the Civil War, yet comprehensive price data never existed until now
• Three distinct pricing periods: stable 1700-1800, rapid increases 1800-Civil War, then stability except during 1970s energy crisis
• Early GDP estimates were significantly understated because they undervalued firewood as an economic input
• Agricultural productivity measurements missed firewood production, the sector's largest energy commodity output
• Energy transitions consistently coincide with periods of social upheaval - Civil War, World War I, 2008 financial crisis
• Coal replaced firewood due to declining production costs and superior energy density per unit volume
• Firewood markets demonstrate classic transportation-driven price convergence as railroad networks expanded
• Digital archives and AI-powered text extraction made this historical research possible for the first time
• Energy sources never completely disappear - firewood demand resurged during 1970s oil shocks and 2008 recession

Timeline Overview

• 1700-1800 — Firewood prices remain stable relative to inflation despite high volatility, serving as America's primary energy source with data collected from probate records and estate valuations
• 1800-Civil War — Systematic price increases of 0.5-1% annually in real terms as urbanization creates formal markets while forests recede from cities, increasing transportation costs
• Civil War Era — Energy transition accelerates as commercial coal production scales up with declining unit costs, offering superior energy density compared to bulky firewood
• Post-Civil War to 1970s — Firewood prices stabilize as coal dominance established, though pockets of wood heating persist in rural areas and certain regions like New England
• 1970s Energy Crisis — Oil price shocks trigger systematic return to firewood heating, driving real price increases as consumers hedge against energy costs
• 2008 Financial Crisis — Economic upheaval again increases firewood demand as households seek cheaper heating alternatives during recession

The Hidden Energy Foundation of Early America

• Firewood represented virtually 100% of American energy consumption before the Civil War, powering households, manufacturing, and even early railroad locomotives that consumed massive quantities stored in cord stacks along rail lines.
• The academic literature and government statistics contained no comprehensive firewood price series despite this fuel's dominant economic role, creating a massive gap in understanding early American economic development and growth patterns.
• Existing GDP estimates from this period used extremely low firewood price assumptions, significantly understating the true size and energy costs of economic growth during America's rapid expansion phase.
• Agricultural productivity measurements failed to account for firewood as the sector's primary energy commodity output, since most wood production occurred within farming operations rather than specialized forestry businesses.
• The informal nature of firewood markets meant that much energy production occurred through home labor - families cutting wood on their own land - making this economic activity invisible to traditional market-based measurement approaches.
• Only urbanization created formal firewood markets as city dwellers lost access to backyard woodlots, forcing commercial exchange and generating the price records that make historical analysis possible.

Three Centuries of Price Patterns and Market Evolution

• From 1700-1800, firewood prices showed no significant trend when adjusted for inflation, moving in line with general price indices despite substantial volatility caused by weather, transportation disruptions, and local supply variations.
• The critical transition period from 1800 to the Civil War saw systematic real price increases of 0.5-1% annually, reflecting growing scarcity as forests near cities were depleted and transportation distances increased.
• Estate records and probate inventories provided the earliest price data, as legal entities valued household assets including "five cords of firewood" or "ten cords of firewood" for settlement purposes.
• Newspaper advertisements became abundant during urbanization, allowing software extraction of pricing data by cord, species, month, and year as commercial firewood markets developed in growing cities.
• Regional price convergence occurred from 1800 to the Civil War as expanding railroad networks enabled arbitrage between Midwest suppliers and Northeastern urban markets, demonstrating classic transportation-driven market integration.
• Quality differentiation appeared in pricing data, with hardwoods like oak and hickory commanding premiums over softwoods like pine, reflecting systematic consumer understanding of energy content differences per cord.

The Great Energy Transition: From Wood to Coal

• Commercial coal production began scaling around 1830-1840, exhibiting the typical pattern of declining unit costs over time as production processes matured and infrastructure developed.
• The energy transition occurred through contrasting price trajectories - firewood becoming more expensive due to scarcity while coal became cheaper through production efficiencies and technological improvements.
• Coal's superior energy density provided crucial advantages beyond price, offering the same BTU content in much smaller volumes, reducing storage costs and inventory management challenges for businesses and households.
• Railroad technology created ambiguous effects on firewood markets, potentially reducing transportation costs while simultaneously creating voracious demand as locomotives burned wood fuel until after the Civil War.
• The transition wasn't immediate or complete - Census data from 1940 showed appreciable shares of home heating still coming from wood in states like Oregon, Washington, and New England regions.
• Iron manufacturing relied exclusively on charcoal (processed wood) from colonial times through the Civil War, creating massive industrial demand that contributed to forest depletion near manufacturing centers.

Seasonal Markets and Quality Premiums

• Portland, Oregon data distinguished between green, half-dry, and fully dry cord pricing for approximately two decades, revealing systematic quality premiums for seasoned wood with lower moisture content.
• Summer firewood sales showed steep discounts compared to winter pricing, reflecting both seasonal demand patterns and storage/seasoning dynamics as suppliers prepared inventory for peak heating months.
• Species-specific pricing data demonstrated clear positive correlation between market prices and energy content, with dense hardwoods like hickory and oak commanding premiums over softer woods.
• Monthly pricing patterns suggested a "seasonal contango" effect where some firewood purchased in summer was stored and seasoned for sale at higher winter spot prices.
• Transportation technology evolution from animal carts to canals to railroads improved supply chain efficiency while railroads simultaneously created massive demand as fuel consumers themselves.
• Multiple cord stashes along rail lines required constant monitoring and manning by railroad companies, illustrating the scale of wood consumption by the transportation infrastructure that was supposedly improving firewood supply chains.

Digital Archives Enable Historical Economic Research

• The research became possible only through digitization efforts that made historical archives accessible online, including probate records from Salem, Massachusetts and newspaper advertisements from multiple cities.
• Software-based text extraction from PDF images of historical documents allowed systematic data collection that would have been prohibitively expensive using traditional microfilm research methods.
• University subscription services providing access to digitized historical archives represent a new frontier for economic research, enabling data collection impossible just 15-20 years ago.
• The methodology demonstrates how modern technology can illuminate economic patterns from centuries past, filling crucial gaps in understanding historical growth, productivity, and market development.
• Future research opportunities include examining price dispersion across markets, transportation cost analysis, and regional convergence patterns as communication and infrastructure networks developed.
• AI-powered text analysis tools will likely enable even more comprehensive historical data collection, potentially revolutionizing economic historians' ability to understand pre-industrial and early industrial economic patterns.

Energy Transitions and Social Upheaval

• Major energy transitions consistently coincide with periods of social disruption - the Civil War marked the wood-to-coal transition, while World War I and Spanish flu represented the peak of US carbon intensity.
• The 2007-2008 financial crisis marked the peak of US carbon emissions in absolute levels, demonstrating how economic disruption drives energy consumption pattern changes even in modern economies.
• Income elasticity for firewood flipped from positive to negative around the Civil War, as rising incomes led families to substitute away from wood toward more convenient coal heating.
• The 1970s energy crisis triggered systematic reversion to firewood heating as households sought to hedge against volatile fossil fuel costs, proving that older energy sources remain viable alternatives.
• Resource scarcity drove the original wood-to-coal transition, offering insights for contemporary discussions about sustainability and renewable versus non-renewable resource dependence.
• Financial crises and recessions consistently increase firewood demand as economic pressure forces households to seek cheaper heating alternatives, demonstrating energy choice sensitivity to economic conditions.

Measuring the Informal Economy and Natural Capital

• Firewood production illustrates the challenge of measuring home production and informal economic activity that occurs outside market transactions but creates genuine economic value.
• The Biden administration's efforts to measure ecosystem services and natural resource values using national income accounting tools reflects the same conceptual challenge identified in historical firewood markets.
• Natural capital contributions to economic growth often go unmeasured, particularly in developing economies where subsistence production and informal markets play larger roles than in modern industrialized societies.
• The firewood case demonstrates how energy sources transition from informal/natural to formal/commercial as economies urbanize and specialize, making previously invisible economic activity measurable through market prices.
• Proper GDP measurement should include home production activities like cleaning, cooking, construction, and fuel gathering, but firewood research represents incremental progress toward more comprehensive economic accounting.
• The paper's online discussions highlighted the broader challenge - if firewood production should be included in GDP measures, then all valuable home production activities deserve similar treatment.

Lessons from America's First Energy Economy

Nicholas Mueller's comprehensive firewood price research reveals how energy transitions shape economic development in ways that standard measurements often miss. The 300-year price series demonstrates that energy sources never completely disappear - they adapt to new roles as backup systems during crises and alternatives for cost-conscious consumers. The wood-to-coal transition around the Civil War established patterns still visible today: new energy sources succeed through superior economics and convenience rather than regulatory mandates, while old sources persist in niches where they maintain advantages. Most importantly, the research shows how technological change in data collection can illuminate previously hidden aspects of economic history, suggesting that our understanding of past economic patterns will continue evolving as digital tools unlock new archival resources.

Practical Implications for Energy and Economic Policy

• Expect energy transitions during social upheaval - major disruptions consistently trigger changes in energy consumption patterns, making crisis periods optimal for introducing new energy technologies
• Plan for persistence of older energy sources - complete displacement of energy sources is extremely rare, with older alternatives remaining viable for specific applications and backup systems
• Measure informal economy contributions systematically - home production and natural resource extraction create genuine economic value that traditional GDP accounting misses
• Recognize transportation infrastructure as market integrator - price convergence across regions depends heavily on physical connectivity through roads, rails, and pipelines
• Account for energy density in transition analysis - superior convenience and storage characteristics often matter as much as price competitiveness in driving energy source adoption
• Use quality premiums to guide resource development - markets systematically reward higher-quality energy sources, providing clear pricing signals for investment and production decisions
• Leverage digital archives for economic research - historical data sources previously inaccessible can reveal new insights about economic patterns and development trajectories
• Design policy for multi-decade time horizons - energy infrastructure and market development require generational planning that transcends political cycles
• Include natural capital in economic accounting - ecosystem services and resource extraction contribute significantly to economic growth, particularly in earlier development stages
• Prepare for energy source substitution during crises - economic disruptions consistently drive households and businesses toward cheaper or more available energy alternatives

The firewood economy demonstrates that energy transitions are gradual, complex processes driven by economic fundamentals rather than sudden technological breakthroughs. Understanding these historical patterns provides essential context for navigating contemporary energy challenges and transition policies.