Appalachia contains enormous quantities of coal. Before the middle of the 19th century, the fueling by coal of the explosion of industry in the United States during the 19th century ensured that the "smokeless" anthracite fields of northeast Pennsylvania would be tapped to supply heat to homes and the vast bituminous coal fields of western Pennsylvania and the Appalachians would be tapped to supply the boilers of the new factories and of the railroad locomotives linking factories to resources and to markets. The arrival of rail lines into the southern mountains after the Civil War did not immediately result in major exploitation of the coal seams.

The panic of 1873 constrained investment, and, in any case, the management of the Chesapeake and the Ohio was initially focused on completing a transcontinental line rather than profiting from the country the railroad passed through. However, in the 1880s, the directors of the Norfolk and Western became very interested in exploiting the recently described Flat Top Coal Field of southernmost West Virginia and southwest Virginia. They must have been reinforced in their interest when the coal dug out of the tunnel through Flat Top Mountain paid the costs of excavation. The profits made by speculators in coal lands and by mine operators prompted a reassessment by the C & O directors and the creation of railroads by other investors interested in profits from coal and timberlands south of the Mason-Dixon line.

While speculators in land assembled huge parcels which could be leased to mining entrepreneurs, coal mine operators discovered that in many cases exposed seams allowed for horizontal mining into mountains utilizing lumber from the mountainside. The ease of this drift, as opposed to vertical shaft, mining, along with local labor supplementing their small wages with farming, enabled many ambitious folk with small amounts of capital to open mines. Low costs allowed the coal of the southern Appalachians to compete in markets rather far away: A successful 1897 UMWA strike in the northern fields enabled coal from the southern highlands to begin to penetrate the Midwest market, despite the proximity of Indiana and Illinois mines to those markets. The success of this Midwest initiative was "extraordinary," and soon millions of tons of mountain coal were flowing to the factories of the Great Lakes.

After 1900, capital that had previously gone into the northern coal fields was increasingly diverted into the southern mountains, and new mines were opened on the creeks and in the hollows every year. Miners, Millhand, and Mountaineers; Industrialization of the Appalachian South, 1880-1930, Ronald D Eller, 129.

Labor for the mines came from the local population and from Italian and Slavic immigrant labor. To a much higher degree than in northern fields, workers lived with their families in company towns, often paying for what they needed at company stores with company scrip, and under the supervision of company guards. By the 1920s, 80% of West Virginia's mine labor lived in such towns, as did 64% of Kentucky's miners.

Some camps, such as the U.S. Steel-sponsored camp at Lynch, Ky., were model examples of paternalism. But most were noted as grimy, unpleasant, isolated villages filled with dozens of simple, standardized, company-built houses rented to workers. The company guards made sure that union organizers stayed out: the company owners had no interest in losing their comparative advantage in wage rates.

In Tennessee and Alabama, state budgets in the late 19th century were aided by the leasing of the labor of convicts to industrial concerns, including mines. Regular miners bitterly resented this practice, and , in the former state, convict leasing lasted from 1871 to 1896 and was bitterly opposed by free miners from the beginning. The conflict between the huge Tennessee Coal, Iron, and Railway Company (TCI) and mining population was characterized by violence. This conflict resulted from the wage rate of the miners falling from $1.25 per ton of coal before convict leasing to just $0.50 wherever convict leasing was implemented. TCI admitted that the main reason it used convict labor was to break strikes and undermine union formation.

Alabama derived 73% of its 1898 budget from leasing convicts, a distressing number of them Blacks arrested on flimsy charges. Alabama's leased prisoners died at a rate ten times that of prisoners in states not leasing prisoners. The grim practice continued in Alabama until 1928, and ended less because of humanitarian concerns than because free workers became as cheap to hire as convicts. times the death rates of prisoners in non-lease states. In 1873, for example, 25 percent of all black leased convicts died. Possibly the greatest impetus to the continuance of convict labor in Alabama was to depress the union movement.

In any part of the southern Appalachians, the wage rate for miners was notoriously low until the New Deal gave an impetus to UMWA organizing. In West Virginia, union membership grew from a few thousand in 1931 to 300,000 in 1941. Beginning in 1933, John L. Lewis, the powerful leader of the UMWA, negotiated a series of agreements aimed at eliminating the wage differential between Appalachian miners and those elsewhere. By 1941 he was laying the foundations of a union-run health and Welfare Fund program. By 1950 John L. Lewis, aware of the U.S. overcapacity in coal production, worked out an agreement with the Bituminous Coal Operators Association which ensured health coverage, including a series of hospitals throughout the Appalachian coal region, and good wages for miners at work at that time. In effect, Lewis traded current miners' benefits for mechanization of the mines and lower employment in the following generation.

During the 1950s, rationalization of the coal industry progressed with many mines in the mountains closing and many miners losing their jobs. Mechanization resulted in massive amounts of coal being mined by fewer and fewer people. Well over 50 percent of the miners of 1950 had lost their jobs by mid-decade, and the newly unemployed miners even found themselves cut off from their hospitals and the Welfare Fund.

There was no one in those years to help those caught in this human tragedy - not the union, nor the owners, not even government. It was the mine and his family who had to bear the burden.A History of Appalachia, Richard Drake, p. 207

The collapse of coal mining employment contributed to the Appalachian "Great Migration" which began when Northern industry geared up for World War II. In the thirty years after 1940, over three million folk left the mountain region.