Ice

My dad grew up on the North Shore of the Boston area, and when he was a child, there were still ice houses in operation.  They would cut up the ice in the from frozen ponds there,  transporting it on big sleds into bigger buildings where it would be stored, packed in sawdust, until it could be shipped all around the world.

Frederic Tudor (1783-1864) dreamt up the scheme when he was 22, thinking to sell ice to rich plantation owners in the American south and the Caribbean.   Ships would come to Boston and the North Shore with cotton and other raw materials for New England manufacturing, and return with finished goods, which occupied less space and weighed much less.  So he could buy space on those return trips for very little.  It took him several attempts to overcome skepticism, and figure out how to keep the ice from melting, losing thousands of dollars at each attempt, until he figured it out.  But eventually he did figure it out, and ponds all over the north shore were used, and New England ice was shipped as far away as India.   Tudor became known as "The Ice King".   Walden Pond was one of the sources of ice they used and Henry David Thoreau wrote admiringly about the ice harvest in Walden.

When it was discovered that food packed in ice would stay fresh a lot longer, other businesses copied the practice, and in the 1850s, ice houses began to be built around the country, especially along railroad tracks.  Special cars, called Refrigerator Cars, were built insulated sides and ice bunkers on their ends, and filled with meat and other perishables.  The ice would melt and drain out, so they needed to be refilled every few hundred miles along their trip.   In addition, most homes had an "Icebox", which was just an insulated box into which ice and food was placed.  Although invented much earlier, mechanical refrigeration finally became practical in the 1920s with the widespread adoption of electricity, but it took a long time for it to be accepted.  My grandfather was a relatively early adopter, buying a mechanical refrigerator in the 1930s, despite living in the home of worldwide ice, and my father barely remembers a time when they didn't have a mechanical refrigerator.  Yet my grandfather continued to call the refrigerator an "Icebox" until he died in the late 1970s.

The ice business illustrates several interesting things about economics.  The first is about entrepreneurship.  Tudor was born into a family that was already very wealthy.  Each of his early failed attempts to ship ice cost thousands of dollars, in a time when $500 a year was a 90th percentile income.   In today's money, he lost half a million dollars each time he failed, and he failed a lot.  He spent time as late as 1813 in debtors prison, until his family bailed him out and he tried again.  Finally, by 1816 it was a going concern, and by 1825 he was a very wealthy man.  Something similar is true today: there are very few successful entrepreneurs who are making bets that would result in their families going hungry.  They may have a bankroll earned in a previous job, a rich relative,  outside investors.  But if they lose, they lose only what they put in.  Their families don't starve to death.  This safety net is critically important.

Secondly, several times in the 150 year timeline of natural ice refrigeration, big businesses continued to do things in the old fashioned, labor intensive, much more expensive way despite the obvious superiority of the new way.  I'll mention two:  prior to 1850, food needed to be used very close to where it was harvested.  In the case of meat, this meant shipping the animals alive to a slaughterhouse near where it would be eaten.  This was very hard on the animals and unless they gave them rest, food and exercise, a lot would die in route, spoiling a lot of the rest.  This was time consuming and expensive.  The ice refrigerator became practical in the late 1850s and the basic design was in place by 1880 and would last into the 1970s.  Yet shipments of livestock continued until well into the 1930s.  The railroads had a monopoly though.  (part of this was that they'd centralized meatpacking in Chicago: live animals would be shipped to Chicago.  Meat would be distributed on ice from Chicago to the rest of the country)

In 1940, a man named Fred Jones received a patent for for a portable mechanical refrigeration unit that would eventually be the basis for what railroads and trucks would use to this day.  He and a businessman friend (Joe Numero) founded a company called ThermoKing. In the late 1940s, the fleet of ice refrigerator railroad cars was pretty much worn out, their usual cycle of replacement being interrupted by the war.  Pacific Fruit Express, which owned the largest number of those cars, decided to replace them with updated ice refrigerator cars, requiring the physical plant and labor to be continued, even though ThermoKing's product was obviously completely viable and a lot cheaper, and PFE's near monopoly meant that ice refrigerators continued to be used on American railroads into the 1970s.  (That Jones was an African American may have contributed to this, although most likely it's just ordinary conservatism).    There was no such monopoly on the highways however, and many trucking companies installed ThermoKing refrigerators on their trucks.  Despite the gigantic advantages of the railroads in driving costs, fuel and more, this was sufficient to move the refrigerated transport business almost entirely to the roads, where it persists to this day.

At the same time, passenger service was also moving from rail to highway, and also to air, and the interstate highway system made shipping of unrefrigerated freight by road closer to cost and time competitive with rail.  Together, this came very close to killing the railroads despite their gigantic inherent advantages.  Through consolidation and government subsidy, they've survived, but it was a near thing.