The Colorado State Penitentiary, founded as a territorial prison in 1871, was the first of Cañon City’s correctional institutions. The number of Cañon City state prisons grew across the twentieth century to seven, with the completion of the last, Arrowhead Correctional Center, in 1989. Cañon City has prisons of all different levels and sizes. Meanwhile, a few miles down the road in Florence, Colorado, lies the federal Supermax, home to some of the greatest terrorists and criminals in the world, as well as other U. S. government facilities. This cluster of eleven prisons stands as a symbol of the tremendous carceral power of modern political systems, but it also begs inquiry into why and especially how these massive colonies of prisoners have been and continue to be funded. Alongside the moral and judicial realities of incarceration stands its economic role, another important element in public discourse about the burgeoning of American prisons in the past half-century.
Understanding of prisons as an economic system requires the initially surprising recognition that the Department of Corrections is an industrial business. The correctional system is very expensive to operate and, in order to reduce net costs, DOC officials put the prisoners to work. The array of jobs historically available to Colorado inmates has been broad and has changed through the decades—from farming, ranching, and making spurs for horseback riders to manufacturing license plates and road signs.
Corrections administrators are careful about which inmate gets which job. A majority of the prison workforce is made up of lower security inmates. The high security prisoners—in the Cañon City-Florence context, those at Colorado State Penitentiary and the federal Supermax—remain in solitary confinement all day and thus cannot be employed in prison industries. Other offenders must be paid so that their labor does not amount to outright slavery. In the late nineteenth and early twentieth centuries, prisoners at Cañon were paid $.35 a day, or about five 2016 dollars. In 1926, the most a prisoner could work in a year was 359 days. This meant that the prisoners earned the equivalent of around $1,800 a year today. This amount was clearly very little, but more than it might initially seem given the provision of three meals a day and a bed.
Investigating finances through state documents
Over more than a century of Colorado prisons’ commercial production, the policies and laws surrounding economic activity in corrections facilities have changed greatly. Until around 1945, the warden of Colorado State Penitentiary had full control over the everyday operations inside prison walls and in CSP’s external economic connections. He oversaw what was released to the public and how the government was informed, telling the State of Colorado how much money the prison needed. For the most part, the legislature and governor complied. The warden filed reports every two years showing the financial situation of the prison. These biennial reports represented the specific assets, industries, and expenses of the prison. Each concluded with a chart summarizing the funding needs for the following two years. These reports together amount to a gold mine for investigating the financial status and goals of CSP from its inception to the mid-twentieth century.
Unfortunately, the format for these reports was changed in the 1970s. The newly formed Department of Corrections, which oversaw all prison operations in the state of Colorado, decided to publish biennial reports encompassing all the prisons in Colorado rather than CSP-specific wardens’ reports. Financial statements about the year-to-year operation of prison industry in Cañon City thereafter are difficult to find. But evidence for the early twentieth century yields rich insights into the state’s and its prisons’ mutual economic interest. For the purposes of assessment of the longitudinal role of commercial enterprises at CSP, such relevant reports as are accessible in state document series from the 1920s to the 1940s have been adjusted for inflation and are here accounted in 2015 dollars.
The year 1925 forms a good starting point. The financial statements on the previous fifty years, included in successive warden’s reports—are not complex enough to compare with the years following. The years 1924 through 1926, however, were important economically for the Colorado State Penitentiary. CSP had just finished several large construction projects and was trying to pay them off. Overall the prison had a positive year in sales. Construction costs, although considerable, were largely state-funded, so they did not cripple the prison. At the end of the 1926 reporting period, the prison had made $58,188.07 in sales beyond a $35,676.47 reserve to make $93,864.54, equivalent to $1,261,841.69 today, of profit. This margin represented an increase from the previous period’s $51,481.08 in revenue. What comprised these increased profits?
Revenue and expenses of CSP
The prison had many revenue-generating industries in the mid-20s. By far the largest was the license plate manufacturing plant. The tag plant at the Colorado State Penitentiary was the archetype for similar factories in prisons throughout the U.S. At its height, the tag plant was making all the license plates and road signs for Colorado, Wyoming, and Utah. It held a market share of the license plate industry in many other western states as well. In 1925-26, the tag plant generated $19,579.71 of profit, equal to $263,214.76 today. This made up thirty-four percent of the prison’s revenue for the period, more than any other industry.
The next most profitable industries within the prison were the packing plant and the ranch. The CSP ranch held livestock until animals were ready to be slaughtered and their meat taken to the facility’s packing plant. The inmates put meat into cans or bags to prepare it for sale. The ranch also grew many more types of food, such as apples, onions, potatoes, and other vegetables. Most of the food grown and preserved at CSP went to feeding the inmates, reducing the prison’s food costs. Even partial food self-sufficiency was fiscally important because the price of feeding roughly 975 inmates three meals a day would have been much higher without these products. Further reduction of the overall cost of maintaining the prison and prisoners came from the sale of cattle and pigs raised by inmate labor and sold in Denver. The hydroelectric plant also generated a small income.
On the other side of the balance sheet, CSP had very large expenses. In 1925-26, the total cost of CSP was $478,735.14, equivalent to $6,435,741.97 today. That number is obviously much larger than the prison’s revenue. As in almost all companies then and now, the greatest expense evident in prison accounts was payroll. The prison paid $219,241.86 in wages to the officers, guards, doctors, and other employees—nearly half its overall costs. The next most important expenditure was in provisions, or the general cost of maintaining the physical integrity of the prison. The two years reviewed here were particularly expensive because of the costs of provisions and the construction on parts of the prison.
Mid-twentieth century prison industry
The warden’s report for the years 1944-1946 only minimally reflected military and geopolitical events in the U.S. and around the world in the past two decades—the Great Depression and outbreak, course, and end of World War II. These cataclysms produced some small financial troubles during the late twenties and early thirties, but during the same period CSP grew in both prisoner capacity and physical space. The number of prisoners rose almost 100 to a daily average of 1,068. The prison’s hospital was completely remodeled and much more attention was paid to remediating the medical conditions of the prisoners. Since 1926 the prison had also added a variety of industrial enterprises—a tailor shop, a mattress factory, a knit mill, a shoe shop, a plumbing shop, and a soap plant—making it a town behind walls.
The addition to these new and more craft-specific economic endeavors meanwhile boosted revenue. In 1945 and 46, the prison made $640,992.07, equal to $7,821,582.47 today. This represented a 683 percent increase since 1926, a massive uptick in the income of the prison. As in the previous report, the 1946 warden’s account showed that most profitable industry was the tag plant, followed closely by the packing plant and canning plant. The tag plant, including road signs it made, brought in $136,151.93, equal to $1,661,367.74 today, a 695 percent increase from 1926. In the past twenty years, the automobile industry had surged. More cars meant more license plates. From 1930 to 1940, the number of cars manufactured in the United States increased from about 2,750,000 to over 5,000,000 per year. The packing plant, meanwhile, made $131,539.42 in 1946, equal to $1,605,084.48, again a strong showing Much of the increase in economic productivity from 1926 to 1946 can be credited to Warden Roy Best, whose financial management was assertive—as indeed were his disciplinary practices.
Along with the rise in the profits of the prison enterprise, however, came a hike in maintenance costs. The Colorado State Penitentiary had maintenance costs of $1,179,007.66, equal to $14,386,614.24 today. Still, the cost of maintaining the prison increased only 246 percent, compared to the almost 700 percent increase in profits. Warden Best was able hold costs down by spending less on the maintenance of older structures and instead constructing new buildings able to more successfully withstand the weather. The prison also relied less on the ranches to provide the food for the inmates. Instead it sold all its crops to the general public. Meanwhile Best was able to keep the increase in salaries down to just 264 percent, enhancing the profitability of the prison. Available reports for years after 1945 fail to support close analysis of economic growth at CSP in the fashion that warden’s reports of the twenties, thirties, and forties enable. No records are readily available for the years 1964-1966, but it is fair to assume that the trends seen between 1926 and 1946 continued through the 1960s and into the 1980s.
Building more prisons
In the early 80s, the buildings of the old Colorado State Penitentiary were renamed the Colorado Territorial Correctional Facility and a new, differently purposed CSP then built outside of Cañon City. The state wanted to design a Level Five maximum-security prison that would hold the death row inmates. The new facility finally opened in 1993 as the first maximum-security prison where the inmates would live in solitary confinement (administrative segregation) for twenty-three hours of the day. The Department of Corrections report on the prisons of Colorado for the years of 1985-86 shows increasing costs for incarceration statewide. Territorial, CSP under a different name until the new prison was built, itself also experienced these trends. One useful financial accounting this mid-eighties report offers is the inmate cost per day. In 1986, the price of holding one man for one day was $46.67, equal to $101.32 today. Territorial was still making license plates for the state of Colorado, but nowhere do available reports say how much revenue the prison was making, although clearly it was substantial.
In the more recent period, public records remain thin, general, and largely silent about economic activity in specific prisons. Now that the Colorado State Penitentiary is a Level Five facility, it cannot generate profit through production of goods because the prisoners are in their cells all day. Meanwhile, increased security and space per inmate are costly. In Level Four prisons, there are two men or women to a cell but in solitary, a cell is provided for each offender at great expense.
The high rate of incarceration in America is a humanitarian issue, but it is also an economic problem. Incarcerating more people means higher costs to the government and thus higher taxes for citizens. The trend of rising per capita daily cost of inmates demands thoughtful analysis. In 1926, it cost the government $.6723 per day, equal to $9.01 today, to imprison a criminal. This figure is calculated by dividing the total cost of maintaining and operating the prison by the number of inmates, then dividing that figure by 365. $.67 was the effective daily per prisoner cost for the prison, considering convicts’ labor brought in almost $100,000 in revenue every two years. By 1946 the per capita cost was $.6894, equal to $8.42 today. The cost of incarceration had gone down, apparently because Warden Best used fewer guards and strict discipline. He was thus successful as a prison manager in terms of fiscal management as well as discipline, though he was criticized for his harshness. As the years went on, however, the per capita cost continued to increase dramatically. In 1986, per prisoner daily cost was $46.67, equal to $101.32 today. At the turn of the century (after CSP turned into a Level Five facility), the daily cost grew to $88.72, equal to $126.71 today. And today the cost to hold one person in solitary confinement for one day is $132.84. The dramatic rise in prison costs from 1946 to 1986 is especially interesting because in 1986 Territorial was still a Level Four prison where the inmates worked and made money. When the old CSP shut down, it lost about half of its inmates to other prisons in the state but it still employed a majority of the guards. The prison was less productive in terms of inmate management than it had previously been, but it still had to pay the officers and guards.
Prisons are government-funded. In the later twentieth century allocations were a major problem for the Department of Corrections, especially in 1992 when the state was building the new Colorado State Penitentiary. An article published in The Denver Post by Peter Sleeth and Jeff Roberts described the issue at hand and suggested measures for fixing it. The DOC was asking for $49.4 million, $83.7 million today, to construct the new CSP. The Colorado DOC needed this new prison because every other facility in the state was over capacity, some facilities by 140 percent. Colorado’s incarceration rate was the highest in the U.S. at the time, and the prisons had to lay off workers just so it could afford to keep the extra inmates. The only solution proposed was to raise taxes for the general public, which citizens in turn resisted. The DOC defended its case by representing to the public that if the tax were not passed, future costs would be still higher. Sleeth writes of his conversation with a DOC official, “Low morale, he said, often leads to tension between the guards and inmates. Which can create a volatile atmosphere behind prison walls. Which can lead to violence and prisoner uprisings. Which can cost taxpayers dearly.” A prison funding bill was passed in the next election and the prison was able to fund its construction costs.
Like other state industries, the prison system is run like a profit-generating business. In the period surveyed here, Colorado’s principal prison in Cañon City grew from a small institution holding criminals for relatively brief periods to large economic structures employing many free citizens and holding offenders long-term at skyrocketing costs to the state’s taxpayers. The fiscal history of Colorado State Penitentiary illustrates important notions in the contemporary discourse about the ethics and effectiveness of the American carceral system, revealing troubling financial realities.
 Originally researched and drafted by Robbie Twells.
 State of Colorado, Board of Corrections, Biennial Report. . .1925-36, 21.
 State of Colorado, Board of Corrections, Biennial Report. . .1923-24, 19.
 Biennial Report. . .1925-26, 23.
 Ibid., 25.
 Ibid., 20.
 Biennial Report. . .1945-46, 5.
 Ibid., 7.
 Ibid., 7.
 Horace Dediu, The Entrant’s Guide to The Automobile Industry, Asymco, February 23, 2015, http://www.asymco.com/2015/02/23/the-entrants-guide-to-the-automobile-industry/.
 Biennial Report. . .1945-46, 7.
 Ibid., 4.
 “CSP – Colorado State Penitentiary,” Prison Handbook, August 25, 2012, http://prisonhandbook.com/8335/csp-colorado-state-penitentiary/.
 State of Colorado, Department of Corrections, Annual Report. . .1985-1986, 53.
 Biennial Report. . .1925-26, 25.
 Biennial Report. . .1945-46, 5.
 Annual Report . . .1985-1986, 53.
 State of Colorado, Department of Corrections, Annual Statistical Report 1998 – 1999, 26.
 State of Colorado, Department of Corrections, Cost per Inmate by Prison 2014, 1.
 Peter Sleeth and Jeffery Roberts, “Prisons Might Not Open on Time,” Denver Post, September 20, 1992.