It refers to the fact that historically, the economy of Newcastle upon Tyne in north-eastern England was heavily dependent on the distribution and sale of coal—by the time of the first known recording of the phrase in 1538, 15,000 tonnes of coal were being exported annually from the area—and therefore any attempt to sell coal to Newcastle would be doomed to failure because of the economic principle of supply and demand. The phrase “To carry Coals to Newcastle” is first documented in North America in 1679 in William Fitzhugh‘s letters (“But relating farther to you would be carrying Coals to new Castle”) and first appears in a printed title in Labour in vain: or Coals to Newcastle: A sermon to the people of Queen-Hith, 1709.
Timothy Dexter, an American entrepreneur, succeeded in defying the idiom in the eighteenth century. Renowned for his eccentricity and widely regarded as a buffoon, he was persuaded to sail a shipment of coal to Newcastle by rival merchants plotting to ruin him. However, he instead got a large profit after his cargo arrived during a miners’ strike which had crippled local production.
Although the coal industry of Newcastle has declined in its relative importance to the city since its historic heyday, the expression can still be used today with a degree of literal accuracy, since the harbour of Newcastle in Australia (named for Newcastle in the UK after abundant coal deposits were discovered there and exploited by early European settlers) has succeeded its UK namesake by becoming the largest exporter of coal in the modern world.
With the increasing onset of globalization, parallels in other industries are being found, and the idiom is now frequently used by the media when reporting business ventures whose success may initially appear just as unlikely. It has been referred to in coverage of the export to India of Saudi Arabian saffron and chicken tikka masala from the United Kingdom, the sale of Scottish pizzas to Italy, the flowing of champagne and cheese from Britain to the French, and the production of manga versions of William Shakespeare from Cambridge for Japan.