Answer to Question 1
Problems exist with historical temperature data. For instance:
Location of stations: Stations located in cities are subject to a heat island effect that causes local temperatures to increase with time.
Coverage in time and space: Some parts of the world have more coverage than the others. There is very little coverage, for example, in the southern oceans.
Answer to Question 2
Burning of coal adds CO2 to the atmosphere and hence warms the surface by increasing the greenhouse effect. However, one possible explanation for the 1940 to 1970 cooling trend is that it was caused by increased reflection of sunlight by sulfate aerosol particles. These tiny airborne particles are formed from sulfur dioxide (SO2) emitted by the burning of coal.