Welsh Journals

CAPITAL FORMATION IN THE SOUTH WALES COAL INDUSTRY, 1840-1914 And how could we have spent all these hundreds of thousands if we had not had them? If we had borrowed it, things would not have been so satisfactory. But we have got our own capital-and I can assure you we can look after it too. David Davies, Llandinam, June 1873. THE growth of the Welsh coal industry in the nineteenth and early- twentieth centuries required heavy capital investment to meet not only the cost of fixed and moveable plant essential to the productive processes and infrastructure, in the form of workers' housing and roads, but also the working capital to provide for short-term debits and credits. The total investment in south Wales colliery concerns cannot sensibly be given for any one time in the period under review, nor can any statistical weighting be given to the relative importance of the sources of investment. On the other hand, there is abundant evidence at the level of the individual firm which indicates the sort of investment in fixed and working capital which the industry required and the sources of capital available to the aspiring coalowner. This, in turn, enables certain generalisations to be made about investment in Welsh collieries, and the extent of public investment in particular, which are to some extent illustrative of the experience of British industry as a whole before the First World War. I A broad picture of the capital requirements of some typical pre- war colliery concerns and of the relative demand for fixed and working capital is disclosed by their asset structure (Table 1). Asset structure cannot be expected to be unchanging: within each concern the ratio of fixed to working capital would vary slightly over a period of time, according to the state and volume of the trade and, as the fixed assets seldom represented precisely the total real investment, from firm to firm. Given, however, that these companies on the whole followed similar accounting conventions, Table 1 provides a useful indication of the weight of fixed relative to working capital, It seems clear that fixed capital made by far the greatest demands, absorbing as it did some 75 per cent to 90 per cent of total assets. As for working capital, stocks and stores accounted for little in comparison with the