Entrepreneurial Efficiency in the British Coal Industry between the Wars: A Comment

Abstract

IN a recent article in this Review' Mr N. K. Buxton stated that probably greatest of coalowner after I9i8 has been seen in his failure to undertake necessary reorganization and so increase efficiency of existing capital assets in (p. 477). The purpose of this comment is to show that whilst Mr Buxton has correctly identified what has come to be regarded as the greatest shortcoming of British colliery owners, he has, at same time, demonstrated a complete misunderstanding of nature of issues involved in reorganization. The major criticism of colliery owners in inter-war years, particularly after I925 and down to publication of Report of Technical Advisory Committee in I945,2 was that they failed to reorganize their industry by means of colliery amalgamation, which can be defined as fusing together to provide unified units of management of individual colliery undertakings which may consist of one mine only, or of several mines, of equal or varying size. It was believed that there were two major benefits to be obtained from colliery amalgamation. Firstly, an amalgamated concern would be in a position to derive full benefit from technical and commercial economies of large-scale production;3 and secondly amalgamation could facilitate elimination of surplus capacity by closure of redundant mines and concentration of output in hands of most efficient productive units. By his failure to define his terms rigorously Mr Buxton has confused issues that were at stake. He begins Section iII of his article (p. 479) by stating correctly problem with which both Royal Commission of I925 and Technical Advisory Committee in I945 were concerned, namely that there was a need to increase efficiency of industry and this could be achieved by amalgamation of colliery undertakings. At this point, therefore, it might be assumed that Mr Buxton would proceed to re-examine issue of efficiency in relation to size of colliery undertakings. Instead he embarked upon an analysis of relationship between size and efficiency of mines. He begins by comparing findings of Royal Commission on size of colliery undertakings with information derived from Ministry of Fuel and Power Statistical Digest from I 9384 relating to size of mines. In view of definition of colliery amalgama-