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CHAPTER XVIII. SOUTH WALES IRON AND STEEL
While there may be some ground for the complaint that the heavy iron and steel trades of South Wales have been hampered by imports of foreign material, it is doubtful whether, having regard to their local situation, the metallurgical industries of that district are less successful than had they been affected only by British, instead of Belgian, German and American competition. Trade conditions in South Wales are, quite apart from occasional "booms" in steel, far from being as bad as they have been represented. In any case, the history of the Welsh iron industry throws a good deal of light on the true position of affairs at the present time. The pioneers of this industry were attracted to Monmouthshire and South Wales, as others had been to Derbyshire and Staffordshire, by the iron ore found on the outcrops with the coal, comparatively near the sea. The Welsh ironmaster, with cheap fuel and labour, thus enjoyed an advantage in his proximity to the coast over the inland iron districts, while the use of Spanish ore, coupled with the cheapening of freights from Bilbao, not only enabled him gradually to dispense with the low-grade ores he formerly smelted, but relatively diminished in his favour the cost of iron production in districts more remote from the sea.
The old Welsh plants consisted of open-top cold-blast furnaces, whose waste gases, to-day used for heating the stoves and raising steam under the boilers, formerly escaped into the air. They consumed, with their low pillar of blast, an enormous quantity of fuel in proportion to the small tonnage of iron they produced. Coke ovens of the modern type were then unknown. The whole of the coke used was made from large coal in the open air at a loss in coking of probably 40 to so per cent. The native ore, calcined to drive off carbonic acid, water and sulphur, contained, as charged into the furnaces, from 30 to 35 per cent only of metal. Three tons of coke per ton of iron were then the rule, which is more than double the amount consumed today. The quantity of pig consumed to produce a ton of finished iron was nearly 30 cwt., and the coal about 8 tons.
Most of the firms which to-day are limited companies were founded at the latter end of the eighteenth century, under other names, for turning out bar iron under these conditions. And they succeeded in making handsome fortunes out of what was then practically a monopolist trade. About 1840 the manufacture of iron rails was introduced, and soon became the leading industry in South Wales, necessitating further capital outlay. The rails were made from cold blast iron, and, homogeneous in structure, and equalling in strength and tenacity the best merchant bars, were, in some respects, even superior to the steel rails of the present day. The price, however, was £12 per ton or more, though the wages then paid were less than half those earned by the men who to-day turn out steel rails which sell at half that sum. No iron workers, except refiners and rollers, who made a little over 30s., got more than 26s. a week. The hot blast was first applied in 1848 to the Abersychan furnaces, now belonging to the Ebbw Vale Co. The output of the furnaces was thereby doubled. Beehive coke ovens came in at the same time, with a saving of 30 per cent in the coal consumption, and the use of hematite ore became more general. Forge cinder produced a cheaper pig, though of a lower quality. The utilisation of waste gases, together with other improvements, was effected. The pillar of blast, though heated to 600 degrees only, was raised to 3 or 4 lb., while the consumption of coal to the ton of pig was reduced from 8 tons to 35 cwt.
It was not until 1864 that the Welsh ironmasters turned their attention to steel-making, when a modification of the Bessemer process was introduced at Ebbw Vale. A mixture of Spanish and Brendon-hill ores, containing manganese, furnished a pig iron free from sulphur. A few years later every furnace in South Wales was using Spanish ores instead of Cumberland hematite, and by 1870 all the Welsh works had begun to make steel rails. The old iron rail plants were broken up and Bessemer converters and heavier rolling-mills were installed in their place. All that remained of the old works were the blast furnaces and some mills for rolling such merchant iron as was consumed in the locality. This was the second financial crisis the trade had to face, and it entailed a heavy outlay on new appliances. The steel-rail works of such firms as the Tredegar, Dowlais and Ebbw Vale Companies were as efficient as they could then be made. The discovery of Cleveland ore, however, soon brought the new-found prosperity of the Welsh steel-makers to an end. Their furnaces were situated on the hills 12 to 15 miles from the coast, and it became difficult to compete with Middlesbrough firms whose iron mines, collieries and works were on the sea-board, who discharged Spanish ores direct from the vessel into their depots, and who started business with absolutely modern plants. The Welsh steel-maker was obliged to haul two tons of ore up to the coal outcrop for every ton of pig iron he made, and his rails had to come down again to the port of shipment. He was, therefore, handicapped by railway rates alone to the extent of 10s. a ton as compared with makers on the North-east and West Coasts of England.
To meet these difficulties the Dowlais works were moved down to the sea at Cardiff, where they have been able to compete with Workington and Middlesbrough. The up-to-date blast furnace, which produces as much iron as did six furnaces of the old type, was introduced with all the improvements in vogue elsewhere, and during subsequent years large sums have been expended at Dowlais, Cyfarthfa, Ebbw Vale and Blaenavon in the erection of thoroughly modern and well-equipped plants.
Other firms, however, took a different view of the situation. The British supply of steel rails had become in excess of the home demand. The American tariff had cut off the exports to the United States, and new capital was not always available for necessary developments. At Ebbw Vale old ideals prevailed for years, and iron manufacture was conducted there with little prospect of profit being made; while at Tredegar the Company, after heavy losses, made a clean sweep of its blast furnaces, cogging milk and Bessemer plant, and abandoned heavy rail and steelmaking altogether. At Rhymney the iron works, following the example of the Llynvi Tondu and Ogmore Companies, ceased production, sacrificing half of a capital of £750,000. For thirty years, between 1870 and 1903, the Ebbw Vale Co., with an inflated capital, paid an average dividend of 1.25 per cent only, passing its dividend altogether in eighteen of those years. The Tredegar Co., also on an inflated capital, paid an average dividend of less than 3.25 per cent., but when this Company gave up iron- and steel-making, and confined itself to coal, its aggregate dividend rose during the succeeding five years to 32.5 per cent., or an average of 6.5 per cent per annum, while its output of coal rose from 600,000 tons in 1873 to 3,000,000 tons in 1923. Some private firms also may have made money from time to time during the thirty years in question, but as no accounts are published, their results can only be conjectured.
It will be seen, therefore, that the Welsh iron trade has gone through three periods involving two revolutionary changes, each of which apparently threatened the ruin of the ironmaster. But ruin was averted by the establishment of an entirely new industry. Bar iron was superseded by the manufacture of iron rails; these again gave place to steel bars and rails; and this manufacture, in its turn, is being hard pressed by the competition of more favourably situated undertakings in the British Isles. The manufacture of steel bars and billets for working up into finished steel is now injured by the import of cheap German and Belgian semi-manufactured material, which has risen from 37 tons in 1820 to 78,573 tons in 1924, and 27,353 tons in 1925; so that Wales, which takes large quantities of this steel, is thus affected by something like a fourth, if a less severe, crisis in its heavy metallurgical trade. On the other hand, these very imports have given an impetus to other industries, and especially to the Swansea manufacture of tin-plate, of so remarkable a character that the conditions under which this is now carried on are well worth some detailed examination. (see Chapter XIX)
Most of the works of the old steel- and iron-makers are now owned by limited companies. The Dowlais furnaces were founded in 1757 by Thomas Lewis and Co, and were afterwards acquired by their manager, Thomas Guest, the ancestor of the Wimborne family, who owned a small furnace in Staffordshire. His Welsh business was carried on by his son, Sir John Guest, and remained in the family until 1900, when it was amalgamated with the Patent Nut and Bolt Co, of Cwmbran and Birmingham, whose managing director was Arthur Keen, under the title of Guest, Keen and Co, with a capital of £2,000,000 in shares and £1,000,000 in debentures. This great firm, which subsequently absorbed Nettlefolds and the famous Cyfarthfa Works, and is now known as Guest Keen and Nettlefolds, with a capital of £15,000,000, has always paid high dividends, though far below the net amount of its profits, which during some years have actually amounted to 25 per cent on its capital. Its shares have stood at a high premium, for its plant is more favourably situated for the manufacture of iron and steel than any other in South Wales. (See chapter XXI)
The Ebbw Vale Co was founded and blast furnaces were built by the Homfrays of Liverpool about 1793. The business was afterwards sold to the Hanfords, and by them to Abraham Darby of the famous Coalbrookdale family (the fifth in descent from Abraham Darby, the founder), who, in 1864, sold the properties to the Ebbw Vale Steel, Iron and Coal Co.
The Rhymney Iron Co was founded by some Bristol merchants trading as the Union Co. in the beginning of the nineteenth century; its works were afterwards bought by the Crawshay family, afterwards sold to a company formed in 1826 by William Forman and ultimately acquired in 1871 by the present company.
The works belonging to North's Navigation Co were founded in 1798, and were, after many vicissitudes, formed in 1872 into the Llynvi Tondu and Ogmore Coal and Iron Co, with a large and inflated capital. The business subsequently went into liquidation, and in 1889 the property was purchased by the late Colonel North for £350,000. He abandoned the iron works, converting the undertaking into the coal company now bearing his name.
The Tredegar Works were started at the end of the eighteenth century by Samuel Homfray and W. Forman, who built the first furnace in the Sirhowy Valley and ran a coal level in 1799; but there are records of work by a level in 1750 which was restruck in 1796. Pits were sunk there in 1806, and at various periods during the last century. The Tytrist Colliery, sunk in 1841, and the Bedwellty, sunk in 1850, are still at work. Trevethick built a high-pressure steam locomotive in 1801, which was worked over the Tredegar tramway for more than half a century. In 1873 the present Tredegar Iron and Coal Co bought the iron works and mineral property, reorganising both the mines and the ironworks. The Pochin pits, named after Henry Davies Pochin, one of the founders of the Company, were sunk in 1880. Amongst the other founders were Benjamin Whitworth, M.P., Isaac Lowthian Bell, Sidney Carr Glyn, Charles Markham, and William Menelaus, the uncle of Mr. Charles Darling, K.C., M.P., a Director of the Company until his elevation to the Judicial Bench. He is now The Rt. Hon. Lord Darling. The Company established before the war the McLaren, the Oakdale and the Markham Collieries, and has recently sunk the Wyllie Colliery at the lower end of the valley. The capital was in each case found by the parent Company from its reserves. The collieries are named after the late Walter McLaren, M.P., the late Sir Arthur Markham, Bart., M.P., the late Mr. James Wyllie (one of the founders) and his son, Colonel Alexander Keith Wyllie, C.B., Directors of the Company.
The Cyfarthfa Works were established under the lease of the Earl of Plymouth in 1765 by Anthony Baker, and exist to-day. The Blaenavon Co has a paid-up capital of £730,000. It was registered in 1880, and makes iron and steel.
The Nixon firm was started by John Nixon, a Durham engineer, who began sinking in 1846. He bought the Deep Duffryn Collieries and was the first to ship Welsh coal abroad. In 1873 he bought the Navigation Colliery, which, with the Deep Duffryn, constitutes the existing firm of Nixon's Navigation Co.
The Powell Duffryn firm was started by Thomas Powell, a timber merchant of Newport. His first colliery was established in 1835, and in 1840 he sank for steam coal in the Aberdare Valley. Six or seven other pits were subsequently sunk by him. The whole of these properties were afterwards bought by Sir George Elliot, by origin a Durham pit-man well known in the North, when he stood for Parliament as the "Bonnie Pit Laddie." He formed the existing Powell Duffryn Co.
The Ferndale Colliery was sunk in the early thirties by David Davies, a draper, who worked a small anthracite level under the Marquess of Bute. With his two sons, Lewis and David, he sank another pit, and in 1839 they, for the first time, shipped coal at Cardiff. A pit was then sunk at Ferndale, and the concern was carried on by the sons until 1890, when they formed the existing Company of David Davies and Sons, of which Viscountess Rhondda is Deputy-Chairman. This afterwards acquired the Tylorstown Collieries, which had been sunk by Alfred Tylor in 1872.
From this brief survey of its history it is clear that the old pre-eminence of South Wales and Monmouthshire in the heavy iron and steel trades has passed away. The natural conditions which originally favoured these industries have disappeared. Shipbuilding, which is the largest consumer of steel, has never found a place in the Bristol Channel. The high wages paid to shipyard hands in the repairing docks of its coal ports, where there is a constant demand for this class of labour, would, of themselves, drive marine construction to the Clyde and the Tyne. The heavy engineering trades, too, centre round Glasgow, Leeds, Manchester, Sheffield and Newcastle. Even the hydraulic machinery and colliery engines used in South Wales are made chiefly in the North of England.
But small engineering establishments abound. The calorific value of South Wales coal is greater than that of the coal of any other part of the United Kingdom, and it pays better to put Welsh coal under a boiler than in a blast furnace. Still, some of the lost ground has been recovered. The output of pig iron in Wales and Monmouthshire in 1893, with twenty-five furnaces in blast, was 710,972 tons; in 1903, with twenty-two furnaces in blast, it was 875,584 tons, showing that better plants gave an increase of 23 per cent. In 1905 the output had grown to a total of 912,217 tons, which, however, had fallen away in 1910 to 787,812 tons. The subsequent five years brought the industry into the abnormal situation created by the War, though perhaps as a consequence the production was raised in 1915 to 829,002 tons. In 1920 this output became re-reduced by roughly a third, to 588,800 tons, though in 1925 it grew once more to a total of 790,000 tons, in spite of the introduction of a large volume of pig iron from the Sarre furnaces, now under French control. How the export of pig iron from the United Kingdom has fallen off from 1,665,809 tons in 1906 and 1,128,412 tons in 1913 to 467,538 tons in 1925 is shown in Appendix P.