Did royalties really impact on profits to the extent that coal companies believed? A case study of the Denbighshire Coalfield, 1870-1914

During the last quarter of the nineteenth century coal companies in the UK became increasingly vocal in their condemnation of the royalty rates charged by the mineral owners of the UK. Such was the furore that a Royal Commission on Mining Royalties was set up in 1890 with a remit to investigate these concerns. However, the commission concluded that royalties were not unduly harsh and did not make up a disproportionate part of costs. This article is an attempt to establish whether the views of the coal companies had any basis in fact or whether, as Mitchell asserts, 'royalties formed a comparatively unimportant fraction of the total cost of the coal industry in the nineteenth century' (B.R. Mitchell, (1984), The economic development of the British coal industry 1800-1914, Cambridge: Cambridge University Press, p. 256). We start by considering royalties within a UK context and the issues that affected the methods used and the rates set. We then examine how royalties affected the profits per ton of the coal companies in Denbighshire for which archival records survive. This will enable us to determine whether Mitchell's view was correct or whether, as Fine believes, the impact can only be determined by considering the marginal impact of royalties on profits.