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The Sankey Commission of 1919-1920 considered the rationalisation of the collieries, but the government decided against the proposal. During the 1920s, coal mining was beset by low demand and foreign competition, and between 1921 and 1925, the government subsidised the industry. The Samuel Commission of 1925 identified problems of deficient demand and surplus capacity. Believing subsidies rewarded inefficiency, it recommended rationalisation and their withdrawal.
The Mining Industry Act of 1926 consequently ended the subsidy and encouraged voluntary amalgamation. It enabled colliery owners to force other owners into amalgamation by means of court applications. In practice the provisions of the act were rarely invoked. Although, during the 1920s, owners did form voluntary regional organisations, leading to competition between regions rather than rationalisation. The causes of the 1920s strikes were linked to those of the General Strike in 1926.
The Coal Mines Act of 1930 provided national regulation of the production, supply and sale of coal. The collieries were divided between 21 districts and reported to the national Central Council, which set the district quotas and minimum prices. The act also set up the Coal Mines Reorganisation Commission to undertake rationalisation of the industry. Progress was slow, partly because the government feared that rationalisation would produce unemployment. The Coal Act of 1938 made provision for government acquisition of national coal reserves (known as royalties).
The outbreak of war brought an increased demand for coal, but production fell as skilled labour left the industry to fight. A new policy of rationalisation was elaborated in a white paper of 1942. The government took ownership of coal reserves and control of the industry, although the ownership of mining companies for now remained in private hands. The Ministry of Fuel and Power took control over the industry, planning and coordinating production through Regional Coal Boards. By the end of the Second World War, the industry was in crisis and production was in decline.
There were strikes in Yorkshire and South Wales in 1944, and expert committees recommended the reorganisation of the industry. Attlee's Labour government proceeded with the Nationalisation Act of 1946. The act set up the National Coal Board (NCB), responsible for overall policy. The industry was divided between eight divisional boards, under which around 950 working collieries were grouped into areas and controlled by area general managers.
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