The In the early part of the century Wales still largely supported the Liberal Party, particularly when David Lloyd George became Prime Minister during the First World War. However the Labour party was steadily gaining ground, and in the years after the war replaced the Liberals as the dominant party in Wales, particularly in the industrial valleys of South Wales.
Plaid Cymru was formed in 1925 but initially its growth was slow and it gained few votes at parliamentary elections. In 1936 an RAF training camp and aerodrome at Penyberth near Pwllheli was burnt by three members of Plaid Cymru – Saunders Lewis, Lewis Valentine, and D. J. Williams. This was a protest not only against the construction of the training camp, known as "the bombing school" but also against the destruction of the historic house of Penyberth to make room for it. This action and the subsequent imprisonment of the three perpetrators considerably raised the profile of Plaid Cymru, at least in the Welsh-speaking areas.
The period following the Second World War saw a decline in several of the traditional industries, in particular the coal industry. The numbers employed in the south Wales coalfield, which at its peak around 1913 employed over 250,000 men, fell to around 75,000 in the mid 1960s and 30,000 in 1979. This period also saw the Aberfan disaster in 1966, when a tip of coal slurry slid down to engulf a school with 144 dead, most of them children. By the early 1990s there was only one deep pit still working in Wales. There was a similar decline in the steel industry, and the Welsh economy, like that of other developed societies, became increasingly based on the expanding service sector.
Wales was officially de-annexed from England within the United Kingdom in 1955, with the term "England" being replaced with "England and Wales" and Cardiff was proclaimed as the capital of Wales. Nationalism only became a major issue during the second half of the twentieth century. In 1962 Saunders Lewis gave a radio talk entitled Tynged yr iaith (The fate of the language) in which he predicted the extinction of the Welsh language unless action was taken. This led to the formation of Cymdeithas yr Iaith Gymraeg (the Welsh Language Society) the same year. Nationalism grew particularly following the flooding of the Tryweryn valley in 1965, drowning the village of Capel Celyn to create a reservoir supplying water to Liverpool. In 1966 Gwynfor Evans won the Carmarthen seat for Plaid Cymru at a by-election, their first Parliamentary seat.
Another response to the flooding of Capel Celyn was the formation of groups such as the Free Wales Army and Mudiad Amddiffyn Cymru (MAC - Welsh Defence Movement). In the years leading up to the investiture of Prince Charles as Prince of Wales in 1969, these groups were responsible for a number of bomb blasts destroying water pipes and tax and other offices. Two members of MAC, George Taylor and Alwyn Jones, the "Abergele Martyrs", were killed by a home made bomb at Abergele the day before the investiture ceremony.
Plaid Cymru made gains in the two General Elections held in 1974, winning three seats. There was increased support for devolution within the Labour party and a Devolution Bill was introduced in late 1976. However a referendum on the creation of an assembly for Wales in 1979 led to a large majority for the "no" vote. The new Conservative government elected in the 1979 General Election had pledged to establish a Welsh-language television channel, but announced in September 1979 that it would not honour this pledge. This led to a campaign of non-payment of television licences by members of Plaid Cymru and an announcement by Gwynfor Evans in 1980 that he would fast unto death if a Welsh channel was not established. In September 1980 the government announced that the channel would after all be set up, and S4C was launched in November 1982. The Welsh Language Act 1993 gave the Welsh language equal status with English in Wales with regard to the public sector.
In May 1997, a Labour government was elected with a promise of creating devolved institutions in Scotland and Wales. In late 1997 a referendum was held on the issue which resulted a "yes" vote, albeit by a narrow majority. The Welsh Assembly was set up in 1999 (as a consequence of the Government of Wales Act 1998) and possesses the power to determine how the government budget for Wales is spent and administered.
Over the course of the 20th century, the population of Wales increased from just over 2,012,000 in 1901 to 2.9 million in 2001, but the process was not linear - 430,000 people left Wales between 1921 and 1940 largely owing to the economic depression of the 1930s. English in-migration became a major factor from the first decade of the 20th century, when there was net gain of 100,000 people from England. In this era, most incomers settled in the expanding industrial areas, contributing to a partial Anglicisation of some parts of south and east Wales. The proportion of the Welsh population able to speak the Welsh language fell from just under 50% in 1901 to 43.5% in 1911, and continued to fall to a low of 18.9% in 1981. Over the century there has also been a marked increase in the proportion of the population born outside Wales; at the time of the 2001 Census 20% of Welsh residents were born in England, 2% were born in Scotland or Ireland, and 3% were born outside the UK. Whereas most incomers settled in industrial districts in the early 1900s, by the 1990s the highest proportions of people born outside Wales were found in Ceredigion, Powys, Conwy, Denbighshire and Flintshire.