1960s >> 1964 >> no-716-april-1964

Finance and Industry: Three cheers for enterprise

Three cheers for enterprise
We are constantly being lectured on the virtues of private enterprise. Our capitalists, we are told, are justified in taking their profits because of the skill and foresight they put into their businesses and of the way they generally plan and run them. But just how enterprising are we supposed to get? At what point does the enterprising deteriorate into the shady?Last month saw the end of the mail train trial. So enterprising are the chief robbers that they have apparently managed to get clear away with most of the loot—to the tune of a couple of million pounds. The operation was certainly well planned, the execution faultless, and both skill and foresight amply displayed. Such results in a company balance sheet would lead to the most fulsome tributes from the shareholders.

Again last month, we were regaled with all the details of the great air ticket swindle. Once more some enterprising characters have been at work, this time getting away with something like a million pounds by selling airline tickets at a discount and conveniently omitting to pay for them or paying for them with dud cheques. And the great joke is that there are apparently quite a lot of eminent and respectable businessmen prepared to “shop around” for this dubious merchandise. It has almost become a status symbol to get a “ticket at a rebate,” said Coloney Ford of B.O.A.C. to the Observer. Carrying enterprise to the lengths of making robbery and fraud tempting to the respectable—what could be more enterprising than that?

And at just about the same time, to give us three examples in a week, H.M. Customs published their report on smuggling during 1963. They seized goods to the value of about £120,000, of which one-half was accounted for by watches. But it is apparently common knowledge in the trade that for every watch that is seized by the Customs, at least fifty others are successfully smuggled through; perhaps as many as two million smuggled watches circulate in this country each year compared with “legitimate” sales of about five millions. One smuggler was recently convicted for concealing 700 watches in his waistcoat, with the option of 12 months imprisonment or a fine of £6,500; the fine was paid the next day. You have to be a very enterprising operator to stand overheads like that!

Three fine illustrations, in short, of how to succeed in business. And just in case someone is all ready to protest about the difference between the straight and the crooked, let him pause a moment. Is there all that difference? The shoddy goods and poor workmanship, the slick advertising and the glib sales talk, the tax evasion and the expense accounts, the cut-throat competition and the take-over bids, the short weight and the wrong change, the cartel and the monopoly, the “loss leader” and the big, plain foot in the door—what is so respectable about all these?

And what is so respectable about the greatest fraud of all the exploitation of the many by the few?

Oil under the sea
The scramble for oil now goes on under the water as well as over the land. The big companies vie with each other to explore the sea bed in more than a dozen parts of the world and are actively prospecting for more.

As long ago as 1937 the Americans were drawing up oil from the Louisiana seaboard, though the amounts were small. But within the last few years, offshore output has gone up considerably and the search has spread to California and Alaska, Mexico and Venezuela, the Middle East and Egypt, West Africa, the Mediterranean, and now the North Sea. Spurred on by the recent huge natural gas find in Holland, British, Dutch and German interests are already struggling hard for concessions. The French and Belgians are showing similar concern for their own coastal areas.

Why such a sudden, spurt of interest in the oil under the sea? First, because the need for more and more oil is unceasing (reserves in 1939 were estimated at 40 years’ supply, today they are reckoned at’ 30). Second, because even if this were not the case, no oil company can afford to let its rivals steal a march on it—this is a law of capitalism stark and simple.

The chances of finding oil under the sea are good, especially when the prospective deposits lie close to oil-bearing land areas. But the expense gives the oil companies the shivers—it is between three and nine times as costly as land prospecting and, of course, the question of coastal water limits immediately becomes an added problem. 21 countries have already signed the proposed Geneva convention on these and Germany, which has hitherto had nothing to do with it, has suddenly decided it might be a good idea to sign it after all. The convention proposes to calculate the national limit as far out as the 100 fathom line and this could cause enormous trouble since in some parts of the world the sea bottom is fairly shallow for many miles; the Straits of Dover, for example, are nowhere near this depth so that both France and Britain could technically lay claim to the entire width of the strait.

All in all, the proverb about pouring oil on troubled waters could hardly be less appropriate.

Exports—or dumping?
The recently published report by the Richardson Committee turned down the idea of introducing the turnover tax as a method of stimulating exports. The decision, was not unexpected, but one of the reasons for it certainly was.

This was that very few of the exporting firms consulted by the Committee thought they would benefit from the system because, they alleged, they generally made little or no profit from their exports anyway. Commented the Guardian, “Does the bulk of our export trade really depend on practices which verge on dumping, as this implies? ”

Perhaps it does, when you come to think of it. Competition in many industries is now fierce indeed, and exporting is made even more difficult when there are tariff barriers to be overcome. Britain is already meeting problems in getting goods into the Common Market because the tariff is getting progressively stiffer, and the Six are having similar troubles with exports to the EFTA bloc.
It is well known that many British cars are going to countries such as France at prices which can at the most cover cost and may be less; French manufacturers are using the same discount methods to send cars to Britain. There is lots of evidence to show that refrigerators, ships, steel products, chemicals of various kinds, agricultural produce, are being similarly marketed, often with government aid to cover the deficit.It would be really interesting to know, in fact, just what proportion of international trade is taking the form of dumping, or something extremely close to it.

An excess of eggs
With the high point of the production year yet to come, there are all the signs of an egg glut extending not only to this country but over the whole of Europe. Germany has already tried to close the door to imports but has had to open it again following protests from her partners in the Six. In Britain, farmers have been warned of the approach of serious over-production, the intention being presumably to get them to cut down their laying flocks.

But such warnings are a waste of time. The small farmer cannot afford to do it anyway and the first reaction of the big producer is to step up the size of his flock so as to get more efficient output! The real irony, however, is that with a government subsidy of 5½d. a dozen, the big man cannot go wrong.

About £30 million of state aid has been paid to egg producers this year. Its intention was to help the small man to survive, but its main effect has been to make the big farmer bigger. This is the inexorable development of capitalism, we know, but it is ironic to see a capitalist government paying out such vast sums so gratuitously to assist the process.

Stan Hampson