CO-OPERATIVE CONTRACTS

NZ Truth, 15 March 1924, Page 5

CO-OPERATIVE CONTRACTS

CAPITALISATION PROBLEM CAN COMPOSITE CONTRACTOR COMPETE WITH PRIVATE INDIVIDUALISM? Story of a Sick Coal Company That Rose From Its Bed to Walk, Perhaps Even to Work

It is fairly safe to say that public opinion is not adverse to co-operative contractors (banded workers) making a very considerable profit, provided that the contractors do their work faithfully, quickly, and without strikes. Subject to that proviso, c PuhWc would probably sooner see a £15,000 profit on a £100,000 job divided between thirty co-operative contractors, than given to one private contractor. In fact, public opinion would possibly sooner see the thirty co-operative contractors divide £20,000 than see one contractor add £15,000 to his private banking account. But, admitting all this, the problem of whether co-operative effort, which has succeeded m small jobs, or m purely labor jobs, can also succeed In big undertakings requiring heavy preliminary capitalisation, remains to be solved.

The rapid, workmanlike and strikeless carrying out of the Wainui-o-Mata to Orongorongo water supply tunnel has impressed not only Wellington, but New Zealand. This tunnel, about two miles long, and seven feet square, is a victory for co-operative contracting. . Co-operative contracting has also done fairly well — m some cases, very well — as applied to coal-mining m small parties on the West Coast The co-operative principle as understood by Mr,> Semple (the leader of the Orongorongo party) has been d_epart-

Ed from by some of these parties, In that they employ wages men, as any ordinary employer might do. But the Mines Department now issues no permit to co-operative coal-mining parties to work portions of the State coal reserve, unless every member is a cooperative partner and not merely a wages man. HOW PAR CAN THE PRINCIPLE BE EXTENDED? The success of co-operative parties m Bmall coal-mining undertakings ralßes the question whether the system could he ' extended to large coalmining undertakings—to enterprises needing a heavy preliminary capitalisation. Where the needed Initial capital Is wholly or almost wholly labor, cooperation has achieved considerable success; but where capital m the form of money or credit is required, what thon? Suppose it is necessary to sink ex- | pensive shafts to reach the coal, and suppose that no coal can be available for sale for at least a year, who is tc find the money for plant, materials, tools, explosives, etc., and for the support of the workers and their families during the coal-less period? Large preliminary capitalisation of this character presents a real difficulty to co-operative effort. Suppose a more favorable case. Suppose that the Government is prepared to throw open to co-operative miners, on liberal terms, the State coal-mine, which Is a going concern paying Its way. j GUARANTEES FOR THE STATE'S CAPITAL. I A Government that would lend to a co-operative party a self-paying asset m which is Invested (say) quarter of a million of Government money might be even more of a benefactor than a Government that would lend j to a co-operative party £100,000 for opening up a new mine. But In neither case could a Government lend either mine or money without guarantees for the safety of the thing loaned. What would these guarantees consist of? If the guarantees Imposed by the Government included control by Go-vernment-appointed officials (minemanager, for Instance) would the miners accept this as consistent with the co-operative principle, and as consistent with an undertaking by the miners to deliver tho coal to the bins at a fixed price? If the miners, as co-oporatlves, delivered tho goods at a price, and themselves undertook to divide that prico among themselves, a big burden would be lifted off Stato employcrship. Yet the State could not hand over State property and plant worth quarter *of a million, and the whole working plan, to men not able to glvo sufficient security. To secure protection of the State property, must not * the mlno-manager be responsible to the j Government? ■ , i NO PARALLEL WITH COMPANY. This is the sort of question that must be discussed, If tho discussion is to reach the heart of the subject. Such underlying principles need to bo sottied. Talking generalisations Bet ties nothing. Someono will say: "A coal -mining company Is allowed to employ Its own mine-manager and all officials. Why should not a co-operative party of miners bo allowed to do likewise?" The answer m that there is no parallel between tho cases, becauso tho company finds tho capital, and the cooperative party does not. Of course. If tho co-operative party could and would find the capital, lt could start co-operating anywhere and anywhen without culling on tho Ooverntnent at nil. Not long ago thoro was a proposal to form h co-operative party of miners to Htart a ih'W coal -mine Jn tho Groy Valley. WHI. not a n«»w iniw. exactly; but rather to further develop an already partly worked mine on such a scale a h to he comparable ln cost to v new undertaking. A oonsldtotttblej,

capitalisation would have been required for development at depth. SICKNESS, AND A REMEDY. The company that owned the mine became financially ill— that is to say, It took steps m liquidation. It owed money to the Government. The Government took charge, and, m the publio interest, carried on exploratory operations by boring, ( A favorable result, m the way ot boring for coal, was bound to be helpful to the mining industry m general (and, incidentally, to the bored-on property of tha liquidating company). The sick man grew sicker. Cooperative tunnellers gathered by the bedside. They grew keenly interested (as did others) m good results that were found m the Government's bores. They saw a promising coal property. The question of capitalisation referred to above began to be discussed. But the boring discoveries that enhanced the prospects of tlie property also quickened the pulse of its sick owner. On the improved prospects money was forthcoming to redeem the property from the Government The Government's success as a bore-pros-pector automatically destroyed the Government's position as a creditor likely to become proprietor. The debt was met. The property went back from Government and from intending co-operative workers to the company's Liquidator. And now there is a prospect of a sufficient capitalisation (local or partly Australian) to work the property on company, not cooperative, lines. \ THE IDEAL MORTGAGEE. It should be added that the redemption was on a more complete scale than is sometimes the case. This escape from liquidation was not made by merely satisfying the debt •to the Mines Department. Other debts to Government departments were met Back rates to local bodies were paid up. And — very important — hack wages were paid up. If somebody were to remark that the Massey Government deserves some credit for seeing to the meeting of % this last-mentioned liability, "Truth" would not deny It And if somebody else were to say that the Government had no business to find cool on the property before the company's title to it was dead, the answer seems to be that the Government Is that Ideal person — a mortgagee who is no self-seeker, Massey the mortgagee did not see what Mas-, scy the coal-borer was doing; and the coal-borer didn't care a pin' whose pocket the increment went into. Anyone can have the use of Massey's drilling apparatus If be pays for it; and m this case he has paid for it. Anyway, for good or 111, company control of this particular property has come to life again. But the question of co-operative coal-mining, m its big scale phase, remains to be settled.