WELLINGTON NEWS

Hokitika Guardian, 27 January 1928, Page 4

WELLINGTON NEWS

COMBINATION IN BUSINESS. (Special to “ Guardian ”.■> WELLINGTON, Jan. 25. It lias lieen stated that one of the causes of unemployment is the multiplication of businesses, the duplication of plants and machinery and the inevitable waste that follows keen competition. There was a time when amalgamation or a combination ol business was viewed with dislavour because it was believed the object was to exploit the people. But that idea has been abandoned and the modern idea of amalgamation of industries is to cheapen production and lower prices so as to prove beneficial both to producer and consumer. It is recognised that in some industries amalgamation is not only desirable, but necessary il trade is to be successfully conducted and maintained. The pooling of knowledge and experience, the contribution of effort, the elimination of waste and a better and more economical adaptatou and use of plant and machinery must bear fruit.

Nationalisation of industries with Government interference would not be in the public interest, noV yet would amalgamation without co-operation achieve their objects both of the management and the workers unless there be on the part of all concerned mutual trust and confidence. Amalgamation is justified only when a common purpose to produce the measure of consumptive needs, as opposed to unrestricted production, and at as low a cost as possible combined with well directed and active salesmanship. Trade thrives and can only prosper by individual initiative and by all who are engaged in industry pulling together. The advantages of amalgamation in a good many eases result m a better utilisation of buildings, plant and machinery by concentrating production in the best equipped works and disposing of works and plant not required. Economy by reason ol less floating capital being required by the combine than by the aggregate business when working independently and in competition. Purchase of material on a large scale and therefore on better terms. Concentration on the work ol Inlying and the placing of this in the hands ol those of most experience and skill. Maintenance of selling prices at a fair and just level, thus obviating the undue and uneconomic cutting ol prices which occurs when a number ol firms engaged in excessive competition. Economy in advertising expenditure by avoiding the excessive expenditure which a number of competing businesses have to incur in self defence. Economy in distributing expenses, as, lor example, by distributing in greater bulk. Advantages arising from the genera! pooling of experience and brain power, to the benefit of the whole combine, saving in general and overhead expenses by concentrating the administration of all the businessees concerned. The probability that a large undertaking is better able to weather financial and industrial storms than are a number of smaller undertakings. Greater financial strength and better opportunities of raising money on favourable terms when required, and there is also the advantage of the shares ol a. large concern being lavniirably received on the Stock Exchange. Of course there are certain disadvantages which may result Irom amalgamation which must not be overlooked. For instance, a combine may be so large as to become unwieldly. The personal touch between those in command and the workers may he lost, with consequent damage to the business. The magnitude of the concern may prevent a close control over its

affairs and this may lead to extravagance and .waste. Then again there combines as a, result of personal feeling on the part of the directors and the management. . . In theory amalgamations slioidd In* wholly beneficial to the community and it is in this respect that they would require watching. Cheap production which a large output and efficient methods of production and distribution render possible should mean a lower selling price to the public while still yielding a reasonable profit to the combine. This aspect of the matter is well dealt with by the

“ Mercantile Gazette ” but is a question whether the public mind lias been sufficiently educated to sanction such procedure. However, there are certain of our industries which need not be scientifically named which would be all the better for joining in a scheme ol amalgamation. At all events combination of this character is the first stop necessary lor international pooling, which is now so strongly advocated b,\ leading industrialists in the world s principal countries