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PART II

THE ENTERPRISE

CHAPTER IV

A SOUND ENTERPRISE

Requisites of Success

While the causes which make for the success or the failure of an enterprise are innumerable, three loom up as basic. For a real industrial or commercial success, there must be:

1. A sound undertaking.

2. Efficient management.
3. Sufficient capital.

If any one of these factors is entirely lacking, failure is sure. If any one is deficient, the difficulties of success are enormously increased. In any case the measure of success of an enterprise usually varies directly with the measure of sufficiency in which these essentials are found. These three basic requisites of success form the subject matter of the present and the two following chapters.

An Unsound Enterprise

Theoretically, the necessity for a sound undertaking as a basis for any commercial or industrial success will not be questioned. In practice, however, the number of failures due to the fact that the basic undertaking was so unsound as to be no adequate support for the proposed industrial structure, is surprising. A striking instance within the writer's knowledge may perhaps still be seen in a certain district of southern Oklahoma where mineral wealth abounds, and Nature, to make it easily accessible, has tilted the rock strata at an angle of nearly forty-five degrees. Here a vein of bituminous coal some two or three inches thick crops out at the top of a grassy hill. In that portion of the state fuel is scarce and a good vein of coal is a development proposition

of much interest. The little seam therefore rightfully enough attracted attention-the attention, it must be said, of men unused to coal mining. No preliminary drilling or other investigation was deemed necessary. The coal was there; it could be seen; it could be picked out with the fingers; and on the easy assumption—which is usually true-that the thickness of a coal vein increases with depth, the matter was taken up and liberally financed by northern capitalists.

A complete and excellent plant was erected on and about the outcrop, including expensive machinery for mining and handling the coal and for pumping out the water that would soon be encountered; some thirty-five or forty comfortable houses were erected in the vicinity for the accommodation of the men; roads were laid out about the mine; a spur was run in from the line of railroad some seven miles distant; and a station, post-office, store, and all the other necessary paraphernalia of a small village were installed. In short, nothing necessary for the economical and convenient operation of the property was neglected.

As soon as the preliminary work had gone far enough to make it practicable, a substantial, well-timbered double-shaft was started down the incline of the little vein. After following the seam several hundred feet it was discovered that its thickness did not increase with depth, and that, so far as they had gone, there was not enough coal in the mine to operate its own hoisting engines. Then diamond drills were resorted to, with the result that the property was shown to be utterly worthless for purposes of coal mining. The whole enterprise was thereupon abandoned and practically the entire investment was lost. Worse still, the confidence of the capitalists whose money had been so ruthlessly and foolishly lost in this "hole in the ground" was shaken, not only as to this particular coal mining venture, but to the mining industry of the whole countryside as well. The failure did in fact hold back the mineral development of that part of the country for several years.

Legitimate Speculative Development

Since the time of this ill-judged enterprise, this same region— southern Oklahoma-has seen very much larger amounts of money disappear just as completely and as irrecoverably in "dusters," i.e., unsuccessful oil wells. Most of this expenditure has been, however, legitimate. Millions of barrels of oil have been won from similar experimental wells that did strike oil. The difference here is that investigation was carried as far as commercially possible to the point where drilling alone could show whether oil was, or was not, in the particular locality. In the case of the coal development, no proper investigation had been made. The real conditions could and should have been discovered by an early and judicious use of the diamond drill at a tithe of the expenditure really made. The failure to do this can only be ascribed to ignorance or possibly to indifference on the part of the promoters. The capitalists were, however, also much to blame for not insisting on a proper investigation of the property before their money was sunk in premature development.

The Wayside Inn

It is not necessary to go so far afield, however, to find instances of enterprises basically unsound. They are the common -but in most cases unnecessary-everyday experience of business development. In a little village in the Ronduit Valley, not a hundred miles from New York, may be seen a large and attractive hotel, pleasantly entitled the "Wayside Inn." Its accommodations would meet the needs of a population many times that of the village in which it was built. Yet there are no special features to draw patronage from the outside that would justify the existence of such a hotel. It now stands an idle and empty failure. It is simply a case of an enterprise good in itself, but unsound there because it neither supplies a need, nor offers a required service. It cost its projectors over one hundred thousand dollars to discover the fact.

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