A modern-day monopoly on northern people
“You load 16 tons, And what do you get? Another day older and deeper in debt, Saint Peter don’t you call me ‘cause I can’t go, I owe my soul to the company store.”
In his hit record, “Sixteen Tons,” Tennessee Ernie Ford sang about how mining companies used to build whole towns that provided for every worker's need: shelter, clothing, food, furniture and fuel.
Unfortunately, this also gave the mining company a monopoly over every aspect of the workers' lives. They were even paid in a form of scrip or credit which could be used at the company store, with the wage rate never high enough to cover all the bills - hence the line “I owe my soul to the company store.”
This kind of monopoly was supposed to have disappeared with the coal miners in Cape Breton, but there is at least one Canadian company that still operates the way Tennessee Ernie described.
The North West Company, through its NorthMart and Northern Stores, has developed almost complete control over every aspect of the lives of some First Nations people, their communities and their local governments. A Northern Store can serve as the community’s grocery store, gas bar, post office, pharmacy, motor vehicle dealership, electronics and furniture retail sales outlet, supplier of doctors (Amdoc), tax preparer and even the bank, as it does in God’s Lake Narrows.
Higher prices in north justified?
This has raised concerns that go hand in hand with monopolies and the lack of competition that exists in this kind of situation.
The higher than average prices that Northern Stores charge for items like a four-litre jug of milk and other goods have been written about extensively elsewhere. Northern claims the prices are due to high transportation costs. First Nations leaders claim that Northern charges an unfairly high markup.
The bottom line is that The North West Company routinely announces profits of $80 million a year, which Derek Reimer, director of business development, maintains is a reasonable profit margin on annual sales of over $1.5 billion. First Nations see it as “economic leakage” they could use for additional economic development and community programs and services if they develop and control the kind of retail outlets that Northern and NorthMart do.
The question to ask then, is why don’t First Nations simply do what you or I do? If we don’t like the prices charged at one store, we just take our business down the street. The problem is there are few other outlets available or businesses that can compete with the economy of scale Northern can bring into play whenever competition tries to raise its head.
Financial literacy part of the problem
The control exercised by that monopoly can become almost absolute as Northern even takes over the financial services of First Nations.
It used to be that the First Nations government would issue payments directly to employees and welfare recipients alike. But now Northern has come up with “Link” debit cards and “Link Benefits” cards.
Monies due to citizens in the community are deposited on the cards. It is a convenience, but First Nations folk in God’s Lake Narrows say it costs 50 cents every time they use the card to buy something, $2.50 to withdraw cash, $3.00 to load money on to the card and $1.50 to check the card balance by phone. Reimer says these fees are competitive with other pre-paid debit cards.
But the big problem is financial literacy. It is hard enough to balance a chequebook, and grassroots people in northern communities face huge difficulties keeping track of how many times they use their cards and for how much, often running out of money and running into debt.
Cycle of debt
The high costs in the north have caused entire communities to borrow to get from month to month, and where do they borrow from? The “company store,” of course. With monthly interest charged at 30 per cent, communities like God’s Lake Narrows claim they spend their entire monthly budget servicing debt instead of investing in economic development which might end their cycle of poverty.
Long-time activist Chris Mcleod, who has served as a community development worker in the north for the Manitoba Indian Brotherhood (forerunner of the Assembly of Manitoba Chiefs) before embarking on a career as a financial and tax consultant, says the North West Company isn’t doing anything illegal but the ethics and the optics of its role in impoverished First Nations deserve to be questioned in this day and age.
North West CEO Edward Kennedy, who is one of the ten highest paid corporate executives in Manitoba at about $2 million a year, has been quoted widely saying that Northern and NorthMart want to be “your trusted local store of choice.”
Whether or not there is a real choice is the big question.
Don Marks is a Winnipeg writer and the Editor of Grassroots News