culminating days of the industrial revolution, when the old organization
of domestic industry had given way before the factory system, and the
population of the factory districts was suffering a martyrdom, with ruin
of body and degradation of character, from unbridled competition, long
hours, women's and children's labour, pauper apprenticeship, great
fluctuations of trade and employment, dearness and adulteration of
provisions, the truck system and insanitary homes. Owen, having himself
become a great employer of labour, after starting as a draper's
assistant, saw that this was in every sense waste, and that as it paid
the manufacturer to have the best machinery and not to overdrive it, but
to tend it well and keep it in the best repair, so it would pay him, and
abundantly pay the nation, to have the human machines well cared for,
not overworked, and kept in the best condition. The popular
individualistic philosophy of that day taught that the good of society
would be achieved by each individual seeking in his business relations
the interest of himself and his family; but Owen maintained that the
well-being of the social body could only be served if each individual
made that his conscious aim. For this reason he and his disciples were
called Socialists. He taught further that a man's character depended
mainly upon the circumstances which influenced his life; he emphasized
environment, and all but denied heredity. At New Lanark, from 1799, he
carried out these ideas among the workers in the cotton mills of which
he was managing partner.[1] "For twenty-nine years," he wrote, "we did
without the necessity for magistrates or lawyers; without a single legal
punishment; without any known poors' rate; without intemperance or
religious animosities. We reduced the hours of labour, well educated all
the children from infancy, greatly improved the condition of the adults,
diminished their daily labour, paid interest on capital, and cleared
upwards of L300,000 of profit." So wonderful were the results upon the
population, that New Lanark became a show-place of world-wide renown,
and was visited by many of the greatest and most exalted people of the
period.
While thus using his own power Owen not only advocated legislation to
limit the hours of factory labour, but appealed to the public
authorities to establish industrial communities, where the poor might be
set to work, and be managed paternally on the principles of New Lanark.
So great was his repute, and so influential the royal and other
personages who gave him their support, that this appeal might probably
have been successful had not Owen, in reply to complaints as to his
religious views--which were deistic--and that his system was not founded
on religion, made a public attack upon all accepted religions.
Failing to get the required support from the Government and magistrates,
he still sought it from wealthy believers in his teaching, and a number
of "communities" (see COMMUNISM) were founded in England and Scotland,
and in the United States. These were intended to be self-supporting, the
land and other means of producing wealth being owned in common, and work
and education being regulated on Owen's principles. Owen well knew that
most of them lacked the large amount of capital necessary, but his hand
was forced by enthusiastic followers, and even the most hopeful of the
experiments, that of Queenwood in Hampshire (1839-1844), was made
prematurely and failed.
His connexion with New Lanark also came to an end, not from any want of
success, but through differences with some of his partners who objected
to such matters as dancing, military drill for the children, and the
wearing of kilts, but above all feared lest Owen's "infidelity" should
undermine the people's faith.
Thus it might have seemed that Owen's life and fortune had been spent in
vain, and resulted only in unsuccessful experiments; but this was far
from being so. His teaching, and in particular his doctrines of
circumstance, and of the conscious seeking after the social good, his
belief in self-supporting communities, and his vision of a new moral and
industrial world, had powerfully affected the working classes, indeed,
all classes. Workmen in many parts of the country had formed groups with
the ultimate object of founding self-supporting communities. If the
government and the rich would not provide capital enough to start
communities, the workers would start them themselves. Thus was the
democratic basis given to co-operation. As a means they had been
founding co-operative societies, which are sometimes called "union
shops" to distinguish them from the later growth of societies of the
Rochdale type. The members began by buying provisions wholesale and
retailing them to themselves at current prices; the difference became
capital, and as soon as possible one member was set to work to make
boots and another clothes, and so forth, until ultimately the society
should have capital enough to take land and form a community. Education
also was prominent among their objects. These co-operative societies
reached some 400 or 500 between 1828 and 1834, but the movement then
collapsed. As the original enthusiasm died out, or members left the
neighbourhood, or capital accumulated in the hands of the original
shareholders, they almost all either failed or became private property.
In those early days, moreover, the law gave no protection to the
property of co-operative societies. This remained so until 1852, when
the Christian Socialists (see SOCIALISM) among their many great services
to the working classes secured such protection. In 1862 they secured
also limited liability for the members.
Rochdale pioneers.
Before 1844 a co-operative society had already been formed and failed at
Rochdale in Lancashire, yet some ardent spirits planned to form another.
Twenty-eight poor men, flannel weavers and such like, got together a
capital of L28 by twopenny and threepenny subscriptions, and in December
1844 opened in Toad Lane, Rochdale, a little shop from which, speaking
broadly, the whole of British co-operation, and very much of that of
other lands, has grown. Their objects were those of other co-operative
societies of the time, including the ultimate aim of a self-supporting
community. In this last they never succeeded, nor indeed did they
attempt it; but they did succeed in vastly improving the position of
millions of the working classes by enabling them to obtain their
provisions cheap and pure, to avoid the millstone of debt, to save
money, to pass from retail to wholesale trade, and from distribution to
manufacturing, building and house-owning, ship-owning and banking; above
all to educate themselves, and to live with an ideal.
The Rochdale Equitable Pioneers began their trading in the smallest way,
the members taking turns to serve in the shop; yet where so many other
Union shops had failed Rochdale succeeded, and it has steadily grown to
an institution with some 14,000 members, doing a trade of L300,000,
owning shops and workshops, a library and reading-rooms, making large
profits, and devoting a substantial part of them to education and to
charitable purposes. What was the reason of this difference? Chiefly it
would seem a different method of dealing with the profits. Earlier
"Stores" had divided these according to the capital contributed by each
member, or else equally among the members: the Rochdale Pioneers
determined that, after paying 5% interest on the share capital, all
profit should be allotted to the purchasing members in proportion to
their purchases, and be capitalized in the name of the member entitled,
until his shares amounted to L5. Thus each member found it his interest
to purchase at the store and to introduce new purchasers. The ownership
of the store remained always with the purchasers, and each came under
the magic influence of a little capital saved.
Growth of co-operative stores.
Not only did Rochdale store grow amazingly, but its example spread far
and near. New stores were founded on the "Rochdale plan" and old stores
adopted it; soon they were numbered by hundreds. In spite of many
failures there were in 1906 more than fourteen hundred such stores in
the United Kingdom, with nearly two and a quarter million members, over
L33,000,000 capital, and sales exceeding L63,000,000 in the year. The
number of societies does not increase of late years, the tendency being
rather for established societies to open branches, but all the other
figures increase rapidly from year to year.
These workmen's Co-operative Stores, or Distributive Societies, flourish
chiefly in the north and midlands of England and in Scotland, but are
found more or less all over the country. They, and practically all other
British co-operative societies, are registered under the Industrial and
Provident Societies Act, which constitutes them corporate bodies, with
limited liability, and fixes L200 as the maximum that any member may
hold in the share capital. Their government is democratic, based on one
vote each, for man or woman; and their members or shareholders, and
their committee-men or directors, are almost exclusively the more
provident of the working classes, or belong to the class just above.
Store societies are of various sizes, from the small village shop to the
greatest of them all, the Leeds Society, with nearly 30,000 members,
sales exceeding a million and a half sterling, and an elaborate
organization of branches and manufacturing departments. Their method,
the "Rochdale system," is as follows, subject to occasional variations.
Membership is open to all who pay a shilling entrance fee and sign for a
L1 share, which can be paid up out of profit. For the most part members
may at any time withdraw their shares in cash at par. A record of each
member's purchases is kept by means of metal tokens or otherwise, and at
the end of each quarter, after paying a limited interest (never more
than 5%, and in very many societies less) on shares, and, in some
societies, paying a proportion of profit to the employees, the surplus
is divided to the members in proportion to their purchases: non-members
also usually receiving half dividends on theirs. Thus the members in
effect obtain their necessaries at cost price. The dividend on members'
purchases averages about 2s. 6d. in the L. In many successful societies
even more is paid, but the average is falling. Where dividend is high,
prices are often fixed above those current in the neighbourhood, so that
the members, in addition to saving the retailer's profit, use their
Society as a sort of savings bank, where they put away a halfpenny or so
for every shilling they spend. In addition to retailing, a store often
manufactures bread, clothes, boots and millinery, sometimes farms land,
or grinds corn; usually for its own members only, but occasionally for
sale to other societies also. Their productions in this way exceed
L5,000,000 a year. They also invest large and increasing sums in
building cottages, to let or sell to their members; and they lend still
more largely to their members, to enable them to buy cottages.
Outwardly these stores may look like mere shops, but they are really
much more. First, they are managed with a view not to a proprietor's
profit, but to cheap and good commodities. Secondly they have done an
immense work for thrift and the material prosperity of the working
classes, and as teachers of business and self-government. But further,
they have a distinct social and economic aim, namely, to correct the
present inequalities of wealth, and substitute for the competitive
system an industry controlled by all in the common interest, and
distributing on principles of equity and reason, mutually agreed on, the
wealth produced. With this view they acknowledge the duties of fair pay
and good conditions for their own employees, and of not buying goods
made under bad conditions. The best societies further set aside a small
proportion of their profits for educational purposes, including
concerts, social gatherings, classes, lectures, reading-rooms and
libraries, and often make grants to causes with which they sympathize.
Their members are prominent in local government affairs; co-operative
candidates are occasionally run for town councils, and often talked of
for parliament. Though the societies are non-political, and have refused
to join the labour representation movement, they are usually centres of
"progressive" ideas. There are of course many defects, and of their two
million members a large, and many fear an increasing, proportion,
attracted by the prosperity of the societies, think chiefly of what they
themselves gain; but the government of the movement has, hitherto at
least, been largely in the hands of men of ideas, who believe that
stores are but a step to co-operative production, and on to the
"co-operative commonwealth."
It is indeed only when we come to federations of co-operative societies,
and above all to production, with its large number of employees, that
the educational side of the movement and its power to promote industrial
reform are most seen. The Co-operative Union, Limited, for instance, is
a propagandist federation of all the chief co-operative societies in
Great Britain, and some in Ireland. Its income of L10,000 a year is
contributed by the Co-operative Societies. It looks after their legal
and parliamentary interests, carries on much educational work by means
of literature, lectures, classes, scholarships, summer meetings at the
universities, and so on; organizes numerous local conferences for
discussion, and once a year a great national co-operative congress, and
exhibition of productions, in some chief centre of population. The
Co-operative Wholesale Society, Limited, is a trading federation of the
great majority of the English stores. Founded in 1863 on a small scale,
it now counts its employees by thousands, its capital by millions, and
its yearly sales by tens of millions. Besides its merchant trade, it
manufactures to the value of L4,500,000, owning factories, warehouses
and land in many districts. It imports largely, and runs its own
steamships. It is also the bank of the co-operative societies, and the
chief outlet for the always redundant capital of the well-established
stores. The Scottish stores also have their Wholesale Society, not less
important relatively. For many purposes these two are in partnership. In
each of them the net profits are returned to the stores as a dividend on
purchases, and thence to the whole body of members; but in the Scottish
Wholesale a part is also paid to its employees as a dividend upon their
wages. There are also a few local federations of stores, mostly for
corn-milling and baking.
Co-partnership.
Strongly contrasting with this production by associations of consumers,
or "consumers' production," is the co-partnership, or labour
co-partnership, branch of co-operation. Its simplest form is an
association of producers formed to carry on their own industry.
Originally such societies were intended to consist solely of the workers
employed; the ideal was the "self-governing workshop," introduced from
France by the Christian Socialists of 1850; but membership is now open
to the distributive societies, which are the chief customers, and
usually, to all sympathizers. Shares are transferable, not withdrawable.
Profits first pay the agreed "wages of capital," usually 5%, and of what
remains the main part goes to the employees as a dividend on their
wages, and to the customers as a dividend on their purchases. In
well-established societies the dividend on wages averages about 1s. on
the L. This is not usually paid in cash, but credited to the employees
as share capital, whereby all may become members. Besides other
producers' associations, more or less co-operative, there are over a
hundred co-partnership societies at work in England, against a dozen or
fifteen in 1883. They are engaged in boot-making, printing, building,
weaving, clothing, wood-working, metal-working, and so on. Some of them
are very small, while others have businesses of L50,000 a year or more,
the average being about L10,000. The majority show fair, sometimes large
profits. Each is governed by a committee, which is elected by the
members and appoints the manager. A minority of them sell in the open,
i.e. the non-co-operative, market, and a few sell largely for export.
Rival theories.
We constantly hear that co-operative production is a failure. There have
no doubt been failures, especially of big experiments attempted among
men totally unprepared. But many of the failures counted were not truly
co-operative. At the present day consumers' production is successful
beyond all question, while the net growth of producers' associations in
the last twenty years has been marked both in number and importance.
These two forms of production best illustrate the two rival theories
which divide British co-operation, and between whose partisans the
conflict has at times been sharp. The consumers' theory maintains that
all profit on price is abstracted from the consumer, and must be
returned to him; while to him should also belong all capital and
control, subject to such regulations as the state and the trade unions
enforce. This theory is fully exemplified in the English Wholesale
Society, and in some of the smaller federations for production, which
employ workmen, whether co-operators or not, for wages only, and admit
no individual, but only co-operative societies, to membership. It is
also exemplified by the great majority of the stores, though in their
case the employee may become a member in his capacity as a consumer. The
co-partnership theory, on the other hand, maintains that the workers
actually employed in any industry, whether distributive or productive,
should be partners with those who find the capital, and those who buy
the produce, and should share with them the profit, responsibilities and
control. The consumers' party contend that societies of producers make a
profit out of the consumers, and thus are never truly co-operative,
while as they multiply they must compete against each other. The
co-partnership party answer that labour at least helps to make the
profit, and that competition, as yet almost insignificant between their
societies, can be avoided by federating them (a process long ago begun)
for buying and selling in common, and for other common purposes, while
leaving each the control and responsibility of its own internal affairs.
They further advocate the eventual federation of the productive wing of
co-operation with the distributive, for settling prices and all matters
in which their interests might conflict. In this way they say the
co-operative system may extend indefinitely without sacrificing either
individual responsibility and freedom, or a general unity and control,
so far as these are necessary to secure the common interest. On the
other hand they hold that the opposing system tends more and more to
centralization and bureaucracy, and divorces the individual workman from
all personal interest in his work, and from any control over its
conditions. They contend, moreover, and it is indeed admitted that, in
spite of the great advantages which consumers' production has in its
command of a market and of abundant capital, only a small part of
industry can ever be carried on by associations of the persons who
actually consume the produce. Outside this small part, therefore,
voluntary co-operation is impossible except as some form of
co-partnership.
On the working-out of these two principles depends the future of
co-operation. The example of Scotland probably throws light on the
problem. There co-operative production, amounting to some millions
sterling, is nearly all carried on by federations of consumers'
societies, including the Scottish Wholesale, which apply more or less
successfully the co-partnership principle--i.e. their employees are
admitted to share in profits, and may become members, whereby they are
further admitted to share in capital and control. The type of
organization hence resulting is very much the same as where a society of
producers admits consumers' societies to membership, and sets aside a
proportion of the profits to be returned to them as dividend upon their
purchases. To this combined type, we have seen, English productive
societies, started by producers, have come; and it would appear that
those started by consumers must ultimately tend to it. However, in spite
of honoured leaders of the early days, the consumers' party is at
present greatly in the ascendant in English co-operation, and even in
the Scottish federations it is almost strong enough to abolish
co-partnership, and allow no one to share in capital, profit or control
except in his capacity as a consumer.
An association of co-operative societies and individuals, called the
Labour Co-partnership Association, exists to maintain the principle of
co-partnership in co-operation, and also to promote its gradual adoption
in ordinary businesses. Some progress in this latter direction is being
made, there being a tendency to improve upon simple profit-sharing by
capitalizing the workman's "bonus," whereby he becomes a shareholder,
and the business is gradually modified in a co-operative direction.
There are remarkable instances of such modification abroad, notably that
of the great iron foundry and _Familistere_ at Guise in France. The most
noteworthy, among several, in England is that of the South Metropolitan
Gas Company, where after eighteen years of the system 5000 odd employees
had in 1907 more than L320,000 invested in the company; they also elect
three of themselves directors of the company, this being one-third of
the board. Unfortunately this example is, or at least was, marred by a
feud with the trade unions, whereas there is friendship between trade
unionism and co-partnership, as indeed between trade unionism and
co-operation generally.
Tenants' co-partnership societies.
One of the most recent and promising developments of English
co-operation is the tenants' co-partnership movement for the common
ownership of groups of houses, which the society owning them lets out to
its members. These societies are but few as yet, but they have sprung up
rapidly and promise great usefulness and extension. Somewhat similar
societies have long been a recognized branch of co-operation on the
continent of Europe.
The movement outside Britain.
Such, then, are the history and present extent of co-operation in Great
Britain. Turning abroad we find in almost all civilized countries,
besides other forms of co-operation, important and growing movements
roughly similar to those above described, but on the whole less
identified with the working classes and less coloured by their social
and economic ideals. In France, Germany, Switzerland, Italy and
elsewhere, there are very important co-operative distributive movements
looking to Rochdale as their prototype; and in the United States of
America there are at least continual attempts to spread Rochdale
co-operation. Of these foreign stores, however, many exhibit important
modifications, such as unlimited liability, and selling at cost price,
or between that and market prices. On the whole we may say that Rochdale
Co-operation is the most extended and the most typical. It, and the
workshop movement springing from Fourier, and the socialist co-operation
of Belgium and elsewhere, are certainly the forms which have most of the
ideal of democratic equality and social reconstruction. Other forms look
more to the money benefits accruing to the members, seeking to
supplement the present order of society, rather than to bring in a new
order. Among these other forms--separate in origin, in methods, and
largely in spirit--the most important are credit co-operation, or
people's banking, and agricultural co-operation, two forms until
recently unknown in the British Islands.
Germany and credit co-operation.
Confusion has sometimes arisen from the fact that while Rochdale
Co-operation sets itself against "credit," continental co-operation is
more concerned with obtaining credit for its members than with anything
else. But credit is used in two senses. The English workman employed for
wages is against the credit which means spending them before they are
earned: continental co-operation seeks by collective credit to put into
the hands of working peasants, craftsmen and traders, the stock and the
tools without which their labour is vain. Credit for consumption is the
road to poverty; credit for production the road to well-being.
Just as with co-operation in labour and in purchase, so mutual help in
obtaining credit may doubtless be traced in primitive forms far back
into history. It was certainly more or less "in the air" in Germany and
France about 1848 and even earlier; but the beginning of systematic
organized credit co-operation may be definitely fixed in the year 1849,
when Raiffeisen began his _Darlehnscasse_, or loan bank, in Rhenish
Prussia. Curiously enough it had also a second and entirely independent
origin. For in the following year Schulze-Delitzsch, in a distant part
of the same kingdom, established his Credit Society based on an entirely
different system. As this second system spread much more rapidly than
the other and attained, as indeed it retains, much greater commercial
magnitude, it came to be regarded as the beginning of credit
co-operation, of which for a long time it was the only important form.
These two remain the two distinct types in every land. Thus Germany,
which has innumerable co-operative societies of every form and of great
importance, is in particular the mother of credit co-operation.
Raiffeisen loan banks.
In the famine years of 1846 and 1847 and for some years after, Friedrich
Wilhelm Raiffeisen was a burgomaster in the barren Westerwald. The
people were hopelessly ground down by debt to money-lenders for small
doles of capital, advanced to purchase stock, or meet times of special
difficulty. It occurred to Raiffeisen that by combining to borrow a
moderate sum of money on their joint responsibility, and afterwards to
lend it out among themselves in small sums at a slightly greater rate of
interest, the peasants might obtain relief from their burden of usury,
and at the same time get the capital necessary to make their labour
productive. Accordingly in 1849 at the little town of Flammersfeld, he
set up a "Loan Bank." Despite its success, it remained the only one of
its kind for five years, when Raiffeisen founded a second. There was no
third for eight years more: it was only in 1880 that they began really
to spread, but now they are found in many lands and are counted by
thousands.
Such a bank is essentially an association of neighbours. Besides
borrowing, it also receives savings deposits, which often produce a
large part of, or even all, the capital it needs. Usually a few of the
members are comparatively well to do people, who join to help their
neighbours by increasing the society's credit. This Raiffeisen
considered essential. They have no actual privilege, but by common
consent they take a leading part. In the true Raiffeisen bank the
liability of each member is unlimited, but limited liability has been
introduced in some of its modifications. The Society confines its
operations strictly to a small area, say a parish, where everyone knows
everyone. Each borrower must specify the purpose for which he wants a
loan, say to buy a cow or drain a field, or pay off a money-lender, and
this is rigorously inquired into. Only members can borrow. Any member,
however poor, can borrow for a profitable approved purpose, and no one,
however rich, for any other. Practically all the members see that the
money is applied as agreed; and, while the loan is often made for a long
period, a year or two--even for ten or more--so as to repay itself out
of the profit, power is reserved to call it in at short notice if
misapplied. Loans are repayable by periodical instalments, but
repayments must be made with absolute punctuality. No bills, mortgages
or other securities are taken, except a note of hand either alone or
with one or two sureties. There are two committees, one to lend and do
the work of the society, and the other to supervise the first; and on
both of these it is understood that the richer members are to be in a
majority. No committeeman or officer receives any remuneration for his
services, except that the accountant gets a small salary. Originally
there were no shares, and when in 1889 the legislature ordained that
there must be shares, the Raiffeisen banks made theirs as small as
possible, generally ten or twelve shillings. Nothing is paid on the
shares as interest or dividend, all profit being voted once for all to
the ordinary reserve and the indivisible reserve, the latter the
backbone of the system. In every large district the Raiffeisen banks are
federated in a Union, and these Unions culminate in a General Agency. As
an intermediary among themselves, and between them and the money market,
the banks have also a central bank with a capital of L500,000, and with
ten provincial branches. A great deal of agricultural co-operation has
arisen from these banks as centres, and with the money they have
supplied.
Raiffeisen banks boast that neither member nor creditor has ever lost a
penny by them, and while this is denied it seems at least near the
truth. Their credit is so good that they can obtain money at very low
rates, and as their expenses are trifling they can re-lend to their
members at rates but little higher. In Germany they usually lend at
about 5%. Only men of good character can obtain membership: thus,
besides spreading prosperity, they have everywhere been great promoters
of sobriety and good conduct. They were only intended to meet the needs
of the peasants, especially of the very poorest, and for this purpose
they have proved admirably suited.
Schulze-Delitzch banks.
Very different were the people among whom Schulze-Delitzsch established
his form of co-operative credit; and very different the organization he
adopted and the results which have flowed from it. In 1850 Franz Hermann
Schulze was a judge in his native town of Delitzsch, almost at the
middle point of the southern edge of Prussia, and established there his
first _Vorschussverein_, or Advance-Union. He had been in England and
knew something of our co-operative movement, but he scarcely seems to
have derived any part of his inspiration from it. The people he desired
to help were townsmen, especially the small craftsmen working on their
own account, the joiners, shoemakers and so forth; and his ideal was to
do this merely by stimulating their thrift.
In a Schulze-Delitzsch bank, a number of such men combine together to
raise a capital of guarantee: to do this every member takes up one share
and one only, which is of large value, say L30 or L50 or even much more,
but can be paid up by small instalments. Thus every member is committed
to a long course of saving. On the strength of this capital in course of
formation, and the unlimited liability of the members, the bank is able
to borrow, or to receive as savings and deposits from members and
others, a much larger capital. The funds so constituted it lends out at
the highest rates it can command, originally 12% or 14%, but now very
much less, and varying, of course, with the market. It lends to members
only, but to any amount, for any purpose and on any good and sufficient
security, whether acceptance, promissory note, overdraft, discount,
mortgage, pledge, surety or what not. The loans, however, are always for
a short period, usually three months, renewable for another three
months, and sometimes further than that. The committee of management are
elected by the general meetings; they decide on all loans, and receive a
salary, plus a commission on the business done. The council of
supervision are also paid, or at least entitled to pay. The great
objects which a bank keeps in view are security and a good return on
capital. It is not confined to a small area, but works for as large and
as varied a constituency as possible. With such a constitution the
Schulze-Delitzsch banks grow big and accumulate a large capital of their
own. On an average each bank has nearly 600 members and lends about
L150,000 per annum, including loans renewed. Losses are sometimes made,
but they are not heavy on the whole. All the profits are divided upon
capital, or put to reserve, except some, usually small, sums given to
charitable or educational purposes. Dividends average about 5%, but have
been known to reach and even exceed 30%.
It may therefore justly be said that for co-operative institutions these
banks smack too much of joint-stockism: they are in fact co-operative
not much more than in the same sense that the Oldham cotton mills, and
other "working-class limiteds," have sometimes been loosely called
co-operative. They seem constituted to make the lender's interest
supreme, but they have, nevertheless, conferred enormous benefits on the
handicraftsmen, small traders, small cultivators and others who borrow
from them. They have put capital within their reach at reasonable rates.
These banks also have their central point. In 1864 the German
Co-operative Societies' Bank was founded to centralize the work of the
local Schulze-Delitzsch banks and to bring the money market within their
reach. It was not itself co-operative, and never confined its business
to the co-operative banks. Beginning in a very small way, by 1903 it had
attained a capital of a million and a half sterling and a yearly
business of L154,000,000, of which L28,000,000 was specifically with
co-operative credit societies. It was then amalgamated with another
banking business, the _Dresdner Bank_, esteemed one of the most
important and successful in Germany.
Thus these two types of credit co-operation agree in being founded on
unlimited liability, but speaking broadly they are contrasted in that
the Schulze-Delitzsch banks work primarily, though by no means solely,
among townsmen, are based on share capital, work for profit, which they
divide on shares, are conducted by paid directors, and confer their
benefits not on the very poorest but rather, as their own friends say,
on the middle classes: the Raiffeisen banks are designed for the
peasantry, are not based upon share capital, neither divide, nor work
for, profit, are conducted by unpaid directors, and confer their
benefits especially on the very poor. The Schulze-Delitzsch type is
strong in self-help, but tends to commercialism as it grows; the other
needs the help of the well-to-do to back up the self-help of the poor,
but it tends to altruism and the union of classes.
The world has 30,000 co-operative credit societies, not counting
building societies; and though they are organized in many groups,
especially in their native Germany, for local reasons, or because of
some modification, or some compromise between the two systems, the two
types really include them all. There is, however, a strong tendency to
introduce limited liability into various offshoots of the one type and
the other; even into the orthodox Schulze-Delitzsch banks themselves,
when they grow big. From Germany co-operative banks have spread into
almost all European countries--even at last to Ireland and England--and
to America and Asia. In Germany there are some fifteen thousand local,
and no less than sixty central, co-operative credit associations, which
lend out L180,000,000 a year including renewals. In Italy, Austria and
Hungary they are also strong. In 1896 it was estimated that L150,000,000
a year must be very well within the total amount lent by money
co-operation on the continent of Europe; eight years later it could not
well fall short of L250,000,000, and the amount keeps constantly
increasing. Of this total only a small percentage represents loans by
banks of the Raiffeisen type, which, though very numerous, often lend
only a few hundred pounds each in the year.
Great controversy has prevailed as to the state subsidies given to
co-operative credit. While governments are sometimes rather inclined to
hinder co-operative distribution, they have shown a marked tendency to
foster, whether for political or economic reasons, co-operative credit.
The Prussian government in response to popular demand, vigorously
supported by the agricultural interest, has founded and endowed with
L2,500,000 of public money, the Central Co-operative Bank, whose object
is to bring capital within the reach of the various groups of
co-operative banks. The Schulze-Delitzsch Union was the only one to
dispute the need of this, and though the bank has given a stimulus to
the formation of co-operative societies, it still denies that this is a
healthy propagation. Nevertheless, some even of the Schulze-Delitzsch
societies resort to this state bank for money. It is under government
administration and lends immense sums each year. In France the Bank of
France has been compelled to lend L1,600,000 free of interest, and to
give about L120,000 per annum out of its profits to assist agriculture;
this money is being lent free to "regional" banks, and by them at about
3% to local societies. State help has also been given to the
co-operative bank of the French workmen's productive societies. In
Austria and in many other countries a great deal of similar help has
been given.
Denmark and agricultural co-operation.
Closely connected with certain developments of credit, and deserving to
rank as the third, if not the second, great subdivision of co-operation,
is agricultural co-operation, a movement in the main of the last twenty
years, but amounting now to a great force, almost everywhere except in
Great Britain, and in some countries almost to a revolution. It is
important to say agricultural co-operation and not co-operative
agriculture, for in spite of some customary mutual help in farm work, in
spite of several attempts, and some small successes, in co-operative
farming, the actual cultivation is almost everywhere individualistic.
The farmer or peasant cultivates alone, or with his family, or servants;
when he co-operates with his fellows, it is to manufacture, or to
market, the products of his farm, or more often to obtain the things he
needs for his farming, to raise stock, to own expensive machinery in
common, or insure against risks. By these means the small farmer,
without sacrificing his own peculiar advantages, obtains most of the
advantages of the big farmer, to the immense improvement of his
position.
At almost every point agricultural and credit co-operation touch; yet
the most perfect example of agricultural co-operation is not concerned
with credit co-operation in any form. The farmers of Denmark practise
co-operation in almost every variety, except for raising capital. The
commercial banks have provided money to start dairies and other
co-operative societies; so that, it would appear, the need of credit
co-operation has not been felt.
The Danish farmer is almost always a freeholder: it is little more than
a century since his ancestors were serfs. It is little more than a
generation since a few men, turning to account the strong national
feeling aroused by the defeat of 1864, started a great educational
movement which has left its mark on all strata of Danish society. After
the People's High School, technical schools arose in various places; and
to these, and to the excellent continuation schools in the country
districts, the Danes are beholden for the regeneration of their
agriculture. From 1867 co-operative distributive societies on the
Rochdale plan had been spreading in Denmark; but it was not till 1882
that co-operation in agriculture began, and the first co-operative dairy
was formed; ten years later there were about a thousand such, a number
which has slightly increased since. These dairies are productive
societies in which the cow-owners are the shareholders, and all
shareholders have equal rights and equal voting power, whether they own
one cow or one hundred. Almost every village has its co-operative dairy,
fitted to deal with the milk of from 400 to 1400, or even 2000 cows.
They far exceed all the other dairies of Denmark. More than four-fifths
of all the milk of Denmark is used in them, and they produce butter
worth more than nine millions sterling. The profits are divided among
those who supply the cream, in proportion to the value of their
supplies--a method of dividing profits characteristic of agricultural
co-operation. The village dairies are united in federations to export
their produce.
Side by side with the dairies are other co-operative societies, quite
independent but largely composed of the same members, for buying
collectively fodder, manures and other agricultural or household
requisites, for collecting and exporting eggs, slaughtering hogs and
curing bacon, improving the breed of stock, for bee-keeping,
fruit-growing and so forth. By means of these societies the country has
been greatly enriched. The farmer not uncommonly belongs to ten
co-operative societies, besides probably a farmers' club. The work of
starting and administrating the societies is seldom paid, and many
farmers give much time to it gratuitously. They are in the main
organized on the same principles as the dairies, but with variations;
the largest egg export society, for instance, has over 30,000 members.
It is not a federation of village societies, but a centralized body with
many branches.
The growth of the bacon-curing societies has been remarkable. The first
of them was not founded until 1887, but they spread rapidly, and in
seven years there were twenty, killing more than half the country's then
produce of hogs. The movement has greatly increased since then, and
multiplied its output about fourfold. Co-operation in collecting,
grading and exporting eggs only began in 1895, and in eight years 65,000
members had joined the various egg societies, and the value of eggs
exported had reached L436,000. Taken as a whole, the effect of
agricultural co-operation in Denmark has amounted to little less than a
revolution. It has brought the results of science within the peasant's
reach, and he has been quick to avail himself of them: it has
transformed a great part of farm work into a factory industry, increased
the yield of the soil, improved the material position of the peasants,
and drawn rich and poor together. Denmark, once so poor, is now, except
England, probably the richest country in Europe in proportion to its
population. Besides Denmark, Germany, France, Italy, Belgium, Holland,
Finland, Australia, New Zealand, the United States, Canada, Ireland and
many other countries have important developments of agricultural
co-operation. In Germany, where it is closely connected with credit
co-operation, it seems to date from 1866 only, yet in forty years
agricultural co-operative societies have come to number six thousand,
without counting the agricultural banks, which exceed twice that number.
There are dairies, societies to purchase farm requisites, societies of
grape-growers, hop-growers and beetroot-growers, distilleries, labour
societies, insurance societies, societies to own warehouses and
granaries and to sell produce, to purchase land and resell it in small
holdings, and even several societies which purchase land to cultivate it
in common. The close connexion between credit-societies and other
agricultural co-operation is exemplified in the Central Union of
orthodox Raiffeisen credit societies at Neuwied. Through a central bank
and a trading department allied to it, it has negotiated the joint
purchase of coal, feeding-stuffs, manures, machinery and so forth to
large amounts, as well as the difficult business of the combined sale of
agricultural produce. Moreover, several local centres connected with
this union have granaries and warehouses for the storage of agricultural
produce, and negotiate joint sales, while within the union facilities
have been found for selling the products of one district to members in
another.
Irish agriculture.
In Ireland stores have not hitherto flourished, though a few exist.
Irish co-operation is agricultural, and dates from the foundation of one
co-operative dairy in 1889. Thence has grown a movement already of great
importance, still advancing and comprising from eighty to ninety
thousand members, belonging to some hundreds of societies--dairies,
agricultural supply societies, banks and so forth, formed on the Danish
model. To form a dairy the small working farmers of a district register
a society and take up shares of L1 each, in proportion to the number of
their cows. Each brings his milk to be separated, is paid for the
butter-making material it contains, and receives back skim milk. If any
profit is divided, it belongs nine-tenths to the suppliers of milk in
proportion to the value of their supplies, and one-tenth to the dairy
employees as dividend on wages in pursuance of the co-partnership
principle. These dairies produce butter worth more than L1,000,000.
Their rapid spread is due to their great influence in improving the
quality of butter, and hence increasing the farmer's gains. The
co-operative banks are of the Raiffeisen type, though a few have limited
liability. They aim at providing the peasants with necessary capital
("the lucky money" they have christened it) and expelling the usurer.
They are increasing rapidly. Among other objects of Irish co-operation
are selling eggs, poultry, barley and pigs, joint-grazing,
potato-spraying, scutching flax, bacon curing, home industries, and of
course supplying farm requisites. The movement promises much further
growth in magnitude and variety. The dairy societies have federated into
an agency for reaching the English market, and the supply societies into
an Irish Wholesale for purchasing to the best advantage. Besides the
direct profits and economies of these societies, they have greatly
benefited Ireland by teaching men of all classes, parties and religions
to act together for peaceful progress; they have led to a wide diffusion
of better agricultural knowledge, and to the establishment by government
of the Agricultural Department. (See IRELAND.)
Co-operative agriculture in France and other countries.
In France, which Englishmen are apt to speak of as preeminently the
country of co-operative production, the agricultural is the most
important branch of co-operation; and the source and mainstay of
agricultural co-operation are the _Syndicats Agricoles_. These are not
technically co-operative societies; they are rather trade unions, not
indeed of wage-earners only, or mainly, but of cultivators. They cannot
legally trade, being constituted for the study and protection of the
general interests of the members, the spread of information, and so
forth. Their principal object however, seems in many cases to be to
combine their members for the purchase of all farm requisites and
especially of chemical manures. This they do by collecting, sorting and
passing on orders. They cannot usually manage selling in common without
the intervention of a society specially registered for that object.
Beginning only in 1893, their number long ago ran into thousands and
their membership into hundreds of thousands, drawn from all classes of
cultivators and landowners, great and little. Among much other good work
they have led to the formation of a large number of strictly
co-operative societies for all the purposes of agriculture, except
cultivation in common. Thus there are two thousand agricultural banks,
besides butter factories, distilleries, associations for threshing, for
sale of fruit and vegetables, for wine-making, oil-pressing, and so on,
amounting altogether to some hundreds. There are also societies, mostly
of ancient date, engaged in making Gruyere cheese: a few years ago these
numbered 2000, but they are dwindling. Lastly, there are some eight
thousand mutual insurance societies organized as agricultural
syndicates.
Everywhere the main features of this agricultural movement are similar
to those we have seen in Denmark and Ireland; it is supplementary to
individual cultivation; hardly ever does it appear as associations for
cultivating in common, and, speaking with certain important exceptions,
it has no very ideal aims, but seeks chiefly to give the farmer a better
profit. In England there are a number of farms worked by stores, and
several large associations for the supply of farm requisites; but the
typical agricultural co-operation, based on small village societies and
federations of such societies, has only recently been made known and
begun to take root.
France and co-operative production.
It is notable that while the _Syndicats agricoles_ are almost exactly
what Fourier, the Robert Owen of France, foresaw as the next stage of
social development, the other great branch of French co-operation, the
workshop movement of the _Associations_ _ouvrieres de production_, is
directly due to his teaching, which led in 1848 to the starting of a
large number of co-operative workshops. The suppression of association
after the advent of Napoleon III. killed most of them, but with the
return of liberty they revived and they have steadily increased ever
since. They vary somewhat among themselves, but are in the main
combinations of workmen to carry on their industries with their own
capital or that of their trade unions. Their chief difference from
English co-partnership societies is that they very rarely admit to
membership any persons not belonging to the trade. They are engaged in a
great variety of industries, selling comparatively little to
co-operative distributive societies, as English co-partnership societies
do, but taking contracts from government departments and the
municipalities, and supplying the general public. Complete statistics of
their total trade are not available, but it exceeds L2,000,000, and the
separate societies seem to vary, like the majority of English
co-partnership societies, from about L40,000 a year downwards, a few
being larger but the great majority small. From about 140 societies in
1896 they have grown to between two and three times that number, and the
increase continues with rapidity. More than two hundred of them are
federated in the _Chambre consultative des associations ouvieres de
production_, which looks after certain business interests of the
societies, and also assists the formation of new ones by propaganda and
advice. In Paris alone about a third of these societies are found.
It has been objected that their growth is artificial inasmuch as the
government gives them certain advantages, such as preference over the
private contractor at an equal price, exemption from the deposit of
security, and special concessions as to payments on account. It also
grants a subvention (recently about L7000 per annum), which was formerly
all given to the societies in grants, but is now largely lent to them at
not more than 2% interest through their own special bank. This bank was
founded in 1893 to help the societies with loans and discounts, and was
soon after endowed by a disciple of Fourier with L20,000. The societies
have also benefited by other private beneficence and public help. As to
the Government aid, it must be remembered that in France the state helps
all forms of industry in ways unknown to us, and the French co-operative
producers always declare that what is done for them is a trifle compared
to what is done for other manufacturers. Moreover, they get many large
contracts in open and unaided competition. In these societies the
_auxiliaires_, or workers who are not members, are often numerous; but
no society is now admitted to their federation which does not share
profits with the _auxiliaires_ and facilitate their admission to
membership.
Consumers' co-operation, credit co-operation, agricultural co-operation,
and workshop co-operation, as exemplified in Great Britain, Germany,
Denmark and France, are found in most advanced countries, some in one
and some in another, in forms roughly similar to those above described.
Of co-operation for production it might have been said, a few years ago,
that outside Great Britain it everywhere meant associations of
producers. Except bakeries, there was but little consumers' production;
that, however, seems now to be spreading in foreign countries also. The
most important developments of co-operation not yet described are the
socialist co-operation of Belgium, the co-operative building societies
of the United States, the labour societies of Italy and Russia, the
co-operation of German craftsmen to provide themselves with raw
material, and the letting out of railway construction to temporary
co-operative groups of workmen by the New Zealand and Victorian
governments.
In Belgium co-operation is mostly socialist in the towns and Catholic in
the country. In all the principal industrial centres are very important
co-operative bakeries and distributive societies, owned by co-operative
groups, numbering thousands of workmen of every calling. These _Maisons
du peuple_ are admitted to be well managed, even by those who dislike
their politics. The socialist party look upon them chiefly as a means
of organizing and educating the working classes for political and
economic emancipation, and of providing funds for political warfare.
Like the English stores, and allied societies, they are based on the
consumer, but unlike them they pay no interest on share capital, though
they do on deposits. A much larger part of the profit than in England is
devoted to propaganda and common purposes, though a part is also paid to
the consumers individually in the form of checks exchangeable for bread
or other goods. The workers employed also receive a share of profit as a
dividend on their wages, and elect their representatives on the
committee of management. By means of these societies the party has a
press, buildings, and the funds to fight elections and support members
in parliament. In France, where the store movement has been of an
individualistic, and often middle class, tendency, the socialists have
lately imitated the example of Belgium, and seem to be winning more
success than the older French stores.
In the United States there has long been much important agricultural
co-operation, and there have been many much-advertised attempts to
establish Rochdale co-operation, but there have so often been failures
and even dishonesties that co-operation has had a bad odour in the
country, and the developments come and go with such rapidity that it is
difficult to speak with confidence of its stability. The branch of
co-operation which has been a great success in the United States
consists of the great co-operative building societies, but building
societies are not considered part of the co-operative movement in Great
Britain.
Co-operation of all kinds is greatly developed in Italy, but one form is
specially notable. The _Societa di lavoro_ are co-operative labour gangs
of great importance. They are counted by hundreds, and are found among
navvies, builders, masons, carriers, stevedores, agricultural labourers
and other workmen, and have carried out very great works in Italy and in
foreign countries. They have, for instance, drained lands in the
Campagna and made a railway in Greece. They differ from productive
societies markedly in that they have comparatively little to do with
capital or material, but contract mainly for labour.
The Slavonic races seem to have a special aptitude for grouping together
co-operatively: it is said that men meeting casually on a journey will
do so for the brief time they are together. In countries like Servia we
see this ancient, and more or less customary, loose and unstable
co-operation meeting the modern contractual, permanent co-operation of
banks and other registered societies. So in Russia, where so large a
part in the national organization is played by the _Artel_ (see RUSSIA),
which may be a transitory co-operative group of workmen undertaking a
particular piece of work, e.g. to build a house, or a permanent
association like that of the bank porters combined together to guarantee
one another's honesty.
State help.
While English and some other forms of co-operation have always
repudiated state help, and probably rightly, so far as their own work is
concerned, the state in almost all countries, and conspicuously in
England, has in fact helped to the extent of providing special
legislation, and waiving fees, so as to encourage the formation of
co-operative societies. A second form of state help is very noticeable
in the modern development of agriculture, as in Denmark, Canada, New
Zealand, Ireland and very many countries, where the state has played a
great part in performing or assisting functions which neither voluntary
association nor individual enterprise could well perform alone; in
providing technical education, expert advisers, exhibitions and prizes;
in distributing information in all forms; in finding out markets,
controlling railway rates, subsidizing steamboats, and even grading,
branding, warehousing and freezing produce, and maintaining trade agents
abroad. These things have not been done for co-operative societies
alone, but for agriculture in general; but co-operation has chiefly
benefited, and much has been done expressly to encourage the formation
of associations of cultivators, and provincial and national federations
of such associations; and government departments of agriculture are
found acting through such bodies, and with their advice and assistance.
The third and most questionable form of state help is by direct
subventions, and we have seen how much has been done in this way for
credit co-operation and particularly agricultural credit. Harm has
undoubtedly been done in certain cases by forcing co-operative
societies, whether from political motives or merely mistaken policy. Yet
even as to money subventions, good authorities, while admitting the
great dangers, remain convinced that the advantages overbalance them,
self-help being evoked, and helped over initial difficulties which would
otherwise be insuperable. Experience in fact shows that governments can
do a very great deal, at least for agricultural co-operation, but only
on condition that they encourage, and do not undermine, self-help and
private initiative. Thus while voluntary association is sometimes
advocated as a step towards, and sometimes on the other hand as a
substitute for, and bulwark against, state socialism, we find in
practice these two forces working each in its own sphere, and in ways
complementary one to the other, while underlying and essential to both
is the force of individual action and self-help.
Conclusion.
We have now surveyed co-operation in its chief forms and in some of the
countries where it is chiefly found. Some years ago it was roughly
estimated that the members of one or other of its branches numbered six
millions, representing with their families a population of 25,000,000
people. This must be much within the truth to-day. In no other country
so much as in Great Britain do we find the tendency for all branches of
co-operation to federate in one union and to help one another by mutual
trade. Yet everywhere the instinct of co-operative societies is to
federate with others--at least with others of their own particular
shade; so that Wholesales and other federations are found more and more
in many countries. Since 1895 the co-operators and co-operative
societies of many far-distant lands--almost of the whole world--have
been drawn together by the International Co-operative Alliance, a body
which, without attempting to interfere in their differences, collects
information from all, and distributes it to all, keeps them all in
touch, and every few years calls their delegates together in congress,
to discuss their problems, and to remember their common ideals.
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Co-operation_ (London, 1875-1879, new ed., 1906), _History of the
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Years Ago_ (London, 3rd ed., 1891), _Co-operative Movement of To-day_
(London, 1891, new ed., 1896); Lloyd Jones, _Life and Times and
Labours of Robert Owen_ (London, 1890, new ed., 1895); F. Podmore,
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Guise_ (Guise, 1892); E. O. Greening, _The Co-operative Traveller
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Mabilleau and others, _La Prevoyance sociale en Italie_ (Paris, 1898);
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1900). See also the annual Reports of the Government Labour
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