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MANUAL FOR CO-OPERATORS.

PREPARED AT TKi REQUEST OF THE

CO-OPERATIVE CONGRESS,

HELD AT

GLOUCESTER,

IN APRIL, 1879;
AND REVISED 1888,

EDITED BY

THOMAS HUGHES, Q.C,

AND

EDWARD VANSITTART NEALE,

General Secretary of the Co-opeeative Union.

MACMILLAN & CO., BEDFORD STREET, W.C., LONDON.

PUBLISHED FOR

THE CENTRAL CO-OPERATIVE BOARD,

CITY BUILDINGS, CORPORATION STREET, MANCHESTER.

1888

i i I

Resolution of the Co-operative Congress, held at
Leeds f in June, 1881 : —

" That we publish the Manual in the same manner as
the other Tracts of the Board, and that our hearty-
thanks be given to Mr. Hughes and Mr. Neale foi
the labour they have devoted to it."

PREFACE.

VT^T has seemed desirable to explain to those who arc
^\ responsible for this Manual, by way of preface, whence
it comes, whom it represents, and why it is put forth.
Whence it came. — The present proposal came from
the Southern Section of the Central Co-operative Union,
who, in December, 1878, resolved that it was desirable that
a Manual should be prepared, and that an outline should, in
the first instance, be submitted for their approval. This
was done on February 19th, 1879, when the following outline
was approved, and referred to the United Board : —
Introductory — Historical Sketch of Co-operation.
Part I. — The Moral Basis of Co-operation, and its
Relations to —

(a) Religious Faith.
(h) Other Philanthropic Movements.
(c) Socialism, Communism, and other Politico-Social
Movements.
Part II. — The Economical Basis of Co-operation, and it?
Relations to —

(a) Competition.
(h) Current Economic Theories.
(c) The State.
Part III. — The Practice of Co-operation —
(a) In Distribution.
(h) In Production.

(d) As respects the Law.

Part IV. — The Helps and Hindrances to Co-operation-
Dangers to be guarded against.

r^ooori 00

iv. Preface.

Adoption bv Central Board. — At the annual meeting
of the Central Board, held at Gloucester on the 12th of
April, 1879, the above outline was laid before the members
from all the sections, and adopted by them; and it was
resolved to recommend it to the Congress then about to be
held, in order that, if approved, the necessary authority
should be given for its preparation and publication.

Sanction by Congress. — Accordingly, at the Congress
held at Gloucester in the month of April, 1879, the proposal
was brought before the general meeting of the representatives
of the societies in union, and was unanimously approved,
and the duty of preparing and editing the Manual in con-
formity with the approved outlines was, in the first instance,
entrusted to myself, with the General Secretary, Mr. E. V.
Neale» On Mr. Neale's suggestion, the United Board
resolved, on December 5th, 1879, "That each Section of the
Board be requested to appoint one, to act as a committee
with the Editors to revise the work." It is under this
authority and supervision, therefore, that this Manual is
now published.

It will thus be clear to all readers acquainted with the
constitution of the Co-operative Union, that every precaution
has been taken to ascertain and carry out the wishes of the
societies who are members of it. To them the words
Southern Section, United Board, and Congress will be
familiar; but, as it is hoped that this Manual may reach
many persons not iii any way connected with the Union,
and having no knowledge of its history or constitution, it
may be well here to give some short details on these points.

Origin and Constitution of the Co-operative Union. —
The Union, then, is composed of societies registered under
the Industrial Societies Acts, the first of which (the 15 and
16 Vict., c. 31) was passed on the 30th June, 1852. (At that
time there were already upwards of forty societies in exist-
ence, some of which were represented by a Central Board
sitting in London — of which, perhaps, the present Union
and Board may claim to be the legitimate successors ; but,
for present purposes, the Act by which such industrial com •
binatibns were first legalised may be taken as a starting point.)

Preface. ■ y.

It is needless to give in any detail the history of the
movement in the first years after the passing of the Act
which legalised industrial societies. They grew and thrived
apace under its protection, but soon began to understand
from their own individual experience that some unioA
between them was necessary, if the full benefit of the Act
was to be realised. What each society had done for its
individual members, a central organisation to which all
might belong might do for the societies as a body. The
chance of injurious rivalry between them might thus be
avoided, commercial advantages might be obtained, and the
sound principles and high tone which characterised the
early associations might be preserved and extended to the
whole body.

For some years, however, this desire for union took n6
definite shape, beyond conferences of delegates from the
Lancashire and Yorkshire societies, which were held from
time to time — generally on Good Friday in each year. At
length the time for a practical effort seemed to have conie ;
and at the conference of 1863 — after the 25 and 26 Vict.,
1 86 1 -2, had given to the societies a corporate existence, and
allowed one society to hold shares in another in its registered
name — it was resolved to establish a centre of supply, of
which every society in its corporate capacity might become
a member. Accordingly, in the autumn of that year-' the
Wholesale Society of Manchester was founded and com-
menced business. The necessary capital was subscribed by
^ fifty societies, numbering in the whole 17,545 individuJtl

members.

The experiment was at once successful. The first balance

sheet showed average weekly sales of ;^8oo. Its progress
up to the close of 1887 may be gathered from the fact
that in the December quarter for that year the average
weekly sales were ;^i 20,044. In the same quarter 827
societies, with 604,800 members, held shares in the Whole-
sale Society, which had supplied goods during the quarter
to 974 societies, and done a business amounting in 1887 to

• The first half-year's accounts are dated April, 1864.

yi. Preface.

;^5,7i3,235. Branches have been estabHshed in London and
Newcastle, and purchasing agencies in Ireland, France, the
United States, and several of the British Colonies.

But we must return to an earlier period — to 1868, when
the members of societies which formed the Wholesale
numbered in the last quarter 74,494, and its sales for the
year amounted to ;^38 1,462 only, in place of the large
numbers quoted above. Still, even then, those who had
watched the growth of the movement from the first felt that
the time had arrived to stimulate the desire of union for
other purposes than the utilisation of joint capital for the
purchase of goods in the best market on the most favourable
terms. The initial steps for this object, which are described
in the preface to the report of the Congress for i86g, were
taken in London, principally through the exertions of an
indefatigable veteran of co-operation, now unhappily lost to
us, the late Mr. William Pare. Communications were
opened with the Conference Committee of the Lancashire
and Yorkshire Co-operative Societies, and, with their
approval and support, a Congress was held in the Theatre
of the Society of Arts, on May 31st and the three following
days of 1869, which was attended by 62 delegates from 57
societies or companies, 23 in London or its immediate
neighbourhood, and a considerable number of visitors.
It led to the appointment of a committee, which afterwards
combined with the Lancashire and Yorkshire Committee ;
and out of this combination arose, in 1873, by resolutions of
a Congress held in Newcastle-on-Tyne, the organisation of
the present Co-operative Union.

This Union includes, at the time when these lines are
written, 775 societies* which, in the year ending March 31st,
1888, subscribed ;^3,892. iis. id. for the current expenses of
the Union.

It is governed by an Annual Congress composed of dele-
gates elected by the subscribing societies, and a Central Board
also directly elected by them, consisting at present of sixty-
one members, and divided into six sections corresponding

* Out of about 1,350 existing in Great Britain.

t*vej'au. vii.

to the divisions of Great Britain placed respectively under
their charge.

These sections, taken in geographical order from south to
north, are* —

NAME. DISTRICT. SOCIETIES.

Southern Southern and Eastern Counties 128

Western South-Western and Western Counties .... 37

Midland Midland Counties and Lincolnshire 116

North-Western . . North-Western Counties and Yorkshire. . . . 267

Northern The Four Northern Counties 94

Scottish Scotland 130

They act as a body through twelve representatives,
appointed by the sections, and called the United Board,
which meets regularly three times a year at Manchester. A
fourth meeting, where all the sections are represented by as
many members as can attend, is held in connection with the
Annual Congress, which is ambulatory, meeting in each
sectional district in rotation.

Each section has a secretary, and most of them are divided
into sub-sections, each of these again having its own secre-
tary, whose principal duties are — to organise local confer-
ences, to keep up correspondence between the societies inter
se and with the Board, and to bring before the whole Union
any cases where advice or other help is required. The
secretary of the United Board, who is also General Secretary
of the Union, is in constant communication with the local
secretaries of all the sections. The Union is thus, as it
were, in permanent session, always ready to take action
wherever it may be necessary or desirable — a permanent
centre of advice and help in case of need. It is also, through
its International Committee and its General Secretary, in corres-
pondence with the leaders of kindred social movements in Europe
and America — such as Herr F. Schenck, the successor of Herr
Schulze-Delitzsch, in Germany ; M. de Boyve, M. C. Limousin,
and Mr C. Roberts, in France ; and Signor Vigano, in Italy.
Indeed it may be confidently affirmed that, so far as the English
co-operative movement is recognised abroad, it is identified with
the Co-operative Union.

For details, see the Rules and Orders of the Union.

viii. Preface.

From this Union the following Manual comes. Dealing
as it does with principles affecting the deepest sentiments of
human nature, and applying them, as it endeavours to do,
with unflinching logic to the matters where men's interests
are directly concerned, it cannot be expected either that the
foundation for co-operative action laid in it should be
universally accepted by all members of the Union, or that
all should agree in the practical conclusions built on this
foundation. But to lay a solid foundation for co-operative
action and raise upon it, in idea, the structural development
of a social system, whose quiet but all-transforming growth
may recall the beautiful lines applied by Bishop Heber to
the Temple of Jerusalem : — }j;i(') ?-ioUi:

No axe was heard, no pond'rous hammers rung, —
Like some tall palm the gracefifi fabric sprung,

this was the difficult duty imposed upon my colleague
and myself by the Congress which asked us to undertake
the preparation of a Manual for Co-operators on the lines
stated above. We should have been false to this duty if we
had laid any " other foundation " than the one on which
alone we believe human progress can firmly rest ; or if, on
that foundation, we had presented a commercial instead of
a social edifice, as the outcome of co-operative work.

If the Congress had desired to see co-operation referred to
some utilitarian basis, or the hopes of human progress
identified with the grinding down of labour beneath the
Juggernaut of cheapness, it should have laid down a dif-
ferent programme, and must have entrusted the preparation
of the Manual to other hands than ours.

It does not follow, nor does either of us ask, that the
Congress, in publishing this Manual as edited by us, should
attempt to clothe it with an authority to which it does not
lay claim. The Manual is written throughout in the style
the least assuming possible, namely, in the singular number,
as if there had been one editor only instead of two ; and it
never appeals to any authority but that of the facts adduced
and the reasonings stated. It makes no attempt to pledge
any member of the Union to any propositions beyond those

Preface. »3».

laid down in the Rules and Orders as the basis ot the Union.
That it will help to spread our convictions of the true
foundation and proper development of co-operation, w6,
being ourselves convinced that the foundation is solid and
the development legitimate, both hope and expect. But we
do not ask the Congress to pass any other resolution about
it than that it shall be published as we have edited it. Wis
desire no acquiescence either in our premises or our con-
clusions, but one resting on the conviction that the premises
are true and the conclusions logical.

What has just been said will, I trust, suffice to remove this
misapprehensions which I find to have been entertained in
some quarters that, in putting forth this Manual, Mr. Neale
•and I seek to narrow the basis of the Co-operative Union to
a creed of our own. There is another and more important
matter on which it seems advisable to say a few words, in
order to remove, if possible, once for all, misapprehensions
concerning the objects and principles of the Union itself.

These misapprehensions are at present twofold. On the
one hand, this Union is supposed to be the representative
in England of the movement known by different names —
Socialism, Communism, Nihilism — which is so profoundly
disturbing all continental nations. On the other, it is
looked upon as a mere effort: of the working class to take the
trade of the country into their own hands and carry it on
for their own benefit on the old lines. Each of these views
has truth in it, but yet is not true, as it is the object of these
introductory remarks to show as shortly as possible.

First, then, what is the moving power which inspires and
gives its ominous significance to the Socialism (to use one
generic word) of the Continent ? It is undoubtedly the
hopelessness of the surroundings of life for the vast majority
of the people under the present organisation of society in all
European States. That organisation seems to these majorities
to have been expressly framed in the interests of the few
who possess wealth and power, against the many who have
neither. And so far from there being any prospect of better
things while that organisation is left standing, it would seem
as though the great material changes wrought by the

X. Pnjav*>,

conquest of steam, electricity, and other natural forctv..
while enormously increasing the wealth at the command
of mankind, have only placed that wealth and the power
and enjoyment that go with it more absolutely under the
control of the few. So long as the strong are allowed to
grow stronger, the rich richer, at the cost of the weak and
the poor, this state of things will continue ; or rather the
conditions of life will constantly become more and morp
mtolerable. Therefore, they say, it must be swept away.
Society must be reorganised in the interest and with a view
to the well-being and well-doing of the many. To this end
the State, which has hitherto been their oppressor, must be
made their servant, and, as a first and necessary step, must
become the owner and distributor of the national wealth,
both real and personal.

This, in a few words, is the contention of the people
waking up as they are all over Europe to a consciousness
at once of their own misery and of their own power. It is
formulated most scientifically, as might be expected, in the
State Communism of Germany, as advocated by Ferdinand
Lassalle, and pushed to more extreme issues by Karl Marx
and his followers. It involves confiscation of the possessions
of the rich by the State, and the forcible repression of one
great class of the community — probably the strongest, as
would be proved in the throes of the revolution by which
alone such a change could be brought about.

How far then is our English Co-operative Union in sym-
pathy with this vast and threatening continental movement,
which no doubt would gladly claim us as fellow-workers,
and with which many amongst ourselves who do not look
below the surface have been ready to identify us ?

It must be frankly admitted that the same motive power
has been at work here in England as in Russia and Germany.
It is the hopelessness of their condition under the present
social and commercial system of England which has led tc
the banding together of our 775 members in this Co-operativt
Union. They see, as clearly as the followers of Lassalle oj
of Karl Marx, that under that system they have no more
chance in the future than in the past or present of raising

Preface. xi.

the condition of themselves or their children ; that the main-
springs of commerce and manufactures, of producing, buying,
and selling — in fact, that all the most potent material factors
of modern life are here also getting into fewer and fewer
governing hands ; that under this system the strong are year
by year becoming stronger, the rich richer, at the cost of the
weak and poor ; and they desire as ardently as any German
Socialist or Russian Nihilist that this state of things should
cease.

Again, they hold as firmly as any continental Socialist the
belief that this can only be brought about by association
amongst the poor and weak, that the wider and deeper such
association can be made, the more firmly it can take hold,
not of this or that isolated portion, but of their whole lives,
the sooner will the desired change be possible. Therefore
they look forward to, and desire to promote in all ways, the
organisation of labour as ardently as Fourier or Louis Blanc.
Their successes hitherto, as well as their failures, have only
confirmed them in this faith, the former being clearly due to
adherence to, the latter to departures from, the true principles
of association, as they understand them.

And they have done their best to leave no doubt upon the
question what these principles, as they understand them, are.
They are set forth as the definition of objects on p. 25
of the Report of the Congress held in London, in an address
to it by myself. The acceptance of them by the Congress is
recorded on p. 41 ; and they are stated as the objects of the
Union in the first of its Rules and Orders, to which every
member assents by joining it. They are as follows : —

" This Union is formed to promote the practice of truth-
fulness, justice, and economy in production and exchange.

" I. By the abolition of all false dealing, either (a) direct,
by representing any article produced or sold to be other
than what it is known to the producer or vendor to be, or (h)
indirect, by concealing from the purchaser any fact known
to the vendor, material to be known by the purchaser, to
enable him to judge of the value of the article purchased :

" 2. By conciliating the conflicting interests of the capi-
talist, the worker, and the purchaser, through an equitable

xii. Preface.

division amongst them of the fuiwi.. commonly known as
profit: '(f(!t'»(k?^

" 3. By preventing the waste of labour now caused by
unregulated competition."

They have been summarised by the General Secretary
in the paper read by him, with general approval, at the
Congress held at Newcastle in this year as twofold.
I. Moral — to promote truth, just dealing, and equity. 2.
Economical — to prevent waste in production and exchange.
.\nd they are in truth only an application of the more
comprehensive summary of principles laid down by thb
Society for Promoting Working Men's Associations, of
which the late Rev. F. D. Maurice was president, namely: —

1. That human society is a brotherhood, not a collection
of warring atoms :

2. That true workers should be fellow- workers, not rivals :

3. That a principle of justice and not of selfishness should
regulate exchanges.

It would be difficult, probably, to find anyone who would
have more deeply sympathised with the Socialists of the
continent in the ideal of a higher social state after which
they aspire, or more decidedly rejected the means by which
they seek to attain it, than the late Mr. Maurice. I claim foi
English co-operators generally that they share both these
sentiments.

The aim of our English Co-operative Union is, like
that of continental Socialism, to change fundamentally
the present social and commercial system. Its instrument
for this purpose, as well as theirs, is association. Here,
however, the likeness ends. Our co-operators, thanks
to their English training, do not ask the State to do
anything for them, beyond giving them a fair field, and
standing aside while they do their own work in it in their
own way. They want no State aid — they would be jealous
of it if proffered. They do not ask that the State shall
assert its right, and reclaim all land and other national
wealth for the benefit of all ; they want no other man's
property, but only that they shall not be hindered in creating
new wealth for themselves.

Preface. xiii.

, In this lies the broad distinction, and here the ways branch
off. The Continental Socialists and Nihilists would use asso-
ciation for converting the State into the sole national land-
owner, capitalist, and employer of labour. The English
Co-operative Union would use it to control and bring into
obedience to the highest moral law the processes of
production and distribution of material things. The
difference — and it is fundamental and irreconcileable — lies
in the uses to which the same instrument — association — is
to be put. It would be as fair to identify those who
blow up a house full of people with those who blow up a
rock which impedes traffic because both use gunpowder,
as to identify the English co-operator with the continental
State Socialist or Nihilist because they all use association.
The fact is that Co-operation, as understood and practised
by the Union, is the surest protection for England from
those dangers to society and property which the democratic
wave is threatening to bring on many other nations.

The second misunderstanding above referred to is, how-
ever, wider of the mark than that which would identify
the Co-operative Union with State Socialism, and under
present circumstances more plausible and more dangerous.
It need not be concealed or denied that perilous times for
co-operation are at hand. The commercial success which
has resulted from the methods of trading always in use
amongst our united societies has gained them a host of
imitators, who seem to think that some charm lies in the
word ** co-operative," and that the whole of their success was
due to combining to purchase and enforcing ready-money
payments for all goods dehvered.

In all other respects these bastard associations, founded
for the most part by gambling traders, follow in the old ruts.
Their first objects are profit and cheapness, and they com-
pete with each other as recklessly as any rival tradesmen.
The scandalous failures which have already begun, and
which will inevitably multiply, involving, it is to be feared,'
much loss and misery to a number of innocent persons, will
soon bring the name of co-operation into discredit, and
meantime may have a malignant influence on the develop-

xiv. Preface.

ment of a movement which, widely as it has spread, and
valuable as has been its influence, is still only in its infancy.'

It is, then, the main object of the present publication to
make clear to all whom it may concern that co-operation, as
understood and practised by this Union, though it takeS
hold, in the first instance, of buying and selling, as that
department in human affairs which lies nearest to hand and
most needs a new and reforming spirit, has aims outside
and above trade. Even in this trading department it comes
into direct conflict with prevailing practice and theory, sub-
stituting "fair exchange" for "profit" and "fair payment"
for "cheapness." These, it asserts, are attainable by well
ordered fellowship in work, but have never been attained,
and are proving themselves every day more unattainable, by
the method of unrestricted competition.

But while it seeks in the first instance to make the material
business of men's lives — production, buying, and selling —
wholesome and honest, it does not stop here. Its object is
to work out in practice the true relations between man and
man, which can only be done by frank acknowledgment of
the ground upon which human society is based — that we
.must be fellow- workers and not rivals, brethren of one
famil)^, to whom indeed the great inheritance of this earth,
has been given, but only on the condition that it shall be
used and enjoyed in the spirit and according to the will of.
Him who created it.

In the effort to carry out these principles the Union has
foimd itself face to face with the deepest problems of human
life, those which are generally known, in fact, as religious.
Our societies have come to acknowledge that the mere fact
of membership in a retail store involves more than paying
ready money, attending once a quarter, and drawing,
dividends. As the years pass they find themselves con-
stantly brought into new and more intimate relations with
their fellow-members, in their own association and in the
Union. In the primary sense of the word, id quod religat,
"that which binds together," they have already found that
co-operation has been a religion to them. It is well for the
nation that it has been so, for the industrial history of

Preface. xv.

England during the past few years has made it clear enough
that unless trade can be mastered and informed with a new
spirit it will destroy the national life ; and no spirit is strong
enough to master and reform it except the religious spirit
in the highest sense, which is the spirit of Christianity.

But religion is not only that which binds men together,
but that which binds man to what is above him, to that
which he looks up to and worships. It must not therefore
be supposed from anything which has been said, either here
or in this Manual, that the compilers, in claiming for co-
operation a distinctly religious side, suppose that any
co-operative union can be a substitute for the Church of
Christ, or co-operative action for that conscious inward
union between men and their Maker, which is religion at its
highest power.

There is truth, no doubt, in the saying, ^^lahorare est orare,''
but only potential truth. It should be written, not "est,"
but " potest esse"* What we do claim, then, is, that so far
as outward things go — for us men, in contact with the visible
things of this world, which we are meant to master, to use,
to enjoy — this method of fellow- work is the right, and just,
and true, and therefore the religious method, and the only
one which will bind us to our fellow-men, and to the Father
of men, and not divide us from one another and from Him.

What we do say, further, is, that this method of dealing
with visible things is only possible, in the long run, for men
who keep before their minds the ideal of righteousness,
truthfulness, and brotherly love in the daily round of their
working lives — who, in other words, keep before themselves
the setting up of the kingdom of God on earth as the
practical goal of all their efforts.

It has been, no doubt, ably maintained of late, that the
worship of humanity is enough of itself to keep alive this
ideal of righteousness, truthfulness, and brotherly love, and
to satisfy men's spirits in their devotion to the service of
mankind. The service of humanity, or, we prefer to say, of
our brethren, is involved in co-oparation ; and we gladly

Not "is," but "may be."

xvi. Preface.

admit that " he who serves men most" is the best co-operator
and member of our Union. We prefer, however, to read
something more into the formula, in order to make it hold at
all times, and under all circumstances. We would read it,
" he serves God best who serves man most." For the
witness of all times — and of none more than our own time —
the experience of all men's hearts and consciences, and of
none more than our own hearts and consciences — proves
that he who would not get weary of serving his brethren,
whom he has seen, must become aware within himself of a
spirit which he cannot see but may feel — a spirit higher than
his own spirit — higher than the spirits of all other men — j'et
working in those spirits, and with which he and they must
become one before they can find and do their true work, or
enter into their true rest.

THOS. HUGHES.

PART I.

THE MORAL
BASIS OF CO-OPERATION

FOR A FULL TABLE OF CONTENTS,

By means of which the course of the argument may be
followed in its main outlines, see the end.

PART I.

Chapter i.

THE RELATION OF CO-OPERATION TO
RELIGIOUS FAITH.

To trace the connection between co-operation and religion
rnay seem to many persons at the present day injurious
rather than beneficial to it, since they look on co-operation
as a principle of union, while religion, notwithstanding the
" binding " character implied in its name, they have, un-
happily, been used to think of mainly as a cause of division.
Nevertheless to point out this connection is a duty imposed
on the editors of this Manual by the programme adopted at
the Congress of Gloucester ; and the consideration of what
is required in such a work as that committed to them will, I
think, show that the Congress was right in making this
requirement.

Every important scheme of social reform hitherto pro-
posed has been founded on some theory about the nature
of man, his place in the universe, and destiny, which are
precisely the subject matters of religion. To confine our-
selves to the two most noted modern instances : — Robert
Owen founded his system on a conception of the influence of
circumstances in forming character, which was afterwards
formally adopted as a creed by the body formed by him, called
The Society of Rational Religionists. Again, Charles Fourier
laid down as the basis of his system a theory of congenital
impulses, named by him " passions," implanted in man by his
Maker, which would find their satisfaction in his proposed

4 The Relation of Co-operation

scheme of association, and ensure its success and the
general well-being, by making labour universally attractive.
Both these great reformers founded their systems on what
was practically a new religion, whence the new order of
society contemplated by them should arise. Co-operation,
if it would be regarded as a reasonable scheme of social
reform, must follow the like course, only in the manner
peculiar to itself, that is, by showing that what is new in
its proposals grows naturally out of what is old.

It has been the special characteristic of co-operation to
start from the present, and look to the future which it
anticipates as a state to be slowly evolved out of the actual,
by transforming without rudely destroying it. This process
co-operators have presented as the only safe road to per-
manent progress. If the conception is conformable to the
true nature of things, it ought to hold good in regard to
religion, of which, as has been said, it is the special function
to deal with the fundamental relations subsisting between
man and the universal power whereby he is sustained.
That is, we ought to find in the religious faiths subsisting
among men some one at least, and that not an insignificant,
uninfluential faith, which will supply, in conceptions proper
to itself, a solid basis for the modes of action through which
we think that co-operation may effect the social reforms
sought for by its means. Now what thus ought to be I shall
endeavour to show is the fact — that the most living, influen-
tial religious faith existing at the present time — the Christian
religion, — in the conception which formed its historical
foundation, and is common to every body of any numerical
importance professing to belong to it, does supply such a
basis — and that the history of this faith has brought to the
fore that application of this conception which makes it
serve as a basis for social reform, pointing it out as the
true outcome of the religion.

It is notorious that for many ages the great and highest
aim of Christianity was considered to be the withdrawing of

to Religious Faith. 5

men, so far as was consistent with their human existence,
from all active part in the business or pleasures of earthly
life, in order to fix their attention on an inner life of
prayer, praise, and meditation, with acts of charity, as the
fitting preparation for an unending future existence to
follow this life. But the sixteenth century after the
birth of Christ brought with it a great modification
of these ideas, which, beginning among the nations pro-
fessing a reformed Christianity, has gradually extended
its influence over those who continued to adhere to
the old faith. The opinion grew up that a life of active
industry, accompanied by the natural pleasures of family
union, if it be pervaded by the spirit of love to man, is more
conformable to the will of God than a life withdrawn from
such employments and pleasures, though spent in a round
of prayer, praise, and meditation, diversified by acts of
benevolence.

Modern society, both in Europe and America, may be
said to have been built on this idea, which has continually
gained ground, through the enormous development of indus-
try in recent times, strengthened by the vast increase of
scientific knowledge, till it threatens to expel as a foolish
superstition the mediaeval idea that the true object of indi-
vidual life is to sink its individuality in union with the
Divine Being.

Yet modern society itself bears witness to the imperfection
of its own ideal. Against this outburst of individualism the
great and rapid growth in the present century of socialistic
systems, carried, at least in theory, to the extent of sinking
individual possession in common property, is a protest, full
of significance to those who would trace in the involved
course of human affairs the footsteps of a Divine guidance.
The subject will be more fully considered in a subsequent
chapter. But I would remark here, that this rebuke to the
excess of individualism by the common feeling which leads
to these social tendencies, has its deep root in the conviction

*6 The Relation of Co-operation

that man finds his true well-being in devotion to a being
higher than his own, which pervaded the religious thought
of the middle ages, and grew up under the shelter of a vast
organised system, the precursor, I trust, of another organi-
sation destined to bear, in these later days, for the benefit
of mankind, fruits such as those unquiet days could not
have produced.

The ideas which I shall endeavour to trace to their logical
issue in social institutions are, then, not an artificial growth
forced on Christianity, but a natural outcome, whose connec-
tion with it is shown by a long historical development. The
Church of the middle ages manifested herself as a powerful
spiritual influence for delivering man from the burden of his
own selfishness in a way which, if it did not exhaust the
Divine action, but fell short of what we hope to achieve, is
yet to us an example of the principle on which institutions
for the common good should be founded, and an encourage-
ment in the difficult attempt to introduce them. She has
been a pioneer, clearing away obstacles, cutting out paths,
throwing bridges over rivers, and thus preparing the way
for the advance of the main body, which may occupy the
lands and utilise them for the general good.

This preliminary work the Catholic organisation of the
Middle Ages has done for us. It has taught us the enormous
power possessed by voluntary associative effort, when
concentrated in institutions adapted to give effect to it.
It has shown us, in its great monastic orders, that large
bodies of men can be held together, without any external
compulsion, to live in common a life from which the
ordinary motive of individual interest is excluded, and its
place is supplied by motives entirely independent of this
individual interest, resting upon hopes which look for their
fulfilment to a future discerned only by the eye of faith. It
has shown us that these remarkable results have been
attained, not only in some particular ages, under some
peculiar conditions of race, or climate, or locality, but in all

to Religions Faith. 7

parts of the earth, among every variety of race or national

character, and for a long succession of generations, each

ready to take up and carry forward the work that its

precursors had commenced or continued ; with no apparent

exhaustion in the efficiency of this voluntary power, so long

as the arbitrary interference of the State did not oppose it.

It has been left for Christianity in our age to apply to

ordinary human life — which Protestants have declared to

be, in their opinion, more truly divine than the monastic

life — that principle of organised combination for realising a

life consistent with the objects accepted by us as its

true end, which our Catholic ancestors systematically and

successfully applied to establish the monastic or ascetic form

of life, believed by them to be the most truly conformable to

the Divine will.

We need not bid for cloistered cell
Our neighbour and the world farewell ;
The common round, the daily task
Will furnish all we ought to ask;
Room to deny ourselves — a road
To bring us daily nearer God ;

says, in well-known words, a poet of the Church of England.
He expresses the feeling common among the Protestant
religious communities — a sentiment which I regard as pro-
foundly true, but requiring to be qualified by the proposition
that, in order to keep alive among men generally the practice
of this divine principle of self-denial, it is indispensable that
the current of their lives should not continually carry them
in the opposite direction. In odcr words, there are wanted
institutions adapted to do for religious principle in its
application to daily life what churches have done for this
principle in its application to the act of worship, and
monastic institutions did for it in its application to that
ascetic life, which formed the ideal of perfection for the
middle ages, and still continues to do, in some measure,
for the large body who adhere either to the Greek or the
Roman communion.

8 The Relation of Co-operation

The experience of the centuries which have passed since
the Reformation furnishes what, to me at least, appears to
be conclusive evidence that — however completely the liberty
of individual action may be secured in any community,
however generally the duty of everyone to " love his neigh-
bour as himself" and " do unto others as he would be done
by" may be admitted by the members of that community
as indisputable, and however vast the increase of material
advantages in that community may be, this liberty will not
produce among the mass of the population a state cor-
responding to the ideal set before us by the Lord's Prayer,
which ought certainly to be the Christian's ideal, that
" God's will shall be done on earth as it is in heaven."
Or, if the contrary be affirmed, I can say only that the God
whose will is supposed to be realised by such a social state
as this individual struggle for existence produces, can be no
better than the ** Unconscious Being" of Hartman ; and the
sooner mankind can arrive at the solution of the problem of
existence proposed by that high priest of pessimism, and,
by a concentrated effort of their united wills, put an end
alike to the fruit of individual life and its unconscious root,
the better.

But not so, I hope, have we learned the lesson of
Calvary. Not this philosophy of despair are we, I trust,
disposed to accept as the outcome of the unnumbered
ages since the patient earth began her unwearied revolu-
tions round the sun, setting us, according to Goethe's
instructive epigram, an example of the spirit in which we
should possess our souls, while she inaugurated that long
development of ascending forms of being recorded in the
leaves of the *' Stone Book."* Individual liberty is a precious

* If e'er I'm impatient, I call to mind
How patient the old Earth I find ;
Who turns on her axis every day,
And twirls round the sun her yearly way.
Why am I here, but the like to do ?
Dear Lady Mamma, I follow you.

Free translation.

to Religious Faith. 9^

possession — a late gift of Time to mankind; who, indeed, as
yet, are far from having generally attained it, and when they
have attained it, are for the most part very far from knowing
how to make a good use of it — if by a good use we mean such
a use as is consistent with that example which all Christians
profess to set before themselves as showing the spirit by which
human life should be guided. How then are we to make
a better use of this great gift, of the power which, in Britain
and many other countries that we call civilised, men now
possess, to wield in entire security of person and property
a command over natural forces unexampled in any former
age, and yet increasing with every decade so rapidly that,
but for old age and death, we might imagine ourselves about
to be transformed into beings of some higher species than
mankind ? I reply — by inspiring the body of science with
the spirit of religion ; by using this material liberty as a
means of lifting ourselves into the spiritual liberty of the
"sons of God;" by substituting the genuine freedom of
working together for the spurious freedom of working against
each other ; and showing that man is as competent to con-
struct instruments of general well-being, as he has unhappily
proved himself competent to construct those fearful instru-
ments of destruction — the iron-clad fleets, the gigantic armies,
the hundred-ton guns, and weapons of precision, of modern
warfare.

The claim that I make for co-operative industry and
associated life, to be the true outcome of the Christian
religion, is not a claim antagonistic to, or condemnatory of,
or a substitution for, any previous phase of that religion. It is
simply a further development for which I think the time is
now ripe ; a new manifestation of the counsels of God for the
redemption of man out of the slavery of the flesh to the
freedom of the spirit; no more opposed to what has gone
before it than the fruit is to the flower, or the flower to the
leaf, or than primitive Christianity was in itself opposed to
the Judaism out of which it sprung. It is not a new form of

lo The Relation of Co-operation

worship, or a new phase of theological teaching, but a new
application of the spirit which has uttered itself in worship
and produced systems of theology. It is the application of
this spirit to solve the great problems of practical life; how
to fill up the gap between rich and poor; how to destroy the
antagonism between capitalist and worker ; how to make the
application of science to industry ease the toil of the worker,
mstead of ousting him from his work ; how to prevent the
fact that the labourer has made the existence of other men
more full of enjoyment, from rendering his own livelihood
more precarious. It is to ask Christianity to do for free
labour, which it may be said to have created in the nations
where it has taken root, what it did for slave labour by
suppressing slavery. To appeal to it to correct the evils
attendant on the good of its own creation is surely no
unreasonable demand.

The light of Christianity arose on a world of slave
owners and slaves, a world where the free labour of men
dependent for their subsistence on wages formed a very
insignificant part of the toil which filled the cities of
the Roman empire with their accumulated wealth. The
New Testament contains no condemnation of slavery. But
when the master 'had learned to look upon his slave as
a "brother beloved in the Lord" the days of slavery were
numbered. The maintenance of such a state of absolute
dependence and arbitrary power was logically so inconsistent
with the feeling of spiritual brotherhood involved in the idea
of a new birth, by water and the spirit, into a " new moral
world" of the sons of that God whose name is " Love," that,
as this idea took hold on men's minds, it naturally put an
end to what was thus irreconcilable with itself.

Now, what Christianity has thus done in the past, those
who regard it as the mighty agent provided by God to
redeem men from that slavery of the spirit out of which the
slavery of the body springs — the slavery to selfishness — may
fittingly ask it to do for the present and the future. We

to Religious Faith. ii

who appeal to Christianity to evolve co-operative industry
and associated life are, in truth, asking it to tame into
obedience to the law of brotherhood, which is the law of
reason, those energies that, left to the law of nature, can
produce only " the struggle for existence" known to modern
political economy under the name of free competition.
Is this request unreasonable ? History, I think, may assure
us that it is not.

Man is at once a natural and a supernatural being. He
belongs to nature by his passions and his strength, and, as
a natural being, is involved in that struggle for existence
dependent on the assertion of self, which is the law of all
natural being — that is to say, of every creature which is
unable to determine the ends of its existence for itself, but
finds them determined for it by its constitution and its sur-
roundings. The will of such a creature, when it has attained
to consciousness, is guided in its actions by the pleasures or
pains which stimulate it to do what is useful, or deter it from
doing what is injurious to itself individually ; or where, as
with bees and other social animals, the welfare of the great
body of individuals depends on their association — stimulate
it to do what is useful, or deter it from doing what is
injurious, to the society, though the individual may be in
some cases sacrificed in the process. But in man there
appears a higher power, linked, it is true, by insensible
gradations with natural being, and dependent upon it for
its own capacity to act, but standing above it : a supernatural
power of will which determines its ends for itself, and uses
natural powers, in the freedom of choice and with the
persistency of deliberation, to do that which it has so deter-
mined. Man possesses not only Strength and Passions, but
Reason. He is not only stimulated or deterred by Pleasure
and Pain, but is capable of rejecting pleasures and accepting
pain for the sake of objects so distant or so vast that, indi-
vidually, he can scarcely hope to realise their accomplishment,
yet deliberately works for them, because they are the choice

12 The Relaticn of Co-operation

of his reason, and to him the satisfaction of his reason can
become superior to the baits of any natural pleasures, or
deterring impulses of any natural pains.

Now this governing Reason is in itself essentially a
principle of unity. It has built up sciences, by per-
fecting conceptions which can give unity in idea to the
endless diversity of appearances presented to us by natural
beings, through the different ways in which they affect our
bodies by what we call our senses; and rhus has given us a
knowledge continually growing more complete of the modes
of action of these beings. It has created States, in order,
by the unity of political institutions, to set bounds to
individual selfishness, and give protection to individual
weakness. The great philosophers of Greece, while Greece
was yet free to act as well as to theorise, saw in the per-
fecting of these political institutions the instrumentality
through which they hoped for the attainment by mankind,
or at least by the privileged body of Hellens, of that
complete social unity which was the avowed though un-
attained object of the political institutions of Hellas in their
own age.

But they had selected a wrong road, though to a right
end. Time unfolded, as the outcome of this political
road to unity, the despotism of Rome. But at the epoch
when the vast machinery of Roman power, consolidating
its own action under the rule of Augustus, showed at
once how mighty this sort of unity could become, and
yet how little it satisfied what Greek philosophy demanded
from the principle of unity applied to human affairs,
there began to be heard a voice which, originating in
a despised race, promulgated by men who made no pre-
tensions either to the philosophical insight of Greece or the
practical wisdom of Rome, and finding a response chiefly
among those whom the great contemned, declared that the
principle of unity was to be sought for from within, and not
from without, and depended, not on political institutions, how-

to Religious Faith. ' 13

ever wisely instituted, but on the union of the will of man
with One who had submitted to be crucified as a malefactor,
that he might resolve the discords of human selfishness into
the harmony of the eternal divine love. From the faith in
this manifestation of the infinite tenderness of God to man
sprung up that rich crop of tender sympathy between man
and man which marked the Church of the first centuries,
and conquered the world, as the Emperor Julian declared,
"by the ministry of tables;" by a social institution, resting
on the free will of those who strove to realise in their own
lives the truth that *' it is more blessed to give than to
receive."

It is to an extension of similar institutions, resting,
like the " ministry of tables," on the free will of those who
maintain them, that the social reformer who would deduce
his reforms from the Christian spirit appeals, as the
instrument to give effect to his desires. He looks to such
institutions to put an end to the present antagonism between
the owner of the accumulated labour called capital and the
owner of the present labour, to which this capital is
indispensable, while, in turn, it is indispensable to make
that capital fruitful of benefit to its owners ; or, between the
man who distributes what others want and those among
whom the distribution is made — an antagonism than which
nothing can be more entirely opposed to the spirit animating
the New Testament, or more completely incapable of
removal by legislative regulations, without the voluntary
help of the persons for whom the legislation is made.
Surely we are justified by history in believing that, in
looking for the help required to this source, we shall not
look in vain.

No one, probably, will dispute that the Christian spirit,
if it is brought to direct itself seriously to these objects,
could accomplish them ; that is to say, no one who calmly
takes count of what this spirit has done in the past, and
is doing in the present — for the formation and support of

14 The Relation of Co-operation

cathedrals, churches, monasteries, schools, colleges, hos-
pitals, almshouses, for the promotion of temperance, the
suppression of slavery, the mitigation of the horrors of war,
and its ultimate removal, and other benevolent purposes,
including the spread of Christianity among non-Christian
nations. That without this spirit the task cannot be performed
will probably be admitted, even by those who hold that the
spirit may be separated from the name, and will do its work
better from the separation. No doubt there are, at the present
time, many — and among them very zealous advocates of social
reforms — who repudiate the name of Christianity, which to
them symbolises only intolerance, credulity, and superstition.
But in so far as these men are really animated by the spirit
that makes social reform possible, they are Christians
without intending it ; men who have the spirit of Christ
in them, by whatever name they choose to call themselves ;
and whom those who hold the Catholic Faith in the Divine
nature of their Lord must recognise as true children of
Him from whom all life proceeds, by that mark ascribed in
the gospels to his own teaching, '* By their fruits ye shall
know them."

As the ultimate result of Christianity, if it is to become
universal, must be to merge the present distinctions oi
Christian theology in the unity of a Christian life, so the
opposition of the Christian and non-Christian name must
merge in the harmony of a spirit which is not satisfied with
any institutions but such as exhibit in action that profound
solidarity of the whole with every part, and every part with
the whole, which St. Paul held out to his Corinthian converts
eighteen hundred years since as the relation that should
subsist between the members of the body of Christ. But
this anticipated universality of the time when Christianity
and Humanity shall be seen to be interchangeable names
for the same idea, does not make it the less important to
point out the support which this idea has in the Catholic
faith. The belief that the Eternal Father manifested to us in

to Religious Faith. 15

the person of Christ what the power underlying all natural
phenomena is in its essential character, and what we must
be to become like Him, crowning, as this belief does for
those who hold it, the long development of natural and
intellectual forces, with the anticipation of an age when the
will of man shall find its repose in voluntarily accepting the
law of love, must be admitted to afford a solid basis for
that idea of the universal brotherhood of mankind which
historically arose out of this Catholic faith.

Now we must not forget that this Catholic faith sums up
the religious conceptions of all the cultivated races of mankind.
Religion has appeared on the earth under two great phases :
(i) The belief in the immanence of the Divine in the world
and its incarnation in man : (2) The belief which sets God
over against the world and man. These conceptions appear
to have slumbered together in Egypt ; they diverged after-
wards ; the first giving rise to the Aryan, the second to
the Semitic religions. But they crossed and spontaneously
united in the Catholic faith as to Christ ; where the sublime
trust of the Jew wedded the philosophical insight of Greece,
and, allying itself with the practical sagacity of Rome,
constituted what must be called the scientific conception of
religion.

On those who would separate the development of Hu-
manity from the development of Christianity, we venture,
then, to urge, as fellow-strugglers with them in the hard
battle against egotistic impulses, not hastily to reject the
help which the history of Christianity offers ; lest in the
endeavour to grasp the fruit whilst they spurn the tree that
bore it, they should sink back from the law of love to the law
of force ; and instead of founding universally liberty, equality,
fraternity, and solidarity as they desire, should perpetuate
that "struggle for existence" out of which the Christian
Church emerged.

1 6 Th6 Keiatton of Co-operation

Chapter 2.

THE RELATION OF CO-OPERATION TO OTHER
PHILANTHROPIC MOVEMENTS.

Benevolence — goodwill to other men — is the common start
ing-point of all plans of social reform, the rendezvous where
all social reformers must meet. From whatever side they
approach these ideas — whether they appeal to the concep-
tion of Christianity presented in our first chapter, or to any
other conception of it entertained, say, by members of the
Greek or Roman communions, or of any other professedly
Christian body; or' rest upon some general conception of
religion; or, rejecting any religious ground, appeal to "a
stream of tendency" shown in the history of mankind, or to
any other notion of man's true nature and the conduct
suitable to it, resting on philosophy, on science, or on
our common sense — from whatever side they come, at this
gate of Benevolence they must arrive, as the door through
which the way lies to social reform. Without goodwill to
men generally no one would ever trouble himself about the
improvement of society.

But Benevolence is no stranger among mankind. She is
quite at home in our race, and has expressed, and does
express herself, in a thousand plans of goodwill, with more or
less successful issues. In what special relation, then, does
the idea of co-operation stand to this widely active prin
ciple? I think the reply must be taken from the motto
of Lord Stafford — because it is "Thorough;" because it
strikes at the root of all those evils of which Benevolence,
in her unceasing efforts at the present day, is only endea-
vouring to keep under this or that ever-fresh-growing off-
shoot. To anticipate shortly what will be more fully dealt

to other Philanthropic Movements. 17

with in subsequent chapters, I would say that while Benevo-
lence has hitherto dealt only or principally with the use. of
income by individuals, the co-operator sets before her the
duty of dealing — ist, with that which creates income, in
order to secure to all that share of income to which by their
work they are equitably entitled ; 2nd, with the collective use
of this income, with a view to form such general conditions
of existence that the income of each individual may be able
to produce to its possessor as great benefits as it is capable
of affording, without interfering with the like enjoyment by
others. In society as it is, the determination of what income
each individual shall have, and what shall be the general
conditions under which it has to be used, has been left, with
exceptions, important, but yet only exceptions in the case of
certain works of common utility undertaken at the common
cost, to be determined by what, in modern political economy,
is called free competition. The co-operator maintains that
it is the duty of Benevolence to obtain this determination
by reasonable agreement.

It may be objected that competition is a law of nature to
which all must be subject, and that, therefore, to call on
Benevolence to fight against it is to impose upon her an
impossible task, I admit the premiss, but deny the inference.

That the tendencies which lead to competition must
always exist I do not deny. They belong to that " struggle
for existence" producing the " survival of the fittest," from
which man can no more withdraw himself as a natural
being than he can withdraw his body, or the materials he
deals with, from the influence of gravity. But why should
he abandon himself and his doings to the one form of
natural action more than he does to the other ? He has
taught iron to float on water, though gravity orders it to
sink; and made the stones which would, at the bidding of
gravity, fall through the air into a river below them, afford
him a safe passage through the air above the water. This
he has done not by getting rid of the force of gravity,

i8 The Relation of Co-operation

but by studying its action, and the nature of the bodies
subject to it, till he has discovered how to make gravity
secure his purposes in place of thwarting them. The fact
that this principle of competition must be admitted to be a
law of nature is, then, no ground for treating its operation
as withdrawn from the control of reason. For it is character-
istic of the action of reason to use natural powers for its own
higher purposes, by subduing their natures into obedience
to its own higher nature, without attempting to destroy
them. Why should it not be able to do as much with the
natural force of competition ?

No doubt we pass in this case from the nature which
acts on man to nature in man. We have to deal with the
resistance of the impulses which naturally urge men to
act to that power whose proper function is to govern these
impulses by harmonising them. The need of that appeal
to the influence of Christianity dwelt on in the ist Chap-
ter arises, as I conceive, from the fact that reason,
although able to point out how men ought to act, in order
to harmonise the discords of conflicting impulses, and con-
vert the scorching heat of competition into a life-giving,
cheering warmth, the fosterer of invention and incentive
to progress, requires the assistance of some power capable
of moving the will by the influence of emotion, to choose to
do what the reason points out as fitting to be done.

But assuming that by this influence, or any other motive
which those who have no faith in Christ may substitute for
this faith, the wills of men are thus swayed — why, I ask
again, should the natural law of competition prove less
amenable to the control of reason than those other natural
laws which Reason now uses, and is learning every day more
completely how to use, so as to convert Nature from her
master into the obedient ministe. to her desires ?

What Benevolence has to do in order to satisfy the require-
ments of the co-operator, as I conceive them, I have already
stated — I hope with sufficient clearness for the purpose of

to other Philanthropic Movements. 19

this chapter. But it may be desirable to make a few-
observations, which, perhaps, may be useful, on some points
bearing on the subject of the relation of co-operation to
other philanthropic efforts.

That which has been already done by Messrs. Leclaire
and Godin in France, by the Rochdale Pioneers and other
distributive societies in England, and what the various
friendly societies and savings banks and other institutions
of a self-supporting character among the poorer classes have
done and are doing in Great Britain and elsewhere, proves
that if the profits of production and distribution, beyond the
necessary charge for capital, became applicable for the benefit
of the workers by whom they are produced, and of the popu-
lation among whom they are distributed, a small percentage
of the total amount would be sufficient, as an assurance fund,
to provide against all the contingencies (including old age)
for which Benevolence at present, by a heavy burden on a
comparatively few benevolent persons, inadequately provides
in her manifold philanthropic institutions.* And yet those
who now devote both time and money to the support and
supervision of these institutions might find a more useful
field for their benevolent activity in the administration of
these common funds. For they would thus confer all the
benefits attending almsgiving without its manifold evils, and
turn what " blesses the giver more than the receiver " into
that truly Divine quality which is twice blest — which
blesses " him that gives and him that takes."

In truth, although it may, perhaps, seem at first to some
philanthropic persons, that in a reformed society such as
co-operators look for they would feel that
Othello's occupation's gone,
true Benevolence would gain greatly by being relieved from
all that part of her work which is open to doubt, and suspicion
of imposture, and allowed to expand in acts of kindness of
a nature to admit of no doubt — in imparting instruction or

• Sec Appendix, Note i, for a furtjjer notice of Friendly Societies, and
their influence in the United Kingdom.

20 The Relation of Co-operation

affording pleasure, in the solace of suffering or sympathy
with delight, in helping affliction to bear its burdens, or adding
to the joyfulness of lighthearted innocence.

That there is in all plans of social reform an element
repulsive to benevolent feeling, as it is trained by our modern
habits, I do not deny — namely, that they deal, and from the
nature of the case cannot but deal, not merely with the
use, but with the acquisition, of wealth; with matters of
business; with buying and selling. They must face that
" higgling -of the market," those keen attempts to take
advantage of the necessities or ignorance of others, against
which Benevolence bears energetic protest. But, in truth,
these immoral practices furnish precisely one of the strongest
reasons why Benevolence should interfere, in order to arrest
this outgrowth of the spirit of competitive struggle, by stop-
ping the source from whence it springs. That it can be
stopped I see no reason to doubt. Even in the present
day these practices do not affect all commercial transactions.
The conduct of many businesses is free from them, either
through their magnitude, which enables their managers to fix
the conditions on which they will act, or through the general
practice in the particular case, as with assurance companies,
which work upon tables at fixed rates. In retail sales, the
.habit of bargaining is most unequally diffused, existing
generally in some countries, and scarcely at all in others.
The most successful businesses have been carried on without
it, such, for instance, as that of the late Mr. Stewart, ol ^lew
York, who had one price only for each class of goods, and
would dismiss, instead of rewarding, any employe who
obtained more. What has thus been done partially might,
it would appear, be easily done universally, among any body
of men who should make it a rule to take no advantage of
each other, but in every transaction to state exactly all that
the other side could wish to know. In such a society all
bargains would be made with full knowledge of the circum-
stances ; and the abatement of price, inevitable if the rates

to other Philanthropic Movements. 2\

Hxed by the seller in any case cannot be obtained, might be
effected by methods not involving individual bargaining, such
as an auction.

When we consider the great effect on the character of any
people inevitably produced by these daily transactions of
buying and selling, it is difficult to name any matter better
deserving the earnest attention of true Benevolence than the
purification of the atmosphere of trade, by the general intro-
duction of institutions where ordinary business 'shall be
conducted in such a way as strict morality can approve.

If these considerations are borne in mind, I cannot but
hope that the indifference which many — I fear I must say
most — modern philanthropists show to plans of social reform
would give place to a prudent, but hearty and persevering,
determination to aid them by every means in their
power. The effect of such a determination would, I
am satisfied, be most beneficial on the present advocates
of social reform. The sort of ostracism suffered by their
wide-reaching proposals, affecting the well-being of countless
millions, if the future history of mankind is to be a sequel
worthy of the enormous period during which the earth has
ripened into fitness for being " ordered and dressed" by man,
has thrown some of those who profess to call themselves
co-operators off the rails, so to speak. Losing sight of the high
aims and noble principles of social reform, which is notliiug
if it be not regarded as the introduction of
NobJer modes of life,
With sweeter manners, purer laws —
such as shall

Ring out the darkness of the land,
iCng in the Christ that is to be.

they have represented co-operation simply as a safe and
efficient machinery lor enaoung consumers to obtain, by
union among themselves, such articles as they desire to
possess, reliable in quality, at the lowest possible cost. It
is not wonderful that Benevolence should turn away from

2-z, The Relation of Co-operation, etc.

such a parody of true co-operation, with an impatience
perhaps somewhat unjust to the intentions of those who have
proposed it, and with great loss to herself. Since in advocating
the self-help on which co-operation rests, and preventing
it from degenerating into selfish help, Benevolence would
conquer for herself a field of action entirely free from the
suspicion of selfish motives which often attends upon the
Benevolence of almsgiving.

The examination in detail of the theory above noticed
belongs to a subsequent part of the present Manual. I am
concerned with it here only in reference to the motives of
co-operative action, and to that estrangement of the body of
philanthropists from this all-important work, which the con-
siderations adduced in the present and the ist Chapter
will, I hope, tend to remove. Then may we hope to see
organised into a united phalanx those who ought to be
working heart and hand in this cause as the great problem
of humanity, the true task, in my judgment, to which
Benevolence is called in the present age ; — a task to be
carried on in reliance upon that Divine aid, which has
never failed those who, comprehending the depth of meaning
lying in the apostolic conception of the good man, as a
" worker together with God," lay their hand to the plough,
and do not look back.

Chapter 3.

THE RELATION OF CO-OPERATION TO SOCIALISM,
COMMUNISM, AND OTHER POLITICO - SOCIAL
MOVEMENTS.

The preceding chapters have spoken of co-operation in
language applying generally to plans of social reform. This
they have clone, because it is only when regarded as a mode
of action having the far-reaching scope which these words
imply that the idea of co-operation acquires the importance
claimed for it by the writers of this Manual, and therefore
can excite the interest which, in their judgment, it ought to
awaken. It may be asked. If your conceptions of the aim of
co-operation are so extensive, how can it be distinguished
from socialism ? What is socialism, but social reform ?

I would reply. The diiference is this. Systems of socialism
are essentially theories, embracing the whole range of
relations subsisting among men, which, in one way or other,
they propose to bring into conformity with these theories.
But social reform, as it is presented in these pages, and
is embodied in the name of Co-operation, is rather a
practice than a theory. It is an attempt to introduce into
the world, as we now find it, modes of action embodying
principles, generally admitted among the nations called
Christian, even by those who more or less completely
separate themselves either from the Catholic faith in Christ,
or from the Christian name, to be such as they ought to act
upon : though, from various causes, they either do not act upon

24 Th^ Relation of Co-operation to Socialism,

them at all, but only hope that they may do so in another
world, or act upon them so imperfectly and inconsistently
that their action has scarcely any effect in producing such
results as ought to flow from their principles. Our English
co-operation, so far, at least, as it has proceeded hitherto, i,s
an attempt founded on the belief, that these principles, when
generally applied in practice, will work out true relations
among men by their own operation, and would be hampered
rather than aided by the endeavour to build up a complete
theory of them beforehand.

Co-operation rests not on a new theory of human
conduct, but on the development of the tendencies which
it traces in past history, and seeks to give more en-
tire expression to in the present and the future. The
special connection claimed for it with Christianity is, in
truth, only a claim for its historical filiation with the
progress of humanity, which has been historically asso-
ciated in the nations of Europe and America with this
religion. While, as the previous chapters have argued,
Christianity does present to us conceptions of the Divine
action, and the mutual relations of man springing out of that
action, eminently adapted to sustain our hopes and guide
our steps in the arduous task which the idea of social reform
opens before us.

But, to the distinction drawn now between co-operation
and socialism, this special historical connection, important
though it is in itself, is not essential. The essential distinc-
tion is that co-operators are those social reformers who
approach the great problems of social reform with their eyes
open and their hands free. Admitting the greatness of the
end which the prophets of socialism have set before their
disciples, they claim for the end to be greater than the
insight of the prophets; and, refusing to be bound by the
words of any master, investigate their social systems in the
free spirit of scientific inquiry, not blindly adopting, nor
having any prejudice against them. The freedom belonging

Communism, and other Politico-Social Movements. 25

to co-operation enables the co-operator to use these systems,
or any parts of them which appear to him useful, as means
for the better giving effect to his ends ; only he does not set
them up as systems to which he is to pin his faith, or by which
he is bound to regulate his conduct.

Fourier, for instance, unfolded, with all the antici
pating minuteness of genius, the principles by which
manual labour may be made attractive, instead of being
so wearisome as it now usually is. Robert Owen has dwelt
upon the vast influence of the surroundings of men (or
circumstances as he said) on their characters. It is
open to the co-operator to study the teachings of both
these eminent thinkers; to adopt the suggested means oi
rendering labour attractive ; to study carefully the influence
of men's surroundings on their characters; without basing
his action upon the assumption that "man's character is
formed for him and not by him;" or substituting for the
maxim, "Bear ye one another's burdens, so shall ye fulfil
the law of love," the apophthegm " Destinies are propor-
tionate to attractions," in which Fourier summed up his
theory. The free spirit of social progress, proper to
Christianity, whether it adopt the Christian name or not,
will be at liberty " to prove all things, and hold fast that
which is good," when it comprehends, as I trust it is begin-
ning to comprehend, what work lies before it if it really
would do God's will on earth.

So it may "prove," but I cannot think that, as a general
rule, it will " hold fast" that system of communism, which
has continually appeared within the Christian Church, con-
stituting the outward life of the monastic and conventual
orders, and forming the external bond of union of a number
of Protestant bodies existing in the United States.*

* See " The Communistic Societies of the Uuited States," by C. Nordhoff,
I vol. Oct., 432 pages, illustrated, i6s. 6d. ; and "American Communities,'"
by W. A. Hinds, i vol. oct., 2s. 6d., paper, published in 1878, at the office
of the American Socialist, at Oneida. I append a list of the names and
situations of these communities, with the number of members, as stated bv

The Relation of Co-operation to Socialism,

Indeed, with the exception of Oneida, all these
communities are either, like the monastic and conven-
tual institutions of Catholicism, founded upon, or tend
to, a practice which makes their adoption by mankind
generally impossible, because, to borrow Sterne's pithy

Mr. Hinds, which may be useful to visitors to the U.S. or others who may

desire to visit or communicate with any of these s

societies : —

COMMUNITY.

ADDRESS.

COUNTY.

STATE.

MEMBERS.

Homestead . . .
Aurora

Iowa

1600
400
178

Oregon

Bethel

Shelby

Missouri ....

Brotherhood of

the New Life —

Fountain Grove

Santa Rosa . .

Sonora ....

California ....

Salem-on-Erie..

Brocton

Chatanque. .

New York ....

Harmony

Economy ....

Beaver

Pennsylvania..

lOO

Perfectionists —

Oneida

Madison

New York

268

Wallingford . .

Newhaven ..

Connecticut . .

Zoar

Tuscarawas .

Ohio

254

SHAKER SETTLEMENTS

Total without

Shakers

2847

Alfred

Allred

Shaker Village

York

Merrimack..

Canterbury

N. Hampshire.

Enfield

Thompsonville
W. Gloucester.
Sonyea

Grafton «...
Hartford ...

N. Hampshire.
Connecticut . .

....

Enfield

Gloucester

Groveland

Cumberland.
Livingston. .

Maine

New York.. ..

Hancock

West Pittsfield

Berkshire ..

Massachusetts

....

1 Harvard

Ayer

Middlesex . .

Massachusetts

. • • •

Mount Lebanon. .

Mt. Lebanon..

Columbia...

New York ....

2400

North Union

Pleasant Hill

Cleveland ....
Pleasant Hill..

Cuyahoga . .
Mercer

Ohio ....

....

Kentucky

Shirley

Shirley Village
South Union ..

South Union ....

Logan

Kentucky

Union Village . .
Waterfliet

Lebanon

Shaker

Warren ....
Albany

Ohio

New York

Waterfliet

While\/ater

Preston

Dayton

Hamilton ..
Montgomery

Ohio ....

Total

...

5227

Mr. Hinds enumerates (pp. 154-58) besides these communities " which
have existed for a number of years and attracted the public attention by
their prosperity," various " socialistic experiments " in different parts of
the United States. Some of these are communistic, but none of them are
of a size to give them importance. Of Icaria, founded by the followers of
Etienne Cabet, at Icaria, in Adams County, Iowa, Mr. Hinds gives a
detailed description. It had, when he wrote, 83 members, and is not
celibate. But its history hitherto is not encouraging to the hopes of forming
successful communistic societies on this basis.

Communism, and other Politico-Social Movements. 27

antithesis, " If it peoples heaven it unpeoples earth" — the
practice of celibacy. Otherwise, economically considered,
the results of the mode of life are, according to Mr. Hind's
description, generally satisfactory. Plenty appears to be
their common character — a plenty obtained without burden-
ing the inmates with any excess of work, and that not because
all the members are able-bodied ; for, besides containing a
large number of old people, these communities, at least in
many cases, receive families of the children of persons join-
ing them, who become a charge on the common fund. The
notion that the stimulus of individual gain is necessary in
order to produce industry is also negatived by these accounts,
which imiformly describe the members as industrious.
While at Oneida, where the advantages derivable from
a united home are appreciated to an extent not shown in
most oi these communities, the inventive faculties of the
members are actively exercised to discover labour-saving
contrivances, which, in an institution where all participate
alike in the common produce, are obviously an unqualified
advantage to all.

The advantage is very great, but there is no sufficient
reason why it should not equally exist under a system of
associated labour, in any community which places at the
command of its members a variety of occupations open to
all, so that the labour saved in one employment may be
taken up by another, without sacrificing the natural con-
stitution of the family to the demands for union in work,
made upon us by the progress of invention and the
growth of capital. In truth, if we except Icaria, all these
communistic societies, including Oneida, have the primary
object of realising some special religious theory ; Oneida
being distinguished by the peculiarity that the theory of
what they call the system of Perfection does not involve the
extinction of the human race as a necessary consequence of
its general adoption. On the other hand, it does involve
the same sort of sacrifice of the family to the community,

28 The Relation of Co-operation to Socialism,

though not carried out with a consistency so complete, as
Plato provides in his ideal republic.

But Plato wrote as a Hellen for Hellens, having before
his mental vision the conditions of life existing in the small
republics of Greece, where a free State meant a free town.
All his proposals have in view the so training a body of
citizens, who would constitute the armed force necessary
to protect the liberties of all against aggressive neighbours,
as to prevent them from abusing, to their own private
advantage, the absolute power over the lives and liberties
of the other citizens, which their position gave them.
With keen insight into human motives, Plato desired to free
these " guards," as he calls them, from the subtle temptation
to selfishness latent in that plausible excuse, "Don't think 1
am working for myself; but it is my duty to raise my family.''
Therefore, he said, the " guards " must have no individual
families. All of them must be one family, supported by the
body of citizens whom they protect, with whose welfare they
will then be identified, and among whom, being themselves
free from unjust motives, they can preserve just action.

Given the conditions of Greek life, this theory of
Plato has much to say for itself. Under the altered con-
ditions of our days the case changes. In the great States
which modern times have made familiar to us, where order
has wedded freedom, and the overpowering strength r the
whole united community is exerted, when necessaiy, to
restrain the governing body in any association from
abusing to their own advantage the powers committed
to them for the good of all, there is no sufficient reason
for merging the natural dualism of human life in an artificial
universalism. The striking example of the Familistere,
formed at Guise* by M. Godin, has shown that it is possible
to attain all the social advantages of communistic institutions
— the care and training of children from their earliest years ;
their subsequent education ; the provision within the unitary

• Department de VAtsne in France.

Communism, and other Pohttco-Social Movements. 29

dwelling, to the degree permitted by the means of its
inhabitants, of whatever can assist want, promote con^
venience, or facilitate enjoyment; the creation among its
inmates of an active concern for each other's welfare, by the
part which each is able and invited to take in this or that
branch of the general administration ; — while yet the inmates
possess a domestic privacy more complete than can be enjoyed
by the occupants of ordinary town dwellings ; earn various
incomes, according to their capacities ; have entire liberty
of disposing of their own property ; and, in short, retain all
the individuality of natural life, superadding to it an
associated life which makes this individual life more full ol
enjoyment as it becomes less selfish.

It may be urged, perhaps, that if the last proposition is
true, a system of complete communism would increase
enjoyment to the highest degree possible, by extinguishing
selfishness altogether. This was apparently the idea of
Robert Owen, who, in consequence, believed that the
attractions of a communistic life to all who ever experienced
them would be so great, that the system, once introduced,
would rapidly spread over the earth. But he overlooked
the fact that the happiness which an unselfish spirit does
produce to its possessor, according to the uniform experience
of all who ever strove to attain it, comes from within, and
cannot be imported from without, whence can come only,
the occasions where this spirit may display itself and thus
increase its energy by the opportunity for its exercise.
Now, these occasions would be afforded by an associated
dwelling, which left the homes of its inmates in their
individual distinctness, but placed along-side of them, as
objects of the common care, institutions conducive to the
general welfare, not less completely than it can be by a system
where this domestic life itself is made a matter of common
regulation. Moreover, the danger would be avoided of that
constant jarring which must be liable to arise between the
general regulations and tb^ variety of individual tastes,

3© The Relation of Co-operation to Socialism,

wherever the distinction between pubhc and private affairs
has disappeared, by the public life having swallowed up
the private life.

Thus then, the relation between co-operation, as a system
of association, and communism, resembles that subsisting
between certain mathematical lines, which may indefinitely
approach, but can never touch. The spirit of true co-operation
will lead those on whom it has taken hold to feel dissatisfied
with any appropriation to themselves of advantages capable,
by their nature, of communication to others who are ex-
cluded from them. Obviously, in proportion to the degree
in which this spirit is the living principle of conduct among
any associated body, its internal constitution will sponta-
neously approach communism. All will feel themselves to be
trustees of their natural or acquired powers for the general
good, and ask only to share in this good equally with those
to whom they impart it. But between communism, as a rule,
and this communistic feeling, there must remain always the
difference that there is between law and gospel, between
thou shalt and thou wilt, between the freedom of the self-
governing will and the yoke of submission to a majority.

The regard for individual freedom which thus distinguishes
co-operation from communism, distinguishes it also, though
still more emphatically, from all attempts to attain the
end of free association by the compulsory intervention of
the State. Now, this is the aim of the theories of socialistic
legislation which have, of late years, fascinated the sober
judgment of large masses of the population in Germany,
in whom long habit of subjection to State regulation may
be pleaded in excuse for their notion that the State could do
everything they desire if only it would. But the same idea
appears to have taken hold also on the free life of the
United States, perhaps, from the opposite habit of the
people, to look on its own will uttered through the ballot
box, as irresistible. The objection to this system, in the
peaceful form proposed by Ferdinand Lassallc, who urged

Communism, and other Politico-Social Movements. 31

only that the State should use the common purse to obtain
for the mass of its members the means of self-employment,
has been very clearly stated by Dr. Schulae-Delitzsch in his
speeches and lectures. For, whence is the State purse, if
it is not swelled by forced contributions from the rich, to be
replenished except by the very persons to whom it is to give
employment ?* If, however, to avoid this difficulty, the
theory is carried to the length advocated by Karl Marx,
who would confiscate the property of the richer classes for
the benefit of the general body, into which they are to be
compelled to sink by the might of the strongest, then, in
opposition to such a tendency, however it may originate,
it must be emphatically asserted, from the point of view
taken in these pages, that only by free self-help can co-opera-
tion procure for man the good claimed in them as capable
of being produced by it. Because its whole power comes
from the acceptance by the will of man of that Divine law
of love, affirmed by us to be the true law of humanity, on
which the well-being of mankind depends.

If even in political life those "who take the sword shall
perish by the sword," as the Gospel declares, and historical
experience has confirmed, with an uniformity of result
disguised only by the fact that in many nations the assertion
of strength has been accompanied by the assertion of prin-
ciples of eternal life which have qualified the action of this
principle of death — assuredly, to think that the victory of
reason is to be earned by the exercise of force, and the reign
of love to be the natural fruit of a reign of terror, must be
the maddest of mad delusions.

Not by cutting the Gordian knot can the genius of
social progress found its beneficent empire. At the present
day, in England most certainly, and, I believe, in every
Christian European country, except, perhaps, Russia, and
assuredly in the United States, the road to a peaceful social
revolution, fraught with unmeasurable benefits to the mass

* See Appendix, Note 2. on Lassalle and his system.

3 - The Relation of Co jperation to Socialism, etc.

of the population, and attended by injury to none: — except it
can be called an injury to shut men out from the hope of
future gains to be made out of other men's pockets — is open
to the whole population, by free association, for objects
which recent experience has proved that association can
successfully effect, if only the masses, who may thus benefit
themselves collectively and individually, are willing to
associate. If the blindness of selfish interest prevents them
from so associating, all the laws which could be passed, to
give them the benefits of association while they are
strangers to its spirit, would be as powerless to quicken
true social life —

As are the blasts of autumn wind,

Which through the withered foliage sing,

To call forth from the sapless boughs

The bloom and verdure of the spring.

Oneida Community. — Since this chapter was in type the community,
on the proposition of its founder, Mr. J. D. Noyes, upon the 20th August,
1879, abolished its peculiar marriage institutions ; and is to consist in
future of " two distinct classes, the married and the celibate, both legitimate
but the last preferred." [American Socialist, 1879, No. 36.) Whether this
new form of communism will prove as enduring as the one it has superseded
must be left to time to show. Mr. Noyes expressed his confidence at the
time of the change that it would be equally enduring. But he has since
written: " Communism, in combination with complex marriage, was com-
paratively a simple construction which we thought we had pretty well
mastered. But communism, in combination with monogamic marriage, is a
very complicated and delicate machine, which we will have to study and
work upon a long while before we shall dare to recommend it, or to set up
for public instructors in the management of it. It is substantially an
untried problem. Even Paul's platform, to which we have committed
ourselves, cannot help us in the details, because he had not absolute
communism for one of the factors as we have." — American Socialist,
1879, p. 388. — The Revue du Mouvemcnt Social for May, 1881, p. 173, con-
tains a statement of the recent transformation of the society into a company
with a collective property represented by shares, held in separate ownersh-.p
which justifies the doubt expressed above.

PART II.

THE ECONOMICAL
BASIS OF CO-OPERATION

PART II.

Chapter 4.

THE RELATION OF CO-OPERATION TO
COMPETITION.

Competition has been more than once admitted in these
pages to be a law of nature, a part of the " struggle
for existence," by which all nature is pervaded, applied
especially to those conscious agents who can compete with
each other for the occupation of any locality, or the enjoy-
ment of any object which more than one of them may desire
to occupy or enjoy. The more varied the faculties, the
more diversified the surroundings of any such creatures, the
stronger must be the tendencies to competition called forth
in the beings thus circumstanced ; whose desires must in
such a case in truth compete with each other, the stronger
expelling, or, at least, overpowering the weaker. Man pos-
sesses the most varied faculties of any inhabitant of the earth,
and from his facilities of locomotion, and the ability gradually
acquired by him through the progress of invention, to trans-
port the produce of one part of the earth to other distant parts,
can, in a certain sense, make the whole earth part of his
surroundings. In man, therefore, this competition of
desires naturally rises to greater intensity than in any other
creature known to us. But, in itself, so long as any body
of men remains in the natural state of every animal capable
of existing, namely, the state of having access to the
means of subsistence, the natural law works for good, by
tending to diversify the pleasures, and through this diversity
to stimulate the industrial activity of the human beings
subject to it.

36 ' The Relation of

In speaking of the good attending the natural competition
of various desires among men who have at their command
ready access to the means of subsistence, I assume the
absence of violence. Of course, I am aware that the assump-
tion is very far from borne out by the history of mankind.
Only very slowly, and still imperfectly, has the natural dispo-
sition of the stronger animal to seize on what it desires
by pure strength been brought under such control as exists
within the civilised States of the present day ; where, how-
ever, the good is qualified by evil in another way soon
to be stated. But, assuming the co-existence of these two
conditions — the absence of violence and command of the
means of subsistence — I say the competition of desires
among men would be essentially beneficial ; because, admit-
ting of satisfaction only by exchange, it stimulates the
inventive faculties of one man to produce something desired
by other men, that fie may De able, by satisfying their
desires, to satisfy his own. For thus is overcome that
apathetic indolence into which savage races are prone to fall,
shutting themselves out by it from intellectual progress, and
consequently, too, from moral progress, which is impossible
when the intellect slumbers. Thus, too, with the growth of
more numerous wants may arise also that greater refinement,
which is the condition of aesthetic taste.

Long periods may elapse in the history of a nation during
which this natural competition of desires continues to operate
to the general advantage of the citizens. It continues thus
to operate so long as, at least in the great majority of cases,
there is no question of the means of subsistence aepending
on the power of individuals to exchange the produce of their
own labour for that of other men ; so long as the competi-
tion is between desires, affecting only the enjoyments of
life, but not the means of living; which, therefore, cannot
be said to exercise a pressure greater than that healthy
stimulus to inventive action above noticed. But, as popula-
tion multiplies, as the cultivation of the ground, followed as it

Co-operation to Competttton, . 39

always has been in some shape or other by its appropriation,
shuts out an ever-increasing number of the population from
the direct natural means of obtaining their subsistence, and
drives them to depend for their living upon their success in
exchanging what they make only in order to exchange it,
the natural law of competition begins to show its inadequacy
to satisfy the requirements of reason. Instead of stimulating
the industry of the worker to make it more fruitful of benefit
to him, by the competition of his own desires against each
other, it begins to lessen the benefits of that industry by the
competition of one worker against another, to obtain the
means of living by underselling each other's labour. The
process once begun has a continual tendency to extend, and
draw in perpetually an increasing proportion of the
population under the wheels of a competition which has
ceased to be beneficial to them, unless from any cause the
demand for work should grow faster than the number of
workers, when the competition for their work would begin
to tell in their favour.

Now, the chance here stated must mainly depend upon
two circumstances — (i) the rate at which capital tends to
accumulate in any country; (2) the degree of enterprise in
its employment existing in that country ; while this very accu-
mulation and enterprise, so long as they are employed — not
on account of the whole body of workers, but by individuals
who endeavour to make out of them a special advantage for
themselves — have a constant tendency to destroy, by the
competition among the employers, the benefits which, in
another way, they tend to produce.

When the channels to which the employment of capital
shall be directed are determined, not with a view to the
general interest by a careful study — of the existing demand for
any class of articles, of the means of supplying it, of the pro-
bability of an increase of consumption in that class of objects,
and of the prevention of waste in making articles not wanted
—but simply by the -expectation entertained by this or

^8 The Relation of

that person, or group of persons, of reaping individually
some special benefit from the enterprises, the determination
what enterprise shall be selected is very likely to be based
ijn the knowledge or belief that some one else has made
large profits out of that particular work; and, therefore, that
there is what is called an " opening for business " — in other
words, a chance of snatching some of these profits away by
offering to the purchaser somewhat lower terms. Now,
in order to unite these cheaper rates with the desired profit,
there is one easy way, — to diminish the cost of productio i.
Hence there arises out of the struggle of the owners of
capital amongst each other for possession of the branches of
business believed to be the most profitable, a tendency to
reduce the wages of labour, to which the workers, notwith-
standing all attempts to arrest it by union for this purj:o5e,
may find themselves driven to submit, after vainly using up
all their own resources in a fruitless resistance, on the principle
that half a loaf is better than no bread. The history of the
coal, iron, and cotton industries, during the last four or five
years, furnishes a striking illustration of the proposition
advanced here; which must not be confused with a denial of
the great benefits that have been conferred on mankind
through individual enterprise, where it has been directed to
perfecting and developmg new processes or discoveries,
and thus has multiplied the means of human wellbeing, by
employing the labour saved to produce some desirable object
hitherto unknown.

But this great triumph of human genius, the progress
of invention, with its marvellous results, multiplied as they
have been of late years with a rapidity unknown, I may
say undreamt of, in former ages, furnishes an additional
and very striking illustration how impracticable it is to found
a human society satisfactory to the demands of reason, upon
the action of the natural law of competitive struggle left to
itself. It is almost impossible to estimate, with any approach
to accuracy, the increase in the productive powers of the

Co-operation to Competition. 39

inhabitants of Great Britain during the last 100 years,
arising from the introduction of steam as a motive power,
and the growth of machinery connected with its use. Still
more difficult would it be to estimate what might have been
done by the use of this "ministry of fire," to which,
pace Mr. Ruskin, I look as <the great magician who shall
charm away in the world of harmony the ills which he
produces in a world of struggle — if his mighty agency had
been systematically used for the common welfare as reason
would prescribe. But a powerful picture has lately been
drawn, not by one person, but by a Committee of the
American Social Science Association, in a paper read at its
meeting at Cincinnati, in 1878, of the progress of machinery
in the United States, where the changes brought about have
been more rapid, and, therefore, more startling than with
us ; while the fact, that in the United States enormous
tracts of fertile land are still uncultivated ; that, in the culti-
vated parts the laws of primogeniture and practice of entail
do not prevail ; that no vast bodies of men are withdrawn
from production while maintained at the cost of the pro-
ducer, either for military or naval purposes ; and that there
is no fetter on individual enterprise, which is generally
remarkably active, makes the picture of the results which
have come from the progress of invention under its influence
the more striking.

At the commencement of the -present century very little labour-saving
machinery was in use. Then the farmer's best plough was of wood, iron-
shod, drawn by from one to four or more yoke of oxen ; one man to drive the
team, another to hold the plough, and often another to keep it clear. Result —
say about one and a half acres ploughed per day, by, say two men. Now
are used ploughs in gangs of two or three, or more, of polished steel, drawn
by horses, controlled by one man who rides at ease. Result — five or more
acres per day, ploughed by a single man, and much better than by our
fathers. Or steam is used, with still greater results, ploughing an acre
or more an hour.

Our fathers sowed their seed by hand, taken from a bag slung from their
shoulders. Now a machine, controlled by any b5y who can drive a single
horse, will do more than three times the work in a given time, and far
better. Similar changes have been made in all the preliminary processes
of agriculture.

40 The Relation of

When the grain was ripe for the harvest our fathers would go into the
field with their sickles in their hands, and a long day of hard work woul
result in one-fourth of an acre of grain per man. Now, a man will take a
reaping machine drawn by one or two pairs of horses and reap his twenty
or more acres per day, one man now doing the work of eighty but about
fifty years ago.

In the case of the sickle the day of our fathers would exceed, rathei
than fall short of, fifteen hours. But I estimate upon ten hours for a
work day.

The reapers here referred to are those in common use in New England
and other places where the land is quite uneven, rough, or hilly, having
cutters about five feet long ; but for the great grain regions of the West,
for the smooth, flat, or prairie lands of Illinois, or other sections of the
valley of the Mississippi, and in California, cutters are made and in common
use of ten and twelve feet in length ; some fifteen and eighteen, and even
twenty-four feet long, are used, cutting swathes of these widths, and pro-
portionately is the reaping hastened and muscular labour displaced.

Our fathers bound the wheat in sheaves after it was cut, and stored it
in their barns for the winter's work for themselves, their boys, and their
men-servants, in thrashing it with flails. Now, machines are sent into the
field, which gather it up and pile it in great heaps, where it is taken by
other machines, and in a few hours, or a few days at most, it is thrashed,
winnowed, sacked, and ready for market.

But in California machines are made and used which at one and the
same time, in moving over the field, cut the grain, thrash, winnow, and
sack it, and the filled sacks are left in rows, where, but a few moments
before, stood the golden grain, untouched, inviting to its harvest.

For our great (Indian) corn-crop the corn planter is used, as is the s« c.
sower for similar grain. Then, instead of using the hoe, as did our fathers in
working their corn, where a man found a hard and long day's work in
hoeing half an acre, a man or boy will now seat himself upon a cultivator,
with a pair of horses before him, and work an acre an hour ; one man now
doing with this machine as much as could be done by twenty with hoes.
Please bear in mind also, that the ploughing with our modern ploughs, and
cultivating and working with our modern cultivators and harrows, so
improve the condition of the ground as to make a marked increase in the
crop. After the corn was harvested our fathers would turn a shovel upside
down over a box, sit on it, and drawing the ears of corn with vigour across
its edge, shell twenty bushels in a long day ; and hard work it was. Now,
two men will take the ordinary improved corn-sheller, and shell twenty-four
bushels in an hour, or 240 bushels in a short day ; leaving out of account
the difference in the length of the day's work, this shows that six times as
much is now done with this machine as our fathers could do by the old
methods. With the three classes of horse power machines, two men will
shell 1,500, 2,000, and 3,000 bushels respectively per day of ten hours; one
man and machine now doing the work of thirty-seven and a half, fifty, and
spventy-five men respectively, without machinery.

Co-operation to Competition. 41

So also in our important hay crop, the machine power is first put in, one
man with team cutting as much grass as twelve men with scythes ; then
follows the tedder, with a man and horse to scatter and turn it, to facilitate
its drying, doing the work of twenty men with the hand-fork, and so much
better as to reduce the time between cutting and harvesting at least twenty-
four hours. Then follows the horse-rake, raking twenty acres a day, while
a man with the ordinary hand-rake can rake but two. Here the machine
and man do the work of twelve, twenty, and ten men respectively with the
old appliances.

In all these operations in agriculture there is a displacement of labour,
by improvements in machinery, of from one doing the work of three in
sowing the grain to twelve and a half in ploughing, and three hundred and
eighty-four in cutting grain at harvest, according to the work done, and the
class of machinery used for the particular operation.

And machinery digs potatoes, milks the cows, makes the butter and
cheese. There is now nothing in food production without the labour-
saving process.

Qur fathers, with all their boys and men-servants, had a full winters work
in thrashing their wheat, shelling their corn, etc., and getting the small
products to the mill or the market. Now, after machinery has done its
work in the field and barn, the iron horse drags the product over its roads
of steel for hundreds and thousands of miles, at less cost and in less time
than it took our fathers to transport the same to distances not greater than
fifty miles. Upon those roads where our fathers had hundreds and
thousands of men and teams constantly employed in hauling products to
market and goods to the country, nowhere now is a man or team so
employed — men and animals are released from all that labour — new forces
take up the work, guided and controlled by comparatively few minds and
hands. Even our cattle and hogs are no longer required to walk to the
shambles; the iron horse takes them to the butcher, labour-saving processes
slaughter them, dress them, prepare their flesh for the market, for the table,
and stop only at mastication, deglutition, and digestion.

To-day, one man with the aid of machinery will produce as much food as
could be produced by the naked muscle and tools of a score of our fathers.
There is now no known limit to the power of its production. In consump-
tion there is no corresponding increase. Our fathers required, obtained,
and used as many ounces of food per day as we do. It might have been
different in kind and quality — nothing more.

Kot long ago the farm found constant employment for all the sons of
the farm and many of the children of the city. Now, the farm furnishes
employment for but a very small number of its sons, and that for a very few
weeks or months at most in the year, and for the rest work must be had in
the cities a.id towns, or not at all.

Here we find the true reason for the stagnation in the population of the
older agricultural sections, and abnormal growth and crowding of the cities.

In the time of our mothers they, with all their daughters, had an
abundance of employment in their homes. Throughout our country every

42 The Relation of

farmhouse possessed its looms and spinning-wheels. From the sheep reared
upon the farm was the wool taken and carded by our mothers ready for
spinning. The flax grown upon the place was by our fathers broken and
hatcheled by hand, and made ready by the women folk, who, day after day,
week after week, month in and month out, for fully or more than one-half
of the year, were all constantly employed in carding, in spinning, and in
weaving the woollen and linen cloths that clothed the family, or were traded
at the store for tea and coffee, and sugar, or other necessaries or luxuries of
life. The household music of that time was the hum of the large spinning-
wheel, that rose and fell as the spinner receded or advanced, in concert with
the more steady flow of the tones of the flax-wheel, as, with foot on treadle,
other members of the family, or women servants, spun the flax which was
changed to linen yarn or thread. At the same time the constantly repeated
rattle of the shuttle could be heard as the dexterous hand sent it flying
through the warp to add another thread to the web, followed by the stroke
of the swinging beam. These operations were in constant progress in all
the farmhouses, and a very large portron of the town houses.

The never-ending labour of our grandmothers must not be forgotten,
who with nimble needle knit our stockings and mittens. The knitting
needle was in as constant play as their tongues, whose music ceased only
under the power of sleep. All, from the youngest to the oldest, wera
abundantly employed, and all decently clothed.

Now all is changed. Throughout the length and breadth of our land
the hand card, the spinning wheel and the hand loom are to be found only
as articles without use, kept as curiosities of a past age.

Now the carding machine, machine spindles, and power looms have
taken their places, and the labour of one pair of hands, guiding and
controlling machinery, turns out a hundred yards of cloth where but one
yard was produced by our mothers.

The occupation of our grandmothers also is gone ; no more does the
knitting needle keep time to the music of their tongues. The knitting
machine, in the hands of one little girl, will do more work than fifty grand-
mothers with their needles.

The consequence is, there is no more work at home for our farmers'
daughters ; they also must seek the towns and cities, where they find their
sisters equally idle, and in thousands are found upon the streets spinning
yarn and weaving webs, the warp of which is not of wool, neither is the
woof of linen.

So the sewing machine has been generally introduced, and where
formerly all the sisterhood were expert seamstresses, now many hardly
know the use of the needle; the machine relieves them of this labour also.

Our fathers in building would begin at the stump, and with their hands
work out all the processes of construction. With their whip-saws they
would turn the logs into boards; they would hew the timber, rive and shave
the shingles ; dress the tongues and groove the flooring ; dress and prepare
all the lumber for doors, windows, and wainscoting ; make the doors and
windows with thtir frames ; work out mouldings, ornaments, and finishing

Co-operation to Competition. 43

of all kinds. With their hands and feet they worked the clay for their
bricks, and moulded them by hand. A house carpenter would then, with
his hands, from the forest, build and finish a house from sill to ridge-pole, and
was furnished with all the tools to do it with, many of which he also made.

Now all these various processes are wrought out by machinery.
Machinery makes the bricks and saws the logs ; the planing machine does
the tonguing and grooving ; the moulding machine makes the moulding ;
the doors, the windows, the blinds, the shingles — all, everything is done by
machinery, and muscle is required only to put the parts together and in
their places. Machinery does nine-tenths of the labour, and muscle the
little remainder.

We will note the work of some half dozen of the machines now in general
use in building and carpentry. The circular saw, controlled by one man,
will saw more in one hour than can be done in ten hours with a hand saw ;
with the moulding machine one man can work out more mouldings than
ten men by hand ; in planing, the planing machine, controlled by one man,
will do the work of fifteen or twenty men with hand planes ; in cutting
mortises and making tenons, one man with a machine will do the work of
ten men by the old methods; with a jig saw he will do the work of eight
men with the old tools ; and with the hand saw will do the work of twelve
men by the old methods. These facts show a general displacement of
muscle by machinery of at least 90 per cent in our great building interests.

The Crispins of our fathers' time were thorough boot and shoe makers,
and a numerous class. But now, after labour-saving processes have killed
the ox and skinned him, and tanned his hide and dressed it, it does seem as
if the leather was put in at one end of a machine, and at the other end is
delivered a shower of boots and shoes, caught by girls and boys.

Until within the last twenty years all the watches worn in our country
were of European hand make, mostly English and Swiss — a business in
those countries that employed thousands. But within the time mentioned,
in Waltham, Mass., and in Elgin, 111., two establishments commenced
making machine watches, followed quite recently by some half-dozen other
establishments in other places ; and now in this country there is no more
sale for hand-made watches. Swiss and English are alike knocked out of
time ; large communities in those countries are in great want — absolutely
destitute because of our machine movement. The hand watchmaker also
must find other employment, if he can.

Even the graders of our towns, cities, and roads are displaced by
machinery. The pick and shovel, wielded by brawny arms, until within a
few years were the only forces used. Now the steam paddy displaces
brawn; the pick and shovel are too costly and too slow. In San Francisco
its hills covering miles of territory, have been removed by labour-saving
processes. The steam paddy, controlled by two men, digs down and
removes the hills at the rate of two or three scoops to the cartload, and then
in trains of a dozen or more cars are run to and dumped into the bays and
hollows to be filled, compelling thousands of muscular workmen, with theit
nicks and shovels, horses and carts, to find other employment.

44 The Relation of

Twenty-five years ago the miner in California and Australia washed his
gold in a pan, or in a cradle into which he had placed a couple of shovelsful
"of earth, rocking the cradle with one hand and pouring in water with the
other. Now, the gold miner conducts the water from some high point to a
favourable position over his placer, giving a large fall, and from that position
in hose to the washings, where, rushing with irresistible power through a small
nozzle, it is turned against the solid hills of dirt, gravel, stone, and cement,
which it cuts down, dissolves, and through sluices carries miles away to a
favourable place for dumping, leaving the gold deposited in the sluice. In
this manner hills 300 and 400 feet high, of the hardness of stone, melt and
disappear like a bank of snow before the summer's sun; half a dozen men,
by this labour-saving process, doing the work that would require an army
with picks, shovels, and cradles only.

Now, let us see what have been the general effects which have resulted,
from the use of labour-saving machinery. I will briefly sum them up in a
few distinct conclusions.

1. It has broken up and destroyed our whole system of agriculture as
practised by our fathers, which required the whole time and attention of all
the sons of the farm and many from the towns, in the never-ending duties
of food production, and has driven them to the towns and cities to hunt for
employment, or remain in great part idle.

2. It has broken up and destroyed our whole system of household and
family manufactures, as done by our mothers, when all took part in the
labour and shared in the product, to the comfort of all ; and has compelled
the daughters of our country and towns to factory operations for ten or
twelve hours a day in the manufacture of cloth they may not wear, though
next to nakedness in the shivering blast ; or to the city to ply their needles
for eighteen or twenty hours a day, in hunger and cold ; or to the street in
thousands, spinning yarns and weaving webs that become their shrouds.

3. It has broken up and destroyed our whole system of working in wood
and iron and leather in small shops of one, two, or it may be half a dozen
workmen, in every town, village, or hamlet in the country, with blacksmith
shops in near neighbourhood upon every road, where every man was a
workman who could take the rough iron or unsl.aped wood and uncut
leather and carry it through all its operations, until a thoroughly finished
article was produced, and has compelled all to production in large shops,
where machinery has minutely divided all work, requiring only knowledge
and strength enough to attend a machine that will heel shoes or cut nails,
or card wool, or spin yarn, or do some other small fraction of a complete
whole.

4. It has broken up and destroyed our whole system of individual and
independent action in production and manufacture, where any man who
possessed a trade by his own hands could at once make that trade his
support and means of advancement, free of control by any other man, and
has compelled all working men and women to a system of communal work,
where, in hundreds and thousands, they are forced to labour with no other
interest in the work than is granted tu them in the wages paid for so much

Co-operation to Competition. 45

toil ; with no voice, no right, no interest in the product of their hands ar.-J
brains, but subject to the uncontrolled interest and caprice of those who,
too often, know no other motive than that of avarice.

5. It has so enormously developed the power of production as to far
outstrip man's utmost power of consumption, enabling less than one-half
of the producing and working classes, working ten hours a day, to produce
vastly more than a market can be found for; filling our graneries, ware-
houses, depots, and stores with enormous amounts of products of every
description, for which there is no sale, though never before offered at such
low prices, with multitudes of men and women in the greatest want —
being without food, clothing, shelter — without work, and consequently
without means to obta'n the simplest necessaries of life.

6. It has thrown out of employment substantially one-half of the work-
ing classes. In fact, it has utterly destroyed all regular or constant
employment for any considerable class in any industry, and is constantly
and steadily displacing able and willing men, and filling their places with
women and children ; leaving no place to be filled by, and no demand for,
the constantly increasing numbers developed in our increase of population,
in this way adding to the number of the unemployed. It takes married
women in thousands from their maternal cares and duties, and children
but little more than infants from the schools, putting them to the care of
machinery and its work, until quite one-third of the machine tenders in our
country are women and children : thus breaking down the mothers,
slaughtering the infants, and giving employment to any who obtaih it
only upon such conditions of uncertainty, insecurity, competition with the
workless, and steady reduction in wages, as create a constant struggle to
obtain the little work they do have, and get such compensation for it as
will barely support life even when in health.

These points show clearly the changes which have taken place in all
our industries within a period of little more than half a century — changes
greater than the world has before known during its whole existence.

Surely such a picture as this, relating to a country where
circumstances are at present so favourable for securing the
welfare of the masses, as is the case in the United States — a
country not long since regarded as the paradise of the work-
ing man — should lead to the most serious consideration
whether the universal freedom to struggle can produce the
universal good often ascribed to it ; whether this " law of
nature" can be the true law of life for reasonable beings,
and is not rather a law to be studied and made subservient
to human progress, but not one which can form the solid
basis of a human society.*

* See notes on pages 56 and 67.

46 The Relation of

It is my position that tliis is the case — that humar. work
ought to be carried on upon a system not of struggle
but of fellowship, where the results of the common labour
are distributed with equity, and the conditions of life
generally are wisely adapted to facilitate the use of these
results in the way which will enable the mass of the popu-
lation to derive from them the largest attainable measure of
advantage.

It is my position that arrangements may be made by which
such effects as those above indicated can be produced,
without in any way interfering with the liberty of any-
one to deal with their own property as they please, so that
they observe the general conditions necessary for the com-
mon welfare ; without any attempt to effect an " equal
division of unequal earnings;" simply by studying the natural
law of competition to determine how to obtain from it the
good which it may yield, without the evil now accom-
panying it. Let us examine this matter calmly.

To what cause have we found that the injurious effects
traced out above are attributable ? Mainly to this — that the
progress of industry, when we allow it to adjust itself by the
natural law of competition left unrestrained, separates a
perpetually increasing proportion of the population from the
natural condition of life — the direct access to that minister of
the Divine bounty, our common mother Earth, to obtain that
gift of food which she is not niggardly in bestowing when
applied to in a fitting manner.

That the appropriation of the land by individual ownership
will certainly lead to this result where that appropriation
is left at liberty to settle itself, we see from our own experi-
ence. That this effect cannot be prevented, even by an
interference with the rights of ownership so considerable as
prevails in France, where the law apportions the lands
owned by anyone at his death among his children, we see
by its effects there. For, though this law has been general
in France for nearly a century, and the practice of sub-

Co-operation to Competition. 47

division in many districts was in full force in the sixteenth
century, and has been carried to an extent very injurious
to the effective cultivation of the soil, which, with a climate
better suited than that of England to the production of
wheat, does not yield on an average two-thirds of the
amount of English produce; still, the total number of
landowners did not exceed one-tenth of the whole popu-
lation (3,800,000), according to the return of 1866 when
x^lsace and Lorraine were still included in France, of whom
3,236,000 were actual land occupiers; while the tendency of
the rural districts to become less populous from migration to
the towns, so marked in England, and which the statement
above quoted shows to be rapidly increasing in the United
States, is beginning to show itself in France also, as appears
from the subjoined table* : —

Towns with Population over 10,000.
Number. Total Population.
1866, including Alsace and Lorraine.. 186 .... 7,214,354
1872, without Alsace and Lorraine. .. . 190 .... Not stated.
1878, ,, ,, .... 204 .... 7,898,915

The largest increase was in the towns of over 200,000 population. The
next largest in those between 30,000 and 40,000. The Department of the
Seine, which includes Paris, showed an increase between 1872 and 1878 of
'63i438- Now, the population of France has, for the last quarter of a
century, been nearly stationary, and the proportion of births is greater in the
country than in the towns, therefore the increase in the towns must be due
to a decrease in the rural districts. — Devoir, March 30th, 1879.

' This decrease of the number of residents in the rural districts must not
be confused with a decrease in the number of landowners, of whom the
statement made above shows that, in 1866, not quite 86 per cent were land
occupiers. The French peasant farmer does not, or at least did not in
1S66, on an average, raise more than i6*6 bushels an acre ("Journal of the
Statistical Society," 33, p. 167), while the English average is for the whole
country 26J bushels, with far higher returns in many parts. (Grey's " Enigmas
of Life," p. 299.) And as the whole tendency of modern agriculture is to
displace manual labour by machine labour, because it gives larger returns
for the same cost, the probability appears to be that the French landowner-
labourer will gradually disappear, from the fact that his income as owner
will be greater if he receives it, say, as dividend from a company to whom
he lets his land, than if he takes it as the surplus above the ordinary wages
of labour paid to himself out of the produce of his lands. The subdivision
of the soil in France taries very much in different parts of the country. The
report of the Commission, of which M. T. de Morney was the head,
appointed by the late Emoeror in i86g, to inquire into the state of French

48 The Relation of

Now, if the case be as is here stated ; if the tendency of
competitive industry is to separate men from the natural
source of Hfe, and the injurious effect upon the worker is
directly traceable to this separation, can we show that in
co-operative trade and industry there is any natural tendency
in the opposite direction ? any mode of action which, coun-
teracting this injurious effect of competition, may, as it
becomes general, leave us in possession of the good arising
from this natural force without its evil ? I think that such a
natural tendency may be pointed out, and I will endeavour
to bear out this position by shortly tracing the way in
which co-operation can deal with the competition of existing
society, in which, clearly, it has to grow up if it ever takes
its place as an important influence in human affairs. This
method essentially consists in using the resources put into
our hands by the present system, in order gradually to
replace it by another where the struggle of interests shall
give place to their reasonable adjustment. To begin with
the theory of co-operative distribution, What is it but a
union of consumers, who say, Why should we run about to
this or that man, who, for his own advantage, undertakes to
supply what we want, and is under continual temptation to
defraud us, because his interests and ours are opposed ?
Why not unite to obtain what we want on the best terms,
namely, by paying ready cash for it, through persons
appointed by ourselves, in whom we begin by having
confidence, and all of whose acts are open to us; with
whom we make definite agreements for payment for their
services; and whom, if there is ever occasion for calling
their conduct in question, we can remove ?

agriculture, states that in one commune in the department of Meuse, 270
persons held 832 hectares (2,080 acres), divided into 5,348 plots, or an
average of a little more than one-third of an acre per plot, and 7*70 acres to
each person. ("Journal of the Statistical Society,'' 32, p. 225.) The
general average for the whole country, excluding woods and forests, is
stated to have been, in 1866, 26-25 acres, 56 per cent of the whole number
holding less than I2'5 acres. ("Journal of the Statistical Society," 32,
p. 168.) See Appendix, Note 3.

Co-operation to Competition. 49

Plainly, here is a step, and a very important step, made
towards the substitution of reasonable accord instead of
competitive struggle in a class of transactions of daily occur-
rence, yet a step such that its success is entirely within the
power of any moderately numerous number of persons, who
have the good sense to take it, and the patience to persevere
in what they have undertaken. This is the first step to get
free from the meshes of competition. It is a step in no
degree involving any loss of the advantages which competi-
tion may have brought within our reach in obtaining the
articles to be distributed, or the neglect of any means of
economising labour, or increasing convenience or efficiency
in the process, introduced by it. It is simply saying, This
act of our daily lives shall be performed so as to bring with
it the least of cost and the most of confidence attainable ;
and, as a most valuable means to this end, under the con-
dition of cash payments, with no capital needlessly lying out
unproductively ; no bad debts swelling the cost to those who
pay by the loss from those who do not.

Now, on this solid foundation, when it has attained a
breadth proportioned to its solidity by the multiplication of
separate centres of supply, it becomes possible to build
with equal solidity, and without any departure from the
accustomed methods of business the further step of a central
association, which may be to the separate stores what they
have been to these individual members — the means of concen-
trating their purchases, and thus enabling them to be made
on the best terms, from their magnitude, and by the best
judges, from the greater power of securing the services of the
persons best qualified to judge, which one wholesale estab-
lishment must possess over a number of retail establishments.
While associations of this kind may, by a further application
of the same principle of union, be federated among themselves
for any purjxises going beyond the separate resources of any
one of them, such as the importing any of the articles they
require in ships of their own ; and thus, without departing

50 The Relation of

from the usual habits of competitive business, may apply
for the advantage of the co-operative union whatever arrange-
ments competitive trade has brought men to use in these
businesses for their private advantage.

With this union for the means of transit, which may apply
to land as well as water, we come pretty well to the end of
what co-operation has to do in the province of distribution.
But men cannot generally live on distributing. Distribution
rests on the previous process of producing what can be
distributed. I proceed to show how co-operative union can
help us to escape from the competitive struggle, in this
primary sphere of production, with the like prospects of
general advantage which accompany its operations in the
secondary sphere of distribution. It acts by a course of
operations of which the wholesale centre of supply forms the
natural pivot, and the rule to be adopted in fixing or settling
the price of the articles distributed, an institution not yet
noticed, furnishes the natural lever.

To commence production successfully at the present day,
the producer needs an assured market. To carry on pro-
duction at all he needs capital. And for the workers to
carry it on so as to derive from it all the advantages that
their work can give them, they require to get this capital
on easy terms, i.e., at moderate rates of interest. Now, to
get capital at moderate rates of interest, it is indispensable
to give its owners security that the payments shall continue.
Produce this conviction, and experience proves conclusively
that in a country such as Great Britain the rate at which
capital can be obtained is so moderate that it ceases to form
any burden upon industry. Now, a body of distributive
societies, united by such a central association as above
described, have in this centre the natural means of ascer-
taining what is their total demand for any manufactured
articles which they can produce and consume; and when
that consumption rises to a height to support a manufactory
of these articles, they have in them the means of providing

Co-operotion to Competition. 51

the first condition of success, a market for their produce,
where they may anticipate at least a fair trial.

But further, this machinery of distribution may supply
them with the means of obtaining the capital required at the
lowest cost allowed by the circumstances, by means of the
savings on their own consumption. If they provide that
the articles obtained by them through their unions for distri-
bution shall be sold at ordinary prices, and return to
their members the surplus, after providing for the total
cost including the interest on the capital employed in this
operation, as dividends on their purchases instead of by an
immediate reduction of prices, they will gain two great
advantages —

1. They can ensure the division of these savings down to
the last farthing, without leaving, in the charge made to
provide for expense, a margin which shall be a temptation to
any body of shareholders to appropriate it to themselves,
and thus practically obtain a benefit at the cost of their
neighbours :

2. They will create, in the permanent incomes resting on
their own consumption, a fund which, used by a union of
these societies as a guarantee for the interest of the capital
they may desire to appropriate to any productive works,
would provide a security sufficient to enable them to obtain
this capital on the best terms that the state of the money
market in the country where they were formed would allow.
While the produce of these works would supply them with
the resources for paying the charge, and relieve the
guaranteeing income from any raal burden.

Here, then, without departing at all from the social con-
ditions created by the present world of competition, adhering
to the prices fixed, and the modes of conducting exchanges
established by it, we see the way opening to the quiet, gradual
introduction of that world of co-operative union, where the
mass of the population shall no longer be shut out from the
natural source of subsistence, and all the advantages of

52 The Relation of

wealth and the civilizing influences of high cultivation may
be brought within the reach of all men. For the co-operators,
having by union attained a market in their own requirements
for what they desire to produce, and the facility for getting
capital on the easiest terms on the security of their own
consumption, would obviously have in their own hands the
power of regulating the mode in which work should be con-
ducted, and its profits dealt with. While securing that this
work was honestly done ; that they got full value for what
they paid, and escaped entirely from the dominion of
adulteration and shams, and providing for the greatest
economy in production by arresting the formation of un-
necessary centres of supply, they might do for the worker
what M. Godin has done at Guise — destroy the antagonism
between labour and capital, and gradually fill up the gulf
between rich and poor by the insensible effect of institutions
where the wealth created by work may do for the worker all
that, by the wise use of it, can be done.

This might be effected even if the laws of England were
far less favourable to associated enterprise than they actually
are under the present law, which clothes societies of working
men with all the rights of bodies-corporate, together with
the right of holding land in any quantity. It is clear that
societies formed for productive purposes under the conditions
above supposed might, as they multiplied and became
wealthy, and spread over the country, combine with their
manufactures those pursuits of horticulture and agriculture,
on whose advantages Mr. Gladstone not long since dwelt
with his usual eloquence ; and open the way, by the pleasant
conditions of residence under which their work was carried
on, for that social union with the classes now separated from
them, which the progress of competitive industry, with its
tendency to crowd the masses of the population into cities,
makes perpetually more remote, by destroying all the natural
friendly ties of residence in the same locality. This might be
done, too, under our existing laws relating to land without

Co-opeyation to Competition. 53

any change; requiring nothing more than preparedness to
buy the land perpetually offered for sale. And it might be
done with far greater facility in a country where land is
habitually held and disposed of in large quantities than
would be the case in a country like France, where, to
acquire an estate of a few hundred acres, might need a
long process of purchases and exchanges of land bought in
fragments. We approach in this picture a state of things
so far removed from what now prevails in a society, of rural
districts which the progress of invention is perpetually
depriving of their population, and cities overflowing with
a population which the same progress is continually de-
priving of the means of subsistence, that those to whom
it is presented as an accomplished fact, rather than as a
process gradually accomplishing itself by natural tendencies,
may be apt to greet it with that cry of " Utopia" with which
selfish indifference is always ready to throw cold water on
large proposals of social improvement; if not by that favour-
ite stalking-horse of pessimism, the more rapid increase of
men than of food — of which I will say only that a race among
whom cultivation and the means of well-being were generally
diffused would be able to deal with it in a satisfactory manner
far better than our present population.

But on what, after all, does the operation I have here
endeavoured to depict rest, but on the assumption that
bodies of men collectively acting for their mutual advantage,
would do for their joint benefit what we find that individu-
ally men are disposed to do for their private benefit, when
competitive industry places the means of so doing in their
hands. Have we not seen generation after generation of
manufacturers, when by their successful industry they have
rolled up from the profits of their business accumulated
stores of capital, investing them in the purchase of land, and
erecting thereon for themselves and their families stately
dwellings, where wealth was made to minister in a thousand
ways to the means of enjoyment. If, then, tiie mass of the

54 2'/t6 Retatton of

working population — those through whose toil this accumu-
lation of wealth has been made possible — find the way by
association among themselves to make the source of riches
flow over for their joint benefit, why should it seem strange
to suppose that they too may seek collectively to invest their
accumulated savings in the land, which to them might be
not mere acres cultivated by others who had to sell the crops
to pay their rent, but the site of homes where these workers
themselves dwelt — homes bringing, by wisely-directed associa-
tion, as the Familistere of Guise now brings, the advantages
of wealth within the reach of the mass of a population, who
would themselves supply the consumers for the food raised
from the lands to which their own consumption perpetually
restored the elements of fertility ; — homes where the pleasures
of the social intercourse now afforded only in towns could
be combined with the pleasures of that rural life from
which the towns of our industrial England ever more and
more shut out their inhabitants. Even at the present day
Lancashire and Yorkshire are full of mills and factories,
which by their situation would offer all the facilities for such
a combination of rural and urban existence, if the profits
derived from their work were concentrated and applied in
the way now indicated, to promote the well-being of the
workers. The spread of rail and tram ways makes the
raising of such centres of industry more easy every day.
Surely, then, it is a reasonable hope that, as the workers
obtain through association increased means of producing
such results, there would be a corresponding increase in the
results produced ; so that the progress of invention and
accumulation of wealth would tend to redistribute over the
country the population which this same progress now
banishes from it ; not as the semi-pauperised tillers of
cottier lots, which they were too scattered and too poor
to cultivate properly, but as the wealthy and intelligent
inhabitants of unitary dwellings, where all the resources
of agricultural and horticultural science would be applied

Co-operatton to CompeMton. 55

to make the produce of the earth keep pace with the produce
of the industries by which its owners were enriched.

That cities would disappear I do not suppose. Emporiums
of commerce, centres of education, centres of art would, no
doubt, exist where circumstances favoured their existence;
but they would be transformed; resembling Dr. Richardson's
City of Health rather than our present deserts of brick and
mortar. A thickly peopled country would be something like
what may be seen now along the shores of the lake of
Zurich, only in greater perfection ; a succession of palaces,
each with its farms, gardens, and orchards, interspersed with
centres of work, all smokeless ; and with now and then
more thickly aggregated masses of a population who, unlike
the residents of our present towns, would never be so closely
crowded together as to lose the pleasures of life in their
search after the means of living. This would be the outcome
of a co-operative world such as I conceive it.

Thus, that benevolence to which the doctrine of the
equality of all in the eyes of God, that corner stone oi
Catholic Christianity, is a reality, would find an effectual
cure for the caste tendencies inevitably produced by the
visible differences of those separate dwellings, where the
rich and poor who alike profess to be the followers of the
"Carpenter's Son" now isolate themselves, by the adapta-
tion of social palaces to form, as in the Familistere of Guise
is actually the case, the joint habitation of all classes, who,
in the ordinary course of their daily life would keep up a
practical sympathy, by arrangements for the general advan-
tage iointly administered by them for their mutual benefit.

I stop here, not because the subject matter does not mvite
me to go on, but because any attempt to trace out the
relations subsisting between the different productive bodies
which might be formed by such means as I have attempted
to trace, carries us into a state of things so far removed from
the present state that the description may be charged with
being as impossible as it must be imaginary. But that it
must be imaginary does not prove it to be impossible.

5b The Relation of Co-operation, etc.

I have desired to point out what, in the present com-
petitive world, could be effected without any departure
from the usual conditions of business, simply by using the
results of this business for the general good, instead of
letting them be appropriated to individual advantage. I have
endeavoured to show that co-operation, in the two prin-
ciples traced out, both consistent with the ordinary course
of competitive industry — the union of consumers to secure
the greatest attainable economy in distribution, and the
union of producers to make the work by which they
live as rich in benefits to them as it is capable of being —
possesses the means of solving that social question which now
"perplexes nations with the fear of change," and is growing
with every returning year to more alarming proportions ; the
upshot of the whole process being that it would gradually
bring men, in the fulness of knowledge and the indefinite
increase of wealth, back to that natural constitution of
things where competition, being directed not to secure sub-
sistence but to multiply the means of enjoyment, would be
seen to have a fitting place in the " best possible world " of
Divine order.

Note on Natural Law (see page 45). — The position taken up in this
chapter in regard to the " Law of Competition," in truth, assumes only that
the same principles which apply to all other so-called Laws of Nature,
apply to it. All such laws have a natural sphere of action, in which they
are beneficial to man ; and if he passes beyond this sphere, will produce
results working to him injury, to be avoided only by carefully studying
their action, in order to preserve what is beneficial, and avert what is
injurious. For instance, our powers of motion and exertion depend upon
the fact that the earth pulls us to itself, in virtue of the so-called Law of
Gravitation. But if we try to leave the natural sphere of activity allotted to
us — the dry land — and would swim like fish or fly like birds; or if, upon the
land, we seek to move large masses instead of contenting ourselves with
moving our own bodies, the force of gravity will drown or crush us, unless
by constructing boats, or balloons, or cranes, we make it serve our purposes.
But what everyone admits to be reasonable in the case of other " Natural
Laws," is disregarded in respect of the " Law of Competition," which is
often presented as if it were a Divine teacher, with a special mission to
construct human society upon a solid basis ; a teacher under whose guidance
we ought to place ourselves, in humble confidence that he cannot lead us
astray. It is my position that this is a total error, and that competition is
simply a natural force which can no more be trusted to construct a true
human society than gravity can be trusted to construct a bridge.

.11 F., Chapter 5.

THE RELATION OF CO-OPERATION TO CURRENT
ECONOMIC THEORIES.

To investigate the different economic theories current at the
present day in detail, in order to see how far they agree or
disagree with the principles of co-operative action, would
require a volume. I do not propose to engage in any
such task. But as what is called the science of Political
Economy is often appealed to — usually with a great deal of
ignorance of what its teachers do say, but not, therefore,
with the less confidence — as if it put an extinguisher on all
schemes of co-operative action, labelling them one and all
as "impracticable," it may be well to consider generally what
is the relation of co-operation to these doctrines. We
shall see that, properly speaking, there can be no antagonism
between co-operation and the doctrines of political economy,
because they deal with distinct subject matters.

Let us bear in mind what has been more than once
stated, that co-operation is not a theory but a practice. Co-
operation, as it is presented in these pages, is an attempt
made by men profoundly convinced of the eternal reality of
moral truth, to embody the high ideal of duty in institu-
tions applying to the daily events of our ordinary lives, in
order that thus, goodness may become more prevalent than
it is among men because its practice will be more easy,
and selfishness diminish because there will be less tempta-
tion to it. But the doctrines of Political Economy, at least
of the school best known in England, relate not to the mode
in which men ought to act towards each other, but to the
way in which they do commonly act in acquiring wealth, and
!.o the results which are found to follow from their thus acting.

58 The Relation of Co-operation

Now, in so far as what man may thus do agrees with what
ought to be done, it is obvious that the co-operator cannot,
as such, have any quarrel with the political economist,
whose teachings, like those of any other scientific teacher
who deals with ascertained facts and logical deductions from
them, continually offer to him much useful information.

On the other hand, in so far as men's present conduct is
not what it ought to be, doctrines concerning their conduct
must of necessity cease to apply to persons whose conduct
has changed, and therefore can affect co-operation only
as demonstrations of the evil consequences of drunkenness
may affect a man of sober habits — namely, as a caution into
what an abyss of degradation and wretchedness he would
fall if he were ever betrayed into such habits."

It may be alleged, What you now say in truth admits the
great charge of the political economists against co-operation
— that it is impracticable ; a mode of acting in which men
will not act in numbers sufficient to make it worth anyone's
while to spend his labour in trying to get them so to act. But
from the point of view taken in these pages of man and his
history — from the conception of it as a moral progress, in
which the idea of human brotherhood gradually becomes
evolved as an active power, by the more complete transform-
ation of the individual man into the likeness of that Divine
ideal in whose manifestation the change began, or from any
other conception of human history which sees in it a story
of moral progress, the answer is clear. It is — we do believe,
that men's conduct will generally come to be such as it
ought to be far more generally than it is now ; and we
believe that men will be brought thus to act by means of such
institutions as we are endeavouring to set up. They will
require to be formed by men profoundly impressed by the
principle of human brotherhood, full of faith in its reality and
enthusiasm over the splendid outlook for the future of mankind
offered by it. But in and by them will be gradually produced
among other men , not necessarily a spirit such as animated these

to Current Economic Theories. eg

founders, but at least a disposition to act in the way recom-
mended, though, perhaps, with a view to personal advantage.
For this must not be forgotten— any institution dehberately
planned with the object of promoting the welfare of all whom
it may sensibly affect, must, unless it is very badly adapted
for the purpose intended by it, be advantageous to the great
majority of men. Only that small but strong minority whose
talent enables them to " get on," as it is called, meaning, to
get up on other men's backs and so be raised above the
crush, to come to the front and roll up wealth and the
power given by wealth, may feel themselves placed relativel)"
at a disadvantage, by having to work for the common good,
and to be contented with the common advantages placed
within the reach of all with such special share of the total
produce as in the general opinion their work deserves,
instead of keeping all that they could get " off their own
bat." Now, no doubt, this powerful minority is the greatest
difficulty in the way of co-operation. Dealing as it does
with matters of business, and requiring, therefore, when it
advances beyond the comparatively simple phase of distri-
bution, that union of qualities which go to make successful
traders or manufacturers, it has to induce such men to devote
themselves to its service, with nothing to offer them but the
consciousness that if they give up much of what they might
have acquired, they have gained what is more worth
gaining — the conviction of having faithfully used their
powers to promote the well-being of mankind.

The hope of the success of co-operation depends upon the
assumption that men may be found possessing the required
capacity, to whom such considerations as those abpve alluded
to are supreme ; who, without demanding, what it would be
suicidal in co-operators to ofifer, a personal remuneration
rivalling that offered by the competitive world to those who
succeed in serving themselves, will give to the service of
Humanity by co-operation work as persevering, and far
more faithful than the competitive world is able to

6o The Relation of Co-operation

purchase, from men whose services are determined only by
the calculation of comparative individual advantages. Is
this hope unreasonable ? I conceive that it is not.

The real antagonism between co-operation and the political
economists of the school referred to lies not in the science
of Political Economy, that is, the principles by which labour
has to be carried on in order to acquire wealth, but in the
assumption continually made by this class of writers
that men are beings whose conduct in commercial matters
will always be regulated solely or mainly with a view to their
individual selfish interest ; while the co-operator, though he
admits that this tendency is lamentably prevalent at the
present time, looks upon it as a " false skin," developed to an
unnatural vigour by the effort to cast off a mediaeval worn-
out skin, that had become too tight for the growing energy
of the body social, but destined itself ultimately to slough
off, and give place to the permanent human skin, at once
firm and elastic, which will give freepla)'' to the activity of
each individual member, while it holds all firmly co-ordinated
in the unity of the social body. Let us examine whether
this assumption of the co-operator is justified by ascer-
tainable facts.

It needs, I think, only that we rub the dust from our eyes
and look around us in the world as it is, to see that assiduous,
unwearied, concentrated, enduring labour may be obtained
from men in pursuits which interest their higher nature, by
considerations in which the idea of working for immediate
self-interest becomes entirely subordinated to other motives.
The pursuit of knowledge of almost any kind, the pursuit of
art, the desire to promote the welfare of other men, whether
in an assumed future existence as among the majority oi
religious teachers, or simply from the wish to alleviate
human suffering as among very many members of the
medical profession, are instances of this sort.

Theserviceof the State in all its branches — military, naval,
and civil — furnishes a similar and, in some respects, more

to Current Economic Theories. 6 1

instructive lesson ; because if we do not usually find here
the enthusiastic devotion often displayed by the scientific
inquirer, the artist, the priest, and the doctor, we keep
within the broad recognised lines of ordinary human action,
so that what it is possible thus to call forth cannot be con-
sidered a flight beyond the common reach of mankind. Now,
if we look at this service of the State, either in our own or other
law-abiding countries, such as France or Germany, we may
satisfy ourselves that, in order to obtain the best work of men
of high ability, very moderate payments suffice, if they are
combined with two conditions — (i) the certainty of their con-
tinuance except through forfeiture from misconduct ; (2) the
prospect of an advance to higher positions, regulated by
merit and not by capricious favour.

But these two conditions a co-operative union would be
peculiarly able to assure, from the very fact of its being
essentially a system in which united action would gradually
supersede individual struggles. In such a system the
uncertain chances of competitive rivalry would naturally
disappear before the establishment of centres of production
and supply, carefully arranged with reference to the wants
of the population, and embracing districts federated together,
so that each centre, while free to act within its recognised
limit, would have the sphere thus defined undisturbed. Such
a system would naturally lead to the permanence of em-
ployments and to a hierarchy of offices. In truth it would
transform the whole machinery of production and distribu-
tion into public functions, and thus bring into general
operation those motives which are found, in the world as it
is, to be reliable means of combining efficiency in the work
done with economy in the payments made for it.

How large a fund co-operative organisation would have
at its command for reasonably rewarding its most efficient
workers, while yet it gave a largely increased individual
advantage to the mass of the population, the actual results
obtained by co-operative societies in their savings upon the

6a The Relation of Co-operation

enormous cost of the present system of competitive distribu-
tion show. We find by a wide experience that, even
among the poorer classes, from lo to 12 and 12^ per cent on
the ordinary price of articles in the most constant demand
may be saved, after paying all the necessary costs, including
£^ per cent a year on the capital used, simply by union among
the consumers to do the work of getting what they want to
their own dwellings in the most economical manner for
themselves, instead of allowing anyone who chooses to set
up a shop to compete for their custom.

It can scarcely be doubted that much larger savings may
be made on the dealings in those articles where, the sale
being less quick, the percentage of profit charged on each
article is greater. But, independently of this saving in the
cost of distribution in each particular case, there is a mode
of possible saving, often little thought of, in the suppression
of the needless centres of supply which now add to the
expense without any corresponding increase of convenience,
on which I would say a few words, availing myself of the care-
ful computation contained in reference to London in one of
the Central Board tracts on the " Economy of Co-operation."
That there is an enormous waste of labour in the system of distribution
in use at present, anyone may satisfy himself who will consider what
arrangements it would be natural to adopt, if we had to supply any of our
great centres of population with their daily demands of food, or any other
articles of ordinary consumption, as a commissariat department would
supply a camp of equal size. A person charged with such a duty would, I
suppose, begin by asking what is the furthest distance beyond which no
dwelling shall be removed from a centre of supply ; and when this had
been settled, would map out the place to be supplied into as many areas as
would be required to secure this end if a centre were placed in the middle
of each, and would set up his establishments accordingly. Considering the
distance at which people are now content to live from the shops whence
they get their ordinary supplies, I think it may be said that if there was no
dwelling more than one-third of a mile from such a centre, the great
majority being of course much nearer, the object would be sufficiently
attained, in those cases where the demand is most frequent ; cases
where the demands were more special or less frequent being met by a
diminished number of centres, always, however, systematically arranged.
That is to say, a city might be supplied with whatever its inhabitants
ordinarily required in a thoroughly convenient and efficient manner, if one

to Current Economic Theories.

good centre of supply were placed in the middle of every square third of a
mile — nine in every square mile — for, in this case, it is clear that the
furthest distance v^'hich anyone would have to go from his dwelling to this
centre, if the streets were laid out on a regular plan, would be two sides of
a square, each one-sixth of a mile long. How many of such centres would
be wanted to supply London, and how many actually exist ?

The Post-office Directory of London contains the names of all the traders
who carry on business in that vast centre of population, classified under
their occupations. The map prefixed to the issue for 1877 represents 108
square miles. But of this space certainly scarcely more than half is
included in the area containing the dwellings of those traders whose
addresses the list furnishes. For the map takes in a tract of at least an
average breadth of a mile, 36 square miles in all, forming suburbs whose
residents are not included in this list. And large deductions must be
made from the remaining 72 miles to allow for the irregularity of outline of
London, and the spaces occupied by the Parks and the Thames, within
those portions where the population is dense. 54 square miles might, I
believe, be fairly taken as the area to be dealt with. But, to err on the
right side, I will assume this area to be two-thirds of the whole 72 square
miles. The computation of nine centres of supply to each of these miles
would give 648 central bazaars as the number of retail establishments
required for the convenient supply of London with the articles of most
common consumption. What is the actual number of establishments which
London contains in this area ? I have taken 22 trades connected with the
supply of (i) alcoholic drinks and tobacco, (2) food and household wants,
(3) clothes and personal wants, (4) books, medicines, and stationery, and
obtain the following results, which, I should add, do not profess to be more
than tolerably near computations : —

Trades connected with the supply of —

I. — Intoxicating Drinks and Tobacco.

Trades. Numbers.

Beersellers 1610

Publicans 5814

Tobacconists 1824

Wine Merchants 2052

Totals 11300

2. — Food and Household Wants

Bakers 2394

Butchers 1596

Chandlers 2479

Cheesemongers 826

Coffee-room Keepers 1721

Confectioners 1018

Dairymen 1824

Greengrocers 1881

Grocers and Tea Dealers 2747

Oil and Colourmen 1379

Totals 17865

Excess

Dver 648.

Actual.

Per cent

962 .

, 148

5166 .

• 797

1 176 .

. 166

1404 .

. 216

8708 .

• 335

rs.
1746 .

. 269

948 .

146

1831 .

. 281

178 .

. 26

1073 .

. 165

370 •

• 57

1176 .

. 181

1233 •

. 190

2099 .

• 324

731 •

. 112

1385 •

• 175

64 ' The Relation of Co-operation

3. — Clothes and Personal Wants.

Excess over 648.

Trades. Numbers. Actual. Per cent.

Boot and Shoe Makers 3477 • • 2829 . . 436

Hairdressers 1083 . . 435 . . 67

Linen Drapers 1368 .. 720 ., 11 1

Tailors 2679 .. 2031 .. 313

Watchmakers 1309 .. 655 .. loi

Totals. 9916 .. 6670 .. 205

4. — Books, Medicines, and Stationery.

Booksellers 912 .. 264 .. 40

Chemists and Druggists 893 . . 245 . . 37

Stationers 855 .. 207 .. 32

Totals 2660 . . 716 . . 36

Adding up the four lists, we get a grand total of 41,735 centres of supply,
against 14,256 wanted — 27,479 too many according to our previous compu-
tation, or 26,903, even if, in the case of public-houses, we suppose one
placed at each corner of each area of one-third of a mile square, in addition
to one in the middle — 251 existing shops, on the average of all these trades,
for every 100 wanted.

It is out of my power to form any accurate estimate of the unnecessary
cost caused to the public of London by the present wasteful system ol
distribution beyond what they would have to pay if this indispensable office
of bringing the things wanted and the persons who want them together
were discharged with the economy which a well ordered organisation might
secure. For, on the one hand, when we take those trades which deal in
articles not so constantly required as the articles enumerated above, each
case would have to be considered by itself, in order to form an estimate of
the number of centres of supply reasonably wanted, so as to compare them
with the number that competition gives us ; while, on the other hand, the
list of London traders contains a large number of producers, who must be
struck off upon an inquiry into the waste of distribution ; and, after all,
unless the actual cost of the existing distributive centres and the amount of
business done could be ascertained and compared with what we know by
experience to be the ordinary cost of doing this amount of business in a
system of well-organised co-operative distribution, we should get only
guesses, which we might make pretty nearly as well without the labour of
such a computation. Even if we confine ourselves to the trades above
enumerated, where in every instance there is a large excess, the great
irregularity in the degrees of this excess, ranging, even if publicans are
excluded, from 26 per cent in the case of cheesemongers, to 436 per cent in
that of shoemakers, and the very great differences which there doubtless
are in the average turnover of a shop in one trade as compared with that in
another trade, makes it impossible to form more than a very rough estimate
of the increased cost of distribution with which London allows itself to be
charged, because its citizens do not combine in a reasonable method of
supplying themselves with the things which they want every day. How-

to Current Economic Theories. 65

ever, to give our ideas some little definiteness in the matter, consider this.
In the 22 trades enumerated above, we have found that there are 26,903
shops more than are necessary. No doubt many of these shops are small.
Suppose that, one with another, the cost of each shop is, for rent, rates,
taxes, light, fuel, &c., ;£"ioo a year, and ;£"i50 for the wages or cost of living
of the persons employed, we get a sum of ^6,725,750 as the total cost of
these shops, of which it is, I think, a moderate supposition that at least
one-third of the rent, &c., and two-thirds of the service, would be saved if
the work was done by the 14,836 centres needed, instead of the 41,735
existing. There would be a direct saving to the citizens of London of over
;£'4,ooo,ooo a year in these trades only, by suppressing the useless cost of
unnecessary establishments ; independently of the great economy produced
by turning the profits of the seller into savings to the buyer, which, we
know, would give to the customers of the reduced number of establish-
ments, after paying all costs and the interest on capital, from is. fid. to
23. 6d. in the £, on whatever may be the turnover of the 41,735 shops with
which we are dealing ; an amount probably much under-estimated at an
average of ^2,500, or ;^ioo,ooo,ooo a year.

Nor must it be forgotten, when we are considering what might be saved
by co-operation in distribution, that the names of the traders mentioned
above occupy 367 columns only of the 1,565 included in the Trades
Directory of that vast magazine of addresses furnished by the Post-office,
of whom by far the greater part are engaged in distribution. It represents
but a fraction of the waste which lies at the door of competition in London
only ; though, for the reasons already given, I refrain from any attempt to
reduce this waste to an amount appreciable by figures.

Now this great saving which association for distribution can effect would
not be purchased by a diminution of the convenience offered by the present
system. On the contrary, there would be an increase of this convenience.

The actual needless multiplication of shops does not prevent a large part
of the residences in London from being much further than the one-third of
a mile assumed by me as the extreme distance of any house from some
centre of supply ; for these centres are distributed with reference, not to the
greatest convenience of the inhabitants, but to the opinions entertained by
their proprietors of the situations where they will have the best chances of
attracting notice and obtaining custom. Therefore they fill the principal
thoroughfares in continuous lines, while they leave large areas of population
with a very scanty number of shops. And these shops are not as they
would be upon a system of organised distribution, all first class, where in
every instance entire reliance might be placed on the quality of the goods
supplied and the fairness of the prices charged, because all would be
supplied from the same v/holesale centres with which they would be con-
nected in federal union ; all would be conducted by managers, appointed by
committees of purchasers who would overhaul all their proceedings,
and liable to summary dismissal at least, if not to other penalties, for any
detected roguery. The actual shops may be said to be of all degrees of
goodness or badness, agreeing with each other only in one respect, that the
F

66 The Relation of Go-operation

ordinary buyer can never get any knowledge of the amount of additional
charge beyond the cost price to which the supposed economy of competitive
trade subjects him.

Now, London is only a specimen of the system universal
over the w^hole country. Hov^^ large a fund would be placed
at the disposal of the co-operatcrs by this mere saving of
useless cost in distribution, out of which to reward useful
activity, is, I think, made very clear by such facts as
these. They may relieve us altogether from the apprehen-
sion that co-operation must give up the hope of raising the
masses because its resources would be used up in paying its
chiefs. There are ample funds in the savings on competitive
waste to effect both objects.

The considerations adduced in the last sentence apply
to life as it is in our competitive world, and the isolated
homes natural to a life so circumstanced. But in contrasting
the motives which may lead men to energetic work in a
co-operative society, we must not leave out the advantages
which the co-operator would derive from the principle of
association when it is applied to the formation of unitary
homes, as it has been applied by M. Godin, at Guise, and
with the growth of co-operative union, must certainly be
applied more and more extensively.

Unitary homes will, I conceive, be to co-operation what
monasteries were in the middle ages to the Church —
the fortresses by which it will take possession of society, and
gradually convert mankind to obedience to the new faith.
Life in them will be greatly more full of physical
enjoyment for the mass of mankind. Life in them
will be infinitely more full of moral satisfaction to
all the noblest spirits of our race. They will see in these
homes the means of abolishing that ever-deepening dyke,
dug by our competitive society between the "two nations"
of rich and poor, and look forward to the ever-increasing
means of general well-being which such institutions will
secure to mankind by the deposit of accumulated wealth

to Current Ecotwmic Theories. 67

left behind by each successive generation. So that the
desire for that isolated family existence which is the
great source of the perpetual race after wealth will cease.
It will yield to a desire to maintain institutions felt by
everyone alike to be the permanent source both of indi-
vidual happiness and general well-being; until the notion
prevalent among many political economists, that this race
after wealth is the only efficient' motive to human activity,
will come to be classed among the comical absurdities into
which clever men have fallen, who, living in an age just
emerging from barbarism, fancied that the society wherein
they lived had spoken the last word in the '* History of
Civilisation."*

* The views advocated in this chapter will be rejected by those who
conceive that, because the struggle for existence is a law of physical being,
it must also be a law of spiritual being. To all objectors of this class I
reply. You are confusing the root with the fruit, which indeed depends upon,
but is very different from it. Self-assertion is the first condition of
individual being ; it does not follow that self-assertion is its end. On the
contrary, the theory of development, which I accept as scientifically estab-
lished, teaches that, in the progress of existence on the earth, the opposite
principle, of combined action, has manifested itself with continually increasing
completeness. Gases have combined into liquids and solids ; liquids and
solids have united to form plants. On the plant has reposed conscious
animal life. With the consciousness of surroundings has appeared the
intelligence capable of combining them, as means for its own ends. And
beneath this intelligence there has become manifest a reasonable self-
governing will, which claims the right to determine those ends. To go
back to the struggle for existence as the law of reasonable life, is to ignore
this vast progress, and treat men as if they were only bags of gas. No
doubt the struggle continues. If it ceased, individual existence must dis-
appear. But to appeal to it as a principle capable of producing a true
human society, is, as has been noticed on p. 56, much like appealing ta the
force of gravitation to build a bridge.

68 The Relation of Co-operation

Chapter 6.

THE RELATION OF CO-OPERATION TO THE STATE.

Co-operation has been presented in these pages as essen-
tially a voluntary system. Its root has been traced back
to that deepest of all principles known to us — free, that is
self-governing, reasonable will : that power which being,
as I believe, the ultimate source of all existence, has
come out on this earth where we dwell as the result of the
long succession of advances conditioned by the struggle for
existence, during the unnumbered ages recorded in the frag-
mentary leaves of the " Stone Book." When Icthyosauri,
PJesiosauri, Megatheria, and all the other tribes of monsters
had improved themselves away ; when the huge fern forests
of the past had stored up in beds of coal the force radial ed
in times long gone by from the central orb ; then, amidst
a world of lowering and fruit-bearing plants and shrubs, a
world of bright-hued insects, and many-voiced birds, man,
the contemporary of the dog, the elephant, the camel, the
horse, the sheep, and the cow, appeared, to " order and to
dress " the abode, made fit by the natural development of
struggle for the dwelling of a creature who could resolve
the discords of nature into the harmonies of reason.

Our first chapter has traced the character of that process
by which the Divine author of the universe, working always
through appropriate means, struck the chords from whence
this harmony can be evolved ; by the manifestation of His
own infinite love in the person of Christ, awaking in the
heart of man the echoes of a responsive love, which should
gradually substitute its divine melody for the discordant
tones of natural selfishness. But harmony consists in

to the State. 6g

many different sounds combined so, that each, while pre-
serving its individual distinctness, contributes to the all
embracing ideal unity. Naturally, therefore, the idea thus
introduced into the world created for itself an organisation,
— a State which, under the name of the Church, soon began
to assert over against the limpiie of the Caesars, the claim
to a sway larger even than that colossal centre of political
might — a kingdom of God, including alike " Greek and Jew,
Barbarian, Scythian, slave and free," combined in common
willing obedience to its Divine head ; whose power rested,
not on the visible force swayed by the master of forty legions,
but in the invisible power that constrains the hearts of men.

Between these rival states, each claiming unlimited obedi-
ence, soon arose a deadly contest, where the victory declared,
not for the external, but for the internal power ; not for the
flesh, but for the spirit ; not for the strongest battalions,
but for the deepest influences; not for the Eagles, but for
the Cross.

The time came when the genius which was throned on
Mount Palatine had to yield to the genius that presided
over the " Lord's Table " — when the new Christian state
swallowed up the ancient State of Rome, and began to
mould according to its own tendencies that powerful agency
of legal might, with which it had been for more than three
centuries engaged in a " struggle for existence ;" an issue
which may reassure those who fear, as many seem at the
present day to fear, that in this "struggle for exi'itence" the
outward will prove too strong for the inward, the bark too
strong for the sap, and that to preserve moral truth from
perishing it is necessary to feed it upon a dietary of
undemonstrable assumptions. That this legal state was
a tough morsel for the Church to digest I do not deny. It
had to swallow an enormous mass of material very little
prepared for assimilation, and still suffers from the indiges-
tion thus occasioned. Yet it has done an immense work, of
which at the present day we are liable not to appreciate the

yo The Relation of Co-operation

importance, because the work has been done so completely
that scarcely any trace of the old state of things remains in our
world ; and because few of us are sufficiently well acquainted
with the past to reproduce it as it was. The Church in
digesting the old body politic has expelled from it slavery.
Thus it has made possible that more perfect organisation
wanted to complete the development of the good seed sown
1, 800 years since in the land of Palestine; to realise that
" more excellent way " set by the great Apostle of the
Gentiles before his Corinthian converts in words that
cannot be bettered ; and to make of the body politic such a
body as shall fulfil the ideas of a true state, which the same
Apostle presents as the natural outcome of this " way."

By the elimination from human society of this indigestible
element of slavery, and the cotemporaneous growth of
orderly political freedom, the natural attendant on its
elimination, and nowhere at the present age more com-
pletely attained than in our own United Kingdom, the way
is prepared for the second great step in the evolution of
humanity — the formation of a Church which shall not only
teach men everywhere to pray that God's kingdom may
come. His will " be done on earth as it is in heaven," but
shall nourish in them the earnest determination that His will
shall be done, for they will do it ; that this kingdom shall
come, for they will not rest from their labours till they
see it established.

Now, this determination the co-operator who takes the
view presented in these pages of what co-operation has to
do, must set before himself as his determination. This state
is the state that he has to bring about, carrying on the work
of the Church of the first centuries to its logical issue. As
the Christians of the first three centuries raised over against
the political state an ecclesiastical state or Church which
absorbed it, so has the co-operator to raise over against tne
present politico-ecclesiastical state, a new social state ; a
voluntary body growing up by its inherent energies like the

to the State. 71

Church of old, but fulfilling what the Church of old coald
only indicate in hope ; till it may say with far deeper truth
what was said of the Bible Society by one of its early
presidents — " If it cannot reconcile all opinions it unites all
hearts." Because, taking as its starting point that sentiment
of general benevolence, that sympathy with human neces-
sities, which is the common outcome of all Christian
teaching, however widely the teachers may differ in the
theories connected by them with it, this social Church will
be able to reconcile the manifoldness of belief in the oneness
of practical action.

Co-operation then is called on to create a new social state,
which, growing over against the present state as the Church
did of old, only now under its shelter instead of in conflict
with it, may, like its precursor, ultimately absorb the law-
making power within its own circle, and can then complete
what may be requisite for its perfect consolidation, by the
same sort of authority, as that whereby, in all ages and
countries, the minority have been required to give up for a
reasonable compensation, rights of which the majority feel
that the cession is necessary for the general welfare.

But, as of old so now, this new state must spring up
freely, in that soil which the action of the older Church, or
the intelligent and moral culture fostered directly or in-
directly by it, has delivered from the incubus of slavery and
the despotism of the body politic. Its claim on the existing
state is simply for leave to grow and develop its own power
in peaceable obedience to the laws which, in the United
Kingdom at least, afford it all that it can require, by cloth-
ing the members of co-operative societies with corporate
privileges for trading purposes, and giving them the unre-
stricted right of holding land.

A great confusion of ideas has prevailed on this matter,
not in England so much as elsewhere, on the continent of
Europe, and latterly in the United States of North America.
Because all social reformers look, and must of necessity

72 The Relation of Go-operation, etc.

look forward, to the formation, as the outcome of theii
reforms, of a state of things where the customs and rules oi
the reformed society will be identical with the laws of the
countries where it flourished ; therefore it has been sup-
posed that a short cut to this reformed condition of things
lay through the law-making power, to be exercised by means
of universal suffrage by the mass of the population, who
should substitute for the spirit of God actuating the will
of man the words of man ordering men's lives.

The delusion has been already denounced in these pages,
and cannot be denounced too strongly. One more fatal to
the hopes of an abiding social reform it is impossible to
imagine. It is analogous to the folly of a child who plants
flowers to get a garden quickly. It is to suppose that a tree
can grow without roots, or that we may gather " grapes of
thorns" and "figs of thistles." Whether that development
of the principle of love, of which the Christian religion has
been the historical nurse, has yet attained a growth deep
and wide enough to produce the social reforms sought by
co-operation is a legitimate subject of question. To the
writers of this Manual the signs of the times seem hopeful,
otherwise it would be useless for them to undertake the
labour of writing it. On this matter they can only hope,
without venturing to dogmatise. But of one thing they
must assert their undoubting conviction, that if the co-opeja-
tive spirit, with the facilities of action now open to it, cannot
succeed in forming a reformed social state, the existing state
will be absolutely powerless to create a co-operative spirit.
As well might we suppose, that if St. Paul had succeeded in
converting the Emperor Nero to the Christian faith, that
religion might have been established as a true spiritual
influence by the javelins and swords of the Roman legions.

PART III.

THE PRACTICE OF
CO-OPERATION.

PART ITI,
Chapter 7.

THE APPLICATION OF CO-OPERATION TO DISTRIBUTION.

Apart from the moral benefit attending all modes of co-opera-
tion, if they are animated by a genuine desire to work for
the common good, the beneficial results arising from
its application to distribution rest upon the fact illus-
trated in the chapter on the Economical Basis of
Co-operation — that there is in the present system of
competitive trade an enormous waste. Not that those who
undertake this office do not endeavour to do their work as
economically as they can, but that, from circumstances which
it would take more space than can be conveniently spared to
trace in detail, there is actually absorbed in the operation of
bringing the desirable things produced in the world to the
hands of those who require them, a part of these things much
larger than is needed in order to get the work done thoroughly
well.

On this fact, the economical strength of co-operative distri-
bution rests in practice. The surplus over cost thus put
into the pockets of the consumers as the result of union
to supply themselves is, in well managed stores, after
paying all expenses and £5 per cent, per annum on the
capital employed, commonly from 2S. to 2s. 6d. in the pound.
This surplus forms the backbone of co-operation. It gives to
that system of trade a solid commercial basis, on which to build
the co-operative edifice, in what is undoubtedly, in my judgment
at least, the safest, the most useful and best plan for every one

^6 The Application of

who does not want co-operation to stop at distribution. This
plan, popularly known as the Rochdale scheme, from its having
been introduced to general acceptance b}' the Equitable Pioneers
of Rochdale, is to sell all goods at the prices charged by
respectable private traders, and returning the surplus over
cost and 5 per cent, on the capital invested, to the members,
as dividends on their purchases. I proceed to explain for
the benefit of those who desire to form co-operative societies
on this plan how to set about doing it; laying under
contribution for the purpose of this explanation, the excellent
tract on Village Co-operative Stores by Walter Morrison,
Esq., formerly M.P. for Plymouth, originally published by the
Central Board, as well as the papers published by the Guild of
Co-operators.

The first thing to be done is to draw together a body of
men so persuaded of the value of co-operation as to be
willing to undertake what, if wisely undertaken, can scarcely
be called the risk of setting up a store. Great help will
probably be found in this step from getting and circulating
a few co-operative tracts. Those called " Christianity in
Common Life," " How Bob became a Co-operator, " The
Banbury Tract," written by one of the founders of the very
successful store at Banbury, in a purely agricultural district,
and the " Guild Papers," are suitable for this purpose.*
Mr. Holyoake's " History of Co-operation in Rochdale,"f is
well adapted, in Mr. Morrison's words, " to excite interest
in Co-operation by its simple, graphic, and humorous account
of the heroic struggles of the Rochdale Pioneers, which go
straight to any man's heart." It is well worth the price asked
for it, IS. for the ist part, and 2S. 6d. for the whole work ; but

* These tracts, with many others, can be got from the Central Co-operative
Board; City Buildings, Corporation Street, Manchester, or at the Office of the
Guild of Co-operators, 19 Russell Street, Covent Garden, London, W.C.
They are sold at the prices stated in the Appendix, No. 13. But the Central
Board makes free grants of tracts for aiding the formation of societies.

+ Published by Messrs. Trubner & Co., 30, Paternoster Row, London.

Co-cperation to Distribution. jy

this price necessarily makes it less suitable for general distri-
bution than the tracts above mentioned.

When the ground has been prepared by this preliminary
treatment with tracts, and the matter has been talked over
sufficiently between those who may be most disposed to take
part in the plan, the next step should be to call a meeting in
any convenient place in the neighbourhood, to see what support
can be got for the scheme, and to appoint a committee of
persons of good character and intelligence, whose names may
give confidence generally to the public. This step is, indeed, not
indispensable. The stories of many now prosperous societies
show how much a few determined men may do in setting up
a store, with scarcely anything but their own energy to help
them at first; and if these pages come into the hands of any
who are conscious of such a heroic determination in them-
selves, I can only say, " go on and prosper," as I have little
doubt you will. But moral miracles of this sort, though the
age for them is not passed, cannot be looked for every day.
It is well, therefore, to consider the means that are most
likely to lead to success among those who have not, as yet,
attained to the " Faith that can move mountains," and of these
means the public meeting is a very good one.

What is best to be done to get up such a meeting is a
matter on which it is difficult to give general advice, because
so much depends on the circumstances of the locality where
the society is intended to be formed.

If it is in a town, Workmen'.s Clubs, Trades Unions,
Friendly Societies, or meetings of men employed in factories
or other establishments, may probably be appealed to lor
support with good effect.

If it is in a rural district, the squire, or some of the gentry,
if more than one family of higher degree are resident in the
district, and possibly some of the farmers maybe got to interest
themselves in the plan. "There are many things," says Mr.
Morrison, " which are as necessary to the household of the
well-to-do as of the poor; the store will be a convenience to

^8 The Application of

every one in the parish, irrespective of social rank. And if the
more prosperous inhabitants join as shareholding members,
and take an active interest in the management, they will be
able, at no cost to themselves, greatly to benefit it. The
farmers' carts returning from the market tov^^n or railway
station may bring back goods for the store free of cost * ; they
may, with the village carrier, bring off from the railway at once
your truck-load of coals (when a society has advanced to a
point where it may venture to deal in coals) and so save loss
from demurrage or pilfering : their capital and trade will enable
the store to keep in hand a larger and more varied assortment
of goods ; while on the other hand it will be a convenience to
them, when pay day comes round, to get cash from the till of
the store with which to pay wages, giving in return their
cheques, which will be a convenient mode of remitting the
accounts due by the store for goods bought. And surely it is
no iight matter that there should be in the parish at least one
institution, where rich and poor can meet on common ground,
and with a common interest."

The last argument is well adapted to gain support to pro-
posals for forming a co-operative store from one class of
persons, whom the promoters of the plan should certainly
endeavour to interest in it, whether in town or country —
the ministers of religion — especially, in the country, the clergy-
man of the parish or district, who, among other services
which he may render, may grant the use of the schoolroom
for the meeting. Men of this class, if they can be induced to
come forward, and say a few words of advice, will tend to
give the undertaking that high moral tone by which all
genuine co-operative enterprises, however shrewdly conducted
as commercial ventures, must be distinguished from the
common ruck of schemes for making money at other men's
cost.

Application for assistance in conducting such meetings

* That is supposing the farmers to be members of the society, and there-
fore willing to do for it, free of charge, what costs them nothing.

Co-operation to Distribution. 79

may be made also to the Secretary of that Section of the
Central Board, in which the society is proposed to be formed ;
or, if those desirous of forming a society do not know the
address of the Local Secretary, to the General Secretary at
City Buildings, Corporation Street, Manchester; who will
put them in communication with the Board of the Section ;
from which they will obtain what will probably prove a valuable
help, and at all events the best they can give.
- In London another organization, called the Guild of Co-
operators, noticed above, has been formed for promoting the
spread of co-operation in the Metropolis and the adjoining
counties, to which appeals for assistance in the formation of
new societies in these localities may be addressed, at 19, Russell
Street, Covent Garden, London, W.C., with an assurance that
every practicable effort will be made to attend to them.

Supposing that, by such means, there has been collected a
sufficient number of persons willing to take shares in the new
society to justify a beginning, the next thing necessary is to
get the rules framed and registered.* Great assistance is
given at the present time to those who desire to form a
society whether for distributive or productive purposes, by
the action of the Central Board, and in the case of distributive
societies by that of the Co-operative Wholesale Societies at
Manchester and Glasgow. The Board publishes a set of General
Rules drawn up by the present General Secretary, in conformity
withthe rec;uirements of the Industrial and Provident Societies'
Act, 1876,1 which have been submitted to the Chief and Assis-
tant Registrars, and are accepted by the Central Office. J These
rules are not merely models : they are in a form such as allows
of their being adopted by any society or persons desirous of
forming one, by means of Special Rules prefixed to them which

* The observations following here on this head apply also to productive
societies, since the latter could not be separately treated in reference to the
mode of their formation without a great deal of useless repetition.

t 39 and 40, Victoria, c. 45.

\ Registrar's Report for 1876, p. 39.

8o The Application of

state the name, the date, the registered office, and the uevice
borne by the seal of the society, all matters which must be
provided for in each case. Farther, if those who adopt the
General Rules, whether as individuals or societies, wish to
make any alteration in their provisions, the Special Rules can
also state what these alterations are ; in which case the
General Rules are so framed as to substitute the alteration in
place of the provisions altered. The General Secretary will
prepare proper Special Rules to give effect to the alterations
desired by the founders or members of any society who
determine to adopt the General Rules, but desire to alter them
on any particular matters which they state to him.

As the General Rules are kept in stock and sold at the charge
of i|d. each, while the cost of the Special Rules, if they are not
much longer than is generally the case, does not exceed a
few shillings for 250 copies ; (the number on which printers'
charges for setting up are based), it is possible for the founders
of a new society to get as many complete sets of rules as they
are likely to require for immediate use, for much less than it
would cost them to get far less complete rules of their own ; leav-
ing a good stock of copies of its Special Rules not used in hand
ready to be made up as occasion requires. When these are
exhausted, the society will be able to obtain as many additional
copies of its rules as it stands in need of at the cost of re-
printing its own Special Rules and the charge of 2d. a copy
for as many of the General Rules as it orders.

It may perhaps appear to some persons who examine these
General Rules with the view of adopting them to found a
society, that they contain a number of provisions on matters
for which they do not wish to provide at all in the first period
of their existence. But if the society should prosper and grow
great, they will probably find these provisions, which have
been suggested by the experience of large societies now
existing, of advantage to them, while they add nothing to
the original charge.

The General Rules are formed upon the plan of requiring

Co-operatioii to Distribution. Si

each member to hold at least one transferable share, which,
however, they authorize the Committee of Management of the
society to repay, if satisfied that it can be done safely, if a
member desires to withdraw from the society ; while they protect
the society against danger from the right of withdrawal, by sub-
jecting it to restrictions on the sum withdrawable, except by con-
sent of its committee, in any year, and by authorizing a special
general meeting to suspend the right altogether, if its exercise
appears likely to be detrimental to the society. Under such
restrictions I do not apprehend that any danger is likely to
arise. from the exercise of the right of withdrawal in distribu-
tive societies ; while there can be no doubt but that the
habit of treating these societies as savings' banks able
safely to pay a much higher interest than ordinary savings'
banks can pay, but from which, as from other savings' banks,
the depositors may draw out their money when they please,
has very materially contributed to the rapid growth of the
societies. It would have been disadvantageously exchanged for
any form which would have prevented the accumulation of
capital by putting difficulties in the way of using it. I think, there-
fore, that for distributive societies such a system as is above
described — though admitting of alteration by the Special Rules — is
generally the best. With productive societies the case is different,
since the capital may be largely sunk in plant, and to allow free
withdrawal might ruin the Society.

On this plan the transferable share, or shares, if more than
one is required to be held, form the primary fund for paying
the debts of the society. For, if a society is wound up, the
withdrawable shares will be converted into claims upon it
subject to the discharge of its debts ; while the transferable
shares, since they cannot thus change their character, can
take only what is left when all other claims are discharged.
An attempt is often made to produce the same effect with
withdrawable shares by distinguishing them into those which
the members are required to hold, and those of which the hold-
ing is optional. But to make withdrawable capital thus act the

<Sj The Application of

part of transferable shares requires the provisions introduced into
the present General Rules, but not often used.

When the rules have been framed, the next step is to get
them registered, for which purpose application must be made to
the Registrar of Friendly Societies, i.e.^ for England, the Central
Office, consisting of the Chief and an Assistant Registrar, 28,
Abingdon Street, Westminster ; for Scotland and Ireland re-
spectively, the Assistant Registrar, 43, New Register House,
Edinburgh, and 9, Upper Ormond Quay, Dublin. The appli-
cation must be made upon a printed form, which can be obtained
from the Registrar's office, containing a list of twenty subjects on
which provision is required to be made by the rules of Industrial
and Provident Societies. Under each of these heads the form
must be filled with the number of the rule of the society where
the particular matter is provided for.

If the founders or members of any society do not adopt the
General Rules, but determine to provide their rules for themselves,
they would do well to apply to the Registrar of the country,
as the case may be, for one of these forms before they draw
up their rules, that they may not have them returned when
sent up for registration, to supply deficiencies in respect to these
provisions. At the same time they should ask for a copy of the
model rules on these matters, which are furnished by the office.

If the General Rules are adopted, the General Secretary
will supply application forms properly filled up with the neces.
sary references, leaving nothing to be done in the case of a
newly formed society but that the form should be signed by
the same eight persons by whom the rules are signed, one of
whom must be the Secretary.

The application form, when duly filled up and signed, must
be sent to the Registrar's office in England, Scotland, or
Ireland, as the case may be, with two copies of the rules,
each marked with the letter A.

If the application to register new rules is made by a society
already in existence, which desires to substitute a complete set

Co-operation to Distribution. ^3

of new rules for its previous rules, the process is somewhat
different. The same twenty matters which have to be provided
for by the rules of a new society are required to be provided for
also by the substituted rules of an existing society, so that the
remarks made above in regard to providing for these matters
in the case of a new society, apply equally to the case of such
new rules. But the form of application is required to be signed
only by the secretary of the society, and the new rules to be
signed only by three members instead of by seven. On the
other hand a copy of the existing rules must be sent up with
the application, in addition to two copies of the new rules,
each properly signed, and marked with the letter P ; and it
must be accompanied by a declaration made by the secretary
before some Justice or other person authorized to receive it,
on a form annexed to the application, that the existing rules
have been complied with in the alteration. No fee is charged
on the registration of a new society in consideration of the ex-
pense connected with the formation of societies, and of the
comparative poverty of those who may form them. But a fee of
IDS. has to be paid on the registration of any amendment of the
rules, though it may relate only to a single rule. The same
declaration must be made in the case of such an amendment
as in that of a complete amendment ; but it is not necessary in
registering a partial amendment to show that the existing rules
make provision for all the matters for which a new set of rules
is required to provide. It is necessary only to state the rules
to which the amendments relate, and the alterations to be
made, in the manner directed by the form of application for
registering such amendments, and to send to the Registrar
with the application for registration two copies of the amend-
ments, and a copy of the rules in which the alterations are shown
in writing. Neither rules nor amendments are required to be
printed. But as the Industrial and Provident Societies Ac*
requires societies to deliver a copy of their rules to every person
on demand, on payment of a sum not exceeding one shilling,
and makes it a " misdemeanour, to give to any person any rules

S\ The Application of

other than the rules for the time being registered under
the Act on the pretence that the same are the existing rules
of a registered society,"* it is obviously expedient, in order
to save endless copying, that both rules and amendments
should be printed.

With these facilities for obtaining, at a very small cost, rules
adequate to meet all the requirements of a society when it
attains the full grown proportions of a prosperous institution,
there is not so much reason as there was formerly, for waiting
till funds sufficient to provide for a fair start in business have
been promised before incurring the cost of giving the society a
legal constitution. If there is only a fair prospect of success*
a beginning may be made with the advantage of being able to
ask support, not to a society to be formed, but to one already
constituted, where every member may both see exactly what
he is asked to join, and know that whatever happens to the
society he can incur no greater liability than is measured by
the shares for which he subscribes. It ought, I think, to be
easier, under such circumstances, than used to be the case, to
work up the- numbers to the point where it may be prudent to
commence business. Where that point should be fixed varies
with the place where a society may be formed. Setting aside,
as irreducible to any rule, the heroic cases where personal
energy is appealed to to supply the lack of pecuniary means,
I may say that in small towns or country districts £"100 paid
up, and ;f 150 in the Metropolis or other large cities, is con-
sidered to afford a fair start, provided that this amount is
either wholly paid on transferable shares, or, if paid on
withdrawable shares, is subject to conditions restricting the
exercise of the right of withdrawal without leave of the com-
mittee, for such a time as will allow a fair chance of getting
the society well afloat.

As the success of a distributive society must depend upon
the amount of trade which it can do, it is desirable to place as
little impediment as possible in the way of members joining,

* Section g (5 & 6).

Co-operation to Distribution. 85

by not requiring, as a condition of membership, the holding of
more shares than the majority of those likely to join can
easily afford to pay up. For though the same class of persons
may place much larger sums in the society if it flourishes
and they acquire confidence in it, at first, when this confi-
dence does not exist, they may be easily frightened by the
possibility of a loss. Many of the most successful societies
have not asked for a larger subscription than £\ to be
gradually paid-up. I am inclined to think this sum a good
limit for a distributive society. If a rule is added that at
least half the dividend to which the members may become
entitled shall be accumulated till they hold any number of
shares, say three or five, fixed as the holding for each member,
the system, I believe, will work well, and give stability to the
society without being a burden to any one.

For the advantages above-mentioned in the formation of
societies, the present generation of co-operators is principally
indebted to the action of the Central Board of the Co-
operative Union, to which a hearty support will be given by
all co-operators who have learnt to look on co-operation in
the light in which these pages present it, as a connected
scheme of action, having as its aim to use the vast powers of
modern industry for the gradual elevation of the masses now
crushed beneath the grindstone of competitive struggles.
But there is another class of benefits, more commonly valued
perhaps, which co-operative union has already placed within
the reach of the co-operative body ; those arising from the
action of the Co-operative Wholesale Societies both in England
and Scotland.

Few probably can fully appreciate the extent of this benefit,
but those who fought through the hard battle, which co-
operative societies formed before any such Wholesales ex-
isted, had to fight against the opposition of the private retail
traders, in order to open the way to getting the articles they
wanted to sell of as good quality and on as easy terms as their
opponents. But this is entirely altered since co-operative

86 The Application of

union has created great central institutions, which from the
magnitude of their transactions can afford to employ skilled
buyers, and get access to the best markets, where these buyers,
dealing for ready money, and buying on a very large scale,
can obtain the most favourable terms, which the magic of
association places at the command of the smallest societies,
equally with the largest. Large and prosperous societies
sometimes imagine, and I believe, are in general mistaken in
imagining, that they can obtain for themselves in the open
market, on better terms than they can secure from the Whole-
sale societies, not only articles where the cost of carriage may
give a great advantage to a local centre of supply, but even
articles where there is nothing to be gained in this respect.
But many of the largest societies, after trying both plans,
have found that to be supplied through the Wholesale centres
is more advantageous to them than the attempt to get their
supplies independently of them. Their experience confirms
what might reasonably be anticipated — the advantage to be
derived from a well organized system of collective purchases,
which shall utilize the custom of the whole body for the
benefit of every member. It should determine every co-opera-
tive society, and certainly every new society, to join the Whole-
sale centre for the district where it is established, whether in
England or Scotland. To do this, requires in each case a
resolution of the society, agreeing to take up the requisite
number of shares. In England, this is one for every ten
members, as shown by their last annual return to the Regis-
trar ; and the shares are of ;^5 each, of which one shilling only
is required to be paid; the remaining £\ igs. being gradually
paid up out of the accumulation of the dividends upon their
purchases and the £"5 per cent, dividend on capital paid by the
Wholesale to its Society members, according to the analogy of
the dealings of the retail societies formed on the Rochdale
plan with their individual members. The shares are trans-
ferable only. But the rules of the Wholesale give power
to its committee to facilitate the transfer of shares from one

Co-operation to Distribution. 87

society to another, by paying to the transferring society its
accumulated dividends, and thus secure societies against the
risk of loss upon their shares, if at any time they desire to
dispose of them.

In Scotland the shares are fifteen shillings each, of which one
is required to be taken up for every member of the societies
admitted, one shilling being paid on admission, and the remaining
fourteen shillings paid up by the accumulation of dividends. As
in England, the shares are transferable only ; but arrangements
may be made under a rule for the application of profits and
interest in liquidation of debts to the Wholesale, by which a
society desiring to transfer its shares may be allowed to reduce
the amount payable on the transfer to the shilling charged on an
original share, so as to produce the same security against loss as
exists in England.

Having become a member of the appropriate Wholesale, a
society will have the right of applying to it for advice as to the
articles with which to commence business, and the quantities of
each to be ordered. A list of such articles, for a society supposed
to have from ;Q\o to ^45 applicable for purchases of stock out
of its original capital, after defraying the necessary expenses ot
formation, including shop fittings and weights, was given by Mr.
Morrison in the tract above mentioned. But as prices vary con-
tinually, and the quantities of each class of goods to be ordered
must depend upon the sum which the society can afford to lay
out, such lists are apt to be misleading. The best plan is to send
to the Wholesale society a statement of this sum, whatever its
amount may be, and ask to be furnished in return with a list of
articles of which the purchase is recommended, specifying quan-
tities and prices so as to absorb that amount, and to give an order
accordingly. With this order, in the first instance, the cash is
required to be remitted. In subsequent orders seven days afte/
the date of the invoice is allowed for payment ; and if payment is
not made within fourteen days, the society is liable to be refused
the execution of any subsequent order, till the previous one nas
been paid for.

S8 The Application of

This rule of short payments may seem hard on the retail
societies, compared with the terms obtainable at the present
day. For many wholesale firms are glad now to get co-
operative societies on their books, and ready to tempt them
by offers of credit to a course calculated to draw them away
froiii the principle of ready money dealings, of which it is one
of the great benefits conferred by co-operative societies on
the working classes, to have led their members to feel the
value and adopt the practice so extensively as has been the case.
But every society which desires to place its own business on a
sound basis should steadfastly resist this temptation. The
terms of payment prescribed by the Wholesale centres can be
no burden to any society which insists on its own members
paying over the counter for the goods sold to them, since
such a society must have got the money originally paid for
these goods back again, together with the profit put upon them,
before it can be under the necessity of ordering any more.
The Wholesale societies only do their duty to the retail
societies by kindly but firmly keeping them up to the whole-
some practice of requiring cash payments from their own
members, that they may be able to meet the demands of the
Wholesales upon them. If the day should come when this
practice is relaxed it would be an evil day for co-operative
societies generally, as well as for the Wholesale societies
especially; which would soon slip down from their present
commanding position when they began themselves to require
the credit they had been too easy in giving. It is better that a
retail society should now and then be crushed, if it is crushed,
through the reaction of its own mismanagement, than that the
soundness, and therefore the healthy progress of the whole
movement, should be endangered by the growth of that creep-
ing palsy — retail indebtedness.

That there are cases where the prevalent custom of paying
wages only once a fortnight makes it more difficult for the
wage-receivers to pay for their purchases as they make them,
I am aware. But it does not follow that the population, among

Co-opcyation io Disirthtition,

whom this mode of payment prevails, are to get out of the
difficulty occasioned by it at the cost of other persons than
themselves. After all it comes to this, that those who begin
to buy at the store must either lay out a fortnight's wages at
once, or keep for a fortnight enough in hand to pay for what they
want as they get it ; a matter which does not appear very
difficult. The true difficulty in this case I take commonly to
be, that in places where this practice prevails, the population
are apt to be deeper in the shopkeepers' books than is usual
elsevi^here, and require a correspondingly greater effort to get out
of them. But it must not be forgotten that the co-operative
society is itself no small help to any who are earnest in their
wish to free themselves from the clog of debt, by the savings
wmch it will put in their pockets. Two shillings in the pound
is a very common dividend for a well managed society to pay.
Suppose the average consumption of a family to be £\ per
week, and that it is two weeks in debt to the shop to begin
with, one quarter's dividend might reduce this debt to fourteen
shillings without any stinting in its customary expenses, and
seven weeks of the next quarter would clear off the whole.
With so much help from the system of Co-operation itself, a
man must have very little energy who cannot escape from
the slavery of owing money to the freedom commended by
St. Paul, when he urges us to " Owe no man anything, but to
love one another."*

The most important word in reference to the good manage-
ment of a store has been spoken in the general maxim,
Deal with the Wholesale Society of your district to
get what you want of all that this society supplies, and
Sell to your own members for cash only. The rule does
not apply to cases where the cost of carriage may make it
impossible for this Wholesale to supply any articles at the
same price at which they can be obtained of good quality from
local traders. But in many localities one of those articles —
Hour, when it cannot be obtained from the Wholesale, may
* Romans xiii. 8.

90 The Application of

be advantageously obtained from Co-operative Societies, of
which, as of the Wholesales other societies may become mem-
bers, and thus realise as dividends all the savings effected by
carrying on the business. A list of such societies will be
found at the end of the Manual.

In regard to the general management of a store I cannot
do better than repeat the excellent advice of Mr. Morrison.
As soon as your rules are registered you must elect a Com-
mittee of Management. Probably the original committee
will be principally composed of those who have been most
active in setting the society on foot. But the committee
may consist of more than can be thus supplied, and at all
events from time to time successors will be required. And
then Mr. Morrison's words should be heeded.

Take care to elect men who can and will attend meetings ; and let
these be frequent, and let the financial position of the society be examined
at every meeting. When co-operative societies have failed, in nine cases
out of ten the blame lies with the Committee. They have lacked the moral
courage to pull up sharply or dismiss a faulty Manager ; or they have allowed
him to let the accounts get into confusion, and perhaps to make away with
the funds. Let stock be taken, at least, twice in every year; above all, let
the Committee be careful never to allow their Manager to get the mastery
over them in the purchase of goods. His duties are inside, not outside the
store; to sell, not to buy. He will be tempted by private traders who will
offer him a commission on trade done with them. He may honestly believe
that tradesmen brought up to the business can do better for his store than
a number of working men carrying on the very varied trades of the Wholesale
Society, or he may be influenced by the offer of a commission. But, depend
upon it, the commission is charged either in the price or the quality of the
goods, as is the case also with the credit given by the firms which give
credit. If you should find that, owing to the cost of carriage, you cannot buy
of any branch of the Wholesale, the Committee should depute one of their
number to go to some neighbouring town, and there ascertain the prices of
one or two respectable wholesale dealers. They should never rely solely on
the recommendation of their Manager ; and if complaint is made by him of
the quality of any goods supplied by the Wholesale, or by any merchant not
recommended by him, they should not take the matter on trust, but examine
the goods complained of for themselves.

I add that in the case of the Wholesales they should
write direct to the Committee of Management, stating the

Co-operation to Distrihition. gi

grounds of their complaint, and see if they cannot get it
remedied before they go elsewhere.

In the general management of a store, the great principle,
as Mr. Morrison suggests in another passage, is to do the
business which will enable you to turn over your stock quickly.
You must not forget the sound maxim that a quick penny is better
than a slow sixpence. If you turn over your stock once a month,
and get only 5 per cent, each time, you will make 20 per cent,
per annum more than if you turn it over only once in six months
and make 20 per cent, on it. For in the first case you will
have 5 times 12, or 60 per cent., and in the second only 40
per cent. ; and although, as will be shown presently, this quick
turn over does not affect the rate of dividend on these shares
otherwise than by tending to diminish the cost of capital and
general expenses, it does affect it in these ways to an
extent, which in the early days of a society may tell con-
siderably on the surplus available for distribution.

This circumstance, the value of a quick turn over, makes
it desirable to begin at first with groceries, which sell best
because they are articles where only a few descriptions of
things are asked for, compared with what is required in other
kinds of business, such for instance as drapery goods, which
change so much with the fashion, or even boots and shoes.
No doubt a good deal depends in this case on locality. " In
village shops we very commonly find boots and shoes, stock-
ings, fustian trousers, brushes, and crockery at least of the
coarser kinds of ware." And a committee who have their eyes
about them, may be able judiciously to follow the lead of such
a shop soon after beginning their business, and so get the
custom of their members more completely. But even in these
cases it is well for the new society to confine itself at starting
to the articles which experience has shown to pay best because
they are turned over most quickly, and to creep into othei
branches of business when they have prospered in this one
first, and can do what they undertake well in consequence
of their capital beginning to grow, as it is sure to do if they

Q2 The Application of

are able to pay good dividends, and thus secure general
confidence

But this brings me to a very important question about
which there has been a great deal of late said and written,
What rate of dividend societies should endeavour to pay ?
I reply, as large a dividend as the prices prevalent in the
locality where the society is established make possible.
But in the present divided state of practice on this subject, it
is desirable to consider whether this is the true answer, or
whether it is not a sounder answer to say, the society should
not pay any dividend at all, but should follow the kind of co-
operation introduced by the Civil Service Stores — the plan
of selling its goods at such prices as will just pay the
cost of management. I say this is the question to be
considered, because each of these systems gives a definite
mtelligible rule of practice. All other plans are necessarily
arbitrary. The choice logically lies between no dividend, or
as large a dividend as circumstances allow. Let us examine
these alternatives.

If any persons united to supply themselves with any articles,
having no other object in view than that of obtaining these
articles genuine in their kinds, and on the cheapest terms
practicable by buying them in the gross, the natural plan
for them to adopt would be to charge themselves only the
actual cost of obtaining the goods originally, with the actual
charge for the trouble of dividing them into such quantities as
they respectively wanted. To apportion this expenditure
equitably, that is in proportion to the amount of benefit which
each derived from the transaction, they might probably agree
to add to the cost of each article a rateable proportion of the
charge for distributing it ; but certainly it would appear absurd
that they should put on to the original cost of the articles
what they believed would be a good deal more than the charge
for distributing them, in order from time to time to divide the
surplus among themselves. The founders of what is known as
the Civil Service system of distribution, did not profess to

Co-operation to Distribution. .7.3

have, and no doubt had not, any other object in view than that
above stated. The system originated in the action of four
clerks in the Post Office, who joined to buy a chest of tea and
divide it among themselves. Finding that they saved a
considerable sum by the operation, they determined to repeat it»
and afterwards extended it to the purchase of other things which
they required. The constitution of the Civil Service Stores
is precisely what would reasonably arise from union for such
objects, and such only.

But when this constitution is recommended, as it has
been, as the model on which all plans of co-operative dis-
tribution should be based, or to which they should be brought
as rapidly as may be, the question arises. Are these objects of
the founders of the Civil Service Stores the only, or even the
principal objects, that co-operators ought to set before them-
selves ? and if they are not, is the Civil Service system the
one best adapted to secure these main objects ? For, if not, it
may well be that in following this system co-operators maybe
casting away the oyster to secure the shell.

Now, if the view taken in this work, of what co-operation
may do, and co-operators should aim at doing, is the true view,
they have other and far more important objects to work for
than merely to supply articles, good in their kind, at the lowest
attainable cost; and the constitution of the Civil Service
Stores, however well adapted to promote the latter object, is
not at all adapted to promote the former, and therefore should
not be imitated by any persons who set these further objects
before them as their goal.

That the Civil Service Stores have done a great service to
co-operators, I admit. They have drawn public attention to them
in a way in which that attention probably would not have been
drawn for a long time, by the growth of the Rochdale system
of co-operation. They have taken root among the richer classes,
whose large purchases, when they become concentrated by
co-operative union, soon swell to amounts which impress the
imagination by their magnitude. They have done great good to

94 ^/^^ Application of

these classes by accustoming them to the practice of ready
money payments. They have fostered among them habits of
union for purposes of common usefulness ; and they may very
possibly open the way to an action in regard to productive
co-operation fraught with incalculable benefits to the working
producer. The promoters of the system are not to be re-
proached, because, being conscious of doing a work highly
useful to those whom it immediately affects, they have not
endeavoured to give it a form which, though leading to far
greater benefits had it succeeded, might not improbably have
led only to failure. Indeed as they had to do mainly with
the richer classes, it might well be the wisest policy, in
order to promote the highest objects of co-operative
action, to attract in the shortest possible time the
largest possible number of wealthy customers ; as to whom
it was of importance, not to increase their power for
promoting the common good, 'since this was already ample,
but to induce them to use for that purpose the power they
possessed. It is otherwise when we have to deal with the
poorer classes, whose individual means are so small that only
collectively do they become of importance. Now, co-operative
union, carried on upon the Rochdale system, places in the
hands of these classes without any burdensome effort on
their part, this indispensable condition of their effective action
for mutual help — collective income. When every £"i,ooo of
business done, after paying all cost, and a dividend of £^ per
cent on the invested capital, will yield a surplus income of
from £100 to £125, gained by the members out of their
household expenditure, without need of stinting any part of
their usual outlay, it will be seen at once what a collective
power they may thus acquire for any common purpose. Much
has been said, and said justly, on the value of the system as a
means of encouraging individual saving. Instances of the
large accumulations made in various cases within a few years,
by persons who, before they became members of a co-opera-
tive society, had saved nothing but were always in debt, have

Co-operation to Distribution. 95

been repeatedly given ; while it has been shown from the
Registrar's returns, that, taking the average of all the societies
in England, the growth of accumulated capital invested in
them has been equal to 60 per cent, of the sums paid as
dividends on purchase. Stress has also been justly laid on
the convenience of this system of paying dividends in facili-
tating saving to all who desire to save, by the insensible ac-
cumulation of small sums, which no one would take the
trouble of laying by, whatever facilities for so doing a society
might afford, if the society did not accumulate these savings
for its members by the addition made to the cost price of the
articles sold. But it is to the collective power, placed by the
system in the hands of the members, far more than to their
individual savings, that I attach importance.

The mass of the population can do little to raise their social
position by what they save individually. They might do
wonders by their use of the collective power put into their
hands through co-operative union, if they could be brought to
use it. To show this more fully belongs to the consideration
of co-operation as applied to production. But here I would
point out, that all which has been done by societies for the
promotion of education * ; all their contributions to the
Central Board for the promotion of co-operation by its
numerous publications, conferences, congresses, &c., as well
as by the diffusion of the Co-operative- News ; all their dona-
tions, often not inconsiderable, for benevolent purposes, depend
upon the existence of this collective income, and must cease,
if it ceased. Even as savings banks, the security offered by
them, which now in prosperous societies is more than sufficient
since it rests upon the large excess of their income over their
liabilities, would disappear as the income vanished. These

* It appears from a table compiled by Mr. Edward Barnish, the librarian
of the Rochdale Pioneers, that in the four years 1875 to 1S79, fifty-five
societies in Lancashire having 102,944 members, expended ;^30>3^8 ^^- 9<J'»
and eighteen in Durham and Yorkshire, with 49,686 members, £,6,$29 *09.
lod. — Co-operative Ne7vs, 1879, p. 726.

gb The Application of

savings would naturally seek some more secure investment;
and with their loss the power of the societies to support such
institutions as the Wholesale societies, which occupy their
commanding position mainly through serving as depositaries
for the floating capital of their members, would, to say the
least, be most seriously enfeebled.

I conclude, then, that for the poorer classes of the popu-
lation, the true policy is to adhere closely to that system of
business which, originating in the sagacity of a few poor men,
has swelled to the large proportions now attained by it '^-^
bringing with it great present good, and possibilities of a
good far greater. Let them leave the Civil Service system to
be used by the richer classes among whom it grew up, so
long as they continue to prefer it. In the mean time we may
observe for the sake of those societies which adopt the Rochdale
system, that this system really assures much more completely
than the Civil Service system the professed object of the latter,
the supplying goods at cost price. For when the savings above
ordinary retail prices are distributed as dividends on con-
sumption, the whole surplus not specially appropriated is
divided to the last penny. But goods professedly sold at cost
price can never really be sold at it, even if the charge required
for expenses is accurately known. There must be a margin left
to cover the chances of the markets. And, though the
surplus thus arising might be applied in reduction of prices in
future, even that would not give back to the purchasers in
the past the excess of what they have paid over what they
needed to have paid ; while the fact that such a margin
will exist must offer to those who found a society on this
plan a temptation to do, what the Civil Service Stores have
in fact done, limit the number of the members, and appro.
priate to them the advantages derived from the sales to a
large number of non-members. The practice is theoretically
only vsrhat societies formed on the Rochdale plan usually do,

• See Appendix, Note 5, Summary of Results of Co-operation in Great
Britain.

Co-operation to Distribution, 97

by admitting non-members to participate in dividends only to
some proportion less than the full amount to which members
may be entitled. The important difference is, that these non-
members may become members when they choose by a very
trifling payment, while the non-members in the Civil Service
Stores must pay sums considerably larger than would make
them members of a society on the Rochdale plan, in order
to be entitled to buy, yet cannot become members of a Civil
Service society without purchasing shares difficult to obtain
and sold at a high premium.

It has been objected to the dividend system that it prevents
the growth of Co-operation by checking purchases at the
stores, in consequence of the high prices charged. The
objection is theoretically specious, but experience appears
to negative it, since it has shown that what is sometimes
called a high dividend, a dividend of two shillings or two
shillings and sixpence in the pound, conduces more to the pro-
gress of a society than a lower dividend of one shilling or one
shilling and sixpence. Prices vary so much with the qualities
of the things sold, that it is very difficult, in most cases,
really to satisfy a purchaser who has not got the articles sold
by a society and those sold at any rival shop before his eyes,
so as to compare the two, that he really is getting more
value for his money by buying of the society than he would
get by buying elsewhere. Hence a society which relies
for its attraction upon the lower prices of its articles is less
likely to satisfy its members that they are really reaping a
considerable advantage from dealing with it, than one which,
not professing to sell at lower prices than prevail among
neighbouring shops, can point at the end of the quarter to the
dividend distributed among these members as an undeniable
proof of the benefit of uniting to supply themselves.

Independently, therefore, of the reasons stated above for
adopting the Rochdale system, to which may be added the
absence of that bitter hostility among the neighbouring
traders called forth by the Civil Service system ; and consider-

qS The Application of

ing only what is likely to make a society attract members
among the working classes, I say, that experience speaks
in favour of selling at such prices as will produce the largest
returns which the competition of respectable private dealers
in the locality allows.*

Assuming that, for the reasons above given, the members
of any society decide to follow the Rochdale system, and
charging the ordinary prices of the neighbourhood for the
goods sold by their society, appropriate the surplus as
dividends on purchase, the question arises, what relation should
they establish between themselves and those whom they may
employ, in regard to these profits ? I answer, without hesitation,
it should be one of participation in a common advantage. No
doubt the establishment of a successful society is in itself a
benefit to all employed by it; since, by becoming members of
the society, they can obtain on their own purchases the same
advantages as the other members. But this is a result fol-
lowing of course, without any special act of the members to
determine it. More than this is required in order to foster
that sense of mutual regard, which it ought to be the great object
of all co-operative institutions to promote. For this purpose
I would urge that the rules should provide, as I am pleased to
say the rules of many societies do provide, for a direct share of
the employes of the society in the profits of the business ; and

* It has been observed above that a quick turnover may yield a much
larger total of gain by a small margin of profit in each case, than is produced
by a much larger margin of profits on fewer sales. £\ per cent, will yield on
^loo turned over once a week ^52 in the year, while to obtain the same
result on a turnover of ^100 a quarter would require a margin of^i3 per cent.
Hence there is a great advantage in a quick turnover in reducing the burden of
all charges such as rent, rates, taxes, which do not increase with the increase
of the business. In regard to wages this advantage may be less felt, because
a quicker turnover means larger sales in the same time, which may require more
persons to make them. While in regard to dividend, it must not be forgotten
that where profits are divided on purchases more cannot be got back than is
originally put on. ^i per cent, as profit on £,\<Xi turned over once a week
will yield ^1^52 per cent, per annum on the capital, but only ^i per cent, on
the sales.

Co-operation to Distribution. 99

would call attention to a scheme for this object suggested by the
General Rules, with the view, while it promotes the sense
of common interest, to promote also the prosperity of the
society. This plan is to form, for division among the em-
ployes, a fund, depending partly on the gross sales, so as to
give them a direct interest in increasing the business of the
society, and partly on the net profits, so as to interest them
also directly in its economical management — the division of
the fund among them being left to the determination of the
general meetings.

Connected with this question of economical management is
another, as I think, of much greater importance to those who
set up a society than they are likely at first to suppose, namely,
the guarding against excessive loss by leakage ; that is by the
niultiplication of that almost imperceptible waste, arising in
various articles, either from the laudable desire to give full
weight * combined with careless weighing, or from wasteful
cutting up by which all that could be made out of any articles
is not made, or from want of due care in keeping the stock.
That a retail business can be conducted entirely without waste
I conceive to be impracticable ; but the waste may certainly
be kept within moderate limits, such as fourpence, or even
threepence in the pound,* while the accounts of societies show
that it sometimes reaches sixpence, sevenpence, eightpence, if
not higher sums, and thus seriously lessens the amount of
dividend that can be declared. To guard against this danger,
the best way, I think, is for the society to have an agreement
with its storekeeper, when it can afford to employ one, by
which the storekeeper engages to make good any excess of
leakage above a stipulated amount per pound on the sales.

The gain, if the leakage can be kept below this amount,
may be either taken by the society or given up to the

• Twopence is sujjgested as sufficfcnt in a town. See Neivs for 1879,
pp. 701, 717, 733, 750, 765. 78r, 797, and paper by Mr. W. Swallow re ic| «(
Js.ci^hli-y, :iiicl sul>s<.ij icnt discus- ion, Ne\cs 1880, pp. 293-4.

lOO The Application of

storekeeper, or shared between them. The last plan is I
think the best, because it creates a common interest in
the matter, between the storekeeper and the members,
which may dispose the latter to be lenient towards him if any
losses above the stipulated limit are incurred from causes
beyond his control, and to agree to such an allowance for
leakage as will cover ordinary cases.

The guarantee to the society that its storekeeper will
perform his agreement may be given by means of a bond with
one or more sureties in addition to the storekeeper himself.
A better plan, however, when it can be arranged, is to get the
storekeeper to deposit with the society a sum which shall
carry interest at the usual rate, and be made applicable to
meet any claims upon the storekeeper under his agreement as
to leakage, as well as any losses arising from fraudulent
acts. Against these last, however, societies may guard by
fidelity guarantee policies, which are issued by the Co-opera-
tive Insurance Company,* as well as by other guarantee
companies. But these policies are limited to cases of dis-
honesty. They dp not extend to losses arising from careless-
ness, against which there is no remedy but in such an
engagement as above-mentioned, secured either by personal
responsibility or a money deposit. f

* 3,4, & 5, City Buildings, Corporation Street, Manchester.

t In a recently formed society where objections might be taken to the
safety of a deposit in the hands of the societ y, the difficulty might be got
over by the money being placed in the names of trustees, in some savings
bank, or other society or company. Objection has been taken to the system
recommended above, on the ground that it gives the storekeeper an interest
opposed to that of the consumer, and thus endangers his falling into the
fraudulent practises which have often disgraced private trade. To avoid this
risk it has been suggested that instead of making the storekeeper directly
responsible for loss by leakage, a stock-book which will clearly show this loss
shall be kept, and carelessness be checked simply by requiring him to acrount
for any excessive leakage shown by it, and dismissing him if he cannot ex^iijain
the excess satisfactorily. But it is obvious that this system, even if it could be
made an effective check in the hands of ordinary committee men, cannot
bring back the money lost by any shortcomings which it may disclose. While
if it is efficiently worked, and the situation of the storekeeper is one which he

Co-operation to Distribution. loi

But while guarding against loss by leakage, care must be
taken also, not to sell less than the full weight, which besides
the injury to the members buying, will subject the society
to imputations very detrimental to its character, if it should
be subject to any public prosecution for such practices.
To prevent this danger, societies should have their scales
examined by the district inspector from time to time, to see
that they are accurately adjusted, since they are liable to
wear away from use, and thus may expose the society to un-
expected accusations.

Four matters remain on which a few words of advice may
be useful to societies. I. Their seal : II. The publication of
their name : III. Their books : IV. The use of checks or
other means for ascertaining the amount of dividend.*

I. Every society registered under the I. and P. Societies Act,
1876, is required to make provision by its rules for the device
to be engraved on its seal, which must always bear the full
name of the society. The device may be whatever the society
desires. Any characteristic word of its name, placed in the
centre of its seal on a scroll or plate or within a ring, will
suffice, the other words being placed round. It is not
necessary to have any special device, as a symbol or motto,
though this is often done, and is desirable because it leaves
open the use of stamps bearing the name of the society, which
may be a convenience, without risk of their being mistaken
for the seal of the society. A seal of some kind is indispen-
sable by the law of England for many acts, such as the issue

desires to keep, the danger of his attempting to conceal his carelessness by
dishonesty must remain. The objection therefore seems to me of less force
than the arguments for the system, though it may be desirable to guard against
the danger indicated, by making the security given by the storekeeper include
a provision against any fraudulent practice. There is, in my judgment, more
danger of loss to societies from the indifference of their storekeepers to the
results of the business than from positive fraud on their part. The leakage
system, combined with a share in the profits of the business given to the
storekeeper, seems to me the best way of checking this serious evil.

* For other matters relating to the law affecting co-operative societies, sec
the chapter on that subject.

102 The Application of

of bonds ; the conveyance of land ; the grant of a lease for any
period of time longer than three years ; the appointment of a
nominee under the Local Government Act, &c,, &c. It is
regarded by the law as the solemn attestation of the acts of
the persons or bodies by whom it is used. An instrument
under seal has peculiar force attributed to it. The society
would not be admitted to contest in a court of law any state-
ment in such an instrument. Hence the importance of having
the seal described in the rules, so that no one can be misled
into taking for the seal of the society a mere stamp bearing its
name. Hence, also, great care should be taken of the seal ;
which should be always kept under lock and key, and carefully
attested when used in the manner prescribed by the rules, that
there may be no danger of the society finding itself bound by
obligations entered into without its knowledge by instruments
under its seal. The use of any seal purporting to be the
seal of a society on which its name is not engraved as required
by the Act, exposes the person using it to the penalty

of £50-

n. The Industrial and Provident Societies' Act requires every
society to " paint or affix, and keep painted or affixed, its name
on the outside of every office or place in which the business
of the society is carried on, m a conspicuous position, in
letters easily legible, and have its name mentioned in legible
characters in all notices, advertisements, and other official
publications of the society, and in all bills of exchange, pro-
missory notes, endorsements, cheques, and orders for money
or goods purporting to be signed by, or on behalf, of such
society, and in all bills of parcels, invoices, receipts, and letters
of credit of the society."* The neglect to comply with these
provisions exposes any officer of the society guilty of the
neglect, not only to a penalty of ;£^o, but also to personal
liability to pay any bill of exchange, promissory note, or
order for money or goods not signed as required by the Act, if

39 & 40 Vict., c. 45, s. la

Co-operation to Distribution. 103

the society does not duly pay it. It should be borne in mind
that the name thus required to be used is the full registered
name of the society. I particularly insist on this, because,
when the registered name of a society includes the name of
the place where it is established, it is not uncommon for the
society, at least in the heading of letters, to drop the place
out of its own name, and intoduce it only in its address. The
Blacktown Progressive Co-operative Society, Limited, of
Blacktown, Lan-Yorkshire, for instance, will head its papers,
The Progressive Co-operative Society, Limited, High-street,
Blacktown. Now, such a title, though a sufficient postal
address, and harmless as the heading of a common letter,
would not be a sufficient compliance with the Act, so as to
secure the officers of the society from liability, if the same
practice were adopted in the heading of any of the documents
above enumerated, and proceedings were taken under the Act
to enforce the penalty. And it should be borne in mind that
proceedings for this purpose may be taken, not only by the
Registrar but " by any person aggrieved," as a person might be
who was misled by such an imperfect statement of the name
of a society into confusing it with another, suppose the
Pioneer Co-operative Society, Limited, also established in
High-street, Blacktown.

HL Full information as to the books which should be
used by a society, desirous of keeping its accounts so that
the results of its trading shall always be clearly ascertained,
and of the mode of keeping them, is given in the System of
Book-keeping, for Industrial and Provident Co-operative
Societies, published by the Central Board. Every newly-
formed society, indeed, I would say, every society which
does not use a form of account settled by some one familiar
with book-keeping, should procure a copy of this book,
as a guide to the form in which its accounts should be
kept. The books required for keeping the accounts in the
form thus recommended are kept in stock by the Co-operative

I04 The Application of

Printing Society,* and may be obtained also of the Edin-
burgh Printing Company. t A statement of the cost of sets
of these books, as well as the seals of societies, and the
apparatus proper for their safe keeping and use, is contained
in the Appendix.

IV. It remains to speak of the mode by which societies can
most easily reckon up the trade done by the members separately,
in order to make a division of profits among them.§

In the commencement of a society, especially one formed
in a place where its members are accustomed to the use of
shop books, the method that will probably be most satisfactory
to thery while it is the cheapest for the society, is to provide
every member with a book in which the articles bought, witb
their prices, and the amounts paid, are entered and cast up, from
time to time ; the dividend being calculated on the amounts
there shown ; and a record of all these purchases, or at least ol
their total amount in each case, being made in a cash receipt
book belonging to the society. A great advantage of this
system is the power given by it to the committee of ascer-
taining, should this appear desirable, what goods have been
sold, as well as of checking the money takings by the accounts
of the members when they are brought in for dividend.

In the case of sales to non-members it would be necessary,
in order to make the system complete, that the articles sold,
with the prices of each, and not the totals only, should be
entered. Indeed, unless this is done in all cases, the value of
the plan as a check on the salesman is very nearly lost. But
if these particulars are entered, the double entries, in the
society's book and the books of the members, take up a great
deal of time. To avoid this consumption of time, various plans
have been adopted for the purpose, without so much writing,
ist, of ascertaining the members' claims ; 2nd, of checking the
money taken.

* 92, Corporation-street, Manchester ; 40, High Bridge-street, Newcastle-
on-Tyne ; and 6, Salisbury-court, Fleet-street, London.

+ Bristo-place, Edinburgh. A smaller work, prepared by authority of the
Southern Section, called "Easy Book-keeping for Co-operative Societies," is
also published by the Central Board.

§ The following account is principally taken from a paper read by Mr. W.
Nutlall, at the Bolton Congress in 1870, and a paper by Mr. W. Swallow,
read at Lancaster. — News, 1880, p. 439.

A Ma.iual of Check Systems, price 4d., is published by the Central Board.

Co-operatioh to Distribution. 105

I. The plan which has come, I tliink, if not into the most
general yet at least very ordinary use, consists in providing a
number of metal tokens, commonly called checks, stamped
with the name of the society and a number indicating some
current coin, from ^d. or even a \^. up to a £"i, which are
issued from time to time to the salesmen, and given by
them to the members according to their payments on articles
admitted to participate in dividend. The tokens for values under
;^i are usually required to be exchanged for others of that
nominal value, on which the claim for dividend is calculated.

It is clear that this system cannot be any check upon the
money taken, unless the amount of the tokens issued to the
salesmen from time to time is accurately ascertained, and
they are required to produce either these tokens or their
equiv'alents in money. A very elaborate system of tokens of
different forms has been adopted for this purpose at a cost
stated to be nearly £1,000 by the Oldham Industrial Society,
and is said to work satisfactorily. The fact that the Society
has put itself to so considerable an expense, and considers this
outlay to pay, is a strong evidence of the disadvantages
attending the system as ordinarily practised, where the
salesmen both give out the tokens and receive those brought
in to be exchanged, and, in consequence, may, if so disposed,
give out tokens largely in excess of the sales made without
being detected. The complaints continually made by societies,
that they find the claims for dividend permanently in excess
of their receipts from sales to considerable amounts, indicate
that this excessive issue often takes place, probably mainly
from carelessness in the hurry of numerous transactions,
coupled with a certain easiness of conscience in many members
which allows them to appropriate without scruple a little extra
dividend if they can.* Besides which, it appears that the
tokens issued to non-members are sometimes purchased by
members, who claim on them a larger dividend than the
original holder is entitled to receive. Still these metal tokens

• See appendix, Note 7, on other matters relating to these check tokens.

io6 The Application of

have come into very common use for three reasons— (i)
That they save trouble, since no writing at all is required ;
(2) That they do not rub to pieces or double up, and are
therefore readily preserved ; (3) That, not being evidence of
any particular payments, no receipt stamp need be used in
respect of the payments represented by them, though, on any
occasion, they should exceed j[^i.

2. The difficulty of making the metal tokens any check on the
money takings, arises from their being used as, in some sense
a circulating medium. By giving up this notion, and using
other substances than metal, the tokens may be made to serve
as such a check. Suppose them to be made of card board,
like railway tickets, each bearing the name of the society and
the coin denoted printed upon it, but being distinguished by
continuous numbers. If the number of such tokens of each
denomination required for the business in any given time
say a week, is issued to a salesman, suppose on Monday, and
he is required on the Monday following to produce these tokens
or their value in money, a check on the money taken would
be supplied, which could scarcely be evaded, without immediate
detection, by any other means than the use of forged tickets
numbered similarly to some of those comprised in the weekly
issue. For, even if the salesman could, by connivance with
some member, purchase tokens previously issued, he could
not use them unless they belonged to the series in use during
the week ; because the numbers would not be right ; and if
the account were taken every evening, as might be easily done
if any fraud were suspected, and probably would be done
regularly in a large business, it would be scarcely possible for
any salesman, without being detected, to buy back tokens issued
during the same day.

Tokens skilfully forged could be discovered only when the
tokens brought in for dividend were compared with them.
Then the duplicate numbers would bring the fraud to light.
Hence it has been objected to this system, that frauds might
easily escape detection, from the trouble of arranging the mass

Co-operation to Distribution. 107

of tokens brought in for examination in the order of their
numbers. But this difficulty may be got over by providing a
means by which the tokens belonging to the same part of the
series can be easily brought together. In one case, where such
a system of tokens was adopted, this means of classification
was supplied by dating the tokens as they were issued. But
this operation implies a continual expenditure of time, as well
as the cost of a dating machine. A less costly and equally
efficient p'an would be to have each set of tokens made up
into packets, containing say, 50 or 100, each packet having a
distinctive nu Tiber conspicuously printed on each token con-
tained in it. By noting the numbers of these packets issaed
to any salesman from time to time, and the value of the
tokens in each, the sums for which he was accountable and
the dates of each issue would be ascertained ; while by group-
ing the tokens as they were brought in under their common
numbers, the labour of arranging them in continuous order
would become light.

The system of exchanging tokens of denominations smallei
than ;^i, or any other minimum amount on which dividend is
calculated under the rules of a society lor others of this
nominal value, might be applied to these cardboard tokens,
as well as to those of metal. And if these dividend
tokens were issued only by the secretary or some person
specially appointed by the committee to discharge this
office, so that there would be no temptation to the
salesman to issue the tokens over again, as might easily be the
case, if any belonging to the series actually in use came into
his hands. *

3. Cardboard is, however, a somewhat expensive material.
A cheaper sort of tokens was formerly adopted at King's Lynn,
in Norfolk.f It consisted of sheets of paper divided by perforated
lines into spaces, on each of which some nominal value was

• The labour of sorting the tokens might be considerably lightened if a box
were provided with as many divisions as there are groups of any denomination
of tokens in use at once. The tokens could then be sorted as they carce in,
merely by throwing them into the appropriate divisions.

\ By a society now defunct.

toH The Application of

printed, beginning with \(S.., and advancing by steps of fd.,
|d., &c., up to IS., and then by steps of is. up to los. Iiach
sheet contained a large number (say 50 or 100) of the denomi-
nation represented by it, and had an index number printed upon
the margin on one side. The sheets were made up into books by
means of two pieces of wood screwed together placed between
the margin and the perforated spaces, and were used by turning
by means of the index to the one containing the required sum,
tearing off one of the tokens and giving it to the purchaser in
exchange for his payments. Each of these sheets would
represent one of the packets of tokens described above, and,
like it, might have printed on each token a common number,
and also a distinctive, continuous number, so that it would offer
the same security against fraud as those already noticed.

The most serious objection to the plan is the number of
sheets used, and the loss of time consequent in pitching on,
the right one.* But if the practice, adopted in the case of
postage stamps, of letting the higher numbers be expressed by
an addition of units, were adopted, the sheets required might
be reduced to four, which might be made up into books,
namely : —

1. For farthings up to ... ... |d.

2. ,, pence from id. to ... ... iid.^'^'^"^'^'^K"

3. ,, shillings from is. upwards.

4. ,, use in larger sums ... ... 5s. f

It would be easy to distinguish the different sets of tokens
expressing different values by differences of colour. Those
issued to different salesmen in the same department would
be distinguished by differences of numbers ; while those issued
to different departments might bear distinctive letters ; as D
for Drapery, B for Butchery, &c.

* At King's Lynn each book consisted of 57 sheets, namely, 47 for farthings
and pence, and 10 for shillings.

t Since in every case except that of single farthing, penny or shilling, at least
2 tokens would be combined, these tokens might be made half the size of a post-
age stamp without danger of their being lost. For further suggestions on
this matter, connected with the use of check cards, see Appendix, Note 7.

Co-operation to Distribution.

109

The case of sales to non-members would be met by furnish-
ing the salesmen with stamps with which to mark the tokens
issued. In the case of articles, such as sugar, not carrying
dividend, they would simply keep and produce the tokens.

In regard to both these classes of sales, however, the
system is imperfect. A dishonest salesman might give out
ordinary tokens, unstamped, upon sales of sugar or sales to
non-members, on an understanding that he was to share in
the dividend obtained by their use. Still, this roguery would
not affect the check on the moneys taken, while, as it must
involve the concert of other persons, and therefore incur
the greater liability to detection, for a small gain, and that
not immediate, it is not very likely to be practised.

Apart from this danger, considered only as a means of con-
trolling the money takings, the system appears to be very
complete at a very small cost, namely, that of the tokens
employed, and the trouble of examining them.

To estimate this cost it is necessary to form an idea of the
number of tokens required for any given amount of trade. The
data for this purpose in the case of metal tokens were obtained
by Mr. Morrison from the experience of the great Halifax
Society, whence the following table is formed.

Quantities required for every £1000 of goods sold, accord-
ing to the experience of the Halifax Society : —

Nominal value.

Number ot checks required.

On sale of ;^iooo. On sale of £,\o a week.

IDS.
IS.

6d.
3d.
id.
id.

228
1000
7000

5500 ...
5000 ...
10,000
7000

30
130
910

715

650

1,300

910

35.72&*

4.645

•If tokens for intermedinte Tuimbers were used the iniinb'r of id , ?<*.
and 6d. tokeiiS might be diminished, but the total numbtr would pro\)al)lj
\x somewhat increased, because theie wo'ild be more unused.

1 10 The Application of

To these must be added, if the smaller tokens usually made
of tin are to be turned into £"i tokens, usually made of copper,
before they become entitled to dividend, looo ;;fi tokens. So
that the total number for a trade of ;^iooo, will be 36,728.

The calculation is based on the business of a quarter.
Dividing ;fiooo by 13, it gives us £76 8s. 4d. as the amount
of weekly sales, which would require this number of checks,
to represent it. That is to say, if account is taken of the time
which the tokens issued remain out en an average before they
come back to the society, it will be found, that, for every ;!^io
of weekly sales, there will be wanted 4645 tokens of the
different denominations above stated, in addition to the 130
tokens of ^\ each, into which the smaller tokens have to be
converted.*

In comparing the cost of the different systems, it must be
remembered that the metal tokens are continually re-issued
while both the paper and cardboard tokens are supposed to be
used once only ; so that though their cost must be considerably
less at first it is constantly renewed ; but with the probable
compensation of saving a great deal more than the cost, by
the losses which it may prevent the society from sustaining,
as well as the satisfaction of feeling that these tokens afford
a real check on the money taken. At King's Lynn this con-
sideration alone appears to have been regarded as a sufficient
reason for adopting the method used there. For the system
is stated to have been combined with the use of metal tokens,
for which the paper tokens were required to be exchanged as
soon as they were issued, f

4. The necessity of keeping the paper tokens as the basis
of a claim for dividend was thus avoided. But paper tickets
have been largely employed for this purpose, though in a
somewhat different form, by a system of summarii'ed entries,

* The terms on which these tokens will be supplied by different manufac«
turers are stated in the Appendix, Note 6.

t In this case, however, the tokens wer? not numbered.

Co-operation to Dhtribiition. 1 1 1 •

in which the amount of each purchase is required to be entered
by the salesman, by what is called the carbon process. On
this plan the salesman is furnished with a book containing
duplicate divisions, similarly numbered, in sets so arranged
that one set, which is separated by perforated lines, either
lies under or over the other not so separated, or can be
brought under or over it by folding the page. The salesman
places a piece of carbon paper between these sets ; enters
with a hard pencil on the upper one the totals of each pur-
chase which are reproduced on the corresponding lower
division, tears off the division separated by the perforated
lines, and gives it to the purchaser to whom it serves as a
warrant for dividend ; while the other part remains in the book
as a record of the sales, and can at anytime be compared with
the one given to the purchaser by means of the number
printed on each.

This system admits of many modifications depending on
the number of spaces comprised in each page of the books
used by the society, and the order in which these spaces are
arranged, either side by side or under each other. For the
convenience of casting, however, the entries should be made
in divisions following each other from the top to the bottom
of the page, and not placed side by side. And there should
be several divisions on each page, Mr. Nuttall says at least
twelve. It is also important that the division given to the
purchaser should always be the lower one, for the following
reason. The protection to the society in this plan depends on
the watchfulness of the purchasers over their own interests.
It is assumed that they will not accept a ticket on which less
is entered than they have paid, while the salesman will not
charge himself with more than he has received. But if the
division given to the purchaser is that on which the salesman
writes, he may contrive, by not placing the carbon paper
underneath it, to make no distinct mark on the lower division,
which, therefore, he may fill up with a figure representing a sum
•mailer than that actually paid, pocketing the difference. 1

g r^ : TAe Application of

have known this to be done in a case where the fraud waa
discovered only by a purchaser who happened to be the
daughter of a member of the committee, having noticed in the
conduct of the salesman when making the entry of her pur-
chases *' something odd," which she mentioned to her father.
But if the purchaser receives the lower division, and the entry
upon that is correct, it must have been distinctly made upon
the upper division, and any attempt to alter it afterwards
would be liable to immediate detection.

5. Asin the case of the paper tokens used at King's Lynn, so in
these systems of tickets, the plan is sometimes combined with
the issue of metal tokens, on which the claim for dividend is
to be based. These are obtained from a clerk, commonly a
lad, who files the tickets and issues the metal tokens for the
amounts entered ; when, if every thing is right, the metal
tokens, the duplicate purchase tickets, and the amount of cash
ought to correspond. In this form the system approaches
that commonly in use in large private shops, and carried to
great perfection at the Civil Service Stores. There no sales-
man is allowed to handle the cash at all. He makes out a
bill of the goods sold on a slip of paper, which is given to the
purchaser. The purchaser takes it to a clerk, who receives
the money, enters the total and the name of the purchaser in
a cash receipt book, stamps and initials the bill, and returns it
to the purchaser, who gives it up in exchange for the goods to the
salesman, by whom it is filed as a record of the transaction.
In most departments of the stores, though not in all, the bills
are written in duplicate by the carbon process. Both are
stamped and initialed by the clerk who receives the money,
and the purchaser keeps one. The stores also provide papers
specially headed for customers who write out their own orders,
and in some cases provide clerks distinct from the salesmen
by whom orders may be written for the customers. When the
goods are not taken away, the purchaser writes his address on
the orders, which are separately filed. In the grocery depart-
ment of the C.S.S.A. there are two sets cf clerus, one to

Co-operation to Distribution, 113

examine the bills, and the other to receive the money, both of
whom enter the amounts separately.

That this system furnishes a very complete check,
both on the money taken and the goods sold, will,
I think, be admitted. It would be easy to combine it with
the issue of tokens as the basis of a claim to dividend, and it
may be worth considering whether some modification of it,
requiring fewer clerks, might not be introduced in other stores,
with the advantage of supplying a fuller record of the tran-
sactions than is given by the plans above described. Since
none of them fully meet either the cases of sales to non-members
or that of articles not carrying full dividend, or aftbrd any means
of checking the goods sold so as to furnish some help for
ascertaining whether any are being improperly made away with.

Some further suggestions on this matter, which I hope may
prove useful, will be found in the Appendix.

A few remarks, in conclusion, on some matters affecting the
progress of societies, which sometimes fall into practices
injurious to their growth.

I. The first of these relates to the selection of their officers.
A disposition occasionally appears to give every member a
fair turn — as it is called — to let every member in succession
have a seat on the committee, and every member of the
committee in turn be president.

Now that it is of advantage to a society that its members
should become generally acquainted with its affairs more
minutely, than they can well become only by attending the
usual quarterly meetings, may be admitted. But the best
way of producing this effect is by monthly meetings, where
there may be ample time to ask questions, obtain explana-
tions, and consider suggestions.

It is of great importance for the growth of a society to have
at its head, men who can manage its affairs well, and who
will give to them the time and attention necessary for seeing
that they are properly conducted. In the early life of societies
it IS not unlikely that a good many changes may be required

114 TJie Application of

before the men fittest to manage are got into the place fit for
them. But if they are found, and the fruits of a prosperous
business, show that they have been discovered, the sound
rule is to continue them in the management. The considera-
tion uppermost in the mind of every true co-operator must be
that the society should prosper, not that he should be at its
head. Societies should endeavour, by their practice, to
foster the growth of this spirit, which they certainly will not
do by the habit of frequent change.*

2. A second matter touching on the general management of
a society to which much less importance is often attached
than it deserves, is the cleanliness, neatness, and general good
order of the shop. Co-operative societies having their customers
ready found, do not want the attractions of mere show, by
which private traders often try to create a business, and
should avoid the waste of money occasioned by them. But
they should carefully check any sort of slovenliness within.
For not only does a dirt}', ill-arranged shop tend to drive
customers away, but it tends to beget a careless, happy-go-
lucky way of conducting the business, which must be very
detrimental to it. There is a close connection between men's
surroundings and their disposition. If the energetic man
moulds his circumstances to his will, those circumstances in
return, continually mould to their likeness the less active
spirits subject to their influence. A society which would have
its business thrive, should take care that the appearance of its
shop is such as a thrivine: business commonly presents.

3. Connected with this good order in arrangements, but
still more important, is the good order and careful auditing of
the accounts. Probably more societies which have failed
after getting under weigh, have been wrecked on the rock of

* If, notwithstanding this danger, any society desires to vary the composi-
tion of its committee, it would be well for them to adopt a regular rotation
of the order in which the members shall be eligible, so that there shall be no
risk of the society being split into fractions over the elections, and those not
in office may not feel themselves unfairly treated.

Co-operation to Distribution. 115

Dad bookkeeping and imperfect auditing, than have perished
from any other cause. The extent to which carelessness in
this respect is sometimes carried is scarcely credible.

I have been furnished with the particulars of a case where
the committee met only once in six weeks, leaving its affairs
to the secretary. The secretary left them to the storekeeper,
who made out his own balance sheet, which the secretary and
auditors signed without verifying it. With such an absence
of check on the expenditure, it cannot be surprising that the
assets of the society were found at last, to the great astonish,
ment of the members and committee, to have mysteriously
disappeared.

4. In auditing it must be remembered that the duty of the
auditors is two-fold : ist, to verify every item entered in the
balance sheet, by requiring the production of the proper
vouchers for it ; 2nd, to cast all the totals, and satisfy them-
selves that they are correct; not to content themselves with seeing
that they correspond with those entered in the sheet. This duty
is expressly laid upon them by the Industrial and Provident
Societies Act, 1876, which requires them, once at least in each
year, to revise the general statement of the receipts and
expenditure, funds and efifects of the society, and verify the
same with the accounts and vouchers relating thereto, and
cither sign the same as found by them to be correct, duly
vouched, and in accordance with law, or specially report to
the society in what respects they find it incorrect, unvouched
or not in accordance with law.

It is a duty which every society that values its own safety and
prosperity should be unflinching in requiring to be properly
performed. If it cannot find among its members any who
will perform the duty properly it can always obtain, by
applying to the Registrar's Office, the names of the public
auditors appointed for the district where it is established, and
will act far more wisely in paying the necessary cost, though
it may perhaps appear high to the members, rather than
expose itself to the danger of having untrustworthy accounts.

1 16 The Application of

5. Another matter bearing on the internal management of
societies deserves notice, because very incorrect ideas often <
prevail about it. This is the powers of general meetings,
more particularly of special general meetings. It seems often
to be supposed that the resolutions of such a meeting
override the decision of the committee of management on
matters expressly assigned to them by the rules with ji t any
reservation to the members of a revising power. But this is
a complete mistake. The rules bind all the members, and
the acts of any officers of the society under the powers given
them by the rules have the force of the rules, and can be set
aside only in a way consistent with them. Where the rules
are silent, a society, as a body corporate, has power to bind
its members by resolutions passed at a meeting properly con-
vened until some other meeting similarly authorized rescinds
or varies them. But these resolutions have no power at all
against the rules, which rest upon the authority of the Act of
Parliament, and confer a like authority on those who are acting
under the powers derived from them.

6. The last case is one where a minority, standing on the rules
of a society, can control a majority which would act in opposi-
tion to them. But other cases may arise of a more difficult
kind, where a minority, finding itself over-ruled on some point
which it feels strongly, it may be the discharge of a manager
in whom they have confidence, or, perhaps, even one of so much
importance as a determination to allow sales on credit, may
be disposed to avail themselves of the power of withdrawal,
if the society is so constituted as to allow of its exercise with-
out restriction, to secede from the society and form a new one
of their own. It is sometimes asked is such conduct justifi-
able ? The answer must depend on the light in which we
regard the functions of co-operation. If co-operative societies
are regarded only as separate units, each striving to do the
best it can for itself, there is no good reason to be alleged
why these units should not split into lesser units if any of the
members composing them think it more to their advantage so

Co-operation to Distribution. 1 17

to do, than to remain part of the larger unity. But, if co-
operation is what in these pages it has been represented to be,
union for the purpose, by the joint strength of its members,
systematically to work out for the mass of mankind a social
state far higher than any hitherto attained, then whatever
tends to weaken this spirit of union is treason to the great
cause of humanity; and therefore all such secessions, since they
unquestionably hiave this tendency, must stand condemned at
the bar of those nobler aims which the co-operator is bound to
keep in view. Men have been sometimes driven unwillingly
to secede from those who have endeavoured to force upon
them professions of belief, contrary to their convictions of
what is true. But no such interference with the liberty of
thought is to be feared by the members of co-operative bodies,
whose differences resolve themselves into differences of means
for producing a common end, and should therefore never be
permitted to divert them from the principle of union with
which the attainment of this end is bound ud.

Chaitlu 3.

CO-OPERATION IN ITS APPLICATION TO
PRODUCTION.

Mankind cannot generally live on distributing. Only a com-
paratively small proportion of the population which it is the
object of co-operative distribution to reduce to the smallest
number required to do this work, can thus live upon the
amount of produce that other men are willing to give up to
them in consideration of the services they render in facilitating
the use of the remainder. But on production the material well
being ot the whole body of mankind depends. The sum of
enjoyable things which can De distributed among any popula-
tion necessarily depends upon the mass of enjoyable things
produced. The degree of enjoyment placed within reach of the
body of the people in any locality largely depends on the
conditions under which the production constituting the means
of their subsistence is carried on there. Even their moral
character is influenced directly or indirectly by these conditions,
which in countless ways continually affect every part of their
lives from infancy to old age. Hence the vast importance of
co-operative production.

It is often said, and said truly, that the evils under which
the poorer producers suffer arise rather from defects in the dis-
tribution of the enjoyable things now produced than from the
mode of their production ; but the imperfections in distributing
alluded to in this saying, are scarcely touched, far less remedied
by the system of co-operative distribution explained in the last
chapter. For all that this system does for the poorer class, is
to make their existing incomes go a little farther than they
would otherwise do. It does nothing at all towards addinjj to

Co-operation in its Application to Production. 1 19

these incomes except in so far as it offers inducements to save
by making saving easy. "Tlie store, it has been said, is open
to every one." Yes, every one v^rho can pay for what it sup-
plies. " Its benefits are for all." True, in proportion to their
independent means of appropriating them. " The larger a man's
family, it is argued, the greater the advantages conferred on
him by co-operative distribution." Certainly, if his income
grows as fast as his family. But the family may starve with-
out the store coming in any way to his assistance. Its gifts
are strictly bounded by what it first receives. Its bounties
are always for " him who has," not for " him who has not ;" to
whom it denies, and, if it is conducted on sound principles,
must deny even that amount of trust which he will often
receive from the private trader. For he may hope to be recouped
at some future day for all these advances, and has in the
profits of his business a fund, which he can apply in making
them, while in a distributive society this fund is strictly pledged
to pay the dividends due to a body of purchasers who need no
trust.

That the distribution of profits on purchases has been of
great advantage to large bodies of the working classes, from
the savings which the system has led them to make, I do
not for a moment question. That numbers who, before they
became members of a store never had a shilling but what
they forthwith spent, have found themselves the owners of
many accumulated pounds through the savings made by the
store for them out ot the shillings which thev spend at it, I
am fully aware. I do not dispute tne value to them of this
result. Still, I must say, the store will not give them the
original shillings. They may grow rich, as the old Yorkshire-
man said only by eating and drinking, but they must get else-
where than at the store, wherewithal to pay for what they eat
and drink. To obtain this "wherewithal" by co-operation,
they must pass from co-operation for distribution, to co-
operation for production. They must press into their service
that more fundamental sort of distribution attached to pro-

i20 Co-operation in its

duction, which determines what men shall receive directly in
exchange for their labour. They must not rest satisfied with the
sort of distribution effected by the distributive society, which
simply enables them to exchange what they have thus earned
for other things which they happen to desire.

Those who set the present distributive ball rolling, the
justly celebrated founders of the Equitable Pioneers Society cf
Rochdale, clearly defined this object of the system which they
introduced, in words often repeated, but still well deserving
repetition, because by the co-operators of the present day,
they are far too much lost sight of. They declared the objects
of their Society to be —

To form arrangements for the pecuniary benefit and the improvement of the
social and domestic condition of its members, by raising a sufficient amount
of capital by shares of £\ each, to bring into operation the following plans
and arrangements : —

1. The establishment of a store for the sale of provisions, clothes, &c. :

2. The building, purchasing or erecting a number of houses, in which
those members desiring to assist each other in improving their domestic and
social condition, may reside :

3. To commence the manufacture of such articles as the society may
determine upon, for the employment of such members as may be without
employment, or who may be suffering in consequence of repeated reductions
in their wages ;

4. As a further benefit and security the members of the society shall purchase
or rent an estate or estates of land, which shall be cultivated by the members
who may be out of employment, or whose labour may be badly remunerated :

5. That as soon as practicable the society shall proceed to arrange the
powers of production y distribution, education, and government, or in other
words, to establish a self-supporting home colony of united interests, and
assist other societies in establishing such colonies.*

They were not afraid, these "owd" weavers, of the ridicule
certain to be poured by the unbelieving world, if they thought
them worth any notice, on the smallness of their means,
twenty-eight shares of £1 each, contrasted with the greatness
of their ends. Still less should co-operators draw back from
them now. For these are the true ends to be set before them-

• " Self-Help by the People : History of C o-operation in Rochdale," by
G. J. Holyoake, Parts I. & II.

Application to Production. 12 1

selves by all who desire to realise the ideal of co-operation — the
gradual substitution of a state of society resting upon reason-
able agreement determining the action of natural forces,
in place of the present system which rests on the play of natural
forces determined by the struggle for existence. Now in this
scheme distributive co-operation appears in its proper place,
as the road leading to production, which again is placed in its
true position, of a means to the improvement of domestic and
social conditions, by associated dwellings. The impotence of
distribution, taken alone, for effecting the ends of co-operation,
is clearly indicated in this memorable programme.

But the idea embodied in the distributive store is not only
thus impotent as an instrument of social progress, but if it
gains a decisive hold on men's minds, it may even become an
obstacle to that progress for the reasons following. The store
deals essentially and primarily with things. Its function is to
enable its members to obtain that of which they stand in need,
better in quality or cheaper in price, or both, than they could
do without its aid ; and there its proper office stops. Distribu-
tive societies have indeed often gone beyond this point to
employ their collective funds in various ways for the
benefit of their members. They have formed libraries
and reading-rooms, have published periodicals, have estab-
lished science and art classes, have instituted musical
and other entertainments for the advantage of their mem-
bers, for whom prosperous societies commonly provide
meeting places of their own in co-operative halls. They
have gone even farther in the direction pointed out by the
Rochdale Pioneers, by purchasing lands and building houses,
to be sold to their members and paid for by instalments,
spread over long periods so as to make the payment easy, or
advancing money to enable them to purchase lands or houses,
or to build houses, which shall be a security to the societies for
the repayment of these advances in a similar way. But all
these beginnings of collective action, useful as they are more
or less in themselves, and valuable especially as evidence of an

122 Co-operation in its

instinctive sense that co-operation has more to do for the
good of mankind than that which the distributive society
can supply, are but feeble expressions of that profound
human sympathy, that mutual regard for each other, that
higher spiritual life which, as they constitute the co-operative
disposition, it should be the especial work of co-operative
institutions to develope and spread, so far as this lies within
the power of any institution.

Now, what the distributive society cannot do in these
respects it is the function of the productive society to do, or
prepare the way for its being done by means of the social
organization to be considered more fully in the next chapter.
Thus co-operation will be raised from the ignoble office of a
union merely in order to get things cheap and good, to the
noble function of an institution by which men may be
gradually made better, and therefore both happier and better
off.

The function of co-operative production in this respect is
so powerfully stated in a paper entitled " Some Hints on the
Problem of Co-operative Production," written by the present
Registrar of Industrial and Provident Societies, and read at
the Congress at Newcastle in 1873, that I make no apology
for reproducing it here, accompanied by a few remarks to
meet the objections raised to this idea of co-operative pro-
duction by those who would make of it a mere handmaid to
distribution.

" I regret exceedingly," says Mr. Ludlow, " that I am not able to attend
the present Newcastle Congress. Of all the practical questions which ro-
operation has to solve, that of the organisation of production seems to me
the most important. It is one that has been constantly before my mind for
over the last twenty years, and I feel anxious to say a few words upon it.
They may seem to many very vague and unsatisfactory, and yet perhaps may
rot be without fruit to some. I think it may be said that by this time three
distinct views on the subject have been more or less expressly formulated in
the movement, with a great variety of intermediate opinions. According
to the first, co-operative production should start entirely from the existing
centre. The Wholesale should take up one by one all branches of produc-
tion for which it can provide a sufficient demand, and carry them on as inci-
dents to distributive business. This might be called the plan of organising
production from above. According to the second view, held, I think,
generally as second-best to the first, and which may be looked upon as the

Application to Production. 123

first in a state of arrested development, production sliould at least be federa-
tive ; societies alone should be members in a productive body, individual
share holding being excluded. This may be called the organisation of pro-
duction from within. Accordin;j to the third, productive co-operation should
be solely or mainly individual. This would be the organisation of produc-
tion from below. Now, the first thing I wish to say is that every one of these
three plans, if urged to the exclusion of the others, appears to me likely to
prove wrong and mischievous ; that every one of the three, if worked on right
principles and in the right spirit is capable of being usefully carried out ; and
that in the present stage of the movement at least, the circumstances of each
particular case must decide wliich of the three is to be preferred. "Where manu-
facturers of a particular article lefuse to sell it to the Wholesale, or to deal
for it on fair terms, or to give it in a pure state, the Wholesale is perfectly
justified in taking up any branch of production, provided it carry on such pro-
duction in a true co-operative spirit. What the Wholesale is justified in
doing, any number of federated societies are justified in doing in 1 ke manner.
And surely any number of working men employed by another in producing
a given article for the profit of that other are equally justified in saying, we
will produce the article ourselves. The question, then, is one of the principles
on which, and of the spiiit in which, not of the form in which, the work is
carried on. And here, unfortunately, I have a most ungracious task to per-
form. Agreeing entirely in the recommendations given by Mr. Holyoake, in
the preface to his ' Logic of Co-operation,' that there should be 'a partner-
ship of labour and custom in every society, and that labour should have
adequate self-protecting representation,' I fear that the tendency of hi;;
pamphlet, taken in conjunction with the views expressed in the Co-opeiative
News, by a few other gentlemen of weight in the movement, threatens con-
siderable danger to the movement. Mr. Holyoake's hero is the 'Poor Con-
sumer.' ' Consideration for the Consumer,' he tells us, is the ' primary step-
ping-stone ' in the path of co-operation. ' The consumer is, after all, the
person to be most cared for,' is the comment on his paper in the Co-operative
News ; ' if we look after the consumer we look after everybody, for every
human be'ng is compised in the description.' And Bastiat is appropriately
quoted — Bastiat the most brilliant votary of competitive plutonomy — as an
authority for the banner under which co-operation has henceforth to march.
Now, on the surface of them, all the above propositions are true to truism. No
doubt, since the present English co-operative movement has its main source
in the co-operative stores, ' consideration for the consumer ' was the first
stepping-stone in its path. No doubt every human being is a consumer, and
in looking after the consumer we look after everybody. But if we dig ever so
little below the surface, a very different set of truths will discover themselves
to us. Although the experiment might take the form of co-operative con-
sumption, it was consideration for the producer that really was the first stcp-
ping-sione in the path of co-operation. The co-operative store w.i«! primarily
the attempt made by producers to make their earnings go further by savings
on their consumption. The reason why it has rooted itself in the afTections of
the people is that it rescues the producer from slavery to the truck shop, to

124 Co-opcratioji in its

the publican, to tlic lallyuian, frees him from debt and from prison. It is the
powerful bearing which it has thus upon his condition that constitutes the link
between our own co-operative movement and that ni foreign ountries, start-
ing, as the latter does in general, directly from the ground of production.
Drop this out of view, treat the movement as one of which the consumer
merely as such, and not the producer as consumer is the object, and whatever
so-called bonus you may hold out to labour, you will estrange that movement
from the sympathies of ihe working class ooth at home and abroad. But you
will do more. You will degrade its cnaracter altogethe^ Instead of vin-
dicating the true principles of human society against abuses which darken
and pervert them, you will fall yourselves into the very net of those abuses.
Considerat on for the consumer is no new thing in the world. Competition
proclaims his interest to be bound up with its own. All popular plutonomy
professes itself devoted to it. To divide profits quarterly or half-yearly with
the consumer, as the result of a new social machinery called co-operation,
may be a very good thing for him. But every ordinary trader who, by reason
of some new invention, or of the opening of some new source of supply,
or simply for the sake of cutting his neighbour trader's throat, lowers the
price of an article to the public, does precisely the same thing by way of dis-
count. Consideration for the consumer may be the tirst stepping-stone in the
path of co-operation. But that stepping-stone is the first in a great many
other paths too, which lead to very ugly goals — idleness, selfishness, tyranny
above ; flunkeyism and slavery below. The world is only too willing to fall
down and worship before the mere consumer, the consumer as such — before
the man who can absorb into himself as large a portion as possible of the
fruits of other men's labour. The world is only too ready to proclaim that
consumption is honourable. The producer himself is but too apt to accept
the sentence ; to think that he is inferior to the consumer, just because he
labours, and the other enjoys ; to look forward to a stage of pure consump-
tion without effort to produce as his supreme happiness. And if the great
social and democratic movement of our age has any meaning and value at all,
it is just so far as it tends to the very opposite of all this, to raise the producer
to his true dignity, to subordinate mere consumption altogether to produc-
tion ; for say what you will of the two elements in man, consumption and pro-
duction, the latter is the higher. Consumption is primarily the animal element ;
production the divine. He shares the former with the meanest of creatures;
the latter with his Maker. If we take production in its widest sense, as com*
prising all effort of a kind in anywise fruitful, all that acts not merely to dis-
place or replace, but to develope, to niake more out of less, we may say that
man only bopins to be man when he produces. Again, consumption, though
it may be used for the highest purposes, is in itself a selfish act — the man
appropriates something to himself. Production, even when its purpose is
most selfish, is in itself, essentially unselfish ; whoever produces, whoever
works, must begin by spending himself. Consumers, you say, are all the
world ; yes, but from another point of view, all the world consists cf pro-
ducers, and of those who are burthens upon production. As a mere consumer,
that is except so far as he restores directly or mdirectly to production some-

• Application to Production, 12 5

thing more than he takes from it, the human creature has a very minimum
of right.

If any six human beings are on an island together, how is social order
to be introduced among them? In other words, how are they to co-
operate ? All consumers, cries the Bastiat worshipper ! Consideration fo-:
the consumer must be the first stepping-stone in the path, repeats another
after Mr. Holyoake. Well, of the six, five are pure consumers, one is a child,
one a madman, one a beggar, one a thief, one a murderer, and the last is a
decent fellow, able and ready to work, in other words a producer. Now, the
only consideration which, I maintain, is due to the five consumers, is this —
that the one producer should obtain mastery over them all ; that he should
exercise authority over the child, in order that he may learn to make himself
useful ; so deal with the madman as to prevent his doing mischief to himself
or to others, and, if possible, to enable him to recover his wits ; so coerce the
beggar and the thief as to compel them to earn their bread ; and, finally,
hang the murderer to the nearest convenient tree branch. Observe, that it
matters little whether the consumers in question be poor or rich ; the beggar
and the thief are presumably ' poor consumers ; ' all the three others may be
so too. It is because they are mere consumers, who either cannot or will not
restore to production what they take from it, that they have absolutely no
right, though five to one, to exercise any control over the producer, but that
the right to control them passes by the moral necessities of social life over
to himself. I have said this much, in order to point out the dangers of the
line of argument which I see pursued by several of our friends. I have no
wish myself to sever production from consumption. In the body politic as in
the human body, consumption without production, production without con-
sumption, alike is death. The essential point is to keep up the due relation
between the two — to remember that as men habitually produce that they
may consume, so they should always consume that they may produce.
Looked at from this point of view, consumption, which is in itself
purely destructive, becomes the great conservative force of society — not
antagonistic to production, which is its progressive force, but serving to
it as a source of maintenance and development. What co-operation really
aims at is to turn all producers into consumers, all consumers into producers ;
to bring out the powers of acquisition and enjoyment among the millions
hitherto absorbed in production alone ; to render all consumption fruitful, and
so to speak, reproductive. I therefore entirely approve of the view that pro-
duction should be chiefly favoured in those branches for which a suflicient
demand can be found within the four corners of the movement itself. This is
empliatically what I mean by making consumption reproductive. But from
the moment production is entered upon, the producer, I consider, and not the
consumer, be he poor or rich, should be the primary object of co-operation
consideration to him the primary stepping-sfone in the path. The main
question becomes one, not whether you or I as consumers should buy a given
article so much per pound or per yard cheaper or dearer, but whether the men
who spend themselves on the production of that article shall or shall not have
the primary claim to the fruits of their labour. Let that claim be first

126 Co-operation in its

admitted, and the claims of other men to share also in those fruits, on the
ground of the help they have given, by capital, skill, or consumption, towards
their being brought forth, will, I think, without difficulty, be admitted.

But it follows from what I have said that it is not only the right of productive
associations to constitute themselves on their own basis, but that a preference
should be given, for productive purposes, to associations of producers. Surely,
if the productive side of the co-operative movement were to issue only in the
benevolent mastership either of the Wholesale or of any number of co-oper-
ative bodies grouped in strict federations, we should have done very little,
and that little wo-ild be in danger of becoming ever beautifully less. The
momentous question of the future, as it seems to me, is not whether the pro-
ducers are to be under better masters than heretofore, but whether they can
be their own masters, and yet do the world's work manfully under the eye of
God. Very little is done towards such a solution when you have merely
turned them from the servants of particular men into the servants
of particular bodies of men, whether with bonuses or without. I am
glad to hear of any employer who gives bonus to labour, encourages
his workmen to take shares in his concern, opens his books to
them, admits them to a share in the management. I am glad when any
co-operative body does the same by those whom it employs. But the good
done by twenty such experiments is not, in my opinion, equivalent to that
achieved by any single set of workers who can make for themselves a position
as associated self-employers, and having made that position, can maintain it in
no spirit of self-exclusiveness, but seek to impart its benefits to as large a
number as possible of their fellow-workers. I think it likely that such men
may find it to their advantage to draw their customers into closer relations with
them by allowing them a share of profits. But it seems to me mere childish
doctrtnaireism to insist upon this as a shibboleth to be swallowed by them
before you admit their claim to be called co-operators. If they have succeeded
in their business, it must be substantially because they have given the con-
sumer already the article, either better for a given price, or at a lower price
altogether, than he could have found it elsewhere."

It will be seen that Mr. Ludlow contemplates in this power-
ful paper that production should be carried on mainly by inde-
pendent unions of workers, such as those which started into
prolific life at Paris in 1848, and exist in considerable numbers
in that city, and some other parts of France at this day ; as
they have sprung up in Germany under the influences origi-
nated in the People's Banks ; and have fought out their way,
if not to great prosperity, yet, at least, to a healthy life, in
various instances in England and Scotland," Now to all

* See Note {<. Appendix.

Applicatiou to Production. 127

plans tor this separate action, Dr. Watts, the most eminent
advocate for subordinating in co-operation production to
distribution objects —

(i) That the system is partial, not universal for the good of
each and of all ;

(2) That it must drift back into competition in a more intense
form.

I reproduce his objections with the statement given by him
of his views, taken from a paper prepared to be read to the
Committee of the House of Commons on Co-operation, and a
reply to strictures which had been made upon his evidence
before the Committee, both published in the Co operative
News.*

" Co-operation," says Dr. Watts, " is a scheme for obtaining honest comnoo-
dities at wholesale prices, and eventually at the cost of production, reserving
the difference between the cost and the retail price for quarterly dividends,
which the members are encouraged to have accumulated at ^f 5 per cent, in-
terest, thus teaching provident habits, and preventing poverty and pauperism."

Then, after explaining the constitution of : (i) The Retail Store. (2) The
Wholesale Store. (3) The Bank. He continues —

(4) The Manufactory. There are two theories at present in debate among
co-operators as to the proper mode of extending manufactures : —

(a). To encourage each retail store or a federation of retail stores, to em-
ploy workmen for the production of such articles as their members can con-
sume, and as can be profitably done in their varous localities, handing over any
surplus products to the Wholesa'e Society, as commission agents, for sale
amongst the other stores, or for export ; and leaving the Wholesale to engage in
the production of such articles as need a large capital, and an extended market.
Many retail stores do now employ workmen for manufacturing purposes, and
this course is likely to be extended. In the cases of manufacture by the retail
store, the profits go directly to increase the members' dividend on purchases.
In manufactures by federated societies, the profits would first be divided
amongst the stores themselves, according to the capital provided by each, and
would then pass to the members in each store as dividend on purchases.

(b). T}ie second plan is to furnish capital at interest to bodies of working
men, who would work for themselves, and appropriate the profits. I prefer
the first plan because it is of universal application, and would benefit all con-
cerned ; while the second would leave bodies of working men competing
with each other for the market, with all the present features of competitive
trade intensified.

* For 1879, pp. 504 .ind ^05.

128 Co-operation in its

In his reply, Dr. Watts supplements and expands this statement as follows;

I have always understood that co-operation is the opposite of competition;
that it means working together for each other, instead of working against
each other, individually, or in masses more or less compact. The co-operative
store is open to everybody, and being capable of expansion to universality,
works together for everybody who chooses to be connected with it ; and when
productive co-operation runs upon the same lines as the store, there will be
no misunderstanding and no dispute about it.

Some retail stores are producers ; and such production, so long as it is
sold to their own members, or handed over to the Wholesale for distribution,
is tnily and wholly co-operative, since its advantages are open to all. But, il
a productive store sends out its travellers into the open market or even toother
stores, so as to establish a practice which cannot be followed by other pro-
ducing stores without falling into competition with e^ch other, it loses its co-
operative character, and is on the downward path which lands only in the old
competitive rut.

The Wholesale Society is wholly and truly co-operative, because member-
ship of a store is membership of the Wholesale, and it is, therefore, like the
stores themselves,. open to all, and it works for the benefit of all; and what'
ever branches of manufacture it may set up and conduct, will therefore De
conducted for the equal benefit of all the stores, in proportion to their loyalty
to the Wholesale, and of all the members of all the stores in proportion to

their loyalty to the various stores Evea an ordinary joint-stock

company composed of workpeople, and especially of the workpeople in the
establishment, is a great improvement on working for an individual employer.
And, a company giving a bonus to the workpeople is a further advance to the
system of true co-operation. But all these are mere temporary expedients,
which, if it be attempted to universalise must nteds end in competition.

Let me take, for example, the highest type of such companies, ' The
Hebden Bridge Fustian Society,' which divides profits with the workmen, and
also with the customers. It admits individual shareholders as well as stores,
and to it« shareholders go the first fruits, beyond even the formal interest of
capital. It passes by the Wholesale in its transactions, and even passes by
the stores which hold shares in it, and sells to the general public. It there-
fore competes with the Wholesale amongst the affiliated stores ; and it also
competes with individual manufacturers in the open market. Now, suppose
that Manchester and Oldham should each set up a Fustian Society on tht
lines of the Hebden Bridge, and suppose that the managers of the Wholesale
should find out that Fustian manufacturing is" one of the staples which it
ought to take up, wheie shall we then be, and what will have become of our
productive co-operation "i *

* Dr. Watts conveys in this passage a somewhat imperfect idea of the
Hebden Bridge Society, which limits the amount of payment on capital on
shares not withdrawable tO;^7 los. percent., and continually obtains by iLe
canvass of societies orders which pass through the Wholesale.

Application to Production. 1 20

I do not question the wish of Dr. Watts and his followers
to deal with the profits of production so as to " be for all/'
But can this plan effect the end proposed ? It seems to me
certain that it cannot. The benefits of distributing profits
on purchases increase precisely in the degree in which they
are not wanted. Even in the case of food, where to the
poorer classes they are at their maximum, the skilful mechanic
who earns his ten shillings a day will derive far more advan-
tage than is obtained by the labourer whose wages are only
3s. 6d. Yet he would be a long way behind the foreman or
clerk who may receive his £"200 to £1^0 a year ; as they in
turn will be utterly distanced by the classes who fall under the
three first divisions of Mr. Dudley Baxter's tables quoted in the
Appendix, Note g; whose incomes are respectively over ;£5,ooo
a year; between £5,000 and £1,000, and between ;^"i,ooo and
£■300. This will be the case even with food, where the
benefit to the poor man from returning him the profits on his
own consumption is most felt, because by far the largest part
of the poor man's income is necessarily spent in articles of
food. But the case is far more striking when we come to
manufactures. The notion of conferring a universal benefit on
the working population by distributing among them the profits
on their own consumption of new manufactured articles, is like
a proposal to satisfy the thirst of a crowd by administering
to them water in drops. The statistics of Mr. Dudley Baxter's
tables, above noticed, as to the distribution of income in the
United Kingdom, show clearly where the great mass of profits
on manufacture, if they are distributed among the consumers
in proportion to their consumption, would necessarily go— to
those, whose over-large share of the material advantages pro-
duced by the industry of the present day forms one of the
crying evils which co- operation proposes to remedy. This evil
the scheme of co-operative production advocated by Dr. Watts
must make hopelessly irremediable. For it would give to the
rich consumers, not only the vast mass of the products
'" modern industry which now falls to their share, but also the

130 Co-operation in its

profits on production — that great instrument to which those
who have studied co-operation as a system have hitherto
looked, as the means of gradually raising the worker to the
position which he ought to occupy. That this must be
the case, so far as regards the home market, the statistics
referred to prove on a large scale, and a little consideration of
the circumstances of the mass of our population, and the
objects to which their largest expenditure is unavoidably
directed will show yet more conclusively, though in a way
inaccessible to proof on the large scale of statistical
returns.

Take away from the earnings of the great body of the popula-
tion who live by the wages of manual labour, all that they
spend in food, drink, tobacco, rent, and second-hand clothes,
there will remain a very small sum per head for expenditure
on new manufactures. I suppose jQ^ a year would be a large
allowance for the average expenditure on such articles, of the
classes whose income is under £100 a year. But put it at ;^io,
present ordinary retail prices. At what sum may we estimate the
"poor consumer's" gains by absorbing the manufacturer's profit?
To measure them we must first deduct from the price the retail
addition to the cost of manufacture put on by the middlemen,
an addition known in numerous instances to equal half the
price, of which co-operative distribution gives to the artizan,
as it will give to the rich consumer, all that belongs to their
respective consumption after paying the actual cost. Then
we have to consider the reduction of profit on each article due
to the fact that the manufacturers of the present day rely
for their income on small profits made upon large sales with a
rapid turn over, rather than upon getting large profits out of
fewer and slower sales. Taking all this into account I think
we may conclude that sixpence in the pound is a liberal aver-
age allowance to make to the consumer as the additional profit
to be gained by him through adding the manufacturer's profits
on his own consumption. In other words. Dr. Watts' scheme
for raising the position of the working population by distri-

Application to Prodtiction. 131

buting among them the profits of manufacture, would end in
giving back on an average to each family a possible 5s., more
probably 2s. 6d. a year.

Dr. Watts may object that this computation takes no account
of the profit on exported manufactures which his scheme sup-
poses to be divided between the stores in proportion to the
capital that they severally contribute to their production,
and through them to be distributed among the consumers.
Now, even if this scheme could be carried out as Dr. Watts
supposes, it would not alter the fact that the largest share
of these profits must go to the richer classes, because they
were the largest buyers. But there is a hitch in the plan.

So long as the distribution of profits on manufactures is con-
fined to giving to every one the profits on his own consump-
tion, it is all of one piece. Each store takes a share of profits
according to what it buys on account of its members, and
divides these profits among them according to what they
buy.

But the proposal to divide profits among the stores according
to the capital contributed by them introduces a principle
which must unavoidably plunge us into the old " competitive
rut," whence I am as anxious as Dr. Watts can be that co-opera-
tors should emerge. To divide profits on capital is the rule
of competitive production. If it is introduced as the true rule
for apportioning among the societies the profits on manufac-
tures for foreign exportation, how can we escape the logical
conclusion, that it must also be the true rule for apportioning
the profits of this trade among the members of those societies
to whom the capital individually belongs. Now they would cer-
tainly be the wealthier members ; those who had most to spare,
and were willing to run the risk of possible loss by these
operations in the hope of large gains from the venture.
The mass of the poorer investors who looked on the store
mainly as a savings' bank, and had no prospect of deriving
any large advantage from such investments, would assuredly
decline to incur any risk through them. Experience has shown

132 Co-operation in its

this. So that, if it were possible, for a system of manufacture
carried on upon what Dr. Watts pronounces to be the " only
thoroughly co-operative plan," to become general, the result
must be, to give to the richer classes by far the largest part of
the profits of our home trade in respect of their purchases, and
all the profits of our foreign trade in respect of their capital-
The difference from the existing mode of distribution would be,
that the chance of any poor man rising into independence
by his enterprise as a manufacturer would be destroyed, by
the closely organized systt.o: of production which would replace
the present system of free competition.

But would not this organization be in itself a benefit so
great as to constitute an object worthy of all the zeal and
energy that co-operators can supply to bring it about. Dr.
Watts apparently so thinks, but I cannot agree with him. An
organization of industry which should simply substitute
•ollective bodies of consumers in place of individuals, firms, or
rompanies, as the active agents in production, which they
carried on without giving the worker any special interest in
the profits on his work, or applying them in any way directly
to improve his position, therefore, without doing anything to
remove that antagonism between labourer and capitalist which
forms the chronic disease of modern industry, would in my
judgment do harm rather than good. For it would hindei
the growth of a better organization, whereby without giving
up the economical advantages of co-operation or which Dr
Watts justly lays stress, it may be possible to attain the mora
and social advantages of which he says nothing.

The scheme advocated by him, is, in fact, only an accident
ot the form taken by co-operative activity in Great Britain
expanded into a general principle.

The distributive societies, as they prospered and accumu-
lated capital, naturally set themselves to consider how they
could use this capital so as to obtain the things they wanted
on the best terms. They formed wholesale centres to do the
business of buying for them to the greatest advantage. They

Application to Production. 1 33

formed mills '.n order to grind corn for their own consumption.*
And within their societies they have employed workmen to make
shoes or other articles of clothing from the materials furnished
to them. They couid scarcely be expected to place the work-
men whom they employed in these domestic manufactures, on
a different footing from those whom they employed in the work
of distribution. While in the peculiar case of the corn mills,
the fact that the labour employed in the current operations is
insignificant if compared with that represented by the capital
expended in the construction of the mill, or in the corn pur-
chased, threw the question concerning ** men " into the back-
ground, and gave to the question concerning " things " a pre-
dominance of which it is quite undeserving. Hence, co-opera-
tive union, instead of being regarded in its true light, as a
scheme for making men better, and therefore both happier in
themselves and better off, by learning to work together and
study each the interests of others, instead of every one
struggling to snatch at some special advantage for himself,
came to be regarded, to use Dr. Watts' language, simply as
"a scheme for obtaining honest commodities at wholesale
prices, and eventually at the cost of production." The notion
of so carrying on work that the worker may get the full benefit
of his labour after providing for the cost of capital, was re-
placed by that of so carrying it on that the consumers, whether
producers or not, should get the greatest possible advantage
out of it.

This conception has the advantage of being more immedi-
ately what is called " practical." Since it asked of the con-
suniers no greater consideration for other men's welfare than

• See Appendix, Note 4. In some instances, as at Hull, Leeds, and
Sheemess these preceded the formation of societies for general distribution.
Corn mills bei.ng directly concerned in supplying an article which enters
largely into the food of the population, stand also in a peculiar position in
regard to the application of profits to reduce the price of the articles, by which,
all, including those who do the work, immediately benefit to a considerable
extent. They are more properly classed under the head of distribution than
that of production ; and the grinding com, &c., belongs to the art of cooking,
rather than to manufacture.

134 Co-operation in its

they had grown accustomed to in the store, namely, that of
not trying to make a profit out of other purchasers, but giving
to every one a benefit proportioned to his consumption — they
had nothing to consider but whether any proposed manufac-
ture was likely to pay, and easily satisfied themselves with
the belief that they fulfilled the co-operative programme " To
make the workers their own employers " when they paid
them ordinary wages and allowed them the privilege of buying
their own work, through any society to which they might
belong, on as good terms as any other consumer.

Now if co-operative production is to be restricted to the small
body of workers to whom the working population could give em-
ployment in supplying their own consumption of various manu-
factured articles, it might be reasonably urged that the working
consumer cannot be expected to do more for the working pro-
ducer than to put him upon the same level with himself, by
allowing him to obtain his own work, if he desires it, at the
same reduction of price which the profit realised upon it is
sufficient to allow to any other customer. But when the
scheme is put forward as a general rule for regulating a system
of co-operative industry, by which the present gigantic opera-
tions of competitive industry are to be replaced, we come face
to face with the objection noticed above, which Dr. Watts
makes no attempt to meet, that the great bulk of the profits
thus dealt with must go, not to the working producers in any
shape, but to the wealthy consumers, without whose custom the
workers would be unable to dispose of the articles on which these
profits were realized. The argument used by Dr. Watts, that
there is no course open between this sacrifice of the producer
to the consumer, and the plan of encouraging the formation of
disconnected productive societies, with the probable result of
their increasing the intensity of competition by competing
with each other for business, assumes an alternative which I
cannot accept as necessary. No doubt, at the present day, these
are the only shapes under which co-operative production exists.
It does not follow that they are the only shapes which it can

Application to Production. 135

adopt. That in a free country men cannot be hindered from
ccuibining to carry on production on their own account, and
obtain whatever advantages they can thus gain, I allow. But the
consumers who, by the savings on their own consumption, can
supply the capital required by the producer, and furnish by their
own purchases a market for the goods produced, if they are willing
to deal equitably with the workers, will, I think, be able to substi-
tute concert for competition, to the mutual benefit of the producers
and themselves. The advantages which they could offer to
associated over isolated producers will operate somewhat as
the attraction of gravitation, which, without preventing the
freedom of our movements on the earth, keeps us close to it.
Productive societies might be formed by means of capital pro-
vided by the consumers, in order to secure for themselves articles
on which they could rely at reasonable prices through a central
association, by which all the guarantees against an injurious
competition desired by Dr. Watts might be attained without
any of the disastrous consequences that must follow his method
of attaining them.

At present the Wholesale withdraws all the profits of its
Leicester Shoe Works from the workers in order to distribute
them among the societies which buy the shoes in infinitesimal
dividends, for which nobody thanks it* Suppose that, instead,
it employed the surplus, after paying the ordinary charge for
capital and making such provision as might be thought expe.
dient for reserve, for the benefit of the workers ; either simply
by converting them into shareholders; or with the addition of
any plans for social good, such as those considered in the
next chapter ; turning its factory into a living witness of what
co-operation might do for the working population. What
would there be in this action tending to competition more
than in the present arrangements ? No doubt the works
would be converted from an ordinary workshop into work-
shops occupied by men who had a direct interest in /he

* How small these dividends really are is shov/n in the next chapter.

136 Co-operation in its

prosperity of the establishment, and were thus stimulated
to do their best to increase by good and quick work the
sales on which their own share of benefit depended. But
the conditions under which this work was carried on might
be such as would keep it always united with the Wholesale*
even if those who carried it on constituted, as they should do, a
separate society itself a member of the Wholesale. These
conditions might be embodied in the rules of such a society,
to any alteration of which the Wholesale might be made
a necessary party, through its representatives, while they gave
it such a voice in the management as would secure the per-
formance of the stipulated conditions. Disputes as to prices
might be settled by arbitration, which might be applied also
to disputes as to wages. It would be as open to the Whole-
sale as it is now to provide for any extension of the business,
either by enlargement of the existing works or by forming new
societies under similar conditions, or new branches of the
same society in any other locality, if this appeared to be
commercially preferable. And what they did for the shoe
works, why should they not do equally well for any other manu-
facture on which they might think it desirable to enter.

That there would be difficulties in the way of such plan, I
do not deny ; but they would not be difficulties of the kind
contemplated by Dr. Watts, not difficulties arising from any
tendency in the system to slip into " the rut of competition."
On the contrary, to all such tendencies the system would
practically oppose the most effectual bar, by inducing all
bodies of workers who might be disposed to start any pro-
ductive enterprise to come to the Wholesale for support, and
accepting its control, to enlist under its banner in the great co-
operative union. For this union would then give them all that
they could hope to get from the m.ost successful independent
attempt, with a probability of success increasing with every ad-
dition to the number of productive ander<:akings brought into
association, from the support that eve'-y member would be able
to give in various ways to the others. At present all workers who

Application to Production. 137

value their own independence and aspire to work out a higher
position for themselves, must necessarily separate from the
Wholesale system, which affords no satisfaction to such aspira-
tions. But if the system were modified, so that while securing
to the purchaser all that he has a right to ask— good work at
reasonable prices — it secured to those who did this work the
full measure of advantage which it was capable of yielding to
them, I am persuaded that the workers would generally be
ready to accept the degree of control which the preservation of
union necessitated, in return for the many benefits that co-
operative union ajfiforded them. They would be transformed
from their present attitude of indifference, almost of hostility,
to the Wholesale into one of hearty adhesion to it.

Then might we reasonably hope to see co-operative produc-
tion spread from one branch of industry to another, till it
gradually embraced the whole circle of our industrial activitierj.
The bodies of workers who now constitute the strength of our
Trades' Unions would begin generally to see and believe as
a practical reality, what at present only a few among them
dream of as a remote possibility — that union for self-employ-
ment is capable of giving the workers all, and far more than
all, that their most sanguine hopes have looked for from union
to impose conditions on their employers. They would bring in
their energy, their resources, their organised funds, their long
established influence, and the trained skill of the workers who
form them, to swell the stream of co-operative production,
and gain for the co-operative workshops, the just reputation
of turning out the best and yet the cheapest work, because it
would be the work into which the worker had thrown his whole
might, from the consciousness that all that he did for others
had a direct reflex action on his own welfare. While, on the
other hand, the combined action of these many centres of in-
dustrial activity, working together and not against each other,
would make it possible to give such security to the capital in-
zested in their united operations, by the formation of reserves,
4nd the principle of mutual assurance, that capital would

13^ Co'Operatio7i in its

flow in upon the union from the great body of the public who
seek for investments at once safe and profitable, as it has flowed
in to the People's Banks in Germany from a similar cause. And
so the problem of the relation between capitalist and worker
would be solved in the only way in which, I think, it can be
satisfactorily solved, namely, by reversing the present relation.
Instead of the capitalist employing the worker, while he takes
upon himself the risk of the work, the workers taking
upon themselves the chances of loss which they may reduce to
an average by the principles of insurance, would find employ-
ment for capital, and, by giving it safety, obtain it on the
most favourable terms.*

I have said that there are difficulties in the way of such
a plan of productive union ; but they are difficulties due, not
to the plan, but to the way in which the problem of co-operative
production has been presented on the scheme expounded by
Dr. Watts. In effect, that plan assumes and says to the
working population, "You have two modes of carrying on
production, i. It may be carried on by a number of isolated socie.
ties insufficiently provided with capital, or obtaining it under
conditions little favourable to the worker, yielding each other
no definite mutual support, and not connected by any common
bond, which shall prevent them if they succeed from com-
peting with each other. 2. Or it may be carried on by produc-
tive establishments, closely united with each other by means
of a common centre of distribution, commanding in conse-
quence of this union an abundant supply of capital at the
ordinary rate of charge, in which all the profit will be applied,
not to enrich a few manufacturers, but for the benefit of
all concerned. If you choose the first alternative you can
judge for yourselves what chance there is of productive co-
operation ever becoming universal. If you choose the second,
you will each severally receive benefit in proportion to your
consumption, and ultimately the working classes will become
the great manufacturers and traders of the countr y." It cannot
* See Appendix, Note 10, " On Work and the Workman."

Application to Production. 139

be surprising that such representations should in^^luence those
who believe in them to choose the second alternative. But let
co-operators generally be brought to see what, I think, calm
enquiry must show them — that the supposed alternative, and the
results attributed to the adoption of the second course, are
both delusions — that it is quite practicable to carry on pro-
duction in close connection with a distributive centre, under
conditions which will prevent any competitive conflict among
the producers, without withdrawing from the workers any of
the advantages derivable from their work — that by thus
carrying on production it will be possible for the body of
the population to appropriate for the general advantage, the
profits now absorbed by private manufacturers or traders —
but that on the scheme of federation advocated by Dr. Watts,
these profits must be mainly handed over to the wealthy con-
sumers ; while the reward of the workers will be only the
insignificant share of any profits belonging to their own con-
sumption. Let this be made clear to them ; and I think that no
body of working men, federated or not federated, will be so
foolishly selfish, as tor the sake of a possible present annual
gain of a few shillings, if this gain ever got to shillings, to throw
away the prospects of future good which co-operative pro-
duction, conducted on the plan of securing the profits on work to
those who do it, may bring to their children if not to them-
selves, and to the whole mass of the working population.

That the working consumers who may set on foot this sys-
tem of production would be entitled to a special benefit from it,
I allow. But this benefit might be secured to them without
sacrificing the hope of permanently raising the condition of
the workers. Without going into details which, under the
present circumstances, must be purely speculative, no
difficulty, I conceive, would be found in giving a preferential
choice of employment in any manufacturing enterprise set on
foot by the Wholesale Centre, to workmen of good character,
recommended by the societies belonging to this Wholesale ,•
the aid of the lot being invoked, if needed, to prevent com-

140 Co-operation in its

plaints of partiality. As co-operative production extended,
the workers thus recommended would come to include all
co-operative workers whose claim to employment depended
on the capital supplied by the societies constituting the central
union, and not on that contributed by the workers themselves.
All might have an equal chance of employment as soon as
there was a possibility of employing them. *

These observations on co-operative production may be
charged with being too theoretical for the title of this chapter.
But in the present position of this branch of co-operation
the most practical considerations are those relating to the
mode on which its practice can be best conducted. Now
on this question I agree with the federalist. Since the in-
dispensable condition of giving to the worker the full benefit
derivable from his work is, that he shall obtain capital on
the most favourable terms, and to obtain capital on these terms
it must get a security, which the workers can give it only by
means of their association as consumers — the close connec-
tion of co-operative production with co-operative distribu-
tion is, in my judgment, an essential element to its success on
any considerable scale. For thus will it become possible for the
worker to obtain capital on terms which will not so swallow up
the profits as to destroy the margin left for the benefit of work.
Further the federal system possesses more fully than any
other form of constitution known to me the power of uniting
freedom in the members with authority in the centre. It is
therefore peculiarly adapted for combining the united action
ii.dispensable to commercial success, with the individual
liberty which the productive societies should secure.

But while, for these reasons, I would urge upon all co-
operators who desire to see productive co-operation take
its fitting position, the great importance of giving to the pro-
duction connected with the great centres of distribution that
direction in the employment of profits which will make
their action a permanent benefit to the workers, the heroic
* See Appendix, Note 1 1, for a modification of this scheme.

Application to Production. I4I

band who, in the absence of such a system, throw themselves
into the breach, and in the hope of promoting the common
good, take the chances of the hard fight involved in the mde-
pendent formation of a productive co-operative society, have a
right to the best advice that the writers of this manual can
give to aid them in their noble efforts. Now, so far as con-
cerns the steps to be taken to form any society for this purpose,
it is unnecessary to repeat the remarks already made in re-
gard to distributive societies, since they apply equally to the for-
mation of productive societies, with exception of the schemes
for obtaining public support. If the idea of production were
taken up by any influential members of a Trades' Union, there
might be some use in an appeal to its members generally, by
public meetings, to raise the required funds. But, except in
such cases, or the rare instances where public sympathy may
be awakened in favour of any particular body of workers, sub-
scriptions will, I take it, generally be got only from those
who hope to obtain employment through the society. The
attractions which fill the lists of ordinary joint-stock companies,
the hope of large dividends on the invested capital, or the
speculative anticipation of premiums on the sale of shares,
which has helped to float company after company, often to the
disaster of those who find themselves left to man the vessel
when it is floated, must necessarily be in-operative in cases
where the anticipated profit is to be employed for the benefit of
the wuikers.

To those workers therefore, or to any persons who, from
the desire to help the working classes to help them-
selves, may be satisfied to receive moderate dividends on their
capital if the business succeeds, and willing to run the chances
of loss if it does not, to one or the other of these classes alone,
can appeals for support be made with much hope of success in
the beginning of the society. And as, with exception of the
last class, few will be disposed to subscribe any consider-
able amount of capital to an isolated enterprise, which can-
not offer security to the capital subscribed, it is desirable in

142 Co-operation in its

all such enterprises to give to capital, in the shape of profit,
some compensation for the possibility of loss. How is this
share to be determined ? I know no better method than one
founded upon the principles laid down and adopted in prac-
tice by M. Godin, in the foundry at Guise, created by him,
and now legally transformed into an Association of Capital
and Labour. M. Godin gives to capital first out of the gross
profits, after carrying to reserve what may be considered neces-
sary for the general security of the business, what he calls its
wages, that is, the interest which capital employed in manu-
facturing operations is expected to receive according to the
rate prevalent in the locality where the business is established.
Then he assigns to it a share in the profits remaining to be
divided, rateably with work of every description, whether
manual or intellectual, employed in the business, according
to their respective wages. I take the balance sheet of the
Association for the year ending 30th June, 1880, the first after
its legal constitution, omitting shillings and pence.t

Capital

184,000

Sales during year, gross

193,066

Less Trade allowances

52,035

141,031

Profits at Familistere

2,370

„ by work at Guise

24,367

„ „ Laecken

5,371

3.2,108

Wages and salaries of all descriptions

In Familistere ... ... 2,580

In Works at Guise ... 53,594

„ Laecken ... 4,959

Extra services 5^520

66,653

Wages on Capital {£e^ per cent)

9,200

Total Claims to Share in Profits ...

75.832

* Sec Le Devoir for Feb. 6, 1881. The same idea li.ns been independently
proposed by Mr. Peter Papin in a pamphlet called " Harmonious Co-operation
between Capital, Intelligence, and Labour in Productive Industries," published
160, Franklin Street, near Washins]ton, Chicago, U.S.

10,065

2,749

2,o62

458

£"9.200

•

1.389

10,589

Application to Production. 143

Application of Profits ... £32,108

To Reserve .. ... ... £5.727

„ Share of Work (15. i per
cent, on ;^66,653)

„ Administration

„ Administrative Council ...

,, Superintending Council ...

For Reward of Exceptional

Services ...
To Capital — Wages ...
,, Share of Profit on ditto
(15. 1 per cent.) ...

£32,108

This rule has the advantage of interesting alike the
capitalist and all who are in any way concerned in the work
in the prosperity of the business. While it applies equally to
all cases, whatever the proportions of labour to capital may be;
and does not, as all plans for capitalizing \vages do, bring out
a different scale of division according to the length of the
period to which the division relates.*

It should be observed, that in this case, though ;^29,730 ol
the profits of the business was applied for the benefit of the
producers, ;^52,035 had been previously allowed to the pur-
chasers ; who, no doubt, were actually various intermediaries
between the manufacturer and the consumer, but in a co-
operative system of distribution would be the associated
consumers, to whom the present customs of trade would thus
have given more than six-tenths (63.62 per cent.) of the
gross proceeds; leaving them little ground of complaint, if
they were asked to leave tc those who produced all the profits,
the remaining 36.38 per cent, of their earnings.

To pass from this rule of division, which may be varied in-

* Suppose ^50,000 capital, and ;^30,ooo wages paid in the course of a year,^
work would share — if the division is annual, in the proportion of if 30,000 tc
^80000 or of 3 to 8 ; if the division is half yearly, in the proportion of^ 15.000
to ^65,000, or of 3 to 15; if it is quarterly, in the proportion of ^7, 500 to /■5 7, 500,
or of 3 to 25.

144 Co-operation in its

definitely according to the rate of wages assigned to capital,*
T would observe, that the profits, whether on the wages of
capital or of work should be capitalized, so long as they can be
advantageously employed in the business, at least until some
minimum limit of capital required to be held by each member
is attained. Private firms have commonly an advantage
over companies in the growth of their capital out of its own
profits, which the desire of its owners to roll up large fortunes
induces them to accumulate. But as this desire cannot
oe expected to have any powerful effect on a large body of per-
sons, each individually entitled to a small part of the profits
only, it is necessary to guard by the rules of the institution
against the danger of dissipating profits in dividends ; which
would affect co-operative societies more injuriously even than
it affects joint- stock companies, from the greater difficulty in
obtaining capital likely to be experiencd by them, than by in-
stitutions where all gains are appropriated by the capitalist.
Still more necessary would the application of this rule be if any
attempt is made to obtain custom by admitting purchasers to
participate in profits in respect of their purchases. For since
the whole charge, for materials, wages, and capital, has to be
paid out of the sales, the claim of the consumer, if it is based on
comparative totals, will be apt to swallow up so large a portion
of the whole amount divisible, that when paid away to persons
who will be generally little concerned in the prosperity of the
business, the result must be more injurious even than such pay-
ments made on capital or work. But notwithstanding the high
authority which has supported, as a truly co-operative plan, the
notion of sharing with the consumer the profits on production,
my advice to those who may unite to carry on productive
co-operation on their own account at the present day is, to
confine the participation in profits to the two factors that
contribute to produce them— the accumulated past work called

* If the rate of profi": given by this method of division is not considered
sufficient in any case, & larger share of profit mijjht iiave to be given. But it
is difficult to lay down any rule by which lo measure this share fairly. As j
mailer of compromise, I may suggest an equal division between capital and
work of th'; surphis over 5 per cent.

Application to Production. 1 4=1

capital, and the present work, intellectual or manual, which is
sustained by this capital and makes it productive — and to
confine their consideration for the consumer to giving him
good work at reasonable prices according to the scale of prices
prevalent in the particular manufacture.

So long, indeed, as there was ground for hoping that some
scheme for dividing profits between capital, labour, and custom,
such as one which should assign a third to each, would meet
with general acceptance among the body of co-operators and
serve to knit them to each other, the admission of the con-
sumers to participate in profits could be fittingly recommended
vbr adoption by any body of workers, as an evidence of their
desire to act in this spirit of union. But since experience has
negatived these hopes of comprehensive conciliation ; since
no symptom appears of that readiness on the part of the co-
operative consumer *' to sleep all night at the door of a co-
operative manufactory that divided its profits with its cus-
tomers," in order to be admitted among the number in the
morning, with which Mr. Holyoake's imagination endowed his
•anticipated purchasers ; but on the contrary, they push
" the logic of co-operation'' to the point where it gives them all,
it has become clear that this " logic " will only lead the worker
into a bog, where all his hopes of benefit from co-operation
must be swallowed up.

Those who have persuaded themselves that consumption is
one of the factors in production entitled to a place alongside
of labour and capital as a third element will, of course, protest
against this exclusion of the consumer as unjust to him. But
if we revert to first principles we shall see that this claim has
no solid foundation. It rests in truth on the mystification
occasioned ly the general use of money as a medium ol
exchange. If we restore in imagination the barter which lies
at the bottom of commerce, and remember that all sales are
essentially exchanges of one product for another product, it
becomes ridiculous to argue that the man who has got the
product which he desires, in exchange for the product which

146 Co-operation in its

he has parted with, can have any claim on the man with whom
he has made the exchange, to share in the advantage that may
result to him from the transaction. If A has agreed with B
to give him, say, 20 pairs of shoes in exchange for 100 pairs of
stockings, there the matter ends. Neither A nor B can have
any claim on the other in consequence of the way in which
that other may dispose of the articles taken in exchange. A
may give 39 pairs of stockings to C, from whom he had got
the leather, and 40 more to D and E who made it up under
agreements which he may have entered into with them, keep-
ing 21 for himself. But this cannot give B a right to say
** Friend A, thou hast advantaged thyself to the extent of
twenty-one pairs of stockings. Give me seven pairs back as
my share of this advantage." A would have the right to
reply, " Friend B, what thou sayest as to the advantage is
true, but as to giving thee back the stockings I cannot do
it unless thou givest me back a like quantity of shoes."

Obviously, then, the claim asserted for the consumer to
share in the profits of production must rest, not on any natural
right, but simply on the wish to reconcile the conflicting
interests existing between the buyer and seller on the one
hand, and the capitalist and worker on the other hand. For
this purpose it is much to be desired that the producers should
mutually agree to share the advantages obtained by any of
them trom any improvement in the production of the articles
respectively produced, which, in the case of such a mutual
understanding, each would make known to the other.

The principle laid down as a basis of the Co-operative
Union, that one of •its objects is "to unite the conflicting
interests of the capitalist, the worker, and the consumer by the
equitable division among them of the fund called profit," has,
I conceive, such an agreement in view. But in order to make
this equitable division the principle must be applied to the
entire fund, not to a small part of it only. This " fund called
profit" includes, in competitive trade, the w)wle difference
between the sum paid by the purchaser and the cost (ist) 0/

Application to Production. 1.47

making what he buys, (2nd) of delivering it to him. This
diflerence constitutes the profit of the manufacturer and the
distributor, including under that name all the middlemen,
merchant, shipper, carrier, wholesale dealer, retailer, who come
between the producer and the purchaser. Of this fund, at the
present day, the producer has by far the smallest share ; four-
fifths of it at least, if not a still larger proportion, are divided
among the different classes of middlemen. This large share
the consumers have discovered the means of appropriating to
themselves, in some cases entirely, in others to a very large
extent, by association. How then can they claim any equitable
right to participate with the producers in the small remainder
while they retain that larger share to themselves ? He who
asks for equity must do equity. Let the consumer concede
to the worker the right to participate as a worker in the
profits which the consumer gains on the distribution of
the work produced, and he will have the right to call on the
worker to admit him to participate as a consumer in the
profits which the worker gets by producing that work. If he
will not allow the worker to share as worker in the profits of
distribution, he loses all right to ask that the worker should
allow him to participate as a distributor in the profits of
production.

It has been alleged in support of the proposal to assign the
profits of production to the consumer, that to give them to
the producer will tend to perpetuate the system of caste,
which it should be the object of the social reformer, as it has
been of late years that of the legislative reformer, to destroy.
The argument goes further than the present question,
extending to that total withdrawal from the producer of the
profit on his work proposed by the federal system discussed
above. Still, were it tenable, it must tell against the claim to
those profits asserted here for the worker. But in truth the
tendency to caste is fostered, not lessened, by the withdrawal
from the worker of the profit, which is the natural means of
counteracting this tendency whenever it is not thwarted by

148 Co-operation in its

arbitrary regulations. The man who has to live on fixed
wages has no motive of interest for cheapening or improving
his work. He stands, therefore, over against the rest of the
community in that stiff, unsympathizing attitude belonging to
a caste. But the man who feels that, by increasing the sale
of his work through its greater cheapness or better quality,
he might improve his condition from the increased profits
which this larger sale may bring him, has a motive in his
own interest to do that which benefits the public at large, with
whom, therefore, he is brought into relations antagonistic to
the feeling of caste.

Without in any way departing from the position already
taken up, that a thorough alliance of the worker with the con-
sumer, by which the latter shall be assured of the goodness of
the articles produced, and the fairness of the prices charged
is of very great importance, while urging upon the worker
to do in order to produce this alliance, whatever he can
do without injuring himself, I must then caution him against
admitting any claim on the part of the consumer, who does
nothing to aid the producer but exchange one product for
another — money for money's worth — to share in the profit
which may arise to the producer through this exchange.

If the co-operative consumers leave the worker as they have
left him to fight his own battle in the field of competition, it
is necessary that the worker should claim the right to fight
it on equal terms with his competitors, by retaining that weapon
of profit on manufacture which forms the ever-growing
strength of successful manufacturing enterprise.

On this basis, therefore, I advise all co-operative productive
societies, independently formed hereafter, to take their stand ;
opening their arms freely to the consumer who will join their
ranks ; and giving to all, whether they accept this invitation or not,
every guarantee in their power of the goodness of their work,
and the fairness of their prices; but absolutely ignoring
the claim of any one to share in profits which he does

Application to Production. 149

nothing to produce beyond paying an equivalent for what he
receives.

I copy, in conclusion, from an excellent tract published
by the Central Board on " Co-operative Production, and the
Duty of the Distributive Stores in relation thereto," the
following sensible remarks on the commercial means oj
success : —

" First of all we should produce what is required. Some socie-
ties have entirely failed, through placing on the market articles
which they wanted to produce, but which the Stores had no
sale for. This often makes store managers disgusted with co-
operative productions, and the producing society has to go
into the general market with only a limited capital, which
soon becomes smaller by degrees, and ultimate failure
ensues.

" Producing societies should, in the first place, look round for
a general co-operative want, and then if good articles are pro-
duced at as cheap a rate as they can be produced by private
firms, the trade would in all probability be ensured, because
there are innumerable articles which the stores distribute, that
would give ample scope for yet very many productive under-
takings."

The writer obviously believes, and I believe with him, that
the working consumers require no other motive than the
desire to do full justice to work, in order to support societies
where the worker is able to apply for the benefit of present
work, the profit hitherto appropriated by past work rolled
up into capital. The apparent selfishness manifested in this
matter by distributive societies has been due, I believe,
mainly to the theories, well intended, but quite deceptive in
everything except the value of federal action, by which they
have been misled.

The time will come, I am persuaded, when the scales will fall
from their eyes, and federal action will be directed to convert
the accumulated savings of co-operative consumption into the
fruitful source of innumerable benefits to the working producer.

150 Co-operation in its

In the meantime we may, I trust, say truly, that for those
workers whose self-reliant energy may create institutions
where labour and capital stand in equitable relations, a
field is opening among the distributive societies which
will not be so difficult to cultivate, as hitherto it often has
proved.

But the working producer who would cultivate this field
successfully must not forget the indispensable condition
of his success that his produce shall stand comparison both
in quality and in price with those of his competitive rivals.
His claim upon the co-operative consumer must be limited to
a fair trial. He cannot expect continued support if his
products when tried are dearer than similar articles of equally
good quality produced by other makers. I fear that this
essential condition has not always been sufficiently borne in
mind ; that the worker has sometimes transferred to his own
workshop the feelings which he has been accustomed to
cherish towards his employer, and has looked upon it as a
quarry from which it was his business to extract as large an
amount of wages as he could. But the businesses which at
the present day could bear this treatment are, I believe, few
and exceptional.

The economical benefits to the worker of becoming his own
employer will not commonly be found in the positive addition
which he will thereby be able to make to his present wages. It
will consist more in the power he may thus attain of regula-
ting the conditions of his own life ; in the possibility of thus
making his wages as fruitful of advantages to him, as they
may be ; in the manly qualities of prudence, foresight and self-
government, which union, for the purpose of mutual aid in
self-employment, will cultivate in the individual, while they
place him in a medium suited to call forth and facilitate their
growth and exercise. The worker will find himself brought
face to face with the unavoidable laws of supply and demand
in their application to the questions of food and population.
He will deal with them in a state of mind produced by a life

Applicatio7i to Production. 151

where, through the results of association, the standard ol
comfort is generally higher than it is at present. Is it unreason-
able to expect that, under such circumstances, the workers
will commonly learn to act in a way in which, were they
commonly to act now, their condition would assume an aspect
very different from what it now offers? While the same
principle of association which works these effects, will give to
them a far greater command than they actually possess over
the resources applicable to increase the means of subsistence
in proportion to the numbers to be fed.

The workers who would not sacrifice a great future to an
insignificant present must look for the improvement of their
condition through self-employment, not to the immediate
increase of their separate incomes, but to the gradual accumu-
lation and wise application of the collective capital rolled up
from their accumulated profits. While for the success of
their businesses whence these profits are to be derived, they
must rely on the good value which they give to those who
deal with them. But here is open to them a road, which any
body of workers bold enough to follow it would, I am con-
vinced, find to lead directly to the desired end. That road is
perfect honesty — honesty which admits of no concealment in
respect to the quality of that which is produced. I lay
emphasis on r/waZtTy, because the rule does not apply in the
same way to profit. I could wish, indeed, that we had
reached the goal to which co-operative production may some
day bring us, when the rate of profit on different articles shall
be substantially uniform — an agreed charge — varying only
with the differences in cost due to the rapidity of the sales, and
it will thus become possible to disclose it without fear of the
consequences. But at present this would be impracticable*
The prices of co-operative work must for a long time be
regulated by the competitive market, — where the small profit
on one class of goods is habitually made up by a much larger
rate of prcffit on other classes. The producer, who should
fix the rate of profit in both cases on a uniform scale, would be

-52 Co-operation in its

rewarded by finding that the purchasers took the articles
where the price was reduced, and left those where it was
raised. The co-operative producer who would not be ruined
must therefore conform to the ordinary rules as to prices ; in
which ne does no injustice to the purchaser, who can judge
for himself whether the thing he buys is worth the price asked
for it, if he can be sure that this thing is what it professes
to be.

Now here it is that the mischiefs of our actual competition
specially show themselves, and make a great opening for the
co-operative producer, who will seriously apply himself to
remedy them.

It has been sometimes maintained that co-operative
societies should sell no articles but those of the first class.
Since, probably, the largest part of the articles produced at the
present time would not come under this description, to
insist upon such a rule would be practically to shut out
co-operative producers from making the articles which they
would have the best chance of selling. I do not ask of them
any sacrifice of this sort. What I would urge on them is,
always to let the purchaser know exactly what he is purchasing.
For instance, textile goods are continually thickened with size
of various ingredients. Let the exact nature and quantity
per yard of this size, and of each ingredient used, be stated on
a ticket attached to each article. Again, substances of different
sorts, silk and cotton, cotton and wool, &c., &c., are con-
tinually intermixed. Let the precise quantities of each, and
if the substances used are of different grades of quality, the
differences of quality be declared. So in other cases, which
it would be endless for me to attempt to specify, the principle
being always the same, that the purchaser shall be informed
by the producer of every fact material for him to know, in
order that he may judge whether the thing purchased is worth
the price given for it.

That such a system of honest trade would be a great success,
if the goods thus described were brought before the true

Application to Prodtiction. 153

purchasers, those who buy to use and not to sell again, so soon
as they were convinced that the statements were trustworthy,
I am satisfied ; and if the statements were strictly accurate,
and therefore capable of being verified by independent exami-
nation, it ought not to require a long time to convince the public
of this fact. Middlemen would doubtless laugh at the plan,
considering themselves duly qualified to determine the value
of any article they desired to buy without information as
to its structure from the maker. Yet even these professional
buyers might probably not be unwilling to be saved the
trouble of careful examination, if they found that whatever it
could tell them they could learn, without this trouble, from the
statement of the producer. While the co-operative distributive
societies which, if they buy to sell again, buy to sell to their
own members, would supply a class of buyers disposed to
value the system, who could be relied on to bring before
their members any statements supplied by the producers in the
form furnished by them, and would thus stand to the co-
operative producer in the position of natural allies without
being subjected to any unreasonable demand for their
support.*

* Some caution would be required in working such a system as is here
suggested, against fraudulent attempts to extort money, made by purchasers
on alleged discoveries after goods had been taken away that they did not
correspond with the statements made. The danger is easily guarded against by
proper notices when it is foreseen. I mention it here only that I may not oe
supposed to have overlooked it.

Chapteu ij.

THE PRACTICE OF CO-OPERATION IN SOCIAL

LIFE.

Co-operation regarded as a systematic course of action by
which the mass of the population may gradually raise them-
selves out of the evils attending a society, where the great
majority are engaged in a ceaseless struggle to promote their
own interests without regard to those of other men, to the good
attainable by a society where the great majority are united
by reasonable agreement to carry on work and promote
institutions for the common interest, naturally falls into two
great divisions :

1. The formation of a collective income — of united resources,
by which the weakness of the individuals who form the mass
may derive strength from association :

2. The employment of this collective strength to create new
conditions of life, adapted to foster the exercise of mutual help,
and divert the spirit of competitive struggle into directions
where it may become useful instead of injurious.

The first of these functions has been fulfilled in England by
the distributive system of retail and wholesale societies, which,
if carried on upon the Rochdale plan, create collective income
for their members ; while they serve as excellent savings' banks,
where the economies produced by the suppression of unneces-
sary middlemen, may be accumulated. In Germany this
function has been discharged hitherto mainly by the People's
Banks, of which more will be said in a subsequent chapter.
But, in either case, if co-operative union should stop at this
stage, it would have very imperfectly accomplished the task

The Practice of Co-operation in Social Life. 155

here assigned to it. Distributive Societies and People's Banks
may apply part of the profits of their business for the forma-
tion of libraries or reading rooms for educational purposes,
or the construction of halls where social as well as business
gatherings may be held ; but these operations leave the ordi-
nary lives of their members almost untouched. So they may
facilitate for a few of their members the obtaining houses of
their own, by acting as building societies for the outlay of the
savings which they have helped them to accumulate. But those
who occupy these houses, except they are themselves employed
by any society, must look for the means of living in them else-
where than to the society. And, as the societies must regulate
their own situation by the places where their members rind
the means of supporting themselves, they can, at the best,
do very little towards bringing within their reach conditions of
life, better suited than the life of our towns and cities is, to
form men into beings worthy of their vocation as children of
God, — as the highest manifestation on earth of spiritual life.
Hence arises the importance of co-operative production. It is
the indispensable intermediary between co-operation as an agent
for giving to the mass of the population the power arising
from their collective income and accumulated savings, and co-
operation as an instrument through which this income and
these savings may place within the reach of their possessors
the largest amount of material advantages attainable by the use
of their accumulated resources, combined with the conditions
most favourable to the development of their moral and intel-
lectual natures.

The last chapter has shown how, by co-operative union, pro-
duction may be carried on for the benefit alike of the con-
sumer, to whom it would secure good articles at reasonable
prices, and of the workers, to whom it would give the full
profits on their work at a minimum charge for the capital
needed in it. The secret of this double benefit is, that the
productive work shall be carried on in connection with a distri-
butive centre, which, by securing custom, may assure the

156 I'he Practice of Co-operation in Social Life.

capitalist against loss and thus obtain capital on the most
favourable terms, while, as the agent for supplying this capital,
it may guarantee to the consumer the goodness and reasonable
prices of the things produced. Now by means of this same
central connection, the productive society can be converted
into the source of innumerable social benefits.

Modern industry, from the vast scale on which it is carried
or. in its manufacturing centres, and the great facility of con-
veyance produced by the extension of railroads, has become, to
a great extent, independent of places. With the exception of
mines and quarries, which must necessarily be worked in the
localities where the substances to be extracted from the earth
are found, it may be said generally of any manufacture for which
there is a good sale, that the site of the manufactories may,
in the present day, be almost wherever those who carry them
on please, and the ground required can be obtained. Now,
since this good sale is precisely that which co-operative union
would have peculiar facility for securing to co-operative manu-
factures, those who carried them on, might, without injury to
their economical production of the articles manufactured, be
guided in the choice of the sites for their buildings by reference
to the general well being of the inhabitants. They might place
these centres of work in pleasant situations. They might
certainly surround them with gardens, in which the workers, or
as many of them as were so disposed, might find an agreeable
and profitable variety in their labours. And by taking
advantage of favourable opportunities they might through the
acquisition of larger estates, combine agriculture with manu-
factures. So that they would begin to exercise, on an extended
scale, that collective ownership of land, that close connection of
the population with the source of their food, which, as has been
already pointed Jut, would be the great security to the whole
body of workers, that, if the progress of invention enabled one
man to do what it required two to do before, this saving of
labour shall work to the benefit of all without detriment to
any.

The Practice of Co-operation in Social Life. 157

But these conditions of permanent economical prosperity are
also the conditions for securing social benefits. The establish-
ments whose formation have been traced, would be co-operative
self-supporting home colonies. The dwellings forming them
might be so arranged as to insure to the inhabitants the
greatest possible amount of convenience within their means,
according to their ideas of what was to be desired. What
these arrangements should be is a matter which may be very
variousiiy settled under differing circumstances by those imme-
diately concerned, and must be left for them to determine.
The benevolence of Sir Titus Salt has given us a striking
illustration of what might be done to improve the conditions
of life of the working population, by the formation of co-
operative villages round the centres of their work. But the
great prophets of social reform in modern days, Robert Owen
and Charles Fourier, more especially the latter, have developed
an idea far more full of promise for the future than any mere
improvement of isolated dwellings, namely — the idea of unitary
homes, where the magic of association shall secure to the whole
population whatever advantage isolated houses can give in com-
bination with those greater advantages that collective action
can provide. And we have now in actual operation a remark-
able example of what may be thus effected. The admir-
able results obtained by M. Godin in the Social Palace
constructed by him at Guise, call upon all who desire to
see the homes of the working population what the homes of
mankind ought to be, to give their most serious attention to
the ideas enunciated by one who has so strikingly illustrated
in practice what he has luminously expounded in principle.*
Individually I may say, that to the Social Palace, with its
varied range of enjoyments and advantages, and the collective
property in land naturally accompanying them, I look as the
true key which will open the door to that higher life — the
goal, and rich reward of co-operative effort. Viewing it in
this light, I proceed to deal with some objections likely to be

* For a fuller account of M. Godin's ideas and the Familistere at Guise, see
4 he tract on " Associated Homes," published by the Central Board.

158 The Practice of Co-operi'*^on m Social Life.

nised to the idea of such common dwellings, by persons whose
beau ideal of desirable domestic arrangements has hitherto
been that of a house and land of their own.

A residence in a unitary home, it may be said, would be
like always living in lodgings. But, intruth, the relation of the
residents in these dwellings to their abode would be quite unlike
that of a lodger to his apartments. The associated home
would be the property of an associated body ; who might indeed
allow persons, not members of the association, to occupy part
of their abode as passing tenants, but would themselves be
jointly interested in the whole property ; holding the rooms in
which they lived as their own, so long as they chose to retain
their occupation, without liability to a rise of rent, or fear
that the outlay on any improvements made by them would be
lost to them if they removed ; but with greatly increased power
either of increasing or diminishing the number of rooms that
it might be convenient to them to occupy, and facilities for
giving them up altogether if they desired to do so. All this
the rules of the society might secure to the residents, in con"
sideration of their paying rent, in proportion to the amount and
character of the accommodation required by them, upon some
fixed scale, which would form the income of the asso-
ciation and make of its stock a safe investment. There
would be no owners behind the residents to take advantage of
them. They would be the collective owners, to whom all ad-
vantages derived from the property wouid belong. They would
regulate for themselves the conditions under which the occu"
pation of their joint property could be made most beneficial to
them. They would thus be able to unite the sense of security
now attending individual ownership, with freedom from the
burdens which the individual ownership of houses and lands
often draws after it ; and would find in the stock of the asso-
ciation a means of investment, practically recouping their rent.*

• Tbe experiment of combining numerous separate family dwellings
into a joint residence has been successfully tried in England among

The Practice of Co-opcracion in Social Life. 159

To the objection that these homes would destroy the privacy
of domestic Hfe, the experience of our ancient colleges, of the
dwellings mentioned in the note at the bottom of this page,
and of any one who has seen the Familistere at Guise, gives
the best answer. It is an objection founded on ignorance of
the fact. The unitary home makes intercourse easy, but it
secures privacy greater than is generally possessed by the
dwellers in town. It expresses the spirit of unity, and gives
it full effect by preserving individuality. It is in truth the
proper co-operative dress needed to make human life such as
we may reasonably aim at making it, and accordingly, as has
been noticed, it forms an essential part of the plans of Robert
Owen, no less than of Charles Fourier.

This circumstance confirms the conclusions arrived at in
treating the question, how the profits on production should
be dealt with. For clearly, if they are to be applied, not in the
mass for the benefit of the workers who are engaged in carry-

the richer classes in the suites of rooms in Queen Victoria-street, London. The
mansion erected by Mr. Hankey at Queen Anne's Gate approaches more nearly
to the idea of an associated home. At Richmond also a similar attempt
has been successfully made. Among the poorer classes, again, the houses built
by the Metropolitan Dwellings Association, the Peabody Dwellings, and the
dwellings erected by the Improved Industrial Dwellings Company, may
be referred to in proof of the superior accommodation capable of being
brought by this means within reach of the bulk of the people. But none
of these attempts come up to the notion of an associated home, such as M.
Godin has produced. The aim of such a home is to unite all its residents into
a self-governing body in all the measures required by their common interest ; so
that those who are neighbours locally may become true associates, with a mutual
disposition to promote each other's welfare, manifested among other ways in
the management of whatever conduces to the common convenience. The
home would have the uniting effect of a co-operative store applied to the daily
affairs of life in a way which cannot be done among men scattered in separate
and often distant residences. Hence, however near one associated home
might be to another, the wholesome feelings of neighbourhood, which naturi
ally exist in country places, but are lost in our great towns, would never
cease. Each would be a little community of its own, where everybody, more
or less, knew every one else ; and found in the help they could render to
each other an inexhaustible field of morally healthy occupation.

i6o The Practice of Co-operation in Social Life.

ing on productive enterprises, but as minute dividends on
purchases, distributed among a body of persons resident in
widely separated localities, co-operative production will not
in any way tend to the formation of associated dwellings.
The workers will live as they do now, where and how they
best can around the places where their work may be carried
on, occupied probably, whenever they entertain the question of
improving their dwellings, with plans of co-operative cottage
building, which tend to strengthen the present tendency
to domestic isolation rather than to replace it by those higher
fbrms of associated life on which, if the "logic of co-operation ''
is not quite at fault, human progress really depends. The idea
which has been sometimes thrown out, that this social prin-
ciple may be left to produce its own appropriate form of
domestic life in the future, and that co-operators have only
to look to the increase of their individual incomes by means of
co-operation in the present, really means, that the poorer
classes should throw away the thoroughly effective means of
creating better domestic arrangements now within their reach,
in order, at some indefinitely remote future, perhaps, under
much greater difficulties, to make such arrangements by union
among themselves.

What they might do now, if they began to carry on pro-
duction with a view to doing it, the statistics of the West
End Leicester shoe works, moderate as is the profit which they
yield, show. I quote them in preference to such results as M.
Godin obtains at Guise, because the profit is moderate, and
therefore at least as large an amount of benefit may be looked
for generally ; while, as we possess also the statement of the
business through which these profits are produced, it is possible
to contrast the effects of the two modes of applying them — scat-
tering them over consumption, or concentrating them on work.
From a table contained in a paper on Co-operative Produc-
tion, written by Mr. Joseph Greenwood,* and compiled from

«"-■»- ■ — — — ' — p^— — — — - — ■

*Nevos for 1879. p. 192.

The Practice of Co-operation in Social Life. i6l

statistics furnished by Mr. T. Wood, of the Wholesale, it appears
that in 1S78 —

The sales at these works produced j^76,884

The number of hands employed was ... 672

The wages paid were ;^25,030

The capital employed was 22,490

And the net profit was ^€^573

or at the rate of £11 8s. lod. percent. This profit is the clear
manufacturing gain, after allowing the usual discount for cash
to meet the cost of distribution. It is what the capitalist
would have got for himself if the work had been carried on
upon his own account; and it leaves £"1,575 surplus, over
;^gg8 the interest on the capital at ^^ per cent.

Now, suppose that instead of a business of some £"76,000,
the sales from the shoe works should be four times the amount,
;f30o,ooo, which even now, the consumption of the present
co-operative societies if it were all concentrated upon them
would probably yield. We should have, at the same rate of
profit some ;^"6,ooo applicable under prudent commercial condi-
tions to improve the social position of the workers, who would
be earning about £"100,000 in wages, and would probably num-
ber if they all found full employment in these works, somewhere
about 2,000. For it appears that about three-fifths of the
workers, 357 out of 595 employed in November 1879, who
earned 48*44 per cent, of the wages paid, £"320 out of £"662,
were out-door workers, who take the work home, and of whom
many work not only for the Wholesale but also for other
employers in this business. So that the wages above men-
tioned are less than the total earnings of those who do the
work ; while the number of workers mentioned is larger than
would be required to turn out the work done, if the whole time
of all the workers was occupied in this work ; as must be
the case, if they occupied such a social mansion as M. Godin
has constructed, connected with a shoe factory built on
-a site selected with a view to the welfare and enjoyment

ib2 The Practice of Co-operation in Social Life.

of the working population, for whose benefit the profits
hitherto absorbed by the capitah'st were applied. What
would the resources placed at the command of" the managers
oi such an establishment enable them to do for its in-
mates ?

First, for defraying the cost of the social dwelling, they
would have the sums paid as rent by its working inhabitants,
which, according to the experience of M. Godin, if they paid
at the same rate as they are used to give in manufacturing dis-
tricts for accomrnodation very inferior to that provided by him,
would yield upon the outlay required more than the customary
£^ per cent. But this wages' fund would not only thus house
the population as it should be housed — it would do a great deal
more. It would maintain the gardens and orchards sur-
rounding the dwelling, where utility might easily be combined
with ornament, as may be seen in the kitchen gardens of many
an old mansion whose flower beds border spaces appropriated
to the production of fruits and vegetables, of which they might
furnish to the inmates an abundant supply on the most reason-
able terms. Again the benefits arising from a co-operative store
might be secured to the inhabitants to a degree far more com-
plete than is usually the case at present, from the fact that the
store would form part of the mansion, and so be within a few
yards of the rooms of all its inhabitants, who, if tha building
was constructed on the model of that at Guise could obtain
whatever they required without having to go out of doors.
Whence their expenditure at the stores, if these were properly
stocked, would probably be a good deal more nearly equal
to the amount of wages and emoluments than is the case
in our present co-operative experience, where we know that
the store is continually exposed to a competition with the
shops which in numerous cases prove, by the attraction
of convenience, very formidable rivals to the attraction of
dividend.

Now, we know that prosperO>us stores with an income of
from ;^io,ooo to ;^i 2,000 a year, at which the income of the

The Practice of Co-operation in Social Life. 163

associated home store must be estimated under the circum-
staiices, generally begin to maice outlays for libraries, reading-
rooms, halls, &c., for the benefit of their members. That a
similar disposition should be manifested by the members of a
store placed within the mansion, where the ease of access would
make these institutions so generally useful, cannot be con-
sidered an improbable assumption. It might be extended
probably to such purposes as washhouses and laundries.
Here then we have a whole mass of social benefits brought
directly within the reach of the body of workers by means of
their own incomes only, before we begin to deal with the
profits on their work ; simply because they would have
acquired by association the power of applying their earn-
ings so as to secure from them the maximr'n of advan-
tage which they can yield, independently of any applica-
tion of profits. Of these, I suppose, 15 percent., say^^iooo to
be carried to reserve. There remains ;^5,ooo. How shall this
be dealt with ?

If we take as our guide the institutions established at
Guise, and resting upon this example, consider what the
profits of the manufacture would make it possible to do for the
workers, beyond what the wages earned by them would enable
them to do for themselves, we obtain the following basis for
our calculation —

Annual Outlay at the Familistere of Guise. *
Administration, office expenses, cleaning,

water service
Gas lighting ...
Repairs

Subscription to Provident Funds, to meet an

equal sum paid by the employes
Nursery and Babies' School (see next page)
Infants' and other Schools (see next page)
Extra lectures

Total ... ... ... 1,540 8

£ s.

209 12

52 16

320

...

4.32

...

432

• • •

316

...

* These figures were carefully compiled from information obtained on the
original issue of the Manual. They are retained as well as those relating to
the Wholesale at that date, because the argument is independent of the
particular figures.

164 The Practice of Co-operation in Social Life.

Annual

Cost.

Institution,

No. of children

provided for.

Per child.

Total.

£ s. d.

Nursery... ... ...

400

Babies' School ...

Infants' School ...

100

3rd class „

I 4 10

2nd class „

I 8

1st class „ .,, .,.

I 16

Total

325

••

748

The rate of contribution to the Provident Fund varies from
9^d. to 2s. (i fr. to 2.50) a month, while the fund created by
the contributions and the addition made from the profits of the
business suffices to give a right in case of illness : —

1. To the visits, at the choice of the patient, of one of the
three regular medical attendants at the Familistdre :

2. To an allowance varying from p^d. to 4s. (i to 5 frs.) a
day during the continuance of the illness :

3. To the use of bed linen, night shirts, and other apparatus
conducive to comfort :

4. To medicines for all members of the family.

For a fuller notice of the admirable system of attention
bestowed on the infants and children in the Nursery and
Babies' School at the Familistdre, I must refer to the tract
on Associated Homes. The cost of them has been dis-
tinguished in the summary above given from that of the schools
for elder children, because, at the present day the expense of
the latter might probably be defrayed from the general educa-
tional rate, and so cease to be a special burden on the funds
of the society. The charge above stated would thus be re-
duced to ^1,224. In an establishment of the size of that
assumed by me, the number of persons would be somewhat
more than double that ot the residents in the Familistfere.

The Practice of Co-operation in Social Life. 165

Put it at i\ times, we should get a charge of about £3,000
as the cost of providing for —

1. The general convenience of the inmates :

2. The perfect care of the children up to the age when the
infant school receives them :

3. Superior teaching for those who, having gone through
the regular school course, are desirous of building up a higher
edifice of knowledge upon it :

4. The care and comfort of the sick and disabled.

These benefits would be additional to the general advan-
tages which the population would derive from using the
savings on their own consumption for common purposes, in
the way above-stated. There would remain £'2,000, which judi-
ciously applied in premiums as the reward of intelligence and
industry among the workers, or to give a general character of
finish and neatness to the mansion and its surroundings, would
produce an effect greater than the smallness of the means might
lead us to expect ; because the action would be repeated year
after year, and tell, as all impulses often renewed and not
counteracting each other do tell, to an extent far beyond .what
might be anticipated from their individual feebleness; and
because they would insensibly produce in the inhabitants
that pride in and attachment to their residence, which the
presence of beauty in some form commonly creates.

Contrast this pictui^ of what the profits of a work yielding
but a moderate return on the capital employed may effect, even
without reckoning on the probable increase if the workers were
working for themselves, supposing these profits to be concen-
trated upon the persons who do the work, with the result
obtainable from dividing them on purchases.

The sales of the Wholesale during the year 1878, to which
the figures above given relate, were ;i^2,739,500.

Now the profits realized by the Wholesale from its manufac-
tures are, it appeals, not distributed specially among those
who huy the particular arlicles, Dul form part of the general

1 66 TJie Practice of Co-operation in Social Life.

fund arising from the charges put by it upon all the
articles which it supplies, whether they are of its own manu-
facture or are bought from other manufacturers. The
Leicester Shoe Works are treated in this respect, with
perfect fairness. The goods are charged with such a discount
as other manufacturers would allow to the Wholesale for cash
payment, and are credited with the whole surplus profit upon
the prices obtained from their sale, without any deductions
but those which prudent private manufacturers would make.
The works, therefore, are fairly treated in estimating their earn-
ings. But what is done with these earnings ? They are cast
into the common pot au feu of the Wholesale business, and
constitute part of the sum applicable to defray its general ex-
penses and pay its dividends, to which in the year 1878 they
contributed £"0*00570, just under one-eighth of a id. in the
f^. No doubt these imperceptible sums are distributed over
a correspondingly large number of persons. But the well-being
of man does not admit of being reduced to a mathematical
equation, where 1,000,000 times t.oo^ outt is equal to i. No
one could feel himself the better off, for the half farthing sav-
ing which the profits of the Leicester Shoe Works, dealt with
in the way they are dealt with, may theoretically bring to him
on an outlay of £1. I say theoretically, because, practically,
the sum is so small, that if taken alone it would not be dis-
tributed at all, but only carried to reserve with an ultimate
possibility of forming part of some dividend to be declared
thereafter.

But, supposing it to be divided, I say its capacity for
social good is reduced to a nullity by the process. Instead
of helping to promote the well-being of a numerous body, as
when concentrated upon work it might do in an important
degree, and, by the desire to imitate such an example called
iorth from the experience of this effect, creating an ever
widening circle of benefit, it will be entirely wasted in an etlect
which will not be perceived at all.

Hence it appears that the scheme of dividing the profits oi

The Practice of Co-operation in Social Life. 167

work among those who only purchase it, is open not only to the
objection that it must give to the richer classes by far the
largest part of the profits on manufactures, because they will be
by far the largest buyers, but also to the objection that what it
does give to the working classes, it will give them in a form in
which the benefits of the gift will be thrown away ; dissipated
into fractions so infinitesimally small that they benefit no one.*
The illustration given above of the way to apply the profits
on work, so that instead of thus uselessly dissipating their
power this power may be made as effective for good as it
can be, has been confined to one kind of work. If we
imagine many varieties of manufacture, yielding various rates
o( profit in proportion to the capital employed, to be carried
on in federal connection, it would become possible so to com-
bine those profits as, without throwing upon one man the bur-
den of another man's acts, to remove, or at least greatly to miti
gate the inequalities of payment at present attaching to

• It may be objected that, in the text, the actual profit on the Wholesale
Shoe Works in 1878, is compared with a profit assumed to be four times as
large. But as this increased profit is supposed to be derived from a fourfold in-
crease in the sales of shoes, which must be expected to correspond to an
increase of sales generally, the proportion of profit to purchases would not be
aflected. It must be also noted that the amount of sales is at wholesale prices.
To see what a purchaser must pay in order to get out of the profits of the
Leicester Shoe Works half a farthing, the retail charge, which cannot be put
at less than 25 per cent, must be added. In other words in order to obtain id.
by co-operative production in the shoe works carried on upon the Wholesale
schejne the purchaser must spend j^io if the rate of profit is no greater than
at Leicester in 1878, or ^f 6 8s. icd. if the profit were a clear^^io percent. This
however, is on one kind of manufacture only. If we would estimate the total
result of a system of production on the Wholesale plan, supposing it applied
to supply all the demands of the working population for manufactured articles,
we may form some idea of it thus: — The profit of the Leicester Shoe Works
in 1878 distributed among the purchasers of the shoes only, would have given
them ^^0-020,485 or a trifle under 5d. on each j^i bought at wholesale prices
or 4d. on each ^ I at retail prices, rising to 6d. in the ;^i, if the net profit
realized on the manufactures aftnr paying^"5 percent, on capital, rose to _^io
per cent. On these data every one can calculate from the consumption cl
ncTv manufactured articles by himself or his family during the year, what the
possible advantage of such a system would be in his own case. See appendix
Note 12, for some addilionsl calcuir.tions.

1 68 The Practice of Co-operation in Social Life.

different kinds of work. For instance, the contributions
to the Provident Fund from different estahhshments
might be combined ; so that in all the trades thus associated
the same rate of payment by any worker would entitle
him to the same amount of benefit secured by his contribu-
tions whatever the particular work in which he was employed.
So the provisions for the care or instruction of children might
be relieved from any uncertainty attending the varying profits
of different businesses in different years, by the institution of
common funds, to which each society should contribute some
fixed proportion of its profits, and thus bring out an average
charge, where the stronger would help the weaker without
feeling any burden.*

The combination of different manufacturing operations might
also afford facility for what would be in itself a great social
advantage, the carrying on of more than one kind of work in
connection v/ith the same associated home ; so as to prevent
the splitting up of the population into separate castes of per-
sons locally separated, of whom each set was busied only with
one kind of work. Thus it would conduce to that fusion of
classes which it should be the social object of associated dwel-
lings to bring about, by the insensible influence of neighbour-
hood combined with the refined influence of education.

While the response, which any such plans of the work-
ing classes for their own social elevation would certainly
call forth among large bodies of the richer classes, would
give to the latter, through the influences connected with the
common dwelling, the means of doing effectually what they are
now trying to do in a thousand ways often productive of more
harm than good. Their wealth would be converted into a real
blessing to those around them, while it became to themselves
a permanent source of happiness from the consciousness that
it was thus used.

In such circumstances the associated homes wouM cease to

* F"( r furlber consideration of this subject see Appendix, Note II.

The Practice of Co-operation in Social Life. 169

be restricted to the dwellings of persons maintained by the
industrial occupations by which the bulk of the population
must always be sustained. Each house would form a society
within itself, whose occupiers might often derive their in-
comes from sources distinct from any work carried on in
immediate connection with it, and, if their resources per-
mitted might be members of many such associations in
various districts, moving from one to another at their pleasure.
So, groups of such homes might spring up in localities which
for any reason attracted a numerous population, who might
find occupation in industrial establishments distinct from any
of them, and form residences possessing the semi-rural
enjoyments lavished by the imagination of Dr. Richardson on
his City of Health. And here it might be found that large
central bazaars, independent of either houses or industrial
establishments, though affiliated with them, might furnish
depots for the distribution of many articles more convenient
than the stores within the homes where articles of food
would naturally be supplied. So that Production, Distribu-
tion, and Home residence would again acquire the independence
now belonging to them, without the evils now attending it.

It is tempting to continue a picture of a world free from
those social evils which now aggravate to an incalculable
extent the difficulty of that con-test with selfish desires,
the expression in ourselves of the struggle for existence
pervading all natural being, which all of us must fight out
in our own breasts. But to yield to this temptation must carry
us so far away from the existing state of society, that the pic-
ture would be in danger of losing all practical usefulness. It
would be a dream banished to that golden age which must
always flee before the experience of life, till men learn that the
heaven from which the Divine vision shall descend is to be
sought within themselves ; and that the kingdom of God on
earth will come, as soon as they heartily will that it shall be
realized, by the simple method of uniting to give generally to
:hose around them the advantages which they seek to secure
personally tor themselves.

Chapter io.

THE APPLICATION OF CO OPERATION TO

BANKING.
It is well known that in various parts of Europe, especially
in Austria, Belgium, Germany and Italy, the system of
People's Banks, introduced into Germany by that eminent
social reformer Dr. Schulze Delitzsch, has formed the first step
of co-operative union, — out of which a great variety of other
co-operative enterprise has arisen in the country of their
origin. A somewhat detailed account of these institutions is
given in the Appendix to the Report of the Congress for 1879.
Since that time there have appeared two of the annual
statements by which their progress in Germany is described
with a profusion of figures, such as, though emanating from a
purely voluntary union put our annual returns quite out oi
countenance. From the first of these I take the following sum-
mary of the state of these associations at the end of 1886 : — *

Total Number. •

Numbers Making Returns.

Banks 2,135

Members (estimate) 1,500,000
Business „ ;^i 50,000,000
Capitalofmembers^ 1 5,000,000
Deposits and loans ;^25, 000^000

881

451,452

^74,128,571

^6,606,266

;!^2o,587,o56

The principle upon which these banks are founded is that
of creating confidence in the public by means of the joint
unlimited engagement entered into by each of the members of
any bank for all its debts, and thus obtaining deposits, or loans
from the ordinary banks as well as from individual depositors,
by means of which the members can make themselves ad-

* I take this return insto.Tl of tlio one for 1.S79 because il contains 49 more
returns. The number of banks had increaseJ in iho 3 car (roni 1841 to 1S66.

Ine Application of Co-operation to Banking. 171

vances to an extent greatly beyond what their own capital would
enable them to do. Whence they gradually accumulate — out
of the profits of this larger business, as well as from that arising
through their own subscriptions, funds out of which they can
in various ways aid themselves ; as they have done, among other
things, by founding the variety of societies of different sorts
enumerated in the Annual Reports — 1879, pp. 75, 92, 97, and
1886, pp. 83, 90.*

This effect of confidence produced and advances of capital
in consequence, showed itself very early in the history of these
banks. Indeed, this confidence if measured by the amount
of money lent, would appear to have been even greater then
than at present ; for, though the total sums dealt with are much
larger than they were at first, the proportion of deposits to the
capital held by the members has decreased, as appears by the
following figures for each five years from 1859 to 1886 : —

Banks
ded in Returns.

Percentage of

Inclu

Own Capital.

Deposits and Loans.

1859

27.50

72.50

1863

333

22.30

77.70

1868

660

30.40

70.70

1873

834

27-33

72.69

1878

943

33-68

66.32

1883

922

32-05

67-93

1886

88t

32.09

67.91

* For the supply of Raw Materials

Agricultural Purposes

Magazines (Industrial)

,, (Agricultural) ...
Productive Purposes (Industrial)

,, ,, (Agricultural)
Assurance and Various Purposes
Distribution (Consumvereine)
lUiilding

211

704

135

202

—

133

154

388

621

696

Total

1305 1337

172 TJie Application of Co-operation to Banking.

The operation is of the same kind as that on which the suc-
cess of our own great banks depends. For their large dividends
are derived not from large profits made on their own capital, but
from small profits on the very large amount of other men's money
beyond the amount of their own capital, with which they have
to deal. The original capital serves mainly to create the
confidence which attracts these moneys, and is kept up by
the amount of the reserves invested in Government Securities,
constituting the ever available assets of those great institu-
tions.

It will be seen that the People's Banks somewhat sur-
pass our distributive societies in facilitating the first step o.'
co-operative work, the accumulation of capital by the poorer
classes — 451,452 persons having accumulated in twenty-seven
years an average of ;^i5 9s. 5d. in share capital, while in England
the amount of share capital accumulated up to the end of 1886,
in forty-three years after the foundation of the Rochdale Equitable
Pioneers' Society, by 702,974 persons, averaged only j[^\\ i8s.
I id. There was indeed also ;^i,4oi,ooo of loan capital. But
this cannot properly be brought into account unless we knew how
much of the ;^2o,587,o56 deposits in the German banks belongs
to the owners of the share capital. The energetic protest of Dr.
Schulze Delitzsch against any measure tending to shake the
confidence which has enabled the members of these societies
to use for their own elevation a capital more than three times
larger than that possessed by them individually, is justified by
these results. They must awaken the desire that an institution
productive of them could be introduced among us. That
the limitation of liability, which would no doubt be called for
by the feeling prevailing in England in this respect, and is made
imperative in the case of Industrial and Provident Societies by
the law relating to them, does not prevent the growth of
such institutions, is shown by the example of Italy, where the
People's Banks have taken firm root and flourish greatly
under this limitation.

In fact, however, our Industrial and Provident Societies Act

The Application of Co-operation to Banking. 173

does apply, in the case of societies transacting banking business,
provisions for the protection of creditors which give them,
in a different way, a security probably practically as effective
as that assured to them by the indefinite liability of the mem-
bers in the banks created under the present German law.
For by this law every member of a society formed under it
has a right to leave the society, at the end of any year,
on a four weeks' notice, unless the rules of the society
especially provide otherwise, and to demand payment of the
sum standing to his credit within three months thereafter ;
remaining liable for the debts due at the time when he ceases
to be a member, for two years. While by our law, since bank-
ing business cannot be carried on by a society with withdraw-
able capital, a member must remain liable to lose the whole
of his investment, whether arising from his own contributions
or the profits of the business, unless he obtain some one to whom
his shares are transferred. And even if he does effect the
transfer he would remain liable for any amount unpaid
upon his shares for a year after he has ceased to be a mem-
ber, if the actual holder did not pay this sum, and the
amount were needed to satisfy the claims of any creditors
for debts subsisting at the time when he ceased to be a
member.

If a reserve of uncalled capital is required in order to
produce confidence in a banking society, it is possible to
create this reserve to any desired extent, by provisions in the
rules of the society under which any determined proportion of
the capital may be left unpaid as a guarantee to creditors. It
seems then that it ought to be practicable to form under our
Industrial and Provident Societies Act, People's Banks, which
might give to their members that power of accumulating
capital out of the profits of banking business, given
by the People's Banks of the Continent to so large an
extent, to the populations of Austria, Belgium, Germany, and
Italy, if the desire to form these institutions should take root
among cur population.

174 The Application of Co-operation to Banking.

For, although the greater number of small manufacturers and
traders in Germany, compared with that in Great Britain, and the
large number of small farmers and peasant occupiers or owners

Members.

Per Centages

(Men & Women)
to whole number.

Occupation.

1878.

1886.

Men.

Women.

Men.

Women.

1878.

1886.

I. Independent

landowners, gar-

deners, foresters,

and fishers

77,342

3,059

103,569

4,920

23- 13

26.77

II. Assistants and

workmen in Class

10,154

687

11,603

977

311

3.10

III. Manufacturers,

ni i n e-o w n e r s.

and builders ...

12,668

277

13,558

376

3-72

3-45

IV. Independent

hand-workers

and craftsmen ...

107,972

3,664

"4,556

4,494

32.0S

29.38

V. "Workmen in

manufactories,

mines, and trades

16,232

547

18,919

669

4. So

4.83

VI. Independent

merchants and

traders

32,894

2,257

35,579

2,843

10.12

9.48

VII. Clerks and

assistants

2,374

117

2,678

103

0.78

0.68

VIII. Carriers by

land and water,

and innkeepers

17,377

884

18,883

1,260

5-^4

4-97

IX. Letter carriers,

r'l way, telegraph.

and post em-

ployes and work-

men, sailors and

waiters

7,033

7,803

148

2.94

1.98

X. Servants

2,449

909

2,601

1,415

0.96

0.99

XL Physicians,

apothecaries.

teachers, artists,

Church and State

officials

23,602

946

25,427

1,136

7-05, 6.55

XII. Fund-holders,

pensioners, and

other persons

with no occupa-

tion

10,388

13,984

11,806

19,758

7.01

7.79

320,479*

27,421*

367,042*

38,099

99-97

99.97

* These are the corrected totals of the Summary. The figures in the tables
for 1878 make the men 320,485, and the women 27,415.

The Application of Co-operation ic Banking, i/t;

of land offer a wider opening for the introduction of the system
there than exists among us, the statistics of the members of the
German banks prove, that they include very large numbers of
persons of occupations analogous to many abounding in our
country, as is shown by the preceding table of the occupations
of the members of 706 banks in 1878, and 747 in 1886 contained
in the Annual Reports for 1878 and 1886.

It will be seen that of all these classes, the only one represented
in Germany much more extensively than in Great Britain, is No.
IV., hand-workers and craftsmen working on their own account.
But this class forms, on the average of the two years, 30.73 per
cent, of the whole body; 69.27 per cent, remain of persons who
certainly must exist in very large numbers in our own country,
where Class IV. would at all events find some persons
answering to it. The difference between Great Britain and
the Continent in this respect can therefore scarcely be such as
to make impossible the working of an institution from which
results so beneficial to the poorer classes, in that first step to
their elevation the accumulation of capital, have followed to so
large a degree as has followed among the Germans, if they were
formed and carried on with the same object as that pursued id
Germany ; — namely, to enable these poorer classes, by means
of the credit obtained through their collective responsibility, tci
become depositories of the savings of the classes richer than
themselves ; and by employing these sums in advances in the
way of banking business at rates of interest higher than those
which they give for them, to realize on their own investments
profits which they may apply in the formation of a capital
for themselves.

The idea is different from that hitherto for the most part asso-
ciated among us with the notion of co-operative banking. We
have been used to look upon it only as a means of providing
from the surplus moneys of co-operative societies, apart from
its use as a convenience of making payments, a fund which,
being managed by persons desirous of promoting co-operative
business, may be thus employed, instead ot being used, as the

I7''> The Application of Co operation to Banking.

moneys in the hands of ordinary bankers largely are used,
in supplying the demands of private traders. The object
is excellent, and if there existed a number of productive
co-operative enterprises carrying on their business upon the
terms of credit customary with private traders, and receiving
payment by acceptances from customers in good repute, which
they desired to discount and place the proceeds to their own
account, according to the custom usual in private trade, it
would be of great advantage to have a central bank disposed
to make the accumulated balances of its customers available
for giving to the co-operative producer the same sort of
facilities which the non-co-operative producer obtains through
the ordinary banking chanels. But at present this advantage
is little felt. The business is conducted as a department of the
Wholesale, and its balance-sheets for the two years ending
March, 1888, show the following results, omitting shillings
and pence : —

Quarters.

Total
Assets.

Bills
not Due.

Loans,
Arrears Acct.

Advances.

£>

£.

£>

1886 March

1,258,387

5.405

93,137

18,599

June

1,297,008

3,165

101,178

19,601

September

1,319,413

8,773

97,901

25,768

December

1,283,000

4,568

101,671

26,000

1887 Tune

1,367,908

5,082

90,281

26,804

September

1,394,459

6,320

104,344

25,898

: December

1,365,842

8,600

106,176

26,350

1 l88i? March

1,451,340

4,132

108,216

27,383

How small is the amount of that staple of ordinary commercial
banking business, — bills discounted, is apparent. The bulk of
the assets beyond cash in hand and balances in other banks,
ccujiists of advances on loans and overdrafts.

I say nothing about the safety of these advances. In some
cases they are made to societies, which hold, in the shape of
loans to the Wholesale, amounts larger than the over-drafts
allowed them. But it is obvious that advances by way of
overdrafts, since they do not represent particular transactions
which come to a natural terminatirn when ihe bills are

The Application of Co-operation to Banking. 177

due, as the discounts of ordinary commercial business do,
must always be in danger of slipping into the character of ad-
vances which cannot be called in without serious inconvenience
to the parties to whom they are made. Whence they may
gravely compromise the position of a banker, who, being liable
to repay the money in his hands on demand, or on very short
notice, should have the assets out of which they are to be met
in a position such, that he can readily make them available to
meet such demands as they arise.* Yet, from the little use of
commercial securities in the businesses of co-operative societies
it is difficult to see in what other way the deposits of the
societies, not employed in the business of the Wholesale itself,
could be productively employed by it except in this kind of
business, and permanent loans, which if made on the security
of commercial properties are peculiarly exposed to risk.

The habit of ready money dealings, which is a tower of
strength to co-operative transactions in so many ways, is, in
this province of banking, a source of difficulty. It reduces the
function of the banker almost to that of taking care of the
moneys entrusted to him, and giving his customers the ad-
vantage arising from making their payments by cheques.
Even for investments in over -drafts and loans the Whole-
sale banking business is largely indebted to societies which
do not properly belong to the co-operative fold. While for a
large proportion of the moneys in its hands it seems, so far as
appears by its balance sheets, unable to find employment, as
is shown by the following table, which includes advances or loans
of every sort, to Manufacturing and Mining Companies, Building,
Distributive, and Productive Societies.

Loans.

Advances.

With other Banks.

Quarters.

•Amount.

Per Cent, of
Total Assets.

1887 June

September
December

1888 March

;^90,28l
101,344
106,176
108,216

;,f26,28l
25,898
26,358
27,383

;^254,l63

146,171

97,380

205,539

18.58

10.48

7.12

14.16

This is after the investment of £\ooyOoo in Consols.

That this danger may exist on over-drafts by the customers of the Wholesale

1/8 The Application of Co-operation to Banking.

It seems clear from these figures that although the connec-
tion of the banking business with the Wholesale was originally
necessary in order to create the confidence without which the
business would not have been commenced, this connection
has now become injurious to its progress. If a co-operative
bank is to become a general depository of the income of co-
operative societies and co-operators ; if it is to do " not only
the business of the Wholesale, but all the banking business of
the co-operative movement, distributive and productive, also
of joint stock companies, trade and friendly societies," as the
resolution of the Wholesale Committee of June, 1872, contem
plates ; if, in fact, it is to become an important banking
institution, it must cease to confine its operations to the
classes to which they have been limited up to the present
time. It must open its doors to every customer, individuals,
firms, companies or societies, and deal generally with the
commercial securities in which other banks find the great
means of profitably employing the balance of deposits in their
hands. While the management of the institution is carefully
retained in the hands of co-operative societies, it must carry
on its business so as to secure the largest returns attainable
upon a solid basis, and under a prudent management.

Such a change would necessarily involve a complete separa-
tion of the bank from the Wholesale Society, whose constitution
is not elastic enough to take in as members those whose ad-
mission is indispensable if the bank is to prosper. But it
was shown m Mr. Hughes' paper, read at the Leicester Con-
gress, and the discussion following upon it, that this separation
would really be a great benefit to the Wholesale, which loses
one of the principal advantages that it should derive from a
co-operative bank, the power of paying its loan holders by
acceptances which they would have no difficulty in discounting,

appears from the fact that, of the advances mentioned in the original issue of
the Manual, there were due from the same 27 societies or companies : —

Dates. Amount. ^^'^^^^ Dates. Amount. P/^^^^-J^;

\^io June £,^o,<:^2 79-75 1880 December ;^97,226 71-55

„» .Sept. 96,834 85.13 1881 March 96,149 83.84

The Application of Co-operatton to Banking. 179

through this bank being only a department of its own business ;
while the position now attained by this business would make
it possible to introduce a co-operative bank free from the fetters
which now prevent its growth, under conditions such as would
give it a peculiar claim to public favour.

The total number of societies and companies which have
banking accounts with the Wholesale, according to its state-
ment in March, 1880, including its own trading department, was
136, and the net income of 87 of these societies, included in
the Registrar's return for the year ending December 31,
1878, was ^279,698. Adding the net income of the 49
societies or companies not included in this return, and that of
the Wholesale itself, we may take the net income of the
customers of the Wholesale bank, on a moderate estimate, as
at least ;^4oo,ooo.

At present the only guarantee for the moneys deposited in
the bank beyond the bank assets is the Wholesale itself.
Now, the net income of the Wholesale according to its
annual return for 1879 was ;f48,i67, or about ^ of the
whole income of the other customers of the bank : and the ex-
cess of its assets over the demands upon them, including the
balances on its trade account, was, according to its March
Balance Sheet, £188,471 which constituted the guarantee
to the bank depositors at that moment. Suppose then a bank to
be formed, upon the principle of using its share capital only as a'
guarantee for the safetv of its deposits, to be gradually replaced
by the accumulated profits arising out of its business, and that
the guarantee of the Wholesale were limited to ;^i50,ooo, pro-
duced by its holding, say, 30,000 £5 shares with is. per share
paid up, surely it would not be difficult to find among the
other 136 depositors, whose net collective incomes must be
eight times that of the Wholesale, a number sufficient to
raise ^150,000 of additional guarantee. Whence, while the
Wholesale was relieved to a considerable extent, the depositors
would obtain an additional security beyond that at present
given them of somewhere about £110,000, with the great ad-
vantage of its resting upon the stability, not only oi tne

I So The Application of Co-operation to Banking.

Wholesale, but also of a number of societies independent of it.
While, practically, they could obtain a great additional security,
in the amount of Government stocks, which it would be pos-
sible for the co-operative bank when disentangled from the
Wholesale to hold, as other banks habitually do, though, as is
shown in Mr, Hughes' paper, so long as the great trading
establishment is united with the bank, such an operation
would involve a heavy loss with no corresponding advantage.

Let us suppose now, that, by the constitution of this co-
operative bank, its profits were divided between shareholders,
and customers; every customer who held an average balance
of some fixed amount, being entitled to take up shares in pro-
portion to the average amount of his balance ; and that the share-
holder's profits were accumulated till the shares were paid up
wholly, ortoanylimitdetermined. We should have a bank unique.;
in its character, since it would practically be mutual. For no
capital would be required to start it beyond the is. per share,
which would, no doubt, be absorbed in the original outfit. The
actual business of the present customers of the Wholesale
would be sufficient to make it self-supporting from the first. So
that every customer would be able to assure himself of a share
in the profits proportioned to the business brought by him, by
taking upon himself a corresponding proportion of guarantee
liability ; while the share of profits of those who declined
this risk would go to augment the benefits of all who under-
took it.

To preserve the character of the direction, it would, I con-
ceive, be sufficient to limit the choice of directors to candi-
dates nominated by the society-members, for whom all the
members might vote as they pleased. So that they would not
feel themselves shut out from a share in the government, while
yet they could not transfer the management to hands opposed
to the progress of co-operation. Thus might an institution
be formed, which having full freedom to direct its resources
to any channel where they could be safely and remuneratively
employed, according to the wants of trade,, might serve to
xtt^Vq^ available for the benefit of co-operators, the large re-

The Application of Co-operation to Banking, l8l

pourccs which a well-manafijed bnnk, able to draw in the busi-
ness of all who were favourable to co-operative progress, would
gradually command.

iNo doubt such an institution would have to run the risks
attending banking operations generally. It could not reason-
ably expect a greater immunity from losses by fraudulent
transactions than its well - managed contemporaries, the
London and Westminster Bank, for example, which we know
has suffered heavily in one case from this cause. But the
London and Westminster Bank has nevertheless done a very
large and profitable banking business. If we compare its
losses with those actually sustained up to the present time by
the Wholesale in its banking department, from the system
of overdrafts and advances on securities of a commercial
nature, in which its operations have mainly consisted,
bearing in mind the proportion of loss sustained to the total
amount of funds employed, we shall not find much reason
for congratulating ourselves on the greater security of this
mode of using deposits over that more generally employed ;
while if the business is confined to such operations, it
appears clear that the Co-operative Bank must be contented
to take up' the position of a somewhat insignificant Finance
and Loan Association.

The question really is, Shall this be its history ? or, Shall it be
transformed into an institution which may give to the co-opera-
tive body a large command over capital, with a correspond-
ing power of aiding co-operative institutions, as they grow
up, by the facihties for transacting business which banks
can properly offer, and by affording to the competitive pro-
ducer and trader very greatly contribute to their pros-
perity. Looking forward to the increasing opposition likely
to be raised to the spread of co-operation sucn a uansforma-
tion of the Co-operative Bank as may convert it into
a powerful centre of bankvrjg operations, appears Very desirable
in the interests of the whole movement. Without it, the time
may come when co-operators may find therr action embarrassed
'KJ various wavs from the want of a strong and widely-spread
«ysterii ot banking busmess.

iSa The Law Relating to iMusinai

^HVkPTIW 1I«

THE LAW RELATING TO INDUSTRIAL AND

" PROVIDENT SOCIETIES.

Various legal provisions affecting societies registered undc/
the Industrial and Provident Societies Act, 1876, have been
noticed in the chapter on Distributive Co-operation. But
these relate to the mode of forming the societies and the registra-
tion of their rules, or amendments, with a few notices of matters
directly bearing upon their business.

I propose here to give an abstract of the whole law specially
relating to them. Where no other reference is expressed, the
reference is to the Act above named, the Customs and Inland
Revenue Act, 1880, and the Provident Nominations and Smali
Intestacies Act, 1883.

I. The constitution and obligations of a society —

1. Members. — A society cannot be registered unless it
consists of at least seven members, besides the secretary,
who need not be a member, but must join in signing the
application for registration and the rules. Sec. 7 (i and 2).

It may comprise any body corporate, including any other
registered society. Sec. 12 (5), and Schedule II.

Minors, if over sixteen, may be members, and have all
the legal powers of members, except that of being officers.
Sec. II (9).

No member except a registered society can hold any
greater interest in its shares than ;^2oo. Sec. 6.

2. Objects. — A society must be formed to carry on some
labour, trade, or handicraft. It may carry on more than
one. The buying and selling of land is expressly included.
Sec. 6.

Therefore a society cannot be formed for any lawful purpose as a
company may be, but as the profits of its business may be applied for any
such purpose, Sec. 12 (7); a society which has some other purpose to

ana ProtiUent Societies- 183

which a trade may be subservient, such as the forming a club, may include
in its rules a power to its managers to apply to this purpose the profits
of any business specified as its object, with any other funds subscribed
for that purpose, and may give them all necessary powers for so doing.

3. Registered Office. — Every society must have a registered
office to which all communications and notices may be
addressed, and notify to the registrar for the country where
it is situate, its situation, and any change in it. Sec. 10 (i a).

If it carries on business in more than one country it is to
be registered in the country where its registered office is
situate, but copies of its rules must be recorded in the other
countries.

4. The name of the society must have " Limited" as its
last word. Sec. 7 (5).

The last word but one need not be society, but cannot be
company. (Practice of the Registrar's office.)

The name must not so nearly resemble the name of any
other society, as in the judgment of the Registrar to be
likely to deceive the public. Sec. 7 (3).

It can be changed with the approval of the Chief Registrar,
in writing, by a process described below. Sec. 7 (3),
Schedule II., 12.

The provisions as to its publication, Sec. 10 (i, b), are stated in the
chapter on Distribution.

5. Audit and Accounts, Sec. 10 (i, c). — Once at least in every
year a society must have its accounts audited —

Either by a public auditor,

Or by two or more persons appointed under its rules :
Who are — To have access to all its books and accounts ;
To examine the general statement of the receipts and

expenditure, funds and effects ;
To verify it with the receipts and vouchers relating

thereto ;
And either to sign it as correct, duly vouched, and in

accordance with law,
Or to report to the society in what respects they find it

incorrect, unvouched. or not in accordance with law.

184 T^- Law Relatin£; to Industrial

6. Balance Sheets. — The society must keep a copy of its
last balance sheet, and the auditors' report, always hung up
conspicuously in its registered office. Sec. 10 (i, g).

7. Annual Return. — The society iiiatst make to the Registrar,
in the form required by the Chief Registrar, before the ist
of June 111 every year, a return of its receipts and expendi-
ture, funds, and effects. Sec. 10 (i, d).

And it must supply a copy of its last return to every
member or person interested, gratuitously on application.
Sec. 10 (i,/).

8. Copies of Rules. — A society must supply a copy of its
rules to every person on demand, at a price not exceeding
one shilling. Sec. 9 (5).

g. Inspection of Books, Sec. 10 (i, e). — A society must permit
every member or person interested in its funds to inspect —
The names of the members ;
And the books, other than the loan or deposit account of

any other member ;
At the registered office of the society ;
At all reasonable hours ;

Subject to any regulations made by it as to the time and
manner of inspection.
10. The Rules of the society must provide for the matters
following. Sec. 9 (i) and Schedule II.
(i) Name, date, and registered office:

(2) The terms of admission of members :

(3) Meetings and the alteration of rules :

(4) The governing body :

(5) The shares which a member may hold.

(6) The terms of loans and deposits, subject to Sec. 10 (2):

(7) Shares, whether to be transferable or withdrawable,
or both, and corresponding provisions:

(8) Audit of accounts :

(g) Withdrawals, death, and bankruptcy of members:

(10) The application of profits:

(11) The seal of the society.

and Provident Societies. 185

(12) Partial investment of capital :

A few additional rules, which are in fact only repetitions ot provisions of
the Act to which it has been thought desirable that the attention of
societies should be especially directed, are required to be inserted. With
the subjects above mentioned, they form twenty matters set out in the
forms of application referred to in the chapter on Distribution, and for
which, as is there stated, model forms may be obtained from the Registrar's
office, and are contained in the General Rules.

Except in those cases where the rules are repetitions of the Act and
follow its words, societies are at liberty to word their rules as they please
on the matters where rules are required, as they are at liberty to add rules
on any other matter they may wish, subject to the power of the Registrar
to rrfuse to register any such rule.

II. Appeals, Sees. 7 (8) and (9) and 9 (3). — This power,
however, is not arbitrary. An appeal lies against a refusal
to register any rule of a society, original or amended ;

In England, to the Queen's Bench Division of the

Supreme Court ;
In Scotland to the Court of Session ;
And in Ireland, to the Court of Queen's Bench at Dublin.
II. The rights of a registered society —

1. Incorporation, Sec. 11 (i) and 7 (10). — By registration,
which is imperative where the provisions of the Act are
complied with. Sec. 7 (7), and of which an acknowledgment
by the Registrar for the country is made conclusive evidence,
unless the registry is proved to have been suspended or
cancelled, a society becomes a body corporate by the name
described in this acknowledgment, by which it may sue and
be sued by its own members or anyone else :

With a common seal :

And liability of its members limited as stated in V.

2. The Rules of the Society bind its members and all persons
claiming through them to the same extent as if each member
had subscribed his name and affixed his seal thereto, and
there were contained in such rules a covenant on the part
of himself, his heirs, executors, and administrators to
conform thereto. Sec. 11 (2).

3. Who are the members of a society is prima facie provable
by any register or list of members kept by a society.
Sec. II (11).

1 86 The Law Relating to Industrial

This supposes that the list or register is not so kept as to contravene any
rule of the society. For if it is so kept the rule would probably be held to
invalidate the proof founded on the register.

This enactment makes quite useless the provision, often found in the rules
of societies, that applicants for admission shall sign a declaration agreeing
to be bound by the rules before they can become members. All that is
required to make the rules as binding upon any person as they can be made
by any agreement, is the proof that the person is a member. Now this
proof the Act makes easy if no special formality is required by the rules.
But if such a formality is required, and it has not been complied with, as is
often the case with declaration books which circumstances prevent many
supposed members of a society from signing, grave questions may arise
dependent on whether these persons can be considered to be members or
not. Hence it is better to dispense altogether with such books. If they are
used they should be made to conform to the practice of joint-stock com-
panies, where the agreement to be bound by the memorandum and articles
of association is made part of the original application for shares.

It must be observed, also, that the Act, while giving to the rules of a
society their binding character, does not give the members any power of
binding persons not members. I mention this because it seems sometimes to
be supposed that a rule of a society as to what is to be done with the share*
of a member who dies intestate will override the claims of next of kin under
the statute for the distribution of the property of intestates. But this is a
mistake. The members may bind themselves, but they cannot take away
the rights of their next of kin except by a nomination or a will properly
executed.

4. No alteration of the rules of a society is of any force until
it is registered, of which the acknowledgment is conclusive
evidence. Sec. 9 (4). Sees. 9 (2) and 7 (6) as to societies
carrying on business in more than one country.

Hence a society cannot reserve to itself the power to modify its rules by
any by-law. Neither can it by the resolutions of any general meeting,
whether ordinary or special, take away or qualify any right or power given
by its rules to any of its officers. But a society as a body corporate may,
by the resolutions of a general meeting duly convened, make any regulations
relating to its affairs not inconsistent with its registered rules, which will
bind all its members so long as they are not altered by a similar authority.

5. All moneys due from a member to the society may be
sued for, at its option, in the County Court,* either for the
district where the registered office of the society is situate,
or that where the member resides. Section 1 1 (3).

* In Scotland the Sheriff's Court, and in Ireland the Civil Bi!/ Court.
Sec. 3.

and Provident Societies. 187

6. Income Tax. — A society is exempt from charge to income
tax under Schedules C, relating to investments in government
securities; and D, to the profits of the business of the society, Sec.

" (4);

Unless it sells to non-members, and^ either by its rules or its
practice, limits the number of its shares. — B., Sec. 8.

This enactment simply places any society subject to it in the position of
a joint-stock company. That is to say, the society will be liable to pay
income tax on its profits, unless these are so small as to entitle it to exemp-
tion ; but any member of it who individually is wliolly or partly exempt from
the tax will be entitled to a return of the sum deducted from his share of
the profits of the society, or so much as corresponds to the proportion of his
income on which he is entitled to claim exemption.

This is the only exemption from taxation enjoyed by societies. In all
other respects they stand on the same footing as other persons ; therefore,
they must put stamps on receipts of sums of ^ 2 and upwards for any moneys
paid to them, if these receipts are to be of use to prove the payment ; and
the transfers of shares must be stamped with the proper stamp aocoiding to
the value transferred, in order to be used in proof of the transfer.

7. CommtYcial Instruments. — A society is empov^ered to make,
accept, or endorse promissory notes or bills of exchange by
the act, under its authority, of any person who makes,
accepts, or endorses such instruments in its name, or by or
on its behalf or account. Sec. 11 (10).

8. Contracts. — Generally, a society is entitled to make any
contracts in the like forms to those in which such contracts
may be made by individuals, either under seal, or by writing
signed by some person acting under its authority, or verbally
by some person similarly acting. Sec. 11 (12).

The Act also contains provisions for facilitating the proof of
the authority given. Sec. 11 (12, c).

9. Land. — A society, if its rules do not forbid it, may
acquire in its own name lands of any tenure, and deal with
them or any buildings on them as it pleases. Sec. 12 (i).

And special provisions are made in the case of copyholds
for enabling the society to be free from any future claim by
the lord of the manor, so long as they remain the property
of the society. Sec 12 (3).

1 88 The Law Relating to Industrial

Wc have sepn, in I., 2, that the buying and selling of land is among the
objects for which a society may be formed.

10. Loans and Deposits. — The terms on which a society may
contract loans are left to be regulated by its rules, the Act re-
quiring only that the rules shall state them, Schedule I., 10 (6).
In regard to deposits the case is different, depending on
the nature of its shares. Sec. 6 and 10, 2 [a, b).

The society may, if it pleases, carry on the business of

banking, if its shares are wholly transferable ;
And since this business rests on the receipt of deposits,
is at liberty to receive them to any amount permitted
by its rules, subject to the publication of a statement
of its assets in the form contained in Schedule III.
But if the society has any withdrawable capital.
Or having only transferable capital, does not include the
business of banking among its objects;

It is limited in the receipt of deposits to sums within the
total limit stated not exceeding 5s. at any one time, or
j^20 for any one depositor, and requiring not less than
two clear days' notice of withdrawal ;
And it is prohibited from making any payment of with-
drawable capital so long as any claim due on account
of any such deposit is unsatisfied. Sec. 10 (2, c).
Disputed claims are, I conceive, not included in this prohibition. It
must be observed also that the deposits referred to are such as would
ordinarily come under banking business. Payments made on account of
loans to the society secured in any way allowed by the rules would there-
fore not come under this rule, though they may be received in small sums,
but may be regulated as the documents by which they are secured provide.
II. Loans and Investments —

(i) Loans. — The power of a society to lend is more limited
than its power to borrow, being confined to advances to
members on the security of real or personal property, if its
rules allow of this. Sec. 12 (2).

The repayment of such loans is faciHtated by provisions;
For re- vesting any property mortgaged to the society in
its owners by the endorsement on the mortgage of a
receipt for the amount. Sec. 12 (8) ;

and Provtaeiit Societies. 189

And for the entry of notice of satisfaction on court rolls
or any other register. Sec. 12 (9).

(2) In investments a greater latitude is permitted. Sec. 12 (4).

Subject to the provisions of the rules of any spciety, such
investments may be made in the registered nama of the
society, in or on the security —

Of any other society registered under the Act., or the

Building Societies Acts ;
Or of any company registered under the Companies
Acts, or incorporated by Act of Parliament or charter;

Provided that if the investment is in, and not on, the
security of any society or company, it is one with limited
liability.

These provisions in respect both to loans and investments appear to
apply only to the partial employment of capital in ways other than the con-
duct of any business which the society is formed to carry on. For this the
Act gives no special authority, apparently because the legislature considered
this power to be implied in the permission to form a society for the particular
business. Hence in the case of a society formed to carry on the " business
of banking," the employment of its capital in any way customary in such a
business must, I conceive, be allowed. Investments in Government
securities, though not mentioned in this section, must therefore be within the
power of such a society, since they form one of the regular modes of employing
capital in banking. So must advances of money on the security of bills of
exchange or promissory notes by discounting them. For the banking
vusmess of the society would be seriously hampered if it were limited to
such advances as are permitted by Sec. 12 (2).

This conclusion is strengthened by the following considerations : — The
statement which Sec. 10 (2, b) and Schedule IV. requires every society
which carries on this business to make out half-yearly, enumerates as two
heads of assets — Government securities, and bills of exchange and promissory
notes. Again, Sec. 11 (8) provides in various cases therein mentioned for the
transfer of stock transferable at the Bank of England or Ireland belonging
to societies, and held in the only way in which such stock could be held, in
the names of trustees. Now, both these provisions would be unmeaning if
no society could make any advances or investments other than such as are
mentioned in Sec. 12 (2) and (4). They become intelligible only if these
sections are considered to be confined to the partial investment of capital
by societies whose business does not require them to use it in the way
customary in banking.

I may observe also, in regard to Government securities, that the Chief
Registrar appears to consider this mode of investment to be allowable to any
society which takes power to make it by its rules.

igo The Law Relating to Industrial

12. Acts requiring a special resolution. Sec. i6.

A society may, by the following process, —
Change its name ;

Amalgamate with any other society ;
Transfer its engagements to any other society oi

company ;
Convert itself into or amalgamate with a company.

(i) It must pass a resolution for the purpose desired, by
a majority of three-fourths of the members present at
a general meeting, of which notice specifying the
intention to propose this resolution has been duly
given. Sec. i6 (i).

That resolution must be confirmed by a majority of the
members present at a meeting, of v.-hich notice has
been similarly given, held not later than fourteen
nor more than thirty days after the first ; Sec. i6 (i).

And it must be registered at the central office. Sec. 16 (6).

(2) To change its name, the society must also obtain the
approval of the Chief, or in Scotland or Ireland the
Assistant Registrar, in writing, to the new name.
Sec. 16 (2).

(3) To an amalgamation, the consent of every society
amalgamated, by resolutions so passed and registered
is requisite. Sec. 16 (2).

(4) To convert a society into a company, the resolution
must contain the particulars required by the Com-
panies Act to be contained in the Memorandum of
Association of a Company.

The Registrar will then issue, under the seal of the
office, a copy, which may be registered as a Memo-
randum of Association under the Companies Act on
being duly stamped. And thereupon the registry of
the society will become void. Sec. 16 (7 and 8),
The effect of this registration being to bind together as a company
under the Companies Act, the same persons who at the moment of registra-
tion formed the society, they will continue to hold as a company whatever

and Frovident Societies. 191

property they held previously as a society. The alteration resembles a
change of dress — the name of the society falls off and that of the company
is drawn on ; but the body clothed is unaltered. Hence no provision for
transferring the property of the society to the company is required or con-
tained in the Act ; though to prevent the possibility of any legal juggle it
keeps alive a society converted into a company for the purpose of enforcing
in its name against the company any right or claim on the society subsisting
at the conversion. Sec. i5 (8).

The Act does not confer on a company any power of amalgamation
which it does not possess independently. It may perhaps be held to place
a society in the position of a company, so as to authorise its amalgamation
with any company which, under its own articles, could have amalgamated
the society with itself had it been a company. But, as this is doubtful, any
society which may desire to amalgamate itself with a company should ascer-
tain before it passes the resolution for amalgamation, that the amalgamation
is authorised by the articles of association of the company in force at the
time when the resolution is registered.

A society which desires to convert itself into a company, should also
ascertain before it passes any resolution for that purpose, that the Registrar of
joint-stock companies does not object to register it, as he is bound to do if
the proposed name should be identical, or likely to be confused, with that of
any other company. In general, a refusal to register on this ground is
unimportant, because the signatories of the memorandum of association can
substitute another memorandum with an altered name. But in the case of
a society the refusal would involve the repetition of the proceedings for con-
verting itself into a company, which might cause great inconvenience ;
against which the Registrar of Industrial and Provident Societies is unable
to give any protection, since he has no information as to the names on
the register of companies. It is necessary, therefore, for the society to
protect itself by previous inquiry at the companies' registry office.

Forms of proceedings for all the cases above-mentioned have been pro-
vided by the Treasur>' Regulations made under the Act, and may be ascer-
tained by application at the Central Office.

13. Administration to intestate members.

If the amount of the shares held by any member does

not exceed ;^ioo ;
And he dies intestate and without having made a sub-
sisting nomination under the power after-mentioned ;

The Act gives the committee of management of the society
the power, without letters of administration,* and charges it
with the duty of distributing these shares among the persons
who appear to them entitled thereto. Sec. 11 (6) ;

* Or confirmation in Scotland. Sec. 3.

192 The Law Relating to Industrial

And it confirms this distribution against any demand upon the
committee or society by any other person. Sec. 11 (7).

14. Tlie profits of the business may be appUed to any lawful
purpose.

III. The rights of members individually —
I. Nomination. Sec. 11 (5).
(i) A member not under the age of 16 is entitled —

To dispose of his interest either in shares, loans, or de-
posits (6), up to the hmit of ^100, by any writing under
his hand, delivered at or sent to the registered office of
the society.
And to revoke or vary this nomination similarly.

(2) This right may be exercised in favour of —
Any person not an officer of the society ;

An officer who is husband, wife, father, mother, brother,
sister, nephew, or niece of the nominator.

(3) Every society is required —

To keep a book where the nominations made by its mem-
bers shall be recorded ;
And, on receiving proof of the death of a member, either
to pay the amount due or transfer the shares comprised
in the nomination to the nominees. Sec. n (5). Sub-
ject, if the amount is over ;^ioo, to the production of a
stamped receipt for the succession or legacy duty payable
thereon, or a certificate from the Commissioners of
Inland Revenue that none such is payable. C. 10 (i).
a. Inspection —

(i) Of the books of the society. See I., 9.
(2) Of the affairs generally. — One-fifth of the members, if not
more than 1,000, or 200, if over t,ooo but not more than
10,000, or 500 if more than 10,000, may, by application to
the Registrar,* supported by such evidence as he requires
of a good reason for the application, obtain :
The appointment of an inspector to examine and report on
the affairs of the society to the Registrar,*

* i.e.y in England the Chief, in Scotland or Ireland the Assistant Registrar.

and Provident Societies. 193

Or the calling a special meeting to discuss and deter-
mine such matters as he directs, under a chairman
appointed by it ; and, if the Registrar* so directs,
at the cost of the society, both as respects the in-
spection and special proceedings. Sec. 15 (1,4).
3. The decision of disputes between a member, or any person
claiming through him or under the rules, and the society or
any of its officers is provided for as follows : —

(i) If the rules contain any direction for their deter-
mination, and they are so decided, the decision is
final. Sec. 14(1).

(2) Sec. 14 (5). — If they contain no such direction ;

Or if no decision is made within forty days after appli-
cation to the society for a reference ;

The case may be decided on the application of the
member or person aggrieved —
By the County Court (for Scotland and Ireland.

see II., 5) ;
Or by a court of summary jurisdiction.!

(3) If the rules direct disputes to be referred to the
justices they are to be determined by a court of sum-
mary jurisdiction. Sec. 14 (4).

(4) By the consent of the parties the matters may be
referred —

To the County Court in any case cognisable under the
rules by a court of summary jurisdiction.! Sec. 14 (4);

If the rules do not expressly forbid it, to the Chief,
or in Scotland or Ireland the Assistant Registrar;
to whom the Act gives all necessary powers for

* i.e., in England, the Chief, in Scotland or Ireland the Assistant
Registrar.

t That is, in the City of London, the Lord Mayor or any alderman ;

In any place in England within the jurisdiction of a metropolitan or other
stipendiary magistrate, such magistrate or his substitute ;

In the police district of Dublin a divisional justice ;

In any other place in England or Ireland two or more justices of the
peace sitting in petty sessions ;

In Scotland the Sherift's Court. Sec. 10 (^ and 4).

194 ^^'^ Laze/ Relating to Industrial

examining witnesses and enforcing the production
of books and documents. Sec. 14 (2 and 3).
(5) The Court or Registrar are authorised to obtain the
decision of the higher courts on any points of law
involved in any matter referred to them, as well as
to grant discovery of documents to either party in
the dispute. Sec. 14 (6).

IV. The protection of the society.

I. General misappropriation of property of the society. — Any
person — Who obtains possession by false representation or
imposition of any property of the society ;

Or having the same in his possession, withholds or mis-
applies it, or wilfully applies any part to purposes other
than those expressed or directed by the rules or
authorised by the Act —
Is liable to be proceeded against summarily —

On the complaint of — The society, or any member

authorised by it, or the committee of management, or

by the Central Office.

Or of the Chief Registrar, or any Assistant Registrar

by his authority ;

And on conviction is liable to a penalty not exceeding £20,

with costs not exceeding 20s. ;
And to be ordered to deliver up all such property or repay

all such moneys improperly applied ;
And in default of payment in compliance with the order, to
imprisonment for any time not exceeding three calendar
months with or without hard labour. Sec. 12 (10).
Or if the offence is indictable under the general law he
may be proceeded against by indictment. Sec. 12 (10).

2. In the case of officers of the society having charge of
money the Act contains two provisions, of which the second
makes the first of little use.

(l) Every such officer must, if the rules of the society so
require, give such security as the committee approve for

and Provident Socutus. 195

July accounting for and paying over all moneys due from
him to the society. Sec. 13 (i).

(2) Every such officer, his executors or administrators,
must — at such times as the rules of the society require;

Or on demand made by a notice, in writing, given or left
at his last or usual place of abode ;

Give in his account as may be required by the
society or committee thereof, to be examined and
allowed or disallowed by them ;
And pay over all moneys, and deliver over all pro-
perty, for the time being in his hands or custody, to
such person as the society or committee appoint ;
And if he neglects or refuses to comply with any such
demand, the society may —

Either sue him on his bond or security [if he has given
one] , or may apply either to —

The County Court, which is authorised to proceed

in a summary manner ;
Or to any court of summary jurisdiction ;
And the order of either of such courts is made final and
conclusive. Sec. 13 (2).

As the directions of the Act are positive, I apprehend, though this is not
positively declared, that a failure to comply with them would be an offence
against the Act, carrying with it the liability to fine under the provisions
relating to offences mentioned subsequently.

3. In the case of the members generally. — A society may protect
itself against any breach of its rules by thereby imposing on
its members penalties which would become binding upon
them by the force given generally to the rules {See II., 2) ;
and are recoverable in the same manner as penalties for
offences against the Act. Sec. 18 (4).
V. The protection of the members. Sec. 17 (2).

I. Contribution to debts of the society. — The members of a

society cannot be required to contribute to the payment of

its debts any larger sum than the amount remaining unpaid —

(i) Upon any shares held by them at the date when

the winding up begins ;

196 The Law Relating to Industrial

(2) Upon any transferable shares held by them within
one year previous to this date ;

(3) Upon any withdrawable shares withdrawn within
one year previous to the date.

2. Case (2) applies only to persons who have ceased to be
members previous to the winding up ;
And to debts then subsisting.

Case (3) applies only to debts subsisting at the time when
the share was withdrawn.

And in both (2) and (3) the contributions can be required
only where the assets of the society, independent of such
contributions, are insufficient to pay the just claims on it.

In case (3) the provisions of the Companies Act as to the liabilities of
members upon shares no longer held by them, which in that Act apply
only to persons who have ceased to be members, are extended so as to
apply to withdrawable shares, although the former holder continues a
member. The effect is that the holders of such shares continue liable to
contribute on all the shares held by them within one year previous to the
commencement of the winding up, to the whole amount received by them;
but only in respect of the debts subsisting at the time of the withdrawal
of the share, and in case they cannot be paid without this contribution.

^^I. The Audit of Accounts and Evidence —

1. Audit. — Under the authority ol the Act, Sec. 21, the
Treasury has appointed public auditors for its purposes,
and fixed the rates of remuneration to be paid to them
by societies.

The employment of such auditors is not obligatory, but a
society employing them has the advantage that the certificate
of one such auditor is sufficient, while otherwise two auditors
are required. Sec. 10 (i c and d).

2. Evidence. — The seal of the Central Office is made evidence
of every instrument, document, copy, or extract to which it
is attached.

And any document purporting to be signed by any regis-
trar, inspector, or public auditor under the Act is receivable
in evidence without proof of the signature. Sec. 24.
VII. Dissolution of Societies —

and trovtdent Societies. 197

The Act provides three modes in which a society may be
brought to an end.

A. — It may be wound up by a process similar to that by
which a company may be wound up under the Companies
Acts ; that is —

(i.) By the resolution of the members to put an end to it ;

(2) By a voluntary winding up, in order to provide for
debts which it cannot otherwise meet ;

(3) By an order to wind it up made by the County
Court (for Scotland and Ireland, see II., 5).

(4) By a voluntary winding up under the supervision of
the court.

1. In case (i) a special resolution is necessary; {See II.,
12).

In case (2) there is required one meeting only, at which
there is carried by a majority of three-fourths of the members
present a resolution — " That it has been proved to the satis-
faction of this society that the society is unable, by reason of
its liabilities, to continue its business, and that it is advisable
to wind up the same ;"

In case (3) a variety of circumstances under which the
order may be made are enumerated in the Companies Act,
1862, Sec. 80, with the general power to make it whenever
the court is of opinion that it is just and equitable that the
society should be wound up ;

Case (4) may arise on a voluntary liquidation ;

Either if it becomes necessary to apply to the court to
restrain the proceedings of any creditor ;

Or if some dissatisfied creditor invokes the interference
of the court, which, however, does not think fit to take the
liquidation wholly out of the hands of the members.

2. In every case a liquidator must be appointed, either by
the shareholders or the court, whose business it is to get in
the assets, including all sums due from contributories, and
to apply them in or towards the discharge of the debts,
and to divide the balance, if any, after payment 0I all

ig8 The Law Relating to Industrial

such debts and the costs of the liquidation among the
shareholders.

The liquidator takes the place of the committee of manage-
ment of the society, and is armed with all the powers
necessary for enabling him to complete the liquidation,
including that of carrying on the business if it appears to
him desirable for this purpose, subject in a voluntary liquida-
tion, to the obligation of laying a statement of accounts
before a meeting of the shareholders once a year so long as
the liquidation goes on. Where the liquidation is conducted
by order or under supervision of the court, all operations
of this kind require its sanction.

3. In a voluntary liquidation it is necessary to advertise
the liquidation in the Gazette,^' though the liquidation begins
from the passing of the resolution or its confirmation where
it requires to be confirmed.

4. When the liquidation is brought to an end, notice of
its termination must be given by a meeting similarly adver-
tised, of which the liquidator is to make a return to the
Registrar. Three months after the date of registration of
this return the society will be dissolved.

A penalty not exceeding ^5 a day is imposed on any default in making
this retutn for every day during which it continues. — Companies Act, 1862,
Sec. 143. And as the Registrar of Industrial and Provident Societies may
fix the form in which any return to him has to be made, Sec. 10, 2 (5), and,
therefore may require it to contain a statement of the advertisement in the
Gazette, he may secure the insertion of this advertisement. There is no
penalty attached to the non-insertion of the original advertisement ; but the
want of such a notice would be a suspicious circumstance, which might
tell gravely against the liquidator if any attempt should be made to set the
liquidation aside.

5. The provisions above stated are contained in the
Companies Act, 1862, and made applicable to Industrial
and Provident Societies by the Act, sec. 17 (i), with the
substitution of the County Court and Registrars of Indus-
trial and Provident Societies in place of the Court of Chan-
cery and Registrar of Joint Stock Companies, as the court

* London, Edinburgh, or Dublin, as the case may be. The Act, Sec. 3.

and Jt^rovtdent Societies. 199

and officers having authority in the matter. But to carry the
account of these proceedings beyond this short notice of
their general character would introduce subjects too ex-
tensive for the present Manual.

B. — The second mode of bringing a society to an end is
by an instrument of dissolution.

1. This instrument must be prepared in duplicate in a
form prescribed by the Treasury regulations, and must set
forth—

(i) The liabilities and assets of the society;

(2) The number of members, and the nature of their
respective interests ;

(3) The claims of creditors (if any), and the provisions
made for their payment;

(4) The intended appropriation or division of the funds
and property of the society, which, however, may be
left to be determined by the Chief Registrar. Sec.
17 (3 '»)•

2. Such instrument must be signed by three-fourths of the
members. Sec. 17 (i) ;

And it must be accompanied by a statutory declaration that
the provisions of the Act have been complied with, made by
three members and the secretary of the society, and sent up
to the Registrar with the instrument. Sec. 17 (3 c).

Alterations in the instrument (if any) must be similarly
consented to and attested. Sec. 17 (3 b).

3. The instrument, with all alterations (if any), must be
registered in the same way as the rules of the society, and
will thus become binding on all the members. Sec. 17 (3 d);

It is to be advertised by the Registrar at the expense of
the society in the Gazette, and some newspaper circulating in
the county where the registered office of the society is situate.

Sec. 17 (3 «) ;

Forms of the notice relative to this advertisement may be obtaiti/ja from
ihe Central Office.

200 The Law Relating to Industrial

And at the end of three months from the date of the
Gazette in which the advertisement appears the society will
be dissolved —

Unless the instrument is set aside by a proceeding com-
menced previously in a court which has jurisdiction
to wind up the society. Sec. 17 (3 e).
Of which notice is to be given —

By the person who makes the application seven days

before making it ;
And by the society if it succeeds. Sec. 17 (3/).
C. — A society may also be put an end to by cancelling its
registry at its own request if the Registrar thinks fit so to do,
Sec. 8 (i a), with the consequences stated in VIII.
VI 11. Provisions for enforcing the Act —

I. The Cancelling or Suspension of Registration. Sec. 8 (i i).
(i) If an acknowledgment of registration has been obtained
by fraud ;

Or a society exists for any unlawful purpose ;
Or it has wilfully, and after notice from the Registrar,*
violated any of the provisions of the Act ;

The Registrar* may, by his own authority, suspend its
registry for any time not exceeding three months ;
And with the consent of the Treasury,

May continue such suspension from time to time for

any similar period.
Or may cancel the registry.

(2) Two months' notice is to be given to a society whose
registry is proposed to be suspended or cancelled on the
ground thereof. Sec. 8 (3).

And the society has the like right of appeal as in the case
of a refusal to register a rule. Sec. 8 (4).

But on a suspension only when it exceeds six months.
Sec. 8 (4).

(3) Notice of every cancellation or suspension is to be given
as on an Instrument of Dissolution. Sec. 8 (3).

* i.e., in England, the Chief, in Scotland or Ireland the Assistant Registrar.

and Provident Societies. 201

(4) Sec. 8 (5). — A society Avhose registry is cancelled —
Absolutely ceases to enjoy as such the privileges of a

registered society ;
But remains subject to any liability incurred by it.

(5) The like effect is produced by any suspension of registry
during the time that it lasts. Sec. 8 (5).

Hence, during the suspense of its registry, a society could not do any
corporate act, such as suing for a debt or making a conveyance, though it
may be sued and the corporate property seized on a judgment.

On the cancelling of the registry of a society, its property would, I
conceive, become the joint property of all the members at the date of the
order, and would devolve to the survivor unless by a conveyance, executed
by all of them, or under an order of partition it is otherwise disposed of.

The reduction of the number of members below seven would be a ground
for an order to wind up the society. — Companies Act, 1862, Sec. 242. But
the case might also be properly met by cancelling the registry.

2. Pecuniary Penalties. — (i) A fine of not less than ^i nor

more than £^ is imposed —

On every society, officer, or member of a society, or

other person guilty of any offence under the Act, for

which no penalty is expressly provided. Sec. 18 (3).

(2) It is declared, Sec. 10, 3 (a-d), to be an offence against
the Act if any society —

Fails to give any notice or send any document, or do or
allow to be done any act or thing which it is by the
Act required to give, send, do, or allow ;
Wilfully neglects or refuses to do any act, or to furnish
any information required for the purposes of the Act,
by the Registrar or other person authorised by it ;
Does any act or thing forbidden by the Act ;
Makes a return or wilfully furnishes information in any

respect false or insufficient ;
Carries on the business of banking, haring any with-
drawable share capital ;

Or, in carrying on such business, does not make out
and keep conspicuously hung up such statement
as is required by the Act. Schedule II.;

202 The Law Relating to Industriai

Makes any payment of withdrawable capital while any
claim due for deposits received under Sec. lo (2 c) is
unsatisfied.

(3) And every offence committed by a society is deemed to
have been committed —

By every officer bound by the rules to fulfil the duty of

which it is a breach ;
Or if there is no such officer, by every member of the
committee who is not proved to have been ignorant
of, or to have endeavoured to prevent it ;
And if continued for more than a week, is taken to be a
fresh offence in every week during which it is continued.
Sec. 10 (4).

(4) Sec. 18 (i). — A penalty not exceeding £5*^ is imposed,
on —

Every person who wilfully makes, orders, or allows any
entry or erasure in, or omission from, any balance sheet of a
society, or any document required by the Act with intent —
To falsify the same ;

Or to evade any provision of the Act. Sec. 18 (i).
Any officer of a society, or person on its behalf, who
transgresses the provisions of the Act mentioned in p. 102,
as to the use of its seal, or the issuing documents not
bearing its registered name; Sec. 18 (2).

Together with the personal liability to payment there
stated. Sec. 18 (3).

(5) The pecuniary penalties are recoverable by summary
process (See III., 3) at the suit either of —

The Registrar ; Sec. 18 (4).
Or any person aggrieved. Sec. 18 (4).
3. Criminal Penalties. — (1) It is made, Sec. 9 (6), a mis-
demeanour, in Scotland a crime and offence (Sec. 3), for
any person, —

To give to any other person, with intent to mislead or
defraud, a copy of any rules, laws, regulations, or other
documents other than the rules for the time being, regis-
tered under the Act, on the pretence —

and Provident Societies.

203

That the same are the existing rules of a registered

society;
Or that there are no other rules of such society.
To give to any person a copy of any rules on the pretence
that such rules are the rules of a registered society when the
society is not registered.

(2) An appeal lies from any order or conviction made by a
court of summary jurisdiction on any complaint or informa-
tion under the Act ;

In England and Ireland, Sec. 19 (6 a,f) —

To some court of general or quarter sessions for the

county or place where the cause of appeal has

arisen, held not less than fifteen days nor more

than four months after the decision appealed from.

In Scotland, Sec. 19 (7) —

To the Court of Justiciary or any other circuit court

thereof, under the 20 Geo. II. (4) ;

Or to the Court of Justiciary in Edinburgh, under the

Summary Prosecution Appeals (Scotland) Act, 1875.

IX. The provisions above stated comprise all the parts of

the Act of general importance, with exception of the clauses

relating to societies registered before it was passed.

1. These societies are taken to be registered under it.
Sec. 5.

And provision is made for preventing the repeal of the
Acts under which they were registered, affecting any rights
arising under them. Sec. 4.

And their rules, so far as they are not contrary to any
express provision of the Act, are kept in force till altered
or rescinded. Sec. 5.

2. But in regard to the powers given by the Act, and not
made to depend upon the rules of a society, the Act relaxes
the operation of the rules, by providing that either the society
or its members may exercise any of such powers, notwith-
standing any provision contained in any rule thereof, certified
before the Act passed. Sec. 11 (2).

204 The Law Relating to Industrial and Provident Societies.

X. The provisions of the Act not noticed above relate
to-
Sec. I. The Short Title.

Sec. 2. The extent of the Act.

Sec. 3. The definition of the various terms employed in it.

Sec. 7 (4). Societies Registered under the Industrial and
Provident Societies Act, 1852, and not under the Industrial
and Provident Societies Acts, 1862 and 1867.

Sec. 10 (5). The Forms of Return.

Sec. 10 (6). The Registration of Documents required to
be sent to the Registrar.

Sec. 12. (6). Setting forth Forms of Mortgage, &c., in the
Rules.

Sec. 1 9 (i and 2). Mode of Prosecuting Offences and
Recovering Penalties. (5). How Offences are to be Described.

Sec. 20. Regulation of Proceedings in the County Court.

Sees. 21 and 22. Power to Treasury to determine Scales of
Fees and Regulate Forms.

Sec. 25. Duties of the Registrar.

Sec. 26. Application of the Act to the Channel Islands.

PART IV.

THE

HELPS AND HINDRANCES
TO CO-OPERATION.

PART IV.

Chapter 12,

THE PERILS OF CO-OPERATION, AND HOW TO
ESCAPE THEM.

To enter at any length into the matters forming the title of this
part would be to repeat much of what the other three parts
have contained. It is not my intention to weary the reader
by carrying him again over the ground we have traversed,
but in a matter of such vital importance to the mass of the
population as co-operative action must be, if it be regarded
from the point of view presented in these pages, a few
words to sum up the teaching of this manual may not be
thrown away. Like the barbed head of the arrow, they
may help to make the thoughts, which constitute its shaft
and give force to the blow, stick.

Co-operation, as described in this manual, is a serious
effort to unite in the business of life the ideal with the real,
or, in the language of the New Testament, to realise on earth
the "kingdom of God and His righteousness," in the assured
conviction that all else shall be added to those who thus
place themselves in harmony with the all-sustaining power,
that Divine unity on which the infinite differences of
individual existence rest, and of which they are the ex-
pression. Co-operation will be helped by whatever promotes
this disposition. It will be hindered by whatever checks it.
Its danger and its safety depend on the absence or presence
of this spirit of unity.

It has been the object of this work to trace how that spirit
can realise itself in the busy world of industry which, in
modern times, has assumed such gigantic and ever-growing
proportions, its writers have endeavoured to point out that

2o8 The Perils of Co-operation,

the means for effecting this reaHsation lie ready to our
hands ; that, in our days and our country, they require no
sweeping changes in existing institutions ; no violent revolu-
tions ; no reigns of terror ; no alteration of the law, extorted
by the many from the fears of the few. On the contrary, it
has been argued that any attempt o'r this nature would
interfere with and thwart the progress of co-operation, by
destroying that peaceful atmosphere of law-abiding activity,
in which alone the institutions, whence we look for these
results, can grow up and thrive.

We have pointed out that, beginning with that which is
in the power of every body of men in the United Kingdom —
union to obtain for their own use what they require every
day — they may pass on to union by which they may give to
those who produce what they want the benefits now absorbed
by those who employ them, while they find in such unions
an evergrowing field of investment for their own savings.
That, by the wise employment of these funds, in bettering
the dwellings of the producers, and providing against the
contingencies of life, they may make the profits of pro-
duction secure for one group of workers after another the
comforts and advantages which, as now used, they can
bestow only on a few, but bestow on them in a superabundance
detrimental to the higher life of the spirit rather than con-
ducive to it. And that thus, by the gradual accumulation
of wealth and the ownership of land which naturally follows
it, they may attain, by a process of peaceful evolution, that
collective property of the soil and the instruments of labour
which the party calling themselves Social Democrats and
Collectivists, propose to attain by throwing themselves
headlong into a current certain to carry them farther and
farther from it — the stream of violent change.

Looked at in its successive steps, the path to the eman-
cipation of labour by converting the capital indispensable to
its activity from an exactmg master mto an obedient servant
seems, and indeed is, easy ; but only on condition that it be

and How to Escape them. 209

followed in a spirit thoroughly co-operative. For, doubtless,
the way is long, far longer than will allow any of the genera-
tion now alive ever to see more than the beginning of the
end. Only a comparatively few, and these exceptionally
favoured, may succeed by their unassisted efforts in reaching
the desired goal. It may be lost for the many, through that
selfish impatience for immediate results, which refuses to
sow the seed because it cannot expect to reap the corn.
And precisely here lies the greatest danger to co-operative
effort.

Co-operation has prospered hitherto in Britain under the
form of union for distribution, as it has prospered in Ger-
many under the form of union for people's banks, greatly
because so many persons have found their immediate indivi-
dual advantage in the effects of the union originated by
those who had higher objects in view.

The distributive store has given to all who joined it not
only articles on which they can rely that they are what they
profess to be, but an increased power of buying these articles.
When they are formed on the Rochdale plan they have
given them, besides, admirable savings banks, banks which
save for them without trouble, and can afford to pay at least
one-third more interest than ordinary savings banks, with a
security which, in societies that have outlived the perils of
infancy, may justly claim comparison with that of any
other banks. So the people's banks of Germany have
prospered, because the confidence inspired by them has
enabled their members to deal with loan capital much larger
than their own capital, for the use of which they paid much
less than they received from this use ; and thus have added
to the savings from their own income the earnings of a
business at once safe and profitable. Each of these institu-
tions, therefore, found support in that principle of direct
self-interest, to follow which it costs us no effort, because it
belongs to our nature as animals, and is kept in constant
training by the struggles of competitive society.

2IO The Perils of Co-operation,

To confine ourselves to our own case, — That, under these
circumstances, this first step in co-operative progress — union
for the accumulation of capital — should have been taken by
the large number who have taken it is not more than might
have been reasonably expected to happen, as soon as the
eyes of the consuming public became opened to what the late
John Stuart Mill saw very clearly, namely, the very large
share of the total produce of labour actually used up by the
charge for distributing the remainder. But the case entirely
changes when we pass from distribution to production.

No doubt here, too, the formation of societies which should
carry on the co-operative programme sketched above in its
completeness, as M. Godin has nobly carried it out at Guise,
would be to the very great advantage of the workers collec-
tively. But individually, to the few whom superior ability
or some happy accident may enable to " get on " the backs
of their fellows in the competitive struggle, it may seem a
disadvantage, hindering them in this " getting on," of which
they are ambitious. While the men who have no chance
of ever " getting on " anybody's legs but their own, whose
only well grounded hope of materially improving their posi-
tion individually is by raising it collectively, are apt to be, if
not opposed to this collective action, yet indifferent to it,
because, while only a few can be lifted up at once, the help
oi a great many is required to lift them. So that the cry of
" every one for himself" makes itself felt if not heard, here,
where it means, "let none of us be raised unless all of us are
equally raised at the same time," as there, where it means
" don't stop me from rising."

' How extensively this feeling works is shown by the readi-
ness with which the large body of working men who compose
the English Wholesale have acquiesced in the scheme of
diverting all the profits of their Leicester shoe works from the
workers there employed, and applying them as part of the
general fund distributed as dividends on purchase; though,
as has been shown in a former chapter, the sum added to these

and How to Escape them. 21 1

dividends when the profits are thus dealt with is so small —
a fraction of a farthing on every pound of outlay — that even
the societies which directly receive it cannot derive from it
any appreciable advantage ; while to the individual buyer
that advantage, small as it is, vanishes by being strained
through the profits of the society ; so that no one can feel
his position to have been sensibly improved by this division.

In this case there is no temptation to withdraw the profits
on work from the workers through that fear of diminished
dividends, which led the members of the so-called Co-
operative Cotton Manufacturing Company at Rochdale
to withdraw the small share of profit they had originally
conceded to them, as it has prevented the Oldham spinning
companies from permitting them to participate in their
profits. And I question whether there are fifty men in
the Wholesale Society who believe in the possibility of
carrying on production generally on the system known as
Federal, described in the chapter on Production, and there-
fore defend this subordination of production to consumption
on theoretical grounds, in the view of a great general good
ultimately anticipated from it. Yet the mass acquiesce in thus
destroying the hopes of the producer, without gaining a benefit
felt by the consumer. More improvident than Esau, these
modern hunters after profit throw away their birthright as
workers, without getting their mess of pottage, and clap their
liands over their success.

Here lies the great danger to the progress of co-operation
as a systematised plan of social reform. The bridge which
the profits on production would allow the workers to build
over the river of poverty that now separates them from the
advantages of wealth, is barred by the twin giants, Indi-
vidual Self-seeking and Collective Indifference, the last-named
being the most formidable. The working producer requires
the alliance of the working consumer, both to obtain the
capital required for his work and to organise for his produce
a market by which the risk of loss may be minimised ; but

•212 The Perils of Co-operation,

the working consumer refuses his assistance except upon
conditions which make it useless for the purpose of bettering
the position of the producer, and useful only in giiaranteeing
the quality of the things produced. How can this great
danger be averted ? In other words, How can we overcome
the indifference of the masses to that employment of capital
which is indispensable to the improvement of their position,
without attempting the impracticable task of supplying them
with the fruit before the tree is grown ?

There appear to be two possible ways to this end — one
inward and the other outward ; the second dependent on
the first.

By unwearied persevering appeals to the principle of
unity it may be possible to diffuse among men more
generally the feeling that a life of perpetual struggle after
objects which perish in the using must be petty, ignoble,
and unsatisfying; but that life may become great and
noble if it is brought into constant harmony with that
Divine spirit which dwells in those who are animated by
love to their fellow-men. By the appeal to reason and ex-
perience it may at the same time be possible to spread the
conviction that only by means of institutions suitable to the
exercise of this spirit can it become a pervading influence in
the ordinary lives of ordinary men. The problems of social
reform depend for their solution upon the joint operation of
both these principles. Without the last men cannot see
what to do; without the first they cannot obtain the strength
to do what they have learned to see should be done. That
the work of diffusing this double conviction will be easy,
I do not say. But there is in the i-uling tendency of
the present age — its scientific spirit — a characteristic which
may make this work easier.

Man has always been urged by the demands of his
spiritual being to seek for certainty — for that which may
be surely known and relied on. But throughout vast
regions and during long ages he has sought this reliable

and How to Escape them. 213

knowledge in affirmations about unseen worlds, where
no testimony of sense exists to qualify the assertions
of his imagination ; whence he could assign to these
imaginary creations qualities of grandeur and permanence,
capacity of conferring infinite happiness or unending pain,
before which earth, with its transitory joys and sorrows,
necessarily fades into insignificance. European life has been
no exception to this disposition. On the contrary, in what
we call the Middle Ages it exercised over all European
thought the profoundest influence, as anyone may realise
who will read the Divina Comniedia of Dante, and remember
that the universe depicted there is the universe in which
Dante and his contemporaries firmly believed. In Europe,
then, no less than in Asia, among Brahmins, Buddhists, or
Mahometans, the all-important inquiry with those who rose
above slavery to animal passions was, What shall I do to
attain the infinite joys or escape the infinite pains of this true
reality — the lasting existence which is to succeed my present
fugitive being ? The peculiarity of the Christian answer, on
which my hopes for the future of mankind rest, has been that
it always included the position. You must strive to become
in spirit like that Divine Being of whom the Gospel tells us.
Hence arose, as is observed in the first chapter of this
manual, those countless works of benevolence by which the
nations professedly Christian have been and are distinguished
from all other nations of whose history we have any record.
Hence must come, according to my conviction, that per-
severing determination to work out the deliverance of man-
kind from the evils produced by competitive selfishness,
which constitutes the ideal of co-operation. The moral
strength required to do this work thoroughly must, in my
judgment, be derived from that faith in the manifestation of
the Divine, from which the good works of the Christian world
liave either directly proceeded, or to which they may be
traced through the indirect influence of the mental atmos-
phere which this faith has created. But for the direction of

214 ^^^^ Perils of Co-operation,

this moral force to work out the collective benefit of mankind,
we shall be indebted, I conceive, mainly, to the results of
modern scientific research.

This scientific thought desires to attain certainty as
ardently as the thought of any previous age. But it has laid
down as a maxim not to be questioned that certainty can be
attained only through the verification of the ideal by the real ;
only in proportion to our power of testing what we imagine
by what we can observe, training ourselves up to the difficult
task of explaining what is, instead of launching out into the
free construction of what we only suppose to be. It is clear
that to such a disposition the invisible world of the Middle
Ages, instead of being, as it was to the thinkers of those ages,
the true reality, must become unreal and worthless. It is
a matter about which the scientific thinker can have no in-
clination to busy himself, since his researches have destroyed
the only motive that could have led him to pay attention
to affirmations which he cannot test — the conviction that
those who made them had access to some source of know-
ledge denied to himself, — for these researches have proved to
him that those who made the assertions were entirely
ignorant of thp constitution of the world in which they
actually lived. Astronomy and geology, to say nothing of
other sciences, have swept away the universe of the Divina
Commedia. " It lives no longer in the faith of reason." How
is it possible for the scientific thinker to place any confidence:
in affirmations about an invisible world made by men who
can be proved to have been entirely mistaken in what they
affirmed about the visible world ? Necessarily the scientific
thinker must dismiss the whole subject from his mind, and
concentrate his thoughts upon that about which alone he has
the hope of attaining to any certainty — the earth and the
universe in which it has a place.

But does it, therefore, follow that the tendencies of scien-
tific thought are only "of the earth earthy." By no means.
It is the object of the scientific inquirer to apprehend the

and How to Escape them. 215

universe in which he finds himself as it is ; to trace back its
phenomena to the powers that actually underlie them, of
which they are really the expression. If, as is maintained in
these pages, the human race, as it is certainly the latest
stage of an enormous series of developments, so is also that
form of individual being in which the universal life returns,
so to speak, into itself, by the voluntary act of the individual
will, merging the animal desire for selfish gratification in an
unselfish desire for the general good, we must expect that the
patient and honest search after the key to the series, will
lead the searchers to this true solution of their investigations.
And as might be anticipated so it has been. From various
thinkers who take their stand on the scientific basis, refusing
to listen to the voice of any master but that of their own
reason, dealing with the materials given her by observation —
thinkers who must be classed among the most fearless-assail-
ants of traditional beliefs— comes the concurrent testimony that
in the negation of selfishness, in altruism, in the placing our
own good not in what we receive from others, but in what we
can do for them, lies the true welfare of man, individually as
well as collectively; his real work upon earth; the true end* of
his being. How is he to attain this end, to do this work,
to grasp this well-being ? Can any other answer be given
bearing even a show of probability than this — by union, in
order to make the enormous and yet constantly increasing
command over natural forces now possessed by men, produc-
tive to the whole body of mankind of the greatest attainable
amount of those advantages which the earth can offer to
them ; while through this same principle of union, thr ex-
ternal element may become the nursery and training school
of those noble inner qualities, whose growth the present com-
petitive struggle for individual possession tends to stifle.

I have noticed the change in mediaeval modes of concep-
tion made by modern science, in the extent to which it turns

*Telos, in the language of Greek philosophy.

ii6 The Perils of Co-operation,

men's thoughts away from the world not manifested to oui
senses to fix them on that which is thus manifested. Let me
observe also that, in so doing, scientific thought really brings
us back to that mode of thought by which the Bible, Old and
New Testament alike, is pervaded, though, no doubt, with
the modifications, belonging to the difference between our
conception, that the Divine action, or what we call nature,
is essentially unchanging under all circumstances, and the
Biblical conception, that it changes as human action does,
according to circumstances. The Bible is full from begin-
ning to end of the deepest trust in the unseen presence
with man of that great Being, to whose will it traces all
phenomena. But this will is, according to the Bible, a will
to be realised on earth. The Jewish prophets look forward,
with ever-brightening hope, to the glories of the reign of the
Messiah. But this reign is to have its seat at Jerusalem,
whence its blessings are to flow over all nations. The New
Testament takes up the same strain. The Lord's Prayer
calls on us to hope, and desire that the will of God be
done on earth as in heaven. The Apocalypse, after a pre-
liminary thousand years' reign of the saints, preceding the
final struggle of evil against good, brings down the
Heavenly Jerusalem, the Temple of the living God, to earth,
among the nations, for whose "healing" the "leaves" of
the trees which grow along the banks of the river of life
flowing from the Divine throne are destined.* Looking, as
I do. Upon the whole development of existence upon earth,
crowned by the history of man, as the continuous manifesta-
tion of the Eternal Invisible Power, who would lead men to
that co-working with Himself in which alone their activity
will find entire satisfaction, I cannot but consider this earth-
ward track of science, as destined to bring piety back to the
sphere of Biblical thoughts and aspirations, and teach it to
find its abiding reward in earnest efforts to spread the

•Revelations xxii., 2.

and How to Escape them. 2iy

kingdom of God over the earth, by creating such conditions
of human life, as good men can feel to be worthy of this
kingdom; the fit expression of the spirit of Him whose
name is Love. How they might realise these conditions,
and that in a very few years, if only they will, these
pages have endeavoured to show. May they help to forward
that great consummation by showing to the will a practi-
cable way.

2. This is the internal road to association on which the
external road necessarily depends. For, unquestionably, the
outward must grow out of the inward ; the will to act must pre-
cede the action ; and the will to work with persevering energy
for the creation of a truly Messianic condition on earth, must
be determined to undertake this work by the conviction that
such a condition can be realised. But assuming that this inner
power is brought into persevering activity among a body of
men numerous enough to make their action perceptible, there
would come into play a second force, not to be despised,
which I have called the external road to association, namely —
the help given to the progress of the idea by those who never
would have originated it, who have, strictly speaking, no
faith in it ; men who aid it only because it aids them, and
whose conduct is, in truth, an illustration of the saying,
•' Nothing succeeds like success." What M. Leclaire has done
at Paris, what M. Godin did, and what is still doing at Guise,
illustrate this position. Men's minds, for the most part,
resemble soil; they respond to skilful cultivation. This is
the truth that Robert Owen laid hold of, and embodied in
his doctrine of men's characters being formed by circum-
stances, which at New Lanark, where he really did mould
these circumstances in a great measure after his own ideas,
produced marvellous results ; failing afterwards, because, in
fact, while he talked about controlling circumstances they
controlled him, and made, if not himself, yet at least his insti-
tutions, illustrate his own theory. The house painters, says
Mr. Sedley Taylor, in an interesting article on M. Leclaire's

2i8 The Perils oj Co-operation,

work, in the Nineteenth Century for September, 1880,* were,
" when Leclah-e commenced his efforts on their behalf, noto-
riously the most dilatory, intemperate, debauched, and
intractable workmen in Paris. Now, the members of the
Noyeaut are greatly in request among architects, from their
exceptional possession of precisely the opposite qualities."

The experience of the Familistere at Guise, often alluded
to in these pages as to the effect of the system of association
introduced there upon the very miscellaneous body of
workers, drawn from all parts of France to obtain employ-
ment in the foundry connected with that establishment, is
not less gratifying. It is an evidence of the beneficent in-
fluence exercised by the habits of associated life upon the
characters of those who come under its influence, though
they retain a freedom of individual action as complete as they
could have in the isolated life of separate homes. The result
of these experiences justifies the affirmation that association
well conducted by those who comprehend its possibilities,
and avail themselves of the lessons offered by institutions
such as those of MM. Leclaire and Godin,J will gradually
produce among the mass who come under its influence that
subordination of selfish desires to a common end, without
which the high aims belonging to co-operative effort, con-
templated from the point of view taken in this work, must be
unattainable.

Associated work and life will thus create around itself the
atmosphere requisite for its own extension. Though few
may attain to that absorption of the individual in his work

•p. 382.
t Then comprising 122 workers, chosen by election of their fellow-
workmen.

J A full statement of M. Godin's plans is given in his " Mutualite
Sociale," containing the regulations of the association which is now
the proprietor of the Familistere and the foundry connected with it. A
description of the FamilistSre, principally taken from M. Godin's earlier
works, " Solutions Socialcs,'' and " La Richesse au Service du Peuple" will
be found in a tract on " Associated Homes," published by the Central
Board.

and How to Escape thetn. 219

which complete unity of the human will with the Divine
appears to imply, and reap the blessings attending it, many
will more or less partake of these blessings.*

To this operation I look as the secret of the general diffu-
sion of associated life which I anticipate. It may spread
originally more from its physical than its moral benefits;
because the masses will find, in association, the way of
general access to advantages which, in the isolated life of
competitive society, are necessarily the portion of compara-
tively a few. But it will maintain itself permanently, because
those who live under its sway will find in it an influence
which, checking the growth of the " thorns and thistles,'"
and favouring that of the " good seed," will enable the latter
to spring up abundantly, and bring forth the rich fruit of
well-being, external and internal, collective and individual,
for the blessing of mankind.

To sum up what has been here argued, co-operation, re-
garded as a system of social reform, has two great perils, on
either of which it may be wrecked.

I. The impatience of the masses for some form of society
less oppressive to them than the system of industry based on
competitive struggles must be, may lead them to waste their
energies in vain attempts at reaching this better state by a

* If we examine the common causes of mental unhappiness, I think we
shall find that it mainly arises from men allowing their minds to be
diverted from that which they seek to do, to something which they hope to
enjoy, or perhaps have enjoyed and lost ; and that the more entirely we can
busy ourselves only about our own acts and their direct effects, and cease
to care about their reaction on ourselves, the more lasting and thorough
peace we shall attain. For this is in truth "the meek and lowly spirit "
which can give " rest to our souls." — Matt, xi., 2j, 29.

Asceticism endeavours to attain the peace belonging to a mind occupied
with its acts and not with their results by directing its action to God alone.
But to suppose that we become conformed to the will of the Great Worker
by withdrawing from work, seems to me, apart from the impossibility of its
general application, to be thoroughly illogical.

The true means of preserving our activity as workers, while we cease to
think of the effect of the work on ourselves would, I conceive, be to carry
on work in a complete system of association, where we may always feel that
we are working for the body, which assigns to us individually a share of the
proceeds proportioned to our work, without requiring us to scramble for it.
Hence arises the great value of associated life to our spiritual well-being.

220 The Perils of Co-operation,

short cut, through the mere will of the greater number, ex-
pressed in political or social changes.

2. Indifference may stifle, or scepticism paralyse the
attempt to build up this better state by higher forms of
social institutions freely developed.

The way of escape from both dangers is really the same,
namely — to persuade men into choosing this better way by
clearly pointing out where it lies ; showing the facilities
which existing circumstances offer for entering upon it ; and
the clear indications on many sides of the success that must
follow the attempt if it is made wisely and perseveringly.

Let me conclude these remarks by briefly retracing the
great lines of this course.

The hope of permanently and effectually raising the con-
dition of the mass of the population by co-operative action
depends —

1. Upon so carrying on production that its profits, aftei
paying the charges of capital, shall be applied for the benefit
of those whose work creates them ;

2. Upon so using these profits that they shall secure the
workers and their families against the destitution liable to
overtake them when isolated, from the contingencies of
human life, and shall place within their reach, by associa-
tion, the advantages which, in a competitive society, must
be the exclusive privilege of wealth.

To attain these ends there is only one practicable road,
namely — the use of the accumulated labour called capital to
create the conditions of existence required for lifting up those
whose present labour makes that capital productive of enjoy-
ment to its owners. How can the capital required be obtained ?

There are only two possible methods, i. The use of the
capital accumulated already. 2. The use of the fresh capital
which is perpetually being accumulated through the opera-
tions of industry.

Now of these two methods the second is the one which
appears most hopeful. The capital already accumulated, or

and How to Escape them, 221

in continual course of accumulation through the savings ol
income, will flow in fast enough to give extension to co-
operative enterprise so soon as that enterprise establishes
for itself the character of solid security, to offer which lies
within its reach. The experience of the people's banks in
Germany and elsewhere abundantly proves this. But until
co-operative enterprise does offer such security, the aid to be
looked for from this accumulated capital will, I fear, be
rarely forthcoming and scanty when it is offered.* It is
otherwise with the capital in the process of creation.

In many quarters an earnest desire appears to be spring-
ing up among our modern captains of industry to make the
wealth produced under their leadership conducive to the
moral and physical elevation of those whom they lead to
these peaceful triumphs of labour. The remarkable in-
stances of this disposition offered by the institutions founded
by MM. Leclaire and Godin, often referred to in these pages,
are the most striking, but by no means isolated cases in re-
cent years of what those who are rolling up capital out of
work have been able and willing to do for the benefit of the
workers, through whose assistance it is rolled up. I trust
that a not remote future has in store for us an ever increasing
number of such examples.

Alongside of these must be placed the efforts of bodies of
working men to raise their own position by associated work.
These, if the idea of the method through which the profits
of this work can be made really useful for that end can ob-
tain a firm hold on the minds of the workers, may in time
become a very powerful influence in their social -elevation.
But I fear that at present such unions, even when they
succeed commercially, will rarely produce the effect that might
result from them, because the profits on their work will be
usually dissipated in inconsiderable additions to the incomes
of the workers, and will not be systematically employed as

• This is an old experience. Compare Matt, xix., v. 23 ; and Luko
xviii., V. 23.

222 The Perils of Co-operation^

they have been by M. Godin to create for them generally
better conditions of life.

But in each of these methods of dealing with the great
social problems we must wait for the " hour and the man."
By neither method can we command them. Not so with
co-operative production, if it be systematically conducted as
the fruit of co-operative distribution. Here it is within the
power of any considerable body of men to create, without
loss to themselves, the capital required for production, out of
the savings on their own consumption, merely by associating
to supply themselves and accumulating the gains ; while by
the same operation they produce the conditions proper for
securing the advantageous employment of that capital, by
utilising their own consumption of manufactured articles,
in introducing the manufactures which by the use of this
capital they may set up.*

Now, suppose these centres of production to be formed on
such a scheme as M. Godin carried out at Guise, they would
have over the existing centres the advantages —

(j) That the workers being directly interested in the profits of
their work, would be likely to work with an energy and economy
which cannot be expected from those who have no interest but in
their wages :

(2) That the best workers would be attracted to establishments
where their work secured to them advantages much beyond what
they could procure elsewhere :

* I may observe that this is a peculiarity of the form taken by co-operation
in Great Britain, whence it offers a more direct passage to a higher social state
than does its great rival, the people's banks of Germany and other foreign
countries. These banks have been quite as effective in increasing the incomes
of the poorer classes and enabling them to accumulate capital as our distributive
societies have been. They have been far more effective in producing unions
for productive purposes than our societies. The Annual Report for the year
ending 31st December, 1886, enumerates 202 such associations, 130 manu-
facturing, and 72 agricultural. But the banks do not facilitate the formation
of these societies by serving as dep6ts for the sale of their produce as our
distributive societies may do. To develop co-operative production out of the
people's banks intermediate institutions in the nature of unions for consumption
are needed, and are indeed beginning to multiply, though still holding only a
secondary place. The Report mentions 642, against 1,866 banks.

and How to Escape them. 223

(3) That the consumers, suppljang the capital through
which the work was carried on, would be able to secure
also that the articles produced were always what they pro-
fessed to be, and were sold to them at reasonable prices.

Hence the manufactures might reasonably be expected to
prosper ; and if they prospered the principle of association
out of which they arose might be applied to ensure their ex-
pansion, by giving to capital that sense of security which in
our age and country will command any amount of it needed
for investment in the enterprises which give this security.
So that the plan, beginning with capital in course of accumu-
lation, would end by drawing in that already accumulated.

Here then, I say, is a systematic scheme of action by which
any body of consumers whose consumption of any particular
article would enable them to support a factory for its produc-
tion, and thus ensure for these products the economical
advantages belonging to industry carried on upon the
large scale of modern manufacture might, without risk to
themselves, raise the condition of bodies of workers by
their own help; through institutions which would make
the incomes of these workers as productive to them of
material advantage as they could be made ; while they
favoured the growth of those moral qualities, without
which these material advantages would add little to their
well-being. Successfully carried out in a few instances,
the plan would find an indefinite power of growth in its
application to the enormous mass of wealth annually pro-
duced by our active population, till, by degrees, the whole
body of the people came under its beneficent influence, and
capital and labour celebrated their permanent reconciliation
in the general prosperity. Surely, even if the workers of
Great Britain are too short-sighted to inaugurate this method
for their own emancipation, the wealth and benevolence of
Great Britain will not allow so easy a means of introducing
so promising a remedy for our many social evils to remain
untried.

APPENDIX.

S. — NoTB TO Page ig.

FRIENDLY SOCIETIES AND THEIR INFLUENCE IN THE
UNITED KINGDOM.

I quote from a letter by the present Chief Registrar of these societies
the following observations, which are, I think, both new and very valuable : —

" What I most miss in your section as to the relation of co-operation
to other philanthropic movements is — what probably not half a dozen other
men in the British Empire would miss like myself. Since I have been at
this office I have been compelled to look at the different forms of societies
in their mutual relations, and see that the friendly society is the common
stock out of which all have sprung, and without which, for instance, neither
co-operation nor trade-unionism can really be understood. Spreading
throughout the length and breadth of the country, to every trade and occu-
pation, the humdrum friendly society has been the school of social self-
government for our working class. It has not only supplied the machinery
in the first instance for the building society, the co-operative society, the
trade union, it has supplied the free spirit and the tendency to federation.
France and Germany supply instances of the same influence differently
exerted. In France the Socicte de Secours Mutuels, although a distinct
entity, is perpetually interfered with by the State, now petted, now pun-
ished. So French Socialism always looks for State help. In Germany
the self-governing friendly society scarcely exists, its place is taken by the
Government insurance of the Zwangs-Kasse. Hence German social
democracy, which thinks only of acting through the State, and pooh-poohs
as well trade-unionism as free co-operation."

The following table, compiled from the Registrar's Reports for 1875 to
1878, illustrates the extent to which this form of self-help by mutual
insurance prevails in the United Kingdom*: —

ENGLAND, WALES, CHANNEL ISLANDS, AND ISLE
OF MAN.

Years.

Forms
Issued.

Returns
Received.

Number of
Members.

Amount of
Funds.

1875
1876*
i877«
1878

26,087

25.234
24,409

24.137

11,282
12,338
12,270
12,300

3,404,187

4.367.772
4,608,794
4,692,175

9,336,948

10,226,883

11,109,571

12,148,609

• These returns include cattle insurance, benevolent societies, working men's clubs, W)4
loccially authorised societies; in 1876, .88; in 1877, 137; and in 1878, 114.

Appendix.

225

SCOTLAND.

Years.

Forms
Issued.

Returns
Received.

Number of
Members.

Amount of
Funds.

1875

835
834
753
753

442
485
543
550

554,551
563,463
618,416

569,275

548,805

587,630
702,962
667,366

1876

1877

1878

IRELAND.

IN ENGLAND AND WALES:

Building Societies under the Act of 1874, Loan Societies, and Trade
Unions show the following results in the latest returns : —

Societies.

Year.

Number of
Societies.

Number of
Returns.

Number of
Members.

Amount of
Funds.

Building..
Loan ....
Trades...

1878
1879
1878

987
380
177

830

387
124

269,400

33,520

202,984

£
28,228,153
122,160
309,223

2. — Note to Page 33.
FERDINAND LASSALLE AND GERMAN SOCIALISM.

I take from an able article in the number of the Contemporary Review for
June, i88r, by Mr. John Rae, the following account of the life and theory of
Ferdinand Lassalle, who, says Mr. Rae, " first really brought Socialism
from the clouds, and made it a living historical force in the common politics
of the day," thus giving it a character at once the source of its apparent
strength and its real weakness.

Lassalle combined with almost equal intensity the capacity for, and
impulse to, profound study and exciting action. He was at once a profound
philosophical thinker, a fearless political agitator, and a fashionable dandy,
noted for his dress, his dinners, and his addiction to pleasure. A sketch of
his life is almost indispensable to the appreciation of the social philosophy
of a man on whose tomb is inscribed the epitaph " Thinker and Fighter."

Z26 Appendix.

Ferdinand Lassalle was born in 1825,31 Breslau,andwas the son of a wealthy
Jewish wholesale merchant. In 1842 he went to the University of Berlin,
then full of revolutionary theories, resting on the celebrated philosophical
system of Hegel, ot which Lassalle became an ardent disciple, sharing, no
doubt in the belief very common among its adherents, that they had the
key to all the mysteries of existence. He had intended to follow the career
of a teacher of philosophy at Berlin, but was diverted from this design by
his sympathy for the wrongs of a lady, the Countess Hatzfeld, who, married
at the age of sixteen to a great German noble, had for twenty years
been subjected to cruel persecution by her husband, without being able to
obtain the aid of her own relations in escaping from him. Lassalle, though
not a lawyer, undertook her case, which he is stated to have carried before
thirty-six different courts; till, in 1851, he obtained for her a divorce, and in
1854 a princely fortune, out of which she gave him a considerable annuity
for life. In the meantime, in 1849, he had been tried for treason, in urging
the citizens of Dusseldorf to refuse the payment of taxes, after the
forcible dissolution of the Prussian National Assembly in 1848; and though
acquitted by the jury, he was imprisoned for six months by the police magis-
trates. Oil a charge of resisting the police officers, and forbidden to come to
Berlin. Thus shut out from his intended career as teacher, he threw him-
self with the more ardour into study, and in 1857 produced the work which
fouijded his philosophical reputation, his commentary on the writings oi
Heraclitus, a Greek philosopher, surnamed " the Dark," from the obscurity
of his utterances. The reputation procured for him by this work emboldened
him to come to Berlin, where he gained admission under the disguise of a
waggoner, and was allowed to remain, through the personal intercession
with the King of Alexander von Humbolt, who had known Lassalle from
his boyhooa, and greatly admired his abilities.* Literary work, including a
satirical commentary on Julius Schmidt's " History of German Literature,"
which created much attention and amusement on its publication, occupied him
for the next five years, during which he was engaged also in controversy
with Dr. Schulze-Delitzsch. In 1862 he was again prosecuted by the
Government, and imprisoned for the opinions put forth in a lecture on
" The Connection between the Present Epoch of History and the Idea
of the Working Class;" and, as a result of these proceedings, threw himself
into the socio-political agitation, which, for the reasons to be stated presently,
he regarded as the gate leading to social reform. To open this gate by
convincing the population of the importance of opening it, became thence-
forth his main object. For this purpose he founded, in May, 1863, the
General Working Mens Association for the Promotion of Universal
Suffrage ; and, in aid of this association, says Mr. Rae, " he passed from
place to place delis'ering speeches, establishing branches — he started news-
papers, wrote pamphlets and even larger works, published tracts by Rodbertus,
songs by Herwegh, romances by Von Schwizer; but it was up-hill work."
Lassalle hoped to obtain a membership of 100,000, without which, he said,

called him a wunder kind (a marvellors child).

Appendix. 227

nothing could be done. But in August, 1863, he had enrolled only i.ooo,
and at his death, twelve months later, " after another year's hard work," the
numbers had risen only to 4,610. They increased afterwards much more
rapidly, partly from the interest aroused by the romance connected with his
death ; partly, it is stated, from a delusion not very creditable either to the
intelligence of the German population or the honesty of their social leaders,
that Lassalle was not dead, but only translated to a higher and surer
leadership. A Lassalle cultus was instituted and kept up by periodical
celebrations down at least to the anti-Socialist law of 1878. B. Becker,
Lassalle's successor in the presidency of the association, states that many
working men believed that Lassalle had died for them, and would come
again to save them. The real manner of his death was this. He had fallen
in love with Helena, the daughter of Herr von Donningsen, the Bavarian
envoy at Berlin, "the courtliest of the courtly, a conservative seven times
refined." Helena returned Lassalle's passion, and in August, 1864, met
Lassalle on theRighi. and arranged that he should come to Geneva, where
her father then lived, to press his suit in person. He came, but the
parents refused to see him, and the young lady, in despair, fled from her
father's house and urged him to elope with her. Lassalle calmly led her
back to her home, probably, says Mr. Rae, from the belief " that he would be
able to talk the parents round, if he got the chance, and the desire to try
constitutional means before resorting to revolutionary. Helena was locked
in her room for days, alone, with her excited brain and panting heart. For
days father, mother, sister, brother, all came and laid before her what ruin
she was bringing on her family for a mere selfish whim of her own. If she
married a man so objectionable to people in power, her father would be
obliged to resign his post ; her brother could never look for one ; and her
sister, who had just been engaged to a count, would have, of course, to give
up her engagement." Helena was in despair, but ultimately submitted to
marry a young Wallachian Boyar, Herr von Racovitza, to whom she had
been previously engaged, and whom she liked and respected without loving
him as she loved Lassalle; and this she told, with a request that Lassalle's
suit might be no more urged, to two of his friends who obtained an interview
with her in the presence of her father. Lassalle, in the meantime, had
worked himself up into a fury of excitement in efforts to prevent the mar-
riage, and though he always held that a democrat should not fight duels, and
had got Robespierre's stick as a present for having declined one, challenged
both the father and the bridegroom. " The latter accepted. The duel was
fought; Lassalle was fatally wounded, and died two days after on the 3i8t
August, 1864, at the age of 39. Helena married Herr von Racovitza shortly
afterwards; but he was already seized with consumption, and she, as she
says, found great comfort, after the tumult and excitement of the Lassalle
episode, in nursing her husband during the few months that he lived after
this marriage."

Such was the life of Lassalle. His system is contained mainly in the
lecture above-mentioned, and in a work published at Berlin in 1864, called
" Mr. Bastiat Schulze von Delitzsch, the Economistical Julian ; or, Capital and

228 Appendix.

Labour."* It is, according to the account given of it by Mr. Rae, a battle
against Ricardo, whom he describes as the last and most representative
development of bourgeois economy, fought with Ricardo's own weapons,
and on Ricardo's own ground.

Ricardo has laid down that the value of a commodity, or the quantity
of any other commodity for which it will exchange, depends on the relative
quantity of labour, mental and manual, necessary for its production, which
must be measured by the time consumed in that labour. This reduction of
value to quantity of time, Lassalle considered to be the one great merit of
the school of economists represented by Ricardo. But he gave it an exten-
sion not contemplated by them. Ricardo confined his theory to commo-
dities admitting of indefinite multiplication, so that their value is not aff'ected
by their scarcity, and to their normal value independently of the fluctuations
of market price. Lassalle sought to apply the principle to these cases, also,
by the argument that this value was constituted, not by labour pure and
simple, but by labour modified by the general condition of society — powers
of production — rarity — demand depending on social necessity — which, as
they have not been created by any one in particular, should not be permitted
to benefit any one in particular. Hence he concluded that so far as the
problem of the distribution of value goes, the one factor which needs to be
taken into account is only labour. All value comes from it, represents so
much time of labour, is in fact so much " labour jelly," so much preserved
labour. But while this full value is simply the sweat, brain, and sinew of
the labourer, incorporated in the product, the mass of labourers, whatever
they produce, earn only the same wages — bare subsistence. The labourer
who, according to the previous argument, is entitled to everything, actually
gets, on the economist's own showing, just enough to keep body and soul
together, and on the present system can never get any more. The value of
labour, says Ricardo, like the value of everything else, is determined by the
cost of its production, that is the cost of the labourer's subsistence, according
to the standard of living customary among his class at the time. Wages
may rise for a while above this level, or fall below it, but they always tend
to return again to it, and cannot permanently settle anywhere else. When
they are higher, the labouring class are encouraged by their increased pros-
perity to marry, and eventually their numbers multiply, so that by the force
of ordinary competition the rate of wages is brought down again. When
they fall lower, marriages diminish, and mortality increases among the
working classes, till their numbers are so reduced that the rate of wages
rises again to its old level. This is the economical law of natural, or
necessary wages, " the iron and cruel law," which, said Lassalle, absolutely
prohibited all wage labourers — that is, 96 per cent of the population — from
the possibility of ever improving their condition, or benefiting from the
growing productivity of their work. This law converted industrial free-
dom into an aggravated slavery. The labourer was sent like a commodity,
to be bought in the cheapest market, and there deprived by the force of

* Herr Bastiat Schutzc von Delitzsch der ^konomische Hulian odcr Capital und Arbeit.

Appendix, 229

competition of the value of the property which his own hands had made.
His property is given over to a stranger.*

How was this evil to be removed ? The answer of Lassalle is, by the
abolition of the commercial system of which this injustice constitutes the
essence. The question can be solved only by a socialistic reconstruction
which shall make of the instruments of production collective property, and
subordinate capital to labour; the solution will, of course, be the work of
generations, but the easiest mode of transition from the old state of things
to the new. lies in establishing productive associations of working men on
State credit. They would form the living seed corn of the new era.
Lassalle did not assume that the State should introduce a new organisation
of labour all at once, or that it should make its advances gratuitously.
They were to be made to such associations only as appeared to rest on a
sound basis, and at ordinary commercial interest. The State, he argued, would
really run no risk of loss, since the associations in the same trade would not
cut each other's throats, as, in fact, there would be only one in each town ;
and, besides, they would establish a mutual insurance against loss, trade by
trade; while they would lead to an increase of production, without which
Lassalle admitted that his scheme would not be economically justifiable,
because " an increase of production is an indispensable condition of every
improvement of the social state." This increase would be effected, he
alleged, by the saving of loss through abolishing local competition, domg
away with middle-men and private capitalists, and better adapting produc-
tion to needs. The business books of the associations would form the basis
of trustworthy commercial statistics, so requisite for the purpose of avoiding
over production. And the change would improve the character of produc-
tion, by substituting in place of the taste of the bourgeois for the cheap and
nasty, the sounder taste of the working class for the substantial and
beautiful.

Such was Lassalle's system. To introduce it, he said that he asked of
the State " not so much help as a whole hand, but only that of a little finger,"
Still, as he had no hope of inducing the German States, as they were then
constituted, to put out this little finger, he threw himself into the political
agitation, described above, for obtaining universal suffrage, and thus giving
to that 96 per cent of the population, in whose behalf he claimed to act, the
power of inducing the State to stretch out at least its little finger in the
required direction. A large part of Mr. Rae's interesting article is devoted
to a statement of the arguments by which Lassalle justified this political
agitation, or supported the proposition that the time for the advent of the
working population to political power had arrived in the necessary
course of the evolution of humanity; and that it would not be attended by
the evils which had accompanied the advent of the bourgeois class
to power through the French Revolution of 1789 and its consequences.
From the point of view taken in this work, Lassalle's system is open
to the criticism that it asks the State to do what it should be asked only

* Das Eigenthum ist Frendthiim gewordeii.

230 Appendix.

to give facilities for the doing, and to affirm when it is done. The
People's Banks, set on foot by Dr. Schulze-Delitzsch, may be admitted
to be as ineffective for radically reforming social evils, as Lassalle
maintained that they were, and as our distributive societies would
be, if co-operation is to stop at them ; but not the less do they embody the
true principle on which alone a permanent social reform can be introduced —
the principle of voluntary union, for a self-help which is not selfish help.
Not the less do they indicate the true method on which this unselfish self-
help must set about its work, namely, by accumulating a collective fund, by
whose wise use the worker may convert capital from the master of labour into
its servant. Only the guarantee against loss which such funds would create,
could justify the appropriation ofthe credit of the State, which necessarily rests
on the incomes of all the members, for the purpose of aiding part of them,
as Lassalle proposed. While, if by such unions, the requisite guarantees
were provided, the use of the State credit would become unnecessary ;
because the ever-accumulating private capital which is always looking out
for safe investments producing a somewhat higher rate of interest than can
be got from the State, would flow in spontaneously to supply the wants of
the co-operators, as it has done on the German banks, and tends to do on
our distributive societies. On the other hand, experience has abundantly
shown, that no application of money is more liable to abuse than that
of grants out of the public purse for private purposes, which are almost
certain to get into the hands of precisely those persons who are the least
likely to make a good use of them. So that, however effective the
polemic of Lassalle was in stirring up the masses by its powerful descrip-
tion of the effect on the working population of the modern commercial
competition ; and however fascinating the notion of gliding into a better
condition, without the trouble of self-sacrifice, by the magic of credit voted
by universal suffrage ; yet the system of Lassalle, if it ever got tried, would
in all probability impede the progress of social reform, instead of helping it,
by blocking up the road with a mass of ruins. The rosy light of imagination
may clothe the State-born associations with an ideal perfection, in which
the protean shapes of selfishness disappear. But in the actual world they
would crowd in to convert to their own purposes what was, in truth, a
creation of their own spirit.

3. — Note to Page 48.
AGRICULTURAL POPULATION OF FRANCE.
It is not easy to ascertain accurately the number of landed proprietors.
The " Slatistique Generate de la France" gives as the result of the census
of 1876:—

Number. Per cent.

Proprietors cultivating their own lands. .. . 10,620,000 .. SS'gg

Farmers, Cultivators, and Metayers 5,708,000 .. 30-09

Vinedressers, Woodmen, and Gardeners . . 2,639,000 .. 13-91

Total 18,967,000

99-99

Appendix 231

I'ut these numbers include the members of their families. M. A. Le Roy
I'eaulieu, following Mr. G. de Lavergne, estimates the families Ihas: —

Independent Proprietors living on their own lands 2,000,000

Farmers and Metayers i,ooo,oco

Workmen living on wages, but who also are generally

proprietors 2,ooo,000

— Revtie des Deux Mondes^ i^79. vol. 30, '■^ Sodalisvie Agi aire,^*

4. — Note to Page 90.

LIST OF CORN MILLS,
Tahen from the Registrar's Returns for \ 886.

The societies in this list confine themselves to supplying flour. Several not
included in the list deal in flour and provisions ; others, such as the Carlisle,
Cleator Moor, Crook, Leigh Friendly, Leeds, and Lincoln, grind flour foi
their own members.

C means Co-operative ; Cn, Corn ; and M, Mill.

Society, Name, and Address.

Devonshire —

Devonport Union

Durham —

Derwent C. Cn. M., Shotley Bridge ,

Kent —

Sheerness Economical, 2, Broad-street, Mile

End, Sheerness , ,

Lancashire —

Rochdale C. Cn. M., Weir-street, Rochdale

Star C. Cn. Millers, Star Cn. M., Oldham..,
Yorkshire —

Easingwold Union Steam Flour M., Easingwold

Halifax Flour, Bailey Mall M., Halifax

Hull Anti-M., 31, Scale-lane, Hull

,, Subscription M., 3, George-street, Hull...

Northallerton Provident Cn. M., Noithallrrton

Sowerby Bridge United District Flour, Union-
street, Soweriiy Bridge

Business, 1886.

Sales.

3,843
77,571

22,857

167,657
153,914

5,945

•93,349

31,016

4,664

7,091

344,569

Net
Profits.

328
813

1,801
372

8,205

676

362

20,047

C.^pital,

and V/aan.

3,3'8
19,649

9,412

95:j20
65,663

1,133

122,878

12,895

3,568
1,615

104,554

232

Appendix.

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Appendix.

233

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236

Appendix.

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Appendix. 237

6. — Note to Page iio.

PRICES AT WHICH METAL TOKENS CAN BE OBTAINED.

The following lists were obtained from the undermentioned firms, in
answer to inquiries made in November, 1879: —

Messrs. jfohn Ardhill and Co., St. George's Works, Little Woodhouse
Street, near Leeds.

THIN TOKENS. — PER THOUSAND.

Diameter. Tin. Brass. Copper.

J inch ; \ 6/0 6/6

6/6 7/-

7/0 7/6

-2/6 7/6 8/-

8/- 8/5

8/6 g/-

9/- 9/6

inch.

THICK TOKENS.

Tin-Milled White Metal

Edges. Thickness of Coin.

J inch 7/6 14/-

I , 8/- 18/-

14 9/- 22/-

Thickness of Coin. Brass. Copper.

J inch (Half Sovereigns) 14/- 16/-

I „ (Sovereigns) 16/- 18/-

I » 22/- 24/-

4.. 30/- 35/-

Messrs. yames Hinks and Son Limited, Birmingham and London,
80, Holborn Viaduct, E.C.

Round Dies, engraved to order * -/6 each net.

Tin Tokens „ ,, from i/- per gross net.

Copper „ ,, „ from 1/6 „ „

Seven gross the smallest amount supplied from each die.
T/ie A fid/a fid Co-operative Tinplate Workers' Prodticlive Society, 25,
Masshouse-lane, Birmingham, will be glad to send estimates for metal checks
to any Society.

7. — Note to Page 112.
SUGGESTION FOR AN IMPROVED SYSTEM OF CHECK

ON SALES AND MONEY TAKINGS.
1 . A complete system of check on the business of societies should possess
the following qualities : —

(i) It should effectually check the actual amount of money taken.
(2) If the society does not pay dividend on all articles, it should distinguish
those on which dividend is paid from those on which it is not.

238 Appendix.

(3) If non-members are entitled to dividend at a less rate than members,

It should distinguish the two sets of claims, so that it may not be
possible for a member to buy up the claims of non-members and get
a dividend larger than the seller was entitled to by claiming in his
own name.

(4) It should enable the managers of the society to have a complete

record of the articles stated to have been sold, if it appeared to be
desirable, either generally or in any particular case.

(5) It must be workable without such a consumption of time and money

to the members or the society as may outweigh its advantages.

2. None of the systems explained in the chapter on Distribution fulfil all
these conditions. The system of metal tokens ordinarily used fulfils none,
except the last. But since the chapter on Distribution was written, a plan
has been suggested, which appears very completely to combine (i), (2), (3),
and (5) of the conditions above-named, while it may be easily extended so
as to embrace (4), if this is desired in any case.

This plan consists in issuing paper tokens, similar to postage stamps,
made up into books for shillings, pence, and farthings, if checks are issued
for such small sums.

Each token in each set would be of the same value, i.e,, for sums under
los., id. or IS. ; and for sums of los. and upwards, los. The tokens should be
separated by perforated lines, like postal stamps, and each set should be
numbered continuously. Sums of more than Jd., id. ; is. or los. respectively
would be indicated, as is done with postal stamps, by using more than
one without separating them.

The tokens should be gummed at the back, and purchasers should be
supplied with cards, divided by lines so as to leave spaces corresponding to
the size of the tokens, in which they might be fastened ; columns for
£. s. d. being added on one side into which the money value of each set of
tokens might be carried out. These cards would be the basis for calculating
dividends. When one was fiUed up, the sum in the columns of figures would
be added up, and the total carried on to the top of the column of a new
card, which would be supplied to the purchasers on giving up the first.

Each card should be distinguished by either the name of the holder, or a
number by which the holder could be identified.

The continuous numbers would aff'ord a very easy method of verification.
It would be necessary only to provide for each set of tokens a check book
containing a similar set of numbers. As the cards were brought in, the
numbers on the tokens would be ticked off in these books ; when, if any
duplicate numbers appeared, there would be direct proof that one or the
other of these duplicate tokens was forged ; while the question which one
v/ould be reduced to the simplest possible elements of inquiry, since the
two persons between whom the fraud must lie would be ascertained by the
names or numbers on the cards. As the check cards would be constantly
coming in during each quarter, the verification might be always going on,
so as to prevent there being a great pressure in this operation at the end of
the quarter.

Appendix. 239

On the salesman the system v/ould provide a very effectual check, by
recording the number of the last token whenever any book given to him
was examined. For the difference between the two numbers would represent
the exact sum for which he had to account in respect of the tokens taken
from that book.

Of course, this assumes that the purchasers would require in every case
tokens equal to the amount of their purchases. If this were not done, in any
instance, there would be a possibility of fraud to the extent of that purchase.
Probably, however, it would be confined to very narrow limits. But this
possibility apart, if tokens were required to be given in every case, any
discrepancy between the actual takings and the money produced must
immediately come to light.

For sales to non-members and sales of articles on which no dividend was
paid, provision might be made by a stamp with the letters N M or N D,
which the salesman should be required to mark on the token on issuing it.

It may, perhaps be objected that these tokens would take up so much
space that the cards would require to be renewed inconveniently often. But
considering the provision made for preserving them by the cards, and that
for all sums over one of each denomination, more than one token would be
used in connection, there would probably be no inconvenience in reducing the
tokens for shillings to J and for pence to J of a postage stamp divided by lines
parallel to the top and bottom; so that the space occupied by iid. orgs,
would be only equal respectively to af or 3 postage stamps. But books
might be used for intermediate values, say 3 and 6 pence or shillings, if
this were thought desirable.

The system here described would supply an effective check on money
takings without requiring any entry of the purchases. If an entry of these
particulars is desired, it may be made by such a system of books, in which
the bills are written on the carbon process, as is described in the body of
the work to be in use in the Civil Service Stores.

If such a method of entry were combined, with a separation of the
cash takings from the dealing with the goods, and it were connected with
the system of tokens here explained, there would be produced a very com-
plete check on the salesmen, but at a considerably additional cost for
labour, which societies, who have a large business in tiansactiona indi-
vidually small, may not think it wcrth their while to incur

240

Appendix

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241

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242

Appendix.

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Appendix. 243

9. — Note to Page 129.

THE EFFECTS OF THE SYSTEM OF COMPETITION ON THE
DISTRIBUTION OF PROPERTY.

The tendency of the competitive system to throw the increased wealth
caused by the growth of knowledge and improvements in production into
the hands of a comparatively small proportion of the community is strikingly
illustrated by the recent inquiries of two eminent statisticians, Mr. R.
Giffen and the late Mr. Dudley Baxter.

Mr. Giffen showed from the income tax returns, in a paper read before the
Statistical Society on January 15th, 1878, that between 1866 and 1876 the
national estate had improved in value at the rate of ;£"24o,ooo,ooo a year, the
increase of personal property alone being ;^i42,ooo,ooo a year. So that in
ten years the country had accumulated three times the amount of the
National Debt; or, while the populaton had increased i per cent per annum
the amount of property had increased from 3 to 4 per cent per annum. Now,
as there certainly has not been any improvement in the general condition of
the people at all corresponding to this increase of property, it follows that
the increase must have gone to augment the incomes of the richer classes.
That is to say, this accumulation has been the continuation at a still more
rapid rate of the process which a comparison of the distribution of income
within each of the divisions of the United Kingdom within itself, and that
of England, Scotland, and Ireland, as compared with each other, according
to the estimate for 1868 contained in Mr. Baxter's valuable work on
" National Income," shows to have gone on for centuries in these countries.

Mr. Baxter divides the income receivers, for the purpose of comparison,
into two great classes : — I. Those who have means of subsistence inde-
pendent of manual labour. II. Those whose subsistence depends upon
manual labour. Each of these classes he divides into groups, of which
there are in Class I. five, and in Class II. three.

Class I. contains —

I. Those whose annual income is over

. £5,000.

2- 1) »

between .

. £$■,000 and ;^i,ooo

3' f» »»

. /■ 1, 000 and £300.

4- »» ♦»

. ;^30o and £100.

' 5" •» ••

below ...

. ^lOO.

Class II. contains —

6. Highly Skilled Labour.

7. Lower Skilled Labour.

8. Unskilled Labour ^A Agrtcuiture,

244

Appendix.

From these divisions Mr. Baxter obtains for 1868 the results following ;
ENGLAND.

Class. Numbers.

Income.

Percentage of

Total.

Annual Average.

Numbers.

Incomes.

I. I..

7,500

42,500

150,000

850,000

1,003,000

L
111,104,000
69,440,000
72,910,000
93,746,000
60,000,000

£ S. D.
14,813 17 4

1,633 17 7

486 I 4

no 5 9
59 16 7

.0761

.4269

1.5246

8.6455
10. 1950

£
16.7849
10.4905
II. 0148
14.1625
9.0644

-I

Total of I

2,053,000 i 407,200,000

198 6 10

20.8681

61.5171

n. 6

1,123,000 ! 56,149,000
2,819,000 1 127,921,000
3,843,000 1 70,659,000

50
45 7 6
18 7 8

II.4149
28.6542
39.0627

8.4826

19-3251
10.6751

Total of II. ... 7,785,000 1 254,729,000

32 14 5

79.1318

38.4828

I. and II ' 9,838,000 661,929,000

67 5 7

99-9999

SCOTLAND.

I. I

600

4,100

13,900

97,400

156,000

10,068,000
8,505,000
7,464,000
8,679,000
7,800,000

16,780

2,074 9

5.36 19 6

89 2

.0430
.2941

•9971

6.9870

11.1908

13-5572

".4525
10.0507
II. 6868

•J

10.5032

Total of I

272,000

42,516,000 1 156 6 2

19.5120

57.2504

n. 6

137,000
558,000
427,000

6,454,000

16,543,000

8,750,000

47 2 3
29 12 II
20 9 10

9.8278 8.6907
40.0286 22.2760
30.6312 11.7824

Total of IL ...

1,122,000

31,747,000

28 5 10

80.4876

42.7491

L and II

1,394,000

74,263,000 1 53 5 6

99.9996 99.9995

IRELAND,

I. I

400

2,700

14,400

78,500

338,000

4,985,000
5,379,000
7,347,000
8,527,000
13,520,000

12,462 10

1,992 4 5i

510 4 2

108 12 5

•0160

6.3970

6.9026

9.4280

10.9422

17-3495

.1085

.5787

3-1551

13-5852

■I

C-

Total of I

434,000

39,758,000

91 12 2

17.5435

51-0193

IL6

85,000

710,000

1,259,000

3,750,000
16,188,000
18,231,000

44 2 4
22 16
14 9 7

4.4164
28. 5369
50.602S

4.8221
20.7732
23.3848

Total of II

2,054,000

38,169,000 ; 18 II 7

82.5561

48.9801

I. and II

2,488,000

77,927,000 i 31 6 5

99.9996

99.9994

Appendix. 245

Taking the two extremes of this table, we have two countries — England
and Ireland — differing so much in their collective wealth than the income
per head of the whole income-receiving population is, in the former, more
than double that in the latter, £(i'j. 5s. yd. per head of every income
receiver in England, against ;i^3i. 6s. 5d. in Ireland. How is the surplus
income of England distributed? The table shows that it goes mainly to
increase the incomes of the richer classes. Of the ;^77,927,ooo total income
of Ireland, nearly half, 48.98 per cent., is absorbed by the earnings of the
class who depend on manual labour for their support. 51.019 per cent, only
goes into the pockets of those who are independent of this source. It yields
them an average income of ;^9i. 12s. per head. But of the ;^66i, 929,000 o'
English income, ;^407, 200,000 (61.5171 per cent. ) of the whole is appropriated
by the owners of revenue independent of manual labour, to whom it gives
an average income oi £\cl&. 6s. lod. a year, leaving to the classes dependent
on manual labour ;i^254, 729,000 (38.4829 per cent, of the whole income), with
an average receipt of £1"^. 14s. 5d., against ;^i8. lis. 7d., the average for the
same classes in Ireland.

Scotland, as it occupies a middle place in wealth, so it has a middle
position in its distribution. Of the ;^74,263,ooo total income ascribed to it
in the table, ;^3i,747,ooo (42.7491 per cent.) goes among the classes who live
by their manual labour, to whom it gives an average income of ;^28. 5s. lod.,
while ;^42, 516,000 (57.2504 per cent.) belongs to the richer classes, yielding
them an average income of ;^I56. 6s. 2d.

Taking the two great divisions collectively, we find that while the average
income of the classes supported by manual labour in England is higher
than that of the same classes in Ireland and Scotland in the proportion
of ;if32.720 to ;i^i8.562 in the first case, and ;^28.266 in the second, or an
increase of 77.77 per cent, over the Irish, and 15.75 over the Scotch rate,
the average incomes of the richer class in England have increased in the
proportion <:>{ £\o,%.l£,o to £()\.^o% over the Irish, and of ;^i50.3o8 over the
Scotch average, or 115.87 per cent, in the first case, and 64.62 in the second.
That is to say, while the poorer classes in England are, on an average, a
good deal short of being twice as well off as the poorer classes in Ireland,
and less than one-sixth part better off than the same classes in Scotland, the
richer classes are, on a like average, a good deal more than twice as wealthy
as the corresponding classes in Ireland, and one and a half times as rich as
those of Scotland.

It must be observed, however, that this increased average arises not from
the incomes of the richer classes taken individually being larger, so much
as from these classes being so much more numerous in proportion to the
whole population. Mr. Baxter's tables give for the incomes of classes i, 2,
and 3 individually, a higher average in Scotland than in England ; and in
Ireland, for the ist class, an average not far short of the English average,
while for the 2nd and 3rd the average is actually higher. But, then, while
class I is only .0160 of the Irish income receivers, it is .0438 of the Scotch,
and .0762 of the English, nearly five times as large in England, and three
times as large in Scotland. Classes 2 and 3, which form together only

246 Appendix.

•6872 per cent of the Irish income receivers, form 1-2192 of the Scotch, and
1-9524 per cent of the EngHsh; numbers which, when compared with the
proportion for the highest class, are a further illustration of the tendency in
the present system to throw the increase of income into the hands of the
richest class, since they show that the increase in number of the richest class
in England is proportionately greater than that of the two classes next to
them in wealth.

I began by stating that Mr. Baxter's tables relate to a period nearly twelve
years distant from us. But the more recent researches of Mr. Giffen may
assure us that the tendency disclosed by these tables has not at all ceased to
operate since they were compiled. On the contrary, there is every reason
for thinking that if the tables were carried down to the present time, they
would show the richer classes, at least in England and in Scotland, in pos-
session of a proportion of the national income still larger than that held by
them twelve years since, and distributed so that the shares belonging to the
richest class among the rich has increased in the largest proportions; while
the poorer classes, if collectively they possess a larger income than Mr.
Baxter assigns to them, as they probably may do from their increased
number, would own a smaller proportion of the whole amount, with an
individual average diminished by the results of the long depression of trade.

If a more satisfactory state of things is to be introduced, it is clear that
we must look for it in something very different from that struggle, perpetually
increasing in intensity, which assumes the pretentious, but very deceitful
name, of Free Trade.

10. — Note to Page 138.
WORK AND THE WORKMAN.

A remarkable paper, read by Dr. Ingram, Fellow of Trinity College, at
the Trades Union Congress, at Dublin, on " Work and the Workman,"
contains observations upon the effects of co-operation upon the working
population which I am unwilling to leave without notice.

" Much stress," says Dr. Ingram, "has been laid by the advocates of the
co-operative system on the enlightenment and the moral benefits which must
arise from its practice. It is said that it will bring working men to under-
stand the grave difficulties with which employers have to contend in the
conduct of their business, and will make them more reasonable in their
dealings with employers, by showing them in a practical way the bearing
on production and prices of the regulations they desire to enforce on the
masters. It is to be observed that this implies only a partial or temporary
trial of the system, and looks to the organisation of employer and employes
as the really permanent and normal one. The instruction so received
might be useful enough, but it would be dearly purchased by extensive and
repeated failures, and I believe the same lesson can be sufficiently inculcated
through study and observation without compromising the interests of
families. It is also alleged that the working of the co-operative system,
regarded in its reaction on character, will call forth many of the highest

Appendix, 247

qualities of our nature. All combined action of men for honest ends
doubtless develops some useful elements of character; but the degree of
the elevation of these elements depends on the nature and objects of the
combination, which may be of a kind to starve other better traits. I be^eve
in no moral regeneration founded on appeals to private interest. Social
motives alone can truly moralise ; and I cannot help thinking that upon
the whole the tendency of the co-operative system would be to spoil the
best qualities of the working man. Large sympathies and generous
impulses which are natural to the one would be supplanted by the com-
parative deadness to social interests, and the constant gain regarding the
attitude of the other. I believe thus the immense majority of working men
must remain to the end working men, and that only. I further believe that
this necessity admits of being fully reconciled with their happiness and their
dignity. They would, in my opinion, best consult their best interests by
recognising these truths as soon as may be, and sincerely renouncing the
pursuit of a different position. What they ought to aim at is the elevation
of their class, as such, without seeking to alter the bases of the existing
organisation of industry."

On the way in which the workers should seek the elevation of their class,
Dr. Ingram proceeds to give much excellent advice, concluding with a
passage which, notwithstanding its length, I extract, both for the intrinsic
value of the teachings contained in it, and because they supply the best
refutation of the opinions expressed by the Dr. in opposition to co-
operative union, if that union is looked at from the point of view presented
in this work.

" I have not," he says," you will observe, presented the view that the
intellectual improvement of the workman," of which he had urged the
importance, " will assist him in rising out of his class into a higher sphere
of life. I do not, either for him or his employer, contemplate what is
called 'getting on in life' as the great end of existence. In much of the
popular literature of self-help, the hero held out to our admiration is the
man who, beginning as a workman, scales the ladder of social elevation,
and closes his career as a master; and it is almost implied, that the great
question is not how to improve and ennoble the workman's life, but how to
enable the ambitious and energetic to escape from it. I think current ideas
on this matter want a good deal of correction. The causes which determine
the rise of some to the rank of directors of industry, while others remain in
the position of workmen, are not always easy to trace; most frequently
accidental elements of situation or opportunity are involved. But, so far as
personal qualities are operative, it is a great mistake to suppose, as is too
often taken for granted, that a rise of this sort is always or ordinarily con-
nected with superiority of nature. A man who remains a workman all his
life may be, and often is, in all the essential qualities of manhood, of far
greater intrinsic value than another who raises himself to wealth and rank.
The practical qualities which most lead to what is called success — tough-
ness, dexterity, and caution — valuable, no doubt, in themselves, may be
combined with a poor intellect and a narrow heart. The very process by

248 Appendix.

which industrial ascendancy is reached, even when the means used are per-
fectly legitimate, involve grave dangers to man's nature. The constant
habit of self-regard; the temptation to put aside the claims of others; the
intense preoccupation with the possibilities of profit, have a tendency to
produce on the intellectual side narrowness of view, and on the moral side
hardness and want of sympathy. These qualities have often been observed
in self-made men, and particularly in the smaller capitalists, who are still
suffering from the deteriorating effects of the struggle. It is only just,
however, to add, that in nature's fundamentally good, when the strain
of acquisition is relaxed, the possession of wealth and the power it bestows
often develop the better elements, and bring out the nobler instincts of the
genuine chief. More frequently, perhaps, social fruit is not derived from
these elevations till the second generation ; and then only where vanity and
a weak imitation of the old aristocracy do not lead to a life of luxury and
ostentation. But, be this as it may, there is no reason why we should think
less of a man because ambition and the desire to be rich are weak in his
nature. They are weak, I believe, in most healthy natures, and it is well
that they should be so. Morality and religion have always deprecated any
intense degree of them. We cannot, indeed, dispense with a strong dose
of them in some members of the industrial world, for they are necessary to
bring about the formation of large capital, and to provide efficient directors
of industry. But the development of these elements of character is
required only for the actual or destined capitalist. They are foreign to the
vocation of the ordinary working man, and, if indulged, produce from the
necessary limitation of his circumstances a miserable restlessness and spirit
of revolt. What is really important for working men is, not that a few
should rise out of their class — this sometimes rather injures the class by
depriving it of its more energetic members. The truly vital interest is that
the whole class should rise in material comfort and security, and still more in
moral and intellectual attainments."

The italics in the closing sentence are mine ; I have added them because
the words so well express the aim of co-operation as it has been presented
in these pages, at least with the addition of a proviso, which I am confident
that Dr. Ingram would heartily endorse — that this rise of the working classes in
material comfort and moral and intellectual attainment should be made, not
in antagonism to any other class but in the joint interest of all. The defect
in Dr. Ingram's positions appears to me to be that he overlooks the means
through which alone the result which he desires can be attained. How can
we suppose that this high minded indifference to material advantages and
devotion to intellectual and moral improvement are to be generally, or even
largely, produced among bodies of men whom the circumstances of their
position condemn to a perpetual struggle, against employers who are
themselves impelled, by the ever-increasing keenness of the competition to
which they are exposed, to seek for the means of holding their own position
by the reduction of their payments to those whom they employ. Surely if
the calm devotion to the pursuit of the higher ends of human existence,
on which Dr. Ingram justly sets such high store, is to spring up anywhere

Appendix, 249

abundantly among the working population, this would be within the shelter
of such institutions as the great Co-operative Society now founded by
M. Godin, at Guise; where every worker could feel that the future of himself
and his family was assured by the permanence of the association which
gave them employment; where there was no body of men to profit by a
reduction of his earnings ; and where he was liable to no loss of employment
by the arbitrary will of any employer ; but if this employment were ever
lost it must be through a wilful breach on his part of rules in the forming of
which he as a member of the society had himself a part.

Again, admitting the truth of Dr. Ingram's assertion as to the specialite
of the qualities which go to form a successful manufacturer, I claim it as a
great and unique advantage of co-operative action that it can make use of
these energetic characters for the good of the whole body, without that
individual deterioration, which Dr. Ingram admits to be the general con-
sequence of the struggle forming at present the ordinary accompaniment
of the progress to success. For that "constant habit of self-regard," and
"temptation to put aside the claims of others," to which Dr. Ingram justlj
ascribes the " tendency to produce, on the intellectual side narrowness of
view, on the moral side hardness and want of sympathy," what more appro-
priate medicine could be prescribed than that the practical energies, of
which these tendencies are a misdirection, should find their readiest and
most natural employment in the service of a society, which, by its internal
constitution, and external association, as a member in a great union whose
motto was "one and all," perpetually inculcated as the true ends of human
actions, the supreme rule of individual conduct — regard for others.

The more completely we enter into Dr. Ingram's ideal of life for the
worker, the more thorough, I think, must be our conviction that only by
co-operative union, for such purposes as have been set forth in these pages,
is there any reasonable hope of this ideal becoming in any considerable
measure, a reality.

Necessarily the attainment of this end requires that the associations
through which it is to be brought about should not be commercially failures.
The education of the working population to the higher level, on which I
claim for co-operation the power to place them, could not be attained by the
" ruin of families." But when the danger of the loss of earnings in co-
operative enterprises is adduced as an objection to their being undertaken
by bodies of workers, we must not forget the enormous amount of these
earnings which have been spent in maintaining men out of work; I will not
say with no beneficial result, but certainly with results attained at a cost .
which it is hard to imaginethat any amount of loss sustained in co-operative
manufactures, supported by contributions equally large and carried on with
equal persistency could have occasioned. That this danger of ruin really
exists at all in co-operative enterprises, as conducted on the associative bases
advocated in this Manual, I do not admit. But, at the worst, the sort
of ruin which such efforts would bring upon families would be a very advan-
tageous exchange for the misery which, if the accounts given us of the
effects of long strikes are true, have been entailed on hundreds and thousands
of families by these deplorable conflicts.

250

Appendix.

II. — Note to Page 140.

THE DISTRIBUTION OF PROFITS IN FEDERATIVE
PRODUCTION.

The scheme sketched out on pages 135 to 140 assumes, on the part oi
the workers, a disposition to seek systematically the elevation of their class
as workers; and, for this purpose, to do whatever is in their power to
increase the earnings of work by diminishing the charge of capital, from the
conviction that the rapidity with which the whole working population can
be lifted up to a higher social level, must depend upon the results obtained
in the co-operative workshops first set up. It is a result to be attained, not
at the cost of the consumer, by increasing prices against him, but by
applying for the benefit of those who do the work, and therefore ultimately
of the whole working population, the surplus now absorbed by the class of
capitalists alone. Prices would remain, so long as competitive production
ruled the market, what this competition made then. If co-operative pro-
duction superseded it, they would be fixed by an agreement between tht
consumers whose savings formed the basis of the system, and the producers
whose labour made those savings into increased wealth. And the surplus
employed for the benefit of work would not be paid away to the workers to
be dealt with as they please. It would benefit the workers by whom it had
been accumulated, through the share guaranteed them in the products ol
the ever-growing number of productive establishments, by which the whole
body of workers would be gradually raised from the position of mere wage
receivers to that of joint owners of the workshops, through which these
wages were earned.

For these reasons I have suggested the plan as the best suited for adoption
by societies of working consumers who wish to use Co-operative Distribution
as a safe road to Co-operative Production. But if the members of such societies
consider that some direct advantage should be secured to those who may
not find employment in the productive establishments, this might be efiected
by an ingenious modification of the self-acting rule adopted at Guise by M.
Godin, for the equitable division of profits between .capital and labour,
suggested by Mr. Gray in the paper on " Co-operative Production," read by him
at the Plymouth Congress, namely, to use as the factors of division the sums
represented by — (i) the wages of work capitalised at 5 per cent. ; (2) the wages
of capital similarly capitalised ; (3) the amount of sales.

The following figures .illustrate the application of this system to the West
End Leicester Shoe Works, using the statistics given on page 161.

Factors of Division.

Profits.

Actual.

Capitalised.

Total.

Apportioned.

Per Cent.

Wages —

Work

Capital
Sales

;^25,030

1,120

76,884

;,^5oo,6oo

22,400

;^2,573

;{:2,I48

96
329

83-45

3-73
12.81

Appendix. 251

12. — Note to Page 167.
THE APPLICATION OF THE PROFITS OF PRODUCTION.

We may consider this question with reference to the total amount of
the income of which the working population could obtain the command by
means of the profits on their own consumption of manufactured articles.
The total income of this class in the United Kingdom has recently been
estimated by Mr. Leone Levi, at ^400,000,000 out of ^1,000,000,000
estimated income of all classes, taking, as the line of division, incomes
below and above ;^ioo a year. It is, I conceive, a high average to assume
the consumption of new manufactured goods by persons whose incomes are
not over this sum to be 10 per cent of their total expenditure, or ;^40,ooo,ooo
for the whole body. But this is at retail prices. To obtain the manu-
facturer's charge, we must deduct at least 20 per cent, or ^8,000,000. Now,
this ;£"8,ooo,ooo, less the actual cost of retail distribution, the workers may
put into their own pockets, by association, without interfering with the
earnings of work. What more could they get by absorbing them ? Taking the
Leicester Shoe Works as our guide, we obtain as average profit, on the turn-
over of ;^32,ooo,ooo, 3-5 per cent, or ;£"i, 230,000 ; for the capital required to
produce it, ;£'g,ooo,ooo ; and for the charge on this capital at 5 per cent,
;^45o,ooo. Deducting this charge from the £'1,230,000, we arrive at
;^78o,ooo as the total addition, which could be thus made. Suppose it raised
to £1,000,000. Can anyone imagine that this £1,000,000, if simply dis-
tributed over the individual incomes of £400,000,000, could make any
material difference in the position of the receivers of these incomes ?

Is it not clear that if any important effect is to be produced from the use
of such small means, this must arise from using them so as to show what
can be done for the workers, by the wise use of the earnings of their work
for the benefit of those who make them — that is to say, by the system
advocated in this Manual, and in actual operation at Guise ?

Note 13.

LIST OF THE PUBLICATIONS OF THE CENTRAL-
CO-OPERATIVE BOARD.

Per 100. s. d

Aci.AND, A. H. D.— The Education of Citizens 7 6

Allan, John — Productive Cooperation ! 9

Anonymous — Banbury Co-operative Tract i o

" Co-operation a Cure for Poverty o 5

" Co-operation z/. Private Traders o 5

» Five Reasons Why I am a Co-operator o 5

» Opinions of Eminent Men on Co-operation, No. I ... 03

H H H It No. 2 ... 03

" Self-Help and Help to our Neighbour o 5

• The Co-operative Wholesale Society — What is it? ... Graft's.

» Working Together , and Helping One Another I o

252 Appendix.

PUBLICATIONS— av/////?/^'/.

P r loo. s. d.

Booth, Nelson — How Bob became a Co-operator o g

BoYVE, M. DE — International Co-operation I o

Carter, W. T. — Unbelievers in Co-operation, and How to Win

Them 3 6

Copland, E. — Ought Productive Works to be carried on as Depart-
ments of Wholesale Societies ? I 9

Crooks, W. — Co-operative Education 2 o

» Dividend : What it is, and How it is made I o

Davies, Miss M. Llewelyn — The Co-operative Movement o 9

Fales, Miss I. C. — The Industrial Conditions of the United States i 9

GODIN — The Association of the Familistere at Guise 2 o

Gray, J. C. — How to Start Co-operative Stores Gratis.

n Co-operative Production 2 o

» Co-operative Production in Great Britain 2 6

Greenwood, A. — The Educational Department of Rochdale Pioneers'

Society Limited : Its Origin and Development 2 6

» The Fundamental Principles of Co-operation 2 o

Hall, W. H. — Leclaire : " A Real Saviour of Society " 4 o

Havercroft, C. — How can a Man become his own Landlord? 2 o

HiNES, G. — Co-operation and the Perils of Credit 2 o

ff The Full and Fair Reward of Labour o 5

Holmes, J, — The Second Great Step — Co-operative Beneficence ... 26

Holyoake, G. J. — Logic of Co-operation 5 6

» The Policy of Commercial Co-operation 3 o

» The Growth of Co-operation in England 4 o

HOPKINSON, G. H. — The Best System of Leakage for a Country

Co-operative Store 2 o

Hughes, Thos., Q.C.— An Address i 9

• Lecture on the History and Objects of Co-
operation 4 o

Johnson, D. — Association Farming i 9

Jones, B. — Lecture: What is Meant by Co-operation 4

» Co-operation z/. Socialism 4 o

- Possibilities of Co-operation, with Diagrams o 6

Jones, J. H. — Co-operative Education i 9

LoVEDAY, W. G. — Co-operative Agriculture 2 o

M'Innes, D. — Co-operative Agriculture 2 6

M'VlTTlE, J.— Riding the Marches Round Labour's Estate 2 o

Marcroft, W. — A Co-operative Village : Plow to Conduct it, and

Where to Form it 3 6

Maxwell, W. — Wholesale Co-operation 4 o

Nash, Vaughan — The Relation of Co-operative to Competitive

Trading 2 6

Neale, E. V. — Association and Education : What they may do for

the People 4 o

m Co-operation z'. Joint-Stockism i 9

• Co-operative Production I o

Appendix. 253
PUBLICATIONS— Co«/m«^^.

Per TOO. s. d.

Neale, E. V. — Co-operative Societies and the Income Tax Gratis.

i> Copyhold Enfranchisement 2 o

» Housekeeping under Difficulties : A Dialogue for

Young People I o

» Land, Labour, and Machinery 5 o

If The Central Board : Its Use, Work, and Cost Gratis.

H The Common Sense of Co-operation i 9

» The Co-operative News, and Why Co-operators should

Support it Gratis.

H The Economics of Co-operation 5 o

" The Economic Aspect of Co-operation 2 o

" The Principle of Unity i 9

" The Three C's : Co-operative Triologue i o

« True Refinement 2 6

» What is Co-operation ? I 9

» , What Co-operation can do for the Labourer o 5

» Why should the Rich interest themselves in Co-opera-
tion ? And How can they Promote it ? I o

NuTTALL, W. — Co-operative Share Capital : Transferable or With-
drawable? 2 6

P. H.— What's the Good of It? I o

Quirk, G. E. — The True Relation between Wholesale and Productive

Societies i 9

Randle, A. — A District Co-operative Farm ; 2 o

Ripper, Professor — Technical Education 3 6

Ritchie, T. — The Relation of Co-operative to Competitive Trading 2 o

ScoTTON, A. — Cottage Purchasing 2 o

Sharp, Miss — Co-operative Education 2 o

n What has a Woman to do with Co-operation ? 2 6

Shufflebotham, C. — The True Relation between Wholesale and

Productive Societies I 9

9 Ought Productive Works to be carried on as

Departments of Wholesale Societies ? I 9

Slatter, H. R. — The Advantages of an Alliance between Co-opera-
tors and Trade-unionists I o

Smith, Joseph — Educational Funds : Their Value, and How to use

them I o

» How to take a Town (Co-operatively) by Storm... o 5

n Some of the Weaknesses of Co-operation i o

Swallow, W. — Co-operative Production 2 o

Thomson, D. — The Relation of Co-operative to Competitive Trading 2 6

Watts, Dr. J.— Co-operation an Economic Element in Society 5 o

H The Working Man : A Problem 4 o

WiiSON, J-— The Wholesale Society and our Relation to it_ 2 c

Woodcock, J> — Copyhold Enfranchisement 2 c

W. E.— Sham Co-operation I o

TABLE OF CONTENTS.

PAGE

Preface i. to xvi.

PART I.
THE MORAL BASIS OF CO-OPERATION i

CHAPTER I.
The Relation of Co-operation to Religious Faith 3

Religious foundation common to page
all schemes of social reform —
instances in R. Owen and C.
Fourier 3

Co-operation must seek its re-
ligious foundation in some
existing religion 3

Christianity offers such a founda-
tion, which has historically
come to light 4

Mediaeval Christianity essentially
ascetic 5

Change of ideas in the i6th cen-
tury to the conception of active
life as the true ideal. Modern
society built on this idea 6

Socialism, and reaction against
the exaggerated individualism
attending it 6

The institutions of the Middle
Ages are an evidence of the
possibilities and power of asso-
ciated life 7

Duty of the present age to apply
this principle to active life .... 7

Experience since the Reformation
shows that the liberty of indi-
vidual action does not suffice to
secure the general good 8

But no occasion to despair, or
adopt Hartman's philosophy of
Pessimism 8

We may learn patience from the
earth, as Goethe teaches 8

The power given us by science,
taught by the lesson of Calvary,
could produce general wellbeing 9

This claim is not antagonistic to
any previous phase of Christian-
ity, but supplementary to its
past action le

It asks Christianity to do for the
modern free worker what it did
for the ancient slave 11

This demand is not unreason-
able I]

Man is at once a natural being by
his passions, and a supernatural
being by his reason which is
essentially a principle of unity. . 1 2

The Greeks sought to apply this
principle of unity in order to
limit the selfishness of passion
by political institutions 12

But this method ended in the
despotism of Rome 12

Then appeared the teaching, that
the principle of unity is to be
sought within, in love called
forth in man by the love of God
manifested in Christ 13

This idea conquered the world by
the Ministry of Tables, as the
Emperor Julian declared 13

The same spirit may be appealed
to now, by an extension of
similar institutions, to solve
modern social questions 13

The present action of the Chrifetian
Spirit is a proof that it could
effect this object if systemati-
cally applied to it 14

Many zealous advocates of social
reforms do indeed repudiate the
Christian name 14

But if they are true social re-
formers they are Christians
without intending it 14

Still the support given by the
Catholic idea as to Christ is of
great value to sustain the feel-
ing of brotherhood which his-
torically grew out of it 15

This idea is the scientific con-
ception of religion 15

It is a support which we need
individually, and should not
hastily reject 15

Table of Contents.

255

CHAPTER 2.

PAGh

The Relation of Co-operation to other Philanthropic Movements 16

Benevolence is the indispensable paqb
condition of all plans of social
reform on whatever grounds
they are based

But benevolence is no stranger
on earth; the peculiarity of
co-operative benevolence lies
in its being " Thorough " ....

It goes to the root of social evils
by regulating the general con-
ditions of the acquisition and
employment of income 17

If it is urged that this is to run
counter to the natural law of
competition, the reply is — that
it is the general function of
reason to control natural laws
by studying their action 18

True we deal here with an internal
not an external force, whence
the need of the influence of
religion to give strength to
reason by emotion 18

But reason thus strengthened is
as competent to deal with the

law of competition as with
other natural laws 19

The power of association to re-
lieve social miseries has been
shown in numerous cases both
in England and on the Con-
tinent 19

The universal introduction of such
associations would give to
Benevolence a higher sphere of
action than at present 20

Commercial transactions may be
so dealt with as not to repel
benevolent sentiment; and the
systematic recognition of social
reforms by philanthropists as
a true sphere of action would
be beneficial to social reformers,
by preventing the self-help of
co-operation from degenerating
into selfish-help 21

Thus may all good men be brought
to work heart and hand together
in solving the great problem of
Humanity 22

CHAPTER 3.

The Relation of Co-operation to Socialism, Communism, and
other Politico-Social Movements 23

If co-operation have aims as large
as those stated above, how is it
distinguished from socialism?.. 23

By being a practice founded on
principles generally admitted in
nations professedly Christian,
not a new theory of human
conduct 24

Co-operators investigate the sys-
tems proposed by the great
social reformers in scientific
freedom as means to their ends 24

Illustration of this position —
In regard to the systems of

C. Fourier and R. Owen .... 25
And in the case of the American
communities, of which a list
is given from Hind's work. . . 26

These communities show that
communism does not destroy
industry or invention, which in
it is a benefit to everyone .... 27

But the sacrifice of the family
to the community is not neces-
sary in order to secure this
benefit 27

Plato, indeed, treats this sacrifice
as requisite to check selfish
instincts 28

But this conclusion arose from the
peculiarities of Greek life. It
does not apply to the modern
States 28

The Familistere at Guise shows
that all the advantages of the
common life may be obtained
without sacrificing individual
property or freedom 29

To extend association beyond this
point in the hope of securing
general happiness by extinguish-
ing selfishness, as R. Owen
believed, is to misconceive the
true source of happiness 29

Communistic feeling, and com-
munism as a rule, resemble
mathematical lines which ap-
proach indefinitely, without
touching 30

So, also, the regard for individual
freedom distinguishes co-opera-
tion from political socialism ... 30

256

fable of Contents.

Either in the form proposed
by Lassalle of State-sup-
ported industries 31

Or that of the compulsory
collectivism taught by Karl
Marx and his followers ... 31
The Gordian knot of social con-
quest cannot be cut 31

Only by love, not by violence, can

permanent social reforms be
effected 31

If the blindness of self-interest
prevents men from forming free
associations of a higher social
order than the present, no lav/
could secure them the benefit. . 32

Note on the Oneida community in
its recent transformation 32

PART II.
THE ECONOMICAL BASIS OF CO-OPERATION

CHAPTER 4.
The Rei^ation of Co-operation to Competition

Competition arises as a natural
law from the diversity of human
desires and surroundings .... 35

So long as man remains in his
natural relations to the means
of subsistence it works for good,
assuming the absence of vio-
lence 36

The evils attending it arise when
from the change of the natural
state by the appropriation of
the earth, the workers begin to
compete for the means of sub-
sistence 37

They are intensified by the com-
petition of the possessors of
'capital for its profitable em-
ployment 38

And have been increased by the
recent rapid progress of inven-
tion, and the superseding of
manual by mechanical power. . 39

Illustrations of these propositions
in a paper prepared by a Com-
mittee of the American Social
Science Association, read at
Cincinnati, in 1878, on the effects
of the application of machinery to
agriculture and domestic manu-
facture in the United States.39 to 45

These results prove that human
society must be based on some
principle other than the uni-
versal freedom to struggle .... 46

They come from the appropriation
of land by individual owner-
ship, and cannot be prevented
even by an interference with
this right, as great as exists
in France; though the sub-
division of land is carried there
to an extent which seriously
lessens the produce as com-
pared with England 47

Now, co-operation has a natural
tendency to cure these results
of competitive struggle 48

It begins by substituting reason-
able accord for this struggle in
the ordinary transactions of
life through associations for
self-help 49

On this union it rears, by a federa-
tion of such associations, whole-
sale centres, which may extend
till they embrace land and
water transit 49, 50

By this federation it makes
possible the creation of a market
for the production of any
articles required by the co-
operators 51

While, by the saving on the cost
of distribution, it supplies a
direct means of acquiring the
capital needed for production . . 51

And if this saving is made by

Table of Contents.

257

means of dividends on pur-
chases, It creates a sure income,
available for obtaining any
capital required for productive
purposes by guaranteeing the
interest on it 51

Thus, while the producers secured
to themselves good work for
unadulterated produce, they
might stop all waste in forming
unnecessary centres, and carry
on that work so as to destroy
the antagonism between labour
and capital, and to make the
wealth created by work do all
that can be done by it for the
worker 52

Thus manufacturing operations
might be reunited with agri-
culture, by an action similar to
that which now covers the
country with the residences of

wealthy manufacturers 53, 54

But by an action directed to
make the homes of the mass of
the people, which could also
be the dwellings of the richer
classes, full of enjo\ ment .... 54

Towns might continue to exist,
but they would form groups
of smokeless palaces, consti-
tuting cities of health 53

While the joint abodes and the
common institutions connected
with them would keep up that
general sympathy, and absence
of caste feeling, which ought
to mark the followers of the
" Carpenter's Son " 55

And all this may grow naturally
out of union to buy and sell
on the most economical terms.. 56

Note on Natural Law 56

CHAPTER .<;.
The Relation of Co-operation to Current Economic Theories... 57

Co-operation and political economy
have different subject matters,
therefore cannot be antagon-
istic 57

Co-operation is a better practice
applied to the ordinary course
of life. Political economy, of
the ordinary English school, is
an inquiry into the actual prac-
tice of men in acquiring wealth 57

Now, if this practice agrees with
the co-operative ideal, the co-
operator has nothing to quarrel
with 58

If it differs from the ideal, the
doctrines relating to it do not
touch co-operators 58

if it be urged , Your system requires
better men than exist, we reply,
Not better than many who now
exist, while its introduction
would improve the mass up to
the degree required for success. 58

The majority must always benefit
by institutions planned for the
general good ; the minority, the
strong men able to get on other
men's backs, are the difficulty . 59

But this we may resonably hope
to get over 59

Political economists often assume
that selfish interest is the only
efficient motive to human action 60

But science, art, religion, benevo-
lence refute this assumption . . 60

The State obtains good work
for moderate pay, from its cer-
tainty and the hope of advance 61

Now, these conditions co-opera-
tion is specially adapted to
secure Pi

And it would have, in the great
saving of waste made by it,
ample means for rewarding
efficient workers 62

Illustrations of the waste of com-
petition by the London shops. 62 to 66

So that co-operation may raise
the masses and yet pay its chiefs
sufficiently 66

To this consideration must be
added the superior advantages
of unitary homes 67

Note on the assumption that the
struggle for existence mupt, be
a law of spiritual being because
it is a law of physical being . . 67

25B

Table of Contents.

CHAPTER 6.
The Relation of Co-operation to the State

PAGE
68

Co-operation is essentially a mani- page
Testation of the power of reason-
able will, which has come out
as the result of the struggle for
existence 68

And, when roused to a conscious-
ness of its own harmony by the
manifestation of Divine love,
created for itself a state over
against the Empire of Rome,
which it ultimately swallowed. 69

Thus it was able to mould legal
power after its own views, and
prepare the way for a higher

social state by eliminating slavery 70
This higher state the co-operator
has to realise, by a process
similar to that which created
the Church, by voluntary action 71
A great confusion has prevailed in
supposing that because reformed
society would create laws suited
to it ; therefore there is a short
cut to the reform by legal change 72
But if the co-operative spirit can-
not form such a state, the State
would be quite powerless to
create this spirit 72

PART III.

THE PRACTICE OF CO-OPERATION ..

CHAPTER 7.
The Application of Co-operation to Distribution.

I. The econorr.ical strength of co-
operative distribution rests on
the needless cost of competi-
tive distribution 75

This amounts to from 2S. to
2S. 6d. in the £ over the ex-
penses and interest at 5 per
cent, in a society formed on
the Rochdale plan of selling
at ordinary prices and return-
'ng dividends on purchases. . 76
. To get up a society —

Circulate co-operative tracts ;
Appoint committee of trusted
men ;

Get up meetings 77

Apply to men of local influ-
ence ;
Appeal to the ministers of

religion 78

Apply for aid to the Central
Board and, if near London,
to the Guild of Co-operators 79
3. Use the General Rules pub-
lished by the Central Board.
They may be adopted, with any
change desired by Special
Rules which the General
Secretary will prepare on ap-
plication 80

And are kept in stock and sold
at 2d. a copy for as many as
are ordered ; :

And are adapted for the wants
of a society as it grows, while
costing less than the imperfect
rules often employed 81

Advice as to transferable shares 81

4. Steps to be taken in order to

get the rules registered 82

Steps on the registration of an
amendment 83

5. Amount of capital desirable on

starting, in towns and country 84
Amount which each member
should be required to hold . . 85

6. Advantage derived by existing

societies from the existence
of the English and Scottish

Wholesales 8€

Rules and conditions of joining
the business of these societies 87

7. Importance of ready money

dealings both to the Whole-
sales and the societies 88, 8g

8. Flour mills 90

9. Rules for good management —

The committee;

Complaints to the Wholesale go

Table of Contents.

259

Value of a quick turnover;
hence the importance of
beginning with the articles

of the readiest sale gi

10. Considerations on the rate of
dividend to be aimed at ... . 92

The Civil Service system of
selling as nearly as possible
at cost price is, at first sight,
the most reasonable 93

These stores have done great
good in calling attention to
co-operation, and may further
the highest aims of co-opera-
tive action, if directed to them 94

But for the poorer classes the
plan is undesirable, because
it does not promote the accu-
mulation of capital 95

And therefore weakens the col-
lective action on which the
power of raising their social
position depends 65

Note on educational work of
distributive societies 95

Further, the Rochdale plan
really secures a complete re-
turn of profits on purchases
to the purchasers better than
the Civil Service 96

The objection that the higher
prices check dealings at the
stores is not well founded . . 97

On the whole, the best rule is to
sell at such prices as are cus-
tomary among respectable
private dealers of the locality 98

Note on the fallacy of thinking
that a quick turnover adds to
the dividend on purchases. . . 98
[I. Advisability of rules for giving

a share of profits to employes 99

Scheme for this purpose sug-
gested by the General Rules. 99

12. Leakage —

The risk to societies of loss by it 99
Desirability of checking it by
making the storekeeper re-
sponsible for loss over a fixed
limit 100

With a share of benefit if the
limit is not reached. — Note on
objection raised to this plan.. 100

13. Different modes of guarantee

against loss from storekeepers lOo

Fidelity policies issued by the
Co-operative Insurance Com-
pany IOC

14. Scales and weights — Import-

ance of having them duly
tested loi

15. The seals of societies — Law as

to and requisites of. 102

16. The announcement of the

name of the societies — Law
as to, and error often com-
mitted 103

17. The books wanted for business 103

18. The different systems of checks

on sales and money takings. 104

The book entry system — Its use
and objections to 105

The metal token system — Its
merits and disadvantage. . . . 106

The cardboard token — Sug-
gestion for lessening the
trouble of examining these
tokens loj

The printed sheets of tokens
used at King's Lynn, with
suggestions for their improve-
ment 108

Number of tokens required for
a given amount of business
as a means of estimating
the cost 109

The carbon entry system .... no

Arrangements for convenient
casting, and precautions
against fraudulent alterations
by salesmen in

19. The employment of boys to

issue the tokens 112

30. The Civil Service system of
cash takings separate from

sales 113

21. Suggestions on matters affect-
ing the progress of societies . 113
Changes of the committee-men 113
Want of cleanliness and neat-
ness in the shops 114

Bad bookkeeping and auditing. 115
Neglect of their proper duties

by the auditors 115

Attempts of general meetings to
usurp powers not given them

by the rules 116

The disposition to secede on mat-
ters not of vital importance. . 117

26o

Table of Contents.

CHAPTER 8.
Co-operation in its Application to Production

1. The greater importance of pro- page

duction than distribution .. ii8
Exaggeration as to the benefits

of co-operative distribution . . iig
The original Rochdale pro-
gramme places these factors

in their true relations 120

The store deals mainly with

things; though pointing to

higher objects in the use often

made of its funds 121

Therefore, to dwell mainly on

this side of co-operation may

lead to placing things above

men 121

The productive society can do,

or prepare the way for the

doing, what the distributive

store cannot ; hence its value 122

2. Considerations on the relations

of producers and consumers,
by the present Chief Registrar,
in a paper read at Newcastle-
on-Tyne, in 1873 .... 123 to 126

3. Objection taken by Dr. Watts

to the notion of separate pro-
ductive societies, as leading
to competition, and advocacy
of a division of the profits
on production on purchases
through the Wholesale

Societies 127, 128

His criticism of the Hebden
Bridge Fustian Society, and
correction of his statement. . 128

4. But the present distribution of

property in the United King-
dom makes the notion of

materially benefiting the poor

by dividing the profits on pro- I

duction among the consumers

absurd 129

It must give the bulk of these

profits to the richer classes. . 130
The result would probably not

give more than 2s. 6d. a year

to each family whose earnings

are below ;^ioo 130

Nor could this amount be in-
creased by the profits on

foreign trade, which must be

divided on capital 131

5. Hence Dr. Watts's scheme

would mainly benefit the
richer classes 132

FAGB
118

And the organisation estab-
lished by it would be in-
jurious, by hindering the
growth of a better form. . . . 132

The scheme is the expansion
into a general plan of an acci-
dent in the form taken by
co-operative union in Great
Britain, which gave to dis-
tribution a prominence not
naturally belonging to it. ... 133

Note on corn mills 133

6. The system is popular, be-
cause it suits the immediate
wants of workers, who are sup-
plying only their own wants. 134

But it is not sound as a general
plan for giving the workers
the profits on production ... 134

7. The alternative of either sac-
rificing the producer to the
consumer, or falling back into
competition, is not necessary 135

Productive societies might be
formed on a federal plan by
which the consumers would
secure to themselves good
articles at reasonable prices,
and to the workers the full
benefit of this 135

Illustration from the Leicester
West End Shoe Works .... 136

8. Such a scheme would have no
tendency to slip into com-
petition, but the converse, •
because it would naturally
draw the producers into con-
nection with the consumers.. 137

And woiMd thus enable them to
obtain capital on the cheapest
terms 138

8. The difficulty in introducing
the system lies mainly in the
alternative of federation or
competition presented to the
workers by the federalists. . . 138
It may be expected to disappear
when the workers see the
real effect of the plan, and
that the alternative is not
necessary 139

g. The workers who set the
scheme on foot may receive
a special benefit, without
giving up the hope of per-

Table of Contents.

261

PAGE

manently raising the condition
of the class 140

10. Value of the federal system

thus applied as a means (i) of
obtaining capital on the
cheapest terms by giving it
security ; (2) of uniting liberty
with authority 140

11. But where this system cannot

be introduced, how may pro-
ductive societies be best
formed ? 141

They must interest the capi-
talist by giving him a share in
profits, which is best done by
apportioning them between
capital and work according
to the wages of each 143

Illustrations of this system from
the balance sheet of the
Familestere at Guise 143

Note on the arbitrary character
of a division by capitalising
wages 143

12. They should capitalise profits

to prevent their being dis-
sipated 144

13. But they should not give the

profits on work to the pur-
chaser 145

Experience has shown that the
hopes of getting hearty sup-
port by that plan are a delu-
sion 145

And the notion that the pur-
chaser has any natural right
to them is a mystification,
inconsistent with the idea of
exchange 146

The rule that co-operation
should unite the conflicting

interests of the capitalist, the
worker, and the consumer, by
an equitable division among
them of the fund called profit,
applies to the whole profit on
distribution as well as pro-
duction. The consumer who
claims to share as such in the
profits of production must let
in the worker to share as such
in the profits of distribution. . 148
The allegation that to give the
profits on production to the
workers tends to produce
caste is an error; it is the
pitting them as mere wage
receivers against the con-
sumer which has this tendency 148

14. The workers, therefore, while

acting with entire fairness to
the consumer, should avoid
the error of giving them the
earnings on which their own
progress must depend 148

15. Advice to the founders of pro-

ductive societies on the means

of commercial success 149

Grounds for hope and cautions. 150

The way in which productive
societies may be expected to
improve the condition of the
population 151

The prospect of success opened
by supplying work on which
the purchaser can rely that
he knows exactly what is
supplied to him 152

Peculiar facilities for intro-
ducing such a system afforded
by the co-operative stores . . 153

CHAPTER 9.

The Practice of Co-opebation in Social Life

154

1. Co-operation, as a system for

raising the population to a
higher state has two main
phases — the formation of
united resources, and their
application to create new
conditions of life 154

2. The first function has been dis-

charged — in England by the
distributive society ; in Ger-
many by the People's Banks, i ss

But neither of these institutions
can materially affect the con-
ditions of life of the masses. . 155

Hence the importance of
co-operative production as
intermediary between the col-
lective savings and their ap-
plication 155

3. Now, the central connection
which is needed for carrying
on work in the best way would

262

Table of Contents.

facilitate also the carrying it
on in sites, which would con-
duce to the general wellbeing
of the worker 156

Thus co-operative home colonies
would be formed, it might be
such as Saltaire 157

But if we follow the ideas of R.
Owen and C. Fourier, they
should be connected with
unitary homes, social palaces,
of which the Familistere at
Guise is an existing example. 157

Answer to the objections likely
to be made to such homes,
with illustrations from Eng-
lish experiments of united
dwellings 158

Distinction between such homes

and these dwellings. .. . 158,159
, The importance of the Unitary
Home confirms the arguments
for securing the earnings of
work for the benefit of those
who do it 160

Illustration of this from what
might be done in the Leices-
ter West End Shoe Works
on an assumed sale of

;£"3oo,ooo a year, according
to the statistics of the actual
profits for 1878, and the
experience of what is done at
Guise 161 to 165

Contrast of the result produced
by dividing the profits on pur-
chases 166

Conclusion, that on this plan,
not only must the largest
share go to the richer classes,
but the share given to the
poorer classes would be frit-
tered away 167

Possibility of combining profits
in joint funds so as to lessen
the present inequalities in the
remuneration of work 16S

Also that of diiTerent manufac-
turingoperationsbeing carried
on in the same home, thus
preventing the population
being split up into castes ... 16.S

The Associated Homes might
thus come to form groups
resembling Dr. Richardson's
City of Health, without ceas-
ing to be distinct societies . . 169

CHAPTER 10.

The Application of Co-operation to Banking 170

1. The People's Banks introduced

by Dr. Schulze-Delitzsch
have formed in Germany and
other European countries the
first step of co-operative union 170
Statement of their progress up
to the end of 1878 170

2. The banks founded on the prin-

ciple of enabling the members
to obtain, through the con-
fidence produced by their joint
union, moneys from the public
with which to make loans to
themselves, and thus accu-
mulate from the profits of the
business capital available for
different social objects 171

List of associations formed in
connection with these banks. 171

Table showing how soon the
public confidence displayed
Itself 171

The operation similar to that on
which our great banks depend 172

Comparative statement showing
that the rate of accumulating
capital in these banks sur-
passes that of our societies. . 172

3. Why, then, cannot such banks

be introduced into England ? 172
The Industrial and Provident
Societies Act might be made
to furnish guarantees practi-
cally equal to those given by

the German banks 173

And the statistics of their mem-
bers show that at least 68 per
cent of those assisted are
represented by similar classes
among us. Why then should
our poorer classes not enjoy
the benefits of a similar
system ? 175

Table of Contents.

263

4. Co-operative banking among
us has hitherto been only a
means of collecting the sur-
plus funds of societies to
make advances to other
societies or companies 176

This would be of value if there
were many productive so-
cieties requiring ordinary
banking accommodation to
assist them in the course of
their trade 176

But in the absence of such in-
vestments the fund is employed
mainly in advances to com-
panies and building societies,
very little being wanted by
the distributive societies. . . . 176

While for a considerable pro-
portion of its funds the
Wholesale is unable to find
investments 177

Tables illustrating these posi-
tions 177

5. Therefore the separation of the

bank from the Wholesale, so
that it may be open to do busi-
ness generally, is desirable.. 178
And this change could be now
made without requiring any
payment of capital, on a
principle of mutuality likely
to be popular 179

6. Explanation of plan 179, 180

The bank might incur losses, as

other banks have done; but
on the present system far
greater losses have been in-
curred in proportion to the
business than in other well-
managed banks ,.... 181

And the formation of a powerful
banking centre may be of
great value to co-operators. . i8i

CHAPTER II.
The Law Relating to Industrial and Provident Societies 182

I. The constitution and objects

of a society 182

1. Its members.

2. Its objects —

Purposes which may be in-
directly included 183

3. Its registered office — where
it carries on business in more
than one country.

4. Its name.

5. Its audit and accounts.

6. Its balance sheets 184

7. Its annual returns.

8. The supplying copies of its
rules.

9. The inspection of its books.

10. Its rules — What must be and
what may be inserted 185

11. Appeals against the Registrar.

II. The rights of a registered

society.

1. Incorporation with limited
liability.

2. Binding effect of rules.

3. Proof of membership.
Inutility of declaration books 186
No power to alter the dis-
position of property by the
rules in cases of intestacy.

4. Registration of alterations of
rules.

Right of a society to make
regulations not incon-
sistent with its rules.

5. Suits against members.

6. Exemption from income tax

under Schedule D 187

Qualification of this exemp-
tion by the Customs and
Inland Revenue Act 1880,
and effect of this qualifi-
cation.

No exemption from stamp
duties or any other tax
is given to societies.

7. Bills of exchange and pro-
missory notes.

8. Contracts — Mode of making.

9. Holding and dealing with
land.

10. Deposits and banking busi-
ness — where the shares are
all transferable — where they
or any of them are with-
drawable 188

Loans which would not
come under the descrip-
tion of banking business,
(i) Loans — Limited to mem-
bers.
(2) Investments — Latitude

permitted i8g

264

Table of Contents.

Considerations on invest-
ments in Government
securities.

12. Acts requiring a special
resolution and what is neces-
sary to such a resolution . . 190
Change of name.
Amalgamation.

Conversion into a company.
The effect of this conversion.
Caution as to the name of
the new company 191

13. Power of administering to
intestate members.

III. The rights of members indi-
vidually 192

1. The power of nomination.

2. Inspection — Of the books.
Of the affairs of the society

generally.

3. The decision of disputes . . . 193

(i) Where the rules contain
a direction.

(2) Where they contain no
direction, or a decision
cannot be obtained.

(3) Where they refer dis-
putes to the justices.

(4) By consent of the parties.

(5) Powers of the County
Courts and Registrar 194

IV. The protection of the society.

1. Generally in cases of fraudu-
lent appropriation of its
property.

Note, on courts of summary
jurisdiction.

2. In the case of officers of the
society having charge of

. money.

(i) Provision for giving se-
curity.

(2) Provision for accounting
on demand 195

3. Penalties on members for
breaches of the rules.

V. The protection of the members.
I. Extent to which they are

liable to contribute to the
payment of debts of the
society.

VI. The audit of accounts and
evidence 196

X. Public auditors.

2. Documents proceeding from
the central office, or signed
by any registrar, inspector,
or public auditor.

VII. The dissolution of societies.

A. — I. By liquidation — volun-
tary or compulsory 197

Different cases stated.

2. The appointment and power
of the liquidator.

3. Advertisement in the Grt2<;««. 198

4. Termination of the liquida-
tion.

Penalties on not making
returns.

B. — By an instrument of dis-
solution 199

Statement of the forms and
mode of proceeding under
such an instrument.

C. — By cancelling the registra-
tion of the society at its
request 200

VIII. Provisions for enforcing the
Act.

I. The cancelling or suspension
of the registration.

(2) Notice and right of appeal.

(3) Notice of the cancellation,

&c.
(4 and 5) Effect of the can-
cellation or suspension. . 20i
Case of the number of mem-
bers being reduced to less
than seven.
3. Pecuniary penalties.

(1,2,3) Generally for offences

under the Act 202

(4) Special on falsification of

balance sheets or trans-
gression of the provisions
as to the use of the seal
or registered name.

(5) How the penalties are
recoverable.

3. Criminal penalties.

On issuing false or imperfect
rules.

4. Appeals against orders or
convictions 203

IX. Provisions as to societies
registered before the Act was
passed.

X. Statement of the provisions of

the Act not noticed 204

Fable of Contents.

265

PART IV.

PAGE

THE HELPS AND HINDRANCES TO CO-OPERATION .... 205

CHAPTER 12.
The Perils of Co-operation, and How to Escaie them 207

Short recapitulative view taken in page
the Manual as to the foundation
and course of co-operation. .. . 208

Why co-operation has prospered
in England and Germany .... 209

Change when we pass from dis-
tribution to production 210

Illustrated by the Leicester West
End Shoe Works 211

The twin giants — Individual Self-
seeking and Collective Indif-
ference , 211

Two modes of overcoming them. 212

1. The internal mode — Aid to

be looked for from the
scientific tendencies of the

age 213,215

Analogy of this tendency to
the old Biblical conception 216

2. The external mode — The

effect of association on those
subject to its influences. 217, 219
Note, on causes of mental un-

happiness 2ig

Summary of the argument and
sketch of the modes of action
open to us 220, 223

APPENDIX.

Note I. — Friendly Societies in the
United Kingdom 224

Note 2. — Ferdinand Lassalle and
German Socialism 225

Note 3. — The Agricultural Popu-
lation of France 230

Note 4. — Co-operative Corn Mills 231

Note 5. — Tables of the Progress
of Co-operative Societies .... 232

Note 6. — Prices at which Metal
Tokens can be obtained 239

Note 7. — Suggestions for an Im-
proved System of Check on
Sales and Money Takings .... 235

Note 8. — List of Productive So-
cieties 242

Note g.— The Effects of the Sys-
tem of Competition on the
Distribution of Property 243

Noteio. — Work and the Workman 246

Note II. — The Distribution of
Profitsin Federative Production 250

Note 12. — The Application of the
Profits of Production 25 1

Note 13. — List of the Publica-
tions of the Central Co-operative
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