^-^ 
 
 }6 
 
 [10 ^c 
 
 (P/ 
 
 oN
 
 / / m^c^
 
 CO-OPERATION 
 
 AND 
 
 CO-PARTNERSHIP 
 
 P 
 
 L L.PRICE, M.A.
 
 ?7 
 
 CONTENTS 
 
 PART I.— WHAT CO-OPERATION AND 
 CO-PARTNERSHIP HAVE NOT DONE 
 
 CHAP. PAGE 
 
 I. THE ORIGIN OF THE PBOBLEM WHICH CO- 
 OPERATION AND CO-PARTNERSHIP 
 WERE TO SOLVE ... 5 
 
 II. THE NATURE OF THE PROBLEM MIS- 
 UNDERSTANDING DUE TO THE 
 SPECIAL CIRCUMSTANCES OF THE 
 TIMES ..... 21 
 
 III. JOHN STUART MILl'S FORECAST IN 1848 44 
 
 IV. AN ERRONEOUS THEORY OF WAGES . 58 
 V. A DEFECTIVE ACCOUNT OF THE DISTRIBU- 
 TION OF WEALTH ... 73 
 
 VI. A REVERSAL OF THE ORDER OF PREFER- 
 ENCE ..... 88 
 VII. ANOTHER SOLUTION OF THE PROBLEM 107 
 
 PART II.— WHAT CO-OPERATION AND 
 CO-PARTNERSHIP HAVE DONE 
 
 VIII. THE CO-OPERATIVE STORE. THE ROCH- 
 DALE PLAN . . . .127 
 
 IX. THE ADVANTAGES OF THE 'ROCHDALE 
 
 plan' ...... 151 
 
 X. THE WHOLESALE SOCIETY CO-OPERA- 
 TIVE PRODUCTION — OTHER DEPART- 
 MENTS OF THE MOVEMENT . . 179 
 XI. CO-OPERATION AND AGRICULTURE . 187 
 
 XII. CO-PARTNERSHIP FACTS AND FIGURES 
 
 THE ATTITUDE OF CO-OPERATORS 215 
 
 XIII. CO-PARTNERSHIP AS PRACTISED BY 
 
 PRIVATE FIRMS AND COMPANIES 
 
 CONCLUSION .... 239
 
 Co-operation and Co-partnership 
 
 PART I 
 
 WHAT CO-OPERATION AND CO-PARTNERSHIP 
 HAVE NOT DONE 
 
 CHAPTER I 
 
 THE ORIGIN OF THE PROBLEM "WHICH CO-OPERATION 
 AND CO-PARTNERSHIP WERE TO SOLVE 
 
 The two terms handled in the following pages 
 are not free from ambiguity. As we shall see, 
 they have been used and understood in differ- 
 ent senses. Sometimes identified, they have 
 also been sometimes contrasted. The theories 
 with which they have been linked successively 
 by their interpreters have varied; and in the 
 case of one at least, with the lapse of time, the 
 practical embodiment sought by many of its ad- 
 vocates has undergone a transforming change. 
 We shall not attempt at the outset to 
 draw anyfine or absolute distinctions, although 
 we hope before we end to reach a broad 
 classification which may be accepted. It 
 was, however, a remark no less happy than 
 profound of Henry Sidgwick, that the final 
 discovery of a perfect definition, should that be 
 possible, was less essential than the preceding 
 search ; for the process, he maintained,
 
 6 CO-OPERATION AND 
 
 when conducted with intelligence and zeal, 
 could not fail to inform. It must prompt the 
 enlightening scrutiny and invigorating pursuit 
 of several suggestions. The chief part of our 
 task will be of this kind. We shall try to show 
 how, under the combined stimulus of the devel- 
 oped thinking and the enlarged experience to 
 which we have referred, points of view have 
 shifted, and reasonings and conclusions liave 
 been revised. In a measure, perhaps, the alter- 
 ation wrought has been unconscious ; and the 
 character and extent of the readjustment 
 needed may not yet have been fully realised. 
 We shall at any rate distinguish negative from 
 positive results. In the first part of the book, 
 we shall note how far Co-operation and Co-part- 
 nership have failed to settle separately or con- 
 jointly the problem which it was believed in in- 
 fluential quarters they wouldconfrontand solve; 
 and we shall then investigate, in the second part, 
 what either has in fact accomplished. We may 
 find that the performance does not correspond 
 with promises made on their behalf, although 
 their place on the record and the programme of 
 industrial advance remams conspicuous. 
 
 We shall begin with an examination of the 
 origin and nature of the economic problem 
 offered, as it was thought, for their solution 
 in the middle of t)ic nineteenth century.
 
 CO-PARTNERSHIP 7 
 
 In Karl Marx's Capital, the 'Bible' of 
 Socialism, as it has been sometimes called, 
 two ideas are dominant. The one is theo- 
 retical. It purported to prove, by argument 
 which boasted of the authority of 'scientific' 
 Economics, that capital continually 'ex- 
 ploited' labour. The value of goods, it 
 declared, was measured by the quantity of 
 labour which had gone to their production. 
 Labour itself, however, the value of which 
 was regulated similarly by the expense of 
 its subsistence, had the faculty of making 
 in the working-day more than this amount 
 of wealth; and the capitalist, commanding 
 the control of the instruments of production, 
 was enabled to appropriate the 'surplus' 
 for himself. By every new contrivance 
 placed at his disposal through what we 
 should call 'improvement,' he might, and 
 would, alter to his profit, and the damage of 
 the labourer, the magnitude of the pro- 
 portion of the product he was thus fated to 
 rob. An extension of the working-day ob- 
 viously had this result. No less sure was 
 the effeet of some diminution in what was 
 needed to supply the labourer's subsistence, 
 or of the fresh use of an additional device 
 which would enlarge the output of the 
 same number of hours as those worked before.
 
 8 CO-OPERATION AND 
 
 This perverse theory of 'surplus value,' 
 by which what ordinary folk would deem 
 advance was ingeniously represented in 
 a sinuous dialectic as binding tighter on 
 the workmen their oppressive chains, was 
 qualified by a significant admission in the 
 author's own lifetime. He himself stated 
 that the labour which thus fixed the value of 
 commodities was that 'socially necessary' for 
 their production. The varying demand of the 
 choice made by society was thus allowed to have 
 a part in settling the reward properly attribut- 
 able to labour; and the question became quali- 
 tative, ceasing to be quantitative alone. 
 
 Since the death of Marx, the voice of 
 criticism has been heard in tones continually 
 becoming louder and less reverent among 
 professed supporters of the Socialistic faith 
 to which he swore allegiance; and item after 
 item of his elaborated 'system* has been 
 successively discarded. The paradox has 
 even been put forward that Marx himself 
 was not an adequate exponent of 'Marxism'; 
 and 'Revisionists' in Germany, led by 
 Bernstein, have so far worked in sjinpathy 
 with 'Fabians' in this country, as repre- 
 sented by Mr and Mrs Webb, that in many 
 Socialistic circles little now remains accepted 
 of the unemended text of the Marxian
 
 GO-PARTXERSHIP 9 
 
 manuscript. Xo book, perhaps, has had a more 
 compeUing hold over the minds of a host of 
 thoughtful working men; and a broad belief 
 in 'surpluses' accruing to different classes, 
 or to different individuals, without commen- 
 surate exertion of their own, with a general 
 persuasion that such 'unearned' gains should 
 be secured for the public benefit by taxation 
 or other more promising expedients, may be 
 regarded as common features of most, if not 
 all, varieties of contemporary Socialistic 
 propaganda. But their vague, attenuated 
 comprehensiveness contrasts notably with the 
 definite objective of Marx's dogmatic logic. 
 
 The other prominent idea of Da^ Kapital 
 has gained wider and more complete assent, 
 and its influence promises to be more lasting. 
 It seems less likely to be drastically ques- 
 tioned. For, as an American economist has 
 observed, Marx was also responsible for 
 bringing forward what is known as the 
 'economic interpretation of history.' He 
 has not. Professor Seligman remarked, been 
 praised sufficiently for urging the suggestive 
 and illuminating notion that the course of 
 history can be explained by economic forces. 
 This conception, in its turn, can no doubt 
 be pushed too far, and the special 'inter- 
 pretation ' advanced by Marx himself has met
 
 10 CO-OPERATION AND 
 
 with adverse commentary in quarters which 
 might have been expected to be friendly. 
 
 'Revisionists,* for example, have found sub- 
 sequent facts too strong, in the case of German 
 peasant proprietors at least, for the full accept- 
 ance of the confident prediction that the smaller 
 men would be steadily absorbed by the larger, 
 until the State, thrusting these aside, should 
 take theirplaceinsingleundisturbed possession. 
 But, if this forecast of the future, drawn by 
 Marx from his explanation of the past, cannot 
 be justified, the governing idea that the history 
 of men pursues an evolution fixed by potent 
 influences which can be traced has been 
 received with favour. The derived opinion 
 that the age succeeding the 'Industrial 
 Revolution' could be labelled distinctively 
 'capitalistic' is not substantially disputed 
 either by historical economists or by Social- 
 ists of any sect, orthodox or dissentient. 
 
 Later research has, it is true, shown that 
 'capitalism,' in the sense of the control of in- 
 dustry by moneyed men, was not an arrange- 
 ment entirely new at the end of the eighteenth 
 and the beginning of the nineteenth century. It 
 had become known atan earlierdatcin thiscoun- 
 try. Some time before, the financing ' clothier ' 
 was the conspicuous centre of the 'domestic 
 system' of woollen manufacture, which con-
 
 CO-PARTNERSHIP 11 
 
 trived, by developing in the country districts 
 lying outside their range, to escape the disabHng 
 regulations of the gilds still dominant in the 
 towns. That personage apparently had super- 
 intended the whole process of production. 
 In their altering forms, he had Iianded the 
 goods to, and taken them back from, each 
 distinct class of craftsmen occupied at each 
 successive stage of the manufacture. Eveja 
 within the sphere controlled by the gilds them- 
 selves, or their successors, the companies, we 
 now know that a struggle arose between the 
 larger commercial and the smaller industrial 
 capitalists, resulting in the victory of the 
 former and the subordination of the latter class. 
 The intricacies of trade, especially with 
 foreign customers, undoubtedly tended, with 
 the lapse of time, to increase the influence of 
 great merchants, who possessed alone the 
 needed knowledge; and generally, before 
 the Factory system came, the business of 
 marketing the finished goods was largely 
 in the hands of moneyed dealers, who, in 
 the expressive words used by Adam Smith in 
 1776, were the 'undertakers' of the attendant 
 risks. These entrepreneurs, 'adventuring' 
 their capital, sometimes furnished also the 
 raw materials, and sometimes, too, supplied 
 the simple implements in use, to the
 
 12 CO-OPERATION AND 
 
 ^manufacturing' craftsmen who performed the 
 actual details of production, for the most part 
 in their own homes, assisted by a small number 
 of journeymen or hired labourers, and by a few 
 apprentices, living underneath their roof,work- 
 ing by their side and eating at their table. The 
 * domestic system ' of industry was thus found to 
 be compatible with the presence, and even with 
 the dominance, of moneyed men, controlling 
 the supply of necessary capital. 
 
 But none the less would it be correct to 
 say that the Industrial Revolution ushered 
 in a 'capitalistic age.' Before then factories 
 in some isolated instances were found. 
 In the early sixteenth century 'Jack of 
 Newbury,' we are told, in the person of John 
 Winchcombe, won European repute for an 
 establishment with a hundred or two hundred 
 looms and a thousand men, women, and 
 children, working under his direction. But 
 this and other less fabulous instances had been 
 exceptions to the general rule. After 1800 they 
 became the prevailing pattern, and the domestic 
 industries which remained waged an unequal 
 contest with an inevitable, if delayed, discom- 
 fiture. At last only a few survivors lingered, 
 interesting but solitary relics of an order that 
 had passed. With the astonishing succession of 
 mechanical inventions, the quick discoveiy of
 
 CO-PARTNERSHIP 13 
 
 which during so short a period over so wide a 
 range must remain an inexplicable marvel, in- 
 dustrial capitalism, ousting the anterior com- 
 mercial type, made its way to a foremost place. 
 
 The substitution, first of water, and then of 
 steam, for the manual labour by which the fresh 
 machinery had at the beginning been set in 
 motion, drew manufacturing forcibly away from 
 the small scattered cottages of the country-side 
 to the plentiful rivers, flowing in great volume, 
 and afterwards to the populous towns, with their 
 abundant crowds of workers gathered to- 
 gether. In the new favoured seats of industry 
 Lancashire and Yorkshire were especially 
 conspicuous. Factories arose there in obedi- 
 ence to dominating economic influences. Iron 
 to make, and coal to propel, the mechanism were 
 found there in convenient proximity. Thej; 
 accordingly became the 'manufacturing' 
 districts in the novel meaning of the word. 
 
 What was the outstanding feature of this 
 new economic order? It was the separation 
 of the actual workers from the ownership 
 and control of the instruments of production. 
 That was what the exchange of tk© domestic 
 workshop for the factory implied; that was 
 what the replacement of simple tools, or un- 
 elaborate devices moved by hand, with costly 
 intricate machineiy, impelled by water, and,still
 
 14 CO-OPERATION AND 
 
 more, by steam, inevitably produced. This was 
 indeedamaturedtypeof capitalismunparalleled 
 before; and a capitalistic organisation became 
 henceforth indispensable to success. 
 
 The nature of the situation will be elu- 
 cidated by some further scrutiny. Fi'om 
 the detached standpoint of later study we 
 can now see more clearly than the actors at 
 the time that the development of credit, 
 rendering available for quick effective use 
 the abundant supplies of fresh capital which 
 were then forthcoming, was as much a cause 
 of the manufacturing progress of England 
 as were the great inventions. Our banking 
 arrangements are only now being slowly 
 imitated in such active business centres as 
 are found in Germany and France : to their 
 earlier superiority we largely owe our advan- 
 tageous start in the industrial and trading 
 race. No less manifestly can we ascribe it 
 to this influence than to the mastery of the 
 sea, won finally by the exhausting contest 
 with the French. For duruig that hard 
 protracted struggle Continental countries 
 were, by contrast with our own, the harassed 
 areas of disturbing war, which was a hin- 
 drance no less formidable to banking business 
 than it was to general trade and manufacture. 
 
 The significant discovery has been lately
 
 CO-PARTNERSHIP 15 
 
 made, or confirmed, that Napoleon tried, and 
 hoped with reason, to bring England to her 
 knees by damaging irreparably her credit- 
 system. He failed; as he did not succeed in 
 another cognate aim. That was to exclude 
 the desired English articles from the Conti- 
 nent by prohibitive decrees. The contrary 
 forces favouring our industry and trade were 
 victorious; and they worked together, for the 
 profits from the extensive sales of the goods, 
 which supplied the funds to finance the war, 
 were possible because the development of 
 effective banking accumulated in convenient 
 readiness the capital required for undertaking 
 and continuing their manufacture. In that 
 sense — in the growth of credit as a means of 
 making capital available — the age was 
 'capitalistic' as earlier periods had not been. 
 Another point requires, and will reward, 
 our notice. It has been remarked by a 
 writer who was the first to give by his account 
 to the epoch the distinctive name by which 
 it has since been generally known, that the 
 ' Industrial Revolution' was accompanied by 
 agrarian change no less remarkable in its 
 character and equally considerable in its 
 effects. Like the alterations in the methods 
 of conducting business, and the improve- 
 ments of the modes of transporting goods
 
 16 CO-OPERATION AND 
 
 and men, the agricultural and the manu- 
 facturing developments played into one 
 another's hands. Jointly they promoted the 
 transition from an old to a new economic 
 order in which capitalism was destined to 
 take a leading part. For the rise of the 
 factory rendered impossible the continued 
 profitable pursuit of the domestic industries 
 in the rural districts as by-occupations fol- 
 lowed in the hours of agricultural life that 
 would otherwise be idle; and the loss of 
 rights of grazing on the common, and of 
 cutting turf or underwood from the waste 
 or woodland, which the inclosures caused, 
 deprived the villagers of the means of prac- 
 tising the farming that had filled the leisure 
 left by antique fashions of spinning wool 
 and weaving cloth. The two employments 
 had dovetailed into one another. But now 
 in agriculture, as in manufacture, the larger 
 man was superseding his smaller rivals, and 
 in both correspondingly the demand and 
 opportunity for capitalism developed fast. 
 In the country, no less markedly than in the 
 towns, the separation of those who supplied 
 the labour from the possession and control 
 of capital in the shape of the necessary in- 
 struments of production became usual. 
 The agricultural improvements deserve their
 
 CO-PARTNERSHIP 17 
 
 niche in the temple of Fame beside the more 
 renowned mechanical discoveries which trans- 
 formed manufacturing industry in this eventful 
 age. The new ' Norfolk husbandry,' by which 
 turnips and artificial grasses were assigned their 
 regular turn in a four-course rotation, might be 
 fittingly compared with Watt's invention of the 
 steam-engine in the ' revolution ' it produced. 
 The considerable waste due to the need of 
 letting the land lie fallow for some time was 
 avoided; and an adequate supply of winter- 
 food for the cattle was furnished by a process 
 which simultaneously refreshed the soil. 
 Nor was Bakewell's celebrated art, which 
 paid to the carcass of the sheep as meat the 
 attention that had formerly been given 
 exclusively to its fleece as wool, less remark- 
 able or less productive than the inventive 
 skill which in turn led Hargreaves with his 
 spinning-] enny, Arkwright with his water- 
 frame, and Crompton with his combination 
 of the principles of the prior two machines 
 in his 'mule,* fittingly so-called, to arouse the 
 cotton industry into active life and successful 
 competition with the ancient woollen trade. 
 
 These agrarian changes demanded as impera- 
 tively as the substitution of the new order in 
 manufacturing industry the disappearance of 
 the old. The open-field system, which, despite
 
 18 CO-OPERATION AND 
 
 of earlier inclosures in some districts, still 
 prevailed through large areas of the country, 
 could not continue if the methods of culti- 
 vation prescribed by the diffusion of fresh 
 knowledge were to find free scope. Drainage 
 was futile if your neighbour's plots of land, 
 intermixed with your own, were undrained. Nor 
 could his cattle wander as heretofore acrossyour 
 holding without hindering your better farming. 
 In the same spirit, in which Fitzherbert had in 
 1523 advised improving agriculturists to ' throw 
 their lands together,' Arthur Young, about 
 three centuries afterwards, pronounced that 
 advancement was impossible until the 'Goths 
 and Vandals' of old open-field farmers were 
 removed. Inclosm'c, therefore, was dictated, 
 and it was adopted on an extensive scale. 
 
 The process, even when conducted w^ith 
 strict legality, and the consideration that 
 was required for the rights of the smaller com- 
 moners, acted as an inducement or provo- 
 cative to larger farming. The liumbler folk, 
 it is probable, had sometimes been mere 
 squatters on the waste, and these enjoyed 
 accordingly no established privilege. It is 
 clear t!hat many of their number, whose 
 title could not be impeached, would be 
 unwilling or unable to face the formida])le 
 cost of that fencing which was a compulsory
 
 CO-PARTNERSHIP 19 
 
 incident of iliclosure. In addition to such 
 prejudicial influences the illicit action of 
 unauthorised inclosers, whether they were 
 landlords or farmers, worked against the less 
 powerful peasantry; and the economic trend 
 that was giving an advantage to the growth and 
 sale of products suited to larger farms operated 
 to curtail the chances of small cultivators. 
 Such conditions required and evoked the aid of 
 capital, helping to establish its predominance. 
 Here, too, another example of the inter- 
 action of the manufacturing and the agri- 
 cultural novelties was supplied. The crowd- 
 ing of the factory workers in the towns 
 enhanced the demand for the prime neces- 
 sary of life — the wheat to make the bread 
 consumed — and an increased supply of wheat 
 could be profitably raised by the scientific 
 methods of more extensive farming. So also in 
 our days a similar connection can be seen. The 
 possibility has recently appeared that the use 
 of electricity in place of steam as motive-power, 
 generated at a single spot and diffused through 
 a wide area, may to some extent reverse the con- 
 centration of manufacturing industry which 
 the earlier changes caused. It m.ay permit a 
 return into the country districts from the 
 towns. And by a curious destiny this change 
 may synchronise with the increased importance
 
 20 CO-OPERATION AND 
 
 of the custom offered in older countries like 
 our own for those products of farms, which, 
 like milk, butter, and poultry, vegetables and 
 fruit, are adapted to the intensive methods 
 appropriate to smaller holdings. 
 
 These, however, are at present indistinctprob- 
 abilities which have, as we shall see, an impor- 
 tant bearing on the need, and on the chances of 
 success, of some new varieties of Co-operative 
 activity. Our immediate concern is with the 
 past; and in that connection we cannot doubt 
 that the passage from the old order to the 
 new, known compendiously as the Industrial 
 Revolution, with the accompanying agrarian 
 transformation, meant a severance of Capital 
 from Labour more distinct, more complete, and 
 more general than any which had previously 
 been made. The succeeding period has earned 
 on that account its title of the ' capitalistic age.' 
 
 It requires, then, no irrational concession to 
 Marx's economic theories, nor even any un- 
 reserved recognition of the antecedents or the 
 consequences comprised in his interpretation 
 of the course of history, to acknowledge the 
 aptness of the epithet applied by him to this 
 stage of development. For it was during the 
 nineteenth century that workmen first became 
 a class so manifestly separate in status and in 
 feeling from their employers, and that life-long
 
 CO-PARTNERSHIP 21 
 
 wage-earners were, as it seemed, definitively 
 parted from the ownership and control of capital. 
 Without this backward glance we could 
 not understand the meaning of the efforts 
 made to bridge the gulf by the movements 
 to be examined in the following pages. Nor 
 could we otherwise hope to gauge accurately 
 their possibilities or appreciate, as we ought, 
 their limitations. 
 
 CHAPTER II 
 
 THE NATURE OF THE PROBLEM — MISUNDERSTANDING DUE 
 TO THE SPECIAL CIRCUMSTANCES OF THE TIBIES 
 
 The observant witnesi:, watching the new 
 conditions which obtained in this country, 
 both in manufacturing and in agricultural 
 industry, at the close of the eighteenth and 
 the opening of the nineteenth century, could 
 not fail to have been struck, if he were toler- 
 ably acute, or moderately informed, by the 
 special feature of the situation emphasised 
 in the preceding chapter. The division of 
 Capital from Labour — the severance, in other 
 words, of the workmen from the possession 
 and control of the instruments of production 
 — became then unmistakably a prevailing 
 fact. Its significance was great, and 
 its consequences might be regarded as 
 twofold. On the one hand, those who now
 
 22 CO-OPERATION AND 
 
 seemed fated to remain wage-earners tlirough 
 their lives were henceforth destined to be 
 kept in a position less desirable on a cursory 
 inspection than that opened apparently to them 
 before. On the other hand, the unwelcome 
 menace of disturbing wasteful strife between 
 classes so definitely opposed as capitalists and 
 labourers were now conceived to be in interest 
 and aims was continuously suspended, it might 
 be thought, like the fabled sword of Damocles, 
 above their heads and that of the general public. 
 
 In one shape or another, by contrast. Co- 
 operation and Co-partnership have been held to 
 offer a solution more or less satisfying of this 
 dual problem. They would, it was confidently 
 hoped, remove the occasion for industrial dis- 
 putes; and it was claimed that they possessed 
 the power to raise the working classes fiom a 
 dependent posture to an independent status. 
 What either has, in fact, achieved in such direc- 
 tions we shall subsequently ascertain and note; 
 and we may try then to estimate what can, or 
 cannot, be still accomplished by such means. 
 
 In the course of our inquiry we shall find 
 that neither project has adhered to the 
 programme sketched originally for them by 
 their prominent advocates, and that the 
 indubitable success they have won has 
 differed in degree and kind from that once
 
 CO-PARTNERSHIP 23 
 
 sajiguincly anticipated. Our time, then, will 
 not be wasted if we first attempt to form an 
 adequate conception of the environment of 
 thought and conduct amid which they came 
 to their birth; and this and the following 
 three chapters will be devoted to the con- 
 sideration and removal of some common 
 misunderstandings which have sprung from 
 that connection. One set seems to be due to 
 comparisons made between the earlier part of 
 the nineteenth century and preceding times to 
 the excessive disadvantage of the later period. 
 
 It has been pertinently said that England 
 could not properly be called an 'earthly 
 paradise' before the Industrial Revolution 
 raised the curtain on a capitalistic age. And 
 yet it was not surprising that those who saw 
 the ugly incidents occurring, and felt the 
 ominous influences hovering round, in the 
 stormy act of the industrial drama they 
 were witnessing, should cast regretful glances 
 backward to the contrasted happiness and 
 comparative peace associated in their memory 
 with bygone scenes. Mai-x's choice of the 
 unpleasant facts he quoted in abundance 
 from the official testimony of Blue Books 
 may have been deliberately designed to 
 produce a strong impression. Its pervading 
 gloom might have been relieved by a
 
 24 CO-OPERATION AND 
 
 personal acquaintance with the disposition, and 
 behaviour, of some, at any rate, of the early 
 Factory employers on the part even of those 
 who were ready to accept entirely his bitter 
 reading of economic history, and did not 
 dissent from the harsh narrow conclusions 
 of his theory. Others, freed from bias of this 
 sort, would probably incline of their own 
 motion to more charitable views. 
 
 Nevertheless the feeling stirred by impas- 
 sioned poetry like that of Mrs Browningwas not 
 disproportionate to the intensity of the actual 
 suffering borne by the apprenticed children in 
 the factories; and in such noble moving prose 
 as thatwritten by Mrs Gaskellwe find the skilled 
 perspective, and the vivid colouring, of an expert 
 novelist used in a life-like picture of strained 
 relations which, in truth, existed between many 
 employers and employed. That the industrial 
 atmosphere was charged with a dangerous 
 amount of explosive violence in the first half of 
 the nineteenth century, due to class hostility, 
 could no more be successfully refuted than the 
 melancholy patent circumstance that much 
 human misery attended the transition from the 
 old 'domestic' to the new 'factory' system. 
 Similarly, the inclosuresof land broughtloss and 
 injury to lowly villagers if they were not distri- 
 buted with such conscious ordeliberate injustice
 
 CO-PARTNERSHIP 25 
 
 as some writers have alleged. Yet the changes 
 could not fairly be treated as themselves 
 responsible for all the attendant confusion 
 and distress ; atid a return to the departed 
 conditions, had that been possible, must have 
 caused disappointment. A cool comparison 
 between the former and the existing state 
 would yield mixed results. Let us note 
 some considerations less exclusively uncom- 
 plimentary to the new industrial order. 
 
 To begin with human nature itself, that 
 was fundamentally incapable of undergoing 
 so complete a transformation as the changes 
 wrought in the processes of industry, both 
 manufacturing and agricultural, and of trade. 
 Adam Smith composed his Wealth of Nations 
 on the eve of the Revolution. The main 
 developments had not yet begun. But he 
 describes the masters of his day as being 
 • always ' in a ' tacit combination ' to keep down 
 the wages of the men. Robert Owen, known, 
 as he deserved to be, as the 'father' of Co- 
 operation, lived a long life, dying at the age 
 of nearly ninety in 1858. He was an em- 
 ployer at the beginning of the capitalistic 
 era, whose humane treatment of the workers 
 in his famed establishment at New Lanark 
 furnished hints which were taken by the 
 Legislature in the earUest factory Laws that
 
 26 CO-OPERATION AND 
 
 ^vere passed. He himself was largely instru- 
 mental in securing the second Act, that of 1819. 
 
 Nor is it possible to credit without reluc- 
 tance the absolute assertion that in the 
 domestic system all craftsmen had sho^^^l 
 unvarying kindness to their journeymen and 
 their apprentices when they dwelt beneath 
 one roof. We shall not be more ready there- 
 fore to believe that the 'cash-nexus' substi- 
 tuted in the factory regime between capi- 
 talists and their 'hands,' on which Carlyle 
 poured the vials of his irate contempt, 
 expresses adequately in every instance 
 the spirit entertained and the attitude ex- 
 hibited. The 'open-field' s^'stem of agricul- 
 ture, iji its turn, gave abundant opportunities 
 for quarrelling which had not been neglected. 
 
 A similar verdict of 'not guilty,' or 'not 
 proven,' will be returned on other counts of the 
 indictment brought by those who have found 
 naught but good in the previous age, and dis- 
 covered evil everywhere in the period following 
 the Industrial Revolution. The development of 
 credit, as we saw, rendered material help to the 
 growth of English industry and commerce: its 
 assistance was not otiose or unwelcome in the 
 new practices of scientific agriculture. It has, 
 however, been an important factor in producing 
 ot permitting, those successive alternations of
 
 CO-PARTNERSHIP 2T 
 
 * brisk' and 'dull' trade, embraced in what 
 is technically known as the * credit cycle,' which 
 suggest that some amount of unemployment 
 must be treated as a regular recurring incident 
 in modern iadustry, due, so far as can be seen, 
 to no personal fault in the unemployed. 
 
 No less significant and true is the compari- 
 son often made between the general conditions 
 of the markets, to which the old handicrafts- 
 men sent their goods, and those supplied by our 
 modei'n capitalist-employers. The leisurely 
 execution of the customary orders of near neigh- 
 bours, given beforehand, for regular amounts, 
 and settled patterns, of goods turned out on a 
 modest scale, must obviously have been less 
 speculative in itscharacter than the more or less 
 skilful, or lucky, anticipation of a varying host 
 of demands of uncertain magnitude forth- 
 coming or not from distant quarters of the 
 globe. Under the latter complicated system 
 the results of a miscalculation are more 
 considerable, if there is a greater chance that 
 one disappointing loss may be counter- 
 balanced by another unexpected gain. Yet, 
 while 'freaks' of fashion have acquired the 
 power to produce more serious and more 
 extensive consequences than their silly, 
 servile votaries imagine, irregularity of work 
 was not a new experience in the nineteenth
 
 28 CO-OPERATION AND 
 
 century. Th ere is, on the contrary, valid reason 
 for supposing that the many rehgious 'holy 
 days ' of niediaeval strict observance had some- 
 times been ordained at the first, and often 
 continued to be kept, owing to the urgent need 
 for enforced idleness imposed imperatively by 
 the want of continuous employment. 
 
 Balanced reflections such as these may 
 extort perhaps a grudging recognition from 
 hostile critics of the ' capitalistic age.' They 
 may allow more willingly the argument that 
 the machinery now used more commonly than 
 in previous times, superseding, as it often does, 
 the artistic instinct of the hand-worker for 
 finished detail lovingly elaborated, has also 
 withdra^^^l a large part of the barbarous neces- 
 sity for the exertion of mere brute strength. 
 
 They may admit, too, with the needful 
 reservation, that the consequent displacement 
 of some workers, who lose suddenly or gradually 
 the advantage of trained ability or acquired 
 knowledge, may meet with more or less 
 adequate compensation in the additional em- 
 ployment given eventually in most cases by an 
 augumentcd output from the same or some other 
 trade. They may grant the further concession 
 that the division of labour which permits of a 
 workman being tauglit with greater speed, and 
 less outlay, one portion instead of the whole of
 
 CO-PARTNERSHIP 29 
 
 the industry he was wont to learn before, may, 
 by prompting and smoothing the introduction 
 of mechanical appliances, spread a general- 
 ised kind of knowledge ajid ability. As that can 
 be appropriately used in attending to similar 
 machinery at work in a great number of differ- 
 ent occupations, the chances of employment 
 somewhere else, if the engagement at the original 
 trade or place be interrupted, should, it would 
 appear, be increased rather then diminished. 
 
 Yet, surrendering these or other points, 
 capable of being thus argued for and against, 
 the admirers of bygone days would still be 
 able to resort to one powerful plea. They 
 would contend that the likelihood of leaving 
 the ranks of the employed, and entering the 
 separated class of the employers, had beeji 
 appreciably lessened by the change of 
 system. They could compare the facile, 
 normal process by which the apprentice, or 
 the journeyman, became a master-craftsman 
 with the wide and treacherous gulf to be 
 crossed now and again at their peril by 
 workmen aspiring to attain the higher 
 status and larger emoluments of 'captains 
 of industry.' In short, they might peremp- 
 torily call us back to what they would describe 
 with reason as the 'crucial question.' The 
 cardinal difference, they would urge, between
 
 80 CO-OPERATION AND 
 
 the old and the new situation consists in the 
 loss by the wage-earner of tlie possession and 
 control of the necessary instruments of produc- 
 tion. No remedy for the severance of Capital 
 froniLabour would be effective, in their opinion, 
 which did not, enabling labourers to become 
 capitalists, end the division into hostile classes 
 parted permanently from one another. 
 
 But even here demurrers have been lodged 
 which should receive consideration before a 
 final sentence is pronounced. The upward 
 path of the apprentice was obstructed in 
 mediaeval times by initial hindrances. Such 
 was an addition, by no means singular, to the 
 fees charged for indenturing. Later in his 
 career a similar increase of levy often con- 
 fronted him when he sought the admission he 
 had contemplated to mastership. The direct 
 overt restriction, again, of the number of appren- 
 tices, which each craftsman could take, was re- 
 inforced by such indirect, but effectual, limita- 
 tions as those involved in the production of a 
 costly * masterpiece,' or in the purchase of an 
 expensive ' livery ' to be worn at ceremonies. 
 
 Nor did the Industrial Revolution render it 
 impossible for workmen to become employers. 
 Such cases were by no means rare at the 
 beginning of the new regime ; and the 
 notorious abuses of the early factories can be
 
 CO-PARTNERSHIP 81 
 
 ascribed in part to the sudden rise to power 
 of men unfitted by habit or by instinct for 
 its discreet, impartial exercise. An instruc- 
 tive study lately made has shown that in the 
 cotton industry of Lancashire many oppor- 
 tunities of moving upward continue to exist 
 and are regularly employed. The substitu- 
 tion of companies for private firms, which 
 has become so general, probably does not 
 diminish the 'careers open to the talents'; 
 and, as the maligned Trusts, specially dreaded 
 by Co-operators, can only prosper in most 
 instances by securing good administration, 
 their promoters are likely to be constantly 
 on the alert for the opportune discovery 
 and effective use of natural ability. A 
 developed capitalism is then compatible with 
 the provision of a ladder stretching from the 
 lower to the upper story of business life. 
 
 Apart, however, from possibilities thus 
 opened, the fundamental question remains. 
 It must be tackled in any discussion of Co- 
 operation and Co-partnership regarded as 
 remedial movements for the parting of Capital 
 from Labour. That division between classes 
 was attributed to the Industrial Revolution; 
 and we may admit frankly that sueha severance 
 now exists, if it has been exaggerated or misrep- 
 resented. The inquiry, then, is raised whether
 
 82 CO-OPERATION AND 
 
 the status of the wage-earner as such is entirely 
 unfortunate. Must compulsory continuance 
 in that condition be absolutely deprecated? 
 
 We are here, of course, properly concerned 
 with the merits and demerits of the wages 
 system in itself without reference to the special 
 circumstances of the period when it first came 
 generally into vogue. But those particular 
 surroundings have affected, or determined, the 
 response commonly made to the mterrogation. 
 John Stuart Mill was unquestionably the repre- 
 sentative economist of his time, and, writing in 
 1848, he had no doubt, as we shall see more fully 
 in the following chapter, in what direction lay 
 the hope of any tolerable future for the labour- 
 ing classes. It was in the achievement of 
 Co-operation or Co-partnership. Why, we 
 may ask, did he reach this conclusion? The 
 answer we shall find is complex; but of 
 his sensitiveness to his environment there 
 can be no doubt. 
 
 Some of his critics have remarked with 
 truth that he was oppressed throughout his 
 life by a haunting dread of 'over-population.* 
 He judged most projects of reform by their 
 prospective influence on the numbers of the 
 people. Peasant proprietorship was approved 
 and allotments were condemned by the applica- 
 tion of such a decidiaig test. In tliat sense he
 
 CO-PARTNERSHIP 83 
 
 was a confirmed *Malthusiaii*; and he thus 
 betrayed the atmosphere in which he Hved. 
 
 How he was beset by the idea of an excess 
 of numbers can perhaps be best illustrated 
 by his mode of handling a conception brought 
 by him into close affinity with the growth 
 of population. Mai thus may ha\e discerned, 
 dimly perhaps, the idea, but he did not state 
 explicitly what economists have called the 
 * law of diminishing returns.' No subse- 
 quent writer, however, has shown more fully 
 and persuasively than Mill that the forces we 
 should be disposed with him spontaneously 
 to summarise as typical of civilising progress 
 tend in their ordinary operations to oppose 
 or delay the menace to human happiness 
 offered by the fulfilment of the law. Yet, 
 at the close of his discussion of the subject, 
 he yields in surrender to the disheartening 
 conviction of the imminent approach of a 
 period of diminishing retm-ns. If its onward 
 march can be deferred for a while it cannot 
 be for long prevented. It is inevitable, and 
 will not be counteracted. He almost seems 
 to regard this tendency as a 'law* in the legal 
 and not the scientific sense; and we can 
 imagine him discovering a more apt expression 
 for it in the imperative than in that indicative 
 mood which is usually treated as appropriate
 
 84 CO-OPERATION AND 
 
 to 'economic laws.' At any rate, he is sure 
 that the plain warning he has given must be 
 heeded on pain of irrevocable grave disaster. 
 
 The law affirms that, as the pressure of 
 population compels recourse to poorer soils 
 for the supply of wheat or other agricultural 
 produce, or, as an alternative, demands an 
 increased production from the richer land, the 
 cost of furnishing the necessaries of life in the 
 required quantity must rise, and the propor- 
 tionate returns to the outlay of capital and the 
 expenditure of labour on the work of cultivation 
 will diminish. The 'law 'applies also, as Mill 
 shows, to all raw materials, although he allows 
 that in manufacturing, and in the early stages at 
 least of agricultural enterprise, production on a 
 larger scale may permit of such an improve- 
 ment in the organisation of the work, and of 
 such employment of mechanical and other aids, 
 as to increase and not decrease the probable 
 returns. That, however, is, in his opinion, a 
 passing and subordinate phase. Although he 
 addsonequalificationtoanotherinhisdeveloped 
 statement of the law, he comes back at the end 
 to a reiterated emphasis of its dread force. 
 
 This attitude was characteristic of the 
 age. When Malthus wrote, in 1798, his 
 'controversial pamphlet,' in which, 'finding 
 the bow bent too much one way,' he
 
 CO-PARTNERSHIP 85 
 
 was perhaps 'induced to bend it too much 
 the other in order to make it straight,' the 
 * niggardhjiess ' of Nature seemed to stand in 
 awful contrast with the 'fecundity' of man ; 
 and Mill, in 1848, was still a prey to the intense 
 alarm which the famous Essay onPopulationhad 
 aroused in many thoughtful minds besides his 
 own. His judgment of the immediate practical 
 pertinence of the 'law of diminishing returns,* 
 in the s trong bias impar tedby this besetting fear, 
 reflected a feeling which was widely entertained. 
 For these melancholyforebodings an explana- 
 tion, if not an excuse, might be discovered in 
 surrounding circumstance. Whatever might 
 lie hid in the womb of a more kindly future 
 than Mill consistently conceived, the ' condition 
 of the people ' of England in the first half of 
 the nineteenth century was not cheering to a 
 reflective mind. Their numbers, too, seemed 
 to be closely related to their distressful 
 state. Partly under the misguided impulse of 
 a Poor Law administered with mischievous 
 laxity before 1834, partly in obedience to 
 the imperative demand for abundant labour 
 presented by the rising factories, partly in 
 compulsory response to the need, that allowed 
 of no refusal, for men to fight on sea, if not on 
 land, in the war against the formidable 
 French Emperor, the growth of population
 
 86 CO-OPERATION AND 
 
 had been powerfully stimulated in the first 
 quarter of that nineteenth century, on the 
 eve of which Malthus's disturbing Essay 
 had been published. By the close of the 
 second quarter, when Mill himself was 
 writing, the pressure for supplies of food had 
 not been so eased by emigration of the men, 
 or by importation of the corn, as to cease to 
 seem an urgent problem. Nor was there a pros- 
 pect, as it then appeared, of an improvement in 
 the methods of English cultivation adequate to 
 meet the case, although the Corn Laws are now 
 held by historians to have acted as a stimulus to 
 the extension of the area sown with wheat. 
 Over-population was thought by many to be a 
 perpetual menace to prosperity or even comfort. 
 The economic state of large masses of the 
 people, at any rate, was indubitably bad. 
 
 Mill's own views, like those of many con- 
 temporary thinkers, derived a specially sombre 
 hue from the mistaken theory of a fixed 
 'wages-fund.' The theory was abandoned 
 subsequently by himself, though it was 
 retained unaltered in his Principles, and can 
 be read there to-day in the last edition. The 
 erroneous notion was no less fatalistic in its 
 narrow logic than that subtle fantastic theory 
 of Marx on 'surplus value' to which we have 
 referred in the opening paragraphs of this book.
 
 CO-PARTNERSHIP 87 
 
 It rested on no more substantial and endur- 
 ing a foundation, and it was afterwards as 
 generally discarded by economists as the 
 text of Das Kapital has been unsparingly 
 deleted by Socialists who aspire to be pro- 
 gressive. But it seemed to correspond to 
 some conspicuous circumstances of the day, 
 and it was bound closely to the population 
 question. Its precise bearing on Co-opera- 
 tion and Co-partnership we shall investigate 
 more fully in a later portion of this book. 
 Here we may rest content with stating that 
 Mill was probably led especially by this 
 particular cause to think that the main road 
 of improvement open to the labouring classes 
 was one which would conduct them across 
 the whole, or part, of the area intervening 
 between their existing status and that of 
 capitalists. Unless a transforming change of 
 this character could be affected there was 
 not, in his opinion, much solid hope that 
 they would, even when better educated, deal, 
 of their own initiative, successfully with the 
 dangers offered by excessive numbers. 
 
 His conclusion can now properly be treated as, 
 in part at least, a product of erroneous think- 
 ing, but it drew the strength which it possessed 
 largely from the environment of fact in which 
 it had been conceived and developed. It
 
 88 CO-OPERATION AND 
 
 was, we cannot doubt, the wretched and 
 discouraging condition of considerable masses 
 of wage-earners, as they then appeared, which 
 seemed to render it desirable, or necessary, to 
 devise and use some drastic plan to ameliorate 
 their lot. Their actual state it was which lent 
 convincing force to the suggestion that they 
 must be enabled by some means to quit the 
 ranks of labour before they could attain and 
 preserve a decent mode of livelihood. By no 
 other route than this could their ' standard of 
 comfort' be effectively or permanently raised. 
 This was the only programme of reform which 
 would give them independence in exchange 
 for demoralising degradation. 
 
 The efforts of Christian Socialists to start 
 about this time 'self-governing workshops' 
 can be traced to a similar origin. Their 
 sanguine hopes about the future of Co- 
 operation in the shape which they, wdth 
 Mill, thought the best, most characteristic, 
 and essential, were inspired by the same 
 ideas. Such a revolutionising change alone, 
 they held, could achieve the alleviation or the 
 cure of the grinding poverty, and disperse 
 the pervading numbing gloom, they saw 
 around them in the working-classes of their 
 day. They hoped, too, thus to stay the ' class 
 war' which was then being waged, it seemed,
 
 CO-PARTNERSHIP 89 
 
 with savage bitterness between Capital and 
 Labour; for how, they asked, could the desir- 
 able peace begotunlesslabourers andcapitahsts 
 were merged together? It is significant that 
 Mill's systematic treatise on Political Economy 
 was published in the fateful year of '48.' 
 Revolution may be said to have been then the 
 'mode' in Europe. The economic inspiration 
 of the eineute that overthrew the bourgeois Mon- 
 archy in France at that date has been gener- 
 ally recognised; and in England the Chartists 
 — especially those who advocated 'physical 
 force' — furnished the parallel in London to 
 what was happening with more startling 
 vehemence in many Continental capitals. The 
 occasion of this stir, if not the cause, was found 
 in the prevalent distress. The position of 
 the working classes appeared desperate unless 
 they could be helped to cheat their fate by 
 becoming capitalists. The miserable present 
 lot of the unhappy wage-earner was com- 
 pared unfavourably with the imagined bliss 
 of craftsmen, journeymen, and apprentices, 
 in the retreating days anterior to the stupen- 
 dous changes wrought by the Industrial 
 Revolution. It was confidently preached 
 that a more fortunate and quiet future could 
 be ciisured if wise men would faithfully revert 
 to the better pattern set by an envied past.
 
 40 CO-OPERATION AND 
 
 Industrial strife would cease; and the labourer 
 would wiji independence and security. 
 
 There was, as we have noticed, another 
 side to the shield, which was not exposed. 
 Its discovery at that moment was scarcely 
 to be expected; its scrutiny was certainly 
 deferred. The suffering from the abuses of 
 the early Factory system was acute. It was 
 a present, felt reality. The ' domestic ' system 
 and its handicraftsmen enjoyed, by contrast, 
 the considerable benefit of the 'enchantment* 
 'lent' proverbially by 'distance' 'to the view.* 
 Our country had not been, in fact, a 'paradise' 
 in that lauded age. But the England which 
 Ruskin and Carlyle denounced, with the 
 rhetoric musical or strident they respectively 
 commanded with such copious ease, and 
 the England which Charles Kingsley, Frede- 
 rick Denison Maurice, Thomas Hughes, John 
 Malcolm Ludlow, and Edward Vansittart 
 Neale sought to reform by what they 
 regal ded as the chief principle of Co-operation, 
 bore an unfortunate resemblance in some 
 respects at least to the fiery region with which 
 heaven has been cojitrasted in Christian theo- 
 logy. The picture which they drew may have 
 been extravagant in parts and exaggerated as 
 a whole. But it recalled outstanding facts. 
 . In conclusion, too, it should be borne in mind
 
 CO-PARTNERSHIP 41 
 
 that the early days of the new 'capitaHstic age' 
 may be regarded as a period, happily not pro- 
 longed, when individualism was allowed free 
 rein. Laisser-faire certainly supplied the key- 
 note of the novel economic thinking which 
 seemed to explain, to set in order, and to justify, 
 the fresh arrangements of industry and trade. 
 The ' ijiterf erence ' of the State with individual 
 'liberty' was similarly minimised, or it was 
 avoided altogether, in legislative and admin- 
 istrative action by those — and they numbered 
 many able conscientious men of high repute 
 and large influence — who took their cue 
 from the philosophy theji current. 
 
 Co-operation on the contrary would direct its 
 appeal to the corporate feeling which perhaps 
 was slumbering but was not dead. Although 
 on some counts Co-operators were, and con- 
 tinued to be, hostile to the methods, on others 
 they were friendly to the spirit, of Collectivism, 
 if that term were liberally understood. Robert 
 Owen, the ' father ' of Co-operation, has usually 
 been treated as one of the select class of the 
 early English Socialists ; and the Christian 
 Socialists of the middle of the nineteenth 
 century by no means favoured what has since 
 been aptly called ' administrative nihilism.* 
 
 Co-operation has no doubt supplied con- 
 vincing testimony of the great achievement •
 
 42 CO-OPERATION AND 
 
 thai may lie within the scope of volun- 
 tary self-help without the aid of force; but 
 nevertheless, broadly interpreted, the spirit of 
 - ' Collectivism " may be said at once to have 
 prompted the regulation of the Government, 
 which, leaving the impossible neutrality of 
 laisser-faire, framed opportunely the elaborate 
 code of Factory Laws, and also to have stimu- 
 lated the large use of the strength of com- 
 bination which was successfully invoked by 
 Trade Unions. It furnished too, it is true, 
 the inspiration of the revolutionary Socialism 
 preached by Marx ond others; but beside the 
 former milder exliibitions of the potent prin- 
 cipleofjointactionCo-operationandCo-partner- 
 ship might find an appropriateplaceas practical 
 embodiments of a common animating impulse. 
 From an historical standpoint it is not 
 strange that a reaction should have soon set 
 in from the unbridled licence which pre- 
 vailed for a time. The sway of unrestrained 
 individualism over English thought and con- 
 duct was, in fact, no more than a passing 
 episode which came and went, leaving an ugly 
 memory behind. It was fortunately short, 
 although the power for mischief shown in 
 that brief intei-val was great. But through 
 the long preceding centuries of economic 
 growth the collective action of the local or
 
 CO-PARTNERSHIP 43 
 
 the central government had been prominent 
 in industry and commerce as in other depart- 
 ments of the normal lives of Englishmen. 
 Individuals had been wont also to seek 
 inclusion in some smaller corporate body, 
 which, in order to safeguard their interests, 
 was accustomed to direct or restrain their acts. 
 Such exercise of authority might some- 
 times, like the encouragement or the prohibi- 
 tion of the State, earn the reproach of being 
 clumsy, meddlesome or injurious. But so 
 might individual liberty degenerate into 
 unwholesome licence. The sufferers from the 
 latter evil then, w^e can imagine, would look 
 forward with rejoicing to new varieties of 
 joint action promising release from their 
 distress. They, or sympathetic observers, 
 certainly looked backward with a fond regret, 
 which was pardonable, to the bygone days 
 when Capitalism had not yet assumed so 
 prominent a shape, or gained the great 
 power it seemed to be tyranically exerting. 
 Because the wage-earners they knew were 
 often poor, were sometimes oppressed, and 
 were frequently unhappy, they may have 
 been prompted to consider the wage-system 
 itself as necessarily noxious. They may have 
 been thus driven to the conclusion that it 
 could not be permitted to become a
 
 44 CO-OPERATION AND 
 
 permanent feature of a well-ordered consti- 
 tution. But they judged it at its worst and 
 not its best. They were biased by the special 
 ch'cumstances of their day. 
 
 CHAPTER III 
 
 JOHN STUABT MILL'S FORECAST IN 1848 
 
 It has been truly said that we cannot 
 properly imderstand, or at any rate that we 
 shall not render adequate justice to, the 
 different theories advanced from time to time 
 by speculative thinkers unless we try to 
 reproduce the atmosphere of facts in which 
 they originated. That plan we have already 
 followed in the previous chapter and we 
 shall pursue the same course in this and the 
 two which succeed. But we may also 
 at this point remember appropriately that, 
 if the concrete circumstances of the day 
 generally mould the shape in which ideas are 
 presented to the public, and often prompt, 
 or assist, their conception in the mind of 
 their begetters, abstract notions have too in 
 their turn started, or urged in their develop- 
 ment, not a few important schemes of action. 
 Who can measure, for example, the effect 
 on the later history of France of the popu- 
 lar triplet, 'Liberte, Egalit6, Fraternite'? 
 Even with a nation less obviously sensible to
 
 CO-PARTNERSHIP 45 
 
 the dominance of the idea as such than the 
 French, similar consequences can be traced. 
 The American Constitution was the con- 
 sidered work of cool, hard-headed politicians 
 conversant with affairs. But the influence 
 of rhetorical phrases, such as that enshrining 
 in the Declaration of Independence the 
 philosophical fancy of the 'natural' equality 
 of men, can be detected by a discerning eye 
 in some provisions; and the abstraction, 
 favoured by Montesquieu, of a 'balance of 
 powers,' is allowed by later critics to have 
 caused practical inconvenience which might 
 have been avoided by less indiscriminate 
 reverence for the maxim. 
 
 In a study like Economics, we may expect 
 abundant illustration of the action and reaction 
 of fact and theory on one another. Dr Marshall 
 has described the science as a ' study of man- 
 kind in the ordinary business of life. ' Here, as 
 elsewhere, extended knowledge and repeated 
 scrutiny will substitute emended for original 
 reasonings. The abandonment of old must 
 accompany the introduction of new theories. 
 But we should approach the dead or dying 
 notions of the past from the sympathetic stand- 
 point of historical esteem; and we should admit 
 no less readily that present interpretations may 
 at some time need re-adjustment in their turn.
 
 46 CO-OPERATION AND 
 
 In this spirit let us deal with the particular 
 question we are now considering. We shall 
 find there persuasive catchwords which have 
 not only captivated the minds of men but have 
 also been responsible for their acts. We shall 
 discover phrases which crystallise neatly 
 theories but can be differently interpreted, 
 and we may see successive users employing 
 the same language without being conscious of 
 the change that has meanwhile occurred in 
 its signification or its reference. It is an easy 
 task to prove that the actual movement of 
 Co-operation in this country has derived 
 such advantage as the benediction of econ- 
 omists can bring at most, if not all, of the 
 stages of its remarkable, prosperous develop- 
 ment. But it is no more difficult a work 
 to show that to some extent at least that 
 approval, endorsed as it has been by the be- 
 nignant countenance of astute statesmen, and 
 tlie encouraging favour of the general public, 
 has been given for reasons differing from 
 those for which it is deserved. The practical 
 development has followed in the main other 
 lines than those anticipated or imagined; 
 and the praise itself has been begotten by some 
 theoretical misunderstanding. We do not 
 mean that the support is not justified by the 
 results; but we do contend that the grounds
 
 CO-PARTNERSHIP 47 
 
 on which Co-operation may be truly said to 
 have merited the eulogy of economic thinkers, 
 and the help of prominent public men, are not 
 those which appear to haveelicited their friendly 
 sympathy at the outset or to have secured 
 subsequently their warm commendation. 
 
 This paradox, as it may be thought, can, we 
 hold, be ascribed in part at least to errors, 
 or defects, which we shall now proceed to 
 note, in economic theories that were at one 
 time current, and were suggested by the facts 
 then conspicuous. Their place, as we shall 
 urge, has since been taken in the reasonings 
 of economists by more accurate and adequate 
 conceptions, prompted in their turn by some 
 altered circumstances. But the first con- 
 clusions which were drawn by external popular 
 opinion have not been as yet fully adjusted to 
 the changed situation. 
 
 John Stuart Mill, considering in his Prin- 
 ciples of Political Economy, in 1848, the 
 * probable futurity of the labourhig classes,' 
 ventured, as we have hinted, on the treach- 
 erous ground of prophecy. His unfortunate 
 experience may serve to deter rash imitators. 
 For not only have his confident predictions re- 
 mained unfulfilled; but there seems less reason 
 for expecting a favourable result now that two 
 generationshaveelapsedsincethehoroscopewas
 
 48 CO-OPERATION AND 
 
 cast. Nor are the causes of the disappointment 
 far to seek or difficult to discover. The analysis 
 of the situation offered in 1848 would now be 
 questioned or discarded. Mill's theorising was 
 partly wrong, and partly it was defective. 
 
 What then was his forecast ? He was sure that 
 the wages system would not be permanent. It 
 would, on the contrary, be replaced ultimately 
 by some superior arrangements. He was no 
 less certain that the most desirable substitute 
 was a plan by which workmen would become 
 their own employers, and this supreme result 
 he thought would be achieved when they had 
 been moved from the lower grade of labourers 
 to the higher station of capitalists. As mere 
 wace-earners he held that their security was 
 precarious and their prospects disheartening. 
 But, if they could once acquire and dispose of 
 capital, they would have won emancipation. 
 Such a triumphant issue, he considered, 
 might possibly be delayed, but the welcome 
 goal must be reached in the end. Its attain- 
 ment was the mission of Co-operation, as he 
 understood the full significance of the term, 
 and interpreted the movement so described. 
 It might also, as we shall presently see, be 
 called ' Co-partnership,' in the complete mean- 
 ing of that word. Were it realised, all occasion 
 foi irritalingcostly conflict between Capital and
 
 CO-PAHTNERSHIP 49 
 
 Labour would be withdrawn, as labourers and 
 capitalists would be merged together in the un- 
 divided personalities of workmen owning and 
 controlling the required instruments o! pro- 
 duction. 
 
 It is curious, and not irrelevant, to note 
 that Mill's picture of the future of industrial 
 society thus portrayed has some resemblance 
 to that subsequently drawn by the French 
 Revolutionary Syndicalists of whom we have 
 lately heard so much. It is also, of course, in 
 many respects unlike. But they too would 
 entrust the administration of the new regime 
 they want to introduce to bodies of working- 
 men placed in sole and complete possessioji 
 of the capital needed and used in their respec- 
 tive trades. They conceive, however, of an 
 organisation by whole industries, and not by 
 separate establishments. In this point they 
 do not coincide with Mill ; but they differ from 
 the advocates of State Socialism. The latest, 
 and, in some respects, most strange and start- 
 ling product of Socialistic thought, and object 
 of democratic propaganda, contemplates, and, 
 in practice, has already utilised in the country of 
 its origin, a federation of the Syndicats, or Trade 
 Unions, which are its outstanding feature. 
 
 But the larger combination thus constructed 
 is in fact loosely knit together, and the
 
 60 CO-OPERATION AND 
 
 federating units are supposed to continue to 
 enjoy an amount of autonomous independence 
 which bids fair to make the schemcunworkable. 
 The omnipotent ever-peesent State favoured 
 by most SociaHsts of a CoUectivist persuasion, 
 from Karl Marx to German Revisionists and 
 Enghsh Fabians, is dismissed because it 
 is unduly centralising. Yet, despite some 
 resemblances, it is clear that the scale of 
 magnitude of the 'self-governing workshop* 
 contemplated by Mill would scarcely corre- 
 spond with that of an entire Trade Union, 
 however small and independent. 
 
 It is, nevertheless, apposite here to remember 
 that Lassalle too, in his meteoric career of 
 brilliant agitation, regarded the establish- 
 ment of co-operative workshops with State 
 help as practicable steps which could, and 
 should, at once be taken; and he agiecd 
 with Marx in proclaiming the era of 'scien- 
 tific' Socialism, moved and directed by the 
 central government, as the ultimate goal of 
 revolutionary endeavour. It was this par- 
 ticular part also of the machinery of Co- 
 operation which formed the main attraction 
 of the movement for the English Christian 
 Socialists. Where Kinpslcy and his fellow- 
 workers differed alike from Lassalle and 
 Marx, and from the more recent Syndicalists,
 
 CO-PARTNERSHIP 61 
 
 was in the conviction shared by Mill that the 
 change, certaiji as it ^vas, should be accom- 
 plished by pacific methods, and would not 
 even be assisted, or accelerated, in its ap- 
 proach by the use of violence. 
 
 An ironical fate has, notwithstanding, led 
 Co-operators in this country to claim with 
 justice the complimentary title of a 'peaceful 
 revolution' for the successful work they have 
 accomplished. As we shall note more fully 
 later, the least considerable and conspicuous 
 advance has been achieved in the particular 
 direction that Mill confidently thought, and 
 unhesitatingly affirmed, would be followed. 
 The successes have been few and the failures 
 many in this field of action. The Christian 
 Socialists in their turn combined some practical 
 advice and opportune assistance of the more 
 prosaic side of the movement, by procuring 
 useful changes of the law, with tlie fervent hope 
 that by pursuing the particular path they indi- 
 cated the working men of England would avoid 
 the dangerous morass of revolutionary agita- 
 tion into which their Continental brethren were 
 being led by an unreasoning passion for dc- 
 structivcness. But, in their case also, the actual 
 subsequent practice of Co-operators has failed 
 to correspond with the theories they conceived 
 and to realise the prophecies they uttered.
 
 52 CO-OPERATION AND 
 
 As a 'half-way house* to the final desti- 
 nation of the labouring classes, Mill was 
 ready to regard Co-partnership in the sense 
 in which it is now more generally employed 
 in popular discussion. The phrase has, as 
 we have hinted, been applied sometimes to 
 the completed plan which Mill considered as 
 the most desirable arrangement. He was 
 convinced that ultimately the workmen, 
 having no 'partners' but themselves, would in 
 the double capacity of labourers and capitalists 
 merged together present the finished ideal of 
 Co-operation, which might also not improperly 
 be described as ' Co-partnership ' in the fullest 
 significance of that term. The expression, how- 
 ever, may cover this perfect ultimate develop- 
 ment as well as compromises more or less 
 satisfying and successful with an existing order 
 of industrial affairs. It may include approxi- 
 mations to the ideal which occupy a transi- 
 tional stage in the advance. 
 
 At the present day the phrase is familiar 
 in connection with various schemes by which 
 employers try to link those whom they 
 employ in some kind of 'partnership* with 
 themselves ; and while diverse modes of 
 giving effect to the principle may be tried, 
 and the amount of association sought, and 
 secured, may differ greatly in different
 
 CO-PARTNERSHIP 58 
 
 instances, the term is by prevailing usage 
 made to correspond with 'profit-sharing,* 
 and the parties involved in the arrangement 
 are understood to be workmen and their 
 employers. In a Report of the Board ol 
 Trade, to which we shall subsequently refer, 
 * labour co-partnership' has been distiaguished 
 from 'profit-sharing,' and regarded as invol- 
 ving a share in the capital and iji the 
 responsibility and control of a business as 
 well as a share iji the profits earned. But 
 the general term 'Co-partnership' can be 
 used and understood comprehensively. Such 
 a system at any rate, so broadly interpreted. 
 Mill considered to be a distinct improvement 
 on the ordinary relation of the wage-payer to 
 the wage-receiver; and he described with 
 minute detail some examples of its appli- 
 cation, in France and elsewhere, which may 
 be said to have become 'classical' in cojise- 
 quence of his treatment. But he also thought 
 that its adoption represented no more than 
 a passing phase of a continuing process, the 
 inevitable end of which must be Co-operation, 
 as he conceived aad explained the rightfil 
 mission of true Co-operators.' 
 
 The distribution, then, of some proportion 
 of the profits of an industrial enterprise 
 among the wage-earners was in his view an
 
 64 CO-OPERATION AND 
 
 imperfect form of Co-operation. It was a 
 concession necessary perhaps iji the actual 
 circumstances. But the conditions dictat- 
 ing such a compromise would, he believed and 
 declared, undergo further change in the 
 direction which he hoped, and the experience 
 of the incomplete alternative would of itself 
 suggest and prompt recourse to the greater 
 benefits offered in the ultimate programme. 
 
 Thus it was probable that the adoption of 
 this kind of partnership as a temporary 
 measure would not delay, but would on the 
 contrary hasten, the desired consummation. 
 A partial combination of labour with capital 
 would conduct to that state when labourers 
 became completely merged with capitalists. 
 For that junction, in Mill's mind, was the 
 outstanding feature of the less as of the more 
 satisfactory policy. It was the recommenda- 
 tion of profit-sharing, or labour co-parlner- 
 ship, that it permitted the wage-earner to 
 taste the pleasure, and receive the stimulus, 
 of being in some degree a possessor and con- 
 troller of capital. The full enjoyment of the 
 higher dignity, and the final and entiic escape 
 from the risk and gloom of the lower status 
 were reserved for 'Co-operation' properly 
 understood and successfully accomplished. 
 
 Mill's forecast, however^ cannot be said to
 
 CO-PARTNERSHIP 55 
 
 have been hitherto more justified by the 
 event in the case of the less than in that of 
 the more comprehensive project. The actual 
 achievements of profit-sharing or labour co- 
 partnership have been incommensurate with 
 such high hopes. A larger development may 
 be reserved for them in the near or the dis- 
 tant future; but present indications point 
 to no such definite and big conclusions 
 as those which Mill and others drew. The 
 wages-system has in fact shown a greater 
 capacity for an enduring life than they 
 imagined. Reasons which deserve con- 
 sideration may be brought for modifying or 
 reversing the unfavourable verdict that they 
 gave upon its character and its consequences. 
 It may be capableof great improvementwithout 
 the entire transformation which they sought. 
 
 Mill's sway over the economic thought of 
 his own and the succeeding generation has 
 been described by an acute observer as 
 * monarchical ' ; and it was therefore only to 
 be expected that his view of the probable 
 future of the labouring classes should fix the 
 attitude assumed by the economists who 
 followed him towards Co-operation and Co- 
 partnership. The conceptions which he 
 framed, and communicated to the public 
 through his writings, were, we can have
 
 56 CO-OPERATION AND 
 
 little doubt, responsible for the heaity conv- 
 inendation generally bestowed; and it is not 
 fanciful to discern traces of his influence in 
 practical action taken in some quarters. 
 
 While the maia Co-operative movement went 
 quietly on its way pursuing independently a 
 steady course on lines which proved unques- 
 tionably to be successful, although they were 
 not those forecast by Mill, more than one 
 ambitious adventure was from time to time 
 attemp ted inthe directionhe anticipated and ap- 
 proved. Such experiments were regarded with 
 a benignant countenance by those who sym- 
 pathised warmly with the aims he had espoused 
 and approved enthusiastically of the conse- 
 quences he foretold; and substantial pecuniary 
 aid was also frequently forthcoming from 
 members of the circle that embraced Kingsley 
 and Maurice. But the hopes confidently raised 
 were often, or indeed generally, doomed to 
 disappointment; and, when money had been 
 bountifully supplied, and lavishly expended, 
 the desired result was not yet achieved. 
 
 These schemes usually took the shape of 
 those 'self-governing workshops' which the 
 Christian Socialists advocated as the remedy 
 that would heal the social suffering of the time. 
 Or, if the later instances were not exact 
 reproductions of the earlier examples, and
 
 CO-PARTNERSHIP «7 
 
 sometimes, as we shall see, departed in some 
 measure from the older spirit, they adhered 
 to the same general plan. Their professed 
 object was to enable workmen to be their own 
 employers by becoming capitalists. They 
 failed partly perhaps because they left the 
 safe road along which, as we shall notice, the 
 main movement has throughout travelled, 
 being assured of its market before it has 
 embarked on any fresh extension of its 
 enterprise. But their want of success seems 
 to have been also due to a lack of apprecia- 
 tion of the dangers and defects which appear 
 to threaten all adventures based upon such 
 principles. They did not realise the need of 
 competent management. They overlooked 
 the probable absence of the necessary disci- 
 pline. And it is significant that the intrusion 
 of practices contrary to the pure belief with 
 which they started, like the introduction, 
 which was not unknown, of ordinary wage- 
 earners with no share in profits, cannot justly 
 be held responsible for their discomfiture. 
 
 Mill's * monarchical ' influence over economic 
 thought,as Bagehot called it,did notremain un- 
 disputed; and the enlarged ideas and corrected 
 notions of succeeding writers, liberated from this 
 predominance, brought a change in the attitude 
 from which they approached the possibilities
 
 58 CO-OPERATION AND 
 
 and limits alike of Co-operation and Co- 
 partnership. They arrived at conclusions 
 differing from those reached by Mill; and their 
 revisions and emendations may have produced 
 an effect upon the later practical development 
 of the movement. Populardiscussion,however, 
 has not yet, it may be suspected, become fully 
 conscious of the change; and Co-operation and 
 Co-partnership are sometimes still conceived, 
 in much the unique, attractive guise in which 
 they appeared to Mill and his contemporaries. 
 
 CHAPTER IV 
 
 AN ERRONEOUS THEORY OF WAGES 
 
 At the end of the preceding chapter it was 
 noted that I^Iill's judgment on Co-operation 
 and Co-partnership, delivered in 1848, has 
 been reversed, in some counts at least, when an 
 appeal has been made to the reasonings and 
 deductions of later representative economists. 
 They, hke Mill, have shown a sensitiveness to 
 their environment ; and in the next chapter we 
 shall delineate the mode in which noteworthy 
 changes of industrial structure that earlier 
 writers had not known or realised have affected 
 the conceptions framed by subsequent exposi- 
 tors. This influence has been manifest in 
 their treatment of labour, and of wages,
 
 CO-PARTNERSHIP 59 
 
 and of allied departments dealing with pro- 
 duction and with distribution. As the result an 
 altered 'appreciation' of Co-operation and Co- 
 partnership is, we shall see, forthcoming ; and 
 the ameliorative capacity ascribed to them 
 differs from that attributed in Mill's unfulfilled 
 prediction. But before we consider this signifi- 
 cant change we should investigate the source of 
 MUl'sownmisconception. It is, we think,mainly 
 revealed by a scrutiny of his theory of wages. 
 Before his death, he abandoned that ' wage- 
 fund' theory which nevertheless is found un- 
 altered in thelatesteditionof his famoustreatise. 
 The responsibility for the origination of the 
 theory has not yet perhaps been finally assigned; 
 its influence may be correctly viewed as practi- 
 cally limited to English economic thought; and 
 it is now generally discarded there. But it 
 played an important, and indeed a leading, role 
 in its day. The attention we have given to 
 Mill's prophecy of the future of the labouring 
 classes is justified by his sway over his con- 
 temporaries, and also over many leaders both 
 of thought and action in the following period. 
 The dogma of the 'wages-fund' was through- 
 out that time a favourite and powerful 
 weapon in the hands of controversial jour- 
 nalists; and, if Mill's ripe, and, presumably, 
 better, judgment revolted at last against its
 
 60 CO-OPERATION AND 
 
 extravagant pretensions, some of the ideas 
 to which he gave emphatic utterance else- 
 where in his book were derived from, or con- 
 nected with, conceptions on which the theory 
 itself appeared to depend. 
 
 Stated most concisely, the theory declared 
 that wages were settled by the ratio between 
 capital and population. Expressed more 
 fully and less loosely it assumed, as some 
 critics urged, the shape of a truism, main- 
 tainmg that the rate of wages was determined 
 by the proportion existing between the amount 
 of circulating capital devoted to, or set aside 
 for, the payment of wages, and the numbers of 
 the wage-earning population. That assertion 
 was represented by hostile objectors as tanta- 
 mount to the idle proposition that in a division 
 sum the divisor multiplied by the quotient 
 equalled the dividend. But friendly com- 
 mentators allo-wed that more than this barren 
 formula was intended. What was meant was 
 that in any country at any given time the 
 relation between the fixed capital, in the 
 shape of buildings and machinery, and the 
 circulating capital, comprising, it was true, 
 materials, but consisting preponderantly of the 
 food and other articles bought by the workmen 
 Avith their wages, was * determined ' in the 
 sense that it could not be altered without
 
 CO-PARTNERSHIP 61 
 
 some delay. Similarly, too, the increase or 
 decrease of population was a process which 
 required time for its accomplishment; and 
 thus the idea of fixity, for which in the 
 theorising of the present day the more cor- 
 rect and adequate conception of elasticity has 
 been substituted, was established. 
 
 The accompanying and corroborating 
 notion of capital — a pre-determined fund of 
 capital — being the source from which alone 
 wages were, or could be, paid was suggested 
 by some obvious circumstances of the time. 
 In any event, as the last defenders of the 
 theory urged, it contained this modicum of 
 truth, pertinent in every age and clime, that 
 the antecedent provision of some capital was 
 a necessary condition of further production. 
 With the doubtful exception of primitive 
 savagery indeed the labourer must, as a rule, 
 be fed, clothed, and lodged at least before he 
 could make commodities and sell them in the 
 market. In some instances it was true that ha 
 might be supposed — if for example he were a 
 tramway conductor collecting fares day by day 
 — to provide his employers beforehand with 
 the means of payment of his weekly wages. 
 
 But commonly they were ' advanced ' to him, 
 because the goods he produced could not be 
 marketed until they had been finished, while
 
 62 CO-OPERATION AND 
 
 he must be sustained, and was paid, through- 
 out the preceding interval. Although, then, 
 the price at which the products of industry 
 were sold might be the ultimate source from 
 which the remuneration of all engaged in the 
 production was obtained, the channel through 
 which payment reached the labourer might be 
 properly identified in theory, as, in fact, it 
 often, if not generally, coincided, with the purse 
 of the capitalist. The conditions, too, of modern 
 industry prescribed an elaborate equipment of 
 fixed capital in many, if not most, instances; 
 for expensive buildings, fitted with costly 
 intricate machines, were the theatre in which 
 the workmen played their numerous different 
 parts, contributing their small individual 
 quotas to the systematised activity of some 
 huge organisation. By the middle of the nine- 
 teenth century, Avhcn Mill Aviote, this complex 
 arrangement had become the prevailing type. 
 The need of an abundant stock of capital 
 appeared then to be paramount ; it seemed 
 an indispensable preliminary to the continued 
 payment of the labourer. No less forcibly 
 did the conditions of the time suggest the 
 intimate relation of the numbers of the 
 people to the amount of the wages they could 
 cam. Mill's besetting fear of an excessive 
 population had, as we have seen, some
 
 CO-PARTNERSHIP 63 
 
 excuse in the actual circumstances of his 
 day, when the law of diminishing returns 
 was in manifest operation, and the ' fecundity * 
 of man was, at any rate in this country, 
 putting the 'niggardliness' of Nature to a 
 stringent test. It required the subsequent 
 experience of happier later days to realise 
 that it was only in the ranks of unskilled 
 labour that wages could reasonably be held 
 to correspond with the necessaries of a bare 
 subsistence, and that even at this low level, and 
 still more above, the possibility of a rise in their 
 * standard of comfort' countenanced a view 
 which regarded population as no obdurate resist- 
 less regulator of the earnings of the labourers. 
 The lowest limit, then, of wages is not rigor- 
 ously fixed, and, in actual fact on this side of the 
 question since Mill's time elasticity has been 
 shown to be the hypothesis more likely to be 
 realised. On the other side, similarly, the notion 
 of a 'flow' has replaced that of a 'fund.' The 
 pointof viewof the economic theorist has shifted 
 from the past to the present and the future — 
 from a predetermined fund of accumulated 
 capital to the altering amount of wealth pro- 
 duced. It has been seen that different applica- 
 tions of capital are more interchangeable than 
 the contemporaries of Mill thought possible. 
 It has been recognised that an improvement
 
 64 CO-OPERATION AND 
 
 in the quality of labour may furnish both 
 the motive and the means of a rise in the rate of 
 wages. In fine, the development of systematic 
 thought on this question may be summarised 
 by saying that ' fluidity ' has replaced * fixity/ 
 
 Jevons has compared not inaptly the produc- 
 tion and the distribution of wealth to a * hotch- 
 potch,' to which the different classes and 
 individuals maketheir respective contributions, 
 and from which they draw their correspondiag 
 shares. Dr Marshall, in the more technical 
 language which he has introduced, has spoken 
 of the 'national dividend' as being at once 
 the outcome and result of the production of 
 wealth and the scource and means of its dis- 
 tribution. The total amount of wealth pro- 
 duced, or the 'national dividend,' obviously 
 depends on the efficiency of each contributor 
 and of their combined capacities and exertions. 
 
 The share obtained by each in tlie distri- 
 bution is governed ultimately by the size 
 of the ' national dividend ' or the total amount 
 of wealth produced; but, this once settled, 
 it depends more immediately on their relative 
 strength as bargaining parties, on the urgency 
 that is, with which their services are demanded 
 by one another, and on the facility with 
 which such services arc supplied. The signifi- 
 cance of this broad conception in its bearing on
 
 CO-PARTNERSHIP 65 
 
 other problems raised by Co-operation and Co- 
 partnership will be shown at a later stage of 
 the discussion ; at the present moment the 
 contrast which it offers to the narrow rigidity 
 of the wage-fund theory is diametrical. 
 
 Yet it is not hard to understand why Mill 
 should have adopted such a depressing and un- 
 satisfactory theory. In two respects at least its 
 affinity is tolerably clear to other favourite con- 
 ceptions of which his mindwas full. Its intimate 
 connection with the population question does 
 not require much emphasis. The influence of 
 Malthus,aswe have remarked, rested as a heavy 
 weight on the shoulders of most of his suc- 
 cessors. Mill at least never freed himself, or 
 perhaps tried to effect his escape, from the fear 
 of over-population. He hoped, indeed, that in 
 time the labouring classes might be brought 
 by education to act differently in contracting 
 marriages and begetting children. But the 
 'wish' was perhaps 'father to the thought,' 
 and he does not really seem to have felt any 
 abiding confidence that a radical change 
 would soon occur. So long at least as they 
 continued to be mere wage-earners the hope 
 was almost desperate. He was evidently 
 filled with the apprehension that a rise in 
 wages would not ordinarily cause a rise of 
 the standard of comfort which the labourer
 
 66 CO-OPERATION AND 
 
 would resolutely maintain. On the contrary 
 it might more probably produce a growth of 
 population that would lower wages to their 
 former level. His general conception was 
 not in effect far removed from that 'iron law* 
 of wages of which Socialists like Lassalle or 
 Marx afterwards made large use for their 
 controversial purposes. It was a rare event, 
 which might occasionally happen, for the wage- 
 earners, as they were situated in his day, to be- 
 come so attached to a higher standard by an 
 advance of their income that they would not 
 utilise it in an addition to their numbers can- 
 celling the improvement. An alteration of con- 
 siderable magnitudemight actthus asasurprise, 
 and,breakingwith abrupt decisiveness thesway 
 of previous habit, be likely to be permanently 
 beneficial. But such incidents could not be 
 treated as other than abnormal. Such at least 
 appears to have been Mill's habitual attitude. 
 The other conception, which obtained an 
 extravagant hold on Mill, was the supreme 
 power and the unique importance of capital. 
 We can discern that dominating influence 
 in his treatment of 'productive' and 'unpro- 
 ductive' labour and consumption. He is, in 
 effect, disposed to consider nothing 'pro- 
 ductive' which does not add in the long run 
 to the quantity of capital in existence.
 
 CO-PARTNERSHIP 67 
 
 Similarly, to his 'fundamental propositions* 
 about capital he attached the greatest weight. 
 Their close connection with the theory of the 
 wages-fund is manifest. Two at least — the 
 first which states that 'industry is limited by 
 capital,' and the fourth and last which has 
 caused unnecessary perplexity to not a few 
 plain minds, and has been the topic of much 
 ingenious commentary, and provoked many 
 subtle explanations, of the reason why a 
 'demand for commodities is not a demand 
 for labour' — contain and express, so far as 
 they are now accepted, the same truths as 
 those which have endured in the latest 
 justifications of the wages-fund theory. They 
 are that the labourer must generally be fed, 
 clothed, and lodged, and therefore supplied 
 with the wages to pay for the same, before 
 the goods he is helping to produce can be 
 offered for successful sale in the market, and 
 that in the modern business which we know 
 much costly and elaborate preliminary equip- 
 ment is required. 
 
 The remaining two 'fundamental proposi- 
 tions' that 'capital is the result of saving' 
 and that ' capital, though saved, is continually 
 being consumed ' have alsotheirbearing, though 
 it may be less direct, on the ' wages-fund.' For 
 they serve to call attention to the origin and
 
 68 CO-OPERATION AND 
 
 application of that fund, and to emphasise the 
 necessary mode and limited speed of its re- 
 plenishment. There can be little doubt that 
 the theory was agi-eeable to Mill because it 
 tended to lay great stress upon the place and 
 Work of capital as a factor of production. 
 
 But what were the deductions which were 
 naturally, or even necessarily, suggested by this 
 theory ? If we study them for a few moments, 
 we shall readily understand how eagerly Mill 
 seized, and how stoutly he endeavoured to re- 
 tain, the means of escape from thepractical con- 
 clusions of its gloomy logic, which was offered, 
 as he confidently thought, by Co-operation and 
 Co-partnership. Such a theory was calculated 
 to bring out into bold relief the unfortunate, 
 and even desperate, position of the ordinary 
 wage-earner. The haunting menace of over- 
 population was ever present in the back- 
 ground ready to place a crushing hand on 
 his efforts to rise from a degrading posture. 
 
 In spite of qualifying considerations, which 
 he noted, Mill could not banish the conceptioji 
 which Turgot had first put prominently for- 
 ward, ajid the German Socialists afterwards eji- 
 dorsed and popularised, thatwages tended to be 
 equal to the necessaries of abare subsistence. In 
 any event the wage-earner as such depended, he 
 considered,on the capitalist, and his position by
 
 CO-PARTNERSHIP 6d 
 
 itselfwas not one to kindle hope or to encourage 
 self-respect. It was unsatisfactory, and the 
 path of progress lay beyond a doubt in eman- 
 cipation fiom its restrictions. The labourei 
 must obtain the control or OAvnership, partial 
 or more complete, of capital before he could 
 be correctly said to possess and exhibit a 
 dignity worthy of his human character. As 
 mere wage- earner he was not much better than 
 a brute. He was indeed a slave. 
 
 This description is hardly an extravagant 
 account of the position and prospects of the 
 wage- earner as they were represented in the 
 wages-fund theory. The change produced in 
 the aspect of the problem by the later 
 theorising, of which we have furnished a brief 
 outline, was so great that it might be said 
 to have caused a transformation of the 
 scene. Elasticity took the place of rigidity. 
 The standard of comfort even of the unskilled 
 workman might be, and in fact has been, 
 raised. If his efficiency were improved the 
 employer could probably afford to pay him 
 more, and would, it was likely, receive a potent 
 stimulus to pursue this policy. In a sense 
 which was pertinent to the satisfactory 
 settlement of the bargain, the labourer 
 became as necessary to the capitalist as 
 capital was indispensable to labour. The
 
 70 CO-OPERATION AND 
 
 capitalist might sometimes be squeezed, and 
 induced, where he was not compelled, by 
 the labourer to be content with a smaller 
 proportion of the total amount of the wealth 
 produced. The share, which would be suf- 
 ficient to ensure an effective and continuous 
 supply of the different agents of production, 
 not being fixed, might be altered to the benefit 
 of any of the parties by a change in bargaining 
 strength. The condition of wage-earners 
 as such was by no means desperate; and with- 
 out quitting this status they might reasonably 
 expect to become more prosperous. 
 
 For a second inference, which was legiti- 
 mately drawn from the wages-fund theory, 
 if its rigid limitations were allowed to be 
 correct, was that the endeavours of Trade 
 Unions were destined to fail. Workmen, 
 seeking to raise their wages by these means, 
 on which, in fact, they reposed their sanguine 
 trust, were merely preparing disappointment 
 for themselves. In a pre-determined sum of 
 accumulated capital, no more and no less 
 than which would or could be spent in wages, 
 there was, so to speak, a blank wall arresting 
 movement against which they ran their heads. 
 Even if the workmen in one occupation suc- 
 ceeded in procuring an advance, it would be 
 gained at the expense of their fellows in some
 
 CO-PARTNERSHIP 71 
 
 other industry, for the wages fund was fixed. 
 Nor was any such special mechanism as com- 
 bination furnished needed to obtain what they 
 were fated to receive. The ' fund ' would and 
 must be distributed among them in the ordin- 
 ary course. Trade Unionism then at the best 
 was superfluous : at the worst it was likely 
 or certain to be mischievous. 
 
 Here once more the situation was trans- 
 formed in the fresh light shed by subsequent 
 theories. Room was opened for the play of 
 the strength derived from union. Pressure 
 might be opportunely used, if the determining 
 forces were elastic and not rigid. The iso- 
 lated workman bargaining with his employer 
 might he compelled to accept the proffered 
 terms, for the commodity he had to sell 
 was perishable labour. With the accuimi- 
 lated funds of his trade union at his back 
 he could name and insist on a higher price. 
 It was true, that in any case, if machinery 
 were kept idle, the capitalist as well would 
 unwillingly be losing money; and it was 
 also true that combinations of labourers 
 were exposed to the chance of the successful 
 introduction of substitutes, especially perhaps 
 in the effective form of mechanical devices. 
 But none the less was it impossible to gainsay 
 the demonstrated fact that trade unions helped
 
 72 CO-OPERATION AND 
 
 their members to become stronger bargainers 
 in the settlement of wages. 
 
 The stronger bargainer in any deal was 
 likely to reap benefit from his position of 
 advantage. That position might be secured 
 in some instances by dexterous manoeuvring 
 or it might have been occupied at the outset 
 of the contest. It might derive its superi- 
 ority from the natural lie or configuratioji 
 of the land; or that might be reinforced by 
 the erection of planned defences or by the 
 provision of additional means of attack. 
 All such possibilities were opened to the 
 wage-earner as such when the new more 
 flexible and more elastic notion of a 'flow' was 
 substituted for the rigidity and inelasticity of 
 the old 'wages-fund,' and his varying share in 
 the distribution of wealth was considered to 
 be derived from the 'national dividend,* the 
 amount of which was also varying. 
 
 The 'right' of labour to the 'whole pro- 
 duce' of industry was a claim put forward 
 in the speculative writings of forgotten or 
 neglected early English Socialists like 
 William Thompson. To that writer Marx 
 seems undoubtedly to have been itidebted for 
 the idea which he systematised; and it was 
 originally obtained, if in a perverted form, 
 from Ricardian theorising. But it in curiously
 
 CO-PARTNERSHIP 73 
 
 significant that the latest economic thought 
 on both sides of the Atlantic should so far 
 reproduce the notion in a corrected and 
 elaborated shape that the labourer should 
 be conceived, and represented, as obtaining 
 under circumstances of normal competition 
 from the wealth produced a share in dis- 
 tribution which is the equivalent of his 
 contribution to production. In this new 
 economic harmony, whether it be open to 
 criticism or not, the position of the wage- 
 earner appears to authors writing half a 
 centuiy afterwards very different from what 
 it seemed to Mill to be in 1848. 
 
 CHAPTER V 
 
 A DEFECTIVE ACCOUNT OF THE DISTRIBUTION OF WEALTH 
 
 In the last chapter we have seen that the 
 erroneous theory of the wages-fund might be 
 held responsible for the belief that the lot of 
 the labouring classes must be desperate, or at 
 any rate incapable of satisfactory ameliora- 
 tion, so long as they remained wage-eamers. 
 The theory hinted no less broadly what Mill 
 may be supposed for other reasons to have been 
 inclined to think. He was persistently afraid 
 of over-population. He was convinced of the 
 great influence of capital on the production of
 
 74 CO-OPERATION AND 
 
 national and individual wealth. He was dis- 
 posed to exaggerate the prominence of the 
 part played by this important force in the 
 industrial drama; of its absolute necessity to 
 the plot, and its determining power, exercised 
 at crucial junctures, he had no doubt. 
 
 In the wage-fund theory the fate of the 
 labourer was joined indissolubly to the action 
 of the capitalist; although the latter too 
 appeared, for the time, to be no free or 
 voluntary agent, but, on the contrary, to 
 be fast bound by the inflexible compulsion 
 of a fund destined irrevocably to an appointed 
 end and incapable of rapid or extensive altera- 
 tion. There seemed, accordingly,no cscapefrom 
 the conclusion that the wage- earners must be- 
 come capitalists on pain of condemnation to a 
 life-long dependence which was a humiliating 
 stigma and an extinguisher of hope. Co-op- 
 eration, and, in a less perfect measure, 
 Co-partnership, as we have defined them, were 
 the only promising projects of reform ; and 
 their validity consisted in their power of 
 changing wage-earners into capitalists. 
 
 Thus Mill may have been prompted irre- 
 sistibly by the reasoning we have summarised 
 to deliver his mistaken prophecy. The wage- 
 fund theory at any rate was wrong, and Mill 
 himself abandoned it, as he confessed in a
 
 CO-PARTNERSHIP 75 
 
 review of Thornton's book on Labour. The 
 theory has been generally discarded since, 
 largely in consequence of the destructive 
 criticisms of such writers as F. D. Longe in 
 this country and F. A. Walker in the United 
 States. Attempts have, it is true, been made 
 to rehabilitate it as a whole, or at least to 
 explain satisfactorily certain parts ; and 
 the most careful and judicial essay in this 
 direction proceeded not very long ago from 
 the able, learned pen of Professor Taussig. 
 But little that is substantial has been left; 
 and, while a journalist in the casual haste of 
 an ephemeral article, or a politician catching 
 eagerly at some plausible phrase to serve 
 his temporary purpose on a public platform, 
 may WTite or talk of the 'wages fund,' in 
 the authoritative, systematic text-books the 
 theory of wages now set forth is of the more 
 elastic character we have sketched. 
 
 In such accoujits, revised to date, the wage- 
 earner becomes an independent bargainer, 
 using the strength which he possesses to 
 improve his condition and increase his wealth. 
 In these efforts, which sometimes fail, but 
 often are attended by a remarkable measure 
 of success, there is no imperative necessity 
 for him to quit his class; and, accordingly, 
 the benefits which he expects to derive from
 
 76 CO-OPERATION AND 
 
 Co-operation or Co-partnership must be pre- 
 sented in a different guise from that appearing 
 to Mill's ardent prophetic vision, if such pro- 
 posals are to make no less moving an appeal. 
 But we have yet to note another change 
 which has occurred in economic analysis 
 since Mill's time. The alteration was empha- 
 sised and elucidated by General Walker, in 
 his book on The Wages Questiofi, which pur- 
 ported to be also a criticism of the 
 wage-fund theory. It enjoyed, moreover, the 
 great advantage of the vivid exposition ol 
 that most brilliant and attractive wTiter, 
 Bagehot, who possessed a veritable genius 
 for the coinage of apt phrases, and for 
 epigrammatic statements that could not 
 afterwards be forgotten. He has told 
 us in this connection that the modern em- 
 ployer, whom he, with Walker, has separ- 
 ated from the capitalist, is in truth a 'captain 
 of industry,' but, like the general of a modern 
 army, he may possibly not be taking any 
 obvious part in the actual fray. He may 
 be a man 'at the far-end of a telegraph-wire — 
 a Count Moltke — with his head over some 
 papers,' who 'sees that the proper persons 
 are slain.* By writers more methodical than 
 Bagehot and later in date than Walker, the 
 fourfold classification, which those economists
 
 CO-PARTNERSHIP 77 
 
 had already substituted for Mill's threefold 
 division in the distribution of wealth, has 
 been extended to the analysis of production. 
 
 This double change — perhaps the most note- 
 worthy variation since Mill wrote in the syste- 
 matic statement of the principles of Economics 
 in formal text-books — has a very significant 
 bearing on the question of Co-operation and Co- 
 partnership. In this chapter we shall examine 
 its nature and review its consequences. 
 
 The agents of production were described 
 by Mill as land, labour, and capital. More 
 summarily it might be said that nature and 
 man were the two necessary contributors; 
 for the forces of nature, such as the wind and 
 falling water, were understood to be included 
 in 'land'; and, while the primary contri- 
 bution of man was his labour, whether of 
 mind or of body, as soon as civilisation 
 replaced savagery, capital, if strictly second- 
 ary to and derivative from labour, appeared 
 to be as indispensable. In Mill's eyes, as we 
 have noticed, its importance was greatly 
 magnified, and, in actual fact, with the mani- 
 fold and complicated expensive instruments 
 and elaborated environment of modem 
 industry and trade, capital has taken a 
 position which is certainly not inferior to 
 ■labour as a factor in production. Turning
 
 T8 CO-OPERATION AND 
 
 to the distribution of the wealth, thus pro- 
 duced, as he described, by land, labour, and 
 capital. Mill similarly considered that three 
 corresponding shares should be distinguished 
 and the forces governing them explained. 
 These were, accordingly, the rent of land, 
 going to the landlord, profits received by the 
 capitalist, and wages earned by the labourer. 
 But he was driven in his account of profits to 
 an attempt at further analysis, and found that 
 they usually contained three elements. They 
 may be distinguished as 'interest of capital,* 
 *insurance against risk,' and 'wages of super- 
 intendence' or 'earnings of management.* 
 
 Mill's classification, accordingly, both of 
 the agents of production and of the shares in 
 distribution, was threefold. In an ordinary 
 manual to-day, by contrast, the student will 
 generally find a quadruple division adopted in 
 both parts of the discussion. An explanation 
 of the significant change "vvill conveniently be 
 furnished by means of a scrutiny conducted 
 from an historical standpoint of Mill's triple sub- 
 division of the term 'profits.' That investigation 
 will reveal distinctly the bearing of the altera- 
 tion on the problem considered in this book. 
 
 At different periods in the evolution of econ- 
 omic thought, representative economists have 
 laid their stress on one of the three elements
 
 CO-PARTNERSHIP 79 
 
 of profits named by Mill; and in their selec- 
 tion it is not difficult to show that they have 
 been consciously or insensibly affected by 
 outstanding circumstances in the environment 
 of business life in which they have respec- 
 tively been placed. A review of the succes- 
 sive uses of the term which have thus 
 found favour will accordingly supply no 
 inappropriate example of the way iji which 
 economic theorising necessarily exhibits a 
 reflection of contemporary industrial and 
 trading practice. It may also serve the more 
 immediate purpose of suggesting that am- 
 biguities lie hid in the common employment 
 of the phrase 'profit-sharing,* and that the 
 transformation of wage-earners into capit- 
 alists may be more easily accomplished than 
 Mill imagined, and yet may fail to fulfil the 
 special object which he had in view. 
 
 It would perhaps be allowed that in the 
 common parlance of the ordinary business 
 man, as in the daily speech of the plain 
 citizen, who takes an intelligent interest in 
 the transactions of industry and trade, Mill's 
 interpretation of the term corresponds to 
 what, if they were pressed, they would 
 acknowledge to be correct. In 'profits,' as 
 generally understood, we might thus discover 
 au element which would certahily represent
 
 80 CO-OPERATION AND 
 
 'interest* on the capital invested in the 
 business, whether that capital belonged to 
 the actual head of the firm or had been 
 borrowed from outside. The demand for 
 such interest must be satisfied in the long 
 run, or the required capital will not be forth- 
 coming. But, if the enterprise involve unusual 
 possibilities of loss, some additional return must 
 be procured, which may be fittingly called and 
 considered 'insurance against risk.' In any 
 event, now as in the past, those who sink capital 
 in a business-undertaking may be held to incur 
 a risk which is not run by investment in ' gilt- 
 edged securities,' and, generally, those who 
 embark upon the conduct of manufacturing 
 or trading concerns may be described by the 
 old expressive term of 'adventurers.' 
 
 A recent writer considers that a distinction 
 should be drawn between 'waiting' and 
 'uncertainty bearing' as characteristics of 
 capitalists. Against such risk something of 
 the character of 'insurance' is dictated by 
 common prudence. Finally, the labour of 
 managing a business may possibly be treated 
 as belojiging to the same genus as the labour 
 of those employed, and the ' earnings of manage- 
 ment' may appropriately be called the ' Avages 
 of superintendence,' and, under the system, 
 now so prevalent, of joint-stock companies,
 
 CO-PARTNERSHIP 81 
 
 the immediate direction of the enterprise is 
 often entrusted to a salaried manager. But the 
 work of management is at least of a special 
 nature, differing from the ordinary mental oi 
 manual toil of the bulk of those who are gener- 
 ally included in the ranks of labour, and, if it 
 is to be efficiently performed by the head of a 
 private firm, he nmst receive an adequate 
 reward for his peculiar capacity and exertions. 
 At different epochs of business develop- 
 ment these three elements have assumed 
 differing prominence, and corresponding 
 emphasis has been laid on each in turn by 
 the chief economic writers. It may be said 
 broadly that Adam Smith in 1776 regarded 
 the interest of capital as the sole or dominant 
 constituent of profits. He recognised, indeed, 
 that capital placed in a business might 
 legitimately expect to earn more than 
 ordinary interest; but he demurred to any 
 confusion of the wages of labour with the 
 profits of stock. They were, he held, regulated 
 by quite different principles; for the rate of 
 profits depended on the 'extent' and 'value' 
 of 'stock,' and not on the 'hardness or in- 
 genuity' of the 'supposed labour of inspection 
 and direction.' "When, however, we pass to the 
 close of the succeeding century we find the 
 American economist, Walker, wishing toconfijie
 
 82 CO-OPERATION AND 
 
 the term profits to the reward of the employer as 
 such, and to separate interest altogether as the 
 share of the capitalist in the distribution of 
 wealth. He would accordingly substitute a 
 quadruple for the triple division used by Mill. 
 The reason for this shifting of emphasis is 
 not far to seek. In the days when the Wealth 
 of Nations was composed, the organisation 
 of industry was, as we have seen, compara- 
 tively simple. Such capitalists as existed were 
 in the main commercial and not industrial. 
 The work of management was not hard or 
 complicated, needing special ability, natural 
 or trained. The 'labour of inspection or 
 direction' required no peculiar payment. 
 The independent craftsman was the dominant 
 type of 'manufacturer' who produced for the 
 mostpart by ' hand, ' as thetermliterally implied ; 
 andthe ' undertakers'werethemerchant-dealers 
 who incurred the risks of marketing the finished 
 goods. Of factories there were none or few. A 
 centurypassedjthe beginning of whichwas filled 
 by the Industrial Revolution, and at the end 
 the prominent figures in the business world 
 were large employers, directing in vast build- 
 ings full of complicated machinery driven by 
 steam, organised hosts of men, women, and 
 children. They were engaged in minutely 
 sub-divided work on the production of great
 
 CO-PARTNERSHIP 88 
 
 quantities of goods of the most diverse kinds, 
 which were sent, often in anticipation of orders, 
 to markets at the other side of the world. 
 
 An elaborate system of credit had also 
 been developed in the intervening period, 
 and these 'captains of industry,' while 
 generally possessing some capital of their 
 own, traded largely with the help of loans 
 from bankers and from others. A more 
 exact and penetrating analysis, suggested by 
 this notable change in fact, parted in theory 
 the employer from the capitalist, and, leaving 
 the term interest for the share of the latter 
 in the distribution of wealth, asked for the 
 appropriation of profits to the return from 
 the distinctive work of business management. 
 
 Recently a fresh bent has been given to the 
 discussion by the tendency of economic writers, 
 especially in the United States, to emphasise the 
 element of risk as the prominent characteristic 
 of business enterprise. Ti eating the capital of 
 the employer as earning interest like the capital 
 which is lent to him, and assimilating the labour 
 of management, now so frequently performed 
 by salaried officials, to labour generally, they 
 discover that an element remains in * net profit,' 
 at any rate, of which a separate account should 
 be given. They distinguish very properly * net 
 profit ' from * gross profit,' which represents the
 
 84 CO-OPERATION AND 
 
 difference primarily shown between outlay and 
 income; and they suggest that under normal 
 conditions of perfect competition net profit, as 
 they circumscribe the term, might be expected 
 to disappear. It is generally due, they hold, 
 to the presence and exercise of a monopoly 
 which is natural or has been more often 
 artificially acquired. Or, if chance or luck 
 be responsible for unusual gains, these 
 abnormal phenomena may be appropriately 
 connected with the process of incurring risk. 
 This last reading of the expository puzzle 
 would seem to derive its inspiration, in part at 
 least, from the prominence in modern business 
 life, unwelcome in certain respects as it may be, 
 and severely as his alleged or proved misdeedsare 
 reprobated in some quarters, of the ' financier,* 
 who spends time and thought and energy in the 
 promotion of successive companies. But the 
 whole course of the analysis shows tliat the 
 categories of abstract economic theory do not 
 always, and perhaps do not generally, coincide 
 precisely with those of concrete business life. 
 We may, for example — with the discussions in 
 thetext-books — separate employers from capit- 
 alists; but most employers own, in fact, some 
 portion of the capital they use. Nor would 
 it be easy in a modern railway company, for 
 instance, to point out distinctly the persons—
 
 CO-PARTNERSHIP 85 
 
 whether they be ordinary shareholders or the 
 debenture owners, or, again, the directors, 
 or the general manager — who should pro- 
 perly be identified with the receivers o! 
 profits in each of the various senses given 
 to the word by different economists. Actual 
 experience, certainly, has also shown that the 
 wage-earner need not quit his class to become 
 a capitalist, or to be entitled to * profits,* in 
 some of the meanings in which writers have 
 used the shifting phrase. As Trade Unionists, 
 and as the Co-operators we know, we shall see 
 that workmen own and dispose of accumulated 
 funds while they remain wage-earners, and in 
 the latter capacity they may have a number 
 of employees in their service without any 
 trace being discoverable of the system fore- 
 cast by Mill and others as sure to be evolved. 
 But this obsei-vation, relevant as it is, is 
 not the point of most immediate interest 
 raised by the discussion on which we have 
 been engaged in this chapter. The difference 
 between Mill's classification of the shares in 
 the distribution of wealth and that proposed 
 by Walker, and adopted by most succeeding 
 writers, and the divergent use, by the two 
 authors respectively, of the term profits, are 
 more significant. In gauging their impor- 
 tance, it must also be remembered that in
 
 88 CO-OPERATION AND 
 
 most recent manuals to the three agents of 
 production mentioned by Mill uxider the head- 
 ings of land, labour, and capital, it has become 
 thecustom to add a fourth, distinguished as busi- 
 ness organisation. Or, if this work, so necessary 
 and so conspicuous in modern industry, is not 
 definitely designated asaseparate 'agentof pro- 
 duction,' it nevertheless habitually receives the 
 compliment of a distinct chapter devoted to its 
 treatment. Economists, then, are now alive to 
 its importance; and it was because the function 
 thus described had become so essential a factor 
 in industrial activity that Walker wished to 
 call the remuneration paid for its discharge ])y 
 a special title recognised as distinctive. 
 
 But, while Mill mentioned the 'wages of 
 superintendence' or the 'earnings of manage- 
 ment' as an element of profits, he did not, it 
 was clear, attach the weight to the efRcient 
 performance of the attendant duties which 
 was given afterwards. They might be 
 regarded as existing ; but they had not yet 
 attained the conspicuous prominence they 
 finally secured in actual business practice. 
 
 The bearing of these considerations on 
 Co-operation and Co-partnership is obvious. 
 The problem of working men becoming their 
 own employers is not solved by their acqui- 
 sition of capital. The latter achievement may
 
 CO-PARTNERSHIP 87 
 
 prove comparatively easy; but the full com- 
 mand and the free exercise of the capacities 
 required for successful business management 
 are far more difficult to secure. The work 
 itself does not become less hard or less respon- 
 sible with the lapse of thne and the develop- 
 ment of industry; atid on this accoujit, at any 
 rate, there is now no greater but a less chance 
 of the successful prevalency of Co-operation, 
 understood in the full sense whichMill accepted 
 and proclaimed, than there was in his time. 
 
 The renmneration offered to ability of 
 the description indicated in competitive 
 enterprise, whether it be that of private 
 firms or of joint- stock companies, is consider- 
 able. Nor have working men yet shown that, 
 as a rule, they themselves possess the requisite 
 capacity, or have generally received the train- 
 ing which is needed ; while they have more 
 than once confirmed the likely supposition 
 that they will be reluctant, even if they have 
 the means, to offer pay which is adequate to 
 secure competent management, and that they 
 may be indisposed to observe the disciplined 
 obedience necessary to retain such service and 
 derive the full advantage from its presence. It 
 is OQ rocks like these that self-governing work- 
 shops foundered; and Mill, in his assured predic- 
 tion of the future of the labouring classes.
 
 88 CO-OPERATION AND 
 
 slurred or ignored difficulties and perils of this 
 nature which would beset the practice of Co- 
 operation as he interpreted the real mission of 
 Co-operators. His mistake seems to have been 
 partly due to adefective analysis of the distribu- 
 tion of wealth, and to a failure to recognise 
 and separate the distinctive work of business 
 organisation which belonged to the employer. 
 
 CHAPTER VI 
 
 A EEVERSAI. OF THE ORDER OF PREFERENCH 
 
 One result of the theoretical developments just 
 reviewed, — of the special place assigned to the 
 function of thebusiness-organiser in the produc- 
 tion of wealth, and of the more or less complete 
 severance of the share received byhim in its dis- 
 tribution from that falling to capital alone, — ^was 
 that the solution of theeconomicproblemforced 
 ijito prominence by the arrival of the * capital- 
 istic age,* which Mill considered incomplete and 
 temporary, attracted an increased amoimt of 
 favour. A tendency became evident to alter the 
 order of preference followed by that writer. He 
 had regarded Co-operation, as he understood the 
 primary aim of its practicers, as the ultimate 
 goal certain to be reached by the labouring 
 classes inthe 'future' thathethought' probable*; 
 and he had accepted an imperfect realisation of
 
 CO-PARTNERSHIP 89 
 
 that full ideal in a limited form, as we may call 
 it, of Co-partnership, as a makeshift. 
 
 It constituted a decisive improvement, it 
 was true, on the ordinary wages system, but it 
 was nevertheless a compromise dictated by the 
 tiansitory conditions of the passing moment. 
 Superior as it might [^properly be deemed 
 to present arrangements which Mill con- 
 demned as humiliating the wage-earner, it 
 was as manifestly inferior to the perfect 
 scheme which must in his opinion eventually 
 take its place. It was only because the final 
 plan, by which Labour was completely merged 
 with Capital, could not be reached at once that 
 the intermediate stage, when workmen were 
 admitted to a more or less considerable amount 
 of partnership with their employers, could be 
 countenanced and encouraged by reformers. 
 
 This 'profit-sharing,' as we now commonly 
 term the projects thus esteemed by Mill, 
 was a variety of Co-partnership which seemed 
 to be immediately feasible; but it was 
 approved by him only because it would and 
 must lead those who had once tasted the good 
 fare to insist on gratifying the appetite, which 
 was sure to be excited, for a more satisfying 
 meal. That was to be found alone in an 
 arrangement by which the workmen were 
 the sole partners. That result attained.
 
 90 CO-OPERATION AND 
 
 Co-partnership in the full meaning of the word 
 was assured; and Co-operation thus interpreted 
 would have solved the riddle of the capitalistic 
 age. The wage-earner would be his own em- 
 ployer ; labourers would become capitalists. 
 
 Such was Mill's answer to the question : 
 the reply returned by subsequent reformers 
 acquainted with the results of later econ- 
 omic analysis has been different. For the 
 problem has presented itself to them in an 
 altered shape. They have been taught to 
 appreciate in a measure which Mill never 
 attained the necessity and importance, the 
 difficulty and complexity, of the labour of 
 * inspection and direction' mentioned by 
 Adam Smith as a 'supposed regulator' of the 
 profits, which were in his opinion determined 
 solely by the amount or value of the ' stock ' or 
 capital invested. They have learnt to give far 
 more prominence than Mill accorded, explicitly 
 at any rate, to the element in profits which 
 represents ' wages of superintendence ' or ' earn- 
 ings of management,' although he recognised 
 its existence and gave these expressive names. 
 
 General Walker, indeed, wishing to confine 
 the term profits to this particular one of the 
 three constituents mentioned by Mill, applied 
 to ordinary profits reasoning which could 
 be appropriately used, and has in recent
 
 CO-PARTNERSHIP 91 
 
 expositions been instructively employed, 
 about extraordinary profits and unusual 
 interest and wages as well. He maintained 
 that 'profits' were 'of the same genus as 
 rent.' He meant that they could properly 
 be treated as 'surpluses,' forming no burden 
 on production, into the cost of which they 
 did not enter. They corresponded in his view 
 to what was due to the superior ability pos- 
 sessed, or opportunity enjoyed, by employers, 
 just as the rent of land had been traced by 
 the older writers to the greater fertility, or 
 the better situation, of the soils which were 
 removed by such differential advantages from 
 the poor plots lying on what was known in tech- 
 nical language as the 'margia of cultivation.' 
 
 The American economist may not have put 
 this theory into its correct and final form; 
 but his conclusion that the incapable 
 employers, who, in the homely language of 
 proverbial metaphor, 'clung to the skirts' of 
 industry, were the costliest and the least 
 desirable, and that the presence and activity 
 on the economic stage of the most efficient 
 business-managers conduced to the general well- 
 being of the public, and to the particular 
 welfare of those whom they employed, could be 
 corroborated by abundant and convincing testi- 
 mony drawn from the obvious facts of daily life.
 
 92 CO-OPERATION AND 
 
 His conception, too, had some affinities with 
 later developments of economic theorising 
 to which we have already referred. For, 11 
 profits were thus, as Walker thought, the 
 reward of special talent or unusual luck, they 
 might be traced in some degree, as writers 
 in his country afterwards maintained, to 
 abnormal circumstances. And, on the other 
 hand, the notion encouraged by economists 
 on different sides of the Atlantic that, with 
 full and free competition, the share which the 
 labourer and others received in distribution 
 would be equivalent to what they had contri- 
 buted to the production of wealth might be ad- 
 justed to the view that capacity in any kind of 
 labour is no burden on industry but the reverse. 
 
 Here we are not so much concerned with the 
 sequence of systematic reflection on economic 
 topics, or with the agreements or divergences of 
 successive expositors, or even with the correct- 
 ness or consistency of a single author. What we 
 wish to emphasise is the great stress laid by this 
 economist on the initiating power and sustain- 
 ing strength of the typical employer. The 
 qualities which the successful 'captain of in- 
 dustry ' displays are, in some respects, unlovely; 
 and what has been lately called the spirit of 
 business 'chivalry' may be rarely possessed 
 or seldom exhibited. But economists
 
 CO-PARTNERSHIP 9B 
 
 have shown their sensibility to the atmos- 
 phere of fact around them in the central 
 position given in their theories to those who, 
 in the more expressive term borrowed from 
 the French, have been called •entrepreneurs.* 
 
 The observation of Mr Mallock, in his recent 
 clever criticism of Socialism, that the gov- 
 ernors of the new regime, which is to succeed 
 the existing economic order, are credited with 
 the capacity, and saddled with the responsi- 
 bility, of the typical employer whom we know, 
 while they are deprived of the stimulus of 
 personal pecuniary gain now applied to him, 
 is acute and pertinent. It cannot reasonably 
 be disputed that without the command and 
 exercise of administrative ability commen- 
 surate to the difficult work to be performed 
 such Socialistic schemes must come to grief; 
 and far smaller 'communities* than those now 
 contemplated have been shipwrecked through 
 the disregard of less elementary precautions. 
 Robert Owen, the 'father of Co-operation,' 
 was himself personally acquainted with some 
 of these failures. 
 
 The supersession of the employer so 
 delineated, and the discovery of a satisfactory 
 substitute, are then the crucial problems ol 
 * Co-operation,* as Mill interpreted the term. 
 His prognostications have proved incorrect,
 
 94 CO-OPERATION AND 
 
 because he did not give sufficient considera- 
 tion to such a determining factor; and he 
 may even be said to have taken scarcely any 
 account of it at all. Its presence, however, 
 cannot be ignored ; and subsequent reformers 
 were not equally negligent. Theymayhavebeeti 
 helped in their movement to a less indefensible 
 position by the altered theorising we have sur- 
 veyed. But it seems more probable that they 
 felt the direct compulsion of the facts which sug- 
 gested a change in the theory. The facts indeed 
 of actual business practice, even within the 
 range of the Co-operative movement, could not 
 easily be gainsaid. The self-governing work- 
 shops, which survived for any time, were sparse 
 in number, and some of these undertakings, 
 departing in greater or less degree from their 
 original purity, took into their employment 
 wage-earners paid on ordinary principles. 
 
 The same course was pursued, in England 
 at least, by the main body of Co-operators, who 
 were winning great success in the retail and 
 wholesale supply of different articles of con- 
 sumption on lines which neither theoretical 
 economists like Mill, nor practical Socialists 
 like Kingslcy, had considered the most 
 promising or important part of Co-operation. 
 It became so in fact. 
 . This success will be considered in detail
 
 CO-PARTNERSHIP 95 
 
 afterwards. But, if the employer could not 
 be easily supplanted or replaced, why, it was 
 asked, should not his services be retained, and 
 yet the wage-earner be given a share of 
 profits? The partial abandonment of this 
 principle by some of the self-governing work- 
 shops, which we have just noticed, and the 
 omission to use it, which has beea almost uni- 
 versal in the case of the English Co-operative 
 Stores and Wholesale Society, are so curious 
 as to require explanation. Nevertheless it is 
 not difficult to see why the profit-sharing, or 
 imperfect Co-partnership, which Mill treated as 
 * second-best,' should be preferred by observers, 
 better informed,to the complete Co-partnership 
 or Co-operation that implied the removal or 
 withdrawal of the employer. The order of 
 choice was reversed in obedience to reasons 
 which allowed of no denial, and capricious fate 
 exhibited again her favourite trait of irony. 
 
 Her resources were not yet exhausted as 
 the incidents to which we have alluded 
 showed. For profit-sharing in its turn was 
 open to more searching and destructive 
 criticism than the obvious objections which 
 Mill himself might have raised to its substitu- 
 tion for the fuller scheme that he placed first. 
 He could appropriately have remarked that, 
 "while he was willing to accept it as a temporary
 
 96 CO-OPERATION AND 
 
 expedient, it could not possibly satisfy 
 the requirements of an enduring system. 
 If such misused figures of speech as meta- 
 phors were allowed, then, in answer to the 
 proverb that ' half a loaf is better than none,* 
 the comparison might be adduced that a * half- 
 way resting-place ' is no permanent * home.* If 
 it really was the case that the positioQ of wage- 
 earner was impossible because he was not inde- 
 pendent, the reply had force; for profit-sharing 
 was at the bestapartial relief from entire depen- 
 dence, and the introduction, the extension, 
 and the continuance of the system generally 
 remained, in fact, in the hands of the employer. 
 
 More formidable objections to the system 
 will appear if we turn our notice now 
 to another aspect of the situation which 
 is thought to have been introduced by 
 the capitalism accompanying the Industrial 
 Revolution. The possibility of costly, irri- 
 tating strife seemed, as we saw, to be enlarged 
 when workmen and their employers were con- 
 ceived as paited from one another as classes 
 with separate feelings, interests, and aims; 
 and it was anticipated that Co-operation or 
 Co-partnership would solve the problem thus 
 presented as well as that raised by the undesir- 
 able condition of the permanent wage-earner. 
 
 With this ideal before their eyes writers
 
 CO-PARTNERSHIP 97 
 
 described the state of affairs to be trans- 
 formed as one of inevitable opposition between 
 Capital and Labour. If, however, the two 
 parties could be merged in Co-operation, as 
 the phrase was understood and interpreted, 
 the quarrelling would cease. And, if this were 
 shown to be impossible, then an imperfect 
 form of Co-partnership between capitalist 
 employers and wage-earning labourers would 
 exercise a powerful restraint on either side, for 
 they would be to some extent at least linked to- 
 gether by a joint interest in the profits shared. 
 This motive for preserving the industrial peace 
 would be especially influential, itwashoped and 
 believed, with the workmen; and those reformers 
 subsequent to Mill, who, for fuller appreciation 
 had distinguished the function and reward of 
 the employer from those appertaining to the 
 capitalist, generally attached more impor- 
 tance to this probable consequence of Co- 
 partnership than to ajiy ameliorating influ- 
 ence on the position of the wage-earner. 
 
 The account given previously of the develop- 
 ment of economic theorising on the distri- 
 bution of wealth would suggest, at the outset, 
 that it is a misdescription to call the indus- 
 trial warfare that we know too well a con- 
 test between 'Capital and Labour.' The 
 label, however, has been indelibly so
 
 98 CO-OPERATION AND 
 
 inscribed by popular opinion. Nor is it untrue 
 that the menace, if not the occurrence, of 
 disputes would seem on some accounts to be 
 an inseparable accompaniment of the new order 
 introduced by the Industrial Revolution. The 
 known fact that quan-els between master- 
 craftsmen and their journeymen and appren- 
 tices occurred under the domestic system, 
 attaining sometimes the proportions of an 
 organised conflict lasting for some while, must, 
 of course, be borne in mind. Nor should it be 
 forgotten that gratifying progress has been 
 achieved, especially in this country, in the 
 peaceful settlement of differences between 
 employers and employed, and, still more 
 notably, in preventing minor local or individual 
 dissensions from swelling to the dangerous 
 magnitude of the strike or lock-out of a 
 whole district or trade. But, nevertheless, the 
 friction and disturbance ruffling the smooth 
 course of business life from time to time occa- 
 sioned by some great protracted battle between 
 the organised hosts of Capital and Labour have 
 obtained an ominous familiarity since large 
 factories became the prevailing mode. 
 
 It may, however, be worth while to spend 
 some moments in considering the Economics 
 of the matter. That is, indeed, a far more 
 complex problem of the action and reaction of
 
 CO-PARTNERSHIP 99 
 
 different forces than economists of Mill's 
 time were wont to think. Many of them 
 considered that the matter could be settled 
 by a dogmatic reference to the resistless 
 logic of the theory of the 'wages fund.' 
 Mill himself evidently felt grave doubt about 
 the necessity or the usefulness of trade unions. 
 But unionism has endured as a factor with 
 which wise economists must reckon ; and 
 to-day we find them arguing that, by belong- 
 ing to a combination, a workman can alone 
 succeed in placing himself on an equality 
 in bargaining strength with his employer. 
 The following assertion may also appear 
 at the first sight to be a paradox; but it is 
 nevertheless a demonstrated truth that a 
 guarantee for the conservation of industrial 
 peace has been discovered in the existence 
 in sufficient power of the very organisations, 
 whether formed by the employed or by the 
 employers, which were originally designed, 
 and are still intended, for use, for defensive 
 and aggressive purposes, in industrial war. 
 Nor is it less incontestable a fact that it is 
 from the Trade Unions that the most obstinate, 
 and by no means the least rational, oppo- 
 sition has been offered to that expedient of 
 profit-sharing which has been recommended 
 as a remedy for industrial strife. We must
 
 100 CO-OPERATION AND 
 
 try, then, to untie this tangle; and we shall 
 derive some help from economic theory. 
 
 If we look back at the outline given before 
 of the distribution of wealth as pictured by 
 recent economists, we shall find that the 
 different agents contributing to its produc- 
 tion are conceived as obtaining their respec- 
 tive shares from the total amount of wealth 
 produced. The magnitude of their shares 
 depends, then, iji the ultimate resort on 
 the size of this 'national dividend* as it has 
 been technically called. But, this amount 
 once given, the bargaining power of each 
 agent or sharer comes into play, and, the 
 larger the share secured by the superiority of 
 ojie contributor iji this respect, the smaller 
 must necessarily be the shares remaining for 
 the others. Thus the possibility, and indeed 
 the likelihood, that the bargaining process will 
 cease to be pacifically conducted are suggested; 
 and they must be taken into account in any 
 complete survey. But, on the other hand, it 
 is relevant to urge thata fundamental harmony 
 of interests is compatible with the probability 
 of some amount of divergency and conflict. 
 
 Summarily it can be stated that, so far as 
 the production of wealth is concerned, it is 
 the common interest of all that the total 
 amount of wealth produced should be as
 
 CO-PARTNERSHIP 101 
 
 large as possible; but, so far as the distri- 
 bution of the ' national dividend' is concerned, 
 their common interest is limited to the 
 reminder that, if an advantage in the distri- 
 bution be pushed too far, it may react on 
 the production by injuring the efficiency 
 of some one or more of the parties as agents 
 in that process. Nevertheless the interest in 
 a larger share of the distribution may be the 
 more immediate, while the ultimate interest 
 in the magnitude of the total amount of wealth 
 produced may seem by comparison remote. 
 Their relative distance may make them appear 
 of different proportions to the parties affected, 
 or that difference may be real ; and in such a 
 situation it is hopeless, as it is unreasonable, to 
 imagine that the greater interest will be will- 
 ingly, or wittingly, subordinated or sacrificed. 
 Such is an account of the position in abstract 
 language. We may impart concreteness by 
 naming the factors in operation. But they are 
 not capital and labour alone, important as these 
 may be; and, in fact, the question is compli- 
 cated by the interplay of a number of forces, 
 and the final result becomes xmcertaiji. It 
 is clear that it is in the interest of all that the 
 others should be efficient contributors to the 
 production of wealth. To that extent labour 
 is concerned in the efficiency of capital and
 
 102 CO-OPERATION AND 
 
 capital will be affected by the ineffieiency of 
 labour. The employer, too, making his special 
 contribution of business orgajiisation, generally 
 acts as an intermediary, bringing labourers 
 into communication with capitalists. 
 
 If he be the enlightened, far-sighted man 
 economists habitually postulate, he is eager to 
 ensure an abundant supply of suitable capital 
 and to commaad an adequate amount of 
 effective labour. Accordingly, if he be wise, 
 he will pay such a rate of interest as will 
 not deter capital from being forthcoming, 
 and he will not offer so poor wages that the 
 labourers cannot be well fed, decently clad, 
 and comfortably housed, or that they will not 
 obtain a suitable education or training, or that 
 they will be apathetic and discontented in their 
 work because their future prospects are not 
 bright. Capitalists and labourers too, on their 
 part, will not, or should not, grudge the profits 
 needed to elicit competent business ability. 
 
 But these admonitory hints may turn out 
 to be 'counsels of perfection,' and, with human 
 nature as it is, the immediate advantage 
 offered at the present may be seized without 
 any thought being given, or at any rate any 
 prolonged attention being devoted, to the 
 possibilities, or the probabilities, of a more 
 or less remote future. Bargaining strength
 
 CO-PARTNERSHIP 103 
 
 will be likely to be used if it be possessed; 
 and that strejigth depends on the urgency 
 with whieh each demands the services of the 
 others. That urgency will in its turn be the 
 resultant of two factors, of which the one 
 is found in the conditions of demand and the 
 other in the circumstances of supply. 
 
 It is tolerably evident that a scarcity in the 
 supply, whether naturally existing or arti- 
 ficially produced, will tend to increase the 
 urgency with which the service in question is 
 required, but, on the other hand, the demand 
 may be elastic or inelastic. It may grow or 
 fall off rapidly in response to small changes 
 in the supply; or the service may be either 
 such a necessity, or such a luxury, that nothing 
 save perhaps a strong inducement caused by 
 some great change will reduce or extend the 
 demand. If the price of labour be too high, the 
 employer will be tempted to introduce more 
 machinery, and, if the price of capital be low, he 
 will be encouraged to enlarge his business opera- 
 tions. If clerks are comparatively plentiful, 
 clerical salaries tend to fall; while, should 
 business ability be so scarce and necessary as 
 to enjoy, and be able to exercise, a monopoly, 
 the profits obtained would be considerable. 
 
 Trade unions, bringing the bargaining 
 strength of a combination to the help of the
 
 104 CO-OPERATION AND 
 
 isolated working-man, are subject to the limita- 
 tions, as they command the power, of monopo- 
 lists. They may be met by an elastic demand 
 or by the appearance on thesccne of substitutes. 
 But it cannot be denied that, subject to 
 such conditions, the maxim which declares 
 that 'union is strength' is applicable to the 
 question. The settlement of the problem in 
 this particular respect, as in others, is com- 
 plicated by the possible reaction of demand 
 on supply ; and, in many industries, there 
 are other employments connected, furnishing 
 the materials or the machinery which is 
 used, or turning into the form of more 
 finished manufactures the goods which are 
 produced. The labourers, capitalists, and 
 employers too, in one occupation, buy from 
 as well as sell to those in others ; for they 
 must at least be fed, clothed, and lodged. 
 
 So varied is the scene of industry; and so 
 intertwined are the motives animating, and the 
 influences affecting, the different actors on the 
 stage. A few inferences, which are suggested, 
 may be now briefly stated in conclusion, al- 
 though some may require further elucidation 
 at a later stage. That occasions for quarrelling 
 should arise is to be expected. But these dis- 
 putes will not be limited to capitalists and 
 labourers, nor will they necessarily cease with
 
 CO-PARTNERSHIP 105 
 
 the acquisition of capital by labour. They will 
 more probably break out between employers 
 and employed; but they may conceivably in- 
 volve employers and capitalists, and again 
 labourers may be engaged in disputes with 
 other labourers, employers with other em- 
 ployers, and capitalists with other capitalists. 
 We have heard a good deal of 'sympathetic 
 strikes' in recent days; but 'demarcation' 
 controversies between different classes of 
 workmen, putting forth rival claims to perform 
 exclusively the same work, are still more difficult 
 to settle, and are less irrational, ia many in- 
 stances, than the gratuitous participation in a 
 conflict of those who have no personal grievance. 
 
 Nor is it probable that a smallshare in profits, 
 which may not be transferred immediately, but 
 may be retained for investment in the business, 
 or for some species of insurance against sick* 
 ness, or incapacity from age, will suffice to out- 
 weigh the chance, or opportunity, of obtaining 
 a larger and more immediate increase in current 
 wages. Further objections to the system 
 have been raised w^hich are relevant to the 
 particular problem we are now discussing. 
 
 If the profits be additional, and due to 
 increased energy, or lessened waste, on the 
 part of the w^orkmen, it has been contended 
 that they should be paid wholly to them and
 
 106 CO-OPERATION AND 
 
 to them alone. On the other hand, if the 
 profits arise from managing abihty, the 
 claim of labour to a portion, it would seem, 
 is dependent on generosity rather than on 
 equity; and in strict justice sharing in pro- 
 fits should be accompanied, it would appear, 
 by participation in losses. Nor, once more, 
 if Trade Unions are allowed to enhance the 
 bargaining power of workmen in their dealings 
 with employers, can the latter be reproached 
 severely for their reluctance or refusal to 
 weaken their combination by such surrender 
 of the opportunity of free resort to the neces- 
 sary action offensive or defensive as schemes 
 of profit-sharing commonly imply. All these 
 considerations do not point towards industrial 
 peace as the sure result of Co-partnership. 
 
 Finally, it may be hinted in this connection, 
 too, that the wages-system has more merit, and 
 is more likely to endure, than many critics, en- 
 thusiastically recommending their pet substi- 
 tutes, have suj^poscd. Under it the workman 
 does not bear the first brunt of disaster, if he 
 suffer in the end. Under it the employer acts to 
 some extent as a buffer. In a real sense he also 
 acts as a pilot or a helmsman. He is at the rud- 
 der navigating the bark of industry through 
 dangerous shoals and across stormy seas. It is 
 no small advantage for a labourer to know that
 
 CO-PARTNERSHIP 107 
 
 for some time at least he will be guaranteed 
 the payment of a fixed reward; andM. Leroy- 
 Beaulieu's apt comparison of wages to the 
 substantial portion of the meal — ^the meat 
 and vegetables — ^while such devices as profit- 
 sharing represent no more than the condi- 
 ments which are added — the salt, mustard, 
 and pepper, that give a flavour without being 
 essential, is relevant to the discussion in 
 which we have been engaged. It is the more 
 pertinent, if the wage-earner, remaining a 
 wage-earner, can become to some extent a 
 capitalist and to some extent also an employer. 
 That possibility seems, as we have noticed, to 
 remain open in the present world of industry. 
 
 CHAPTER VII 
 
 ANOTHER SOLtmON OF THE PROBLEM 
 
 The probability of strife between Capital and 
 Labour was, as we have seen, regarded in some 
 quarters as the necessary but deplorable out- 
 come of the transition from an old economic 
 order to a new, which occurred at the Industrial 
 Revolution. The situation was in some respects 
 at least wrongly, or, at any rate, imperfectly, 
 conceived, and represented, by many of those 
 who took this view. Industrial quarrels had not 
 been entirely unknown before, although the
 
 108 CO-OPERATION AND 
 
 scale on which they were conducted was, ol 
 course, magnified when industrial operations 
 themselves were organised in the main on 
 the fresh methods of large production. The 
 disputes, however, could more correctly be 
 described in what was not improperly called the 
 
 * capitalistic age' as occurring between em- 
 ployers and those whom they employed than as 
 concerning Capital and Labour. Nor was it a 
 possibility to be disregarded that the clashing in- 
 terests, which might give rise to friction and find 
 expression in a wrangle, might be those of differ- 
 ent classes of capitalists, labourers , or employers. 
 
 It was true that the Industrial Revolution 
 could be said to have made the ' horizontal 'divi- 
 sions of industrial society more conspicuous than 
 the ' vertical'; but * demarcation disputes ' and 
 
 * consumers' leagues ' showed that the interests 
 and aims of one variety of workmen might collide 
 with those of another, and that producers might 
 agree to apply joint pressure to the buying 
 public. In the Lancashire cotton trade, again, 
 a determination to work short time in order to 
 defeat a comer attempted by the suppliers 
 of the raw material, or to ease the depressing 
 influence on selling prices of an over-stocked 
 market, is a device which has more than once 
 secured the joint sanction of the associations 
 of the employers and the unions of the
 
 CO-PARTNERSHIP 109 
 
 workers male and female in the mills. Nor 
 has it become incredible that a federation 
 on the one side should assist or invite a 
 federation on the other to exert the compul- 
 sion of the threat, or the use, of a strike, or 
 lock-out, to bring ijito line some recalcitrant 
 section or individual members of their class. 
 
 Yet the opposing attitudes of employers 
 and employed are an outstanding feature of 
 the existing situation; and it is as a remedial 
 measure for the dangers and defects conse- 
 quent thereon that profit-sharing or Co- 
 partnership was strongly recommended. It 
 was especially on this account that the order of 
 choice preferred by Mill was reversed. But not 
 only has its efficacy for the performance of this 
 work been subsequently questioned ; in the 
 interval another means of cure has appeared to 
 dispute its claim. The origin of this competing 
 plan would at first seem unpromising, but its 
 worth has been proved. It is discovered in the 
 help which the organisation of workmen in their 
 trade unions can, if they will, provide to make 
 effective negotiations for the prevention or ad- 
 justment of disputes. Intended at the outset to 
 be the powerful instruments of war, offensive or 
 at least defensive, they have become the most 
 feasible guarantees which can be used for the 
 continuance or renewal of industrial peace.
 
 110 CO-OPERATION AND 
 
 Such an issue is not merely the outcome, 
 which might have been anticipated by acute, 
 intelHgent witnesses, of tlie apphcation to 
 industrial matters of the statesmanship 
 which holds that the best security for peace 
 is to be thoroughly prepared for war. That 
 consideration may, no doubt, be said to have 
 operated both directly and indirectly. The 
 additional strength derived from union 
 undoubtedly tends to beget a prudent chari- 
 ness on the part of opponents to challenge 
 persons so armed without counting the cost. 
 But, in a more literal sense, the responsible 
 leaders of the men are unwilling, if it can be 
 jivoided, to dissipate on the strike-pay 
 required by a quarrel the funds accumulated 
 for what may be generically called the 
 friendly society purposes of a trade union. In 
 most large unions, at any rate of the older type, 
 the amount expended during a series of years 
 on the latter objects is a sum which equals 
 the money absorbed by disputes many times 
 multiplied; and for this reason the sever- 
 ance of the two by law, which has sometimes 
 been mooted on other grounds meriting some 
 attention is to be deprecated. 
 
 But over and beyond their influence on the 
 likelihood that disputants equal or nearly equal 
 to one another in resources will be more
 
 CO-PARTNERSHIP 1 1 1 
 
 ready to parley, and less anxious to fight, 
 than foes, of whom the one is stronger than 
 the other, unless the superiority be over- 
 whelming, Trade Unions can fulfil a further 
 useful office in this matter. They can supply 
 suitable negotiators; and they can furnish 
 a sanction for the treaties which are arranged. 
 Such contingencies as these are no specu- 
 lative surmises; they are accom.plished, demon- 
 strated facts. The chain of reasoning, on 
 which the conclusion depends, is neither 
 intricate nor lengthy; and some recent 
 disquieting instances of forcible interruption 
 of the smooth movement of the machinery can- 
 not set aside the convincing evidence borne 
 by a wide experience to its general efficacy. 
 
 The argum^ent succinctly stated is this. No 
 negotiations for the prevention or adjustm.ent 
 of quarrels are likely to be effective 
 unless the negotiators are few in number and 
 representative in character. It is practically 
 impossible to discuss fully or freely differences 
 of opinion with an unorganised or undis- 
 ciplined crowd. But a small group of dis- 
 putants meeting in friendly fashion round a 
 table can often by frank talk reduce their 
 disagreements to the vanishing point. Still 
 they must know that they possess the confi- 
 dence of those for whom they speak; and they
 
 112 CO-OPERATION AND 
 
 must be sure that what they agree upon will 
 not be straightway repudiated or upset. 
 
 The compelling strength of an association, 
 whether of employers or of the employed, is 
 competent to exert this binding force; and 
 the officials of those bodies are qualified to 
 be chosen, and to act, as diplomats. Whether 
 they are given or denied plenipotentiary 
 power is a consideration which may affect 
 their success as negotiators ; and willmgness 
 or refusal to approve what they have done 
 are alternatives which they and their con- 
 stituents must face. But, unless the inter- 
 ference of the State be invited or introduced, 
 the Trade Unions and their counterparts 
 on the side of the employers are at once the 
 likely and the necessary instruments to be 
 employed for the purposes we have indicated. 
 
 In our Australasian Dominions beyond the 
 Sea arbitration courts have been established 
 where judges give decisions in industrial dis- 
 putes. In Canada in certain occupations, 
 the continuance of which is required for the 
 public welfare, no strike or lock-out is now 
 allowed before opportunity has been afforded 
 by official inquiry for the restraining force of 
 public opinion to be brought to bear on the 
 would-be combatants. In England, it is not 
 impossible that in the near or distant future
 
 CO-PARTNERSHIP 113 
 
 the offices of the Government may be extended 
 beyond that 'mediation' whieh has been 
 offered or interposed, sometimes with prompt, 
 and sometimes with eventual success. But 
 it is noteworthy that neither employers nor 
 employed welcome the prospect of the com- 
 pulsory intervention of the State. Such action 
 would indeed seem incompatible with the 
 *give and take' of that conference of repre- 
 sentatives of the disputing parties with each 
 other, which has been distinguished as 'con- 
 ciliation' from the 'arbitration,' where 
 recourse is had to more formal pleadings 
 before a third neutral party. Even under the 
 volimtary methods practised and preferred in 
 this country the last expedient has been more 
 unusual and much less successful than the first. 
 But that has a long extensive record in its 
 favour. It may sometimes fail; and our previ- 
 ous analysis of the different forces present in the 
 distribution of wealth, and of their complicated 
 interaction, points to the conclusion that 
 quarrels will sometimes arise which will defy 
 pacific settlement. The same account, how- 
 ever, shows that, if time for consideration 
 can be secured, a longer and a wider view of 
 possibilities and interests may suggest and 
 promote adjustment; and the advantage of 
 the existence of some regular and recognised
 
 114 CO-OPERATION AND 
 
 machinery of conciliation is that it ensures 
 this interval for thought, and provides the 
 means for conference and discussion. 
 
 In actual fact, as we have remarked before, 
 the most gratifying success has been attained 
 in preventing the individual or local friction 
 arising in some one establishment or place 
 from being fanned through neglect of speedy 
 skilful handling into a more extensive and 
 obstinate conflagration. But the work done in 
 this direction has been far more important 
 and considerable than the general puljlic, 
 excited from time to time by some large 
 notorious dispute, is aware. The mechanism 
 has been rendered effectual through the action 
 of the ofRcials of Trade Unions and the restraint 
 they have been able to exercise through the 
 medium of their organisation on their con- 
 stituents. It is in this sense, workmg together 
 with the associations of the employers, that the 
 combinations of the men have su])plicd a war- 
 ranty for the conservation of industrial peace. 
 
 Of this possibility Mill, with his attention 
 concentrated on Co-operation in its more 
 complete embodiment as the ultimate destiny 
 of the labouring classes, and his mind pos- 
 sessed by the rigid restrictions of the wages- 
 fund, had no suspicion. It would probably 
 have been legarded by him as a miracle that
 
 CO-PARTNERSHIP 115 
 
 Trade Unions, for which he showed no marked 
 liking, should occupy this position, and fulfil 
 with efficiency these offices. But the demon- 
 strated fact that the avowed weapons of war 
 should thus become the instruments of peace 
 may prepare us for the recognition of a different 
 fate for Co-operation than that which Mill fore- 
 cast. We shall feel the less surprise that its 
 great successes should be achieved in other 
 directions than those chosen for single or 
 preponderant commendation by some of its 
 most warm early supporters. We may, too, be 
 confirmed in the opinion that the wages-system 
 cannot after all be so inferior, if the interests 
 of the wage-earners can be protected by 
 organisations in which they believe without 
 impeding the smooth conduct of industry. 
 
 Nor, with this alternative method in view, 
 shall we repose the exclusive or implicit faith 
 in Co-partnership as the means of avoiding 
 strife, which some of Mill's successors have 
 exhibited. This inference also can be con- 
 firmed from unsuspected sources by further 
 inquiry. In actual fact profit-sharing is not 
 viewed with favour by trade unionists. 
 Their suspicion which is widely, if not gener- 
 ally, felt cannot justly be regarded as mere 
 empty prejudice, and peremptorily dismissed. 
 It is based on substantial reasons, sometimes
 
 116 CO-OPERATION AND 
 
 candidly expressed, sometimes tacitly enter- 
 tained or unconsciously countenanced. 
 
 There are some considerations which lie, so 
 to speak, upon the surface. The very plea 
 which is given the greatest prominence by 
 those who recommend Co-partnership, that 
 it will prevent the loss and irritation due to 
 a strike, is not calculated to promote an exces- 
 sive cordiality becween the introducers of 
 the principle with this end in view and the 
 adherents of a body that in the last resort at 
 least regards a strike as a legitimate and 
 effective weapon of which it has no desire 
 or intention to be willingly or knowingly 
 deprived. The more prudent and experienced 
 trade unionists may dislike and will avoid 
 the use of this arm, which often proves to be 
 double-edged; but, unless it remains in their 
 armom'y, cleaned, polished, and ready for 
 prompt handling, if that be requisite, they 
 may with good cause suspect that they are 
 appreciably weakened in their dealings with 
 employers. 
 
 The employers, however, may not think the 
 practice of profit-sharing worth their while 
 unless some definite guarantee be given that 
 no resort will be made to offensive or defensive 
 strikes. They may not be willing to rely 
 alone on the pacific influence exerted by the
 
 CO-PARTNERSHIP 1 17 
 
 unassisted principle of Co-partnership. Even 
 without any express injunction barring mem- 
 bership of a Trade Union, they may yet prefer 
 that employees, who share their profits, 
 should not retain or display firm or enthusi- 
 astic allegiance to bodies with such antece- 
 dents. It is we then, and not employers or 
 employed, who are foolishly obstinate, if our 
 appreciation of the suggested remedy for 
 industrial strife blinds us to the recognition 
 of some amount of incompatibility existing 
 between it and Trade Unionism. 
 
 A point less obvious, but tolerably plain, is 
 raised in another set of arguments which have 
 been put forward. It is a primary object of 
 trade unionist policy to erect, in the shape of 
 a standard wage, 'breakwaters,' as they have 
 been aptly called by historians of the move- 
 ment, against the encroachment of the 
 advancing tide of individual competition. 
 
 The whole motive of the ' collective bargain- 
 ing' of combinations is to secure that their 
 members shall not, taken separately unawares, 
 forfeit the benefit of the additional strength 
 derived from union. To ensure this result 
 it has been found by a posteriori experience, 
 confirming what might have been inferred 
 from a priori reasoning, that it is desirable 
 to have some defined standard which is
 
 118 CO-OPERATION AND 
 
 known to, and will be observed by, the 
 parties concerned. The establishment of 
 such a standard is compatible, as the success- 
 ful complicated arrangements in the cotton 
 manufacturing and coal mining industries 
 have shown, with local variations ajid indi- 
 vidual adjustments. These may still be 
 suited to the special circumstances of the 
 work to be done; and it is most markedly in 
 this particular sphere that the pacific pos- 
 sibilities of an effective mechanism propelled 
 and guided in its movement by associations 
 of masters and of men have been plainly 
 demonstrated. The alteration, too, from time 
 to time, as necessity may dictate, or oppor- 
 tunity may offer, of these standards has been 
 accomplished with the minimum of dis- 
 turbing friction in important trades by diplo- 
 matic negotiations between the accredited 
 representatives of such bodies. 
 
 Nor have they been as reluctant as is 
 frequently supposed to comply with the 
 diverse requirements of different situations if 
 their dominant object can be achieved. The 
 introduction of fresh machinery has been 
 accompanied by agreed readjustments to the 
 new conditions. Neither payment by piece nor 
 that by time has been vetoed, if the circum- 
 stances of the occupation made the one or
 
 CO-PARTNERSHIP 1 1 9 
 
 the other kind of wages respectively more 
 desirable or necessary ; but the adoption and 
 the maintenance of standard rates of remun- 
 eration have been asked and granted. The 
 institution of a 'minimum wage/ a favourite 
 legend commonly inscribed on the banner of 
 trade unionists, cannot fairly be identified, 
 as unfriendly critics were once wont to argue, 
 with its enforced recognition as a maximum. 
 By the sane and shrewd theoretical ex- 
 pounders, and by the cool-headed and far- 
 sighted politic practitioners, of unionism the 
 need for the amount of elasticity we have 
 indicated has been discerned and recognised. 
 But they are afraid with reason that the 
 fundamental principle will be undermined by 
 the unintentional action or deliberate design of 
 employers offering a share in profits to those 
 whom they employ. They are haunted by 
 the disquieting suspicion that higher wages 
 might have been demanded and allowed had 
 not the prospect of some gratuitous addition 
 of this sort been presented. Their minds are 
 uneasy on the danger that the increased energy 
 and diminished waste, loudly acclaimed by 
 advocates of Co-partnership as the certain 
 source of the new profits to be distributed 
 should cause the excessive pressure (sometimes, 
 it should be remembered, associated with
 
 120 CO-OPERATION AND 
 
 scamped work), which has been attributed to 
 payment by piece. 
 
 These fears may not be reahsed in actual 
 practice, and scrupulous care may be taken 
 by profit-sharing masters to avoid any excuse 
 for misapprehension felt on such grounds 
 by the men. But nevertheless the signifi- 
 cant fact exists that it is difficult or impos- 
 sible to prevent the methods of adoption of 
 the one principle — ^that of profit-sharing — from 
 colliding with the means of observance of 
 the other — that of Trade Unionism. It is hard 
 to see how a share of profits could be distri- 
 buted to the employed without affordiag some 
 apology for the surmise that the standard rate of 
 wages may be wittingly or unwittingly infringed. 
 
 If these objections have been faced a ad 
 overcome, another, which is more subtle but 
 also more persistent, remains behind. With- 
 out any purpose, avowed or tacit, to interfere 
 with the function or the aim of the unions, 
 it can scarcely be disputed by any but a 
 superficial investigator that a familiarity 
 with profit-sharing is not unlikely to impair 
 the hold of Trade Unionism on the workmen. 
 For in appearance, if not in rcahty, it is 
 deprived of some part at any rate of its 
 recommendation to its faithful supporters. 
 They are prompted to inquire whether it is
 
 CO-PARTNERSHIP 121 
 
 worth their while to continue to subscribe to its 
 funds. They ask — and the query is not im- 
 pertinent — ^whether they are Ukely to obtain 
 an adequate return for their contributions. 
 
 The ordinary levy recurring regularly is 
 a reminder which they cannot readily ignore 
 or forget; but the promised or expected 
 benefits, so far at least as strike-pay, or an 
 advance of vrages gained by trade-unionisb 
 action, are concerned become, or seem to be, 
 more distant and problematic. In any event 
 they belong to the future; the payment is 
 a present incident. It is to be noticed that 
 profit-sharing, as it is generally practised, 
 where the share is kept for the purpose of 
 an insurance against sickness or old age or 
 death, may be considered to discharge to 
 some extent the duties of the Unions as 
 friendly societies. Viewing the result from 
 different standpoints we can pronounce that 
 the former will fill satisfactorily the place 
 voluntarily left vacant by the latter, or that 
 the two will collide, or that the one will 
 forcibly supplant the other. 
 
 But it is especially in its mission as a trade 
 and not as a friendly society that the Union 
 may be unconsciously affected for the worse, 
 or sensibly and unmistakably injured, through 
 profit-sharing. Its raison d'etre is weakened 
 
 cc, »
 
 122 CO-OPERATION AND 
 
 at the very source of its sustenance, if its 
 funds are not unlikely to diminish. Its com- 
 manding position in the world of industry is 
 shaken, for its members are tempted to feel 
 that they have less need for its fighting 
 capabilities. This inference can be corrob- 
 orated by the similar outcome resulting from 
 the use of the Unions as instruments for the 
 promotion of industrial peace. There, too, it 
 cannot be doubted that the irony of destiny 
 has been at work. There, too, symptoms have 
 been manifest of a sense entertained by the 
 members of the Unions of some real incom- 
 patibility, or at least of some apparent incon- 
 sistency, between the original aggressive aims 
 and the subsequent pacific methods. 
 
 It may be regretted, but it must neverthe- 
 less be allowed, that recently the sanction of 
 conciliatory agreements, which the power of 
 Unionism over its adherents had seemed to 
 supply, has lost a part of its ostensible 
 effectiveness. The word of the leaders has 
 not been considered binding by their fol- 
 lowers. The officials themselves have been 
 grudgingly allowed, or refused altogether, the 
 plenipotentiary authority which facilitates 
 negotiation. The sudden violent ^meute. 
 which might have been expected to exert 
 the powerful attraction that it has in fact
 
 CO-PARTNERSHIP 123 
 
 exhibited for the emotional temperament of 
 the French, as preached by Revolutionary- 
 Syndicalists, has also made a startling appear- 
 ance in the industrial arena of this country. 
 Its presence here may not be abiding; and the 
 most obvious result of the 'general strike' 
 of the English coal miners in 1912 was the 
 temporaiy depletion of their large accumu- 
 lated funds. But the short quick struggle, 
 which will take the employers unawares, and 
 put compelling pressure on the public, without 
 requiring great pecuniary resources at the back, 
 has certainly been favoured by some sections of 
 our own working-men in the last few years. 
 
 It is possible to exaggerate what may be 
 a passing phase. Some signs have already 
 become manifest that Syndicalism will 
 eventually discover no congenial atmosphere 
 in the compromising disposition v/hich is so 
 general an attribute of the typical English 
 mind. The ' labour unrest, * latterly prevail- 
 ing, may have been due to a discrepancy 
 between stationary wages and a rising cost 
 of living, which will soon be narrowed, 
 whether that increase be due to the fleeting 
 influence of an enlarged output of the prec- 
 ious metal used as the monetary standard, 
 or to a more permanent attainment, such as 
 Mill thought desirable, of a higher standard
 
 124 CO-OPERATION AND 
 
 of comfort among the workitig-classes. The 
 natural impatience of the younger men in 
 the ranks of Unionism with the conservatism 
 of the older leaders may be lessened as they 
 themselves are brought into closer contact 
 with the responsibility of taking serious 
 decisions. They may then attempt a more 
 extensive survey of the possibilities of success 
 or of the alternative of costly failure. But 
 with suitable allowance made for these vari- 
 ous circumstances, it remains true that Trade 
 Unions may reasonably expect to be placed 
 under the necessity of relaxing their tight 
 hold upon the hopes and the beliefs of working- 
 men when they are more conspicuous in the 
 guise of peace-makers than in their original 
 garb of the protagonists of industrial war. 
 It is certain that this consequence has fol- 
 lowed an increased prominence of con- 
 ciliatory arrangements. 
 
 From the dilemma thus presented an 
 escape could perhaps be found on the 
 one side in an appeal to the compulsion of 
 the State to secure an observance of 
 the treaties made between employers and 
 employed. The enforcement of pecuniary 
 penalties for the breach of an agreement, 
 which has been advocated in some quarters 
 and, in a few instances at least, has been
 
 CO-PARTNERSHIP 125 
 
 required under the existing voluntary schemes 
 of concihation or arbitration, would appear 
 to depend in the ultimate resort on pressure 
 so applied. But experience has proved that, 
 while the smaller number of masters, which is 
 usually concerned, may be made amenable to 
 such force, and the funds of the Trade Unions 
 can be rendered liable to seizure, the larger 
 crowd of men could avoid the punishment by 
 withdrawing from their association; and if they 
 will, they may thus set the law at naught. 
 
 In the other direction, however, the way 
 of deliverance from the entanglement seems 
 more plain and less unsatisfactory. For the 
 sapping of the strength of the Trade Unions by 
 such arrangements as those commonly con- 
 nected with Co-partnership is less seriously to be 
 deprecated, if their employment in conciliation 
 and in arbitration has a similar weakening 
 result. Their opposition to profit-sharing may 
 continue; for it is not unnatural or irrational. 
 But the alternative method of dealing with 
 the problem of industrial strife which is open 
 has been shown to be liable to a like defect. 
 
 We thus reach the conclusion to which 
 most, if not all, investigations of social 
 problems eventually conduct, if the inquirers 
 are careful to preserve an open mind. There 
 is no short road which will lead them without
 
 126 CO-OPERATION AND 
 
 any toil directly to the destination that 
 they seek. A gratifying amount of progress 
 can be made in several directions by diligent 
 and patient exploration; and some paths which 
 may seem at first to lead away may finally by 
 converging bring us nearer to our goal. 
 •,^ln the next section of this book, when 
 we pass from the discussion of the unattain- 
 able ideals which have been mistakenly set 
 forth as certain to be compassed by Co- 
 operation or Co-partnership alone to a review 
 of the more modest, but not less important, 
 achievements they can claim to be within 
 their grasp, we may perhaps realise more 
 fully this sobering but wholesome truth. 
 When, leaving behind us what they have not 
 done, and probably cannot do, we note what 
 they have accomplished, and may reasonably be 
 hoped to perform, we shall acknowledge that 
 there are no enduring grounds for feeling grave 
 disappointment, if neither Co-operation nor 
 Co-partnership is entitled to be conceived or 
 described as a panacea. They should oxi 
 the contrary take their place, which, as we 
 shall see, is neither small nor inconspicuous, 
 beside other plans of social amelioration.
 
 CO-PARTNERSHIP 127 
 
 PART II 
 
 WHAT CO-OPERATION AND CO-PARTNERSHIP 
 HAVE DONE 
 
 CHAPTER VIII 
 
 THE CO-OPERATIVE STORE. THE ROCHDALE PLAN 
 
 Prominent workers on that side of the Co- 
 operative Movement which has won a great suc- 
 cess in this country have remarked that Co- 
 operation is ' not a theory but a practice.' The 
 observation is justified. While the theoretical 
 conjectures, which have occupied our study in 
 the previous portion of this book, have failed, 
 as we noticed, to secure fulfilment, Co- opera tion, 
 exemplified by the retail stores, which, concen- 
 trated in especial strength in the manufacturing 
 districts, and in some other populous places, 
 are also found dispersed throughout the length 
 and breadth of the land, is an irrefutable fact. 
 The progressive figures of the trade trans- 
 acted through these distributive agencies, 
 and by the English and Scottish Wholesale 
 Societies, are impressive. To the latter we 
 shall refer again in greater detail in a subse- 
 quent chapter. But, in 1904, sixty years 
 after the introduction of the new 'plan,* which 
 we shall presently explain, thenumberof British
 
 128 CO-OPERATION AND 
 
 Distributive Societies, as given in the Year Book 
 published by the International Co-operative 
 Alliance, was 1469. Their membership 
 amounted to 2,078,178 persons. Their share 
 capital was over twenty-five million pounds, 
 and their loans and deposits (amounting to 
 £3,971,231), and their reserve fund (being 
 £1,297,645), brought their total working capital 
 to little short of thirty and a half million pounds. 
 Their ' turn-over' was stated to be £59,311,934, 
 their net profits to be £9,411,348, and the value 
 of their real estate to be £10,810,488. Between 
 1900 and 1910 the growth in their membership 
 was reckoned to comprise 833,161 persons, and 
 to be some forty-nine per cent, while the 
 increase in their 'turn-over' was £21,807,810, 
 or some forty-three per cent. 
 
 If we include in the statistics for 1904 the 
 figures of the two Wholesale Societies, the 
 total capital would be raised to some thirty- 
 five millions and the total 'turn-over' to 
 some eighty-six millions, and the total profit 
 would amount to some ten millions of pounds. 
 For 1909, the Year Book, basing its data on 
 the Abstract of Labour Statistics published 
 by the Board of Trade, furnished a figure of 
 nearly ojie hundred and thirty-two million 
 pounds for the 'turn-over' of the 'British 
 Co-operative Movement,' of nearly fifty
 
 CO-PARTNERSHIP 129 
 
 million pounds for the capital, ajid of 
 2,597,229 persons for the membership. From 
 these calculations 'credit societies,' the work 
 of which will engage our notice in a later 
 chapter, were excluded; and for the United 
 Kingdom the estimate was offered that in 
 1911 about one individual in every sixteen 
 of the population was a member of some kind 
 of Co-operative Society. As we shall after- 
 wards see, there are different types of association 
 between which distinctions should be made. 
 
 The Wholesale Societies have embarked on 
 various productive enterprises, and they own 
 ships conveying to our shores from foreign 
 lands the commodities which they sell, and 
 have bought tea plantations on the other 
 side of the globe. A certain amount of pro- 
 duction has also been midertaken by the 
 distributive stores on their own account, and 
 a few small independent associations of pro- 
 ducers are busied entirely with similar 
 work. If we do not now embrace within 
 our survey the notable development of 
 co-operative activity in agriculture, of which 
 Ireland has been recently the scene, it is 
 hardly an exaggeration to declare that at 
 the present moment the bulk of the articles 
 purchased by a considerable proportion of 
 the working-classes in many important towns
 
 130 CO-OPERATION AND 
 
 of England, Wales, and Scotland, in satisfac- 
 tion of their ordinary daily wants, are sold 
 co-operatively, even if they are not co-opera- 
 tively produced. When, then, we compare 
 these solid proved results with the unsubstantial 
 speculation of thinkers, like Mill and some of his 
 successors, we shall not be reluctant to agree 
 with the dictum we have quoted. We may even 
 be disposed to add by way of commentary that 
 the logic of hard fact must be more convincing 
 than the logic of any theory, however flawless 
 and complete it might seem. The theorising we 
 have been examining was, as we have tried to 
 show, sometimes WTong and sometimes defective. 
 In another respect the actual Co-operative 
 Movement that we know has established a 
 claim to be considered practical. Its advance 
 from stage to stage of development has been 
 sure and steady. Such occasional failures 
 as occur have been due to a depar- 
 ture from the cautious principle, which has 
 usually been jealously observed, of being 
 quite certain before any fresh venture is 
 begun that the ground has been thoroughly 
 surveyed. The crucial question, whether 
 there will or will not be a market for the 
 goods offered for sale, has, as a rule, been 
 first answered in the affirmative, and then 
 arrangements have been made for their
 
 CO-PARTNERSHIP 131 
 
 supply, or their production, as the case 
 may be. 
 
 It is thus that the wholesale societies 
 have fed the retail stores, aud the various 
 productive undertakiags have responded to 
 the demands of the distributive associations. 
 The different portions of the movement have 
 truly 'co-operated' with each other in the 
 very practical sense that they have 'worked 
 together.' In the rare instances, where, aban- 
 doning the sensible criterion just laid down, 
 they have moved too fast or too far, they have 
 run the risk of a discomfiture or a disasterwhich 
 they have not always managed by good luck to 
 avoid. The consequence has been that some- 
 times, though not frequently, through the un- 
 wise action of enthusiasts, genuinely anxious to 
 advance the cause but incautious about the 
 means adopted, the movement has received a 
 temporary 'set-back.' This was the case, for 
 instance, with the Ouseburn Engineering 
 Works which failed. But on the whole these 
 lapses from safe practice have seldom occurred, 
 and a gratifying advance has been achieved. 
 
 Nevertheless another epigrammatic sen- 
 tence, which has fallen from the lips of some 
 Co-operators, is no less correct and apposite. 
 For Co-operation is, in a very real sense, 
 both a 'practice' and a 'faith.' It has been
 
 182 CO-OPERATION AND 
 
 honourably distinguished from other labour 
 movements by the attention given to the 
 education of its members. 
 
 That notice, indeed, may have been feeble or 
 intermittent on the part of some societies or 
 individuals, and the large amount now devoted 
 every year by the movement as a whole to 
 so-called 'educational' objects may comprise 
 expenditure to which the designation is only 
 nommally appropriate. But classes aie held, 
 teachers appointed, and students examined, 
 annually under the auspices of the Co-opera- 
 tive Union, and, while such practical subjects 
 as book-keeping are included in the list, the 
 curriculum comprises industrial history, citi- 
 zenship, and economics. The large majority 
 of the papers done are based on the knowledge 
 of the history and principles of Co-operation 
 which has been duly gained by previous 
 ijitclligejit and painstaking study. 
 
 Such an acquaintance so acquired and so 
 tested is surely calculated to kindle and sustain 
 an interest in the animating spirit of the move- 
 ment, which goes beyond the sensible but 
 prosaic wish to procure in good quality, at 
 comparatively small expense, the goods 
 required for daily life. The writer of this book, 
 who has acted as an examiner for many years, 
 has often been impressed by the zeal shown by
 
 CO-PARTNERSHIP 133 
 
 the candidates, sometimes risijig to the impas- 
 sioned elevation of religious fervour, for the ful- 
 filment of the * mission ' set before Co-operators. 
 This Co-operative 'faith,' which has been 
 able to arouse and maintain such consuming 
 ardour in its devotees, derives, it canJiot be 
 doubted, its original potency from somewhat 
 the same source as that from which the 
 Christian Socialists drew their inspiration. 
 It is a belief that Co-operation can, and will, 
 transform the world, which is the animating 
 creed common to both. It is possible that 
 British Co-operators of the present day- 
 would in the large majority of cases differ 
 from Kingsley and Hughes and Mill in 
 their view of the means of transformation to 
 be used; and there might be corresponding 
 disagreement on the particular details or the 
 general character of the end to be achieved. 
 Mill's assured prediction of the future of the 
 labouring classes might not recommend itself 
 to the ' federalists,* as they are termed, who do 
 not view with much favour the multiplication 
 of small productive societies organised on the 
 principle of ' self-governing workshops.' 
 
 They hold, on the contrary, that the wage- 
 earner should receive his share of profits not 
 as producer, but, according to that ' Rochdale 
 plan/ which we shall presently describe, as
 
 134 CO-OPERATION AND 
 
 consumer ; and, hence, they think that 
 the future lies with the development of 
 the productive enterprises of the wholesale 
 societies, which are federations of the retail 
 stores, conducting their business, like theit 
 constituent units, by the methods of that parti- 
 cular scheme. The Scottish Wholesale Society, 
 however, parting company in this matter 
 from the English, grants to its employees a 
 bonus upon wages ; and there is a strong 
 minority in the rank and file of Co-operators, 
 who are distinguished as 'individualistic* 
 because they would foster the production of 
 Co-operative goods by the small societies 
 organised in the main on profit-sharing lines. 
 It cannot be denied that the spiritual 'unction* 
 which, in no offensive or ridiculous sense, 
 continues to possess many Co-operators was 
 begotten by the enthusiasm of early propa- 
 gandists who, in prominent instances, adopted 
 in its integrity the theory and forecast of 
 Mill. Their stimulating influence remains as 
 a factor to be counted in gauging the pro- 
 gressive power of the movement. 
 
 Its poetry has mingled with its prose in 
 other incidents of its history. There is, it 
 will be allowed, nothing 'magical' about the 
 word Co-operation in itself. It has been 
 employed by economic writers in a technical
 
 CO-PARTNERSHIP 185 
 
 sense in their expositions of the principle of 
 the division of labour. They have distin- 
 guished between 'simple co-operation' and 
 ' complex co-operation.' In the foraier case a 
 number of people aid one another by doing 
 the same work at the same time. For ins tance, 
 in hauling a boat, or in working a pulley, their 
 united efforts may suffice to achieve what sijigly 
 no one individual among them could accomplish . 
 The latter form of co-operation is identical 
 with the division of labour, in which many 
 workers help one another by doing different 
 work, it may be simultaneously, it may be suc- 
 cessively, it may be at widely severed times. 
 
 This eff cc tiveprinciple, Adam Smi th's account 
 of which enjoys a classic fame, has been realised 
 in various shapes. The separation of trades 
 is one obvious variety. Another, illustrated in 
 the Wealth of Nations by the making of pins, 
 is the pursuit at the same time of different 
 occupations in a single factory or establish* 
 ment. The manufactured product, however, 
 may also be the outcome of a more or less 
 long series of operations, following one another, 
 from the extraction of the raw material from 
 the earth to the delivery of the finished goods 
 to the customer. This process, too, was 
 brought by the parent of mxodem economics 
 under the general designation of the ' division
 
 136 CO-OPERATION AND 
 
 of labour'; but at least one of his critics has 
 observed that as a common comprehensive 
 title the 'co-operation' of employments or 
 occupations would be more suitable. 
 
 It is not from their separation or distinction 
 that the efficacy of the principle is derived; but 
 it is their junction, or working together, their 
 'co-operation,' in fact, which brings such 
 manifest advantage — so diverse and con- 
 iiderable — to society. Theresults of that might 
 indeed seem ' magical ' to the primitive savage, 
 with whom Adam Smith compared the civilised 
 man, noting the number and variety of persons 
 who had* worked together ' to provide the latter 
 with so simple an article as a loaf of bread. 
 
 The fundamental idea then of Co-operation 
 can boast of a remote antiquity and of world- 
 wide recognition. It is not in any sense ab- 
 stract or recondite; nor for that matter is the 
 allied conception of Co-partnership. But the 
 narrative of the Co-operative movement in this 
 country has nevertheless its element of imagina- 
 tion and its moments of romance. It fascinates, 
 at any rate, by its surprises. In the determin- 
 ing episodes of the ' Rochdale Pioneers,' and the 
 founding of the 'English Wholesale Society,' 
 those who, like ourselves, stand at the vantage 
 point of the fuller knowledge of later times can 
 discern the tiay obscure birth from which an
 
 CO-PARTNERSHIP 187 
 
 immense and famous growth has subsequently 
 sprung. 
 
 As we turn over the successive pages of the 
 moving story, and note the ardent hopes, and 
 tentative essays of the beginners, we experience 
 a thrill of pleased anticipatioQ of the wondrous 
 consequences we are aware will follow in due 
 course. We are impelled to imagine what 
 the 'owd weaver,* who boldly took down the 
 shutters from the insignificant shop in Toad 
 Lane at Rochdale in 1844, or Abraham Green- 
 wood, who advanced the scheme for a 'whole- 
 sale agency ' before the conference of delegates 
 at Oldham in 1862, would have thought of the 
 ultimate outcome of the novel, audacious pro- 
 jects with which they were connected. 
 
 We, who are aware of the great results, 
 must admit that the authoritative history 
 published by the Co-operative Union is ex- 
 pressing no more than the literal truth in 
 describing 'Industrial Co-operation' as having 
 wrought a 'peaceful revolution.' The means 
 employed may have been simple; their issue 
 marks an epoch. The translation into practice 
 of theelementary principle of 'workingtogether,* 
 and the adoption in thought and the interpreta- 
 tion in act of the motto ' Each for all and all for 
 each,' which is a forcible epigrammatic expres- 
 sion of the same idea, have sufficed to alter
 
 138 CO-OPERATION AND 
 
 radically the position as consumers of large 
 massesofourcountrymcn. The effects maywith- 
 out extravagance be declared to be 'magical.* 
 
 The chief source of this marvel is undoubt- 
 edly to be found in the 'Rochdale plan.' 
 The year 1844 is on that account the annus 
 mirabilis of Co-operation. It is true that the 
 idea then definitively embodied in Co-opera- 
 tive practice had apparently presented itself 
 some time before to the active mind of 
 Robert Owen. He had at any rate, it seems, 
 formed the general notion of abolishing 
 'profit on price.' But the 'Union Shops,' as 
 they were called, which were established in 
 the first part of the nineteenth century, had 
 proceeded on the ordinary principle of divid- 
 ing the profits earned among the shareholders. 
 They had failed; while the stores conducted on 
 the new method succeeded. The earlier mis- 
 carriage may be attributed in part to mal- 
 administration. It may be traced in some 
 degree to a lack of loyalty to the store among 
 the members. It may be ascribed in a measure 
 to a deficiency of funds. \Yith the joint influ- 
 ence of such causes, and of others resembling 
 them in character and in results, the recurring 
 disappohitment and defeat may be connected. 
 
 But the merit of the system practised by the 
 Equitable Pioneers at the Lancashire town in
 
 CO-PARTNERSHIP 139 
 
 the middle of the nineteenth century, as a 
 means of escape from the distress to which 
 they had been reduced by an unsuccessful 
 strike in the weaving industry, was that it 
 dealt triumphantly with all these difficulties. 
 Although their entire programme was compre- 
 hensive, and their ultimate aims were hardly 
 less ambitious than the bold prophecy of 
 Mill, their immediate policy enabled working 
 men to become capitalists, while remaining 
 labourers, and to improve with easy certainty 
 their position as consumers, however arduous 
 and problematic it might be to change their 
 status as producers. It secured effectually 
 one object which Mill and the Christian 
 Socialists had in view — that of lessening the 
 dependence of the wage-earner — by a plan 
 the full capacity and significance of which 
 neither he nor they had realised. 
 ? Before we attempt to unfold the meaning of 
 this felicitous discovery, a few words are due 
 to the character and career of Robert Owen, 
 the founder or 'father of Co-operation' as 
 he has been called. He was also a prominent 
 member of that small company of early Eng- 
 lish Socialists to whose influence on Marx vre 
 have before referred. On som^e grounds he may 
 be fittingly described as their leading repre- 
 sentative; for, while the writings of others of
 
 140 CO-OPERATION AND 
 
 the band have only recently been disinterred 
 from the oblivion or neglect in which they had 
 for long been buried, the considerable repute 
 vron from the first by Owen has never faded, 
 lie was possibly less original or constructive 
 a thinker than they were, but he was eminently 
 successful as a populariser of his views. 
 
 The voluntary mutual self-help of Co- 
 operators has often been contrasted with 
 the compulsory methods of all kinds of 
 Socialism to the disadvantage of the latter 
 and the elevation of the former in general 
 esteem ; and the ' father of Co-operation ' 
 might not improbably have thought himself 
 more Socialistic in spirit and in act than 
 many of his children, or even of his grand- or 
 great-grandchildren, have cared to profess 
 themselves to be. The Factory Laws, indeed, 
 which, trangressing the strict letter of the 
 theoretical philosophy of laisser-fairc, made a 
 necessary breach in the practice of the excessive 
 individualism then in vogue, had their exemplar 
 in the admirable humane provisions of the 
 successful model establishment at New Lanark 
 run by Owen and his partners. 
 
 But these measures were only Socialistic 
 in a very general sense, and at any rate 
 the Socialism associated with him was not 
 representative of the type we know now as
 
 CO-PARTNERSHIP 141 
 
 'State Socialism.' It followed for the most 
 part the direction given by the earlier 
 class of romantic and imaginative Utopias. 
 It was idealistic. Yet the settlements founded 
 under his aegis at New Harmony and else- 
 where were actual and concrete, and they 
 were intended to be no more impracticable 
 than his device of a Labour Exchange. 
 
 Whether that expedient or the Owenite 
 Communities proved the greater failure it 
 might be difficult to decide. For the Exchange 
 was no counterpart of the official institutions 
 recently established in this country with 
 success under the same name. But, after the 
 fashion subsequently approved in not a few 
 of the constructive sketches of modern 
 'scientific' Socialism, it tried to provide a 
 substitute for the metallic and paper money 
 with which we are familiar. That useful 
 instrument — the 'root of all evil' as it has 
 been luridly, if unfairly, pictured both in 
 Biblical morality and in different varieties 
 of collectivist belief — ^^vas to be superseded 
 in Owen's scheme by 'labour notes' repre- 
 senting commodities equated, as Marxian 
 orthodoxy afterwards enjoined, according to 
 the quantity of labour involved in their pro- 
 duction. The misfortunes, however, of the 
 Communities and of the Labour Exchanges
 
 142 CO-OPERATION AND 
 
 were no more abstract or imaginary than their 
 attempted institution, and their collapse has 
 cast reproach on Owen's credit for sagacity. 
 Yet he was a mixture composed in varying 
 proportions of visionary idealist and prac- 
 tical reformer His speedy rise to a respon- 
 sible post bore indisputable testimony to his 
 painstaking industiy and his rare ability. 
 Of his aptitude for business there could be 
 no doubt, at any rate in his earlier years ; 
 and the arrangements which he made for the 
 benefit of those whom he employed showed 
 an acute insight and a sane discriminating 
 judgment. They comprised, not merely the 
 due limitation of the hours worked, and 
 proper provision for the health and safety 
 of the workers, but also stores of the co- 
 operative type where excellent goods could 
 be procured for cash payments at cheap 
 prices. Owen devoted special care, as well, 
 to the opportunities offered to the men, 
 women, and children in his establishment for 
 elevating and refreshing recreation in their 
 leisure hours, and he bestowed peculiar 
 pains on educational facilities. For it was 
 a chief article of his creed that human con- 
 duct depended on human character, which 
 could be changed by altering the external 
 circumstances; and he was throughout firmly
 
 CO-PARTNERSHIP 143 
 
 convinced of the moulding power of educa- 
 tion. 
 
 Owen's gift of enthusiasm, which was 
 manifest in his theorising and his action, had 
 been no unimportant factor in the history of the 
 Co-operative movement before the successful 
 Rochdale plan was put in practice. It was 
 communicated to his admirers and disciples, 
 and it fanned their eagerness to fight for the im- 
 provement of their fellow-citizens, moral and 
 material alike. The two were, in fact, indis- 
 solubly linked in Owen's teaching. Hismemory 
 is still fragrant in Co-operative circles ; and his 
 spirit has not ceased to animate prominent 
 leaders and many individuals in the rank and 
 file. Yet the experiments tried before 1844 were 
 marked by zeal more noticeably than by discre- 
 tion; and the conception of abolishing ' profit on 
 price' had not emerged from the embryonic 
 stage of a theory unrealised in practice. 
 
 How, then, was this seminal idea given 
 fortunate development by the Rochdale 
 Pioneers? The story has been frequently 
 retold of the way in which twenty-eight 
 poor weavers clubbed together to subscribe 
 a small sum every week. This plan, they 
 thought rightly, would enable them eventu- 
 ally to obtain good provisions for themselves 
 and their families at a cheaper cost than that
 
 144, CO-OPERATION AND 
 
 for which they had been compelled hitherto 
 to buy articles, which were not always of satis- 
 factory quality, from the ordinary tradesmen. 
 
 In order to expedite this bold venture 
 to ease the poverty in which they had been 
 left through an unsuccessful strike for higher 
 wages, they increased their weekly contri- 
 butions; and at last they had amassed the 
 modest sum on which they had set their aim. 
 By means of this £28 they stocked with a 
 small quantity of goods the tiny shop they had 
 secured in Toad Lane; and on the night 
 announced for the opening an interested but 
 somewhat contemptuous crowd collected, 
 eager to observe what would happen. It was 
 then that at last the shutters were taken 
 down by one of the weavers who was more 
 courageous than his fellows, and the store began 
 business with another weaver as the salesman. 
 
 It was only when the period had expired, 
 at the end of which the attraction of the 
 Rochdale plan began to operate, that the doubt 
 and hesitation feltabout thesuccess of the store 
 disappeared : but from that moment onward 
 its progress was assured. The goods supplied 
 increased in quantity and variety. The mem- 
 bership of the society was rapidly enlarged. 
 More and more commodious and extensive 
 premises, manned by a numerous body of shop
 
 CO-PARTNERSHIP 145 
 
 servers and clerks, bore indisputable testimony 
 to the growth of the trade transacted; and 
 various supplementary portions of the scheme 
 contemplated by the original 'pioneers' were 
 carried more or less fully into practice. 
 
 For in a sense they may be said to have 
 embraced in their thoughts, if not in their 
 acts, the entire programme of Co-operative 
 enterprise. They looked forward to the 
 ultimate establishment of a self-contained 
 community. They intended to build houses 
 for their members, and to begin the cultiva- 
 tion of laiid, from which their need for 
 various agricultural products would in the 
 end be met. They recognised the advantage 
 and necessity of embarking on wholesale 
 trade in order to ensure a satisfactory supply 
 on reasonable terms of the commodities 
 which their store sold retail. They made an 
 early essay in this direction before the Eng- 
 lish Wholesale Society finally started business 
 on a successful footing. A corn mill, which 
 they also worked, was a type of the productive 
 undertakings which they saw weie needed to 
 respond to the demand of consumers like 
 themselves, and to round off the design 
 which they had formed some further produc- 
 tive ventures were commenced. And from the 
 
 outset they devoted a fixed proportion of their 
 cc a
 
 146 CO-OPERATION AND 
 
 funds, and gave their careful notice, to educa- 
 tion. They seem, in fact, to have anticipated 
 in their hopes and their beliefs the description 
 of Co-operation as *a state within the State' 
 which was afterwards deftly applied by Lord 
 Rosebery to the movement as a whole. 
 
 But this was not their most remarkable 
 achievement. It was not on this account that 
 the year 1844 marked an epoch in the history of 
 Co-operation, separating what had gone before 
 from what was to follow after. In order to 
 explain this point we must expound the ' Roch- 
 dale plan.* Stated shortly, it was the division of 
 the profits among the consumers in proportion to 
 their purchases. The usual modus operandi was 
 of the following character. When the customers 
 bought their goods, which were priced 
 according to the usual terms prevailing in the 
 neighbourhood, they received tickets or checks 
 recording the amount of their purchases. At the 
 end of each quarter the accounts were made up: 
 a certain sum was set aside for interest on capital 
 at a fixed rate, for depreciation of the stock or 
 the buildings, and for educational ob j ects . The 
 balance left from the sale of the goods formed 
 the quarterly 'dividend,' and this sum was 
 distributed among the purchasers. It was 
 generally the case that enough was at first 
 retained to buy a share in the store; and,
 
 CO-PARTNERSHIP 1 47 
 
 while shareholding purchasers received a full 
 dividend, half the proportion might be paid 
 to those purchasers who were not shareholders. 
 This was the 'Rochdale plan.* Like many 
 inventions which have won great fortunes 
 for their discoverers, and have brought vast 
 benefits to the community at large, it seems 
 as simple as it has proved to be effective. 
 We may be surprised tliat the device had not 
 been used before. But, in fact, in the previous 
 co-operative stores belonging to working-men 
 the profits had gone to the shareholders as 
 capitalists, and not to them or others as con- 
 sumers; and in the large undertakings supply- 
 ing the middle and upper classes, which now 
 bear the name of Co-operative Societies, or 
 Supply Companies, in London and elsewhere, 
 the attraction offered is the sale of goods at 
 cheaper prices than those at which they can 
 be bought in the ordinary shops. The Whole- 
 sale Society started at first without the 'Roch- 
 dale plan, ' but it soon adopted it in preference 
 to tlie practice generally followed in the trade. 
 The substitution of cash payments for credit 
 given for long or short periods has been common 
 to the working and the middle class Co-opera- 
 tive stores; and the intention, which is avowed, 
 to supply none but genuine articles of good 
 quality is shared by many undertakings. It
 
 148 CO-OPERATIGN AND 
 
 is the wonder-working principle of the 'divi- 
 dend on purchase' which differentiates the 
 institutions following the 'Rochdale plan.' 
 
 That plan realises the conception attributed 
 to Owen of abolishing ' profit on price.' From 
 one standpoint it may be regarded as a mode 
 of profit-sharing; and, taking this attitude, we 
 might compare instructively the merits and 
 demerits of that scheme, recommended some- 
 what tepidly by Mill, and strongly preferred 
 by his successors, by which employers dis- 
 tribute a more or less considerable amount 
 of profits to their employees in proportion to 
 the wages earned, with the 'Rochdale plan' 
 of dividing the bulk of the profits gained 
 among consumers in proportion to their 
 purchases. We should find, as we have hinted, 
 a brisk controversy conducted on this ques- 
 tion in the inner circles of Co-operators; and 
 we shall subsequently review the chief con- 
 clusions reached by them and by one external 
 able critic on the advantages and drawbacks 
 of the respective schemes. But for the 
 moment we are more closely concerned with 
 the mode in which the idea ascribed to 
 Robert Owen has been interpreted in practice. 
 
 What Co-operators have intended to con- 
 vey is, as indeed they have explicitly 
 remarked, that profit ia the ordinary sense
 
 CO-PARTNERSHIP 149 
 
 of the term as it has been used by econo- 
 mists, and as it is understood by the pubhc, 
 does not exist in the Co-operative movement 
 when modelled on the 'Rochdale plan.' 
 Economic text-books are not to-day entirely 
 agreed upon their definition of 'profits,' and in 
 fact we have traced an informing change in 
 the content of the phrase when employed by 
 succeeding writers. But by 'gross profit,' at 
 any rate, we understand the difference which 
 is found between the incomings and the out- 
 goings of a business when a balance is first 
 struck without any minute analysis ; and 
 by 'net profit' we have come to recognise 
 what is left for the man or men who 'run the 
 business,' when they have paid the interest due 
 on the capital they have been using, and the 
 wages, or the salaries, owing to all the labour, 
 of whatever variety, that has been employed. 
 The last conception may be difficult to fix in 
 any case. There may seem to be no correspond- 
 ing parallel easily discoverable in the practical 
 working of Co-operation, to which the requisite 
 precision can be given. But there, as in all busi- 
 ness which is not moving towards bankruptcy, 
 a balance normally exists when the outgoings 
 have been set against the incomings. That 
 balance is, in fact, represented by the 'divi- 
 dend,' when the sum devoted to educational
 
 150 CO-OPERATION AND 
 
 purposes has been included in the reckoning, as 
 well as interest on capital and an allowance for 
 depreciation and possibly for a reserve. 
 
 Co-operators, however,argue with persuasive 
 cogency that this dividend arises only because 
 the prices charged for the goods sold have been 
 the ordinary prices of the neighbourhood, and 
 not cost-prices, so that in effect the purchasers 
 receive back in a lump sum at a later date what 
 they havepreviouslypaidinseparatesmall parts, 
 and might, if they had preferred the alternative, 
 have then detained. In reality they procure the 
 articles at cost-price and the commodities thus 
 sold may be said to yield no substantial 'profit.* 
 The apparent difference between incomings 
 and outgoings is a matter of book-keeping. 
 
 The force of this plea has, in a sense, received 
 the compliment of practical approval by high 
 authority in the exemption of Co-operative 
 stores from income-tax; and it appears to state 
 what happens with an accuracy which cannot 
 reasonably be impugned. Controversies in any 
 event on terminology are perhaps generally in- 
 conclusive and seldom reward the trouble or the 
 anger that they cause. We may allow without 
 more scrutiny thecontention that the ' Rochdale 
 plan' does away with ' profit on price' as that term 
 has commonly been understood by economists 
 and is treated in ordinary business practice.
 
 CO-PARTNERSHIP 151 
 
 CHAPTER IX 
 
 THE ADVANTAGES OF THE 'ROCHDALE PLAN* 
 
 The principle of 'dividend on purchase,' by 
 which, in effect, 'profit on price* has been 
 abolished, was the outstanding feature of the 
 'Rochdale plan.* The profits, if such they 
 could be strictly called, were to be distributed 
 among the consumers in proportion to their 
 purchases. Why, we may now inquire, did 
 this simple principle produce such gratifying 
 results that Co-operation, which had pre- 
 viously been a failure, henceforth became an 
 assured success? What were the sufficient 
 reasons for the growth from the tiny seedling 
 of the weavers' shop in Toad Lane of the gigan- 
 tic tree, with its many vigorous branches 
 spreading from its sturdystem, to which we may 
 fittingly compare the Co-operative movement 
 as it now exists in Great Britain ? The answer 
 to these questions is not difficult to supply. 
 
 In the first place the distribution of the 
 periodical dividend in proportion to the 
 purchases was calculated to ejisure and pro- 
 mote loyalty to the store. That feeling of 
 attachment might be strengthened in various 
 ways. The most obvious was the inducement 
 offered, or the pressure applied, to customers to 
 become shareholders; and besides this first
 
 152 CO-OPERATION AND 
 
 compulsory investment subsequent trans- 
 actions of a similar nature were encouraged 
 by the payment quarterly, iti the periodical 
 dividend, of a sum which, from its compara- 
 tive magnitude, it might seem worth while 
 to save. Other methods of cementing the 
 mutual affection of the members of the dis- 
 tributive society for each other would be 
 furnished by the gathei-ings for recreation or 
 for educational purposes. Attendance also at 
 the regular meetings for the transaction of the 
 necessary business — to hear the announcement 
 of the dividend, or the report of the auditors 
 on the accounts, or to elect the officers or 
 the committee — might lead in turn to the 
 appointment to, and the performance of, such 
 duties. But all these might be treated as 
 extensions of the original binding tie which 
 consisted in the dividend on purchase. 
 
 That principle would also encourage the 
 members of the store to make their own 
 purchases there in preference to buying from 
 the shops of the ordinary traders; and the 
 same principle, it may be noticed, extends its 
 stimulating influence to another larger sphere. 
 It embraces the goods sold or made by the 
 Wholesale Societies. The loyalty which will 
 by itself lead the manager, or the committee, 
 of a retail store, steeped in the feelings, and
 
 CO-PARTNERSHIP 153 
 
 imbued with the traditions, of the movement, 
 to prefer what are known shortly as 'C.W.S.' 
 articles, is reinforced in its turn by the sale of 
 those goods by the Wholesale Societies at ordin- 
 ary prices, and the distribution of the resultiag 
 dividend to the shareholding retail stores in 
 proportion to the amounts of their purchases. 
 The principle has a further consequence. 
 It offers a powerful motive for the endeav- 
 our to maintain and develop the trade of 
 the store through the acquisition of new 
 members. It is an effective substitute for 
 that advertisement which is so conspicuous 
 an item in the cost of modern business entet- 
 prise when it is conducted by private firms 
 or by joint-stock companies. Impressed by 
 this feature among others of a similar kind 
 characterising the age in which we live, a 
 recent writer has argued instructively that 
 economists, discoursing as they are wont 
 upon the 'cost' or 'expenses' of 'production' 
 of an article, should distinguish expressly 
 between the cost of actual manufacture, or 
 production, as that may be strictly called, 
 and the cost of selling, or marketing, the goods. 
 The latter, he urges with cogency, is becom- 
 ing more considerable than the former, and 
 deserves separate attention. The bearing of 
 this reasoning on the habit of Co-operators to
 
 154 CO-OPERATION AND 
 
 secure a market beforehand for the articles 
 they sell or produce is obvious. It is no less 
 plain that, in the cost of selling, the expense 
 of advertisement bulks in these days with 
 increasing promiaence and magnitude; and 
 the dexterous handling of this item so as to 
 curtail the required outlay tests, it will be 
 allowed, the capability of business managers. 
 A reduction of the charge is one of the econo- 
 mies Vvhich give Trusts an advantage in the 
 arduous struggle, now so evident, to win or 
 keep custom, and enable them, while obtaining 
 profit for themselves, to confer a corresponding 
 benefit simultaneously on the general public. 
 
 But not only can Co-operators, who dread the 
 Trusts as dangerous to their own and the com- 
 mon welfare, be advertisers of their store; they 
 are also prompted by the wish to preserve 
 and enlarge its trading connection to watch 
 jealously the quality of the goods supplied. In 
 their oavti interests as purchasers they are not 
 likely to countenance adulteration or imposture: 
 the additional motive furnished by the principle 
 of dividend on purchase should cause them to 
 cherish anxiously the fair repute of their society. 
 
 The same consideration, we may reasonably 
 suppose, should operate to make them take 
 a lively and continuing interest in the welfare 
 of those whom they employ. For, although they
 
 CO-PARTNERSHIP 155 
 
 themselves do not cease to be wage-earners 
 because they become Co-operators, they will 
 have in their service others who are earning the 
 wages which they pay; and they are in fact to 
 that extent both capitalists and employers. 
 
 For the good treatment of their employees 
 they have as forcible reasons as any which 
 can actuate a private employer or a joint- 
 stock company ; and, in addition, the prin- 
 ciple of dividend on purchase may bring home 
 to them still more vividly the great advan- 
 tage to be gained by ensuring that the manager 
 and his assistants should use their constant 
 efforts to maintain and develop the business 
 by their diligence and their efficiency, and 
 should at least send away no customer by 
 slackness or discourtesy. To achieve this 
 object it is necessary that the employees in 
 an undertaking should be neither unwilling 
 nor despondent workers; and, in fact, Co- 
 operators are wont to boast that their behav- 
 iour to those whom they employ is desei'ving 
 of especial praise. They have urged this 
 particular plea with strenuous insistence when 
 they have maintained the superiority of their 
 own system, by which the workman shares in 
 the profits gained as a consumer, to the scheme, 
 extravagantly lauded as they hold, under 
 which he would participate as a wage-earner.
 
 156 CO-OPERATION AND 
 
 It is, however, oa another argument that the 
 chief stress has been laid in the contrast drawn 
 between the profit-sharing practised by the 
 small societies of producers which exist with 
 the system of 'dividend on purchase' adopted 
 by the main body of Co-operators. The domi- 
 nant contention of the searching criticism 
 directed some years since against the few strug- 
 gling examples of 'self-governing workshops' 
 that could still be found by Mi-s Webb (then INIiss 
 Beatrice Potter) was that they were liable to 
 possess and display an exclusive spirit. Those 
 who distributed among themselves the profits 
 of the enterprise in which they were working 
 were not, she held, unlikely to reserve 
 jealously this privilege. In actual fact, she 
 showed, iji the absence of any strong economic 
 force working in the contrary direction, a 
 tradition nurtured by long custom, if not 
 founded upon reason, re-assumed its sway; 
 and the reprobated wage-system, ejected by 
 vhe front-door, entered again at the back. 
 
 Some of these societies, nominally profit- 
 sharing, had taken into their employment 
 additional workers, who were treated as ordin- 
 ary wage-earners and received no supple- 
 mentary bonus. But, without this significant 
 illustration of the abiding truth of the provei-b 
 dwelling on the persistence with which Nature,
 
 CO-PARTNERSHIP 15? 
 
 expelled by any instruments you may devise 
 and use, will return to thwart your most careful 
 plans, such profit-sharers betrayed no great 
 anxiety to enrol fresh members. Mrs Webb was 
 then justified in comparing what she was dis- 
 posed to stigmatise as an aristocratic taint in- 
 fecting these societies of producers with the 
 democratic comprehensis^eness which, by con- 
 tinually extending the trade of the store, aimed 
 at an increase in the number of those who 
 would receive the quarterly dividend. 
 
 It might perhaps be urged in retort that 
 Buch liberality could not claim the credit of 
 being purely altruistic. But, if the motives 
 by which it was produced were mixed, and 
 perhaps not wholly to be praised by stern 
 moralists, it is on the other hand perverse 
 to regret that economic considerations 
 should urge Co-operators to pursue a policy 
 which would place the advantages they have 
 to offer at the disposal of as large a number 
 as was possible. That result seems to be, as 
 Mrs Webb maintained, the normal outcome 
 of the recognition of the principle of distribut- 
 ing the profits among the consumers in pro- 
 portion to their purchases; while a restriction 
 of the benefits, if it is not a universal or a 
 necessary consequence of profit-sharing as 
 generally interpreted, is not unlikely to
 
 158 CO-OPERATION AND 
 
 suggest itself to the profit-sharers. It has, in 
 fact, found favour with some of the small 
 societies of producers organised at the outset 
 oa these lines. The criticism would seem less 
 applicable to cases where the adoption, 
 maintenance, and extension of the principle 
 are mainly dependent on the will of an employer 
 — a single individual or a firm — joining in co- 
 partnership with thosewhom he or they employ. 
 Co-operators, at any rate, who share the 
 views formulated by Mrs Webb, have framed 
 the large conception of the mass of work- 
 people, or even of the whole community, 
 participating as consumers in these dividends 
 on purchase; and this ultimate ideal has 
 appeared to them preferable to that which 
 Mill forecast. It has the advantage in their 
 eyes, which it may also possess in the judg- 
 ment of more detached observers, of affording 
 a wide scope for the development of Co- 
 operation without weakening the influence, 
 or superseding the functions, of Trade Unions. 
 For the latter would remain as the offensive 
 and defensive weapon of the workers as wage- 
 earners. While Co-operation might improve 
 greatly their position as consumers they would 
 not cease to require the strength derived 
 from combination, if they were to secure the 
 proper advances in their wages, and to resist
 
 CO-PARTNERSHIP 159 
 
 successfully any wrongful encroachment 
 which might otherwise be achieved. Those 
 necessaty barriers which collective bargaining 
 erects would be maintained intact, and they 
 would not be liable to be undermined, imper- 
 ceptibly perhaps, but none the less destruc- 
 tively, by the gradual sinuous advance of 
 profit-sharing, until they were finally removed. 
 
 Some bold theorisers, indeed, who have a 
 fancy for the rounded completeness of a precise 
 compact system, have prepared and submitted 
 a programme of the future of society in which 
 three varieties of collective action will have 
 their respective spheres duly assigned, and none 
 will be permitted to trespass on the province 
 appropriated to the others. In this neat 
 and complacent scheme Co-operation will guar- 
 antee the advantage of the consumer, Trade 
 Unions will shield producers from injury, and 
 State Socialism will occupy the gaps still left. 
 Such an orderly arrangement is probably too 
 smooth and perfect for ready adaptation to 
 the rough angles of the workaday world. 
 
 But in the present condition of affairs, 
 under the actual practice of Co-operation, 
 the co-existence of Trade Unionism is an 
 imi)ortant factor which cannot be left out 
 of the account in any study which pretends 
 to completeness. The two movements have
 
 160 CO-OPERATION AND 
 
 some close and obvious ties of connection. 
 Their membership corresponds in a large 
 degree, and it is probable that no dissimilar 
 influences produce the vicissitudes of their 
 varying fortunes. The districts and industries, 
 where Trade Unions are most powerful, offer 
 a favourable sphere for Co-operation; and vice 
 versa, where the latter movement has not 
 obtamed much hold, the former is not unlikely 
 to be weak or to be non-existent. Both make 
 their chief appeal to, and draw their main sup- 
 port from, the more prosperous of the working 
 classes; neither could or would deny the im- 
 peachment of seeking and using for all that it is 
 worth the power derived from joint action. 
 
 Yet the possibility of collision between them 
 must be contemplated, if its likelihood can be 
 diminished by timely and expert diplomacy. 
 For even supposing that the workman be at 
 the same moment a wage-earner with his Trade 
 Union to protect him, and a consumer with 
 Co-operation in the shape of his retail dis- 
 tributive store or the Wholesale Society to 
 supply him with what are in effect cheaper 
 goods than he can procure at the ordinary shops, 
 his interest as a wage -earner may seem, and 
 may actually be, greater than his interest as a 
 consumer. And, if he be employed in a Co- 
 operative undertaking, his immediate obvious
 
 CO-PARTNERSHIP 161 
 
 advantage or disadvantage as wage-earner may 
 clash with his less distinct and more prospective 
 disadvantage or advantage as consumer. 
 
 It is a significant rule, not uncommonly ob- 
 served in the practice of Co-operators, that 
 employees should not be allowed to serve on 
 the committee of the society by which 
 they are employed. The reason is obvious. 
 Discipline might be difficult to enforce if the 
 interests of the committee man and the 
 workman came into sharp collision and a 
 judicial attitude would be impossible. Not 
 only have disputes between employers and 
 employed occurred in Co-operative estab- 
 lishments, but a curious, more complicated 
 situation has also been presented. A strike 
 has been declared in some productive under- 
 taking of the Wholesale Society by those 
 who, as members of the retail distributive 
 stores, which are shareholders in the Whole- 
 sale Society, are themselves concerned ijidi- 
 rectly in an increase of the balance between 
 the ijacome and expenditure of that society. - 
 
 Co-opeiators, nevertheless, pride themselves 
 generally on their spontaneous recognition of 
 the chief aims for which Trade Unions have 
 been formed. They emphatically profess that 
 their employees must be treated well; and 
 they commonly declare that their rule is to
 
 162 CO-OPERATION AND 
 
 pay "Prade Union or even higher rates of wages. 
 The two bodies ostensibly cultivate friendly 
 relations, and there are no valid grounds in 
 theory or in fact for regarding this external atti- 
 tude as incongruouswith their inner disposition. 
 On the contrary there is the further link 
 between them that both are democratic in 
 origin and constitution, inmethods, and in aims. 
 The idea still prevalent in some circles which 
 pictures a number of workmen, amicably dis- 
 posed towards their employers, being ignorantly 
 misled into a gratuitous quarrel provoked per- 
 versely by the autocratic dictation of a small 
 oligarchy of irresponsible leaders, is a travesty 
 and a caricature rather than a ti-ustworthy and 
 precise account of the habitual conduct of trade 
 unionists. The opportunities lent thereby for 
 the lively portraits, the dramatic contrasts, and 
 the piquant situations favoured by novelists and 
 reporters have given currency to such a concep- 
 tion, and sometimes the sharj^ly drawn and 
 highly coloured representation has not been 
 noticeably untrue to the conspicuous facts. 
 
 But it is perhaps more generally the case 
 that the restraining hands of the leaders are 
 forced by the irresponsible eagerness or the 
 passing passion of their followers; and in any 
 event in most large unions the decision to 
 strike depends on a vote in which all the
 
 CO-PARTNERSHIP 163 
 
 members of the union can take part if they 
 will. In many instances it has been definitely 
 provided that the majority in favour of a 
 certain course of action must amount to a 
 prescribed proportion, exceeding a half or 
 more, of the total number voting or belong- 
 ing to the association. 
 
 A spirit similarly democratic pervades the 
 politics of Co-operation. Committees popu- 
 larly elected govern the stores and choose 
 the manager. The accounts are submitted 
 to, and scrutinised by, the general body of 
 the members, with whom the ultimate 
 settlement of the quarterly dividend rests. 
 The responsibility of the manager is no doubt 
 very great, and much should be left to his dis- 
 cretion. On his foresight and judgment the 
 question of success or failure must largely 
 depend. But the committee remain legally re- 
 sponsible to the members for the conduct of the 
 business ; and, apart from the occupancy of any 
 professional position or official rank, there is 
 ample opportunity in the ordinary life of Co- 
 operators for the efficient performance of duties 
 which constitute a training in citizenship. 
 
 An acquaintance with affairs can thus be 
 gained, and an aptitude for business can be 
 developed, which will prove of service in the 
 larger public life of the district or the country
 
 164 CO-OPERATION AND 
 
 as a whole. The same quaUfications thus 
 acquired may facihtate the effective handhng 
 of the more difficult problems raised by the 
 initiation and direction of considerable pro- 
 ductive enterprises. It can hardly be ques- 
 tioned that, as it is, in the Co-operative 
 movement as a whole, no small amount of 
 business talent of a high order is engaged; 
 and the question on which stress has been 
 pertinently laid since Mill's time of finding 
 adequate substitutes for the employer in the 
 ranks of the employed should be reviewed 
 in the light of the figures of the trade now 
 successfully conducted by the Co-operative 
 Wholesale Society. The favourable condition 
 of a market ensured beforehand must not of 
 course be forgotten; but during the remark- 
 able progress made successfully by Co-opera- 
 tion on the lines we have noted, it is true that 
 the men for whom the circumstances have 
 called have not failed to be forthcoming. 
 
 The encouragement to thrift offered by the 
 'Rochdale plan' of 'dividend on purchase* 
 must now be considered, for it is a recom- 
 mendation of that device. It has been said 
 that Co-operators have been persuaded or 
 compelled to save without noticing the 
 process. They practically effect a saving 
 when they buy their goods at the stores,
 
 CO-PARTNERSHIP 165 
 
 and m reality they obtain them at a cheaper 
 rate. But, if they received back in driblets at 
 the time the money which is thus saved, they 
 might very probably yield to the temptation 
 to spend it on some fresh purchase. Coming 
 in the larger quantity at the payment of 
 the quarterly dividend it is far more likely to 
 seem worth while to lay it by. 
 
 In fact, the subsequent difficulty of 
 finding suitable channels of sufficient width for 
 the advantageous investment of the savings 
 of their members appears to have become 
 more pressing with Co-operators than the 
 initial task of inducing the stream of accumu- 
 lation to start upon its course. The substitu- 
 tion of cash-payments for credit given and 
 received tends to swell its volume. For, on 
 the one hand, it checks the extravagance of 
 running into debt and bearing its increasing 
 burden, and, on the other, it should diminish 
 the expense of book-keeping and of writing off 
 from time to time debts which have proved to 
 be bad. Thus both the store as a whole, and 
 the members as individuals, should derive 
 benefit from that disuse of credit, which was 
 certainly an integral part of the old ideal 
 cherished by Co-operators, and belonged in- 
 deed to the machinery by which the dividend 
 on purchase was to be produced.
 
 166 CO-OPERATION AND 
 
 In their present practice, however, it must 
 be admitted that Co-operators seem to have 
 left behind this counsel of perfection, and, 
 while many consider the departure to be 
 gratuitous and deserving of the strictest cen- 
 sure, others regard it as a regrettable neces- 
 sity, if it is not a harmless and convenient 
 innovation. The entire avoidance of the 
 slightest amount of credit may be difficult 
 to achieve. But, on the other hand, it is not 
 easy to set limits to the habit, if it once be 
 countenanced ; and this lapse from pure Co- 
 operative principle may not unreasonably be 
 held to have a connection, direct or indirect, 
 with the failing commonly attributed both by 
 friends and foes to the system the merits of which 
 we have hitherto been recording. The ob j ection 
 is expressed in the reproach of 'dividend-hunt- 
 ing' raised in Co-operative circles and outside. 
 
 The persons thus stigmatised are considered 
 by the orthodox to fall short of the Co- 
 operative faith, while they seize all the 
 advantage they can get from the oppor- 
 tunities offered to their greed by Co-opera- 
 tive practice. They care naught, accord- 
 ingly, for the lax or injurious bestowal of 
 credit, unless the dividend should be pre- 
 judicially affected. Their view of this matter 
 is likely to become short-sighted ; and the
 
 • CO-PARTNERSHIP 167 
 
 evil consequences of credit in the shape or 
 bad debts will not be immediately apparent. 
 Their attitude here is typical of their general 
 disposition. Their one object of pursuit is 
 the dividend, which they wish to be as high 
 as possible. They rejoice at its increase 
 whatever be the cause; they complain 
 loudly and unreasonably of any diminution 
 to whatever source that may be traced. 
 
 A high dividend, it requires little discern- 
 ment to discover, may be due to different 
 causes. It may be the subject of legitimate 
 congratulation when it is the natural result 
 of a larger trade, which has not been arti- 
 ficially induced ; nor is it to be deprecated 
 when it is the consequence of the introduction 
 of some appropriate economy, or of the oppor- 
 tune exhibition of efficiency. But, as it is the 
 difference between the incomings and the out- 
 goings, an apparent improvement may prove 
 in reality a change for the worse. Insuf- 
 ficient depreciation of stock, or of machinery, is 
 one of the most common expedients to which 
 incapable or dishonest business-managers 
 resort in their desperation when they 
 want to produce a balance sheet which will 
 satisfy. The giatification caused by the de- 
 creased expenditure may in fact be short-lived, 
 for the risk of eventual bankruptcy has
 
 168 CO-OPERATION AND 
 
 been brought nearer. But for the moment 
 the accounts will probably pass muster. 
 
 Or, again, the dividend may be raised by 
 another variety of false economy. The wages 
 of the employees may be reduced, and the 
 fall of expenditure, temporarily successful, 
 may prove in the long run an injudicious or 
 even a disastrous policy. It is the powerful 
 temptation to this unwise course Ciffered 
 by 'dividend-hunting' which has emphasised 
 in the minds of some Co-operators, and of 
 external observers of the movement, the 
 continuing necessity for Trade Unions ; 
 while others, criticising from within and from 
 without, have made no secret of their strong 
 opinion that the satisfactory treatment of the 
 employees is a matter which Co-operation, in 
 spite of much high promise and some good per- 
 formance, has still to re-consider. They must, 
 it is maintained, be linked more closely than 
 they are at present to the fortunes of the stores. 
 
 A danger, which is more special to Co- 
 operation, and does not concern the general 
 relations of employers to employed, will be 
 found in another shape. The increase of 
 the dividend, so indiscreetly wished and 
 asked by pseudo-Co-operators, may be the 
 outcome of excessive prices. It is here that 
 the direct connection of the grant of credit
 
 CO-PARTNERSHIP 169 
 
 with the evil habit of 'dividend-hunting' is 
 discovered. For the cost of giving credit may 
 provoke or excuse the adoption of high prices. 
 According to the 'Rochdale plan,' as originally 
 schemed, the prices fixed should be the ordin- 
 ary retail prices of the neighbourhood. An 
 endeavour to attract custom may of course 
 tempt managers, or committees, to lower the 
 prices asked; and this action defeats, it is clear, 
 the intentions of the 'plan.' But the conse- 
 quence of raising prices unduly may be as bad. 
 For, while such conduct seems to ensure the 
 large dividend which gratifies' dividend-hunt ers, ' 
 it may prove in the long run equally prejudicial 
 to the cause. For it postpones or renders im- 
 possible the removal of what most observers — 
 both inside and outside the movement — have 
 considered its chief defect. That Co-operation 
 has hitherto failed to reach the very poor must 
 be admitted, in spite of occasional experiments 
 made with this object. Some little while ago 
 the town of Sunderland was the scene of a 
 notable attempt, which was not unsuccessful, to 
 embrace this class of the population. They 
 might well be thought to require most urgently 
 the help that Co-operation could provide in 
 easing the burden of their poverty. But cheap, 
 or at any rate reasonable, prices seem indispen- 
 sable to an essay in this direction.
 
 170 CO-OPERATION AND 
 
 As it is, it must be confessed that the upper 
 and middle rather than the lower ranks of the 
 workers furnish the main clientele of the Co- 
 operative movement in this country. Some of 
 its prominent adherents might receive from 
 unfriendly Socialists the opprobrious designa- 
 tion of 'bourgeois'; and of the working-class 
 Co-operators the majority not improbably 
 belojig to what would be correctly called the 
 'aristocracy' of that section of society. Re- 
 garded from this standpoint at least the day 
 does not seem very near when Co-operation will 
 have brought its advantages to the whole body 
 of consumers. The ' Rochdale plan,' despite of 
 its great success, invites suspicion or provokes 
 exj)osure if it pretends to be a panacea. 
 
 CHAPTER X 
 
 THE WnOLEPALE SOCIETY CO-OPERATIVE PRODUCTION. 
 
 OTIIEU DEPARTMENTS OF THE MOVEMENT 
 
 From the retail distributive stores to the 
 Wholesale Society was a step which it was 
 natural, if it was not necessary, for Co- 
 operators to take. It was dictated by two 
 considerations. On the one hand, the retail 
 societies did not understand how to deal with 
 the intricacies of the wholesale market; and, 
 acting separately, they raised the prices of 1 
 the goods they were bound to buy against
 
 CO-PARTNERSHIP 171 
 
 themselves unnecessarily by competing with 
 one another. On the other hand, the private 
 shopkeepers, anxious to restrain, or even to 
 abohsh, if it were possible, the business of the 
 Co-operative stores, attempted to induce the 
 wholesale traders with whom they dealt to 
 boycott the new competitors by refusing to 
 supply them with the articles they needed. 
 
 But these two motives, powerful as they were, 
 could not produce the result which might have 
 been expected until an obstacle in the way had 
 been withdrawn. For the necessary help of en- 
 abling legislation the Co-operative movement 
 was indebted to the zeal and skill of prominent 
 Christian Socialists. The Industrial and Pro- 
 vident Societies Acts of 1852 and 1862, secured 
 by their efforts, constituted in a sense the 
 ' charter * of Co-operators ; and the later 
 measure, which permitted one Co-operative 
 society to hold shares in another, was followed 
 almost immediately by the formation of the 
 North of England Co-operative Wholesale 
 Industrial and Provident Society. 
 
 The conference at which Abraham Green- 
 wood submitted his scheme for the fresh 
 development, that was destined to be only 
 second in importance in the history of the 
 movement to the action of the Rochdale 
 Pioneers taken some twenty years before, was
 
 172 CO-OPERATION AND 
 
 held in Oldham at the Christmas of 1862 ; 
 the new 'wholesale agency' M'as registered in 
 1863, and commeneed business at Man- 
 chester in 1864 ; and by 1873, when its de- 
 scription was abbreviated to that of the 
 ' Co-operative Wholesale Society ' (kno%m 
 familarly to Co-operators as the 'C.W.S.'), 
 a branch for selling had been opened at 
 Newcastle-on-Tyne, and for buying at Tip*- 
 perary, a banking department had begun 
 operations, and two productive works, one 
 for biscuits at Crumpsall, and the other for 
 boots and shoes at Leicester, had been pur- 
 chased. The Scottish Wholesale Society had 
 also been registered and had initiated its 
 trading operations in 1868. By 1904. the two 
 societies were employing more than 15,000 
 workpeople, and using nearly £2,400,000 of 
 capital, while the value of their productions at 
 cost price was estimated to be some £5,700,000. 
 The ' productive wages' alone they were paying 
 were reckoned to amount to £744,485. 
 
 At the end of half a century from its 
 foundation it is safe to prophesy that the 
 'turnover' of the English Co-operative Whole- 
 sale Society will not fall short of thirty 
 million pounds, and some authorities declare 
 that a figure of forty millions is not an exces- 
 sive forecast for the year 1920. As a matter
 
 CO-PARTNERSHIP 178 
 
 of fact, the Society has recently begun the 
 celebration of its 'jubilee' by the issue of 
 a volume in which its 'story' is narrated. 
 While the first completed year (1865) saw net 
 sales of £120,754 and a capital of £7182, the 
 fifty-three weeks of 1912 gave as corresponding 
 figures £29,732,154 and £8,055,473. For the 
 whole period of its existence the net sales 
 amounted, so it was reckoned, to nearly five 
 hundred million pounds and the net profit in the 
 trade department to £7,819,083. In October, 
 1912, the Society had 21,210 permanent em- 
 ployees engaged in ' scores of tra des and callings.* 
 The Christian Socialists may be said to have 
 been partly responsible for this astonishing 
 new gro%vth : for, as we have noticed, they 
 secured by their advice and exertions the 
 Acts of 1852 and 1862. That important 
 legislation, besides permitting the Wholesale 
 Society, guaranteed the protection of the 
 money of the stores one and all from em- 
 bezzlement by fraudulent officials. The 
 success of the fresh departure may, indeed, be 
 chiefly traced in its turn to the cause to which 
 the prosperity of the older institutions was 
 mainly due. It was the 'Rochdale plan' of 
 selling at the ordinary market prices, and of 
 dividing the 'fund usually knoMTi as profit* 
 among the purchasers, which was adopted by
 
 174 CO-OPERATION AND 
 
 the English Wliolesale Society, after a brief 
 trial of the method commonly in vogue in 
 the transactions of wholesale and retail 
 traders with one another. 
 
 The Scottish undertaking followed suit in this 
 respect. It parted company from the English, 
 when it introduced in addition the practice, 
 which it continues to observe, of distributing a 
 bonus on their wages to those whom it employs. 
 The English Society tried this system, but 
 abandoned it because it was not satisfactory. 
 In the Scottish Society the bonus bears the 
 same relation to the wages as the dividend to 
 thepurchases,but one-half is retained and placed 
 in a fund. The Society also admits its em- 
 ployees to membership, and compels such to 
 take up shares, while it gives them certain 
 voting power. The membership of the English 
 Society is, by contrast, confined to retail dis- 
 tributive societies alone. Its dealings are 
 limited to them, and they must take up shares. 
 But, while such members receive a whole divi- 
 dend, to non-members half a dividend is given. 
 The practice of the Scottish Society in this last 
 respect is similar. Both societies strive, as they 
 profess, to reach a high level in the general con- 
 ditions of employment, and both make grants 
 for various charitable and propagandist pur- 
 poses connected with the movement.
 
 CO-PARTNERSHIP 175 
 
 The Wholesale Societies have grown by 
 an inevitable but safe process from the 
 original retail distributive stores. They have 
 come into being in response to an imperative 
 demand, which they have satisfactorily met. 
 The two developments are thus complementary 
 to one another, and lend, as they receive, mutual 
 support. The retail stores, in effect, guarantee 
 a market for the wholesale societies; and the 
 latter, in their turn, furnish the means by which 
 the former can feel a confidence they could not 
 otherwise attain that a supply on reasonable 
 terms will be forthcoming of the goods they 
 want. Both departments thus fit into one 
 another, or, in other words, they ' co-operate.* 
 
 It is true that the retail stores do not buy 
 exclusively 'C.W.S.' goods ; and it may 
 also be said that the Wholesale Society 
 cannot yet offer for sale everything that the 
 distributive societies need. Accusations of 
 disloyalty have been advanced against the 
 stores in reference to the bestowal of their 
 custom in other quarters than the Wholesale 
 Society, just as individual members of the 
 retail societies have been rebuked for going 
 to the ordinary traders for some goods 
 instead of purchasing at the stores. But, 
 while the self-sufficiency of the whole body 
 may be destined to remain an unattained
 
 176 CO-OPERATION AND 
 
 ideal, the ' Rochdale plan ' can be seen at work 
 exerting its binding power no less unmistakably 
 throughout the larger area than in the smaller 
 original sphere of its operations. 
 
 From the figures we have quoted it may be 
 gathered that the statistical record of the 
 productive business of the Wholesale Society 
 is as eloquent of a remarkable advance as 
 are the amounts of its sales alone; and the 
 line which parts distribution from production 
 has not proved to be more impassable by 
 Co-operators than by other people. The 
 work of production, as a whole, is no doubt 
 correctly represented as involving more con- 
 spicuous, if not more considerable, hazard than 
 the work of distribution. The possibilities of 
 error are more numerous and more subtle: 
 the consequences of a mistake are graver and 
 more extensive. The position of the business- 
 managers involves greater responsibilities; and 
 the qualities of courage and discretion, of cool 
 judgment combined with boldenterprise, should 
 be o\vned and used by those who would win 
 success and avoid discomfiture in this region. 
 
 It may thus be admitted that the replace- 
 ment of the individual employer becomes more 
 difficult, and the discovery of satisfactory sub- 
 stitutes is less easy, in what is generally distin- 
 guished as production than in distributive trade,
 
 CO-PARTNERSHIP 177 
 
 whether wholesale or retail. But the most 
 menacing obstacle which impedes the passage 
 from the one to the other is removed, when, 
 as in Co-operation, the market is secured. 
 
 The antithesis accordingly expressed in the 
 frequent assertion that 'Co-operative Pro- 
 duction has failed while Co-operative Distri- 
 bution has succeeded' should be revised in 
 the light shed by accomplished facts. Econ- 
 omists, and others who have argued thus, 
 have understood by 'Co-operative Production' 
 what Mill meant when he predicted the prob- 
 able future of the labouring classes. They have 
 contemplated a system under which, with the 
 employer banished from the field of action, the 
 workmen actually engaged in the industry con- 
 cerned would realise full 'co-partnership,' by 
 combining in their persons, not merely Labour 
 and Capital generally, but also the direction 
 and management of the particular business. 
 
 Such an arrangement can be found existing 
 in some districts of the area now embraced by 
 the productive enterprises under the control 
 of Co-operators. But the self-governing 
 workshops occupy small 'enclaves' compared 
 with the whole territory which is covered. 
 Some of them do not adhere with strictness 
 to that principle approved by Mill, and 
 advocated by the Christian Socialists, of
 
 178 CO-OPERATION AND 
 
 distributing all the profits among the actual 
 workers, which was to stay industrial quar- 
 relling and to raise the wage-earner to inde- 
 pendence. Nor is their success very definite 
 or extensive. ' Co-operative Production,' thus 
 interpreted and illustrated, may, without 
 apparent injustice, be pronounced a comfjara- 
 tive ' failure ' at the present, whatever destiny 
 await it in the future. It has, at any rate, 
 not succeeded in the ifiission assigned to it 
 by the sanguine horoscopes of the middle of 
 the nineteenth century. It has not yet 
 regenerated the industrial world of England or 
 of any other country : it has not "^Tought the 
 transformation which was confidently pre- 
 dicted. But its limited achievement may have 
 served a useful purpose; and it may not only 
 have yielded some spiritual satisfaction but also 
 brought some material advantage to those few 
 persons who have come within its influence. 
 
 Yet the bulk of the productive enterprise 
 attempted and accomplished by Co-operators 
 in this country has proceeded on the 'Roch- 
 dale plan' of a 'dividend on purchase.* It 
 has been started, and is now conducted, on 
 * f ederalistie ' lines, for it is in the hands of 
 the two Wholesale Societies. It is true that 
 the Scottish Association combines the prin- 
 ciple of profit-sharing, in the shape of a
 
 CO-PARTNERSHIP 179 
 
 bonus upon wages paid to its employees as 
 producers, with the other form of appHeation 
 of the principle which divides the profit among 
 the purchasers as consumers; and this society 
 also admits some of its workers to membership, 
 placing them thus in the position of employers 
 of themselves, or at least giving them some 
 power of electing representatives on the com- 
 mittee of management. 
 
 It is also true that some of the retail dis- 
 tributive stores have engaged in some minor 
 productive undertakings. But this last fact 
 illustrates the fineness of the line severing 
 the two kinds of business; and the English 
 Wholesale Society wholly disapproves of the 
 practice of a bonus upon wages, which it has 
 discarded, while that plan cannot be said to be 
 viewed with favour, or adopted otherwise than 
 sparsely, by the retail stores in their essays at 
 production. There is then no marked distinc- 
 tion between the methods of productive and 
 distributive industry and trade as they are 
 in the main now pursued by Co-operators in 
 this country. 
 
 Nor can any irremovable contrast be 
 definitively drawn between their respective 
 fortunes. The 'Rochdale plan' is at the 
 moment predominant in both, and the one 
 has led as naturally to the other as the retail
 
 180 CO-OPERATION AND 
 
 societies suggested and required the estab- 
 lishment of the wholesale. Given the favour- 
 ing condition of the prior existence, or 
 concurrent opening, and continued main- 
 tenance, of a sufficient market readily acces- 
 sible, there seems to be no a priori reason in 
 theory why Co-operators should not have 
 won the success, which is attested a posteriori 
 by their recorded practice, in organising the 
 production of some of the articles most com- 
 monly demanded by working men and women 
 and their families. They might even be 
 regarded as taking a valuable, if uncon- 
 scious, lesson from the procedure of those 
 Trusts, which they reprobate as an ominous 
 sign of the times, menacing the well-being of 
 the. general public, and threatening the con- 
 tinued prosperity of Co-operation. 
 
 For those combinations of capital, it has been 
 shown, are likely to be most powerful and lucra- 
 tive when they bring under one control the suc- 
 cessive stages of manufacture from the extrac- 
 tion of the raw material to the delivery of the 
 finished goods. Such 'vertical' combinations, 
 as they have been called, have been recom- 
 mended in preference to the 'horizontal' 
 varieties which seek to include alone in their 
 directing sway all, or most, of the undertakings 
 dealing with one stage in the productive
 
 CO-PARTNERSHIP 181 
 
 process. Co-operators, however, fear with most 
 reason the Trusts which have arisen in distri- 
 butive trade, wholesale and retail ; and those 
 combinations have, in actual fact, trium- 
 phantly applied their energies to the costs 
 of selling or marketing as compared with 
 those of strict manufacture or production. 
 
 If a distinction, then, of any substantial 
 or abiding significance can be drawn, it has 
 been pertinently proposed that 'associations 
 of producers' might be set against 'associa- 
 tions of consumers.' The former would repre- 
 sent the type embodied in those 'self-govern- 
 ing workshops,' unreservedly admired by 
 Mill, which, in some instances, were started 
 on their ephemeral career by the Christian 
 Socialists. The latter would coincide with the 
 main body of Co-operators that we know. 
 
 To those small societies of producers we shall 
 turn our attention again when in a subsequent 
 chapter we review the facts of the past 
 history and the present state of Co-partner- 
 ship. But we have already hinted that the 
 antique model fashioned affectionately by 
 early enthusiasts has given way to hybrid 
 varieties. We shall discover that, while the 
 later advocates of Co-partnership enumerate 
 essential marks which must not be omitted on 
 pain of disqualification, they may be combined
 
 182 CO-OPERATION AND 
 
 in varying proportions with the famihar 
 arrangements of the ordinary wages-system. 
 
 What it is now more relevant to notice is that 
 the associations of consumers offer the advan- 
 tn.ge of a known market to the associations of 
 producers, of whom they are, in fact, the best 
 customers; and, en revanche, they generally fill 
 the role of shareholders under the mixed system 
 which usually prevails and participate in profits, 
 while the small productive societies themselves 
 often give also a dividend to purchasers as well 
 as to labour. 'Producers and consumers,' it 
 has then been observed with significant instruc- 
 tiveness, 'merge in one association and are 
 very frequently the same individuals.' 
 
 Other illustrations of Co-operative activity 
 call for less prolonged consideration. The 
 Co-operative Union is mainly responsible for 
 education and propaganda. It was the pro- 
 duct of the first of what has now become a 
 long series of Co-operative Congresses. That 
 Congress, held in London in 1869 under the 
 presidency of Mr Thomas Hughes (the author 
 of the famous Tom Broxvn's Schooldays and 
 one of the band of Christian Socialists), set 
 on foot the formation of an Executive Com- 
 mittee, which in 1873 became a 'Central 
 I?oavd,' and in 1889 was re-constituted and 
 registered as the 'Co-operative Union.'
 
 CO-PARTNERSHIP 183 
 
 In effect the Union was to be responsible 
 in the interval between the annual congresses, 
 which it arranged, for somewhat the same 
 stimulating, surveying, and superintending 
 work as that intended for the Congresses 
 themselves. For many years Mr Edward Van- 
 sittart Neale (also a Christian Socialist) acted 
 as Honorary General Secretary of the Union. 
 He was not the least conspicuous member 
 of a group of able, generous, enthusiastic 
 men, who, belonging themselves to other 
 ranks of life, gave much time and labour, and, 
 in some instances, consecrated, in no unstin- 
 ted measure, a large portion of their wealth, 
 to the service of the working-classes in the way 
 which they considered the most open to them- 
 selves and the most useful to their friends, 
 namely, the advancement of Co-operation. 
 
 The movemejit has in fact during a great 
 part of its prosperous history enjoyed the 
 advantage of the favourable countenance of 
 popular opinioji. It has been praised by 
 statesmen and approved by journalists. 
 Economists besides Mill, both on the grounds 
 which he selected, and for other reasons, have 
 given it a prominent place in their treatises, 
 and have been perhaps more ready to eulogise 
 its undoubted m.erits than to expose or blame 
 its possible defects. Some of this high repute
 
 184 CO-OPERATION AND 
 
 may have been due to the misunderstandings 
 we have examined; and the fresh distri- 
 bution of emphasis, which might be expected 
 from a corrected view, Mould probably dis- 
 turb the unanimity of the verdict. Co- 
 operation would nevertheless still remain, in 
 a real sense, the 'social marvel' which it was 
 called by so shrewd and informed an admirer 
 as Mr Gladstone, and be esteemed accordingly. 
 
 Yet it is worthy of note that, while in bygone 
 days the chosen Presidents of the Co-operative 
 Congresses were more frequently eminent public 
 men, sympathetic to the movement, who judged 
 it from outside, it has latterly become the 
 custom to select practical experienced Co-opera- 
 tors whose knowledge, acquired inside, is likely 
 to be more intimate, if it is less detached. 
 
 This change may be treated as significant: it 
 is probably no less salutary than it is inevit- 
 able. With the development of the movement 
 the men of mark, of whom it can boast, bred 
 within its ranks, have become more numerous, 
 and the general body of members is moreanxious 
 to pay them their due meed of honourable dig- 
 nity. It is also less necessary or less desirable 
 than it was to seek from external sources, in the 
 recommendation of some personage of distinc- 
 tion in the outer world, the evidence of the im- 
 portant place Co-operation fills. Nor, lastly, is
 
 CO-PARTNERSHIP 185 
 
 it fanciful to think that, as the number and 
 variety of its interests grows, there are more 
 questions which require expert discussion. A 
 movement, which has always claimed with good 
 reason, to be practical, is not likely, and cannot 
 afford, to let that distinguishing characteristic 
 become less prominent ; and Co-operators, who 
 have been justifiably proud of their use of the 
 admirablequality of se]f-help,may appropriately 
 exhibit greaterindependence in their ripematur- 
 ity than in their callow youth. If any movement 
 should be able to stand alone on its own feet, 
 without support from others, Co-operation 
 should aspire to that honourable posture. 
 
 Of the value, however, of the long service of 
 Mr NealeasSecretary of the Co-operative Union 
 no loyal Co-operator could entertain a doubt. 
 By bis indefatigable industry, his wise insight, 
 and his organising skill, he brought that repre- 
 sentative institution into the place of honour 
 and utility which it now occupies. Its work, as 
 we have remarked, has been described as educa- 
 tional and propagandist. Some Co-operators 
 have called it the 'brains,' others have spoken 
 of it as the ' heart,' of the movement. 
 
 By its competent and judicious efforts it 
 has succeeded in improving the legal status 
 of Co-operative societies and their members. 
 With its model rules it assists new stores
 
 186 CO-OPERATION AND 
 
 when they are starting. With its skilled 
 advice, ready to respond to all appeals, it 
 prcseiTes old stores from disaster. It has, for 
 instance, attempted with success to limit, or 
 avoid, the waste of energy caused by 'over- 
 lapping,' where a second store is being need- 
 lessly established within the area fully 
 covered by an existing store. Together with 
 the Wholesale Society it facilitates efficient 
 auditing. Its manuals aid correct book- 
 keeping. Its spea,kers and its literature 
 spread the knowledge and extend the prac- 
 tice of Co-operation, and it has devised and 
 put into working an elaborate and considered 
 scheme of methodical instruction. This 
 includes subjects of such practical impor- 
 tance to Co-operators as book-keeping, and 
 of such vital interest to them as the history, 
 the principles, and the practice of Co-operation. 
 But it also comprises topics of broader scope, 
 like industrial history, citizenship, and econ- 
 omics. The activities of the Union, which is 
 constituted on a basis of careful representation 
 of the different districts of the comitry may be 
 summarised, if a single comprehensive epithet 
 be sought, as 'missionary' in character. 
 
 A similar place in the propaganda of the 
 movement has been taken, more recently, by 
 the Women's Guild, while the Co-operative
 
 CO-PARTNERSHIP 187 
 
 News is its official organ in the Press. More 
 intimately connected with the detailed prac- 
 tical development of Co-operation are such 
 matters as insurance, house-building, and 
 banking. In these directions, too, Co-opera- 
 tors have put their animating principle to the 
 test. They have ' worked together.' In some 
 departments they have achieved already a 
 growth which would have gratified, though it 
 might perhaps have astonished, the Rochdale 
 Pioneers of 1844. In others they have not yet 
 reached the standard set by the large con- 
 ceptions and the lofty aspirations of that re- 
 markable body of bold but wise reformers. 
 
 In the following chapter we shall review the 
 work of Co-operation in agriculture. There, 
 as we shall see, more notable successes have 
 hitherto been won in other countries than in 
 this. But immense benefit has been brought, 
 and a conspicuous triumph admittedly secured, 
 in Ireland by such means. Co-operation has 
 there assisted at a new ' agrarian revolution.* 
 
 CHAPTER XI 
 
 CO-OPEBATION AND AGRICULTURE 
 
 Large as has been the achievement of 
 Co-operation conducted on the 'Rochdale 
 plan' in this and in other countries which 
 have followed the example set, the
 
 188 CO-OPERATION AND 
 
 performance that the movement can place 
 indisputably to its credit has not yet 
 overtaken the ambitions entertained in 1844 
 by the ' Equitable Pioneers.' Regarding 
 merely the design of some of the objectors 
 to the customary method of profit-sharing, 
 whose enthusiastic confidence in the superior 
 merits of their alternative, practised by the 
 main body of Co-operators, looks forward to a 
 time when all consumers, or at any rate all those 
 belonging to the working-classes, or to the 
 ranks of wage-earners, will receive ' dividends' 
 on their 'purchases,' that day is still distant. 
 Co-operation confessedly has failed to reach 
 the very poor; and the means suggested for 
 the removal of some obvious obstacles might 
 be criticised in their turn as hindering the 
 full realisation of the 'Rochdale plan.* The 
 poor, it would seem, must be attracted by 
 low prices placed upon the goods they buy, 
 and they must not be deterred by any costly 
 obligation to become shareholders in the 
 stores. Yet there con be 'no dividend oxi 
 purchase' in the Rochdale sense, unless the 
 prices charged are as high as those demanded 
 at the ordinary shops in the neighbourhood; 
 and the additional link binding the member 
 to the store by the possession of one share 
 at least would appear to be a tie to be desired.
 
 CO-PARTNERSHIP 189 
 
 if it be not made an indispensable condition. 
 Its acquisition, however, it has been suggested, 
 could be eased by payment in instalments. 
 
 Many Co-operators, again, feel dissatisfied 
 with the present relations of the societies 
 to their employees. They may willingly 
 acquiesce in, or they may cordially approve 
 of, the formation of an Amalgamated Union 
 to defend and advance the interests of their 
 servants; but their uneasiness could only be 
 removed were some practicable means dis- 
 covered of making those in their employment 
 sensible that they and their employers were 
 bound together by some closer, more enduring 
 bond than the common 'cash-nexus' con- 
 necting wage-payer with wage-receiver. No 
 solution of this difficulty could perhaps be 
 found apart from the adoption of some variety 
 of the profit-sharing which such Co-operators 
 generally deprecate or distrust^ the problem 
 nevertheless is being anxiously considered, and 
 has occasioned some misgiving on the future. 
 
 Apart from these two special questions, 
 there are districts both in England (and Wales) 
 and in Scotland where comparatively few stores 
 exist, and there are also industries in which Co- 
 operation has as yet brought within the range 
 of its influence as consumers but a sparsenumber 
 of the workei s. Formidable and even terrifying
 
 190 CO-OPERATION AND 
 
 rival as it may appear in many places to the 
 small private tradesman, his extinction, it is 
 likely, is at the present moment more seriously 
 tlireatened by those large combinations in the 
 distributive trade, which are not conducted on 
 Co-operative principles in any other matter 
 except the general observance of the inexpen- 
 sive practice of cash-payments. The credit, it 
 is true, given normally by the independent 
 shopkeeper to his customers has an attrac- 
 tive power which cannot be ignored; and in 
 seasons like a strike it may lend no ineffective 
 aid to workmen in their resistance to the pres- 
 sure caused by discontinuance of their wages. 
 We have seen that the convictions even of 
 the members of Co-operative stores upon this 
 subject, however firmly held by some indivi- 
 duals, have not been able to avoid altogether 
 inconsistency in their conduct as a body. 
 
 Nor, again, have the productiv^c enterprises 
 of the wholesale and the small societies, and the 
 minor performances of the retail stores in this 
 dhection, become so comprehensive as to include 
 from the outset to the finish the entire })rocesses 
 involved in placing in the hands of their members 
 all articles required for their daily needs. From 
 the days of the Rochdale Pioneers, ajid eve)! 
 earlier. Com Mills indeed have taken a promi- 
 nent place among the activities of Co-operators.
 
 CO-PARTNERSHIP 191 
 
 Their record is not free from disappointing 
 failure, but in the main they have succeeaed. 
 For the tea again which they sell, the Whole- 
 sale Societies have lately gone- to the source 
 of production, for they own tea plantations in 
 Ceylon. Similarly in less distant places they 
 have made arrangements for obtaining such 
 agricultural commodities as cream and butter 
 directly from establishments which they con- 
 trol. But nevertheless in England, at least, 
 the connection of Co-operation with agriculture 
 has hitherto been slight. If it cannot justly be 
 called a branch of Co-operative activity wholly 
 neglected, it may more fittingly be compared to 
 a puny sapling rather than a full-grown, firmly- 
 rooted tree. Or we may appropriately say that 
 seed has been sparsely thrown, and the plants 
 which have come up have not shown signs of 
 endurance. 
 
 The Rochdale Pioneers, however, included in 
 their projected scheme for realisation in the 
 future the idea of a prosperous community 
 settled upon the land, and living on the produce 
 resulting from its cultivation by themselves. 
 There have been, too, a few scattered examples 
 in agricultural work of Co-operative Produc- 
 tion, in the sense iji which Mill and others 
 understood the term 'Co-operation,' believing 
 in its future prevalence. But their fortunes
 
 192 CO-OPERATION AND 
 
 have been chequered; and the experiments 
 tried have taken usually the shape of a co- 
 partnership, in which the agricultural labourers 
 concerned have had the use of capital previ- 
 ously accumulated, and, as a rule, still con- 
 trolled by their landlord, and, in most 
 instances, remainingunder his superintendence, 
 they have enjoyed the benefit, in greater or less 
 measure, of his direction. With this assistance 
 the ventures cannot be declared to have won 
 any abiding, recognised success, although in 
 some of the rare examples of this kind of 
 agricultural co-operation the ultimate failure 
 could be traced to an accidental cause, like the 
 bankruptcy, due to gambling, of the projector, 
 and not to any reason inherent in the plan 
 itself. 
 
 The metayer system, indeed, of land- tenancy, 
 which is found to-day as the prevailing type 
 through large districts of the Continent, has 
 had its advocates, including Mill; and it is 
 obviously a species of co-partnership between 
 landlord and tenant. Quarrelling may occur in 
 ascertaining the fixed proportion of the produce 
 which belongs to the landlord in return for his 
 supply of capital; but the system has been 
 stated to have passed successfully the strin- 
 gent test imposed on different methods of land- 
 holding by the depression to which the older
 
 CO-PARTNERSHIP 193 
 
 countries of the world were subjected during 
 the final quarter of the nineteenth centuiy. 
 
 The mediaeval ' stock-and-land system' of 
 England itself was somewhatsimilar, and, under 
 the arrangement which was subsequently de- 
 veloped, and now generally exists, the land- 
 lord is in virtual partnership with the farmer, 
 as he supplies the equipment of the land in 
 the shape of the necessary buildings, and 
 executes such permanent improvements as 
 drainage and the like. There are critics who 
 hold that this tripartite scheme, iji which, 
 it must be confessed, the agricultural labourer 
 must remain a dependent wage-earner, is now 
 moribund; but from an economic standpoint 
 the ability of the tenant to devote all his 
 capital to the immediate work of farming — 
 to the cultivation of the land and the rearing 
 of the live-stock — is an advantage not to be 
 lightly estimated. 
 
 It is, however, in other directions that v/e 
 shall look for convincing illustration of the 
 effective part which systems of Co-operation 
 can play in agricultural life. In some villages 
 of England a retail distributive store has been 
 established. It has flourished, and has shown 
 in these cases the capacity of the 'Rochdale 
 plan ' for working ' marvels ' in the improvement 
 of the lives of those whom it affects. But in
 
 194 CO-OPERATION AND 
 
 many European countries the ' agrieulturaj 
 revival,' which is now a notable, established 
 fact, has indisputably been due in the main 
 to the use of co-operative methods for a great 
 number of varied purposes. 
 
 The same tale comes from nearly every 
 quarter. Unofficial travellers like Sir Rider 
 Haggard bring back from 'Rural Denmark* 
 the sure conviction that the remarkable 
 achievements of the hard-working Danish 
 farmers would have been impossible without 
 the general employment of co-operative ways 
 of buying and of selling. Official representa- 
 tives of our Government in Germany send 
 home reports in which the extensive opera- 
 tions of the successful Credit Banks are 
 described with the warm praise that they 
 deserve. They furnish perhaps the most 
 conspicuous examples of institutions co- 
 operative in character, methods, and aims 
 which have become essential to small culti- 
 vators. The 'new Ireland,' which is largely 
 the creation of Sir Horace Plunkett and his 
 fellow-workers, is being made by the instru- 
 ment, welcome to the Irish love for comrade- 
 ship, of Co-operation, in buying seeds and 
 manures, in making milk and other dairy 
 produce ready for the market, and in provid- 
 ing loans of capital independently of the
 
 CO-PARTNERSHIP 1 95 
 
 extortionate methods of the ' gombeen man.* 
 The Enghsh farmer may be naturally prone to 
 •go his own way,' without combination or con- 
 sultation with his neighbours, and the English 
 agricultural labourer may be secretive and even 
 suspicious of his fellows ; but it is difficult to 
 imagine that Co-operation in the modes in which 
 it has admittedly helped agriculturists in other 
 countries can have no future success in this. 
 
 A place of usefulness for some of the practical 
 methods of joint action we have named might 
 be discovered, even if no marked change occur- 
 red in the average size of holdings, and the 
 conditions of land tenancy remained generally 
 unaltered. Large farmers, for example, might 
 reasonably be supposed to derive considerable 
 advantage from such a manifestation of collec- 
 tive energy as would be involved in combining 
 to deliver their marketable produce to the rail- 
 ways for convey ajice in quantities, and at 
 times, which would justify their demand for 
 a reduction in the charges made for freight. 
 
 Nor, again, is it unlikely that the use of the 
 results of scientific knowledge and research 
 in agricultural operations could be facilitated 
 or expedited through the combined activity 
 familiar to Co-operators. The State, no doubt, 
 has attempted much, as in Denmark, and else- 
 where on theContinent,and could do more than
 
 196 CO-OPERATION AND 
 
 it has yet attempted in this country, to spread 
 Buch information; and few will be so blind to 
 probabilities, which stare them in the face, 
 as to think that agriculture is not destined to 
 derive material aid from valuable advice thus 
 communicated. Wlien we read, for instance, 
 of the cross-fertilisation of different kinds of 
 wheats achieved at Cambridge, or of the 
 inoculation of unfertile soils with the constit- 
 uents of good earth taken from superior land, 
 or of the extinction of some insect pest which 
 has been preying upon fruit-trees by the in- 
 troduction of its enemy discovered in some 
 distant foreign land, suggested by experi- 
 ments in the agricultural laboratories of the 
 United States, we may fairly anticipate that 
 greater wonders arc in store. 
 
 But the comparatively simple plan of using 
 an electric lamp to test the quality of eggs, 
 proceeding from the suggestion or compulsion 
 of no Government official, may yet require for 
 its profitable use the amount of voluntary Co- 
 operation implied in the establishment and the 
 maintenance of the joint institution of an ' egg- 
 factory.' Large farmers, whose poultry-rearing 
 is still a minoradjunct of their otherenterprises, 
 might nevertheless conceivably secure appreci- 
 able benefit for themselves in marketing their 
 eggs through such a factory — in arranging, that
 
 CO-PARTNERSHIP 197 
 
 is, for their collection from the separate farms, 
 their sampling by experts properly trained 
 and adequately equipped, and their sale in 
 convenient quantity and guaranteed quality. 
 An awakened public, it is no less likely, may 
 demand before long such certificates of the 
 produce offered for their consumption. 
 
 Nor, lastly, would large farmers appear to 
 be consulting their best interests, if they con- 
 temned altogether the opportune assistance 
 of Co-operation in the approved shape of 
 'credit banks.' For there seems to be valid 
 reason for believing that the marked tendency 
 to amalgamation of banking firms, which has 
 recently been manifest in this country, may be 
 fraught with disadvantage in limiting the credit 
 given previously by private banks to farmers 
 whom they knew, and could safely trust. 
 
 From what we have said before in 
 this book it might be inferred that Co- 
 operators are unlikely to encourage credit 
 if they are consistent with their principles. 
 But 'credit banks' are certainly one variety 
 of Co-operative activity which has been of 
 special service to agriculturists. Their function 
 is to procure the necessary capital, and to 
 furnish therefrom loans on easy terms to 
 trustworthy borrowers, who 'work together' 
 with one another in this important matter,
 
 198 CO-OPERATION AND 
 
 and achieve results which would otherwise 
 be impossible. Under one class, not the less 
 important or successful of the two chief 
 types of these institutions, the unlimited 
 liability of every member is the guarantee 
 which, coupled with close personal knowledge, 
 renders feasible and secure the full supply of 
 capital loaned to one another on terms which 
 ordinaiy banks, dealing directly with indi- 
 viduals alone, would not recognise as safe or 
 even prudent. They would think such business 
 risky; but, in effect, there is little or no risk, be- 
 cause the knowledge and the liabihty are joint 
 and are indissolubly connected. Credit, it need 
 scarcely be added, seems especially helpful, if it 
 is not essential, to farming enterprise, for of its 
 transactions the casewhere theseedissownsome 
 time before the harvest can be reaped is typical. 
 In the bygone days of private banking the 
 personal knowledge of the applicant for a 
 loan possessed by the partner or partners was 
 sometimes the chief wan-ant for its repay- 
 ment; and it sufficed. With the large joint- 
 stock banks that have now taken the chief 
 place both in town and in country, the dis- 
 cretion of a local manager on the spot is 
 liable to be hampered by some general rule 
 issuing from the chief office in London. The 
 apt illuminating phrase of Bagchot that a
 
 CO-PARTNERSHIP 199 
 
 banker is a kind of ' solvency-metre ' in his par- 
 ticular neighbourhood, 'showing what people 
 may be trusted with borrowed money and how 
 far that trust may go,* seems accordingly to be 
 losing part of its pertinence; and farmers living 
 in the rural districts aie not ujilikely to be num- 
 bered among the chief sufferers by the change. 
 
 The arguments we have used with reference 
 to the large farming, which is the prevalent 
 mode of holding and of cultivating land in 
 England at the present day, gain additional 
 force when small tenants and small owners 
 are the general rule and not the cojispicuous 
 exceptions. That is now the case with many 
 Continental countries, and that was the preva- 
 lent condition of affairs in England before the 
 agrarian changes which accompanied the 
 Industrial Revolution. It is not impossible 
 that the trend of economic forces may bring 
 back some of the earlier surroundings, or may 
 introduce freshcircumstances, which would pro- 
 vide an environment favourable to some species 
 at least of la petite culture. They wouldthus also 
 necessitate or encourage co-operative activity 
 of the kind we have indicated in rural life. 
 Its study, therefore, is by no means otiose. 
 
 As we have observed in the earlier portion of 
 this book, the manufacturing and agricultural 
 changes which produced the economic order
 
 200 CO-OPERATION AND 
 
 of affairs not inaccurately called the 'capi- 
 talistic age' acted and reacted on each other. 
 This mutual connection was emphasised by 
 similarities which they exhibited. To some 
 extent at least it may be said with truth that, 
 originating from like motives, they proceeded 
 by similar methods to produce the same effects. 
 The result of both was to separate the labourer 
 from the possession and control of the necessary 
 instruments of production. The replacement of 
 small by large enterprise was a consequence 
 again common to both. Both enhanced the 
 importance and enlarged the use of capital. 
 
 Nor was the new type of farmer very different 
 from the employer, who became henceforth the 
 central figure of manufacturing industry. The 
 farmer undertook in a measuie the risks of 
 management. While he supplied from his own 
 resources the capital for cultivation, he was also 
 dependent on capital forthcoming from else- 
 where,and the rent he paid might be considered 
 to be in some degree interest on what had been 
 sunk in the preparation and improvement of the 
 farm required to make it suitable for profitable 
 use. In a sense, too, he was an intermediary 
 between two other parties — the landlord, who 
 was partly a capitalist, and the labourer. 
 Nor could he succeed in the changed con- 
 ditions unless he practised the fresh methods
 
 CO-PARTNERSHIP 201 
 
 which were in vogue and availed himself of 
 the enlarged opportunities now opening. 
 
 The disappearance of the yeomen, who, 
 occupying a status of independence, culti- 
 vated their own land, has absorbed a consider- 
 able amount of the notice of historians. It 
 has been generally regretted on social grounds; 
 and the decline of this class has been attrib- 
 uted by some to a political influence. It has 
 been contended that, crushed by the weight of 
 mortgages incurred to meet expenditure partly 
 due to heavy taxation during the Napoleonic 
 wars, and tempted by the high price offered by 
 the rising manufacturers and merchants, who de- 
 sired to gain the political privileges attaching to 
 the ownership of land, they sold theirproperties. 
 
 So, too, it has been maintained that the 
 humbler peasantry were driven from the 
 rural districts by the loss of their rights of 
 common caused by enclosure unwarrant- 
 ably begun and inequitably conducted. But 
 later research has thrown more stress, in 
 both instances, on general economic tenden- 
 cies. The enclosures, it is admitted, were 
 necessary to improvement, and for such 
 irregular action as accompanied strictly legal 
 conduct the censured landlords do not seem 
 to have been solely responsible. Others, too, 
 including probably the new farmers, found the
 
 202 CO-OPERATION AND 
 
 open fields, and the exercise of common rights, 
 an obstacle to the fresh methods of cultivation. 
 
 Similarly the small yeomen, it may be 
 supposed, voluntarily became large farmers 
 under the improving landlords. The economic 
 trend, in shoit, was the most considerable 
 influence encouraging large farming and dis- 
 couraging small cultivation. It may have 
 been accelerated by certain incidents con- 
 nected with the process of enclosure. It 
 may have been assisted by the presence of 
 other forces which co-operated, and did not 
 collide, such as the attraction of the factories 
 in the to\Mis to the labourers, and the wish of 
 the nouveaux riches to secure a passport to 
 political authority. But the dominant factor 
 was the change of circumstance which, render- 
 ing small farming less possible or lucrative, 
 made large farming pay more handsomely. 
 
 The German economist, Dr Levy, who has 
 recently brought new testimony to elucidate 
 and confirm this conclusion, maintains that 
 before the agrarian revolution of the eight- 
 eenth and nineteenth centuries, the products 
 of small farming, such as certain kinds of 
 meat, poultry, fruit, and dairy and vegetable 
 produce, found their way, in spite of defec- 
 tive modes of transport, to markets situated 
 at some distance from the place of original
 
 CO-PARTNERSHIP 203 
 
 production. With the gathering population 
 in the factory towns, the demand for corn 
 increased, and the rising price of wheat 
 curtailed the margin left for buying other 
 agricultural commodities. The cultivation of 
 wheat was especially adapted to the more 
 scientific farming which was now being intro- 
 duced, and it could be grown more advan- 
 tageously if the scale of production was 
 enlarged. Accordingly the large farmer pros- 
 pered and the small farmer declined; and, 
 while the economic trend set steadily in this 
 direction, it was futile to combat its deter- 
 mining influence. The consolidation of farms 
 thus promoted was no doubt agreeable to the 
 landlords and their agents for the same reasons 
 as those which make them now disinclined to 
 undertake the opposite procedure. Expense 
 was saved in the collection of the rents, and 
 in the repair of the farm buildings, when a 
 few tenants, who could be more easily 
 handled, replaced a greater number. 
 
 But Dr Levy now contends that a fresh 
 situation has arrived or is approaching. The 
 substitution of small for large holdings is, 
 he thinks, becoming desirable, but it is hin- 
 dered by the operation of such motives as those 
 we have just mentioned, and by an expensive, 
 durable equipment of the land which was
 
 204 CO-OPERATION AND 
 
 adapted for farming methods that in their 
 turn are ceasing to be generally suitable or 
 lucrative. The economic trend, he argues, is 
 turning, or has already turned, in favour of 
 small farming. He investigates in succession 
 the various products of agricultural enterprise, 
 and he arrives at the conclusion that, with the 
 exception of the growth of wheat, of sheep- 
 farming, and the breeding of pedigree stock, the 
 other objects of attention yield no advantage 
 but rather the reverse to the large cultivator. 
 The exceptions which he mentions are, of 
 course, very important, and the foremost place 
 occupied at the present day by England in the 
 supply of sheep and cattle for breedijig pur- 
 poses to other countries, which continue to 
 have recourse to our flocks and herds for the 
 replenishment of their stock, lends a special 
 emphasis to his exclusion of that department. 
 Nor is the evidence afforded by a recent rise in 
 the price of wheat of the probability that the 
 world's consumption may be overtaking the 
 world's production of that commodity to be 
 neglected in weighing his contention that 
 the cultivation of the cereal has ceased to be 
 profitable in the older countries of the world, 
 because it can be raised more inexpensively 
 elsewhere, and be transported oversea to its 
 destination at a trifling cost.
 
 CO-PARTNERSHIP 205 
 
 Yet these qualifications do not affect his 
 argument that a better chance is being opened 
 to the small farmer in those countries as a 
 consequence of the growing demand for 
 products of agricultural activity which are 
 suited to the intenser methods of la petite 
 culture. Many of them must, or at any rate 
 should, if they are to attract by their fresh con- 
 dition, reach their market quickly. For fruit 
 and vegetables, for poultry and the ordinary 
 kinds of butchers' meat, for eggs, milk, butter 
 and cheese, there is undeniably an increasing 
 number of consumers in the populous centres of 
 the older world, including such communities as 
 our own. The present economic trend appears, 
 therefore, to be setting once again, in these 
 respects at least, in favour of small farming. 
 
 We are not concerned at the present moment 
 with the vexed question whether the small culti- 
 vators should be small owners or small holders, 
 although there are pertinence and force in the 
 arg-ument which has been used to show that the 
 former are more likely than the latter to take 
 kindly to Co-operation. Nor need we occupy our 
 minds for long with the social or political benefits 
 of a change which would multiply the number of 
 those interested in the possession or control of 
 land. It is nevertheless true, on the one hand, 
 and the point deserves consideiration, that
 
 206 CO-OPERATION AND 
 
 this is the pi-imary instrument of production of 
 which, according to SociaHst writers, the work- 
 man has been deprived. He should presumably 
 be reinstated if that be possible. And, on the 
 other hand, it seems plain that the conserva- 
 tive clement of society, guaranteeing its 
 stability, might thus be strengthened. 
 
 It is significant that Mill, in spite of a 
 socialistic inclination exhibited in other por- 
 tions of his treatise, was a strenuous advocate 
 of peasant proprietorship; and this firm sup- 
 port was due, not only to what he would 
 consider the beneficial restriction manifestly 
 exerted by that system of land-holding on 
 the growth of population, but also to a 
 feeling that there was some similarity between 
 a class of persons who were at once landlords, 
 farmers, and labourers, and those Co-operators 
 who, in his ideal, were to be at once capit- 
 alists and labourers. The metayers, as we 
 have seen, occupied a position half-way, 
 not unlike that attributed by Mill to imper- 
 fect Co-partnership. It is no less significant, 
 perhaps, that the preference for small holdings, 
 rented from some public body, receives the coun- 
 tenance of collectivists, who would ' nationalise* 
 the land, or would at least retain the ' unearned 
 increment ' of rent for the community to whose 
 influence it is ascribed, while the creation of
 
 CO-PARTNERSHIP 20T 
 
 small ownerships is urged by those who dislike 
 Socialism. The latter would, however, use in 
 England, as in Ireland, the credit of the State 
 to assist the purchase of the land from the 
 landlords by farmers or by labourers. 
 
 But the problem in which we are now inter- 
 ested, is the place of Co-operation in agriculture; 
 and it is plain that, if that system can be shown 
 to be specially necessary or desirable for smalJ 
 farmers, then aji economic trend, which favours 
 small cultivation, opens simultaneously a bigger 
 door more widely for Co-operative activity in 
 the future. But, apart from the tendency 
 described, it would seem that in many matters 
 the small farmer can only place himself on 
 an equality with the larger by invoking some 
 such aid as 'working together' with his 
 fellows can supply. He is likely, on the whole, 
 to be more conservative and less progressive in 
 his methods. He is not, indeed, always 
 inferior in this respect, and the deficiency may 
 be neutralised if the trend we have indicated 
 should exist. For the close personal attention 
 needed in intensive farming may be more 
 confidently expected from the smaller man, 
 and, in a sphere so circumscribed, may com- 
 pensate for the lack of the organising skill and 
 managing capacity which find greater scope 
 in the extensive practices of large cultivation.
 
 208 CO-OPERATION AND 
 
 The State, too, by popularising scientific 
 knowledge, may redress the inferiority of 
 Bmall farmers, which consists in their want of 
 familiarity with the latest agricultural im- 
 provements. Yet, despite of such considera- 
 tions, it remains true that certain general 
 disadvantages exist in smaller as compared 
 with larger farming ; and in their removal 
 Co-operation can give effectual timely help. 
 Dr Levy is by no means unaware of the need 
 and benefit of such joint action. Tlie acquisi- 
 tion and the use of the machinery, for instance, 
 which becomes more common every day in 
 nearly every branch of farming practice, 
 could be secured by the less considerable 
 farmers if they would, 'working together,' 
 combine their individual pecuniary resources. 
 This is a tolerably clear and conclusive illus- 
 tration, and others could be added. It may 
 even be stated broadly that, while manufac- 
 turing industry will continue to be adapted 
 more conspicuously to production on a larger 
 scale, and be more likely, accordingly, to reap 
 the advantages accruing in buying and in sell- 
 ing, as well as in management and organisation, 
 the antithesis drawn in this matter between it 
 and agriculture continually becomes less pro- 
 nounced. In any case it is the aim, as it has 
 been the result, of Co-operation to supply by
 
 CO-PARTNERSHIP 209 
 
 joint action the shortcomings of small farmers 
 which can be traced to the less considerable 
 scale of their individual undertakings. 
 
 Co-operation, then, can aid the smaller 
 farmer to purchase what he needs for his 
 farming enterprise more prudently and inex- 
 pensively; and societies exist for buying such 
 articles as seeds and manures, oil-cake and 
 other artificial food for cattle, and tools, 
 implements, and machines. Societies have 
 also been formed to help the farmer to dis- 
 charge the duties resting on him at the other 
 end of the farming process. Through their 
 agency the terms on which the middleman gives 
 his aid may be appreciably reduced, or his 
 services may be dispensed with altogether, when 
 this course offers more advantage. Despite, 
 however, of the fact that the Co-operative 
 movement as a whole has been described in 
 practice as the elimination of the 'unneces- 
 sary' middleman, sometimes that abused 
 personage is indispensable, and sometimes his 
 employment is preferable to another policy. 
 
 Yet the sale of agricultural products may, as 
 we have hinted earlier, be often rendered more 
 remunerative and efficient by previous collec- 
 tion from the separate producers and theirtrans- 
 port to a common centre, from which they 
 are afterwards distributed to the intermediate
 
 210 CO-OPERATION AND 
 
 dealers or the ultimate consumers. At this 
 centre, too, they may undergo some kind of 
 manufacturing treatment or they may at least 
 be ' standardised.' In this way they may be pre- 
 pared for profitable sale. Their quality may be 
 submitted to inspection and be guaranteed; or 
 their quantities may be rearranged in quotas 
 more convenient to the customer. A uniformity 
 of size, or a constancy of excellence, or a regu- 
 larity of supply, desired or demanded to meet 
 the wishes or requirements of consumers, may 
 be thus secured. Egg factories, as they are 
 called, where this grading and this standardising 
 work can be effectively performed, fulfil these 
 various aims, and are an exJiibition of co- 
 operative activity which has proved to be of 
 invaluable advantage to small poultry farmers. 
 The creameries now so abundant and so 
 prosperous on the other side of the Irish 
 Channel serve a similar purpose and yield no 
 less satisfactory results to dairy farmers. 
 
 To produce, indeed, its full beneficent effects 
 the operations of land-purchase in that region 
 needed imperatively, as they have received 
 opportunely, the complementary action for 
 which Sir Horace Plunkett and his fellow- 
 workers in the Irish Agricultural Organisation 
 Society, aided by the warm sympathy and 
 generous advice of the official leaders of the
 
 CO-PARTNERSHIP 211 
 
 Co-operative Movement in this country, are 
 responsible. The unmistakable improvement 
 wrought already in that part of the United 
 Kingdom is largely, if not preponderantly, due 
 to the apt introduction, and extensive use, of 
 appropriate co-operative devices. 
 
 There are other applications of the principle 
 to agriculture besides those already mentioned 
 which have met with gratifying success where 
 they have been tried by small cultivators. 
 Societies may be formed to serve one or 
 several purposes combined. It is difficult, 
 indeed, to name any department of the varied 
 work of a farmer in which Co-operation has 
 not been found of use in one or more of the 
 countries or districts where small farming is 
 the prevalent type. In the disposal of grain 
 and live-stock, as well as in the sale of milk, 
 eggs, and poultry, it has been employed with 
 profit alike to the producing agriculturist and 
 to the consuming public. Such a sanitary 
 provision as sterilising milk can, it is evident, 
 be more securely guaranteed if the article 
 is brought from the producing farmer to the 
 consuming customer through the purifying 
 channel of some central depot. The insurance 
 against loss, and the improvement of live-stock, 
 are other spheres suitable for the use of com- 
 bined effort and of massed resources.
 
 212 CO-OPERATION AND 
 
 Agricultural education, too, in the widest 
 interpretation of the term, can be spread 
 effectively by such an agency even if the State 
 arrange by literature or other means for the 
 satisfactory execution of preliminary steps. 
 The peripatetic inspectorwho,inDenmark,goes 
 the round of the farms, and compares the yield 
 of milk of the dairy cows with the amounts and 
 kinds of the foods consumed, is an illustration 
 of the nature of the work which can be thus 
 effectively and easily accomplished. 
 
 But there is no more important sphere of Co- 
 operative help to small cultivators than that 
 occupied by credit banks. The facile supply of 
 sufficient credit opportunely is an advantage, if 
 it is not a necessity, in agricultural enterprise of 
 any kind or magnitude. Large farmers may, it 
 is not improbable, obtain material and timely aid 
 in thenear future from the establishment and use 
 of such co-operative agencies as credit banks. 
 But for small owners, and for small holders as 
 well, they may be described as indispensable. 
 
 A melancholy experience has proved beyond 
 dispute that no burden is likely to hang heavier 
 round the necks of the small cultivator than that 
 of debt. TJie peasant proprietor described by 
 Mill in the extravagant terms of indiscriminate 
 eulogyis,aslater adverse investigatorshavebeen 
 at pains to emphasise, often mortgaged to the
 
 CO-PARTNERSHIP 213 
 
 hilt; and, nominally enjoying the lauded in- 
 dependence of being his own landlord, has in 
 reality fallen into the remorseless clutches of an 
 usurious money-lender on whom his body and 
 his soul are in a sense literally dependent. The 
 popular hatred of the Jews in many parts of 
 Europe can be traced in a large measure to the 
 unamiable r61e they have thus played as mort- 
 gagees of peasant properties; andinBritish India 
 the Government has been forced to take definite 
 measures expressly to prevent its cultivating 
 tenants from incurring similar embarrassment. 
 
 The absolute prohibition, or the stringent 
 limitation, of the power of mortgaging is an 
 expedient which has been strongly recom- 
 mended by informed observers, or has been 
 actually embodied in their schemes by wise 
 legislators, when projects of establishing a new, 
 or assisting an old, body of peasant owners, or 
 some cognate form of land-holding, have been 
 mooted or discussed. Nor is the small holder 
 immune from this danger, which is specially 
 menacing to the small owner, if he has an in- 
 terest that can be made the subject of a mort' 
 gage or of some allied contractual bargain. 
 
 But the total deprivation of the opportunity 
 of obtaining credit, or its rigorous restriction, 
 is, under the normal circumstances of farming 
 business, only less considerable an evil than
 
 214 CO-OPERATION AND 
 
 the removal of all restraint on the liberty of 
 action of extortionate money-lenders; and 
 the merit of credit banks is that they provide 
 a third plan to be used in place of both these 
 desperate policies. It should be noted that 
 the security on which they generally rely is 
 personal and not mortgaged property. They 
 are, it has been sho^vn, most effective for their 
 purpose when they are run most completely 
 on Co-operative lines. For they are then able 
 to combine a desirable elasticity in granting 
 loans with the guarantee for safety requisite 
 in raising capital. They can undertake, 
 without risk, business which a private banker 
 might permit with some hesitation as excep- 
 tional, and a large joint-stock banking com- 
 pany would peremptorily dismiss because it 
 would conflict with its general rules. 
 
 The explanation is that with the joint 
 knowledge and the joint liability, which 
 Co-operation in the form of a credit bank 
 combines, a venture becomes 'sound' that 
 would be 'unsound' without this combination. 
 Offering such security these institutions can 
 obtain the funds required for their operations 
 from some external sources like ordinary banks, 
 or they may be aided, occasionally or regu- 
 larly, by grants from the State. But the 
 latter kind of assistance appears in practice
 
 CO-PARTNERSHIP 215 
 
 to be of dubious benefit; and credit banks, 
 like the Co-operative movement as a whole, 
 seem to prosper most when, standing on their 
 own legs, they reject the support of the 
 crutches which are proffered. In Germany 
 they have had a remarkable success. 
 
 That has been especially the case in agri- 
 culture with the Raiffeisen variety, where the 
 liability of the co-operating peasants is un- 
 limited. This additional risk makes each 
 member careful not to sanction loans to any 
 of his fellows without being sure that they 
 will be properly used and punctually repaid; 
 and it offers more adequate security to the 
 creditors who furnish capital. The Schulze 
 Delitsch type is less fully co-operative and it 
 is also less adapted to the special needs of 
 small farmers. But both have attained great 
 repute for the benefits they have wrought. 
 The failures have been noticeably few. 
 
 CHAPTER XII 
 
 CO-PARTNERSHIP — FACTS AND FIGURES ^THE 
 
 ATTITUDE OF CO-OPERATORS 
 
 The various modes of Co-operative activity 
 in agriculture, which we have just been in- 
 vestigating, might seem, by contrast with the 
 systematic development traced in the pre- 
 ceding chapters, to resemble small side-
 
 216 CO-OPERATION AND 
 
 streams, moving erratically in separate chan- 
 nels of their o^vn, apart from the main current 
 of a mighty river , flowing steadily onwards with 
 resistless strength, and gathering speed and 
 volume as it advances from its source to its 
 mouth. But the comparisoQ would mislead; for 
 we can soon discover possibilities of appropriate 
 connection "which will bring mutual benefit. 
 
 The arrangements for combined sellingwhich 
 we have described in the last chapter may cor- 
 rectly be regarded as more important than the 
 schemes for joint buying: for the first and last 
 requirement of small holders is easy, inexpen- 
 sive access to a suitable market for the advan- 
 tageous sale of their produce. Unless such a 
 market can be found, Co-operation, in the differ- 
 ent forms in which it has appeared in agricul- 
 tural life, is of little use. But, if the custom of 
 the Co-operative Wholesale Societies, and of 
 the retail distributive stores, could be once 
 obtained for the commodities produced by the 
 small cultivators and offered through Co-oper- 
 ative agency for sale, then the two kinds of 
 Co-operation would ' work together,' the 
 streams and the river mingling their waters 
 would derive fresh force from the junction, 
 and the eponymous principle of the movement 
 would gain additional illustration. The small 
 farmers would thus secure what they want in
 
 CO-PARTNERSHIP 217 
 
 a permanent guarantee for the profitable sale of 
 their goods; and the condition of success of past 
 Co-operative endeavours, namely, the provi- 
 sion of a market, would be once more realised. 
 
 Such a consummation, too, seems to be no 
 impracticable ideal; and one important step 
 towards its achievement has been taken when 
 agrarian reformers recognise that small 
 farmers are more likely to succeed if they 
 can be grouped together in a colony than if 
 their holdings are dispersed. The recognition, 
 too, of a body like a Co-operative society as a 
 desirable tenant, or purchaser, of the land to be 
 let, or sold, by public authorities, such as are the 
 County Councils, may be similarly commended 
 as a move in the same promising direction. 
 
 It is curiously significant that in recent 
 discussions of the subject we are now about 
 to treat. Co-operators should also urge that 
 the 'associations of producers' of various 
 types, which exist, should try to form a 
 federation of their own as the preliminary 
 to the establishmc: t of s^me more regular 
 and intimate connection thai can now be 
 found with the 'associations of consumers' 
 which are already federated. Such reformers 
 obviously feel that Co-cperators should be 
 comprehensive and not exclusive. They 
 should be ready to recognise a diversity of
 
 218 CO-OPERATION AND 
 
 pattern and should not demand an impossible 
 uniformity. There may be, they should 
 allow, different forms and degi*ees of embodi- 
 ment of the fundamental principle of 'working 
 together'; and the motto 'Each for all and 
 all for each' is in no sense limited to a single 
 mode of application. As it is, the Co-operative 
 Union comprises associations of all kinds, 
 from the survivals of the small self-governing 
 workshops to the great federations represented 
 by the Wholesale Societies; and the Interna- 
 tional Co-operative Alliance, started in 1892, is 
 similarly comprehensive in the types drawn 
 from numerous lands which it includes within 
 the wide boundaries of its catholic organisation. 
 The small societies of producers, too, in 
 this country, which give prominence to the 
 principle of profit-sharing in the sense of 
 distribution among the wage-earners, find that 
 the most remunerative and extensive custom 
 is now given to them by the associations 
 of consumers, whose profit-sharing, if it can 
 properly be so called, is of the particular 
 fashion of the 'Rochdale plan.' One further 
 bond of union may be noted in conclusion 
 before we proceed to discuss in detail the 
 special topic of Co-partnership. That consists 
 in the bestowal of a share in profits on those 
 employed by some of the Co-operative societies
 
 CO-PARTNERSHIP 219 
 
 for buying, or for selling, or for other purposes, 
 considered in the previous chapter, which have 
 lately been established among agriculturists. 
 
 Iti this book we have hitherto, it will be 
 remembered, employed the term ' Co-partner- 
 ship' in a sense which is, we think, not in- 
 congruous with common usage. We have 
 recognised that a comprehensive interpreta- 
 tion is admissible; and, so understood, it may, 
 like ' Co-operatioji,' embrace a considerable 
 variety of schemes. In one use, indeed, it 
 may be regarded as practically identical with 
 what Mill meant by the 'Co-operation,' which 
 he felt sure would be the final destiny of the 
 labouring classes. The fullest 'Co-partner- 
 ship' might thus be discovered where there 
 were no partners left besides the workmen, 
 concentrating in their persons Capital and 
 Labour, and managing wholly for themselves 
 the businesses in which they were engaged. 
 But we ourselves have generally used the term 
 as corresponding to that 'half-way house* 
 which Mill placed between his ultimate ideal 
 thus conceived and the ordinary familiar sys- 
 tem of wage-payment which he contemned. 
 
 We have thus distinguished 'Co-partner- 
 ship' from 'Co-operation,' and we have 
 treated it as being virtually a synonym for 
 what has been variously called, in popular
 
 220 CO-OPERATION AND 
 
 speech, 'profit-sharing' or 'industrial part- 
 nership.' These expressions are, we think, 
 commonly understood as exchangeable, and 
 are indifferently employed, although, thus 
 interpreted, it may be admitted that they are 
 somewhat laxly used. Yet it is certainly 
 convenient, as we have found, to contrast 
 *Co-partXiership,' where employers contmue to 
 direct their undertakings, but allow employees 
 to become so far partners as to receive a share 
 of profits regulated according to the wages they 
 are paid, vnth the full type of 'Co-operation,' 
 where emploj-ers disappear from the scene 
 and the workmen are left in sole undisturbed 
 possession of the business enterprise. 
 
 Co-operation in practice, as we have seen, 
 covers a great number of varying applications 
 of a general principle, and, similarly, there 
 would appear to be many modes of joining 
 employers in partnership with the employed. 
 But some critics contend that no arrange- 
 ment deserves the title of 'Co-partnership' 
 unless it satisfies three conditions. The first 
 is that all the workers should receive a share in 
 profits as wage- earners, apart from any capital 
 they may hold. A second condition is that they 
 should be allowed to take up capital and become 
 ' shareholders ' in that sense as well. The third 
 and last is that they should have some part in
 
 CO-PARTNERSHIP 221 
 
 responsibility and in control; but this may be 
 indirectly and not directly exercised. 
 
 In the Report recently issued by the Labour 
 Department of the Board of Trade on * Profit- 
 Sharing and Labour Co-partnership in the 
 United Kingdom,' an attempt is made to attain 
 greater precision by distinguishing the two 
 terms; but the definitions adopted, which pos- 
 sess the sanction in the one case of Interna- 
 tional Co-operative Congi-esses and in the other of 
 the Labour Co-pr.rtnership Association, do not 
 conflict with the conditions before enumerated. 
 
 According to this Report, 'profit-sharing' 
 is a more general and less finished system 
 than 'labour co-partnership'; and the latter, 
 in the shape of participation in the capital as 
 well, with only such control of the management 
 of the business as ordinary shareholders exer- 
 cise, is itself separated from a more developed 
 form, in which the shareholding workmen are 
 allowed the effective influence attaching to re- 
 presentation in one or more seats upon the 
 Board of Directors. Under profit-sharing, then, 
 so defined, it is stated that ' an employer agrees 
 with his employees that they shall receive, in 
 partial remuneration of their labour, and in 
 addition to their wages, a share, fixed before- 
 hand, in the profits realised by the undertaking 
 to which the profit-sharing scheme relates.'
 
 222 CO-OPERATION AND 
 
 The ' Co-partnership of Labour with Capital' 
 extends further, and goes, it is affirmed, 
 beyond the receipt of 'some share in the final 
 profit of the business or the economy of pro- 
 duction' to 'an accumulation' of this share, 
 or part of it, ' in the capital of the business,' 
 giving thereby the 'ordinary rights and re- 
 sponsibilities of a shareholder.' And, in its 
 fuller shape, a more complete control over the 
 management is obtained by specific repre- 
 sentation on the Board of the Directors. 
 That, however, is rarely found in practice. 
 
 But these definitions are tantamount to 
 saying that to the one condition needed for 
 'profit-sharing' the other two conditions 
 named by the advocates, to whom we have 
 referred, must be added to realise ' labour co- 
 partnership.' The right to a share in profits 
 is not sufficient ; the further right to a share 
 in capital car lying with it some share less or 
 more extensive and direct in responsibility 
 and control is required. In fact the distinc- 
 tion is not perhaps of very great importance, 
 as in the case at any rate of private firms and 
 companies the right to a share in profits has, 
 as a rule, especially in the more recent in- 
 stances, been compulsorily connected with 
 the acquisition of a share iji the capital. But 
 it must be remembered that profit-sharing
 
 CO-PARTNERSHIP 223 
 
 has also been recognised by some Co-operative 
 Societies; and here the connection between 
 the different rights is, we must allow, less inti- 
 mate or general, and is at any rate somewhat 
 accidental. Yet there seems no grave breach 
 of propriety, or serious sacrifice of exactitude, 
 in using 'profit-sharing,' as we have done, as 
 a generic term interchangeable with 'Co- 
 partnership ' broadly understood. There is, at 
 least, little risk of misapprehension, and there 
 is considerable convenience, in this course. 
 
 Using the term ' Co-partnership,' then, in this 
 catholic signification, we may, with the help 
 of the new evidence supplied in the Board of 
 Trade Report, try to measure what in fact has 
 been achieved by such a system. The Report 
 itself, drawing the distinctions we have noted, 
 does not, within such limits, show any lack of 
 comprehensiveness in its interpretation of the 
 terms. It recognises, on the contrary, great 
 variety of detail in their practical embodiments. 
 
 Under 'profit-sharing,' for instance, it does 
 not insist, as some strict supporters of the 
 principle have done, on the receipt by all the 
 employees of a share. Nor would it even pre- 
 scribe, with other exponents of the scheme, that 
 a ' large proportion' (amounting to not less than 
 75 per cent.) 'of the total number of the adult 
 employees who have been in the service of the
 
 224 CO-OPERATION AND 
 
 employer for at least one year' should be in- 
 cluded in its application. No sueh 'hard and 
 fast line' has been drawn and no 'irreducible 
 minimum proportion' has been fixed ia the 
 Report. 
 
 Again, while purchase by a workman iji 
 the open market of a share in the company 
 by which he is employed may be properly 
 excluded, the issue gratuitously, or at a price 
 below the market value, or on conditions 
 rendered specially favourable by other means, 
 of sueh shares to their employees, or the 
 receipt exclusively from them of loans bearing 
 interest, by the companies concerned, is treated 
 as a 'kind of profit-sharing.' 
 
 And lastly, while the basis on which the total 
 amount of the profits to be distributed should 
 be predetermined, some discretion in varying 
 the share falling to each participant will be al- 
 lowed, and the agreement governing the general 
 scheme need not be legally enforceable. It 
 may be sanctioned by no more than a moral 
 obligation, or an honourable understanding. 
 
 Similarly, in the original statement of the 
 definition of Labour Co-partnership adopted 
 by the Report it is frankly affirmed that 
 *the Co-partnership of Labour with Capital 
 is capable of many modifications according to 
 the needs of varying industries, and in some
 
 CO-PARTNERSHIP 225 
 
 one of them it is applicable to almost every 
 industry where labour is employed.' To the 
 diversity of detail in the accounts furnishe.l 
 of these arrangements we shall c: ]I further 
 attention at the end of the discussii n. 
 
 The recent ofTicial document to which we 
 are referring does not profess to be exhaus- 
 tive, and it is noteworthy that since the publi- 
 cation, nearly twenty years ago, of the previous 
 * Report on Profit-Sharing ' the acquain- 
 tance of the Labour Department with cases, 
 both past and present, of the principle, has 
 been greatly enlarged. The special investiga- 
 tion made expressly for the purpose of this 
 Report has had this result. For in the 
 Abstract of Labour Statistics, issued in 1912, 
 the total number of schemes started by pri- 
 vate companies and firms since 1829 (the 
 date of the earliest experiment of the kind 
 known to have been tried in the United 
 Kingdom) was put at 232, of which 76 were 
 in operation in the middle of 1911. The 
 corresponding numbers given in the present 
 Report, which has embraced an additional year 
 in its purview, are 299 and 133. Accordingly, 
 when three schemes have been deducted, for 
 which no recent information could be obtained, 
 it would appear that 163 had ceased to exist. 
 
 The great majority of the continuing
 
 226 CO-OPERATION AND 
 
 experiments are of recent date; for, while more 
 than half (73 in number) have so recent a record 
 as ten years, of the others only four can look 
 back for more than forty years, and as many 
 as forty -four were not begun earlier than 1889. 
 Of the 73 belonging to the last decade, 52 
 must be assigned to the five concluding years, 
 and of these nearly one-half have been due 
 to the adoption of the principle by gas 
 companies alone. Of the 163 lapsed instances, 
 the duration of 11 is not knoMii, and the 
 average length of life of the remaining 152 
 was about eight years, although more than a 
 third came to an end before the fourth year 
 of their trial. 
 
 These are remarkable figures, the exact 
 meaning of which we shall try to ascertain. 
 But, on the other hand, as the Report states, 
 in 92 of the 155 cases where the causes of the 
 failure are known, and have been stated, the 
 discontinuance of the plan seems to have been 
 due to extraneous circumstances; and the 
 106,000 persons now employed under schemes 
 of this description cover 'a wide range of 
 business undertakings of varying magnitude 
 in all parts' of the United Kingdom. 'The 
 methods,' we are told, 'are in numerous 
 instances considered by practical men to pro- 
 duce excellent results.*
 
 CO-PARTNERSHIP 227 
 
 Before, however, we push our examination 
 further into the details of the 'profit-sharing* 
 and 'labour co-partnership' practised by 
 private firms and companies, which, as the 
 Report states, have 'received most general 
 attention.' we may appropriately devote some 
 preliminary study to the reception of these 
 ideas in the special area occupied by Co- 
 operative activity. Here, of course, as we 
 are reminded, * there is no separate employing 
 class,' and the 'capital is provided by the 
 members' of the Co-operative Societies. But 
 'profit-sharing' of the kind described ia this 
 Report has been practised in this region; and 
 its merits and demerits have been the subject, 
 as we know, of a lively, and even of an em- 
 bittered, controversy. In that debate those 
 enjoying aad proclaiming the advantages of 
 the ' Rochdale plan ' of distributing the ' fund 
 known as profit' among consumers in propor- 
 tion to their purchasers have participated, 
 and they are not found on one side alone. 
 
 Yet, in fact, the actual recognition of ' profit- 
 sharing' is very restricted in this quarter ; and 
 the 'labour co-partnership' distinguished in the 
 Report has not been more ejithusiastically wel- 
 comed. In 195, or about one in seven, of the 
 1421 retail distributive stores which existed in 
 the United Kingdom at the end of 1910, a share
 
 228 CO-OPERATION AND 
 
 in profits, in the shape of a bonus upon wages, 
 averaging five per cent, during a period of tM-elve 
 years, was given to the employees. There is no 
 obstaele to hinder them from becoming share- 
 holders in the ordinary way; for membership of 
 the societies is, as we have seen, freely opened 
 to one and all without restriction. The Report 
 states that it is probable that most of the em- 
 ploy ees take this step, and may thus be said to 
 be placed in a position to exert some measure of 
 indirect control upon the management of the 
 stores. But on the other hand it is 'very 
 unlikely that in any appreciable number' 
 they 'would be foimd to have seats on the 
 Committee.' Co-partnership, then, is more 
 conspicuous by its absence than its presence 
 in this particular sphere of Co-operation. 
 
 The Wholesale Societies, as we have noticed, 
 have the bulk of Co-operative Production in 
 their hands. But the English Society, which, 
 the Report recalls, carries on a great variety 
 of industries, has abandoned the bonus upon 
 wages, which it once bestowed, for the express 
 reason that it was found unsatisfactory; and it 
 is not possible for any employee to hold shares, 
 which are, in fact, confined to other Co-opera- 
 tive Societies. A ' thrift fund ' has been formed 
 and is managed by a committee, consisting 
 jointly of directors and of elected employees,
 
 CO-PARTNERSHIP 229 
 
 who are the trustees of the fund, which is 
 invested with the Society. The Society and 
 the employees, who can become members 
 after six months' service, contribute jointly 
 to the fund, which provides benefits of the 
 friendly society description. But the signifi- 
 cant fact cannot be gainsaid that no 'profit- 
 sharing' or 'labour co-partnership' is to be 
 now discovered in the building operations, 
 the metal-working, the textile manufactures, 
 the boot, shoe, and other clothing industries, the 
 printing and bookbinding, the wood- working, 
 furnishing and brush-making, the flour-milling, 
 farming and dairying, and the manufactures of 
 soap, candles, starch, biscuits, sweets, preserves, 
 pickles, and other food, and tobacco, which 
 comprise the productive energies of this vast 
 association and its em.ployees, numbering 
 nearly 18,000 persons at the end of 1910. 
 
 The Scottish Wholesale Society, by con- 
 trast, between 1870, when it adopted the 
 principle, and the same date of 1910, had 
 paid a total sum of £197,071 to its employees, 
 numbering, at the end, 7G11, in the shape of 
 a bonus upon wages , averaging during the last 
 twelve years some three per cent. The rate 
 of the bonus has since 1892 been identical 
 with that of the dividend declared on pur- 
 chases, and also since that date half has been
 
 230 CO-OPERATION AND 
 
 retained, and placed in a special fund, the 
 deposits in which can be withdrawn three 
 months after an employee has left the service 
 of the Society. Employees can also become 
 shareholders, and can send a certain number 
 of representatives to the general meeting. 
 But no employee can be an auditor or sit on 
 the Committee. At the end of 1910, 561 
 employees held 15,704 shares, of which 
 £13,915 were paid up, and the Bonus Loan 
 Fund had an invested capital of £57,892. 
 
 Two other classes of Co-operative Society 
 mentioned in the Report can be briefly dis- 
 missed. Of the 39 'Consumers' Productive 
 Societies,' which are distinguished from the 
 'Productive Associations of Workers,' only 
 three gave any share of profits to their 
 employees; and the control of the manage- 
 ment of societies of this group exerted by 
 employees as shareholding members or as 
 committee men was ' insignificant.' Of the 1312 
 profit-sharers 1255 belonged to one associa- 
 tion — the United Baking Society of Glasgow. 
 The bonus given by it was invested in a Bonus 
 Investment Society which placed its capital in 
 shares of the parent society, and thus the em- 
 ployees here obtained a voice in the manage- 
 ment of the enterprise in which they worked. 
 The Consumers' Productive Societies comprised
 
 CO-PARTNERSHIP 231 
 
 at the end of 1910 five com mills, 22 bread- 
 baking soeieties, and 12 miscellaneous societies 
 engaged in such industries as ' building, print- 
 ing, laundry work, dyeing and cleaning, and 
 mineral water manufacture.' 
 
 Nor is the part played by 'profit-sharing' 
 or 'labour co-partnership' much more impor- 
 tant in another class — ^that comprising 'agri- 
 cultural productive societies.' Of the 335 
 existing at the end of 1910, 291 were the Irish 
 Dairying Societies, whose sales, amounting to 
 some two million pounds, comprised some 
 93 per cent, of the total sales of all this species 
 of society. Their profits in 1910 were nearly 
 £24,000, and from these the small sum of £591 
 was paid by 38 societies in a bonus on wages at 
 the rate of 5 per cent. Altogether of this whole 
 class 45 societies paid a bonus to 321 employees, 
 and the bonus was invested in the societies 
 themselves. When the results of this practice 
 are included in the calculation, the number 
 of employees holding shares, and represented 
 on the Committees, is not 'considerable.* 
 
 It is in the class of Productive Societies, which 
 we have now finally to consider, that the methods 
 of ' profit-sharing ' and ' labour co-partnership' 
 have any real hold in the Co-operative world. 
 
 The Productive Associations of Workers 
 have, as the Report affirms, been formed, and
 
 232 CO-OPERATION AND 
 
 are managed, 'primarily in the interests of the 
 persons employed,' whereas it is the interests 
 of consumers which are mainly, if not exclu- 
 sively, borne in view in the other kinds of 
 Co-operative Societies. But of the 96 associ- 
 ations of this description existing at the end 
 of 1910 10 were of a character somewhat 
 different from the rest, and at any rate afforded 
 little or no illustration of the working of the 
 principle we are considering, for two alone 
 paid a total sum of £10 as bonus upon wages. 
 They were situated in Ireland; and of the 
 remaining 86, 82 were at work in England, 8 
 in Scotland, and 1 in Ireland. Nineteen were 
 engaged in the boot and shoe industries, and 
 the same number in the printing trade, 13 
 were occupied in textile manufacture, and 12 
 in the metal and engineering trades. Building, 
 quarrying, other clothing besides boots and 
 shoes, wood- working, and furnishing, food-pre- 
 paration, bass-dressing, mat-making, and brush- 
 making, and leather accomited for the rest. 
 
 What number of workers and what amount 
 of trade were represented by these produc- 
 tive associations ? and what were the character 
 and extent of their recognition and adoption 
 of * Co-partnership ' ? We may have been pre- 
 pared by the earlier chapters of this book for 
 the disappointing answers to these questions;
 
 CO-PARTNERSHIP 233 
 
 the meagre response to the claims of the prin- 
 ciple which they show is hardly encouraging 
 to the advocates of those methods. 
 
 These 86 associations have a membership 
 consisting of some 21,000 individuals and some 
 4000 societies. As we have noticed before, — 
 and the fact has, wc shall see, no small signifi- 
 cance, — the best part of their limited trade is 
 transacted with the retail distributive socie- 
 ties, who often supply most of the capital em- 
 ployed, and consequently, through the delegates 
 whom they elect to the Committees,have a large 
 share in the management. Their share capital 
 amounted at the end of 1910 to nearly £400, 000, 
 and their loan capital to little less than£300,000. 
 Their sales were somewhat below one and a half 
 millions of pounds. These statistics are not in 
 themselves very impressive, and do not offer 
 much solid reason for expecting that the system 
 of 'Co-partnership' as practised by Co-opera- 
 tors at least, is destined to effect a speedy 
 transformation of industrial arrangements. 
 
 But there is a second chapter to be added 
 to the story. Of these 86 associations less thaji 
 half, or 40, allotted a share of profits to their 
 employees, either in the shape of a bonus upon 
 wages, or as a contribution to a provident fund, 
 or in both forms. Nineteen adopted both ex- 
 pedients, 16 the formet alone, and 2 the latter
 
 234 CO-OPERATION AND 
 
 alone. The average rate of the bonus was in 
 1910 four per cent. Of the 6766 employees, 
 4969 received a bonus. The proportion 
 yielded by the last two figures is less un- 
 favourable than that given by the earlier 
 numbers; but the comparative statistics of 
 membership will be more disappointing to 
 sanguine believers in Co-partnership. 
 
 Seventy-eight societies, representing 95 per 
 cent, of the total sales of the 86 associations, 
 furnished information on this important point. 
 The result shown was that nearly 67 per cent, 
 of the members were persons not employed 
 by the associations, 17 per cent, were other 
 co-operative societies, and only 16 per cent, 
 were employees. In 1899 the higher percent- 
 age of 19 had been reached. Of the total 
 employees of these 78 associations, numbering 
 6358, 3699, or not quite three out of every 
 five, were members of the society for which 
 they worked. Of the total share and loan 
 capital 12 per cent, belonged to them and 43 
 per cent, to other societies; and of the 701 
 members of the management committees 36 
 per cent, were employees and 21 per cent, repre- 
 sentatives of other societies holding shares. In 
 19 societies the employees had no representa- 
 tives on these committees, and in 20 alone did 
 their delegates constitute a majority. Of
 
 CO-PARTNERSHIP 235 
 
 these 20 societies, 14 were concerned with the 
 production of boots and shoes. 
 
 Such is the plain tale told impartially by the 
 unadorned numerical data of this recent Report. 
 It is a forcible commentary on the erroneous 
 nature of Mill's prediction. It is difficult in the 
 face of thisunf avourable evidence to believe that 
 either 'profit-sharing' or 'labour co-partnership' 
 have it in their power to make any strong appeal, 
 in the near future at least, to Co-operators. 
 
 For it is in but a small part of the whole 
 of the considerable area brought within the 
 range of the Co-operative movement in this 
 country that these methods have been adopted; 
 and even in these scattered preserves, as they 
 may perhaps be called, of the ground occupied 
 by Co-operation, the recognition has been 
 limited rather than complete. The adherence 
 of the productive associations of workers to 
 the essential principles of Co-partnership 
 may, without serious injustice to their faith, 
 be pronounced, from the testimony of their 
 works, to be half-hearted. Nor does the 
 Report attempt to place on record in this 
 section dealing with Co-operative Societies, 
 as distinguished from private firms or com- 
 panies, any calculation of the schemes which 
 have been started and have failed or been 
 withdrawn. The significant alterations in
 
 236 CO-OPERATION AND 
 
 the practice of the pjnglish Wholesale Society 
 are indeed noted; but in the main the instruc- 
 tive facts and informing figures brought 
 conveniently together from authoritative 
 sources relate to present conditions and are 
 not concerned with past history. 
 
 We know, however, that the ' self-governing 
 workshops,' to which the enthusiasm stirred by 
 the ardent confidence of the Christian Socialists 
 gave bh'th in the middle of the nineteenth 
 century, had in many instances a brief, strug- 
 gling life. We are aware that they fell away in 
 some cases from the strict purity of their original 
 creed, and that in others they were more or less 
 entirely transformed. Nor are we ignorant of 
 the nature and the potency of the forces which 
 have operated to produce these disappoint- 
 ments of high hopes and large ambitions. 
 
 Those unfavomable influences, we must 
 frankly admit, persist, and will, so far as we can 
 see, continue to be powerful. The choice of a 
 competent manager, and the rarity with which 
 an enthusiasm for the cause that would be 
 content with a salary comparatively small 
 may reasonably be expected to be found in 
 combination with the capacity that will 
 guarantee success, and could command iji 
 consequence a much more considerable reward 
 elsewhere, are difficulties which confront
 
 CO-PARTNERSHIP 287 
 
 llicse ventures at the outset. The preserva- 
 tion of the needful disciphne, which "will 
 ensure obedience to his direction by those 
 who in other respects feel that they are 
 entitled to be treated as his equals, and the 
 avoidance of irritating breaches of the peace 
 among themselves, are continuiiig conditions 
 hard to fulfil. But, on the other hand, the pro- 
 vision of a market in the custom of Co-operators 
 has been proved to be no more incapable of 
 achievement than the handling by working mcji 
 of the more complex and arduous problems of 
 productive as contrasted with distributive 
 enterprise in many of those businesses which 
 cater for their ordinary wants. 
 
 The eminent success of the ' Rochdale plan ' 
 has brought that method forward in the guise 
 of a victorious competitor for the approval of 
 Co-operators; and it has secured, as it deserved, 
 their firm allegiance. Irrefutable facts compel 
 a belief in its efficacy. But nevertheless in 
 practice the method of 'dividend on purchase* 
 has been linked together with ' profit-sharing ' 
 and 'labour-co-partnership'; for the Scottish 
 Wholesale Society has paid a bonus to its 
 workers and admitted them to membership; 
 and some, if not most, of the small associations 
 of producers include in their shareholders other 
 Co-operative Societies, and pay, not merely
 
 233 CO-OPERATION AND 
 
 a share of profits to the workers, but also a 
 dividend to customers in proportion to their 
 purchases. The original members, too, are 
 themselves in fact often 'store-co-operators' 
 of the familiar type. Nor has the 'Rochdale 
 plan* as yet reached all working-class con- 
 sumers; and it is manifestly difficult to bring 
 the poor within its scope. It has also failed 
 hitherto, in the opinion of some of its supporters, 
 to solve the hard problem of joining the interests 
 of the employees so closely to the welfare of the 
 store as they conceive to be desirable. Finally, 
 the new developments of Co-operative activity 
 in agricultural life are a departure which could 
 hardly have been anticipated not very long 
 ago; and they suggest accordingly that there 
 may still remain unexplored regions, which 
 could be won for Co-operation, ])y methods 
 not identical with the 'Rochdale |jian,' with- 
 out impugning its indubitable success. 
 
 Co-operation may not then be limited, as 
 some observers in contempt have declared, 
 to the 'extermination of the middleman.* 
 There may be a place reserved, different 
 from that now occupied, for the methods of 
 'co-partnership* in the future of the move- 
 ment. It is only the foolhardy or the forgetful 
 who will now be betrayed into a dogmatic 
 narrowness in the forecasts they essay.
 
 CO-PARTNERSHIP 239 
 
 CHAPTER XIII 
 
 CO-PARTNERSinP AS PRACTISED BY PRIVATE FIRMS 
 AND COMP.VNIES CONCLUSION 
 
 The methods of profit-sharing and labour 
 co-partnership, hitherto employed so sparsely 
 and imperfectly by Co-operators themselves, 
 as the candid and impartial critic must perforce 
 allow, have also been used in varying shapes 
 and differing measure by private firms and 
 companies. The Report of the Board of Trade, 
 to which we have referred so frequently as the 
 most recent and authoritative account of the 
 subject that is now available, has given the 
 larger proportion of its space to the detailed 
 treatment of this aspect of the question. We 
 have already quoted the remark that 'this is 
 probably the aspect which has received most 
 general attention*; and we have cited some 
 statistical data recording the results of past and 
 present experiments in this particular direction. 
 From these figures some general inferences 
 can be drawn; and they are not much more 
 favourable to Co-partnership than those sug- 
 gested by the experience of the system among 
 Co-operators which we have just reviewed. 
 It must be admitted, that if the industries 
 in which profit-sharing has been introduced 
 are varied, and its successes have not been
 
 240 CO-OPERATION AND 
 
 strictly limited to one or two pursuits, yet at 
 the present moment it extends over an infini- 
 tesimal proportion of tlie whole field of busi- 
 ness enterprise. What is perhaps of even more 
 significanee is that the average duration of the 
 experiments knowQ to have been started in the 
 past was short, although their failure might, in 
 no small quota of the cases noted, be reasonably 
 ascribed to some accidental cause that could 
 not be considered necessarily inherent in the 
 principle itself wliich was undergoing trial. 
 
 The fact, at first sight not dissimilar, that 
 the existing instances are of recent date 
 admits of different interpretations. For, on 
 the one hand, it might be argued that there 
 is still a fair prospect of a continuing success 
 for these fresh examples, and, on the other 
 hand, it might be maintained that they can- 
 not point to any weighty testimony in favour 
 of their proved efficiency. The safer middle 
 course is followed by the Report when it 
 suggests as most appropriate a prudent 
 caution in drawing any positive inference. 
 
 It is noticeable, however, that the for- 
 mation in 1883 of the Labour Association 
 (now called the Labour Co-partnership Associ- 
 ation) was followed, after a while, by a decided 
 increase in the schemes of profit-sharing 
 promoted by various private firms and
 
 CO-PARTNERSHIP 241 
 
 companies. During the four years, at any rate, 
 stretchi]ig from 1889 to 1892 such an exten- 
 sion of the principle was seen. The Associa- 
 tion was started to 'promote co-operative 
 production based on the Co-partnership of 
 the woikers'; and Mr Neale, the first General 
 Secretary of the Co-operative Union, was one 
 of the survivors of the old Christian Socialist 
 party who lent their warm sympathy and 
 active aid to the fresh development. 
 
 At that time onl^^fifteen productive Co-opera- 
 tive societies based on Co-partnership were 
 known to be existing. The propaganda of the 
 new organisation was .no doubt primarily in- 
 tended to recallCo-operatorsthemselvesto their 
 first designs as they appeared to its promoters; 
 and we have tried, with the help of the Board 
 of Trade Report, to gauge the present magni- 
 tude of the approval given to Co-partnership 
 within the limits of the Co-operative Movement 
 as that is generally understood. The Labour 
 Co-partnership Association was able to apply 
 there a stimulus which met with a response. 
 
 But the clientele of the Association has not 
 been limited rigidly by any narrow boundaries. 
 It has been wisely tolerant in its recognition 
 of those it would include beneath its banner. 
 Its aims are missionary; and, departing from the 
 earlier precedent set by the Christian Socialists'
 
 242 CO-OPERATION AND 
 
 Society ' to promote the Working Men's 
 Associations, ' it has followed the less risky and 
 more beneficial policy of supplying not money 
 but advice. It has not confined its counten- 
 ance to the relics or revivals of ' self-governing 
 workshops' of the 'preoriginal' t}'pe. It does 
 not disdain to recognise among the gratifying 
 consequences of its preaching the larger prac- 
 tice of the principle of profit-sharing by 
 private firms, or companies even on the 
 broad lines of interpretation observed in the 
 Board of Trade Report. 
 
 At any rate, in 1889, 20 projects of profit- 
 sharing are stated in that official document 
 to have been begun by such firms or com- 
 panies; and in 1890 the number started 
 swelled to 33, while in each of the two follow- 
 ing years it was 17. Of these 87 schemes it 
 must be added that only 19 were known to 
 be alive in 1912; and, with the exception of 
 1895, when the number rose to 10, it never, 
 after 1892, passed outside the limits of the 
 units until 1908. It was at this last date 
 that the marked extension of profit-sharing 
 methods among gas companies began. Of the 
 whole 299 schemes, indeed, adopted since the 
 first kno^^^l example of the idea in the United 
 Kingdom in 1829, gas-works account for as 
 many as 34, or some eleven per cent. As only
 
 CO-PARTNERSHIP 213 
 
 one of these has been abandoned, of the 133 
 reeorded survivors of the original sehemes 
 this single industry represents as large a 
 proportion as a quarter, and of the 106,189 
 employees participating in profits it comprises 
 more than that quota, for the numbers for 
 which it is alone responsible are 28,246. 
 
 The only other trades which exceed 7000 
 workers thus affected are the engineering and 
 shipbuilding trades with 17,336 employees 
 concerned, and the chemical, glass, and pot- 
 tei-y industries with 15,649. It is then among 
 gas-works that the method of profit-sharing 
 has recently been most conspicuously de- 
 veloped. Even in that particular department 
 of industrial enterprise it can as yet claim 
 no more than a short life, for its growth has 
 been as rapid as it has been great. 
 
 But it is even more significant that this 
 industry, as the Report observes, 'is carried 
 on under very special circumstances and 
 enjoys exceptional advantages.' 'The Gas 
 Companies afford,' it is added, 'a field excep- 
 tionally favourable for the application of 
 co-partnership methods.' We cannot there- 
 fore conclude with any certainty that what 
 has been successful in so distinct a situation 
 will be found suitable, or will attain a similar 
 prosperity, elsewhere. For two dangers or
 
 244 CO-OPERATION AND 
 
 difficulties, whicii menace the continuance of 
 Co-partnership, are conspicuous by their 
 absence from this favoured industry. One 
 of these is more obviously related to the 
 ' jDrofit-sharing ' and the other to the 'labour 
 co-partnership' which are distinguished in the 
 Report, although they may, as we think, be 
 properly regarded as applications in varying 
 measure of the self -same general principle. 
 
 Profit-sharing has been criticised for the 
 reason that, if employees ask or receive a share 
 in profits, they should not beunwillijig, or refuse, 
 to participate in losses. Whether this reasoning 
 be or be not considered valid from a theoretical 
 s tandpoint, it has been practically demonstrated 
 that, without any such provision for reciprocal 
 concessions, it requires no more than the merely 
 negative absence of profit to endanger the con- 
 tinuance of a profit-sharing scheme. The em- 
 ployees may not be requested, or compelled, to 
 make up any loss in bad years ; but, if the 
 good years, in which there is some appreciable 
 amomit of profit to distribute, are infrequent, 
 then they do not feel that stimulus to work hard, 
 or limit waste, which is put forward as one 
 recommendation of the plan to the employer. 
 But, as the Report affirms, ' the absence of 
 bonus, caused by insufficiency of profits, is 
 practically unknown in Gas Companies.'
 
 CO-PARTNERSHIP 245 
 
 In another respect also they are singularly 
 situated. The bonus upon wages, given in 
 profit-sharing schemes, is sometimes not dis- 
 tributed in cash at all. It is retained for 
 some provident purpose; and it may be said 
 that the encouragement of thrift by such 
 forcible means is, in some measure at least, 
 almost an inseparable feature of these arrange- 
 ments. But the funds thus accumulated are 
 generally invested in the company which has 
 been responsible for starting and continuing 
 the project; and 'labour co-partnership' is 
 expressly distinguished in the Report from 
 which we are quoting by the stipulation, 
 added to ' profit-sharing, ' that the worker 
 should enjoy some right of becoming a share- 
 holder, and should thus acquire indirectly some 
 responsibility and control in the management 
 of the enterprise for which he is working. 
 
 In fact, just as the facilities for saving offered, 
 almost imperceptibly, under the 'Rochdale 
 plan,' were perhaps an incidental but are now 
 an important consequence of that system, 
 so it is conceivable that the compulsory 
 thrift, which has certainly become more and 
 not less prominent a feature of profit-sharing 
 methods with the lapse of time, may ultimately 
 be regarded as the chief benefit that they 
 bring. In Co-operation, however, the irony of
 
 246 CO-OPERATION AND 
 
 fate has been exemplified in the increasing 
 difficulty of discoveving an outlet for the 
 surplus capita] of the stores and their mem- 
 bers ; and, by a curious parallel, the addition 
 to a capital account involved through the 
 issue of shares to emploj^ces is, as the Report 
 states to have been affirmed by observers 
 both friendly and adverse to labour co- 
 partnership, 'not always possible or desirable' 
 in every enterprise. A gas company, by con- 
 trast, by extending its mains and the like, is 
 constantly adding to its capital account in 
 the normal course of its business action; and no 
 less relevant to the interests of the employees, 
 who become shareholders directly, or subscribe 
 compulsorily to a provident fund invested with 
 the company, is the great improbability that 
 the liquidation of businesses, whose stocks 
 and shares arc 'often classed as gilt-edged 
 securities,' will deprive them of their savings. 
 These, then, are the special circumstances 
 which appear to favour the practice of 
 Co-partnership in that particular sphere of 
 industrial activity in which the principle has, 
 in fact, recently been most conspicuously 
 recognised. They should, of course, be 
 remembered and appraised when the ques- 
 tion of its extension to other trades is 
 being discussed. But, if Co-partnership is
 
 CO-PARTNERSHIP 247 
 
 regarded, not as an unfailing plan applicable to 
 all kinds of business enterprise indifferently, but 
 as a promising expedient to be tried where it is 
 likely to be preferable to other sehemes, their 
 consideration takes its proper place as being 
 pertinent and suggestive rather than absolutely 
 or fatally decisive. For their influence may 
 conceivably be neutralised altogether by the 
 presence of a different force, or it may be ap- 
 preciably strengthened or weakened from some 
 such cause. In all questions of this type, the 
 wise bystander will never forget the prudent 
 maxim that ' circumstances may alter cases.' 
 
 It is, however, no less precipitate to assume 
 that Co-partnership is bound to succeed under 
 conditions like those prevailing in gas-making 
 than it is to conclude that it must fail if the 
 environment be dissimilar. The Report to 
 v/hich we have alluded quotes the opinions 
 given by a number of employers who adopt 
 the new methods in their businesses on the 
 results which have ensued. Many of them 
 have no doubt that these have been excellent. 
 The methods, in their view, have developed 
 efficiency; and they have secured greater 
 harmony. From the stf^ndpoint of the 
 employed there also seems little question of 
 the capacity of the methods, when continued 
 for some length of time, to produce certain
 
 248 CO-OPERATION AND 
 
 advantages. They can conveniently be classi- 
 fied as three. The first is an addition to the 
 normal earnings; the second is the provision 
 of special facilities for thrift; and the third, 
 which is not so certainly assured as the other 
 two, is the possession of a measure of control 
 over the management of the business. That, 
 however, it seems, is rarely given in the form 
 of direct representation on the body entrusted 
 with this function; and it is often, and perhaps 
 necessarily, hedged about with precautionary 
 limitations. 
 
 This restriction has its significance; and 
 the answers of the employers, which are gener- 
 ally favourable to Co-partnership, and often 
 approve emphatically of the principle, never- 
 theless lend some support to the objections, 
 raised, mainly, it is true, by trade unionists, 
 to the methods in their practical operation. 
 It is admitted by one or two that they have 
 had no sensible effect at all, or that they 
 have not hitherto produced the results which 
 were hoped; and the cause of this partial 
 failure, or total disappointment, of the expec- 
 tations that were raised has been sought and 
 found in the comparative smallness of the 
 share received of the profits contrasted ^vith 
 the relative largeness of the wage on which 
 it is a bonus. Nor can it be disputed that the
 
 CO-PARTNERSHIP 249 
 
 increasing tendency, which is manifest, to 
 retain the bonus, in place of its distribution 
 in immediate cash, may create, or foster, the 
 suspicion that employers wish thereby to 
 tighten appreciably the hold they have upon 
 the services of those whom they employ. 
 In the gas companies it is a very general, if it 
 is not a universal, stipulation that the profit- 
 sharing employees should sign a contract bind- 
 ing themselves to remain with the company for 
 a year at least. Such a rule is reasonable, 
 but it is not likely to find favour with Trade 
 Unions, and their objection is not irrational. 
 
 Nor, again, is it otherwise than consonant 
 with their natural wish to preserve the full 
 independence of their members in what they 
 may probably consider the essential shape 
 of liberty to strike for higher wages, or 
 for shorter hours, or to leave a particular 
 employer, for them to distrust the formation 
 of a 'thrift fund,' to provide for friendly 
 benefits, or the purchase of a quantity of 
 shares on favourable terms in the company 
 by which the workers are themselves employed. 
 The bystander must agree that the principle 
 of Co-partnership runs athwart the solidarity 
 of the workers in a trade which is at once the 
 motive and the basis of effective combination. 
 
 The inherent conflict between the idea of
 
 250 CO-OPERATION AND 
 
 ■wage-earners as a ^vhole in an industry, 
 united with their fellows to advance and 
 defend their class-interests, and the concep- 
 tion of binding links between the employers 
 and employed in their respective single, 
 separate establishments cannot be ignored. 
 The situation may be regretted, but it is 
 difficult to see how it can be fully met by 
 the recognition of trade-union rates of wages 
 as the standard to which the bonus must be 
 an addition, and not a substitute in any 
 shape or measure, or by the avowal that 
 profit-sharers retain unimpaired their power 
 to be trade unionists. The way out of this 
 dilemma is not plain; it is rendered even 
 more obscure by some recent tendencies. 
 
 It may be argued, too, that the form of 
 investment of their savings pressed on work- 
 ing men by schemes of Co-partnership might 
 fairly be considered more hazardous, and less 
 desirable, in itself, apart from its consequences, 
 than that offered by friendly societies or even 
 perhaps by the Trade Unions. The oppor- 
 tunity of thrift opened by Co-operation of 
 the 'Rochdale type' could also be contrasted 
 to the disadvantage of the provident funds 
 favoured by Co-partnership. 
 
 Such reasoning may not be conclusive, but 
 it deserves consideration; and of the trend of
 
 CO-PARTNERSHIP 251 
 
 profit-sharing plans in the direction we have 
 noted copious testimony is forthcoming. As the 
 Report states, comparing its details with those 
 of its predecessor, published some twenty years 
 ago, 'the fact that comes most prominently 
 to light is the marked increase in those forms 
 of profit-sharing in which the method adopted 
 is either to invest the whole or part of the 
 bonus in shares in the undertaking — shares 
 which generally though not always confer 
 voting rights — or in other ways to secure that 
 the employees shall possess a direct financial 
 stake in the capital of the business.' It is to 
 ' this form of profit-sharing,' it adds, ' that public 
 attention is at the present moment principally 
 directed.' The correspondence of the idea with 
 the original conception that what was needed 
 to raise the labourer and prevent industrial 
 strife was to make wa,ge-earners capitalists will 
 be noticed; and the latter aim would, it is 
 not improbable, be brought somewhat nearer 
 to achievement, were these projects of mvesc- 
 ment received with greater popularity. 
 
 As it is, the hostility of trade unionists is 
 a factor which cannot be omitted from the 
 reckoning mthout risk of miscalculation. It 
 proceeds from motives which are powerful 
 and can be justified. It is a serious obstacle, 
 though it may not prove a permanent barrier,
 
 252 CO-OPERATION AND 
 
 to the adoption and success of profit-sharing 
 plans. But Co-partnership has one con- 
 spicuous advantage which may enable it to 
 pass round formidable opposition. That is 
 the variety of detail of which it is manifestly 
 capable without infringement of the leading 
 principle. Its elasticity in this respect is the 
 chief reason for anticipating favourable conse- 
 quences from its use. It is also the most 
 substantial guarantee for its occupation of a 
 place in the wage-arrangements of the future. 
 It is true that the methods of 'gain-sharing,* 
 as they have been styled, by which various 
 additions are made to the wages eamedj to evoke 
 better quality or produce greater quantity of 
 work, by ensuring care, or by stimulating 
 energy, would appear, with less disturbance to 
 the ordinaiy wages-system, to accomplish part 
 at any rate of what is sought by profit-sharing. 
 They, too, in their turn may excite, though per- 
 haps with less valid reason, the suspicion of 
 trade unionists; for they also constitute fluctu- 
 ating supplements to wages. But they are 
 more definitely measured, and can be known 
 beforehand with more certainty than is 
 usually the case with a share of profits. 
 They depend more obviously upon, and corre- 
 spond more closely to, the exertion, or the 
 care, of the recipients. Iji different forms —
 
 CO-PARTNERSHIP 258 
 
 for they admit of large variety — they may 
 be discovered now in many industries. 
 
 But the dominant faet in this discussion 
 has still to be emphasised; and it is this. The 
 wages-system itself, geneiically so called, 
 which may have more capacity of endurance, 
 and be less liable to disadvantage, than 
 impetuous reformers have been prone to 
 recognise, is susceptible of sub-division. Its 
 species are mauy : and the line which parts 
 some modes of 'gain-sharing' from some 
 varieties of 'profit-sharing' cannot be sharply 
 drawn without causing perplexity or hesita- 
 tion. It may be transgressed imperceptibly. 
 Such a conclusion is suggested by the difficulty 
 experienced, as we have seen, by trained 
 economists in defining the term ' profits,' and 
 by their interpreters in pointing to the classes, 
 or the individuals, who in actual business 
 practice are receiving 'profits' so described. 
 Co-operators themselves, seeking to justify 
 their honoured maxim of the ' abolition of profit 
 upon price' are driven to a vague ambiguity 
 when they allude to the ' fund known as profit.' 
 
 In the Report, from which the facts and 
 figures of this and the previous chapter have 
 been drawn, a detailed account is given of the 
 conversion of three business undertakings of 
 the ordinary type into co-operative societies
 
 254 CO-OPERxiTION AND 
 
 practising the principle of profit-sharing. But 
 it "svould be hard to fix with unimpeachable pre- 
 cision the exact points marking separate stages 
 in the transition. Its original commencement 
 and its final completion might be roughly dis- 
 tinguished. Trade Unions themselves, which 
 are hostile to Co-partnership, have, as we have 
 noticed, been susceptible to change. They 
 vary in their character and conduct. If in 
 Bome places, and on some occasions, they 
 become more or less effective and trustworthy 
 warranties for peace, at other seasons, and in 
 other surroundings, they seem to be little 
 else than instruments of war. 
 
 Nor, with all their vaulting ambitions, have 
 they yet encompassed the entire range of in- 
 dustry. LikeCo-operationofthe'Rochdalct}'pe' 
 they embrace what may be called the ' aristoc- 
 racy' of skilled workers, and their more recent 
 extension among the ranks of the unskilled 
 has been a notable departure. The general 
 conclusion, then, which we reach can hardly 
 fail to resemble that stated at the end of the 
 preceding chapter. He would be an audacious, 
 and he might prove a deceptive, prophet who 
 should allow no room whatever for Co- 
 partnership in those industrial regions, which 
 will not be brought for many a year, if they 
 ai'c at any future time, however far distant,
 
 CO-PARTNERSHIP 255 
 
 included within the sphere of influence of 
 Co-operation of the Rochdale kind. 
 
 Of the elasticity of the principle of profit- 
 sharing, to which we have been alluding, the 
 Board of Trade Report affords abundant 
 proof; and of the great variety of practice, 
 which has in fact resulted, we shall now 
 supply some account. The most obvious ajid 
 common form of profit-sharing is a bonus 
 given upon wages. That bonus, which, 
 according to the returns furnished by the 
 profit-sharing firms, averaged for the eleven 
 years from 1901 to 1911 inclusive some five 
 per cent, on the wages paid, rising to seven 
 in 1906 and falling to four in 1908 and 1909, 
 has usually been given gratuitously as a 
 voluntary payment, but in a few instances 
 it has become a legal right. It may be a 
 fixed proportion of the profits, whatever 
 their amount, or a maximum may be pre- 
 scribed beyond which participation ceases. 
 
 Or, again, in the event of a certain rate of 
 profit being earned, a sum may be divided, 
 representing either a percentage upon wages 
 or an amount increasing with the rate of 
 profit. The percentage upon wages may be 
 fixed, or may vary with the amount of profits 
 or with the length of service. In the case of 
 the gas companies, which are only allowed by
 
 256 CO-OPERATION AND 
 
 law to raise their dividends beyond a certain 
 point, if they make a proportionate reduetion 
 in the price they charge for gas, the bonus varies 
 with that price. It rises as the price falls, and it 
 falls as the price rises. Its connection, there- 
 fore, with the profits earned, as shown by the 
 dividend paid, is real though it is not direct. 
 
 The profits reckoned aregenerallythoseearncd 
 in a year, and are ' net ' and not ' gross ' profits. 
 The working expenses are first deducted, and 
 zmong these a fixed rate of interest, usually five 
 per cent., is allowed on the capital employed. 
 The percentage of the profits distributed may 
 vary in different cases from twelve to a hun- 
 dred, where no reserved limit exists, and, 
 where such a limit is established, a great 
 variety of percentages can also be discovered. 
 In some cases all employees participate, in 
 others certain qualifications are prescribed, of 
 which the most common is length of service, 
 although character or conduct may also be con- 
 sidered. The average percentage of the total 
 number of employees, who were entitled to 
 participate, was in 1911, in the case of the 130 
 firms which gave information, fifty-seven. 
 
 The bonus may be paid wholly or partly 
 in cash. The method of total payment 
 immediately in cash has prevailed in about 
 three-fifths of the schemes noted in the Report.
 
 CO-PARTNERSHIP • 257 
 
 In about half of the remaining schemes part 
 was paid in cash and part either placed in 
 a provident fund or invested at once in 
 shares. The third variety, which was found 
 more commonly than the fourth and last, 
 was that in which the whole of the bonus 
 was retained, but was partly invested and 
 partly kept on deposit to be withdrawn for pro- 
 vident purposes. In a very few cases, finally, 
 the wjiole was devoted to the last-named object; 
 but the proportion generally used for provi- 
 dent purposes was about a half. Sometimes 
 the thrift or provident fund so established is 
 collective, for the common benefit of all, and 
 sometimes the sums transferred are credited 
 to the individual employees. Sickness, old 
 age, disablement, and death are the most usual 
 occurrences for which provision is thus made, 
 but a marriage dowry for female employees has 
 been included in some schemes. If the fund 
 is collective, the benefits are generally forfeited 
 by quitting the service of the firm; but, if the 
 sums are credited to individuals, they can 
 usually be recovered in such an event. The 
 amounts placed in the funds are generally left 
 in the hands of the firms bearing interest as 
 deposits, but sometimes they are invested 
 outside in securities considered to be safe. 
 Besides the bonus upon wages, two other
 
 258 CO OPERATION AND 
 
 forms of profit-sharing arc recognised. One 
 is to pay, first a fixed rate of interest on 
 deposits left by employees in the hands of 
 their employers, and then, in addition, a 
 further return varying with the rate of profits. 
 The fixed rate generally lies between 3 and 
 5 per cent., and the additional payment may 
 be a different percentage in different instances. 
 The other form is to issue shares as a gift or 
 oja special terms. In the case of these shares, 
 as of those acquired by the compulsory 
 investment of part of the bonus retained, it 
 is generally provided that they are not 
 transferable except at death, or with the 
 consent of the issuing company. 
 
 They usually carry the ordinary voting 
 power; but in most cases the proportion of 
 the total number of votes gained thus by 
 the employees is insignificant. In nine cases 
 alone they are represented on the Boards of 
 Directors, but under many schemes there are 
 joint eoimnittees of employers and employed 
 with consultative functions. A recent Act, 
 it may be noted, allows ' limited partnerships,' 
 by which the employees in a private firm 
 can obtain an interest in the business without 
 any rights of interference in the management, 
 but also without any but a limited respon- 
 sibility for the debts and obligations.
 
 CO-PARTNERSHIP 259 
 
 So varied, then, is the detail of these profit- 
 sharing plans. Does it need a fanciful 
 imagination to suppose that by opportune 
 shaping to the circumstanees they will be 
 found sometimes of use in many different 
 industries? The hostility of trade unionists 
 is intelligible, and should not be minimised. 
 The potency and likelihood of profit-sharing 
 have been exaggerated. But, if neither 
 Co-operation nor Co-partnership can, in the 
 face of attested facts, be properly treated as 
 a panacea, their past history has shown that 
 it is not M'hat was previously expected that 
 always occurs. This wholesome lesson, which 
 is plainly taught to those who will humbly 
 leai-n, should warn us against any rash indul- 
 gence in excessive hope: it may, too, prevent 
 our foolish abandonment to extravagant 
 despair. For apparent obstacles might be 
 removed and seeming difficulties resolved in 
 ways we cannot now conceive or predict. We 
 must not, indeed, ignore impediments, but 
 we need not fall into the opposite extreme 
 of an affrighted immobility. Even while we 
 act, or fail to act, so irrationally, of the in- 
 dustrial world as a whole, it cannot be denied 
 that, if it progress more slowly than 
 enthusiasts desire, 'yet it moves.'
 
 BIBLIOGRAPHY 
 
 GENERAL 
 
 Ely, R. T., and Wicker, G. R. Elementary Principles of 
 
 Ecotwmics. (First published in 1904.) Macnullan. 
 
 3s. Gd. 
 Indxislrial Co-operation : the Story of a Peaceful Revolution. 
 
 Prepared for the Co-operative Union. Edited by 
 
 CAxnERiNE Webb. (Fourth edition, revised.) 1910. 
 
 The Co-operative Union. 2s. Cd. 
 Sixteenth Abstract of Labour Statistics of the United 
 
 Kingdom. (Board of Trade Report.) 1913. W>Tnan 
 
 and Sons. Is. 6d. 
 Warner, G. T. Landmarks in English Industrial History. 
 
 (First published in 1899.) Blackie. 3s. Gd. 
 
 CO-OPERATION 
 
 AvES, E. Co-operative Industry. 1907. JNIethuen. 5s. 
 
 Fay, C. R. Co-operation at Ilotne and Abroad. 1908. 
 P. S. King. 10s. Gd. 
 
 Hughes, T., and Neale, E. V. A Manual for Co-operators. 
 1888. The Co-operative Union. 2s. Gd. 
 
 Reports of Annual Co-operative Congresses. The Co- 
 operative Union. 
 
 Report on Industrial and Agricultural Co-operative 
 Societies in the United Kingdom. (Board of Trade 
 Report.) 1912. Wj-man & Sons. Is. 8d. 
 
 Year-Book of International Co-operation (Second Year). 
 1913. P. S. King. 4s. 
 
 CO-PARTNERSHIP AND PROFIT-SHARING 
 
 GiLMAN, N. P. Profit-Sharing between Employer and 
 
 Employee. 1889. Macmillan. 7s. Gd. 
 Labour Co-partnership. A Journal published by the 
 
 Labour Co-partnership Association. 
 Report on Profit-Sharing and Labour Co-partnership in 
 
 the United Kingdom. (Board of Trade Report.) 1912. 
 
 Wyman & Sons. Bid. 
 ScHLOSs, D. F. Methods of Industrial Remuneration 
 
 (l^rst published in 1891.) Williams & Norgate. .'3s. " 
 Taylor, S. Profit-Sharing between Capital and Labour. 
 
 1884. Kegan Paul, Trench & Co. 2s. Gd. 
 Webb, B. (formerly Potter). The Co-operative Moot' 
 
 ment in Great Britain. (First published in 1895.) 
 
 G. Allen. 2s. Gd.
 
 BIBLIOGRAPHY 261 
 
 ECONOMIC THEORY 
 Marshall, A. Elements of Eeonomies of Industry. (First 
 
 published in 1892.) Macmillan. 3s. Gd. 
 Mill, J. S. Principles of Political Economy. Edited by 
 
 W. J. Ashley. 1909. Longmans. 5s. 
 Nicholson, J. S. Principles of Political Economy (in 
 
 3 vols., on the lines of Mill's treatise). (First published 
 
 in 1901.) Blaek. £2 2s. 6d. 
 Price, L. I^. A Short History of Political Economy in 
 
 England from Adam Smith to Arnold Toynbce. (First 
 
 published in 1891.) Methuen. 2s. Gd. 
 Seager, II. R. Principles of Economics. 1913. Bell. 
 
 10s. Gd. 
 Seligman, E. R, a. Principles of Economics. (First 
 
 published in 1905.) Longmans. 10s. Gd. 
 
 INDUSTRIAL AND COMMERCIAL HISTORY 
 
 Cunningham, W. Growth of English Industry and Com- 
 merce in Modern Times. Part I. — The Mereantile 
 System. Part II. — Laissez-Faire. 1903. Cambridge 
 University Press. 25s. 
 
 Conner, E. C. K. Common Land and Inclosure. 1912. 
 Macmillan. 12s. 
 
 Lev^% H. Large and Small Holdings. 1911. Cambridge 
 University Press. 15s. 
 
 Price, L. L. A Short History of English Commerce and 
 Industry. (First published in 1900.) Arnold. 3s. Gd. 
 
 Slater, G. The English Peasantry and the Enclosure of 
 Common Fields. 1907. Constable. 10s. Gd. 
 
 ToYNBEE, A. The Industrial Revolution. (First pub- 
 lished in 1884.) Longmans. 2s. Gd. 
 
 THE THEORY OF WAGES AND THE 
 
 DISTRIBUTION OF WEALTH 
 
 Bagehot, W. Economic Studies. 1880. Longmans. 
 
 3s. 6d. 
 Haney, L. H. History of Economic Thought. 1911. 
 
 Macmillan. 8s. Gd. 
 Taussig, F.W. Wages and Capital. 1896. Macmillan. 5s. 
 Walker, F. A. The Wages Question. 1884. Macmillan. 
 8s. 6d. 
 
 CO-OPERATIVE PRODUCTION 
 Jones, B. Co-operative Production. 2 vols. 1894. 
 
 Oxford University Press. 15s. 
 Redfern, p. The Story of the C.W.S. : the Jubilee 
 
 History of the Co-operative Wholesale Society, 1863- 
 
 1913. 1913. The Co-operative Wholesale Society. 
 
 2s. Gd.
 
 262 BIBLIOGRAPHY 
 
 CO-OPERATION IN AGRICULTURE 
 
 Haggard, Sir H. Rider. Rural Denmark and its Lessons. 
 
 1911. Longmans. 7s. 6d. 
 
 Jeeb, L. Small Holdings. 1907. J. Murray. 10s. 6d. 
 Plun'kett, Sir II. Ireland in the New Caitury. 1904. 
 
 J. Murray. 5s. 
 Pratt, E. A. The Transition in Agriculture. 1900. 
 
 J. Murray. 5s. 
 Protuero, R. E. English Farming, Past and Present. 
 
 1912. Longmans. 12s. 6d. 
 
 Report of an Enquiry on Agricultural Credit and Agri- 
 cultural Co-operation in Germany. (Board of Agriculture 
 Report.) By J.R.C.vHiLL. 1912. Wyman & Sons. 5s. 
 
 Wolff, II. W. Co-operation in Agriculture. 1912. 
 P. S. King. 6s. 
 
 Wolff, H. W. People's Banks. 1910. P. S. King. 6s. 
 
 TRADE UNIONS AND INDUSTRIAL 
 CONCILIATION 
 
 Ashley, W. J. The Adjustment of Wages. 1903. Long- 
 mans. 12s. 6d. 
 
 Price, L. L. Industrial Peace : its Advantages, Methods, 
 and Difficulties. 1887. Macmillan. 7s. 6d. 
 
 "Report on Strikes and Lock-outs and Conciliation and 
 Arbitration Boards in the United Kingdom in 1912. 
 (Board of Trade Report.) 1913. W\Tnan & Sons. 10|d. 
 
 Webb, S. and B. Industrial Democracy. (First published 
 in 1897.) Longmans. 12s. 
 
 SOCIALISM 
 
 Ensor, E. K. Modern Socialism. 1904. Harpers. 5s. 
 EsTEY, J. A. Ii€Volutio)iary Syndicalism. 1913. P. S. 
 
 King. 7s. 6d. 
 Jones, Lloyd. Life, Times, and Labours of Robert Owen. 
 
 1889. Labour Association. 2s. Gd. 
 Macdonald, J. Ramsay. The Socialist Movement. 
 
 1913. Williams & Norgate. Is. 
 Mallock, W. II. A Critical Examination of Socialism. 
 
 1908. J. Murray. Is. 
 Monger, A. The Right to the Whole Produce of Labour. 
 
 1899. Macmillan. 6s. 
 Rae, J. Contemporary Socialism. 1891. G. Allen. 
 
 10s. 6d. 
 Skelton, J. Socialism : a Critical Analysis. 1911. 
 
 Constable. 6s.
 
 INDEX 
 
 Agkarian changes, 15, 200. 
 Agriculture and Co-opcru- 
 
 tion, 187. 
 Arbitration in industrial 
 
 disputes, 112. 
 Associations of consumers, 
 
 181, 217. 
 
 • producers, 181, 217. 
 
 Bageiiot, W., 57, 76, 198. 
 Banking, importance of, 14. 
 
 , to farmers, 197. 
 
 Business-management, im- 
 portance of, 82, 88, 92. 
 Bonus on viages, 174, 179, 
 
 228, 245, 255. 
 Capital and Labour, rela- 
 tions between, 20, 30, 
 
 97, 251. 
 , Mill's propositions 
 
 about, G7. 
 Capitalism, commercial, 11. 
 
 • , early, 10. 
 
 • , industrial, 12. 
 
 Capitalistic age, character 
 
 of, 10, 15, 20. 
 Carlyle, Thomas, 26, 40. 
 Christian Socialists, 38, 41, 
 
 50, 133, 171, 177. 
 Clothier, the, 10. 
 Collective bargaining, 117. 
 Collectivism, 41. 
 Conciliation in industrial 
 
 disputes, 113. 
 Co-operation, meaning of, 
 
 134. 
 Co-operative Congresses,182 
 
 . Union, 182, 185, 
 
 Production, 176. 
 
 Co-partnersliip, meaning of, 
 
 52, 219. 
 
 . by Co-operators, 227. 
 
 ■ by private firms, 239. 
 
 Corn Laws, 36. 
 
 Credit, development of, 14, 
 
 26. 
 — — in Co-operation, 165. 
 Credit-banks, 194, 212. 
 Diminishing returns, law 
 
 of, 33. 
 
 Dividend-hunting, 1G6, 
 
 Dividend on pureliase, MO. 
 
 Division of labour, 28, 135. 
 
 Distribution of wealth as 
 treated by Economists, 
 73. 
 
 Domestic system of in- 
 dustry, 10, 98. 
 
 Economic interpretation ol 
 history, 9. 
 
 Education of Co-operators, 
 132, 186. 
 
 Egg factories, 196, 210. 
 
 Emjjloyer, importance of, 
 82. 
 
 Employees, treatment of, 
 155, 168, 189. 
 
 Enclosures of land, 18, 201. 
 
 Entrepreneurs, 11, 93. 
 
 Factories, early, 12. 
 
 , evils of system, 24. 
 
 Federalists, 133, 
 
 Gain-sharing, 252. 
 
 Gas companies and profit- 
 sharing, 243. 
 
 Greenwood, Ab., 137, 171. 
 
 Haggard, Sir Rider, 194. 
 
 Hughes, Thomas, 40, 182. 
 
 Individualism, 41. 
 
 Industrial and Provident 
 Societies Acts, 171. 
 
 Industrial peace, 99. 
 
 Industrial Revolution, 
 character of, 10, 21. 
 
 Industrial quarrels, 22, 39, 
 49, 97, 108. 
 
 International C-operative 
 AlHanee, 128, 218. 
 
 Irish Agriculture and Co- 
 operation, 187, 210. 
 
 Iron law of wages, 66. 
 
 Jevons, Wm. Stanley, 64. 
 
 Jack of Newbury, 12. 
 
 Kinglsey, Charles, 40, 50. 
 
 Labour Co-partnership 
 Association, 240. 
 
 , meaning of 53, 221. 
 
 Labour Exchange, 141. 
 
 Laisser-faire, 41.
 
 2Gi 
 
 INDEX 
 
 Large farms and Co-opera- 
 tion, 195. 
 
 Large farms and small 
 farms, 199. 
 
 Lassalle, Ferdinand, .'50, 66. 
 
 Leroy-Beaulicu, Paul, 107. 
 
 I^evy, Dr Hermann, 202. 
 
 Longe, F. D., 7."). 
 
 Mallock, W. H., 93. 
 
 Malthus, T. 11., 33, 65. 
 
 Marshall, Dr A., 45, 64. 
 
 Marx, Karl, 7, 23, 50, 68, 72. 
 
 Metayer system, 192. 
 
 Mill, John Stuart, on Co- 
 operation and Co-part- 
 nership, 44. 
 
 , on diminishing re- 
 turns, r "1. 
 
 , on the distribution of 
 
 wealth, 77. 
 
 , on population, 32, 65. 
 
 , on the wages fund, 59. 
 
 , on wages system, 48. 
 
 Napoleon and English 
 credit, 15. 
 
 National dividend, 64, 100. 
 
 Ncale, Edward Vansittart, 
 40, 185, 241. 
 
 Owen, R., 25, 41, 93, 139. 
 
 Population, 35, 62, 65. 
 
 Profits and risk-taking, 83. 
 
 , explanation of, by 
 
 Adam Smith, 81. 
 
 , explanation of, by 
 
 Mill, 78. 
 
 , explanation of, by 
 
 "Walker, 81. 
 
 Profit on price, 148. 
 
 Profit-sharing, meaning of, 
 53, 221. 
 
 , advantages of, 248. 
 
 — — , objections to, 105, 
 157, 249. 
 
 — , objections to, raised 
 
 by Trade Unions, 115, 
 249. 
 
 Plunkett, Sir Horace, and 
 
 Ireland, 194, 210. 
 Raiffeisen banks, 215. 
 Revisionists, German, 8, 10. 
 Rochdale Pioneers, 143, 187 
 
 191. 
 Rochdale Plan, advantages 
 
 of, 151. 
 
 , faults of, 166. 
 
 Schl-lze-Delitsch banks, 
 
 215. 
 Self-governing workshops, 
 
 38, 56, 94, 133, 156, 177, 
 
 181, 236. 
 Scligman, Professor, 9. 
 Small farmers and Co-opera« 
 
 tion, 207. 
 Small farmers and large 
 
 farmers, 202. 
 Smith, Adam, 11,25,81, 135. 
 Standard of comfort, 63. 
 Standard rates of wages, 118 
 Standardising, 210. 
 State Socialism, 141, 159. 
 Syndicalists, 49, 123. 
 Taussig, Professor, 75. 
 Thompson, William, 72. 
 Trade Unions, 70, 99, 103, 
 
 106, 109, 158. 
 Toad Lane, 137. 
 Trusts, 31, 154, 180. 
 Untearned gains, 9, 206. 
 Unemplojnient, 27. 
 Union Shops, 138 
 Valute, Surplus, 8, 36. 
 Wages fund, 35, 59. 
 
 system, 82, 48, 55, 
 
 106, 253. 
 -Walker, F. A., 75, 81, 90. 
 Webb, Mr and Mrs, 8. 
 
 , Mrs, 156. 
 
 Wholesale Societv, English, 
 172, 179, 228.* 
 
 , Scottish, 134, 174, 
 
 178, 229. 
 Young, Arthur, 18. 
 
 LONDON AND GLASGOW : COLLINS' CLEAR-TYPE PRESS.
 
 HP 
 P7 
 
 THE LIBRARY 
 UNIVERSITY OF CALIFORNIA 
 
 Santa Barbara 
 
 THIS BOOK IS DUE ON THE LAST DATE 
 STAMPED BELOW. 
 
 M'^E^^] 
 
 mt
 
 3 1205 00011 3686 
 
 UC SOUTHERN REGIONAL LIBRARY FACIUTY 
 
 AA 000 774 031