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TRANSLATED FROM THE FBENCH BY THE STAFF OF 

THE CO-OPEEATIVE EEFEEENCE LIBEAEY, DUBLIN. 

WITH AN INTEODUCTION AND SUPPLEMENT- 

AEY CHAPTEE BY JAMES PETEE WAEBASSE. 

EDITED IN THE UNITED STATES BY CEDEIC LONG 


CONSUMERS' 
CO-OPERATIVE SOCIETIES 


B r CHARLES GIDE 

Profeuorof Political Economy in the Faculty of Lava, Univsriitv of Porff 


NEW YORK 

ALFRED • A •KNOPF 

MCMXXII 


 COPYRIGHT, 1922, BY 
ALFRED A. KNOPF, INC. 

Published. October. 79« 


Bet up and printed &i/ Wte Vatl-Ballou Co., Binßhamton, N. Y, 

Pater furnished tv W. F. Efkeringtvn & Co., New Varie, V. Y. 

Bound Tin the H. Wolff Estate, New York, N. Y. 


TUB VNJTSD STATES OF AMERICA 


EDITOR'S PREFACE 

The excellent translation of Professor Gide's "Les 
Sociétés Coopératives de consommation" which follows is 
the result of the labors of the staff of the Co-operative 
Reference Library, Dublin, Ireland. The present editor, 
in preparing the book for an American public, has, by 
permission of the fellow-co-operators in Dublin, eliminated 
such of the English footnotes as were of interest principally 
to British readers or has incorporated them in his own. He 
has also moved up into the text many of Professor Gide's 
notes added by him at the time of the translation into 
English. Therefore at present there are only the two kinds 
of footnotes: those of the original author and those of the 
American editor. 

Without the painstaking work of the translators and 
those who assisted them, this American edition would 
probably not have been undertaken at this time. Without 
Professor Gide's help in _read,ing"*Jb|wough the proofs and 
making several valuable, '<silggestlotos, tJae, ,'foook would not 
have the contemptfr&Jry" 'value it now postasse*. Finally, 
Dr. Warbasse, in. "con'tributing a preface and a ,ciha,pter on 
"Co-operation inV.the United States," _ has, made'.ihi's book, 
always indispenMble to iihe^t'^detitToj','European Ço'-opera- 
tion, an essential to those'wKo are studying the Co-opera 
tive Movement in the United States. The present editor 
is honoured in being able to append a few additional Amer 
ican notes and to prepare this edition for the publisher. 

CEDEIC LONG 


 CONTENTS 

INTRODUCTION ix 

I. Co-OPERATION IN THE UNITED STATES, 

BY JAMES P. WARBASSE 1 

II. THE OBJECT OF A CONSUMERS' CO-OPEBATIVE 

SOCIETY IT 

III. THE: CO-OPEBATIVE PROGRAM: CRITICISM BY 

ECONOMISTS 22 

IV. THE HISTOKY OF DISTRIBUTIVE CO-OPERATION 31 

V. STATISTICS AND GEOGRAPHICAL DISTRIBUTION 

OF THE CO-OPERATIVE MOVEMENT 48 

VI. VARIOUS SYSTEMS OF SALE 63 

VII. THE DIVISION OF PROFITS 78 

VIII. MEMBERS 100 

TX. CAPITAL 107 

X. VARIOUS TYPES OF CONSUMERS' SOCIETIES 119 

XI. CO-OPERATIVE FEDERATIONS 153 

XII. THE CONFLICT BETWEEN CO-OPERATIVE SO 
CIETIES AND TRADERS 174 

XIII. CAUSES OF SUCCESS OR FAILURE OF CON 
SUMERS' SOCIETIES 190 

XIV. THE RELATIONS BETWEEN CO-OPERATIVE SO 
CIETIES AND THE STATE 207 

XV. PRODUCTION BY CONSUMERS' SOCIETIES 219 

XVI. THE EMPLOYÉS AND WORKMEN IN CO-OPERA 
TIVE SOCIETIES 245 

-XVII. CO-OPERATION AND SOCIALISM 261 
INDEX 289 


 INTRODUCTION 

Two antagonistic economic forces today are striving for 
supremacy. The conflict between them causes the .general 
social disorganization now obvious. A stabilized society 
will come to pass only when one or the other of these becomes 
dominant. The great war was but a minor and subsidiary 
flare-up in one of the contending camps. Shall the life and 
industries of the world be conducted for purposes of profit or 
for purposes of service?—this is the Great Conflict. The 
war was a melange of hidden motives, uncertainties, hypoc 
risies and subterfuges; the Great Conflict is clear-cut and 
definite. On the one side are the most powerful forces in 
society from the material standpoint. They get their 
strength from the belief, of the many, in the competitive 
profit-system. They are supported by the vast interests 
which subsist upon income from property. They are main 
tained by the human hunger for privilege and power and the 
natural desire to have the good things of life without per 
forming service. They are associated with the ownership 
of the major part of the property of the world. They con 
trol the great governments, with their coercive might of 
arms, police, and j urisdiction over the lives of the people. 

On the other side are forces which are as yet weak and 
but meagrely organized but which are steadily growing. 
They are impelled by the determined conviction in the 
minds of people that it is possible to organize the economic 
affairs of the world upon the basis of production and dis 
tribution for service. A hunger is growing among the toil 
ing masses for the control of the affairs of their lives to this 
end. Substantiating these tendencies are the facts that the 


IX 


 x CONSUMERS' CO-OPERATIVE SOCIETIES 

workers are organizing more and more effectively as pro 
ducers in the field of production and as consumers in the 
field of consumption. The demonstrations of these possi 
bilities are capturing the imagination of the people and 
creating the vision of larger things. On the first side, and 
contributing to the strength of the second side, is the present 
breaking down of the profit-system. There are some who 
look forward with fear to a collapse of the economic struc 
ture of modern societ}^ and to a coming revolution. Fears 
of such a futur'e event are groundless—such a catastrophe 
need not be anticipated as a possibility of the future—it 
is already coming to pass. Whether we realize it or not, we 
are living in the midst of a cataclysm. The old order is 
breaking to pieces. The life of an individual is a momen 
tary flash in the history of society ; the events through which 
we are living are burning and quick. 

As the profit-motive in industry fails to serve the people 
as a social instrument, two organizations of society stand 
ready to assume its functions. One is the political State; 
the other is the voluntary, non-political organization of the 
people in the Co-operative Movement. When the present 
disorder has subsided, the future conflict will be between these 
two principles. One is the compulsory political idea; the 
other is the idea of free and voluntary association. Each 
is making progress. Each moves in the direction of pro 
duction and distribution for service. Harmonization of 
these two elements is possible and to be hoped for as an event 
of the future. 

In the reorganization of society now imminent there is 
a question of paramount importance to be answered : Can 
the people conduct their own business effectively or must 
they eternally look to private profit-making interests or to 
the impersonal State to do it for them? This question is 
answered by the co-operative societies in which the people 
are giving the world a demonstration of their capacity to 


XI 


INTRODUCTION 

do things for themselves. They begin with the distribution 
of the necessities of life, such as food, clothing and shelter, 
and thus gain better access to the things they need. But 
what is more important, they learn by experience the tech 
nique of carrying on distributive business in the interest of 
the consumers. Next comes federation of distributive so 
cieties, and then wholesaling. This gives experience in the 
management of big business. Then follows production for 
use—production in their own factories and workshops for 
their own non-speculative use. When the consumers have 
reached back to the ownership of the productive plants, the 
land and the raw material, the demonstration is complete 
that the people can conduct their own business from start to 
finish for service and not for private profit. When this 
end is reached, the victory is won; a revolution has slowly 
but definitely taken place. 

There is another question: How can the people obtain 
control of industry and administer it effectively in their 
own interest? Voting does not provide the training. There 
is a prevalent fiction that all that is needed is for the ma 
jority of people to vote at an election to instruct the gov 
ernment to take over profit-making industries and use them 
for ; the service of the people. But these industries have 
never been used for that purpose, nor have the people who 
are administering them and working in them had experience 
in service for social purposes. The industries and the 
people have been adjusted to the profit motive. The change 
is too difficult to be accomplished by an edict. Russia has 
discovered this. 

There is a serious obstacle to the success of the sudden in 
dustrial revolutionary method in a certain fact that has 
received little attention from leaders of labour and less from 
economists. It is the fact that the organization of society 
solely upon a producers' basis cannot solve the economic 
problem. The theory that the workers should capture the 


 XU 


CONSUMERS' CO-OPERATIVE SOCIETIES 

industries by a revolution and that around the industrial 
function should revolve all of the reforms of the social life, 
has been responsible for many of the vagaries that have led 
the people astray. The "Christian socialist" movement, 
"syndicalism" and "guild socialism" have all been based upon 
the hypothesis that labour is the great function and that it is 
at the point of production that mankind needs to begin or 
ganization and control. For this reason we find these or 
ganizations striving to get for the workers the best rewards 
possible. This is good as far as it goes, but it never has and 
it never can solve the workers' problem. It has not the power 
to change the motive of industry. This method has striven to 
give the worker "the full value of the wealth he produced." 
"Full reward for labour" has been the aim. That motive has 
meant working for wages—producing for wages—and pro 
ducing with that motive has meant not production for use 
but production for profit. Labour, like the capitalist, has 
sought to get as much for itself as possible, and that means 
as much from the consumers—from all the people—as pos 
sible. This psychology is not compatible with production 
for use. In the trade union, as well as in the merchants' 
and manufacturers' association, the chief problem is how to 
get more from the consumer. And no group will solve the 
economic problem with this motive. 

Other exclusively producing enterprises such as the "self- 
governing workshop," "producers' co-operative," and "co 
operative communistic colonies," working for wages, pro 
ducing for profit, laying emphasis on labour as the exalted 
function, all suffer one and the same fate : they either fail or 
they become capitalistic—sooner or later. Let workers, in 
any form of organization, centralized at the point of pro 
duction, succeed from the financial standpoint, and their or 
ganization becomes capitalistic and profit-making. Idealism 
in that field is compatible with poverty; but not with busi 
ness success. 'Success means failure. The industrial coun- 


INTRODUCTION 


Xlll 


tries are written over with a hundred years of historic cor- 
roboration of this fact. The few successful producers' co 
operative enterprises in Great Britain, the larger numbers in 
Germany, and the still more in Italy and France do not con 
tradict the general truth of this statement. Only this modi 
fication need be made : those that are not on the way to fail 
or to become capitalistic are on the way to be taken over by 
the consumers' co-operative societies. 

That work is the great function is an idea that has been 
promoted by slave owners, manufacturers, capitalists, 
schoolmasters, and parents who had no alternative. It is 
not natural to work. Society has been confused by artificial 
standards. People work only as a secondary reason. They 
work in order that they may consume. It is not for the win 
ning of wages ; it is for the things that wages will buy that 
men work. But so much emphasis has been laid upon labour 
and wages that money has come to be the object both of 
worker and capitalist. The fact is, that, not in work but 
in consuming things is to be found the great joys. Food, 
clothing, housing, music, art, literature, entertainment, love, 
the pleasure of companionship—these are the things that 
come into the body through its senses and give it j oy. It is 
not standing at a whirling machine that gives the satisfac 
tions in life ; but in consuming the things that can be gotten 
with the wages obtained, perhaps, in work at the machine. 

The one person who merits supreme consideration is the 
consumer; he is everybody. The alternative to political 
revolution and to profit-making industrial control is produc 
tion controlled by the organized consumers and conducted in 
their interest. This means production for use ; and it is the 
only form of production that has that motive. 

If the world is to be saved by substituting for the profit 
system the system of doing things for purposes of service 
then it must be saved through the organized Consumers' 
Movement, The consumers are no class. They are all. 


 xiv CONSUMERS' CO-OPERATIVE SOCIETIES 

They are the people standing together, not in drudgery, not 
by the whirring wheel, but in the enj oyment of things—unit 
ing to help one another secure better access to the things that 
make life—helping one another to life in greater abundance. 

When the Co-operative method becomes prevalent, then 
should the worker get the value of what he produces ; then 
should the access to the good things of life be secured by the 
performance of useful service. Through the Co-operative 
Movement the prevalent economic competitive system may be 
supplanted—not by chaos, suffering and revolution, but by 
an ordered, evolutionary method which employs the humane 
qualities of friendship and mutual aid, instead of rivalry and 
antagonism. 

My friend, Professor Charles Gide, is the foremost spokes 
man of this Movement in France. His teaching has clari 
fied its philosophy and illumined its social significance. It is 
an augury of moment that an economist of his profound 
scholarship should be drawn to Co-operation as the agency 
above all others which he believes has the power to reorganize 
society. This book represents a study in the field of fun 
damental social reorganization, which should prove of great 
help in promoting an enlightened interest and understanding. 
It is, indeed, a pleasure to contribute the preface and a 
privilege to pay homage to its distinguished author. 

J. P. W. 


CONSUMERS' 

CO-OPERATIVE 

SOCIETIES 


 CHAPTER I 

CO-OPERATION IN THE UNITED STATES 

BY JAMEg PETER WARBASSE 

The spirit of co-operation is discovered early in the 
history of the United States. Although pioneers in a new 
country are prone to develop individualism and seek their 
fortunes alone, sooner or later they learn that positive 
advantages are to be had by union of their forces. Mutual 
aid is called upon to protect them from the elements and from 
unfriendly people. As much as the individual may enjoy 
pushing out alone into the wilderness, he experiences a 
greater sense of security when he unites with his fellow-men 
for their mutual benefit. The union of people in the polit 
ical state is an expression of this sense. In the economic 
field, expressions of co-operation are found in the co 
operative and communistic colonies which settled on the land 
in the latter part of the Eighteenth Century and the early 
part of the Nineteenth. The oldest of these is the Society 
of Shakers which was established at New Lebanon, New 
York State, in 1787. 

From that time down to the present there have always 
been colonies in which the members attempted to carry on 
their industrial and social life in the spirit of co-operation. 
They have been occupied in farming and other forms of 
productive work, owning property, selling their produce, 
and buying in common. They have come and gone. 
Some have succeeded commercially as businesses, but none 
have succeeded as social enterprises because their principles 


 2 CONSUMERS' CO-OPERATIVE SOCIETIES 

were of the profit-making type rather than the social. 
The certain fate of these organizations is either to fail, or, 
if they succeed from the financial standpoint, to become 
capitalistic, profit-making enterprises. So long as they are 
struggling for success their idealism remains; but as soon 
as they win what they are seeking, their idealism perishes. 
Their success is their destruction. This is not only the 
case with so-called "co-operative colonies" but all collective 
enterprises of producers whose purpose is to make profits 
by selling to the consuming public. 

Then came the Rochdale Era, following the definite formu 
lation of a co-operative philosophy and the working out 
of a specific plan for putting it in operation. This was 
the beginning of the Consumers' Co-operative Movement. 
Its first appearance in the United States was in 1845 when 
the Workiagmen's Protective Union opened its first store 
in Boston. Since that time the working people have made 
continuous attempts to establish co-operative societies. In 
1853 the International Industrial Assembly of America, with 
a membership of 200,000, promoted co-operative enterprises. 
The National Labor Union did the same in 1866. These 
were followed by the Patrons of Husbandry, the Granges, 
the Sovereigns of Industry, and the Knights of Labor. By 
1877 these latter organizations had several hundred stores 
throughout the eastern states. They developed also many 
productive industries which they called co-operative. The 
New England Protective Union at one time had 400 dis 
tributive stores extending throughout the Atlantic States. 
The enterprises established by these old organizations 
were all deficient from the co-operative standpoint. Most 
were lacking in the fundamental qualities of Co-operation. 
The others that could be regarded as co-operative were so 
deficient in co-operative education that their members rarely 
understood the nature and possibilities of their enterprise. 
The great majority failed. 


CO-OPERATION IN THE UNITED STATES 3 

Another form of early co-operation in the United States 
was that of the building associations, or "building and loan 
associations," which extends over a long period. The first 
organization of this sort was the Oxford Provident Building 
Association founded near Philadelphia in 1831. From that 
time to the present there has been an extensive development 
of these organizations in the United States. They have 
provided for savings, and for loans for the building of 
homes. These, like many similar organizations, remained 
always on the border line but never became fully co 
operative. 

Co-operative banking and credit associations date back 
also to the early part of the last century. These early 
struggling societies were practically all destroyed by the 
Civil War. Then there crept in from Canada, by way of 
Massachusetts, banking inspiration brought by Alphonse 
Des jardins. Later several states enacted co-operative 
banking laws, and the movement slowly began to spread. 

Co-operative distributive societies also have continued to 
develop with slow but steady improvement since that first 
store in Boston over seventy-five years ago. There was 
a period in the early part of the present century when the 
Socialists became interested in Co-operation and were re 
sponsible for organizing many societies. These suffered 
from an excess of idealism and a deficiency of practical 
executive talent. They disappeared. While Co-operation 
was making its remarkable progress in Europe, it progressed 
very slowly in this country. Greater difficulty in creating 
interest has always existed in the United States and the 
proportion of failures has been larger than in Europe. 

The reasons for this slow .progress are natural and ob 
vious. The chief reason resides in the fact that until 1916 
there was no central source of information and guidance 
such as existed in each European country ; the people started 
societies that were not co-operative; and they attempted to 


 /I 


I 


4 CONSUMERS' CO-OPERATIVE SOCIETIES 
run them without standardized information or guidance. 
Besides this there were the economic reasons. A new 
country with limitless opportunities breeds the spirit of 
individualism. Profit-making business and the eager quest 
for the dollar dominated the public mind. Each individual 
hoped to win and to go ahead of his neighbour in the com 
petitive struggle. In no country has the urge of individual 
profit-making become so strong and the opportunity so 
great as in the United States. This condition engendered 
a state of mind in which Co-operation did not thrive. 

The newness of the country gave rise to fluctuations of 
population. The people have been restless. They have not 
remained to live in the neighbourhood where they were born. 
New neighbours are not 'good co-operators. The presence 
of frontiers to the westward, toward which a fluid population 
could always keep moving, has been an obstacle to the 
stability necessary for co-operative organization. 

The examples of great wealth and the possibilities of 
"getting on" have always encouraged hope even among the 
poorest. The idea that any man can grow rich by his 
own individual actions has deterred people from uniting 
in a project which is based upon an acknowledgment of the 
need of mutual aid, and in which the early rewards are so 
meagre while the efforts are so great. 

The mixture of many races and nationalities, with the 
differences of customs and languages, has militated also 
against the union of people in co-operative societies. 

The strenuous competition among private tradesmen and 
the allurements of advertising have won the people to a 
habit of shopping and bargain hunting until these have 
become a prevalent form of American diversion and recrea 
tion. While competition has kept prices down and has made 
it possible to find reasonable prices, it has prompted the 
tradesmen to offer every conceivable inducement and entice 
ment for the sake of trade. 


CO-OPERATION IN THE UNITED STATES 5 

Then too this is the land of the great god "Business." 
The laws as well as the public psychology are all adjusted 
to the profit-making system. The influential elements in 
each community are the "boards of trade," "merchants 
associations" and "chambers of commerce." These 
organizations are composed of the prominent citizens. 
They dominate the schools, the press, and the public thought, 
as well as the industries. They are organized and operate 
for the purpose of making profits from the unorganized 
consumers. And these bodies, found in every community, 
are naturally opposed to the Co-operative Movement. 
Every device conceivable that can be used by a powerful 
organization to destroy a weaker one is resorted to by these 
elements to suppress co-operative associations, for the latter 
are capable of demonstrating that the people can carry on 
business for themselves, in their own interest. 

A most serious hindrance to co-operative progress has 
been the multitude of spurious '4/co-operative" societies. 
They vary from the wildest and most fanciful schemes of 
well-meaning persons to the most unscrupulous fraud. 
These enterprises take millions of dollars from working 
people, who are left hostile to true Co-operation. During 
the past three years these undertakings have been especially 
flagrant. They have capitalized the growing interest in 
Co-operation and sold the people a poor imitation. Some 
of the promoters of these ventures have been sent to prison ; 
most of them are at large, organizing and reorganizing their 
failing schemes. These organizations follow the chain- 
store methods. This centralized plan of administration 
invariably fails. It succeeds in profit business, but in Co 
operation it fails for lack of democracy, local interest and 
efficiency, when downright fraud is not the cause of the 
failure. The practical reason why even the well-intended 
among these things have failed has been because of a central 
bureaucracy which has been ignorant of both co-operative 


4 (i 


 Ift 

J 


6 CONSUMERS' CO-OPERATIVE SOCIETIES 

theory and practice. During the period from 1919 to 
1923 twelve of these centralized undertakings have failed 
from the Atlantic to the Pacific. They have had presented 
to them every evidence that their schemes could not succeed, 
and still they went on collecting money from working people 
which could have no other fate than to be lost. A 
characteristic of these organizations has been that they all 
attacked The Co-operative League, the national educational 
organization whose function is to give advice on co-opera 
tive problems. Among the most conspicuous examples have 
been the "National Co-operative Association," the "Co 
operative Society of America," and the "Pacific Co-opera 
tive League." Over $15,000,000 has been lost in three years 
in these ventures by deluded people who thought that they 
were promoting Co-operation. But still greater than this 
is the loss of the morale which the movement suffers. This is 
the dark side. It should be kept in mind because the desire 
for quick results, the contempt 'for patient education, and the 
esteem in which the profit motive is held in the United States 
will continue to operate as causes of disaster unless the 
people are forewarned. 

The brighter aspects are to be seen in every field. For 
fifty years there has poured into the United States a stream 
of immigrants from countries having well established Co 
operative Movements. These people have brought with them 
not only the knowledge of what their native societies were 
doing but they brought a co-operative spirit. There have 
survived from the early period many societies scattered over 
the country. A few of these date back nearly forty, and 
some nearly fifty years. The immigrant people have 
promoted Co-operation among these old societies until to 
day co-operative stores are to be found in almost every part 
of the country. 'Since 1916 expansion has taken place due 
partly to the stabilization and enlargement of industry 
during the war, partly to the conspicuousness of profit- 


CO-OPERATION IN THE UNITED STATES 7 

eering and the very obvious evils of the profit-making 
economic system, and partly to the work of The Co-opera 
tive League in promoting the knowledge of the fundamentals 
of Co-operation. 

The Movement has developed all over the country. The 
farmers have done the most of any one class for Co-operation 
in the United States. This is partly due to the fact that 
until 1921 the farmers were the largest class. Unlike Great 
Britain, Germany, and the other industrial countries with a 
large co-operative development, it has not been the 
industrial workers but the farmers who have taken the lead. 
Much help has come from the agricultural population who 
emigrated from Denmark, Germany, Norway, Sweden and 
Finland. But old American stock has also played a part in 
this development. The United States is no longer an agri 
cultural country but an industrial country, now that more 
than half of its population lives in the cities. The strength 
of the Co-operative Movement .was formerly in the rural 
districts and largely among the native born ; but in the last 
few years the strongest and largest societies have developed 
in the industrial centres. This industrial or town move 
ment is predominately foreign born in its leadership. 

Many farmers' national organizations have promoted 
Co-operation. Most important service has been rendered 
by The Farmers' Educational and Co-operative Union. 
This organization started in Texas in 1902, and has now 
extended into thirty states. Its primary business is teach 
ing the farmers how to organize as producers to get the 
best price for their product. This is a trade union or 
business function. But it performs also the service of 
teaching these same farmers how to conduct distributive 
stores. There comes about a very natural sequence. The 
farmers learn how to work together in their selling organ 
ization ; they then use it to purchase for themselves agri 
cultural supplies; having taken this step they have their 


 8 CONSUMERS' CO-OPERATIVE SOCIETIES 

first experience as co-operative consumers; then they ex 
tend the lines of their co-operative buying to household 
and personal needs; discovering the value of this method 
they organize a store, and thus they have engrafted a 
consumers' distributive machinery upon their agricultural 
producers' enterprise. Thus have grown up many of the 
farmers' co-operative societies. Usually the consumers' 
society, as soon as it is ready for a store, is organized and 
capitalized as a separate undertaking. 

The farmers are found entering into many fields of Co 
operation besides the distributive store. They have been 
particularly successful with insurance. There are in the 
United States about 2000 co-operative fire insurance com 
panies among the farmers. They carry insurance exceed 
ing $5,250,000,000 on property valued at nearly $7,000,- 
000,000. This insurance is carried at one half the rate 
charged by the profit-making companies. Hail insurance is 
also provided. 

In many towns the farmers have a co-operative store, 
creamery and grain elevator. Banking has not been entered 
into largely. There are some farmers' societies with good 
buildings in the town, some of which are used for community 
centre purposes. A laundry connected with the creamery 
is one of the many farmers' enterprises. Some societies 
own flour mills. In some small towns in the middle west 
and northern states the co-operative societies do most of 
the business. Co-operative telephone companies developed 
among the farmers of the middle western states thirty-five 
years ago. The telephone monopoly has not destroyed 
them. 

Without reference to occupation of the members we may 
take a general view" of the distributive societies in this 
country. In the New England states there are about 
seventy-five distributive societies. A few are the old 
societies. Most, however, were established in the present 


CO-OPERATION IN THE UNITED STATES 9 

century. The largest single group is that of about thirty 
organizations in Eastern Massachusetts ; most of these are 
composed of Finns. The societies at Fitchburg and May- 
nard are particularly strong. They have stores, restau 
rants, bakeries, and creameries. In the middle Eastern 
states are 250 societies located chiefly in Pennsylvania 
among the coal and iron workers and in and near New York 
City. The Central States have about 100 societies in 
Illinois. A lesser number are in Ohio and Indiana. Most 
of the Illinois organizations are connected with the Central 
States Co-operative Society which has a wholesale house .at 
East St. Louis, Illinois. This has a turnover of $3,000,000 
a year. The members of the constituent societies are 
mostly coal miners. In Illinois are some of the best examples 
of successful Co-operation. Societies of this type average 
about 250 members, have a turnover of $160,000 a year 
and pay savings-returns of from 4 to 7 per cent, quarterly. 
The Illinois societies do a business of about $10,000,000 a 
year. 

In the northern part of Michigan, Wisconsin and Minne 
sota are over 100 societies composed largely of Scandina 
vians. The Co-operative Central Exchange at Superior, 
Wisconsin, is a wholesale composed of fifty of these societies. 
Besides supplying general merchandise it manufactures 
the peculiar bread and biscuit products required by the Fin 
nish societies, all over the country. This organization con 
ducts a school for the training of co-operative executives. 
Its educational work is most effective. 

Most societies in the United States have under 1000 
members. Two societies in Northern Michigan, established 
in 1890, have more than that number. One of the success 
ful younger societies of that district, organized in 1912, has 
over 400 members, owns its own three story stone building, 
operates a bakery, two meat markets, and four branch 
grocery stores, and has a turnover of $300,000 a year. 


 10 CONSUMERS' CO-OPERATIVE SOCIETIES 

Among the northern and western agricultural states are 
scattered societies. Kansas has 275 consumers' societies. 
Nebraska has about the same. The Farmers' Exchange at 
Omaha is the central wholesale. These societies distribute 
groceries, dry-goods, clothing, hardware, machinery and all 
kinds of goods. 

The Southern States have a few scattered societies, but the 
Movement in the South is backward. In 1878 the National 
Grange organized the Texas Co-operative Association. Ten 
years later the association had 155 stores and 6000 members 
and was doing a business of $2,000,000 a year. About this 
time the Grange organized a co-operative educational 
association which established a co-operative ischool in 
Louisiana fo)r the members' children, with a capital of 
$8,000. The school was truly co-operative and paid sav 
ings-returns to patrons. Societies conducting stores were 
established throughout the South between 1877 and 1890 
by the Grange and the Knights of Labour. Most of these 
have disappeared. The negroes have recently become in 
terested in Co-operation and are establishing distributive 
societies. 

The Pacific States have a newer movement. The general 
prosperity of the people and newness of the communities 
seems to have militated against interest in Co-operation. A 
scattering of societies existed in California the latter part of 
the Nineteenth Century. These suffered from the inex 
perience and apathy of the members. Some were finally 
closed because they had developed a good big surplus and the 
members' fingers itched to get possession of it, so the societies 
were disbanded on account of their success. Lack of ed 
ucation and standardization seemed to be the chief trouble. 
In the early part of the present Century there were close 
to a hundred societies in California. By 1910 there were 
only about a score left. Then came a growth of societies 
connected up with an unsound method of centralized control, 


CO-OPERATION IN THE UNITED STATES 11 

which led to vicious practices and failure in 1922. In the 
meantime a true co-operative movement sprang up in the 
Pacific States in the form of independent societies. With 
these as a nucleus a sound development is making progress. 

Much publicity has been given to the fruit-growers, 
prune and grape producing organizations of the Pacific 
Coast. .They have been called "co-operative." Under no 
circumstances should they be classified with Rochdale co 
operative societies. The former are profit-making busi 
nesses. Many of them have succeeded. Their success may 
be measured by the following fact which is also a test of 
their character: before the prune producers' co-operative 
was organized, the people were able to buy prunes for nine 
cents a pound; but so successful has this organization be 
come that the consumers are now paying twenty-nine cents a 
pound for the same prunes. 

Many racial groups are taking an active part in the pro 
motion of Co-operation in the United States. A group 
that stands out most eminently for its idealism, efficiency 
and loyalty is that of the Finns. Their societies in New 
England and in the Northern States are most successful. 
Other racial groups which are making their contributions 
to the structure of Co-operation in this country are the 
English, Scotch, Germans, Scandinavians, Jews, Italians, 
Bohemians, Poles, Slovaks, and people from the Balkan 
countries. Many societies are composed largely or ex 
clusively of these several groups. 

The retail store is the most common co-operative enter 
prise in the United States. There are about 3000 of these. 
Co-operative bakeries have been promoted especially by the 
Jews, although many non-Jewish societies have bakeries. A 
baking society in New York, two in New Jersey, and one in 
Michigan have more than 1000 members each. 

A form of Co-operation which is unique is the co-operative 
school. There are three of these in New York which are 


 i 


12 CONSUMERS' CO-OPERATIVE SOCIETIES 

organized, financed, owned and controlled by the consumers 
—the students. These schools prepare students for college 
and regents' examinations and give business and general 
cultural courses. The faculty is selected and employed by 
the society of students the same as any other consumers' 
society employs its experts, and is entirely under the di 
rection of the students, who also make up the curriculum. 
Compared with the profit-making schools in this field, these 
schools are superior ; the teachers are paid better and the 
costs to the students are less. 

Co-operative housing has recently been attempted on a 
small but satisfactory scale. This is a field in which Co 
operation is urgently needed and in which it could serve the 
people most efficiently in this country. Aside from the 
many spurious enterprises, there are some genuine co 
operative housing societies. These societies have built the 
houses and own them ; the members take leases for as long 
a period as they please, practically having possession in 
perpetuity. By cutting out the real-estate speculator, the 
exploiting contractor and the landlord, these co-operators 
enjoy advantages which should compel the recognition of 
this method of housing as most economical and most prac 
tical. The American working-man non-co-operator pays 
one fourth of his wages for house-rent and the German work 
ing-man co-operator pays one-eighth to one-fifteenth of his 
wages for a better home than that in which the American 
working-man lives. When this is finally understood the 
people of this country should eventually see where their best 
interest lies. In no country are the people so exploited and 
so at the mercy of the land speculator and the landlord as 
in the United States. The people are rapidly losing their 
homes. Co-operation offers them the chance to recover 
them. 

Co-operative milk distribution has recently been developed 
to a successful point. Some societies in Massachusetts have 


CO-OPERATION IN THE UNITED STATES 13 

contracts with the farmers to produce milk for them. They 
collect the milk, treat it in their own creameries, bottle and 
deliver it. In Minneapolis is a co-operative creamery—a 
consumers' distributive society—organized in 1921. They 
built their own creamery-building and distribute milk to 
their 2000 members. As a result of the establishing of this 
society, profit-making dealers in the city of Minneapolis have 
been compelled to reduce the price of milk three cents a 
quart. The mere presence of this society is saving the 
people of Minneapolis $1,500,000 a year. The cleanliness 
and quality of the milk have also improved. 

Co-operative banking is making headway. Massachusetts 
and New York have about 150 societies. Ten other states 
have co-operative banking laws. Some of the large labour 
unions are now energetically promoting this cause. 

Other expressions of Co-operation in the United States 
are motion picture shows, restaurants, boarding houses, 
hotels, recreational clubs and purchasing agencies. 

As yet the United States has no national co-operative 
wholesale society such as is to be found in about twenty other 
countries. The nearest approach to such a commercial 
organization are the district wholesales already mentioned. 
These are owned and controlled by groups of local societies 
which they serve. Nor have these wholesales entered into 
production except in the one instance referred to above. 
There is a borderland of Co-operation in which are many 
organizations lacking only some one or more of the Rochdale 
principles to make them fully co-operative. In this class 
are over 550 fraternal life insurance societies with over 
9,000,000 members and $10,000,000,000 of insurance in 
force. They pay about $100,000,000 annually in benefits. 
These non-profit organizations arc co-operative to a high 
degree. 

Co-operation is developing with the endorsement of the 
Labour Movement. The American Federation of Labour and 


 Il 


14 CONSUMERS' CO-OPERATIVE SOCIETIES 

other labour organizations are giving aid to its promotion. 
Most of the societies are now started among trade 
unionists or among organized farmers. The employment of 
union labour is insisted upon as a rule in the better class of 
societies. Co-operative societies succeed, provided that they 
have efficient administration and observe the simple rules of 
genuine Co-operation. Although a majority in this 
country have neglected education and strict observance of 
co-operative rules they succeed in spite of their mistakes. 
The failures among them are much fewer in proportion to the 
amount of business than among profit-making concerns. 

A peculiarity of the movement in this country is the fact 
that it is endorsed by every class of organization laying any 
claim to social usefulness. Every type of labour organiza 
tion, with the rare exception of some of the branches of the 
Industrial Workers of the World, is friendly to Co-operation. 
The Socialist Party, the Communist Party, the Republican 
Party and the Democratic Party in national, state and 
local conventions have passed resolutions endorsing Co 
operation. The Catholic Church and the Protestant Church 
organizations have passed such resolutions. The Inter- 
church World Movement, the Federation of Churches, and 
many other large religious organizations are among these 
endorsers. It is a noteworthy fact that in the United States 
Catholic leaders are giving sympathetic help to Co-opera 
tion, and advising Catholics to join the regular co-operative 
societies. Every effort is being made to prevent the split 
in the movement which exists in Europe where the Catholics 
are outside of and hostile to the regular co-operative so 
cieties. 

The American Movement is demonstrating that it is cap 
able of harmonizing all classes. It is the common ground 
upon which all who hope for the brotherhood of man may 
unite. That there is such a force, with which the discon 
tented as well as the contented, the radical as well as the 


CO-OPERATION IN THE UNITED STATES 15 

conservative are willing to unite, is a hopeful sign for the se 
curity of society. 

No country ever had a strong and substantial growth of 
Co-operation until it had a national co-operative organ 
ization. This has been the deficiency in this country. 
To meet this need, The Co-operative League was organized 
in 1915 and started work in 1916 with headquarters in New 
York City. It is an organization which collects all pos 
sible information concerning Co-operation in the United 
States ; makes surveys of failures and successes ; publishes in 
formation ; gives advice ; standardizes methods ; creates def 
inite policies of action; prepares bylaws for societies; 
drafts bills to be introduced in legislative bodies; promotes 
favourable legislation; sends out advisors to societies; pro 
vides lectures; prepares study courses; conducts a school; 
publishes books, pamphlets and periodicals; and in every 
way possible promotes practical Co-operation. The 
League is a federation of co-operative societies, governed by 
its constituent members. Already the best and strongest 
of the societies are its members. Through The League the 
United States Movement is connected with the International 
Co-operative Alliance which is composed of the similar 
national unions or leagues of twenty-six countries. 

The First National Co-operative Congress held under the 
auspices of The Co-operative League was at Springfield, 
Illinois, in 1918; the Second Congress was at Cincinnati, 
Ohio, in 1920 ; and the Third Congress will be at Chicago in 
1922. 

The great need in the United States is for the fundamental 
educational work which The League is doing. The day of 
propaganda has passed. What is needed is standarized 
information and practical guidance based upon the sound 
principles of Co-operation. This movement has been so 
effectively standardized, that success and failure can be 
predicted and controlled. It is not more societies that are 


 16 CONSUMERS' CO-OPERATIVE SOCIETIES 

needed but more knowledge among the people of the practical 
principles and technic necessary to success. 

In no country will Co-operation have a more difficult path. 
Profit-making business is in absolute and dominant con 
trol. But the fundamental economic changes must come— 
are coming. The salvation of the people must be by one of 
two methods. They must either learn their lesson by 
suffering, perhaps, by bloody revolution, with all of the 
reaction, delays and distress which these have in store; or 
they must learn their lesson by -education—a slower, surer, 
evolutionary way. Which of these the people of this 
country will employ on their way to emancipation remains to 
be seen. It is by the path of education and evolution that 
the Co-operative Movement would lead. 

BmuoonAPiiY ON CO-OPEEATION IN THE UNITED STATES 

"Communistic Societies in the United States," 1895, Charles Nordhoff. 

"History of Co-operation in the United States," 1888, Johns Hop- 
kins University Studies. 

"Co-operative Savings and Loan Associations," 1889, Seymour Dexter. 

"Co-operation in New England," 1913, James Ford. 

"Co-operative Credit for the United States," 1917, Henry W. Wolff. 

"Co-operation," Vols. I to VI, published by The Co-operative 
League. 

"Transactions" First (1918) and Second (1920) National Congresses, 
The Co-operative League. 


CHAPTER II 

THE OBJECT OF A CONSUMEES5 
C O - O P EKATIV E SOCIETY 

In a broad sense a consumers' co-operative society exists 
every time that a number of persons feeling the same need 
join together collectively to satisfy it better than they could 
do by individual means.* It would follow, therefore, from 
this definition that every consumers' society has for its ob 
ject production, since to supply any need it is necessary 
to produce; and, indeed, that is the aim of consumers' 
co-operation, but, as a matter of fact, it only achieves this 
at an advanced point in its evolution. In its beginnings a 
consumers' co-operative society is satisfied with buying the 
requirements necessary for its members ; it is a shopkeeper 
long before it is a manufacturer. Generally a beginning is 
made with the most important of all needs, the supply of 
foodstuffs, or in one of the particular branches of this gen 
eral need, such as the supply of bread, wine, groceries. 
Thus, Monsignor von Ketteier, Archbishop of Mainz, said 
that the question of co-operation is summed up in the sim 
ple question of food supply ; but that does not belittle it. 

If the consumers' society had no other aim but to enable 

*Author's Note. It is almost impossible to give a precise definition 
of a co-operative society, on account of the great variety of objects 
aimed at. In any case, in our opinion, it is impossible to include a 
consumers' and a producers' society under the same definition, because, 
in spite of the apparent identity of their aims, these aims are really 
antagonistic, as we shall see later. However, in certain Italian books, 
by Wollenborg, Pantaleoni, Valenti, Mariani, &c., we find subtle and 
ingenious analyses which attempt to embrace all forms of co-operation 
under one synthetic formula. 

17 


 18 CONSUMERS' CO-OPERATIVE SOCIETIES 

the working classes and the poor to feed themselves better, 
that would be no small thing. To convince oneself that that 
is not a negligible end it is sufficient to consider: .(1) That 
a considerable proportion of the working-class population 
(which Messrs. Charles Booth and Rowntree estimate at 
27 to 30 per cent, in English towns) do not get the mini 
mum wage necessary to maintain life; they do not receive 
the minimum wage necessary to buy the number of food 
units required for the maintenance of the human body. (2) 
That the means of purchasing at the disposal of the work 
man—already very small—are further wasted by his ina 
bility to use them with economy. He buys in small quan 
tities—a halfpenny worth of sugar or of coffee—from small 
hucksters, whose goods are sold at third or fourth hand, 
deteriorated in quality and raised in price, each middleman 
having taken his profit on the way. When he is forced to 
buy on credit he submits, either through ignorance or 
through apathy, to all the frauds which the fierce struggle 
for life forces on hucksters as poor as himself. He has even 
to pay an insurance to the shopkeeper, in the form, of in 
creased prices, against the insolvency of those of his com 
rades who do not pay. These conditions are so unfavourable 
that, as has been pointed out with savage irony, "there are 
not many rich men who could afford themselves the luxury 
of buying under the same conditions as the poor." 

Consumers' co-operation, above all when it is supported 
by strong purchasing federations, sweeps away all this 
misery. If a society aims at cheapness only it can sell 
goods well below current commercial prices, and even if, as 
is generally the case, it sells at the ordinary trade price, the 
consumers buy goods of better quality—more nourishing 
food and more lasting clothes—and also gain an increase in 
quantity resulting from just weights used for bread, for 
meat, for everything. It becomes an institute of social 
hygiene of the first order, and certainly has been one of the 


OBJECT OF A CO-OPERATIVE SOCIETY 19 

factors in the remarkable decline of tuberculosis in England. 

In spite of what Monsignor von Ketteier says, consumers' 
co-operation is not confined to the supply of food stuffs, but 
is able to extend to all the needs of human life, such as 
clothing, furnishing, and, above all, housing (the last is so 
important a category that the societies for the supply of 
houses are generally treated separately under the name of 
building societies). In the United States there are hundreds 
of towns where consumers' co-operative association has for 
its object the creation and exploitation of a telephone sys 
tem. In New York, Brussels, Berlin, and Milan the owners 
of motor cars have formed co-operative societies to supply 
themselves with petrol, tires, and other accessories, in pur 
chasing which the consumer has been scandalously exploited. 
And not only to the supply of material needs, but also 
to intellectual and moral ones, including all that con 
tributes to well-being, all that adds to the comfort and 
charm of life. One can well imagine—in fact, there al 
ready exist—co-operative clubs, co-operative theatres, co 
operative newspapers, and, above all, co-operative churches, 
that is to say, institutions formed and maintained by those 
who wish to gain by them, to instruct, amuse, and edify 
themselves in common.1 

What makes the success of consumers' co-operation is 
the very fact that its ends are most varied. Whatever is 
wanted of it can be obtained. It lends itself with marvellous 
ease to any social aim, even the most diverse—sometimes, it 
must be avowed, the most antagonistic—so that we must 
choose between them. As we shall see, one can seek in 
consumers' co-operation either cheapness or an increase of 
income, savings for the individual or the constitution of an 

1 In greater New York there are three co-operative schools in which 
the students (adolescent and early adult) employ their own teachers 
and administer the affairs of the schools. In the United States there 
are also two or three moving picture theatres owned and controlled by 
the patrons. 


 20 CONSUMERS' CO-OPERATIVE SOCIETIES 

inalienable fund for social benefits ; but one cannot seek all 
these results at the same time. Thus it is that one can see 
conservatives or revolutionists, bourgeois or workmen, 
collectivists or anarchists, Protestants or Catholics, preach 
co-operation in turn, although with very different objects. 

It is also noticeable that besides the direct aim co-opera 
tive societies set before themselves they can serve indirectly 
all aims by the direction in which their funds are used. Thus 
we shall see the socialist co-operative societies in Belgium 
and in the North of France using their funds for political 
propaganda. Those Jews who are known as Zionists have 
formed a consumers' society in London, of which 30 per 
cent, of the profits are devoted to the development of the 
Zionist movement, that is to say, to laying the foun 
dations of the new kingdom of Jerusalem ; this is surely an 
unforeseen object of co-operative effort—other such will 
arise.2 

French economists who have concerned themselves with 
consumers' co-operation considered at first that its only «nd 
was saving (see the last chapter of this book) ; but today 
that idea is quite out of date. 

In what does co-operation differ from mutuality? Has 
not that also for its end the providing for the satisfaction of 
certain wants, as in the form of sickness benefit, old age 
pensions, burial societies, &c.? Doubtless both are sisters, 
in that both spring from the idea of mutual aid and soli 
darity, but their features are very different. Mutual aid 
societies fight against risks which threaten human life— 

2 One large co-operative lodging house in New York is devoting its 
surplus to a fund which is divided between Russian Famine Relief 
and the campaign for the liberation of Political Prisoners in the United 
States. 

The Central States Co-operative Wholesale Society of East St. 
Louis, Illinois, put all its facilities at the disposal of the United Mine 
Workers who raised money for the striking miners in Kansas. The 
Wholesale shipped more than 40 carloads ($200,000 worth) of food 
to these strikers during the last three months of 1921. 


OBJECT OF A CO-OPERATIVE SOCIETY 21 

sickness, old age, and death; they are of a philanthropic 
nature, and were formerly called "brotherhoods." Co 
operative societies have for their object the providing for 
the needs of every-day life by new economic means ; they 
are businesses in the true sense of that word in political 
economy. This difference of aims is so real that French 
law has had to make different codes for the one and the 
other. Mutual aid societies have one special form of 
legislation, co-operative societies another; for the one, 
capital is required, for the other, periodical subscriptions 
are enough. When it is a question of societies for the 
insurance of goods—'such as fire or live stock insurance—or 
even credit societies, i. e., societies for the borrowing of 
capital, the words "mutual aid" and "co-operative" society 
are used almost indifferently. 


 CHAPTER III 

THE CO-OPERATIVE P E O G E A M : 
CEITICISM BY ECONOMISTS 

The immediate aim of co-operative societies is to sat 
isfy the needs of their members better and more economically 
than is done by existing institutions; for example, if the 
need be bread, to furnish it of better quality, juster weight, 
and more cheaply than the bakers can supply it. Is their 
claim to do this well founded? It seems at first sight very 
daring, for is it probable that simple consumers, who by 
their very definition are not specialists, could be capable of 
making bread or supplying any other service cheaper and 
better than the bakers or members of the trade? Is not that 
a contradiction of the great law of the division of labour 
and of exchange? Is it not a return to a state of savagery, 
to the life of a Robinson Crusoe, or to a feudal family who 
had to provide for all their needs by their own exer 
tions ? 

That is the obj ection on which the economists lav stress ; 
yet the experience of nearly all countries for the last half 
century, vouched for by countless successes, has proved in 
disputably that the claim made by co-operators is well 
founded. No doubt the co-operative business is heavily 
handicapped, first of all by the lack of technical capacity, 
and even more by the lack of personal management, of "the 
master's eye." The manager lacks the stimulus of individual 
profit, whether he be a salaried official or even a philanthro 
pist. 

But, on the other hand, a co-operative society, having 

22 


THE CO-OPERATIVE PROGRAM 


23 


to provide for the needs of its members only, can do so with 
certainty, 'particularly if its members are conscientious and 
loyal in purchasing from the store. It has not to run the 
risks of bad speculation and of bad stock which must be sold 
at a loss. Besides, the co-operative business, as it does not 
need luxurious premises—since it does not appeal to the 
public—and as it runs no risks of bad debts—since it does 
not usually sell on credit—is freed from the two heaviest 
expenses which weigh on ordinary commercial enterprises. 
Finally, a co-operative society can often obtain the serv 
ices of honest, capable, and devoted managers at a far lower 
price than capitalist enterprises have to pay. One of the 
former directors of the English Co-operative Wholesale 
Society, Mr. J. T. Mitchell, in replying to an American 
economist, Graham Brooks, who asked Mm how he was 
satisfied with so small a salary, said, "I enjoy the esteem 
of my colleagues ; I have great power ; I have great faith in 
the co-operative ideal. These things satisfy me." By 
these means co-operation brings into the economic order 
and places at the service of industry a new and very power 
ful factor—disinterested energy.1 

These factors are enough to balance all the disadvantages 
resulting from the inexperience of its managers, and, in the 
struggle against the traders, have given the advantage to 

i Many of the American societies enjoy all these advantages. But 
by far the larger number are less fortunate. Though luxurious prem 
ises are not needed, too many inexperienced boards of directors lux 
uriate in excessive overhead expenditures. Very many managers have 
wrecked their societies by laying in huge stocks of goods at peak 
prices which had to be sold later at a great loss. There are far and 
away too many managers in the American societies who have been 
taken out of positions in private stores because of tlieir experience in 
buying and selling, who know and care nothing about co-operation, and 
who are in the position to demand the same wages to which they have 
been accustomed. Finally, there are many hundreds of the societies 
in the United States which do sell on credit, in order to compete suc 
cessfully with the private merchants. This becomes almost imper 
ative during times of unemployment among the members. 


 24 CONSUMERS' CO-OPERATIVE SOCIETIES 
co-operation. In fact, contrary to general belief, one does 
not find more failures among co-operative societies than 
among ordinary traders, and where statistics are procur 
able they show that co-operative failures are fewer. The 
co-operative review of Hamburg (Konsumgenossenschafts 
Rundschau), in its number of 18th January, 1908, com 
mented on the official statistics of failures in the German 
Empire for 1905-1906. In capitalist enterprises with share 
capital there were 24 failures, out of 4,952 companies, a 
proportion of 4.85 per 1,000, and there were 27 failures 
out of 25,714 co-operative societies, which is a proportion 
of 1.43 per 1,000 only. True, the majority of these co 
operative failures were credit, and not consumers', societies, 
which would make the average more favourable ; but, on the 
other hand, it should be noted that the statistical returns 
of the capitalist concerns refer to large businesses only, and 
not to small traders, and that the latter are the ones whose 
failures are most frequent.2 

As for saying that co-operative organization abolishes 
the division of labour and brings us back to the primitive 
times when each man was constrained to produce for him 
self everything essential for his needs, it is true in so far 
as one can say that a consumers' co-operative society is an 
enlarged family which—as was formerly the case, and is the 
case today on certain farms—makes its own bread and 
jam, and which also spins, weaves, washes, &c. Yet it is 
not the consumer himself who does all that, but specialized 
workers, preferably members of the societies. If the 
division of labour is abolished from the economic point of 
view it remains in full force from the technical point of view, 
and that is enough to ensure progress. 

One may say that co-operative association confines itself 

2 Many guesses have been made as to the proportion of co-operative 
failures to capitalistic failures in this country, but no accurate figures 
are available. 


THE CO-OPERATIVE PROGRAM 


25 


to transforming that co-operation which already exists in 
a latent state in all human society into conscious, organized 
co-operation. It is one of the favorite themes of econo 
mists to point out how the play of individual efforts pro 
duces involuntarily a general harmony; unfortunately, 
facts prove that this harmony is often but a frightful dis 
cord. The co-operative society's rôle is to make each man 
play in tune; it is the conductor of the orchestra. 

The function which we have just indicated as character 
istic of consumers' co-operation—the most economical satis 
faction of all the needs of life—suffices for the greater num 
ber of societies in the world today. Moreover, by itself 
it would be enough to make co-operation a factor of the 
first importance in economic evolution and to gain for it 
an ever-increasing number of supporters, not only among 
those workers whose wages merely suffice to maintain life, 
but also among the middle classes, officials, clerks, or per 
sons of small iprivate means who are crushed between the 
increase in their needs—owing to the spread of luxury—and 
the decrease in their incomes, by reason of the increase in 
taxes and the depreciation of Government stocks. 

If the greater number of co-operators only seek from co 
operation the means of living better, there are a small num 
ber in every country where the co-operative movement has 
made headway, who seek something more from it—the 
attainment of greater justice in economic relations.3 It is 
not for nothing that the Rochdale weavers called themselves 
the "Equitable Pioneers." They did not content them 
selves with seeking from co-operation an increase in comfort 
for the poorer classes, "the chicken in the pot" promised by 

»Almost all of the societies in the United States have leaders of 
this kind, even though the membership generally is money-minded. 
•Any society which is entirely lacking in such idealism faces almost 
certain failure; it cannot compete with the highly organized chain 
stores with their inferior quality of goods at reduced prices, their 
low overhead expense, and their tremendous buying power. 


 ï 


26 CONSUMERS' CO-OPERATIVE SOCIETIES 

King Henry IV. They sought to find in it an instrument 
of economic transformation, not only in the sphere of ex 
change, but also in that of production and the division of 
wealth. A co-operative organization for the distribution of 
wealth which had as its foundation a competitive system of 
production would form a highly unstable, perhaps unin 
habitable edifice. They also sought to find in co-operation 
an equitable division of wealth, enabling the consumers to 
keep for themselves all the gains of the enterprise. Their 
system is the inauguration of a new system of the division of 
wealth; it would mean that capital would have no more 
profits. Co-operation, therefore, means nothing less than 
an economic system destined to supersede capitalism by 
mutual aid, by one more like the earlier "domestic" system 
(see Chapter xv). 

Co-operative association brings with it the hope of moral 
progress ; but in abolishing the pursuit of profit as the only 
real motive of economic activity—substituting for it the sole 
aim of satisfying needs—whilst abolishing advertisement, 
tying» cheating, and inducements to extravagance, co 
operation will succeed in establishing in business a reign of 
truth and justice; in short, it will establish the "fair price." 
If we sought to define the object of co-operation in two 
words these last would be enough. 

No doubt economists will reply that to seek such an end 
is unscientific, because neither co-operative association, nor 
even the State, has the power to fix a "fair price," or any 
price. Only the economic factors known as "the law of 
supply and demand" 'are able to do this. 

Still, the fixing ofi prices is more and more the end sought 
by commerce and industry; they seek to safeguard prices 
from the fluctuations caused by competition. It is for 
that reason that the fixed price has become the rule in all 
big markets, and that the manufacturers themselves tend 
more and more to compel shopkeeper's to sell goods bearing 


THE CO-OPERATIVE PROGRAM 27 

their trade-marks at a fixed price, by forbidding them to sell 
below the price marked. This system, which has spread 
widely in the United States—under the name of "price main 
tenance"—has hardly yet appeared! in France, except 
amongst chemists—for patent medicines—and among pub 
lishers. 

But the fixed price has nothing in common with the 
co-operators' "fair price"; instead of eliminating profit it 
increases it, making it a direct element in the price of goods. 
If this system becomes general the consumer will be abso 
lutely handed over to the discretion of the producer. That 
is why it must be answered by the co-operative system, which 
also tends towards fixed prices, but prices fixed by the con 
sumer, and forbidding sale above the price marked. 

We shall see, later, by what developments of co-opera 
tive association it is hoped to produce these great results, 
but we can say at once that it is by asking co-operators to 
give up, either wholly or in part, the individual economies 
which they gain from co-operation, or, at least, to deposit 
their annual savings in co-operative hands and to use the 
collective capital thus constituted to erect factories, buy 
land, and build houses, the profits from which will naturally 
go into co-operative funds, so that co-operation, like the 
snowball, will, little by little, swallow up the profits which up 
to now have gone exclusively to those who possess capital. 
It is not a question of expropriating the capital already in 
the hands of the capitalists, but one of forming new capital 
for the working classes. 

Socialists object that it is ridiculou» to suppose that the 
wage-earning classes will ever be able to raise from their 
wages—which are already insufficient to support them—new 
capital. But why, since they admit (not without exaggera 
tion, but that is of little importance) that all existing capital 
is but the product of labour, formed by the labour of past 
ages, why not admit that new work exerting the same effort 


 28 CONSUMERS' CO-OPERATIVE SOCIETIES 

can produce as much capital and keep it for itself? And if 
the workers gave up supporting the old capital and turned 
themselves solely to using the new capital which would be 
their own, then the old capital would gradually become use 
less, would become dry and empty as the cocoon after the 
butterfly has taken flight.* 

We recognize that this ideal is far from being realized, 
and that co-operation has not done much towards reforming 
commercial customs. The pursuit of bonuses—"divi- 
hunting," as the English call it—is scarcely less keen than 
profit-hunting, and there are even societies into which the 
worst bourgeois vices, such as illicit commissions, have intro 
duced themselves. But that happens only when the co-op 
erative society, instead of reforming current conditions, has 
let itself become saturated by them. In spite of such cases of 
unfaithfulness to the co-operative ideal co-operation none 
the less keeps its striking characteristic of being at the same 
time highly idealistic and very practical. It is at once 
Martha and Mary, Don Quixote and Sancho. It follows the 
blue bird, but instead of seeking it in the Fortunate Islands, 
shuts it up in a shop. It sets before itself the reforma 
tion of the world ; it begins by sweeping the pavement before 
its own door and setting its own house in order. It follows 
the stars; but looks before it leaps. Professor Marshall, 
the eminent economist, said in his speech as President of the 
Co-operative Congress, at Ipswich, in 1889: "What dis 
tinguishes co-operation from every other movement, is that 
it is at once a strong and calm and wise business, and a 
strong and fervent and proselytizing faith." 

One often hears the somewhat academic question! dis 
cussed: Is co-operation an end, or only a means? For the 

* It has been estimated that all the capital in circulation in the 
United States passes thrice annually through the hands of the wage 


THE CO-OPERATIVE PROGRAM 29 

great majority of those who rally round the co-operative 
movement "bourgeois" co-operation, as it is often called, 
is only a means, a means of living better without spending 
more or, as we shall see later on, of saving without denying 
oneself. For those collectivists or anarchists who support 
co-operation it is also only a means, a means of preparing 
the advent of the collectivist or anarchist régime by training 
and arming the people for a class war; by supplying them 
with the necessary fortresses, munitions, and technical train 
ing, in order that on the morrow of the great revolution the 
people will find themselves capable of maintaining the services 
of production and distribution, For the differences between 
the so-called "middle-class" co-operation and that called 
"socialist," see the last chapter of this book. 

But for those who love co-operation for itself, the true 
co-operators, whom critics ironically call "mystics," co 
operation is an end in itself. Not that they are prepared 
to rest content with the results already gained, but be 
cause they believe that co-operation is a living organism, 
and that the results achieved already contain the germs of 
all the possibilities to be wished for in the future, as the seed 
contains the fruit in a latent state. To drop metaphor, 
they believe that each co-operative society which obeys 
the laws that it has made for itself already constitutes a 
little world organized in conformity with justice and social 
benefit, and that it is sufficient to let it develop spontaneously, 
either by growth or imitation, to realize in the more or less 
distant future the best of all possible worlds. 

In reply to those economists who laugh at these preten 
sions to social regeneration, one may say that they only 
amount to an attempt at realizing one of the principles of a 
classical school of economists which Bastiat, a few hours 
before drawing his last breath, expressed in these words: 
"Political economy must be treated from the point of view 


 30 CONSUMERS' CO-OPERATIVE SOCIETIES 

of the consumer." The co-operative program is to place the 
consumer in a position of economic domination. M. Pan- 
taleoni puts this question: What new element can co-opera 
tion bring among those which influence supply and demand? 
We answer: None, we admit; but it would enable the law 
of supply and demand to work under conditions which open 
competition has never been able to realize (see page 80), 

It is true that public opinion, especially that of protec 
tionists and socialists, considers the producer far more 
useful economically, and morally nobler, than the consumer, 
because he almost always produces for others, while the con 
sumer always consumes for himself and for his own benefit, 
and in consequence that it would be wrong to sacrifice the 
former to the latter. 

But it is merely playing with words to pretend that the 
producer, in the existing economic organization, lives for 
others.6 If the baker makes bread he does not seek to feed 
his customers, but to make profits ; and if he does feed them 
it is because this is his only way of gaining these profits. 
It is only in co-operative association that production is 
organized solely with the view of satisfying needs. In fine, 
it is not a question of sacrificing either the producer or the 
consumer, but of putting each in his proper place in society. 
But it is evident that the producer only exists for the benefit 
of the consumer, the baker for those who are hungry ; it is 
not the other way round. It is this truth, too often falsified 
in the actual economic order of things, that the consumers' 
society seeks to re-establish. 

5 Or that the employé in the bakery works for others ; he works 
for the wages which will enable him to get enjoyment out of life. 
There are co-operative bakeries in the United States where the workers 
receive, in many instances, a straight wage of more than $70 per 
week and often get as high as $100 by working overtime. Attempts 
on the part of devoted co-operators to induce the bakers' union to 
reduce these demands have been unavailing; the leaders of the unions 
and even the majority of the members of the co-operative society in 
sist that these bakers shall receive from co-operators the same wage 
they are able to procure from private bakers. 


CHAPTER IV 

THE 'HISTORY OF DISTRIBUTIVE 
CO-O'FERATION 

(1) In Great Britain 

The date and the birthplace of distributive co-operation is 
well known to every one—the 21st of December, 1844, at 
Rochdale, near Manchester—and the name of the society 
which was, and is still, the parent of the innumerable family 
of societies engendered by its spirit and after its model, is 
"The Equitable Pioneers of Rochdale." This is the date on 
which the first store—a mean little shop—was opened in 
Toad Lane, but the date of the registration of the society 
is 24th October, 1844. The house where the first shop was 
opened is still in existence, and it is hardly credible that it 
(does not belong to the society, which, although having be 
come prosperous, does not own the house where it was born. 
At the Co-operative Congress, held in 1914, a vote of credit 
(£2,000) was passed for this purpose, but the war has so 
far put off this act of reparation. These pioneers were 
weavers, some of whom were disciples of Owen, that is to say, 
socialists, others were Chartists, but all of them had the 
vigorous confidence of the English mind in self-help, or 
rather in mutual aid. It took them one whole year of pain 
ful effort to collect the little capital which they deemed in 
dispensable, and after many desertions twenty-eight of them 
remained loyal, with a capital of £28. This is the starting 
point of a movement which to-day, after only seventy-six 

31 


 32 CONSUMERS' CO-OPERATIVE SOCIETIES 

years, has penetrated every country, and unites more than 
twenty millions of families. 

'The title of "Father of Co-operation" is often given to 
Robert Owen, who was still living at the time of the Roch 
dale Pioneers, several of whom were his disciples. It is true 
that this socialist (who was at one time a big employer) has 
very admirably defined co-operation by this formula : "You 
must become your own merchants and your own manu 
facturers ... to be able to supply yourselves with goods 
of the best quality and at the lowest price." It is also true 
that he popularized the word "co-operation." But Owen, 
being pre-occupied in realizing complete co-operation in his 
"towns of harmony" under the form of communism—more 
particularly that of community of land—was always some 
what disdainful of co-operative stores; any effort towards 
the partial realization of co-operation in the guise of a shop 
he regarded as being more likely to discredit his system than 
to herald its approach. 

However, it would be an error to suppose that Rochdale 
was the first society. From the end of the 18th century 
several societies could be mentioned. The existence of a con 
sumers' co-operative society has been discovered in a village 
in Oxfordshire, at Mongewell, where it had been started on 
the initiative of the Bishop of Durham, in 1794. Mr. Max 
well, in his History of Co-operation in Scotland, claims pri 
ority for a little society, which was existing in 1769 in the 
village of Fenwick, in Ayrshire. In 1820 a league was 
formed "for the propagation of co-operation," and up to 
1840, under the influence of Owen and his disciples, the 
propagandist movement for co-operation was very active. 
There were leagues, journals, congresses; small tracts were 
distributed by the million ; nothing was left undone. There 
were several congresses of co-operative societies during this 
period (1830-1833), including one on October 4th, 1831, at 
Birmingham,- at which the establishment of a wholesale 


DISTRIBUTIVE CO-OPERATION 33 

society was decided upon, and the duty of education was im 
pressed on co-operative societies. Another was held in 
London in the following year. Hundreds of societies were 
founded as a result of this campaign; in 1832 there 
were 3000; even a wholesale society was started about 
this time in Liverpool. Some of the societies existing at 
present, notably that of Sheerness, which dates from 1816, 
are older than the Rochdale one. 

But all these consumers' societies (distributive societies, 
as they are called in England) had one fault which arrested 
their development and ended by causing their extinction— 
they were philanthropic movements of patronage, almost of 
charity. They were created out of a feeling of pity, because 
of a desire to relieve the miseries of the working classes, 
caused by the terribly low wages in the first half of the 19th 
century, when machinery was taking the place of manual 
labour, and aggravated by the high price of bread, which the 
protective duties on grain continued to increase for the 
benefit of the landlords—duties which the noble campaign of 
Cobden and of John Bright, who was a native of Rochdale, 
was soon to abolish. Founded with the capital of philan 
thropists who only played the part of honorary members in 
the society and did not use the so-called co-operative store for 
themselves ; not looking for anything but cheapness ; not seek 
ing any profits—which, if made, were distributed among the 
shareholders and not among the customers, or sometimes bur 
ied in an inalienable reserve fund which would only serve for 
visionary schemes for the benefit of future generations—they 
did not attract new members and were therefore unable to de 
velop, but revolved perpetually in a vicious circle. Some 
what later another method of employing the profits was 
tried, namely, that of an equal distribution among all the 
members; but this was not more happy in its results. As 
a matter of fact, this system of equality put the enthusiastic 
members who conscientiously made all their purchases in 


 34 CONSUMERS' CO-OPERATIVE SOCIETIES 

the common store on the same footing as the indifferent ones 
who never came there at all. 

However, the really fruitful idea of these Rochdale pioneers 
of Charles Howarth,* was that of distributing the profits, 
not according to the net receipts or number of shares or 
equally among all the members, but in proportion to the 
trade of each member, this trade being checked in the simplest 
manner by means of dockets given of equal value to the money 
received at the cash-desk. It appears that other societies 
had tried this system before ; it had even been tried in a bene 
fit society in 1827 ; but this time the results were incalculable. 
It was the fillip which set in full motion the hitherto inactive 
machinery.f Presently we shall see the reason why this 
was so. 

It is evident that through the adoption of this new system 
of distribution the co-operative movement assumed a 
more individual character than heretofore. It was no longer 
communistic or equalizing—as Owen had desired—because 
every one was recompensed according to services rendered. 
But it preserved one aspect of communism by asking mem 
bers to leave their individual dividends as deposits in the 
common fund, which would thereby be increased and em 
ployed collectively, at first for the development of the society 
and then for propaganda and social education. It must 
be admitted that of these two tendencies—both somewhat 
antagonistic to the co-operative movement—it has been the 
latter, the individualist tendency, which has been most de- 

* Author's Note. The centenary of Charles Howarth's birth (he 
was born in 1814, and died in 1868) was celebrated in England a few 
years ago. One of his biographers calls him the "Archimedes of 
Co-operation." He was a working weaver, quite uneducated, but fa 
miliar with the doctrines of Owen. 

t Author's Note. "The History of the Rochdale Pioneers" was 
written and published in 1858 by George Jacob Holyoake. This mar 
vellous book, re-edited and translated into every language, has contrib 
uted not a little to the development of co-operation in many parts of 
the world. 


DISTRIBUTIVE CO-OPERATION 35 

veloped up to the present. But efforts are being made to re 
vive the earlier tendency. 

It seems then only right that history has awarded the 
title of "Fathers of Co-operation" to the twenty-eight 
weavers, who formed the Society of the Equitable Pioneers 
of Rochdale. They have doubly merited this title: 

First, by the broad prophetic manner in which they drew 
up the program of co-operation for their time, and for all 
time. The following is their famous- manifesto. At least, 
this is as it was reproduced in the Pioneers' Almanack for 
1854. It seems, however, according to Miss B. Potter 
(Mrs. Sydney Webb) that this program had already been 
formulated by co-operators at Brighton in 1827. In any 
case, if the Pioneers have not the merit of being the first to 
formulate it, they have had the greater honour of realizing 
it in the greatest possible measure. 

"The objects and plans of this Society are to form 
arrangements for the pecuniary benefit and the improvement 
of the social and domestic condition of its members, by rais 
ing a sufficient amount of capital, in shares of one found 
each, to bring into operation the foUowng plans and ar 
rangements '•— 

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

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

"As a, further benefit and security to the members of this 
Society, the Society shall purchase or rent an estate or 
estates of land, which shall be cultivated by the members 
•who may be out of employment, or whose labour may be 
badly remunerated. 


 36 CONSUMERS' CO-OPERATIVE SOCIETIES 

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

"That, for the promotion of sobriety, a Temperance 
Hotel be opened in one of tlie Society's houses as soon as 
convenient." 

Secondly, because they were not content merely to formu 
late the program and the ideal of co-operation and to 
demonstrate from afar the goal which it was slowly nearing, 
but found practical means of realizing it. And when it is 
remembered that these rules were from the first so defi 
nitely established by these few working flannel weavers that 
the experience of three-quarters of a century has been unable 
to add much to them, and that thousands of societies since 
formed have bound themselves to copy them almost literally, 
we must recognize this as one of the most remarkable phe 
nomena in economic history. Yet it passed quite unnoticed 
by economists of that time, even by Mill. The co-operative 
movement has not issued from the brain of a wise man or a 
reformer, but from the very life of the people themselves. 

We now give the most striking events in the history of 
co-operation in England after the period of the Pioneers. 
In 1852 and 1862 laws called the Industrial and Provident 
Societies Acts were passed. The first Act in particular, 
which was the Magria Charta of co-operation, gave legal 
rights to the societies, hitherto without guarantees or corpo 
rate existence, and whose property could therefore be appro 
priated by the first member who wished to take possession 
of it. This law was largely due to the efforts of a small 
group of religious men, known as the Christian Socialists—of 
whom one of the most celebrated was the clergyman and 
writer, Charles Kingsley,—with the help of the great 
economist, John tjtuart Mill, although thcse men §Qught 


DISTRIBUTIVE CO-OPERATION 37 

their ideal in productive rather than distributive co-oper 
ation, and more among the French socialists than among 
the Rochdale Pioneers. For the English Christian Social 
ists, as for the French socialists, the evil to be fought was 
the wage-system, while for Owen and his school it was the 
system of profit. Nevertheless, thanks to them, co-opera 
tion in all its forms gained not only legislative sanction, but 
also the support of public opinion. Undoubtedly, wage- 
earning and profit-making are, as it were, the two sides of 
the same coin. Both imply the subordination of labour to 
capital; but whereas producers' association seemed to be 
the only remedy whereby to abolish the wage system, it is 
consumers' co-operation which leads more directly to aboli 
tion of profit (see Chapter xvi). 

In 1864 we see the establishment in Manchester of the 
wholesale federation called the Co-operative Wholesale 
Society, or, more familiarly, the C. W. S., which has exer 
cised a powerful influence on the English co-operative move 
ment, an influence which is increasing from day to day (see 
Chapter xi). This step was mainly due to the initiative of 
Abraham Greenwood, one of the survivors of the Rochdale 
Pioneers. The C. W. S. represents the economic and prac 
tical side of co-operation. This institution, which is now 
strikingly successful, only succeeded in keeping alive after 
repeated set-backs. Wholesale agencies had already been 
opened, following on the first Congress at Birmingham, in 
1831, and later, in 1850, on the initiative of the Christian 
Socialists. But the ground had not been sufficiently pre 
pared, and they collapsed. Besides, up till the Act of 1862, 
such federations were legally non-existent. 

In 1869 the Co-operative Union was formed. The affairs 
of this body are administered by a central executive, known 
as the United Board, which acts on behalf of all English 
co-operators ; its authority, however, is purely moral. The 
Union holds annual congresses, which are like sessions of a 


 38 CONSUMERS' CO-OPERATIVE SOCIETIES 

co-operative parliament. The Co-operative Union is to the 
Co-operative Wholesale Society what the soul is to the body. 

From this time onwards English co-operation has no 
longer a history—as is said of happy countries—because it 
moves forward of its own accord, and by its own strength. 
Today, co-operation is one of the live forces of the country ; 
it is "a state within the State," as Lord Rosebery said at 
the Co-operative Congress at Glasgow, in 1890. As we 
shall see in the following chapter, it embraces nearly one- 
third of the people of Great Britain. In fact, many people 
fear that it may degenerate in proportion as it grows and 
spreads. They say that the attempt to realize the ideal of a 
new state of society which, like the Millennium to the early 
Christians, exalted the minds of the Pioneers, is now-a- 
days confined to the search after more comfort or large 
dividends—in a word, they say that co-operation, instead 
of being a religion, is no more than mere business. In fact, 
it is inevitable that the more a movement spreads the more 
its original virtues tend to disappear in the mass of the 
people; nevertheless, education, for which English co-op 
erators make considerable sacrifices, will help to keep co 
operative enthusiasm alive in the coming generations. 

We have given these details—necessarily somewhat cur 
sory—of the origin of co-operation in England, but we 
do not mean that these institutions are peculiar to Eng 
land. They are to be found in every other country, in pro 
portion as these countries come into the co-operative move 
ment. 

(2) In Belgium 

Meantime, while English co-operation of the Rochdale 
type was being evolved, in Belgium another type was 
emerging, having quite a different aspect. It is to Belgium 
(or rather, to certain leaders, César 'de Paepe, and after 
him, Anseele, Bertrand, and Vandervelde) that the merit is 


DISTRIBUTIVE CO-OPERATION 


39 


due of having united in one co-operative party the socialist 
school and the workmen's party, which, as we shall see later, 
had become separated (see, in the last chapter, the pro 
gram and the characteristics of socialist co-operation). 
Not that the co-operative movement has assumed such large 
proportions in Belgium as in England. It is of much more 
recent date, being traced from 1880 only, and, having taken 
from the beginning a socialistic and political character, it 
found itself checked by the antagonism of other political 
parties, Catholic and Liberal, which have rival societies in 
every town. 

But, on the other hand, this struggle has acted as a 
stimulus to co-operation, each party using it as a means of 
influencing the people. Thus, the characteristic feature of 
Belgian co-operation is that it is mixed up with politics, 
which is not at all the case in other countries—at any rate, 
up to the present. The socialist party has, above all, 
made the co-operative store not merely (as Anseele has 
said in his well-known phrase) "a fortress whereby to bom 
bard the captalist society with potatoes and 41b. loaves," 
but, better than this, a club house for the people, to serve 
them not only as a centre for supply, but for meetings, in 
struction, recreation, improvement. It has made co-opera 
tion a sort of patronage, different from capitalist patronage 
but employing the same methods, and we might even say 
using methods which no other patron would dare to do to 
day; for instance, the member has to pay for his bread 
in advance each week—by buying counters, which means 
that the society borrows from the workman funds for its 
working expenses—and, moreover, the member must pay an 
addition of one-third of its real price for his bread. But 
the workman will bear from his society what he would not 
bear from any other master. He willingly allows himself to 
be drawn into a net-work of schemes of insurance, provi 
dence and mutual aid, which surrounds him completely from 


 40 CONSUMERS' CO-OPERATIVE SOCIETIES 

his birth to his death, and follows him into all the actions 
of his domestic, working, and political life. He is taught 
how to vote properly and not to drink alcohol. It is in 
order to keep in daily touch with him and to be able to 
control his actions more minutely that all Belgian co 
operative societies make the selling of bread the basis of 
their operations. 

(3) In France 

France has been late in taking up distributive co-opera 
tion, though the social evil "competition" was being un 
ceasingly anathematized by all French socialists in the first 
half of the 19th century. Therefore, it would seem only 
natural that co-operation, .being the antithesis of competi 
tion, would appear to them the solution sought for. But 
then, they were seeking the solution in co-operation from the 
productive, and not from the distributive side. 

Indeed, thoroughly discouraged 'by their failures, the work 
ing classes turned their backs on co-operation in all its forms. 
They continued to dally with the idea, however, as a 
solution for the social question, in their congresses up to 
that held at Lyons in 1878;* but this was the last sign of 
interest shown by them. From the following year when, at 
the Marseilles Congress, under the initiative of Jules Guesde, 
and influenced by Marxian collectivism—then in its infancy 
in France—they changed completely and resolved that co 
operative societies "could by no means be considered a strong 
enough method for gaining the emancipation of the labour 
ing classes," they voted for the socialization of the means of 
production. 

Nevertheless, here and there distributive co-operative so- 

* Author's Note. "Considering that the condition of wage-earners is 
but a transitory state between serfdom and a nameless condition, the 
"Chambres Syndicales ought to put everything in train for the estab 
lishment of general societies for distribution, credit, and production." 
This was a resolution passed at Lyons. 


DISTRIBUTIVE CO-OPERATION 41 

cities were founded. The oldest of these which appears in 
the Co-operative Almanac is the Ruche Stéphanoise, of St. 
Etienne, which dates from 1855. But there were others, 
even older, which have long since disappeared, leaving no 
traces. The idea of grouping together for purchase in 
common is too simple not to present itself often to the mind 
and not to be acted upon at times. We can cite from 1828 
the existence of a co-operative bakery called Caisse du Pain, 
in Alsace, at Guebwiller. 

The great burst of co-operative enthusiasm in 1848, al 
though it spent itself almost entirely in efforts to establish 
productive societies, did, nevertheless, bring some distribu 
tive societies into existence ; in particular, at Lyons, a great 
centre of social activity at that epoch, there was formed the 
Société des Castors. Several works have been written on 
the history of co-operation at Lyons—one by M. Flotard, 
in the Year Book of Association, published in 1867, and one 
more recently by M. Godard, entitled, "The Origin of Co 
operation at Lyons" in 1904. A co-operative shop, with 
some curious features, was started in 1835, before the Roch 
dale Pioneers' Society was formed, under the name of "Com 
merce Véridique et Social," and was threatened with prose 
cution by the authorities. 

During the period 1867 to 1883, although public enthusi 
asm was more concerned with productive and credit associa 
tions, there were about one hundred distributive societies 
founded, among others, on the initiative of Benoît Malon,* 
the Revendication at Puteaüx. In Paris, in 1867, there 
were only five or six distributive societies, compared with 50 
productive and more than 100 credit societies. All of these 

* Author's Note. Benoît Malon was a socialist of the French School, 
that is, he was not very sympathetic toward Marxianism, but rather 
sympathized with co-operative ideals. He, nevertheless, denounced in 
vehement terms, "the quacks of orthodoxy in the economic school, who 
had driven the workman out into the blind alleys of co-operation." 
(Manual of Social Economy.) 


 •I 


42 CONSUMERS' CO-OPERATIVE SOCIETIES 
were affiliated to one of three credit organizations (People's 
Banks) : Le Credit OM Travail, La Caisse des Associations 
Coopératives, and La Caisse d'Escompt des Associations 
populaires. At this time, co-operation was upheld by 
such well-known economists as Leon Say, Jules Simon, 
and Walras, but it had a more moderate program than 
that of Rochdale; and the law of 1867, which we shall 
examine later, was due to this movement. Jules Simon made 
a very impassioned speech during the discussion on this law. 

It was not until 1885 that distributive co-operation took 
a conscious existence—in the town of Nîmes—thanks to the 
initiative of a little group of co-operators, which included de 
Boyve, Fabre, and several workmen. Since then its prog 
ress has been less broken, if noit very rapid. The first con 
gress, which assembled in Paris in 1885, laid the foundations 
of an organization somewhat similar to that which we have 
described in England. A Co-operative Union with a Central 
Committee, a federation for purchase, annual congresses, 
and a journal were started about this time. During some 
ten years, the societies which had joined the Co-operative 
Union remained loyal to the Rochdale program. The 
Central Committee found a general secretary full of enthu 
siasm and experience in the person of Charles Robert, the 
apostle of profit-sharing; but a premature and unfortunate 
attempt to form a federation for purchase in common (see 
later chapter on "Co-operative Federations") brought 
trouble and a certain amount of discouragement into the 
Union.- 

In the interval, the example of the Belgian co-operative 
societies and the counsel of their chiefs had brought back a 
certain number of French socialists to the co-operative move 
ment. They found in co-operation, if not a solution of the 
social problem, at least a means of action, and these men 
began to form distinctive societies. But those societies of 
socialist tendencies in Paris, which had at first belonged to 


DISTRIBUTIVE CO-OPERATION 43 

the Co-operative Union, soon withdrew from it because they 
thought the Union too bourgeois in its tendency, and too 
provincial in its little parliament, and in 1895 another 
group was founded composed entirely of Parisian societies 
under the name of Bourse cooperative des sociétés social 
istes de consommation. (Co-operative Exchange of Social 
ist Consumers' Societies.) Socialists say that this secession 
marked the new co-operative era in France. 

In this statement there is a measure of truth, and some in 
gratitude. As far as the co-operative program is con 
cerned, the socialist seceders have added nothing to that of 
the founders of the Union ; but as far as its realization is con 
cerned it is true that their societies, being formed exclusively 
of workmen and animated by class prejudice, showed them 
selves more active, more disciplined, and possessed of more 
solidarity. Nevertheless, the period which followed (which 
lasted not less than seventeen years) was full of quarrels be 
tween the socialist group and the so-called bourgeois or neu 
tral group which certainly did not help the progress of co 
operation in France. But we shall postpone to another 
chapter these discussions about the various schools of co 
operative thought. 

Finally, mainly because of the efforts of some loyal co- 
operators of both parties, and also because of the pressure 
of co-operators in other countries—especially Belgium and 
England—which was exercised at every national and inter 
national congress, the co-operative movement in France suc 
ceeded in regaining its unity. In 1912 the two groups were 
in accord in a declaration drawn up by a member of the 
Nîmes school. (For text of the declaration see the last 
chapter: "Co-operation and Socialism.") This declaration, 
called the Covenant of Union, was ratified separately and 
simultaneously by each federation in congress—unanimously 
at the Co-operation Union Congress, and at the Congress of 
the Socialist Exchange by a majority of 307 to 30—and the 


 44 CONSUMERS' CO-OPERATIVE SOCIETIES 

Covenant of Union was finally adopted at the General Con 
gress at Tours, held from December 28th to 30th, 1912, 
in the presence of numerous delegates of foreign co-operative 
federations who had come to witness this very happy union. 

However, there were here aiid there a certain number of 
societies which refused to accept the Union, preferring to 
break away. On the other hand, some which had hitherto 
refused to federate decided to do so from the time when they 
had not the embarrassment of choosing between the two fed 
erations. On the side of the old Co-operative Union, the 
irreconcilables were the semi-patronal co-operative societies. 
On the side of the socialist group the dissentients were the 
large societies of the North not allied with the "Guesdist" 
party, that is to say, the Marxian societies. (Jules Guesde 
was the representative of Marxian socialism in France.) 

It is fortunate that the Union was already established, al 
though it had not borne any fruit at the time of the outbreak 
of war. It is owing to this Union that co-operation in 
France has been able to survive the great calamity, and even 
to render notable services to the country and the co-opera 
tive principle. 

(4) In Germany 

In Germany the working classes for a very long time re 
fused to believe in the efficacy of distributive co-operation 
because they were imbued with the idea or theory of what 
Lassalle calls the brazen law, i. e., the ancient theory which 
teaches that any reduction in the cost of living inevitably 
brings with it an equal reduction in the rate of wages, and 
that, consequently, this would be the unfortunate result of 
the success of a distributive co-operative society. For this 
reason the co-operative movement in Germany was first 
started under Schulze-Delitzsch about 1850 in the form of 
co-operative credit, and in this forai it has had a wonderful 
development, more striking even than that of consumers' co- 


DISTRIBUTIVE CO-OPERATION 45 
operation in England. There are, in fact, 20,000 co-opera 
tive credit societies, both rural and urban. 

As co-operative credit is the most conservative of all forms 
of co-operation it has rallied together the liberal and the 
bourgeois parties, and even the small traders, who have 
gained great advantages therefrom. It was a sort of light 
ning conductor for quite a long time, a preventive against 
the extreme socialism of Lassalle and Karl Marx. Thus, 
credit societies had a high place in the federations—notably 
in the General Union of Berlin, the most important one 
founded by Schulze-Delitzsch—while the distributive societies 
remained in a secondary position, their only function being 
(in the opinion of the Union) to help the workman to save 
and to1 be a source of supply for the credit societies. But 
the federation of credit and distributive societies under one 
banner was impeded by the fact that the small traders (who 
constituted the majority of the co-operative credit societies) 
declared that the development of distributive societies aimed 
at their extermination. Futhermore, the General Union, 
which, inspired always by the spirit of Schulze-Delitzsch, 
stood for bourgeois liberalism, and defended the middle 
classes, was unable to accept the socialist labour- program of 
social reform which the distributive co-operative societies 
both in Germany and France were beginning to teach. At 
the Congress of Kreuznach, in 1902, held under the presi 
dency of Dr. Crüger, disciple and successor of Schulze 
Delitzsch, a resolution of the German Union condemned this 
program as being too socialistic. 

Consequent on this motion, the larger number of distribu 
tive societies resigned, in order to form an independent Union 
with its head-quarters at Hamburg. This Union, however, 
unlike the Belgium group, does not profess the socialist faith ; 
it has not allied itself With the large socialist democratic 
party, but by certain regulations—such as prohibiting 
societies from selling to the public or paying interest on 


 i 


46 CONSUMERS' CO-OPERATIVE SOCIETIES 

shares—it gives to its societies a more "anti-capitalist and 
more mutual aid" character than that which obtains in any 
other country. 

Today, Germany, although very tardy in entering the 
domain of distributive co-operation, advances with gigantic 
strides. The oldest co-operative distributive society on the 
Rochdale system appears to have been formed in Neustadt, 
near Magdeburg, in 1864. But it is only in the last years 
of the 19th century that German co-operation began to ex 
pand. In this field, as in the field of industry, she aimed at 
outstripping England, and at her former rate of progress, 
would probaby have succeeded, as we shall see by the figures 
in the following chapter. This is interesting, because the 
superiority of which Germany boasts, in the domain of 
organization, was not generally recognized, except in 
far as it concerned compulsory State, or military, 


so 


organization. Yet here we have a kind of organization— 
free and spontaneous co-operative association—for which 
Germany displays an aptitude not less remarkable than that 
of the individualist English people. We must remember 
that the qualities, and even the faults of the German race— 
the spirit of discipline which can subordinate private to gen 
eral interests, the gregarious instinct which moves it to join 
together, the enormous capacity for carrying things 
through, the cult of organization, even the very worship of 
the kolossal—are all conditions eminently favourable to the 
success of co-operation in Germany. As we shall see in the 
following chapter, the largest distributive societies in the 
world are to be found in Germany. 

Let us pause here. This is not the place for a history 
of distributive co-operation in every country during the 
second half of the 19th century. It would be very monoto 
nous, because in every country except Belgium the Rochdale 
type has been more or less faithfully copied. It would be 
more interesting tp continue this history later on, in trying 


DISTRIBUTIVE CO-OPERATION 47 

to discover in which countries this form of co-operation has 
the greatest chance of success. It is not certain that the 
small seed imported from England will flourish in every 
country, and, at any rate, it is perfectly clear that its devel 
opment will be unequal, as we shall explain in the following 
chapter. 


 CHAPTER V 

STATISTICS AND GEOGRAPHICAL DIS 
TRIBUTION OF THE CO-OPERATIVE 

MOVEMENT 

When it is remembered that the type of association created 
by the Rochdale Pioneers was specially contrived to meet 
one particular need one cannot fail to admire the way in 
which this little seed of co-operative effort has been able to 
adapt itself to all countries, to modify itself to the special 
circumstances of its surroundings, and to give birth to a 
wonderful variety of different forms of activity. It flour 
ishes in all countries alike—in frozen Iceland and Labrador, 
and in the burning Islands of the Pacific. In Palestine 
several colonies of Zionist Jews, finding themselves cut off 
from all supplies by the war, organized themselves into co-op 
erative societies, in order to be able to live and await relief. 

Unfortunately, statistics relating to consumers' co-opera 
tive societies are very incomplete. The number of societies 
in each country is fairly well known, but there are not many 
where the number of members is stated, and there are'even 
fewer where that most important figure, the turnover, is 
known with any degree of accuracy. Thus hi Italy, where 
co-operation has developed to a remarkable degree, there are, 
as yet, no exact statistics. Even in those countries where 
societies are grouped in federations there are a certain num 
ber of "wild men" who do not supply the returns sought, so 
that the figures given are below the actual figures and ought 
to be increased by an unknown quantity.1 It is only in 

i This condition prevails to a marked degree in the United States. 
Many of the societies are isolated, out of the channels of co-operative 

48 


GEOGRAPHICAL DISTRIBUTION 49 

Great Britain and Switzerland that co-operative statistics 
are more or less complete, because in these two countries 
alone almost all the societies are grouped in a national 
federation. 

Subject to this reservation, the following figures may be 
given for 1914, the last normal* year:— 

Number 
Country. of 

Societies. 

British Isles --- 1,385 

Germany ...... 2,375 

Russia ......... 13,000 

France ........ 3,261 

Austria ........ 1,471 

Italy .......... 2,481 

Switzerland .... 396 

Denmark ...... 1,560 

Hungary ...... 1,300 

Belgium ....... 205 

Sweden ........ 608 

Poland ........ 1,500 

Holland ........ 135 

Finland ........ 512 

Spain .......... 200 

Norway ........ 172 

These figures have been much affected by the war, though 
not generally, as might have been expected, adversely af 
fected. On the contrary, in almost every country, belligerent 

thought and feeling as it circulates among the societies affiliated with 
The Co-operative League or with one or another of the local federa 
tions or wholesales. The officers of such associations do not answer 
or even acknowledge requests for information. Some of these have 
been hunted down by members of the staff of The League or other 
interested persons. But the country is so large and the faithful 
workers so few that scores of co-operatives come into existence, live 
and die without being known to the American Co-operative Move 
ment. 

* Author's Note. These figures are taken from co-operative journals, 
from the "International Co-operative Bulletin," and from reports pre 
sented by delegates to the Congress. The mark of interrogation in some 
cases indicate those whose details are uncertain and sometimes con 
tradictory. We have classified the countries in the order of the figures 
in the second column, which gives the number of members. The number 
of societies indicated in the first column is not really a sign of superior- 


Number of 


Members (in 


Thousands). 


3,054 


2,000 (?) 


1,500 


881 


423 


400 


276 


250 


200 (?) 


170 


153 


120 


99 


97 


40 


39 


Proportion 


per 1,000 


Inhabitants. 


264 


121 


34 


90 


70 


43 


290 


350 


40 


90 


108 


33 


72 


120 


30 


42 


Turnover 


(in 


thousands). 


£88,000 


2q,000 (?) 


32,000 


12,840 


7,200 


7,200(?) 


5,240 


6,000 


3,000 


1,920 


2,440 


1,680 


1,040 


2,520 


800 


550 


 50 CONSUMERS' CO-OPERATIVE SOCIETIES 

or neutral, there is a considerable increase, and in some, 
notably Finland, Russia, Georgia, and Ukrania, the increase 
is enormous. This is an unexpected phenomenon. It can 
be explained as regards neutral countries by the fact that 
co-operative societies have shared in a general prosperity ; 
but one would have expected that in belligerent countries, 
where almost the whole adult population has been mobilized, 
a marked decrease in consumption would have been found. 
But those who remained at home increased their consumption 
on account of the increase in wages and allowances, and 
further, the number of members of the societies has increased, 
because the general raising of prices has forced the public 
towards co-operation. It is possible, however, that these 
increases will not be permanent.* 

ity—rather the contrary—as it shows that the societies are very small. 
However, it has a certain value, as it shows how co-operation has 
spread over the country. The third column shows the number of co- 
operators per 1,000 inhabitants (multiplied by four, because each 
co-operator stands for a family, sometimes a very large family; there is 
very rarely more than one member in the same family). This column 
is the best proof of the penetration of the co-operative spirit in the 
country, which from this point of view ought to be taken as the touch 
stone of co-operative progress in any co-operative classification. The 
high place the small countries—Denmark, Switzerland, and Finland—take 
in this classification is worthy of remark. The fourth column, giving 
the total sales, is more or less equivalent to the second, because it is 
natural that the amount of sales should be proportionate to the number 
of customers. However, the parallel is not absolute, because, as we 
must not forget, in many countries co-operative societies sell not only 
to their members, but also to the general public. 

* Author's Note. The following are the most recent figures (of the 
year 1920 or 1921) for the principal co-operative countries: 

Number of Number of 
Societies. Members. 
Russia ....... .......... 50,000(?) 15,000,000(?) 

British Isles .................... 1,500 4,559,000 

Germany ........................ 1,366 2,832,000 

France ............. ......... 4,000 2,300,000 

Switzerland ..................... 500 369,000 

Finland ......................... 600 375,000 

Denmark ........................ 1,700 376,000 

It is useless to give the figures for the turnover, as fluctuations in the 
value of currency deprive these figures of all significance. It is of little 


GEOGRAPHICAL DISTRIBUTION 


51 


We must add to our list some thousands of consumers' 
co-operative societies in the Balkan States and Portugal, 
and, outside Europe, about a thousand in the United States, 
Canada, Japan, India, Australia, and even in snowbound Ice 
land. The number of consumers' societies in the whole world 
is at least thirty thousand,* having about ten million 2 mem 
bers and a turnover of nearly 200 million pounds. Besides 
this, it must not be forgotten that each co-operator usually 
represents a family (since unmarried people have compara 
tively little reason for joining a co-operative society), and 
working-class families are generally large, so that these ten 
million co-operators represent a population of from 40 to 45 
million persons, the equivalent of a large State. 

As for the turnover, compared with the trade of the world, 
which runs into thousands of millions, it is clearly only an 
infinitesimal portion; it hardly amounts to 8s. per head for 
Europe ! Still, if one remembers that the co-operative move 
ment is not yet three-quarters of a century old—and how 
short a time that is in the history of the world: less than 
the life of a man—these results will not appear despicable, 
but rather of a kind to justify the hopes of co-operators. 

A few words about the principal co-operative countries. 
They advance at very different speeds along the road to co- 
value to record the billions of marks or crowns for Germany or 
Austria, and the trillions of roubles for Russia! The total turnover 
of the co-operative societies of Great Britain was 250,000,000 pounds 
(it should be remembered, however, that the pound has also depre 
ciated in value) ; and the turnover of the Swiss societies was 337,000,000 
francs (the Swiss franc has fluctuated as little as the American dol 
lar). 

Even if the figures for the turnover of all countries were expressed 
in gold (or in dollars) it would be noted that the increase over the 
figures of 1916 Is comparatively little, while the growth in the number 
of members was considerable. 

2 Figures published at the Basel Congress in 1921 showed 25,000,000 
members of co-operative societies. 

* Author's Note. This list does not comprise the following cate 
gories of co-operative societies which, properly speaking, are not Con- 


 52 CONSUMERS' CO-OPERATIVE SOCIETIES 

operation. Far and away in the first place comes Great 
Britain, and this is not surprising, after what we have seen 
in the preceding chapter on the history of co-operation. 
First of all, the United Kingdom excels by the number of its 
co-operators—more than four million families (4,500,000 in 
1920)—which represents about one-third of the population 
of Great Britain, leaving out Ireland, where consumers'' co 
operation is of little account. There are certain counties 
where the proportion of co-operators rises to a half and even 
three-quarters of the population. There are big cities, such 
as Leeds, or small towns, such as Kettcring or Desborough, 
where almost the whole population are co-operators. (Re 
port of General Co-operative Survey Committee, Co-opera 
tive Union, Manchester, 1916- ) 

All the societies are strong, for their average membership 
is over 3,000 (575 in France). There are 100 socie- 

sumers' associations, although they really come under the definition we 
gave, namely:— 

(a) Co-operative building societies, that is to say, societies for the 
supply of houses, to the number of more than 10,000, of which the 
large majority (7,000) are in the United States and England, nearly 
300 being in France. We shall speak of these later on.3 

(6) Co-operative agricultural and urban societies for the purchase 
of fertilizers and raw materials, which number at least 20,000. There 
are 6,000 of these societies in France.* 

Nor does it include co-operative credit societies, both rural ana 
urban, which number about 50,000 to 60,000 (18,000 in Germany and as 
many in Russia), although their object is to satisfy a very pressing 
need of their members, namely, the need of money. 

According to the Russian economist, Tugan Baranowsld, who died 
1S19, there were at that date 160,000 co-operative societies of all 
classes with 30,000,000 members. 

s The Building and Loan Associations, to which Professor Gide here 
doubtless refers, are not strictly co-operative. They do pretend to do 
away with private profit, but they are not democratically controlled, 
nor are there any co-operative features to the 'houses or communities, 
once they are built. They are semi-democratic credit associations. 

4 There are also thousands of these in the United States. Obviously 
they are not consumers' associations; they enable producers to pro 
cure their raw materials more economically. With them should be 
classed such associations as the Artists' Co-operative Store in New 
York in which brushes, paintSj etc. are sold, the Dentists' Co-operative 
society of New York, and similar societies. 


GEOGRAPHICAL DISTRIBUTION 


53 


tics with more than 10,000 members, of which one, Leeds, 
has 190,000 members and a turnover of £3,000,000. The 
turnover of these societies shows their strength, no less than 
their membership. In 1914 the turnover was more than 88 
million pounds, which represents £64,000 per society (£4,000 
in France) and an average of £29. 10s. per member. The 
figures for 1920 are much higher, owing to the rise in prices 
(as we have said £254,000,000 in all, equal to £170,000 per 
society, or £56'per member). This average is far above that 
of any other country (in France the average is about 700 
francs, which are worth in present currency about £14. 
This high average implies two things; first of all, 
that the societies are not merely grocery shops, but supply 
every kind of goods, and, secondly, that the members are very 
loyal to their store. This is a rare quality, and is one of 
the surest tests of co-operative zeal. There are a good num 
ber of English workmen who bring all their wages to their 
own shop and spend scarcely any money outside of it. 

In the above figures, sales made by the English and Scot 
tish federations to their societies (totalling more than 130 
million pounds) are not included, as that would involve a du 
plication ;* neither are the figures for the co-operative bank, 
which has a turnover of more than 400 million pounds, nor 
those of the Co-operative Insurance Society, with its 40 mil 
lion pounds' worth of risks. If the whole were added together 
they would reach a total of about 1,000 million pounds. 

Germany, as we have said, is above all the home of co-oper 
ative credit societies (18,000 with more than 2,500,000 mem 
bers), but still, as regards co-operation for consumption it 
takes second place, though it made great strides in the years 
before the war, at a rate of progress much higher than that 
of Great Britain, as may be seen from the following 
figures :— 

* Author's Note. See page 159, chapter on "Purchasing Federations." 


 54 CONSUMERS' CO-OPERATIVE SOCIETIES 


Great Britain. 
Members 

(in thousands). Sales. 
1902 ....... 1,709 £50,040,000 

1914 ....... 3,054 £88,000,000 


Germany. 
Members 
(in thousands). Sales. 

575 £7,040,000 
1,717 £26,360,000 


Increase 178 p. 100 


176 p. 100 


300 p. 100 374 p. 100 


It is clear that during this last decade the German societies 
have just tripled their number of members, and almost quad 
rupled their turnover, while British societies have only in 
creased in each case by about 75 per cent.6 It is true that in 
making this comparison we must take into consideration, first, 
that in every movement, as in every organism, increase is 
greater in early youth, and, secondly, that the population of 
Germany is half as big again as the population of Great 
Britain and therefore offers a bigger field for extension. 
Consumers' Co-operation in Germany is still far behind that 
of Great Britain, for the total number of members is about 
half, and the turnover not a third of that in Britain.* Still 
there are many important societies there, to which the epithet 
"colossal" may be applied without exaggeration, notably 
that of Hamburg with 80,000 members, Leipzig with 65,000, 
and above all that of Breslau, which has 100,000 
members.7 

6 Germany now has almost as many members as the British move 
ment. Inasmuch as little more than half of the German societies are 
affiliated with the Central Union, precise figures are not available; 
but the leaders estimate a membership of about 4,500,000 for the 
societies of the whole country. 

* Author's Note. The only trustworthy figures are those of the 
societies affiliated to the Hamburg Federation (see page 45). These 
are the ones Which appear in the comparative table above. But this 
Federation only included 1,200 societies out of more than 2,000 existing 
in Germany at that date (1914). The figures in the tables, therefore, 
do not represent the real total. At the same time we must guard 
against believing that they might be doubled, because the societies be 
longing to the Hamburg Federation are the most powerful in Germany. 

r In 1921 the Hamburg Society had 120,724 members, and the Vienna 
Society 152,513 members. 


GEOGRAPHICAL DISTRIBUTION 55 

Moreover, generally speaking, the average of sales per 
member is much smaller in Germany than in Great Britain, 
being only JE15. 11s., which is explained less by the disloyalty 
of members than by the fact that these societies generally 
confine their trade to groceries, as in Breslau. 

France, as we have already seen, comes first after Russia 
as regards the number of its societies, but there is nothing 
for her to boast about in this, as the large number of so 
cieties is not a sign of strength, but of weakness ; it is simply 
a sign of the scattered and overlapping nature of the so 
cieties. As far as France is concerned, for a long time past 
the only statistics published have been those compiled by M. 
Daudé-Bancel, Secretary of the late Union Coopérative 
which appeared since 1882 in I'Almanack, now the Year-book 
of French co-operation. The Labour Bureau (at first for 
the Ministry of Commerce, but now for the Ministry of La 
bour) used to prepare statistics from information obtained 
from official sources. Since 1907 it has published annual 
statistics which are fairly complete. 

The following tables show the comparative increase of the 
number of societies in Great Britain and France. First of 
all for Britain, the following table shows the increase in the 
number of societies and the number of their members :— 


1862 ..... 


1872 .............. 


1882 .............. 


1892 ...... 


1902 ............ 


1912 .............. 


1914 ........... 


1920 .............. 


Number 
of 
Societies. 

......... 331 


930 


......... 1,043 


......... 1,420 


......... 1,476 


......... 1,399 


......... 1,385 


......... 1.379 


Number 
of 
Members. 

QQ (\f\f\ 


324,000 


598,000 


1 19*7 nrirt 


t QQQ nnri 


9 tf^n nnn 


3,054,000 


4.sn4_nnn 


Number 
per 
Society. 

9fiQ 


QAC 


ttro 


1 Ql t 


J.JÏ7 1 U 

o onfc 


^9«n 


It is seen that since the year 1902, which marks the max 
imum, the number of societies has decreased by nearly 100 


 56 CONSUMERS' CO-OPERATIVE SOCIETIES 

while the number of co-operators has increased by nearly 
two-thirds, and if one goes back to 1892, it is seen that the 
number of societies has diminished by 35, while the number 
of members has increased nearly three-fold. For France, 
we give a parallel table, except that we cannot go back fur 
ther than 1900, as no trustworthy statistics exist before that 
date. 


1900 ........... 


1907 ........... 


1914 ........... 


1020 ........... 


Number 


of 
Societies. 

............ 939 


............ 2,214 


............ 3,156 


............ -4.000 


Number 


of 

Members. 

375,000 


705,000 


876,000 


1300,000 


Number 


per 
Society. 

400 


318 


278 


325 


These figures show that since 1900 the number of societies 
has increased more than four-fold but that the average 
number of members per society has diminished by one fourth, 
while the number of British societies in the same period di 
minished a little, and the average number of members per soci 
ety has nearly quadrupled. Nothing is more significant 
than this parallel, which shows clearly the Anglo-Saxon ten 
dency to concentration as opposed to the dispersive tendency 
of the French. It shows that in France the increase in the 
number of societies is far more rapid than the increase in 
members, which shows further that the societies are becoming 
smaller and smaller. This gradual diminution in the average 
number of members can partly be explained by the fact that 
according as statistical investigation spreads more small 
societies are discovered. These figures are those given in 
the Bulletin of the Ministry of Labour. The Year-book 
of French Co-operation of 1914 gives slightly higher figures : 
3,261 societies, and 881,000 members. The average number 
of members in the third column—calculated by simply 
dividing the total number of members by the number of 
societies—is slightly lower than in reality, because a certain 
number of societies have not given the number of their mem- 


GEOGRAPHICAL DISTRIBUTION 57 

bers, and therefore the divisor should be reduced by so much ; 
but the difference is insignificant. Therefore, with us, 
multiplication is synonymous with division! That is why 
(without mentioning Paris, where there are 44 societies, 
of which only 6 or 7 are at all important), we find 54 
societies in Lyons, 21 in Creusot, 11 in Montceau-les-Mines, 
27 in Roubaix, 18 in Tourcoing, 11 in Bourges, &c., &c. 
More than a quarter of the French societies (more than 
900) have less than 100 members ; there are even some which 
have only 7, barely the legal minimum ! 

The French societies are not only weak in the number of 
members, but also in turnover,* and the amount of pur 
chases per member. This last is a very serious symptom of 
the lack of co-operative spirit, for, as we shall see further 
on, it shows but little enthusiasm on the part of the members. 
Still, there is another reason for it, which is that the greater 
number of societies in France deal in groceries only, and 
therefore the amount of purchases which the members can 
make at their co-operative shop is very limited. More than 
a third of the societies (1,300) confine themselves to baking, 
and their turnover is thus necessarily restricted. It is 
hardly possible for a co-operative bakery, no matter how 
enthusiastic its members may be, to sell more than one 4 Ib. 
loaf to each member per day, which hardly makes more than 
£12 per member per annum at pre-war values. Those 
societies which sell all classes of goods are rare. In France 
the average of sales per head is a little below that of Ger 
many, but it is above all in the average membership per so 
ciety and in the turnover, that we are inferior. If we com 
pare the figures of the Fédération Nationale française with 

* Author's Note. The total amount of sales (for the 2,988 societies 
which furnished information) in 1913 was £12,600,000, which represents 
an average of £4,000 per society, while in Great Britain the average 
was £64,000, 16 times morel Even in Switzerland the average is much 
higher, namely, £15,000 sales per society. Recently a striking tend 
ency towards amalgamation has been shown in Paris and the prin 
cipal cities of France. 


 58 CONSUMERS' CO-OPERATIVE SOCIETIES 

those of the Hamburg federation we find for the latter an 
average of 1,560 members and £24,000 turnover, and for the 
former only 315 members and £5,360 turnover. We have 
not huge societies like Germany—only one French society 
(l'Union des Coopératives, of Paris) has 70,000 members, 
a turnover of £3,000,000. This society was formed during 
the war by the amalgamation of a dozen Parisian societies. 

Switzerland takes a high place among the co-operative 
countries, for it has 400 consumers' societies with nearly 
30,000 members, in a population which does not reach 4 
millions. This is a proportion relatively higher than that 
of Great Britain (78 co-operators per 1,000 inhabitants in 
stead of 74) ; and the turnover, close on six millions, is but 
little inferior to that of Britain (£1. 12s. per inhabitant in 
stead of £2), and far above that of Germany and most other 
countries. Switzerland has five societies with over 10,000 
members, of which the Bale society has 37,000 (that is to 
say—counting members of families—nearly the whole pop 
ulation of the town), and a turnover of £1,080,000. Still, 
the Swiss movement is of recent date. It did not really 
start until the formation of the Union Cooperative de Bale 
in 1890, which now has a membership of more than 400 so 
cieties and a turnover of over £2,000,000. One of the fea 
tures of Swiss co-operation is the loyalty with which all the 
societies support the Union and bring to it their moral and 
financial help. Switzerland, being itself a federal democracy 
which bears on its shield the device, "Each for all, and all for 
each," is for this reason particularly inclined towards feder 
ation in its economic life. (For actual figures, see page 49.) 
In Italy also the co-operative movement is very remarkable, 
though for different reasons. Italy is of all countries that 
in which the collaboration of the three great forms of work 
ing class association, namely, Trade Unions, Friendly Soci 
eties, and Co-operative Consumers' Societies, seems best real 
ized. At Reggio Emilia, notably, these bodies are grouped 


GEOGRAPHICAL DISTRIBUTION 


59 


in a very strong union. There are very few large societies 
except "professional" societies like Cooperative Operaie, at 
Trieste (37,000 members), or societies of workmen and 
lower middle classes like I'Unione Cooperativa of Milan 
(17,000 members), and the socialist society at Turin (19,000 
members) ; but the economic evolution of Italy is behind its 
political evolution, and it has not yet been able to realize its 
own unity in this field. Italy has with great difficulty been 
able to create a general wholesale federation, which is not 
making much progress. The lack of statistics makes any 
comparison with other countries impossible. 

Belgium is the only country 'where the co-operative move 
ment has taken a decidedly original form and a socialist and 
political colour; but for this the reader is referred to what 
has been said in the preceding chapter. 

There is one small country where co-operation has de 
veloped to an extraordinary degree more than in any other 
country, not excepting England, and that is Denmark. In 
it there are 1,700 consumers' societies, a huge figure for a 
country with 3 million inhabitants that would represent more 
than 20,000 societies in France or England. It is true 
that the societies are very small, the total number of members 
being about 300,000, or barely 180 per society. That is be 
cause they are above all rural societies. It is in the coun 
try districts, unlike what has happened in other countries, 
that co-operation in all its forms has developed most.8 

At the other extremity of the scale—passing from the 
smallest to the greatest country—we find Russia. There 
the development of co-operation was very slow until the first 
years of this century, but during the last ten years it has 
made great strides, and the war has given it an unexpected 
impetus. Doubtless the Mir and the Artels had already 

8 The greater emphasis, however, is upon the farmers' marketing 
association in Denmark. This is equally true of Ireland. And the 
saine conditions prevail in some of the agricultural states of America. 


 60 CONSUMERS' CO-OPERATIVE SOCIETIES 

shown the innate aptitude of the Russian people for asso 
ciation. It is therefore not surprising that as these anti 
quated forms disappear the spirit of association should mani 
fest itself in a new form. The democratic movement here 
finds an outlet while the special progress due to the war is ex 
plained by the necessity of struggling against the increase of 
prices. 

The number of consumers' societies in Russia is estimated 
at about 50,000, mostly rural, and the number of credit 
societies (with which we have no concern here) is at least 
15,000. These last are in process of transforming Siberia.* 

There is nothing special to say about other countries. 
In Austria-Hungary there is a fair number of consumers' so 
cieties, but diversity of races, and the inequality of their 
economic development, make it impossible to form a united 
organization. Austria properly so-called follows, though 
at a considerable distance, the example of Germany. Hun 
gary, under the impulse of the great society of Budapest, 
Hangya (The Ant), has a great number of consumers' soci 
eties, 1,300, as reported by a correspondent of the "Inter 
national Co-operative Bulletin." The Czechs in their turn 
have formed a Union at Prague. In Czecho-Slovakia the 
co-operative movement has made wonderful progress since 
the country recovered its independence. In it there are now 
7,400 societies, with 600,000 members. 

The Balkan countries have not yet got beyond co-operative 
agriculture, which is better adapted to their economic condi 
tion ; but they are today considering consumers' co-operation, 

* Author's Note. See the numerous articles published in the "Russian 
Co-operator." The advance of the Russian Co-operative movement 
during the war was prodigious. The Moscow Society has 210,000 mem 
bers, which far exceeds the membership of any other existing society 
in the world. It is due to this movement that Russia did not die of 
hunger. The Bolshevik government respected the co-operative move 
ment up to the date that it nationalized it.9 

8 In 1921 The Soviet Government gave back to the Co-operatives 
the greater part of their independence. 


GEOGRAPHICAL DISTRIBUTION 61 

and even Serbia was in process of starting a school, almost 
a university, for teaching co-operation. 

Outside Europe there is a great country which, strangely 
enough, does not take a high place in this brief review, and 
that is the United States. There, co-operation has up to the 
present been almost negligible, as is also the case in other new 
countries and colonies. The explanation for this is that in 
countries where the workers are highly paid and contemptu 
ous of small economies, and where they generally lead a some 
what roving life, economic and social conditions are alto 
gether unfavourable to the success of co-operative associa 
tions.' On the other hand, the struggle for life, which is an 
exact antithesis of co-operation, is nowhere so keen as in the 
United States.10 Nevertheless, there are some nuclei of co 
operation which are gradually forming, on the one hand in 
California, where the majority of co-operative societies are 
productive agricultural societies, and, on the other hand, in 
the oldest States, where the conditions of life are already be 
ginning to resemble those of Europe as, for instance, Mas 
sachusetts, New Jersey, &C.11 

Co-operation also may find a favourable atmosphere in 
the chief centres of German, Italian, Slav, and above all Fin 
nish, immigration, where the immigrants have brought with 
them and still keep the customs of their native land. Min 
neapolis, where there are many Germans and Scandinavians, 
is already a co-operative centre. It seems likely that co 
operation will tend to spread among the negroes, but, that, 
unfortunately, will not increase its popularity in America. 

In 1916, the American Co-operative League was created in 
New York. This has as its program the grouping of all 
co-operative societies, as is done by the "Unions" in other 

1° And conditions are still further aggravated by the inevitable 
"chain-store" which is pushing its way into even the smaller towns. 

11 Since these words were written conditions have changed in the 
United States, and Co-operation is flourishing best in the Central and 
North Central States. See Chapter I. 


 62 CONSUMERS' CO-OPERATIVE SOCIETIES 

countries. Lately the Rochdale type of co-operation has 
developed considerably in the United States. Today (1920) 
there are more than 2,000 societies.12 

12 Experimental attempts have been made with chain stores. To 
day there are none left. Wholesale Co-operatives, with chain stores 
and with authority over all the local groups highly centralized at 
headquarters, have failed in Seattle, Pittsburg, Hoboken, and Chicago. 
In 1922 the Pacific Co-operative League followed these others and 
asked for a receivership. Today the two or three wholesales in exist 
ence are run on the Rochdale plan, granting local autonomy to the 
independent store society (except in the case of those few members of 
the Central States Wholesale Society which have not yet asked for 
local independence). The strength of the American movement is in 
the independent societies at present. 


C H A P T El E VI 
VARIOUS SYSTEMS OF SALE 

(1) Sale at Current Price 

The general rule followed in all the distributive societies in 
the sale * of their goods is to sell them at the same retail 
prices as those current in the neighbourhood. The rule of 
selling at the current trade price does not seem to be con 
sistent with our ideas of distributive co-operation, as a sav 
ing in expenditure is the first obj ect of this type of co-opera 
tion, and it would seem to be more natural to go straight for 
the goal by selling at the lowest possible price, that is, at cost 
price. In fact, there are some societies which, faithless to 
the Rochdale rule, operate in this manner. 

It is noteworthy that these societies are recruited from the 
two extremes of the social ladder :— 

(0) From the middle classes, Government officials, and em 
ployees who, having sufficiently high salaries, (but being 
obliged to live up to a recognized standard, ask no more of 
co-operation than a means of best satisfying their needs at 
the least possible expense, and do not trouble at all about 

* Author's Note. The word "sale" is not absolutely accurate in this 
connection, as it is a question of an association which sells to its own 
members, or, rather, of an association of people who sell to themselves. 
The word "division" or "distribution" would really be more correct. 
Thus the English call these associations distributive societies, and in 
France the employés are often called "répartiteurs" (distributors). 
We shall see further on that the law and the Treasury do not generally 
regard the consumers' society as being in the same category as a trader 
who buys to re-sell. However, the word "sale" is sanctioned by cus 
tom, and it is legally accurate, as the society as a whole is an entity 
distinct from its members. 

63 


 64. CONSUMERS' CO-OPERATIVE SOCIETIES 

realizing any social transformation. To this class belong 
generally such stores as the Civil Service Stores and the Army 
and Navy Stores, which are among the largest shops in Lon 
don. But as we shall see later, these are looked upon by 
English co-operators as being really outside the ranks of 
co-operation.1 

(b) From among the very poor and needy whose wages are 
insufficient to supply the minimum of nourishment. In these 
cases it would be impossible as well as inhuman not to procure 
for them the largest amount of food supplies in return for 
the means at their disposal, as they should get the maximum 
value for every halfpenny. In Russia, for example, where 
wages generally are very low, the distributive societies sell at 
the lowest possible price.2 

But this system of selling at net cost has very serious dis 
advantages :— 

1. It exasperates the traders of the neighbourhood by a 
price-cutting competition, which they are unable to sustain. 
And this is unnecessary, because if a reduction in expendi 
ture were the only-object of co-operation it would be much 
simple/r for people not to trouble to form a society of con 
sumers but merely to make an arrangement with the various 

1 The Staff of the Co-operative Reference Library, Dublin, is 
authority for the statement that the Army and Navy Stores can no 
longer be regarded as co-operative in any way, since it pays a divi 
dend of several hundred per cent, on its share capital. The United 
States have several false co-operatives, masquerading as genuine en 
terprises and collecting millions of dollars from individuals who be 
lieve they are contributing to Rochdale societies. 

2 This is often attempted in the United States. It is known 
as the "cost-plus" system of sale. It is the method adopted in several 
of the societies in the mining towns of the central part of the country. 
But as a matter of fact, there is little to be gained from such an at 
tempt. In this country there is such keen competition among grocers 
that the selling price is usually forced down to a level very close to 
"cost-plus." Many of the societies are barely covering expenses as 
it is, and some are running behind. For this very reason, many co- 
operators are becoming convinced that the grocery store is not the 
best beginning for a co-operative society. 


VARIOUS SYSTEMS OF SALE 65 
traders in the locality, whereby they could get a discount on 
all current prices. This would mean that the larger the 
number of buyers so much the greater advantage fo,r the 
traders. This very simple system has often been tried and 
has been warmly recommended, particularly by those who 
wish to secure the benefits of co-operation for the public 
without interfering with iretail trade.3 (See later, "The 
Conflict between Co-operative Societies and Traders.") 

2. It prevents the society from selling to outsiders, be 
cause, on the one hand, it would be absurd to confer on 
strangers the same benefits as on the members, namely, sup 
plies of goods at cost price ; and, on the other hand, it is im 
practicable to have two different prices for each article. It 
is true that selling to the public is not practised by all co 
operative societies, and is even generally discouraged, as we 
shall see. But, even though the society sells only to its mem 
bers, the system of selling at cost price has another draw 
back, namely, it tempts certain members to buy goods for 
their friends and neighbours, and even perhaps to make a 
profit thereby as middlemen. This abuse has been fairly fre 
quent, especially in the co-operative societies in Spain. 

3. Above all, it prevents the society from attaining any 
of the objects which we shall examine later: individual or col 
lective saving, insurance, production, education or propa 
ganda work, or even the building up of capital, because this 
last can only be done by surplus profits being left in the so 
ciety as deposits. (See p. 108, chapter "Capital.") We may 
say that all these objects are sacrificed; in fact, the whole 
co-operative program is sacrificed for the sale at low prices. 
The societies that work on this system cut their corn while 

3 There are many societies in the United States which follow this 
practice, but it is generally condemned. The co-operative store which 
takes orders for other commodities to be supplied by private mer 
chants, or which rents out part of its floor space to the trader is con 
fusing the public whereas it should be doing everything possible to 
make clear the distinction between private and co-operative business. 


 66 CONSUMERS' CO-OPERATIVE SOCIETIES 

green, and they do not differ much from the philanthropic 
societies of the pre-Rochdale period. Another strong ob 
jection raised against this system of selling at cost price is 
that it tends to the lowering of wages. This was the great 
est argument put forward by socialists against co-operation, 
when, during the second half of the 19th century, they 
hindered the co-operative movement. They laid down the 
law that any permanent lowering of price in articles for 
consumption must bring with it a proportionate lowering 
of wages. This is what was called the "brazen law." To 
day this argument does not hold good, as this law is no 
longer believed in. And even if it were true, it would have 
the same unfortunate consequences in the matter of sales 
with dividend as in that of sales at cost price. 

This is why in every country nearly all co-operative socie 
ties follow the Rochdale rule and sell, not at cost, but at 
current price. The profit thus realized on each purchase is 
credited to the purchasing member, and is returned to him 
at the end of the year, or generally at the end of every six 
months. 

By adopting this method societies give up the idea of of 
fering their members the advantage of a daily saving in their 
purchases, in order to be able to return to them a good 
round sum once or twice a year, a sort of dividend. This 
amounts to the same thing, no doubt, but the effect on the 
consumer is much greater. As a matter of fact, this system 
is extraordinarily appreciated by workmen, and still more 
by their wives. One might almost say that it is too much 
appreciated, because, of the millions of co-operators existing 
in the world, the large majority only become such owing to 
this system of dividends. Wherever we find workmen well 
enough paid to be able to spend freely, well enough educated 
in co-operation to look for t>ig results from it, far-seeing 
enough to prefer the future advantage of an addition to 
their revenue for themselves, or an additional support to 


VARIOUS SYSTEMS OF SALE 67 

their society, to a daily saving of a few pence, there the 
Rochdale rule of sale at current price can be unhesitatingly 
applied. 

It is worthy of note that in both England and Belgium a 
good number of societies raise the prices of their goods 
higher than the current market price in order to augment 
their dividends. Some societies are able by this means to 
declare a dividend of 20 per cent., or even 25 per cent. (4s. 
or 5s. in the £). Many co-operators, so far from objecting 
to this plan (which consists of taking an extra halfpenny 
out of their pockets in order to restore the same halfpenny 
six months later), rather take a pride in it, and press for 
its adoption in their general meetings. The fact is, as we 
shall see further on, they find in this plan a means of com 
pulsory thrift. On the subject of Belgian societies, M. 
Variez writes in a report on Social Economy in Belgium 
for the Paris Exhibition of 1900, as follows : "The fantastic 
system of paying 30 centimes for an article (bread) which 
every one knows to be only worth 20, has become so ingrained 
a habit that the working classes in certain towns do not 
wish to give it up. On various occasions it has been pro 
posed to the members of co-operative societies to lower the 
price of bread. They declined positively as they find this 
mode of saving both easy and efficacious." However, this 
system of raising prices has some serious disadvantages, 
which we shall indicate later, notably that of shutting the 
door of co-operation in the face of the poorest class. On 
the other hand, we must recognize that this exaggeration of 
the Rochdale principle implies a strong enthusiasm for co 
operation. I see in it a robust faith in the power of co 
operation. In countries where such a faith scarcely exists, 
as .in France, a co-operative society which attempted to sell 
above the current price would hardly find a supporter, no 
matter what bonus were returned. Societies which practise 
a mixed system of selling at a price slightly lower than the 


 68 CONSUMERS' CO-OPERATIVE SOCIETIES 

current price in order to attract customers but nevertheless 
sufficient to allow a certain margin of profit, which can be 
employed in one or other of the ways which we shall indicate 
later, are much more numerous, particularly in France.4 
The essential thing is to make co-operators understand 
that they must choose, and that they cannot have the ad 
vantages both of low prices and of large dividends. If they 
wish to extend their movement to the poor they must give 
up their big dividends and sell at cheap rates, always leaving, 
however, a small margin for profit, say 5 per cent. 

The complaint has been made in England that consumers' 
co-operation is only intended for the well-to-do working 
classes, and remains inaccessible for the more needy,* and 
the Women's Co-operative Guild (of which more hereafter) 
is trying to lead the co-operative movement in the direction 
of lower prices. But this is not easy, because mere lowness 
of price is not sufficient to attract a poor clientèle; it is 
also imperative to stock goods of an inferior quality, because, 
unfortunately, these are the only goods which the casual and 
unskilled workers can afford to buy with their resources. 
And co-operative societies hold it as a point of honour to 
keep only goods of the first quality. 

(2) Sales for Cash 

The second rule for sales is sale for cash. For this there 
are both economic and moral reasons: First, economic 
reasons, because every establishment which gives credit must 

4 This is the plan generally prevalent in the United States also. We 
know of no instances where goods are sold above the current price, 
except as the clever manager is able to raise the price on isolated com 
modities so as to increase the surplus-savings. 

* Author's Note. An Englishman has said, "The truth is that co 
operation only saves those who are already converted." This may 
be, but there is now no longer the necessity of making co-operation 
a mere work of salvation. It is rather a work of mutual aid. For 
social institutions, as well as for individuals, there is a law of division 
of labour, which must be respected. 


VARIOUS SYSTEMS OF SALE 69 

raise its prices, or risks failure. In fact, on the one hand, 
it is certain to lose some of its credit, and, on the other, be 
ing obliged by selling on credit to buy on credit from the 
wholesalers, it must buy under less advantageous conditions. 
It must have a larger capital, as it is unable to turn it over 
rapidly. A co-operative society ought not to put itself into 
such an inferior position. Secondly, moral reasons, because 
it is immoral to make the good customers, i. e., the scrupulous 
members, support the insolvency of those who do not pay 
their debts, under the guise of raised prices. Besides, the 
habit of buying on credit constitutes a veritable servitude 
for any workman's family which gets caught in its meshes. 
The word servitude is not exaggerated, for if a man is in 
debt to his grocer or his baker he cannot complain of the 
prices, the weights, or the quality of the goods supplied, nor 
can he go and deal elsewhere ; he must perforce accept every 
thing for fear of his account being closed. And if he sees 
no chance of freeing himself from the debt he gives up hope, 
breaks up his home, and leaves the locality secretly. 

Even for the well-to-do purchasers who always pay up 
in the end buying on the credit system is a, detestable habit, 
for nothing encourages useless expenditure like the oppor 
tunity of being able to buy without money. Traders are 
well aware of this, and therefore are in favour of the credit 
system. True, they themselves are often the victims of the 
habits they have encouraged in their customers. We have 
often seen milliners, dressmakers, restaurant keepers, obliged 
to close down their businesses, unable to meet their obliga 
tions, even with very rich clients on their books. Large 
fancy goods warehouses make a rule of cash sales only, but 
small shops can only hold their customers by offering them 
the bribe of credit. It is therefore not only in its own 
interest, but in that of the labouring population also, that 
the co-operative society should make a rule of sale on a 
ready cash basis, both as a means of education and of 


 \ 


70 CONSUMERS' CO-OPERATIVE SOCIETIES 

emancipating the poor man from this wretched form of de 
pendence. 

Gladstone, the illustrious statesman, viewed this as the 
greatest virtue of the consumers' society. Nevertheless, it 
is necessary to say that this rule is not always observed and 
that a large number of societies, even in England, sell on 
credit, and this number is increasing1.5 However, the total 
sums due only represent 1.5 per cent, of the gross sales, so 
there is no great cause for alarm. Undoubtedly the tempta 
tion is great. On the one hand, a feeling of humanity makes 
it difficult for the society to refuse bread to its necessitous 
member, and, on the other hand, there is always the hope of 
fighting the traders by attracting their clients through the 
same advantages. But it is a bad method of vanquishing 
an adversary to imitate or borrow his bad qualities; such 
tactics may be commercial, they are certainly not co-opera 
tive. The worst evil is when a co-operative society uses the 
sale on credit as a means of enticing away the members of a 
society which sells only for cash. This is self-evident. 

If the working population of a locality is really reduced to 
living from day to day, and has not the ready money to make 
its purchases, if it is obliged to wait for its fortnight's wage 
to be able to pay for its food, it would be better to form near 
the distributive society a loan society, either philanthropic, 
or preferably a mutual aid society, which could make ad 
vances to the necessitous workman. These loans could be 
made by taking the member's share pass-book as a guarantee, 
or by accepting the security of one or two of his friends, or 
even by making the loan a debt of honour, where the mem- 

5 This is equally true of the American societies. Many of the socie 
ties have even been known to give credit in unlimited amount to non- 
members and to share the surplus with them as well! In bad times, 
these societies which give credit to many of their members and at the 
same time are burdened with the expense of a delivery system are ex 
ceedingly hard put to it to compete successfully with the cash-and- 
carry chain stores. 


VARIOUS SYSTEMS OF SALE 71 
ber is worthy of confidence. Some societies have tried these 
systems. 

When a society starts on the perilous path of selling on 
credit it is absolutely essential to impose certain rules. It 
may limit the credit to a certain sum, generally to the amount 
of the shares held by the member, which will serve as a guar 
antee. Or it may only give credit for goods of a durable 
nature, such as furniture. In this case, selling on credit, or 
at least payment by instalments, may be justifiable, the 
ultimate expenditure being greater. We know that one large 
business house in France has made a specialty of selling fur 
niture on the instalment system, and the abuses of the system 
are not as great as we are told. They have even rendered 
a national service by enabling young people to marry and 
set up a home without having to wait until they have saved 
enough money to buy furniture. As regards bread, rather 
than sell it on credit it would be better to give it gratuitously, 
on the member's fulfiling certain conditions as specified in the 
rules—when work is interrupted and when unforseen misfor 
tunes occur, &c. This is what the Belgian societies do; 
they give quantities of bread, proportionate in their value to 
the purchases previously made by the member. 

We see that in Belgium the society not only refuses credit 
to its members, but that, on the contrary, it is the members 
themselves who give credit, by buying counters in advance, 
whereby they can obtain bread for a week or a fortnight. 
An excellent way of compelling the workmen to be provident ! 

(3) Setting to the Public 

The third question which arises à propos of sale is that of 
deciding whether a society should sell to its members only, or 
to the general public. There is no doubt that selling to the 
public is outside the sphere of co-operation. One might 
even say that it is outside its very definition, because when a 
society sells to the public it can no longer say that its object 


 72 CONSUMERS' CO-OPERATIVE SOCIETIES 

is "to provide for the needs of its members." Thus, Ger 
man law, considering that sale to non-members is incompat 
ible with the essential character of co-operation, has pro 
hibited it under severe penalties. (Laws of 1st May, 1889, 
and 12th August, 1896.) This regulation must be posted 
up in the societies' shops. 

The Rochdale Pioneers sold to the public, but in order 
to avoid the reproach, which they themselves levelled at the 
private trader, namely, that of exploiting the public by 
making profit out of them, they adopted the method of giv 
ing the non-members who dealt with their society a bonus 
or dividend at half the rate of that returned to members, 
placing the surplus in the reserve fund. This rule is not 
absolute everywhere. Some societies give the non-member 
buyers a dividend at quarter rate only. Others, on the 
contrary, allow them a three-quarter rate. There are even 
some (at least that of Darwen) which give to non-member 
purchasers the same dividend as that given to members—an 
entirely unwarrantable generosity, as yvc have said above.6 
Perhaps it may be said : Why do you not give the public the 
full amount of the dividend on their purchases, or at least 
a sum equal to that of the members, thereby abolishing all 
exploitation? But if this were done, the public—enjoying 
the same advantages as the members without having their 
responsibilities (shares, administration, &c.)—would have 
no inducement to join the society, and thus the aim of co 
operation, which is to attract as many members as possible, 
would be manifestly diverted. 

This ingenious Rochdale rule of sale to the non-member 
with limited participation in the dividends has been adopted 
by the majority of English consumers' societies. On the 
Continent there is more diversity. Sale to the public is 
generally practiced in Russia, Spain, Switzerland, Belgium, 

6 In the United States one-half or one-third of the full savings-return 
is often given to non-members. In some instances the full return is 


VARIOUS SYSTEMS OF SALE 73 

Holland, Italy, and in France, since in the last-named coun 
try the co-operative societies have been put on the same foot 
ing as the traders in the matter of the imposition of taxes. 
(See Chapter xrv.) It should be said, however, that in 
Switzerland societies are gradually giving up selling to the 
public. In Italy, the heads of the co-operative movement 
are trying, on the contrary, to encourage it. In France 
up to the Act of 1905 co-operative societies were treated 
differently in the matter of taxation, according as to 
whether they did or did not sell to the public, only the 
former societies having to pay for their trade license, the 
latter being exempt. But, as we shall see later on, they 
are all now treated similarly—at least, those which have 
retail stores. 

Both in France and in Switzerland this question of sale 
to the public has been the subject of endless discussions. 
In France the two opinions are equally balanced. The Co 
operative Congress at Limoges in 1907 allowed sale to 
the general public, but more as a matter of toleration, and 
under the condition that the surplus arising from sales 
to the public should not be distributed among the members, 
but be employed for propaganda, for education, or for any 
other work of general interest. The system of sale to the 
public is most generally preferred: First, because it is be 
lieved that selling to the non-member is the most efficacious 
means of propaganda on behalf of co-operation; secondly, 

given. In many societies the return to non-members must remain 
with the society and is applied toward payment for capital stock. 
We met one woman recently who serves us here as a fair example of 
the kind of person with whom Co-operation has to deal in most Ameri 
can cities and towns. Although she had never been a member of the 
local co-operative, she had come around regularly each year to collect 
her savings-return on purchases. This last year the return fell from 
4% to 2%, and she not only refused to trade at the store any longer 
but used her experience as a talking point to prove that co-operation 
is worthless. She is now trading regularly at a private store, receiving 
no return whatever, and appears to be well satisfied. 


 74 CONSUMERS' CO-OPERATIVE SOCIETIES 

because according as it increases the takings of the society 
so it enables the society to reduce its working expenses, to 
increase the rapidity of its turnover, and, finally to enlarge 
its spheres of operation. If it is the ambition of co-opera 
tion to take the place of ordinary traders it will have to 
enter the list by carrying war into the enemy's camp. 

But it must be admitted that those co-operaters who are 
hostile to the system of sale to the public are not without 
excellent arguments. In the first place they hold it as a 
point of honour not to be mistaken for traders, and for 
that reason wish to avoid doing as the latter do. And they 
believe that the habit of selling to the public would have 
the result of developing the mercantile spirit in co-operators, 
and the love of money, to which they are already too much 
inclined. Many co-operators even fear that selling to the 
public kills the co-operative spirit completely and transforms 
the co-operators into traders. 

These apprehensions would, doubtless, be justified if co- 
operators were in the habit of benefiting themselves by the 
profits accruing through sales to non-members. This re 
proach cannot be laid to their charge if they are faithful 
to the Rochdale rule, and give back to non-members a part 
of the dividends due to them and place the surplus in the 
society's reserve fund for the development of the society.* 
We must not forget, however, that the reserve fund belongs 
to the members and must return to them in the event of the 
dissolution of the society, and that, consequently, every 
thing that is put into the reserve fund is to their indirect 
benefit.7 Even such advantages as works of solidarity, bene- 

* Author's Note. This system, however, entails a somewhat com 
plicated system of book-keeping, because two separate accounts have 
to be kept, one for members and one for non-members and an account 
must be opened for each purchase, even though it be a solitary one. 

i The members of the Co-operative Cafeteria of New York City 
voted unanimously to accept from their association only such savings- 
returns as were due them on actual sales to members. Considerably 
more than half of the business of this society is with non-members. 


VARIOUS SYSTEMS OF SALE 75 
fit clubs, education, recreation, &c., profit the members in 
the long run. To do away with all appearance of exploita 
tion of the public it would be better to apply the profits 
accruing to the society from sales to non-members—or at 
least the part which is not returned to them—towards some 
work of public utility outside the society. But then, there 
should be a mutual arrangement for this, because if each so 
ciety were to support some different public institution, such 
scattered expenditure would not have any appreciable re 
sults. 

To sum up, selling to the public should be allowed only as 
a means of attracting members and making the society 
known to the public, and not as a permanent practice. 
Every purchaser should be, if. not actually a member, at 
least a candidate for membership. In every place where 
this principle is understood and applied the sale to non- 
members is a negligible quantity—4 per cent, to 5 per cent, 
of the total sales in England, 7 per cent, to 8 per cent, in 
France.* In fact, these purchases very soon pass from the 
category of non-members to that of members. This is 
even compulsory, for, instead of paying a part of the divi 
dend to non-members (with which they would probably be 
content and not trouble about becoming members), this 
part of their bonus is retained in the society and registered 
to their credit, so that they automatically become members. 

Unfortunately, there are societies which, so far from wish 
ing to convert the non-member purchaser into a member, ask 
nothing better than to leave him outside the participation of 
dividends, so that the latter may become larger. Such is the 

* Author's Note. We say 8 per cent, on the total turnover or sales, 
that comprises all the societies, even those who do not sell to non- 
members; but if we only take into consideration those which do, then 
the proportion of sales to the public is much higher. According to the 
investigation made by the Ministry of Labour, the proportion of socie 
ties selling to the public is 38 per cent., and the proportion of sales to 
the public in these societies is 21 per cent. 


 I I 


76 CONSUMERS' CO-OPERATIVE SOCIETIES 

case in a certain number of societies in France, and still 
more so in Spain. This explains a fact which at first sight 
seems disconcerting. We see, for example, in the Vosges 
district, a society of seven members which did a retail trade 
of £1,964 in 1913. Is it possible that each member's trade 
is £280, that is, about 20 times the average of French co- 
operators? Certainly not, but 95 per cent, of these sales 
are made to strangers. They may not even come to the 
shop, but buy second-hand from the members. Such are 
societies of workmen-traders. At Bordeaux, the co-opera^ 
tive societies reckon that nearly one-third of their sales are 
to the general public. At Barcelona, in Spain, there are 
societies where one sees workmen-members receiving from 
£12 to £14 a year in dividends arising from the sales made 
to their non-member comrades, whom they induce to come 
to their shop as customers. It is somewhat the same system 
as that of workmen who sub-let a room or a bed to com 
rades poorer than themselves, and make a profit at their 
expense. 

It may also be said that the conversion of a non-member 
into a member is hindered, not by the spirit of avarice on the 
part of the society, but by the indifference of the purchaser. 
In order to combat this grievous inertia of the public, a good 
number of French societies have created a category inter 
mediate between non-members and members, that of "adher 
ents." These are reckoned as members in all the statistics, 
although they are not legally so, not having paid for or 
even subscribed for shares. There is only a minimum en 
trance fee demanded of them, generally one of Is. 6d. They 
cannot participate in the management of the society, and 
have no place at the meetings; nevertheless, they generally 
receive the same percentage of bonus as the members. This 
is a method of attracting those workmen to the society who 
are not enthusiastic, or who have not means enough to sub 
scribe for a share. This .system (which establishes two 


VARIOUS SYSTEMS OF SALE 77 
classes of members, superior and inferior), cannot be recom 
mended, because it is anti-democratic and anti-co-operative. 
There are even some societies where the "adherent" cannot 
become a member as the number of shares is limited, as, for 
example, that of the Civil Employees of the Seine. 


 CHAPTER VII 
THE DIVISION OF PROFITS 

Since in accordance with the rules laid down in the pre 
ceding chapter, the co-operative society selling at current 
prices ought to make profits, it remains to be seen what is the 
best way of using these profits. This is one of the funda 
mental questions of co-operation. We have already said 
that the master stroke of genius of the Rochdale Pioneers 
was the discovery of exactly that method of using profits 
which has been the chief cause of the success of consumers' 
co-operation, namely, the division of profits among all the 
members in proportion to the amount of their individual 
(purchases.* 

We must recognize that it is the application of this rule 
which has ensured the successful development of consumers' 
societies, since it gives to each member a reward proportion 
ate to his co-operative zeal, to his loyalty to his shop. Be 
sides, it is founded on one of the most certain of economic 
laws, the law that the success of a business enterprise de 
pends less on its capital than on its customers. It is there 
fore just that the profits should belong to those who by 
their acts ensure the prosperity of the society. 

But it must be admitted that the Rochdale co-operators, 

* Author's Note. The principle of sale at current price, and con 
sequently of a profit to be gained, was promulgated before the time of 
the Pioneers at a co-operative congress held during Owen's lifetime, 
in 1833. But the profits thus to be realized by the society ought to 
be retained by it and dedicated exclusively to the development of the 
society itself. The original idea was to give the profits back to the 
members ( See Industrial Co-operation, by Miss Catherine Webb.) 

78 


THE DIVISION OF PROFITS 79 

although disciples of Owen, showed themselves to be thor 
ough individualists and made an appeal to personal inter 
ests the great motive force of their movement. Still, this 
rule is none the less a new and wholly revolutionary principle 
in our economic organization, because it is no small thing, 
either in fact or in theory, to lay down a proposition that 
capital has never any right to profits. It is so much the 
more severe, because capital is deprived thereby of truly 
enormous profits. (See Chapter ix.) It is nothing less 
than the destruction of capital, or at least its reduction to 
the position of a mere factor1 in production; it amounts, in 
fact, to a decision that all of the profit which capital has 
regarded as its legitimate share should be restored to those 
from whom it was taken, and that share capital should be 
reduced to the position of debenture stock, with a rate of 
interest fixed at the minimum at which its services can be 
hired ; that is to say, that it shall be treated exactly as capi 
tal itself has treated labour. 

It goes even further than this; it is not merely taking 
profit from one person and giving it to others. The transfer 
of profits from the capitalist to the consumer is actually the 
abolition of profits, because to say that profits shall be re 
turned to those from whom they were taken is obviously 
abolishing them. This is clearly expressed by the French 
term which is used to designate these so-called profits. They 
are never called by that name, but are called bonuses, repay 
ments, or, better still, overcharges (trop perçus). In Eng 
land they used to be called dividends, but are today called 
surpluses.1 

It is a way of saying to the consuming member : "We have 
charged a little too much, that is to say, more than the fair 

1 In the United States the word surplus-saving is taking the place 
of "profit" and savings-return is coming into use in place of the 
word "dividend." The word "dividend" is still widely used in Eng 
land as in the United States and "divi-imnting" is the curse of many 
societies in both countries. 


 f" 

l 


80 CONSUMERS' CO-OPERATIVE SOCIETIES 

price, for various reasons, either to help you to save, or to 
give you a pleasant surprise, but the surplus we have taken 
we now return to you ; here it is !" 

The elimination of profits means the establishment of a 
state of society where everything is sold at cost price, that 
is to say, at the price which exactly represents the sum of 
wealth and labour which it has absorbed ; that would be noth 
ing less than to realize the dream of all the socialists since 
Owen, the initiator of co-operation. It may also be said, 
without paradox, that it would be the realization of the ideal 
of all the economists of the liberal school, for, did not these 
aim at a perfect state of free competition which could have 
no other result than to reduce the rate of profits to zero? 
In fact, all competition tends to bring the selling price closer 
to the cost price and consequently to reduce profits. The 
manufacturers know their business ! This law cannot act 
in the present economic conditions, because a thousand obsta 
cles under the form of legal or actual monopolies obstruct 
it, but if undcjr an imaginary régime of absolutely free com 
petition all these obstacles were removed, the sale price and 
the cost price would be identical. So that, paradoxical as 
such an assertion appears, it may be said that if co-opera 
tion were universal the end which is vainly imagined under 
free competition would be attained.* 

In order to calculate the amount returned to each member, 
it is necessary, first of all, to know exactly the amount of 
his purchases. For this purpose, either a special account is 

* Author's Note. See the chapter Cooperation 011 Compétition in 
our book Coopération. M. Walras declares emphatically that, under a 
régime of open competition the margin of profit is zero. There is, 
however, this difference between socialists and economists, as far as 
the abolition of profits is concerned, that the former include interest 
in this abolition, whereas economists see in interest a necessary ele 
ment in the cost of production, which should survive the abolition of 
profit. As for co-operators, they hesitate between these two theories, 
but the majority are generally in agreement with the economists. (See 
later, Chapter ix.) 


THE DIVISION OF PROFITS 81 

opened for each member, or all his purchases are entered in 
a pass book, which he has to bring each time he goes to the 
shop and to return at the time when the accounts are closed, 
or else each purchaser is given a docket on which the total 
price has been printed. We need not discuss the technical 
advantages of these different methods. 

Once the total purchases are known the bonus remains to 
be calculated. Generally, the proportion between the gross 
total of sales and the net profits realized is taken, and this 
proportion is paid on the purchases of each member. Thus, 
if a society sold a million pounds' worth of goods and made 
£150,000 net profit, or 15 per cent., the member who has 
bought £100 worth of goods, has a right to £15 bonus. But 
the profits vary considerably according to the different arti 
cles sold. There are, for example, some goods, such as 
sugar, upon which little or no profit is made ; others, such as 
meat, upon which there is often a loss; and others, such as 
preserves, upon which the profit is high. As a result, the 
member who only bought the goods which were sold without 
profit or at a loss would be very much benefited by such a 
division of dividend. 

To avoid this difficulty some societies make a rule of fixing 
the sale price of each article at, for example, 20 per cent, 
above the cost price in order to make the same profit on each 
article. In these circumstances the prices, being fixed auto 
matically, are sometimes much above and sometimes much 
below the current local prices, and as a rule unscrupulous 
members yield to the temptation of buying from the co-oper 
ative store only those articles which are sold below current 
prices, leaving on its hands those which are sold above mar 
ket rates, because they can buy these cheaper at the ordinary 
shop. 

Is there any need for thus seeking to equalize the advan 
tages which members derive from the division of the bonus? 
We think not. The apparent injustice is, on the contrary, 


 i 


82 CONSUMERS' CO-OPERATIVE SOCIETIES 
a striking application of the law of solidarity which ought 
to govern the societies. In fact, it is generally on articles of 
luxury that the profits are highest, whilst they are lowest on 
articles of prime necessity. Thus the poor members benefit 
from the purchases of the rich, and this is as it should be. 

In what form ar'e the bonuses distributed amongst the 
members? In money, according to the Rochdale rule, which 
is generally followed. The Belgian societies have put into 
practice another system, which is that of paying the bonus in 
the form of dockets which may be exchanged for goods at 
the co-operative shop. The advantage of this system is 
that the member cannot go outside the society to its rivals 
or to the public-house to spend the money made by the soci 
ety; by this means the turnover of the society is increased 
each year. 

Nevertheless this system is not to be recommended, neither 
from the economic point of view, because it forces the mem 
ber to increase his consumption, since he cannot use his 
bonus except by increasing his expenses, nor from the moral 
point of view, because it re-introduces for the benefit of the 
co-operative societies those very acts, such as the practice of 
shopkeepers who give their clients "discount stamps," which 
are convertible into goods in their own shops, which have 
been so strongly blamed in private businesses. It compels 
the workman to spend all his wages in the social shop, and 
does not give him the satisfaction of being able to spend a 
single coin freely. Money implies the liberty of spending; 
it can no doubt be misused, but like all liberty its use can be 
learned only by practice and not by a kind of tutelage. A 
German law of 1896 prohibits co-operative shops, as well as 
économats and traders, from issuing tickets or counters 
payable in goods. 

The half-yearly dividend makes a very appreciable in 
crease of revenue for a working-class family, and is greatly 


THE DIVISION OF PROFITS 83 

welcomed by the house-keeper. I know very well that those 
who disparage co-operation, and who mock at its ambitions, 
say, "What does it give? Taking what it can give, even 
where co-operation has had its greatest success—in England 
—the £13 millions of bonuses (with deduction made for 
interest, as it should be) divided among three million co-oper 
ators, is equal to £4. 7s. 6d. per family. That will not 
change the condition of the working classes. A rise of pay 
gained by a good trade union organization or by collective 
bargaining could give as much." 

But this £4. 7s. 6d- is only an average. It is not surpris 
ing that the average should be small if one considers: (1) 
That among the consumers' societies there are many which do 
not set themselves out to increase their members' incomes, 
but simply aim at selling at a low price, or have one of the 
various other aims which we shall consider later; (2) That 
among the three million co-operators there are many who are 
only co-operators in name, and, since they never go to the 
shop, obtain no bonus. It is the nature and honour of free 
social institutions that they can be useful only to those who 
wish and know how to use them, and they cannot be asked to 
give their services to those who do not want them. But, if 
instead of taking the general average, we find how much 
increase in income certain members in certain societies can 
gain, we shall find results which are far from negligible. 

Thus, according to an enquiry made a few years ago in 
Britain, we find in the Perth Society one member receiving 
£264 in 26 years, which is equal to £10 a year, another in 
the same society receiving £208, also in 26 years, which is 
equal to £8 a year. In the Manchester and Salford Society 
a member received £360 in eighteen years, which is £20 a 
year. Probably this member was a highly-paid clerk, not an 
artisan, but that does not affect the question. A recent 
number of the Co-operative News cites the case of a mem- 


', i 


 84 CONSUMERS' CO-OPERATIVE SOCIETIES 

ber of the Newmains (Lanark) Society, who in 26 years 
received £944. We in France are a long way behind these 
figures. 

The figures for France are not known, as the societies do 
not state their bonuses, but it must be admitted that in France 
—for reasons which we shall give later—the bonuses distrib 
uted are very much lower; they hardly ever amount to £4, 
and are often less. Still they are benefits to small house 
holds, as is proved by the discontent expressed by the mem 
bers if in any year there should be no bonus. M. Barriol, a 
statistician, has published some particularly illuminating 
calculations. They deal with the supplying of a family of 
co-operators with provisions before the war. This family 
belonged to a Parisian co-operative society; their total ex 
penditure was £96. At the prices marked in Potin's cata 
logue the total cost of the articles in this domestic budget 
would have reached £108. Therefore, the saving effected by 
this family amounted to £12. If we add to this the 5 per 
cent, dividend distributed by this co-operative society, 
namely, £4. 16s. (and, if so desired, the 3 per cent, collected 
for the social work of the society, i. e., £2. 17s. 7d.), we see 
that there has been a saving to the amount of £19. 13s. 7d. 
realized by this co-operative household. The difference 
would be still greater if instead of making the comparison 
with the prices of the large Parisian grocery store we took 
those of the grocers in the working-class quarters. Of 
course, it is evident that in this case we are dealing with a 
very well-paid workman's household, as is proved by the 
figure of £96 in purchases, which must mean an income of at 
least £200 in pre-war values. 

The amount of extra money divided among the members 
depends upon somewhat complex conditions : 

(1) It obviously depends upon the good management of 
the society. It is very evident that if the society is badly 
managed it will suffer the fate of all badly-managed busi- 


•'\\ 


THE DIVISION OF PROFITS 


80 


nesses, it will not make any profits, and consequently will have 
nothing to distribute. When a society pays no dividend or 
a small dividend it may be on principle, as we shall see later ; 
but it may be, and more often is, simply owing to incapacity, 
bad management, bad accountancy, dishonest employés, un 
due increase of running expenses, and lack of experience in 
buying, supplemented by the absence of a wholesale society, 
&c. (See the chapter on the causes of success and failure 
of societies.) 

(2) The rate of dividend also depends upon the loyalty of 
the member in using his co-operative shop. The loyalty of 
co-operators, above all that of their wives, who, in fact, have 
entire charge of the purchases of the household, varies 
greatly. Even in the most active societies there is a large 
number of members who only deal at rare intervals, either 
because of their distance from the shop, or from apathy, or, 
from the commonest of all motives, because their wives prefer 
to buy things from the "grocer round the corner." * 

* Author's Note. According to calculations made by Cernesson as 
regards all the Parisian societies (Revue des Deiw-Mondes, 15th Oc 
tober, 1908), the average purchases per member amounted to £10. 14s. 
4d. We went through these calculations, taking the four most impor 
tant societies from those helonging to the Federation and of socialist 
tendency, and, as we foresaw, we obtained a remarkably higher result— 
£23. 7s. 2d. (in 1913). Nevertheless, this figure is still much less than 
it ought to be, because it hardly represents a quarter of the wages 
of a workman's family in Paris, and the societies in Paris offer the 
most varied assortment of goods. If the members really did their 
duty loyally as members, they could double or treble the amount of 
their purchases. In ti»e "professional" co-operative societies of 
workers—societies formed of clerks, &c.—the average purchase per 
member is considerable, because their incomes are larger, and also 
because they are more regular in their purchases. 

The following table shows the average purchases per member in 
various countries before the war:— 

£ 

England .................... 29 

Finland ..................... 25 

Denmark .................... 24 

Switzerland ................. 20 

Germany .................... 15 

France ...................... 14 


s. 
4 
4 
0 

IT 
1 

12 


d. 

0 

0 

0 

0 

0 

0 


 86 CONSUMERS' CO-OPERATIVE SOCIETIES 

There are societies which seek to make loyalty compulsory, 
by excluding any member who has not purchased during the 
year, or the half year, goods to a certain minimum value. 
But this rule, although it is statutory, is very seldom applied, 
because it would have the effect of excluding too many mem 
bers in each year.2 The loyalty of members is a matter of 
education, not of coercion. To become a member of the 
Central Council of the new French Federation one must be 
able to guarantee having made the required minimum amount 
of purchases at one's own society, that is, if there is a statu 
tory minimum. The Siberian co-operative societies have a 
different form of compulsion. Any member who does not 
reach the required minimum of purchases is liable to a fine of 
£1. In fact, the average purchases per member has, as was 
natural, risen since 1914« to £41 in Britain, and £20 in 
France, &c., but if the depreciation of money is taken into 
account it may be said that the average purchases, meas 
ured in quantities rather than values, has fallen. 

(3) Further, success is dependent in part upon the capac 
ity of the shop to supply all the needs of its members. If it 
only supplies bread or groceries it is obvious that the total 
consumption of the member—however zealous he may be, 
though he buys up to the maximum of his possible consump- 

As these figures are obtained by dividing the amount of sales by 
the number of members (see Table, page 49) it follows that in the 
countries where the societies sell to the public the average purchases 
per member is increased by the sum sold to the public, as the two 
sums cannot be distinguished. These averages, then, are not strictly 
comparable. Thus, Germany—where sale to non-members is prohibited 
—would find herself handicapped, if she had not the advantage that 
only her most important societies were chosen as examples, those in 
the Table, page S4. 

2 This is the reason why such a rule is not in practice oftener in 
the United States. But there are societies which do have this rule 
embodied in their by-laws. It is not entirely that they wish to make 
loyalty compulsory (although that element enters in, of course) ; but 
they see no reason why any one should be able to invest money in a 
co-operative society and receive interest on it when they themselves 
have done nothing to contribute to the success of the business. Such 
is a modified form of profiteering. 


THE DIVISION OF PROFITS 87 

tion—and therefore his total bonus, will be very limited. 
If, on the other hand, the co-operative shop sells all possible 
articles, it is clear that the member, having no temptation to 
go elsewhere, can spend in it nearly his whole income, and, 
in consequence of this, gain the benefit of extra income from 
all the branches of his family budget. 

It is partly for this reason that in Britain the average of 
purchases per member is far higher than that of any other 
country, while we know that in France nearly one-half of the 
societies only sell bread while the other half only sell groceries. 

(4) The absence of competition is another factor. If there 
is no shop other than the co-operative society in the local 
ity—as is sometimes the case where co-operative societies are 
attached to large works or mines—it is very clear that the 
worker will buy there everything he needs. Thus, in the 
Society of Anzin (a great French colliery) the average of 
members' purchases is more than double the general aver 
age, being about £32, bringing back £6 in bonuses, or the 
equivalent of a month's pay. 

(5) It also depends partly -on the prices at which goods 
are-sold, for it is obvious that, other things being equal, the 
rate of the bonus to be distributed will depend upon sale 
prices. The question of the price at which goods should be 
sold has been raised in all the Co-operative Congresses. 

The lowest price, that is to say, the cost price, is charged 
at the two extremities of the -scale: First, in those societies 
whose members, coming from the very poorest classes, have 
first to think of eating before they can think of saving or bo 
nuses, and, secondly, in the societies of professional men who 
have to be economical, but who do not bother about small bo 
nuses. 

High prices, that is to say, prices above prices current 
in outside establishments, are favoured in districts which are 
strongly co-operative, and which can equally well be social 
ist or bourgeois. The difference between the two types of 


 88 CONSUMERS' CO-OPERATIVE SOCIETIES 

society lies in the obj ect of employment of the profit obtained 
by increasing prices. The object of the bourgeois societies 
is to give each member the maximum individual return, and 
they pride themselves in distributing 20 per cent., or, even 
like some British societies, 25 per cent, in bonuses. In the so 
cialist societies, such as the Belgian co-operative societies, 
the object is to provide money for works of social solidarity, 
and even to contribute financial support to their political 
party without disdaining, as one may well believe, individual 
sharing. Still, there is today a tendency to re-act against 
high prices, and to be satisfied with moderate dividends. 
High prices make co-operation inaccessible to the poorest 
classes, and often have the effect of creating unfortunate 
rivalries between co-operative societies in the same town, 
since each one tries to attract members to itself through 
their appetites for a larger dividend, and finally pervert the 
co-operative spirit by bringing in the spirit of gain, and thus 
work altogether against co-operative education. 

In England, the question of what is understood by "a 
good dividend," and by what standard it should be measured, 
is often debated. It must be answered that a good dividend 
is one which is obtained solely by good management, and 
on the contrary, that a dividend, however high it may be, is 
bad if it is only obtained by one of the four following means 
—raising the prices above current prices, lowering wages 
below the trades union level, elimination of contributions to 
works of general utility, or the abolition or great reduction 
of the part which ought to be set aside for reserve and 
depreciations.3 In Britain the average of dividends is 13.5 
per cent., but according to general opinion this is too high. 
In Switzerland the average is only 7 per cent. In France 

3 The two first-named of these evil practices by which high surpluses 
are realized are little known to American co-operation. The two 
last-named evils are' all too common. But in any event, returns seldom 
exceed 7 or 8 per cent, here;,and more often they are as low as from 
2 to S per cent. 


THE DIVISION OP PROFITS 89 

it generally does not reach 5 per cent. There is, however, 
a society at St. Remy sur Avre, in Normandy, which dis 
tributes 15 per1 cent., but it is composed almost exclusively 
of farmers. 

What should the member do with this addition to his in 
come? It is possible that he spends it, and in this case he 
draws from it no advantage other than a gratuitous increase 
in his consumption—one can name societies in Paris where 
the bonus, as soon as received, has been used for a little 
"spree,"—but if it be a fairly round sum—some bank notes, 
or at least a few pieces of gold—and if the co-operative spirit 
is sufficiently developed, it is likely that this sum will not be 
spent in the public-house, but will be used for some extraor 
dinary expense, such as the purchase of furniture—this is 
the commonest form among English co-operators, who are 
proud of their homes—the payment of some old debt, the pay 
ment of the doctor's bill in case of sickness, the marriage 
of children, &c. "Extraordinary expenses" come into every 
life, however simple, just as into public finance, and in order 
to meet these a budget of extraordinary receipts should 
be 'kept, as well as one for ordinary expenses. Since the 
workman generally does not have any extraordinary re 
ceipts, his only resource is to run into debt. Co-operation 
brings him this extraordinary income in the form of the bonus. 
When visiting the enormous warehouses of the Co-operative 
Wholesale Society in Manchester we were surprised to see 
relatively elegant and expensive furniture on sale, such as 
wardrobes with mirrors, cabinet dressing-tables, baths with 
gas heaters, and even pianos. Being astonished that such 
furniture could be within the reach of the income of a work 
ing-man, we were told that these things were bought at the 
time of the distribution of dividends. Of course, they are 
often bought by principal employés and other well-paid co- 
operators. 

If he has the good fortune not to have to meet any extraor- 


 90 CONSUMERS' CO-OPERATIVE SOCIETIES 

dinary expenses he can add this extra money to his savings ; 
he finds it a ready means of saving, and this, therefore, is an 
important object of co-operation, and one which economists 
praise above all; and for a long time in France, as in Eng 
land, they have recommended that no other aim should be 
sought. This is what prudent co-operators in Britain do. 
Among those we mentioned (page 83) the one who received 
£264 left £88 in the society, and he who had received £360' 
left £60 in the society. The capital which is left in the 
society in the form of loans or share subscriptions is esti 
mated to be about one-third of the annual profits. The 
gross total of these accumulated savings is now nearly 
£80,000,000. 

It should be remarked that this saving has the wonderful 
property that it has not been made at the cost of priva 
tion. It is the only means of saving of which this can be 
said. Economists consider saving under the word absti 
nence, and, in fact, it seems a contradiction in terms to say 
one can save without depriving oneself of anything. Such 
is, however, the squaring of the circle which co-operation has 
achieved, in the neatest possible manner, by that solution 
which is called "saving by spending." It should be noted 
that this saving is not only easy, but that it becomes compul 
sory and even automatic each time the bonus, instead of 
being paid in cash to the member, is retained and credited 
to his account until a certain sum is reached. That is the 
rule followed in nearly every co-operative society where the 
members have paid only one-tenth of the value of their 
shares on entering, or where they have merely paid an 
entrance fee. Their share of the bonus is retained from half- 
year to half-year until it has ireached a sum equal to the 
value of the share subscribed for, or to be subscribed for. 
This method of enforced thrift is most successful in the 
Schulze-Delitzsch co-operative credit societies and the Eng 
lish and American co-operative building societies, because 


THE DIVISION OF PROFITS 91 

the value of the shares is usually fixed rather high (£20' to 
£40) precisely with this intention. Once a member has got 
into the habit of seeing his bonus kept in the common fund 
he very easily forms the habit of leaving it there of his 
own free will, even after his shares are fully paid up and the 
retention of the bonus is no longer compulsory.4 In this 
way the consumers' society acts as a savings bank. 

One of the methods of saving which is most appreciated 
by co-operators is that of acquiring a house by annual pay 
ment. We shall discuss this later on. 

There is another form of saving which is particularly 
needed by workers, that is insurance against sickness, old 
age, and unemployment ; I do not say insurance against ac 
cidents, because in most countries the employer is liable for 
compensation in such cases. The worker who wishes to 
guard against these risks has to join either a mutual aid 
society or a trade union, if not both at the same time, and to 
pay to each subscriptions which form a fairly heavy tax on 
the income of the worker. Well ! the bonus gained from the 
consumers' society will provide money enough to meet such 
misfortunes, for, by a happy compensation, while other forms 
of association cost money, this one brings it in. M. Cheys- 
son has calculated that the premium to be paid for insurance 
against the five risks to which working-class families are ex 
posed—sickness, incapacity, old age, unemployment, prema 
ture death—did not exceed £2 in all, but this sum of £2 can 
easily be obtained by affiliation to a consumers' society, even 
in France; it only represents a bonus of 6 per cent, on a 
total purchase of £40. M. Cheysson set himself to advocate 
this means of employing bonuses, as he saw in it the saving 

4 The best societies in the United States encourage this practice on 
the part of the members. Many a society has found that it could in 
crease its amount of share capital per member in no other way. Such 
re-investment of savings-returns often goes either toward the purchase 
of shares for other individuals in the member's family or into the loan 
capital fund. 


 92 CONSUMERS' CO-OPERATIVE SOCIETIES 

of mutual benefit societies. We do not object to this, pro 
vided that it is left to the co-operator himself to use his 
bonus in this way ; but if it is the co-operative society which, 
owing to lack of confidence in the spirit of foresight among 
its members, wishes to pay the bonuses to mutual aid so 
cieties directly, then we should have serious objections to 
the system, because in that case co-operative societies would 
only be cows to be milked by mutual aid societies ! It is the 
duty of co-operation to keep its resources for its own ends 
and not to serve as the instrument of other organizations. 

It is also curious to note that on this point economists of 
the "saving" school meet socialists, who also condemn the 
division of bonuses among individuals, in theory at least, and 
wish to consecrate them to social ends. (See the last chap 
ter, "Co-operation and Socialism.") 

When a society divides the whole of its profits, except that 
portion which is by law devoted to a reserve, among its mem 
bers, one may think that it pays too much attention to the 
interests of the individual and is not unlike a purely capital 
ist society. One expects that a co-operative society should 
give some attention to a loftier and more social purpose. 
The Rochdale Pioneers understood this well, as is testified by 
their excellent act in devoting by their rules 2% Per cent, of 
their bonus to education. If all the English -societies had 
conformed to this rule it would have formed a fund for popu 
lar instruction which would be far from negligible, because, 
on a total of £13,200,000 of profits, this tax would have 
realized more than £320,000 a year. It is true that when 
the Pioneers established their budget for educational pur 
poses, public education did not exist in England ; it was only 
given in private establishments, principally religious. 
Nowadays, funds for education are less urgent, as it is 
provided by the State. But the idea of the Pioneers Was 
not merely that of general education, but one of co-operative 
instruction also : they wished to mould new generations of 


THE DIVISION OP PROFITS 93 

co-operators. Now this necessity is more urgent than ever, 
in England and elsewhere. 

In reality, no English society, as far as we know, has had 
the courage to put into force the Pioneers' rate, not even 
the Society called the Rochdale Pioneers! The total sum 
devoted to education by British co-operators does not reach 
£120,000 or less than 1 per cent. In all their Congresses, 
and in their papers, British co-operators complain of the 
small proportion of their funds which societies devote to ed 
ucation, which proportion, instead of growing, is diminish 
ing.8 One of them has said that the dividend among the 
members ought not to exceed 6 or 7 per cent., and that all 
the rest (that is, about an equal part, as the average rate of 
dividend is 13.5 per cent.) ought to go to the education 
fund.6 Out of nearly £80,000 profits in 1912 they only set 
aside £800 (i. e., 1 per 1,000) and £240 for various under 
takings, and distributed all the balance among the members, 
which was a proportion of from 16 to 17 per cent, on their 
purchases. Leeds is one of the societies which contributes 
most largely to education (more than £2,000). Of course, 
it is the largest society of all; but perhaps it is because it 
spends so much on education that it has become so strong.7 
"Education," said Holyoake, "is the basis of all our 
progress." Still, English societies do a great deal compared 
with those of other countries, and notably of France, where 
the education grant was zero in almost all the societies.* 

5 According to Professor Hall of the Co-operative Union, this is no 
longer the case. 

6 Professor Hall tells us that the Rochdale Pioneers' Society reduced 
their grant for education purposes from 2J% to li% in 1904. Out 
of 802 societies malting grants for educational purposes in 1914, 77 
made regular grants, based on surplus-savings, of 2J% or more. 

* Author's Note. However, thanks to the efforts of the Fédération 
Nationale Française, the co-operative societies have lately made a grant 
of Fr. 10,000 to create a Chair of Co-operation at the Collège de France. 

7 Most of the successful societies in the United States do make grants 
to educational work. Even where the directors are not interested in 
education for its own sake, they do nevertheless learn before long that 


 94 CONSUMERS' CO-OPERATIVE SOCIETIES 

Co-operative education begins among the children, but 
it also concerns itself with adults. It has for its object 
special co-operative education—organization, history, serv 
ices rendered—and also general instruction; to make good 
co-operators one must first make men.* Prize competitions 
are organized among the children, and the best compositions 
are published in the co-operative papers. Educational com 
mittees are formed by the societies, or by the Co-operative 
Union, and scholarships are given enablinig members to 
attend "summer meetings" at Oxford, Cambridge, or Edin 
burgh (£5 to £6 for a stay of a fortnight), including 
a series of ten or twelve lectures on a given subject, or even 
scholarships tenable at one of the colleges of the University. 
But these scholarships do not give great satisfaction, since 
they have for their result the creation of "bourgeois" out 
of a few young workmen; it would be preferable to attempt 
to found a college specially for the sons of co-operators. 
There are also numerous conferences, and, it goes without 
saying, libraries, which are the more useful in that books 
are very expensive in England. 

It is true that recreation—the border line between which 
and education is not easily denned—absorbs rather too large 
a part—it is said more than a third—or the education fund, 
notably in the form of teas, picnics, concerts, excursions, 
&c. But these very expenses themselves contribute to develop 

competitive conditions demand it. Where, as it so often happens, there 
can be neither lowering of prices below the current rates nor substan 
tial saving-returns at the end of the quarter, what other method is 
there of holding the loyalty of the membership? 

* Author's Note. "We must not reduce education merely to teach 
ing the history and principles of co-operation. It would be a narrow 
and selfish point of view to say that the money spent on education 
must be employed solely for the development of co-operation and to 
make good co-operators. ... It is necessary that our members be 
come honourable and useful men and women, and then we shall have 
no need to seek special agents for our defence in public bodies." 
(Speech of Mr. Taylor, member of the Leeds Society's Educational Com 
mittee, Co-operative News, 21st October, 1899.) 


THE DIVISION OF PROFITS 95 

a good feeling of brotherhood among the members and help to 
make co-operative societies attractive to the women and the 
children, who will be the co-operators of tomorrow.8 

As to the expenditure on solidarity—the English do not 
fear to say charity—it appears as a not much less consider 
able amount in the budget of British co-operation (£96,000), 
although other institutions, such as friendly societies or 
trade unions, are more specially charged with this expendi 
ture. One should mention the fine convalescent home es 
tablished by the English Wholesale Society on its estate at 
Roden. The expenditure om "solidarity,"1 on the other 
hand, is a considerable item in the balance sheets of the big 
French societies. A good proportion of the profits is de 
voted to it. The Union des Coopératives of Paris gives 
£3,000 per annum to works of solidarity. 

In France the co-operative federation has established an 
education committee, "groups of pupils," and circles, as far 
as possible one for each society, which have the charge of 
keeping the "sacred fire" burning. (There are only about 
thirty at present.) A few societies have established li 
braries, and sometimes halls, theatres, conference rooms, 
consultation rooms, dispensaries and gymnasiums, and 
such societies are called Maisons du Peuple (People's 
Palaces).* At the time of the great movement for 

8 Most of the educational work in American societies is still very 
largely propaganda for the local organization. But there is much 
recreational work also. And during the past five or six years there has 
sprung up a genuine education movement. Most of this is due, of 
course, to the activities of The Co-operative League. During the sea 
son of 1921-22 many of the labour colleges throughout the country 
gave courses of instruction in Co-operation, and in a few instances 
local co-operatives are making financial contributions to this work. 

* Author's Note. Co-operative societies in France willingly subsidize 
the choral societies or the musicians whom they engage for their festi 
vals. 

A magnificent collection of photographic views for lantern slides 
(more than 1,000 views of many countries) was made by M. Fabre, 
one of the founders of the School of Nîmes, and was put by him at 
the service of lecturers. 


 ! V/IBl 


96 CONSUMERS' CO-OPERATIVE SOCIETIES 

the Popular Universities a few societies made them grants, 
but the results which some people expected from this alliance 
of the two movements have not been realized. In Spain, 
curious to relate, consumers' societies, although little devel 
oped, have done much to establish schools for children—which 
are remarkably well kept up—and thus to supply the de 
ficiency of secular education in that country much as was 
done in England at the time of the Pioneers. 

In the Belgian societies education has an important place ; 
it is not that a large part of the bonuses is devoted to it, 
but it is a general influence exercised over the lives of the 
members by means of meetings, newspapers, conferences, 
excursions for the members' children—with entertainment in 
foreign socialist centres, &c.—and also by the anti-drink 
propaganda, which is one of the most interesting features 
of Belgian co-operation. Brandy or distilled liquors are 
not sold in the Belgian co-operative societies. Unfortu 
nately one cannot say the same for those of France; they 
have not the same courage. They give as an excuse that if 
they stopped the sale of alcohol drinking would be in no way 
reduced, but their members would go to buy dearer and 
worse drink at public-houses, and this would be worse both 
for their health and their purses ; possibly they would even 
be lost to the society. Possibly, but if so, so much the 
worse for them, for to subordinate its moral and educative 
action to its commercial instinct is to degrade and to kill 
the co-operative movement. 

The Congresses of the Union Cooperative—notably that 
of Limoges in 1906—have on various occasions passed the 
resolution :— 

"That co-operative societies and federations should do 
all in their power to suppress the sale of alcohol ; 

"That drinking places where alcohol is sold should be 
suppressed ; 


THE DIVISION OF PROFITS 97 

"That, acting on the resolution of M. de Boyve on co 
operative education ( a resolution adopted by our Congress ), 
the educational committees make it one of their first cares 
to explain to co-operators the reasons for the prohibition 
of alcohol." 

Unfortunately the decisions of these Congresses have no 
effective sanction. 

In Hungary, it appears that brandy is one of the chief 
articles of sale in co-operative stores ; and this is what helps 
them to fight against the competition of Jewish traders ! 
However, they only sell it by the litre and for ready money, 
which to some extent may be a deterrent to drunkards. 

Among the means of education for co-operators, news 
papers specially published by co-operative societies must be 
placed in the first rank. One may even say that the develop 
ment of the co-operative movement in a country depends 
in part on the number of subscribers to its publications. 
In England are found the Co-operative News, a weekly 
paper with a circulation of 125,000, and the smaller monthly 
paper, The Wheatsheaf, with one of 596,000. Switzer 
land does better still, since this little country has 182,000 
subscribers to its principal co-operative paper. There, it 
should be mentioned, all co-operators are automatically made 
subscribers by their respective societies, and the price of 
their subscription is deducted from their bonuses. 

In France we are far behind these figures. The Action 
Cooperative, the organ of the Federation Nationale, does 
not yet sell 20,000 copies, and barely pavs its expenses. 
There is also a montWv papeir, L'Emancipation,9 founded by 
our friend de Boyve in 1885, organ of the School of Nîmes, of 

9 In the United States there are a few independent co-operative 
papers with a small circulation, such as those published by the Central 
States Co-operative Wholesale, the Co-operative Central Exchange, and 
the farmers' papers which are primarily interested in the marketing 
'problems but which also devote considerable space to consumers' co- 


 98 CONSUMERS' CO-OPERATIVE SOCIETIES 

which we are now the editor, but this is not exclusively co 
operative. 

Co-operative education, to have any effect, ought to be 
made available to women, not only for the general reason 
that it is they who educate the men, but also for the special 
reason that women have naturally little sympathy with co 
operation, although co-operation cannot live without them. 
There are hardly ever any bachelors among the members of 
co-operative societies, as they nearly all live in boarding 
houses. It is therefore necessary to convert the women; it 
is they who run the household, who make the purchases, who 
carry the market baskets. As has been stated with much 
insight, the woman with her basket is as much one of the 
great types of working humanity as the ploughman with his 
plough, or the smith with his hammer. But she generally 
prefers the shop round the corner to the co-operative 
shop, not only because it is nearer—a matter of no small 
importance to the tired housekeeper or one who has little 
free time between her work—but also because she finds there 
more attention and sometimes small personal discounts which 
the co-operative system does not permit. 

In 1883 the English formed a Co-operative League for 
Women—now the Women's Co-operative Guild—which has 
44,000 members, holds annual congresses, and has a special 
page in the Co-operative News. The Guild devotes itself to 
active propaganda, above all, to the fight against mercantilist 
and individualist tendencies inside the movement, and strives 
to make it easier for the poor to become co-operators. It 
also claims that women should have a larger part in the man 
agement of societies. In Holland and in Hungary similar 

operation. The Co-operative League publishes three monthly periodi 
cals:—the magazine Co-operation, the four-page popular paper 
Home Co-operator, and a four-page sheet in which the last three 
pages are given to syndicated matter and the first page is left blank 
to be used by the local society for local matter. 


THE DIVISION OF PROFITS 99 

leagues have been formed, and not without success, but an 
attempt made in France a few years ago, under the aus 
pices of the then Co-operative Union, was a failure.10 

10 In many of the American societies the Women's Guild is now 
playing a vital part in the strengthening of the movement locally. 
Some societies have actually been saved from bankruptcy by valiant 
action of the women at the last moment. Today many new societies 
are rapidly coming to the realization that active participation by the 
women in the educational as well as the business side of the movement 
is a vital necessity. 


 CHAPTER VIII 


MEMBERS 

Co-operative societies are like miniature republics, and one 
of their first principles is the equality of members. To 
ensure this equality, it is the rule that each member, no mat 
ter how many shares he possesses, has one vote only. "One 
man one vote" is the principle of universal suffrage. This 
is very different from the system in operation in all capitalist 
companies, in which each shareholder has a number of votes 
more or less proportionate to the number of his shares, and 
in which, indeed, even eligibility for executive functions is 
often reserved for very large shareholders.* 1 

Thus, capital, after having been deprived of its right to 
the profits, is almost deprived of its right of control. If we 
were to push the application of this principle to its logical 
conclusion we should only grant the privilege of voting to 
purchasing members, and give them a number of votes pro 
portionate to the amount of their trade. But the law does 
not allow this. A society of shareholders can only be gov 
erned by the shareholders as such. 

* Author's Note. French law permits the limitation of one vote per 
shareholder at ordinary meetings, but at special meetings, held with 
the object of altering the rules, according to a recent law (see later, 
Chapter XIV) each member has the right to as many votes as shares 
held by him. The aim of this measure is to protect the large share 
holders against a possible coalition of small ones. This may be reason 
able in large capitalist companies, but obviously it is quite antagonistic 
to the co-operative principle. 

i Of the many fraudulent co-operative enterprises in the United 
States, the commonest characteristic is this limitation of control to 
the few "elect." 

100 


MEMBERS 


101 


The equality of members is further shown in the fact that 
the later comers into the society join under the same condi 
tions and enjoy the same rights as the first member; they 
even pay the same sum as share subscription. How very 
different is the position in ordinary joint-stock companies, 
where any one wishing to become a shareholder must buy a 
share, i. e., get one transferred to him by an old shareholder, 
and if the company is in a flourishing condition he will have 
to pay a much higher price than the original subscription 
paid, perhaps ten times as much ! This is because in ordi 
nary joint-stock companies the number of shares is limited 
whereas in co-operative societies the number is unlimited, and 
the share register is always open. The law which ensures 
that a co-operative society shall always be open to new mem 
bers is not, however, incompatible with rules making spe 
cial conditions obligatory on members, such as that of be 
longing to a certain trade. 

•Co-operative societies which only admit members of the 
same trade or profession are fairly numerous. Thus, there 
are societies of railway employés, of petty officials, of offi 
cers or workmen from the same factory, for example, the soci 
eties of miners of Anzin, or the workmen of Creusot, &c. 

Co-operative societies reserved for certain cjasses have 
their advantages and disadvantages. 

The advantages are that the spirit of solidarity—the 
"esprit de corps"—is much more strongly developed among 
persons of the same trade than among persons of varied 
occupations. These societies generally become very strong 
and stable ; they are well under the control of their directors. 
This is the reason for the success in every country of til* 
large consumers' societies of civil servants, or members of 
the military and naval services. In London, the two socie 
ties which bear the names the Civil Service Stores and the 
Army and Navy Stores; in Rome, the Umone Militare; in 
Paris the Société des Employés Civils de Paris, &c. (thé 


 102 CONSUMERS' CO-OPERATIVE SOCIETIES 

Society of Civil Servants of Paris and the Department of the 
Seine), are in the first rank of their respective countries, both 
in membership and amount of trade. 

The co-operative societies of railway employés are be 
coming more and more numerous in every country, and tend 
rather to take the place of patronal institutions created by 
the companies. In France, this has already been done by 
the companies of the P. L,. M. and the East. It will prob 
ably be the same with other companies still working on the 
"économat system," because the law of March 21st, 1910, 
which abolished the économats for fear of the truck system, 
making an exception for them in the case of railway com 
panies, has attached certain very inconvenient conditions to 
the working of économats, notably that every five years the 
question of the continuation of the économat must be sub 
mitted to a referendum of the company's employés. 

There are also very prosperous co-operative societies of 
officers in London, Berlin, Rome, and Petrograd. In France 
there was one which at first succeeded admirably, but which 
has since failed, and is now chiefly a club. These societies 
must not be confused with the military co-operative societies, 
with which we shall deal further on, which are started for 
soldiers only, and which cannot be classed as "professional." 

The disadvantage is that these societies generally stand 
aloof from the co-operative movement proper, because, visu 
alizing only economy of distribution, tliey are not inter 
ested in any of the social ends of co-operation and are there 
fore liable to degenerate into mere commercial enterprises. 
This, however, does not prevent them from rendering very 
real service to the class of people for whom they are intended. 

Socialists look askance at these consumers' societies of 
special classes of officials or workers, especially where they 
consist of workmen or clerks employed by the same man, or 
the same company : in this case they liken them to disguised 
économats, and accuse them of being "yellow"—a most un- 


MEMBERS 103 

just imputation, if by it they mean that these societies are 
subservient to the employer or the company as, on the con 
trary, they are often centres of opposition. And even 
though it may be true that these societies are often disposed 
to sacrifice the general interests of co-operation to their 
corporate interests, the same may be said of the socialist co 
operative societies, which only admit workmen, sometimes 
only members of trade unions, and sometimes only workmen 
who belong to the socialist party. This also applies to those 
societies which only admit those of some one religious faith. 
These "red" or "black" associations are open to the same 
reproach that they level at the "yellow" ones, namely, that 
of working solely for the benefit of one party, Church, or 
class, to the exclusion of those who are not of their party, 
Church, or class. By so doing they belie the character of 
consumers' co-operation—which, being universal by its very 
definition, demands from its adherents no other condition 
than that of being consumers—and by bringing divisions into 
the co-operative movement, weaken its strength. But we 
shall return to this question when we are dealing with so 
cialist co-operation. 

It is better, then, to avoid co-operative societies of special 
classes as much as possible, though there are sometimes 
circumstances in which they become necessary. When it 
is a question of workshops or mines lying far outside the 
towns it is necessary to form co-operative societies among 
workmen of the same factory, there being no other possible 
members in the district. And as regards railway employés, 
as the companies allow them special advantages for trans 
port of their provisions—which would not be granted to 
ordinary traders—it would naturally be impossible for these 
societies to open their ranks to outsiders.2 

2 Almost all of the so-called "railroad men's" societies in the United 
States are open to all. They have been started by members of the 
railroad brotherhoods but from the beginning they grant full member- 


 'I 


104 CONSUMERS' CO-OPERATIVE SOCIETIES 

Of course, freedom of entrance should also carry with it 
freedom of withdrawal, and this is the general rule, although 
it is not always easy to apply it in practice. 

If a member's liberty to withdraw depends—as in the 
case of joint-stock companies—on the selling of his share, 
in other words, on his finding a purchaser, this liberty is 
greatly limited, because shares in co-operative societies have 
not the large market possessed by shares of the Bank of 
France, or large industrial companies ; it may be rather 
difficult therefore to find some one willing to purchase a 
share or shares. This difficulty is further increased if the 
society reserves the right, as many societies do, to approve 
or disapprove of the transferee. At the same time it is ob 
vious that this right ought to be reserved, because it would 
not always be advisable to admit the first comer to replace 
a retiring member; co-operative societies are associations of 
persons as distinct from joint-stock companies, which are 
merely associations of capital. The most liberal system 
would be to grant the right of free resignation to the mem 
ber and to refund him his share money on his resignation. 
But here the society would expose itself to great dangers, as 
it would only be necessary for discontented members—and 
there are always such—to organize a plot simultaneously 
to claim the repayment of their shares to embarrass the so- 
. ciety very seriously, perhaps to bring about its ruin. In 
order to avert this danger, or at least to render it less grave, 
the society should reserve to itself the right to delay repay 
ment for a period, on the lines of the "safeguard" clause of 
the Savings Banks. Very often the rules only permit repay 
ment after the death of the member, or on his leaving the 
town ; indeed, the changing of residence ought to be a suffi 
cient reason, in large towns at least. 

ship privileges to all other consumers. We do have other groups, how 
ever, which make their societies exclusive. This feature is very com 
mon to societies among municipal employés, post office employés, and 
employés of certain large corporations. 


MEMBERS 


105 


In principle, therefore, the member is free to join or to 
leave the society. But has the society the right to expel 
the member, if his presence should be deemed prejudicial to 
the interests of the society? Yes, in principle, and this 
right is provided for in the rules of the maj ority of societies. 
However, a recent law (1913) has placed a serious obstacle 
in the way of the exercising of this right, by exacting as a 
condition -of this expulsion the calling of a special general 
meeting under conditions rigorously imposed by law (see 
later, Chapter XIII), that is to say, at least three- 
quarters of the shares must be represented, and the decision 
must be passed by a majority of two-thirds of the votes. 
This is equivalent in large societies to a prohibition of ex 
pulsion. Probably when passing this protective measure for 
members the legislator was not thinking of co-operative so 
cieties; he does not mention them. A revision of this law 
seems to be necessary. 

There is also the much discussed question as to whether 
a co-operative society should be open to all the members of 
a family, or to one member only. As a matter of fact there 
is generally only one person in a household who becomes a 
member of the consumers' society—the husband, although it 
is really the wife who does all the buying. As the purchases 
are made for the whole household it seems unnecessary for 
the other members of the family to join the society. They 
would have to pay the necessary sum to become shareholders, 
while neither they nor the society would gain anything—at 
least in turnover—because the store would not gain more 
custom thereby. 

But it may be said that it is advisable for other members 
of the family—particularly the women—to become share 
holders, in order that they may be able to take part in the 
general meetings and to use their influence in the adminis 
tration of the society. Women are at present more or less 
excluded, owing to the fact that they are scarcely ever mem- 


 106 CONSUMERS' CO-OPERATIVE SOCIETIES 

bers. For this reason the Women's Co-operative Guild 
urgently presses for free admission of all the members of 
the family, for what English co-operators call open member 
ship. Moreover, being a member has unquestionable value 
for young men and women, from the educational standpoint 
at least, and it assures the recruiting of new generations. 

The experiences of several large societies which have 
adopted the principle of open membership seem to demon 
strate that this system has the effect of materially increasing 
the amount of trade done by each family, contrary to what 
we might have expected. This may be due to a more 
constant frequenting of the shop by all the various members 
of the family, and a more active sense of social duty, once 
they have acquired the title of member. 

Finally, this system has the advantage of increasing the 
proportion of the subscribed capital as compared with the 
amount of sales, as the family which was formerly content 
to have one share only now subscribes for several; we shall 
see in the following chapter that this increase of capital is 
highly desirable.3 

3 Most of the Societies in the United States permit more than one 
member of the family to join. Usually, however, considerable urging 
is required before large numbers of women avail themselves of the 
opportunity. 


CHAPTER IX 
CAPITAL 

(1) The Formation of Capital 

The capital of co-operative societies is formed, first of all, 
as in all other forms of association, by the subscriptions of 
those who become members, that is to say by the subscrip 
tions for shares. The French law of 1867, in order to make 
these payments possible for every purse, reduced the amount 
of a share in a co-operative society to £1, and by a recent 
law the maximum is fixed at £4, though for ordinary 
capitalist concerns the share is generally £20.1 The law 
also allows societies to be legally constituted on payment 
of one-tenth of the share, that is to say, the very small 
sum of 2s. per menber. In England the share is £1 for both 
societies and companies. It was therefore not necessary to 
have a special law in favour of co-operative societies. 

This is very little. Fortunately, consumers' societies, by 
the special nature of their business, do not require a large 
capital, for the reason that by their sales the capital renews 
itself rapidly, and even daily, as in bakers' shops, so that a 
small capital is enough for a large business. This is the 

1 A few states in the United States have laws governing the value 
of a share and limiting the number of shares to a member of a co 
operative. Thus New York State sets a share at $5 and permits no 
individual to hold more than ÏOOO shares. Generally, however, the 
local society is free to determine what value it wishes to place on a 
share and how many it will permit to a single member. There are 
societies which permit full membership privileges to the owner of one 
$5 share, and there are others which ask of each member as high as 
$50 or $100. Very few can get along well unless they receive at 
least $20 or $25. 

107 


 108 CONSUMERS' CO-OPERATIVE SOCIETIES 

principal reason for the success of consumers' co-operative 
societies as against producers' societies, from the point of 
view of ease of formation and speed of development. 

Consumers' societies have been started and have succeeded 
without any original capital except a small entrance fee. As 
they buy their goods on credit from the wholesalers and sell 
them for cash to their members, they can start without 
money, except that necessary for their modest equipment.2 
Thus the Bale Society, which is one of the strongest in 
Europe (37,000 members, and a turnover of £1,080,000), 
started without capital, and an entrance fee of only 2s. 6d. 
In Belgium, the law does not require any subscribed capital. 
The Vooruit only requires an entrance fee of 10d., and 2/£d. 
for a pass book. These societies obtain sufficient working 
capital by selling tokens to their members, which serve as 
payment for bread and other goods. In Germany, the law 
permits the payment of one share of Is. only but in practice 
the share is 30s. 

Nevertheless, the capital accumulated under such condi 
tions would be insufficient if the capital of consumers' socie 
ties were not endowed with the remarkable virtue of increas 
ing automatically by the progressive additions of the divi 
dends which the members often leave, either wholly or in 
part, in the hands of the society. Members are always asked 
to do this, and even compelled to do so when they have only 

2 We know of very few societies in the United States capable of 
starting this way at the present time. Even the poorest of co-opera 
tors would advise that the group which could not raise any capital 
through the regular channels of assessment upon each member had 
better not attempt to organize at alL 

Yet there are one or two exceptions to this rule. A society which 
was organized in Reading, Pa., in 1914 and began business with a 
capital of a bag of cornmea], in 1921 had resources of $18,000. And a 
co-operative restaurant in Brooklyn was opened in 1910 without one 
cent of capital stock paid in, conducting its initial operations on $200 
of borrowed capital. At the end of 1921 this Society had assets of 
$13,000, although not a cent of capital had ever been contributed by 
the membership. 


CAPITAL 109 

paid up a tenth or other fraction of their share. Their divi 
dends are retained by the society until the share is "freed," 
as it is called, that is to say fully paid up. 

Not only do a great number of members leave their 
dividends on deposit with the society, but some bring to it 
their savings, as to a savings bank, either on current deposit 
or on deposit for several years. 

If the capital of the British co-operative societies had 
been built up by the subscriptions for shares at one share 
per member only, that would only make a total capital for 
the 4 million co-operators of 4 million pounds, but the cap 
ital actually raised in 1920 was 76 millions.* 

Thus the capital of societies is fed from three sources : («) 
Shares subscribed on entrance; (b) dividends left on deposit 
or converted into shares ; (c) loans from members. Of 
these three sources the first is the least important; the 
second brings in the most money, especially in England; 
in Switzerland, as we shall see, the third is the most impor 
tant. Moreover, consumers' co-operative societies do not 
seek large amounts of capital, on the contrary, they are 
opposed to them. Many societies, by their rules, limit the 
number of shares which any member can hold, generally to 
five, following the example of the Rochdale Pioneers.3 In 

* Author's Note. In this figure is included the figures for the two 
wholesale societies (almost £8,000,000). The capital of the retail 
societies was £48,240,000 in 1914, made up as follows:— 

Share capital ... ... ... ... . £39,920,000 

Loan capital ... ... ... ... ... £ 5,400,000 

Reserve fund ... ... ... ... ... £ 2,920,000 

In 1920 the share capital reached £76,000,000 and loan capital £10,- 
000,000. The increase over 1914 is not in proportion to the increase in 
turnover. 

The same miracle of the multiplication of pennies is realized by the 
individual members also. Thus, the example of a member of the Lan 
ark Society is quoted, who, having subscribed for a few shares, left 
all profits with the society, and found himself after 36 years the 
possessor of £944. 

s Prof essor Hall is authority for the following statement:— 


 110 CONSUMERS' CO-OPERATIVE SOCIETIES 

Austria the rules only allow one share per member, and the 
share is only of the value of 8s. 4d. In England, the law 
itself fixes a limit, though it is fairly high (£200), that is 200 
shares per member. In France there is no legal limit to the 
amount of capital a member may own—even in co-operative 
societies. The law once limited the total capital of a society 
to £8,000 (with power to raise a similar sum each year), 
but this restriction no longer exists. 

What is the reason for this unusual mistrust of capital? 
It is explainable on three grounds:— 

(«) First, since the very spirit of the co-operative move 
ment is anti-capitalist, and since it seeks to destroy the 
domination of capital, it would seem hardly wise to open 
the door and let capital install itself as a master of the 
society. And if some member—a bourgeois—owned a 
large number of shares, there would be a fear that he would 
gain undue influence in spite of the rule which limits the 
votes to one vote per member; it would be enough if he 
threatened to leave and to withdraw his capital. 

(fo) Secondly, because the capital of co-operative socie 
ties, being built up in the ways we have just indicated, 
constitutes a danger as much as an advantage to the 
society. In fact, all of the capital which comes from the 
dividends left on deposit is repayable on demand at the wish 
of the depositor. And the share capital itself has this 
difference from that of ordinary capitalist enterprises—that 
it is withdrawable in case the member leaves the society. 
This is a very dangerous financial position, and one which 
an ordinary business cannot accept without risk of bank- 

"The rules of the Rochdale Pioneers' Society in 1864 limited the 
holding of any one member to fifty shares. It is not known when 
the limit was extended, but from 1878, if not earlier, the rules of 
the society permitted a member to hold one hundred shares. This rule 
continued to operate until 1912, when the rules of the society were 
again revised. There is now no limit to the number of shares a mem 
ber may hold other than that set by Act of Parliament," 


CAPITAL 


111 


ruptcy.* The co-operative societies can do so, thanks to the 
spirit of solidarity among the members, who are not ordinary 
customers and who do not wish to injure the society of which 
they are themselves a part. The late war furnished 
in every country an admirable example of this loyalty. At 
the very moment when the ordinary banks and savings banks 
were besieged by a rush of their depositors, the consumers' 
societies generally succeeded in warding off or checking 
quickly all panic among their members. In England, in 
the course of one year (1915) co-operative capital—con 
trary to all anticipations—increased by more than £4,000,- 
000. 

(c) Thirdly, because the consumers' societies, as long 
as they confine themselves to their ordinary business, do not 
know what to do with surplus capital, and can find no use 
for it. What is the object, therefore, of running the risks, 
which we have just indicated, if they are not compensated 
for by any advantage? 

Lately there has been a reaction against this spirit. 
Co-operators have learned to appreciate, if not the merits, 

»Author's Note. To avoid or limit this danger the Swiss societies 
prefer borrowing in the form of bonds repayable three or five years 
from the date of issue. This precaution is the more necessary in that 
they give far more credit than do the co-operative societies of other 
countries. While in Britain the loan capital is only one-eighth part 
of the share capital, in Switzerland the proportion is reversed; the 
share capital is only one-eighth of the loan capital. 

On the other hand, the reserves in Switzerland are far more than 
double the share capital, which makes for safety, since the reserve 
fund is the indivisible and collective property of the society and can 
not be withdrawn, while the share capital is the individual property 
of the members. The following table shows the comparative division 
of capital in the two countries:— 

Britain. Switzerland. 

Share capital ... .. •• 83% ... 9% 
Reserve capital ... 6% ... 21% 
Loan capital ... ... 11% ••• 70% 

100% ... 100% 


 m mi 


112 CONSUMERS' CO-OPERATIVE SOCIETIES 

at least the advantages of capital—this statement may give 
the ordinary economists an opportunity for a facile triumph ! 
—and as their ambitions have increased they have found 
themselves hampered by the limits which they themselves 
have placed on capital. It is obvious that consumers' 
societies cannot think of engaging in production—which is 
their great object—without having the necessary capital to 
build factories or to buy land. This is why the consumers' 
society in Hamburg, which has the significant name "Pro 
duktion," insists that each member shall have at least four 
shares of 50 marks each—that is £10. The old mistrusts 
are in part dissipated, since, as long as capital has neither 
the right of control nor a share in the profits, its domination 
is hardly to be feared, and the desire for protection against 
its encroachments seems almost fantastic. Today, co-oper 
ators, fearing rather the difficulty of raising capital, are pre 
occupied with the means of attracting it. If there are capi 
talists generous enough to be prepared to subscribe for a 
large number of shares one can hardly see any reason why 
the society should fix a stern limit to their goodwill and thus 
deprive itself of a useful addition to its resources. If it is 
feared that they will embarrass the society by withdrawing 
in a fit of bad temper and taking with them their capital, it 
is possible to guard against this risk by attaching such 
conditions as are deemed necessary to the rules for the repay 
ment of shares (see above, pp. 110, 111). 

Further, in Britain, voices have been raised calling for the 
abolition of all rules limiting the number of shares which 
can be subscribed for by a member, and even for the abolition 
of the limit of £200 imposed by law; and in all the con 
gresses it has been pointed out that it is the duty of members 
to leave their dividends on deposit with the society. 

As for the French societies, up to the present their de 
velopment has not been such as to require much capital. 
However, ways of increasing their resources are now engag- 


CAPITAL 113 

ing their serious consideration. It is customary today in 
French societies (though not legally necessary) to fix the 
value of the share at 100 fr. (£4). But they do not count 
much on the subscriptions of their members, and still less do 
they wish to apply to capitalists for the necessary capital. 
They have turned to the State and ask it to supply capital, 
as the co-operative productive associations and the agricul 
tural and credit associations have done. 

Since 1897 the State has -set aside its part of the profits 
of the Bank of France, which today numbers a good number 
of millions (francs), at the disposal of agricultural credit 
societies, and, later, productive societies. Since 1911 a sum 
of £80,000 has been placed at the disposal of workmen's 
productive societies. Relying on these precedents, the na 
tional federation of consumers' societies has also secured 
an advance of £80,000, which shall renew itself as it is paid. 

It is a modest sum, which cannot be of any use unless it 
is concentrated in the hands of a central body like the Whole 
sale Society, but the State could not confine its advances to 
the Wholesale without raising a storm of protest from the 
societies which are not affiliated to it.4 

(2) The Reward of Capital 

As we know, it is the rule that capital has no share in 
the profits. Where it is given a share the society ceases to 
be co-operative, even if it wrongly calls itself such. 

This is well known, but a thing that is not generally 
realized is the magnitude of the sacrifice which is thereby 
imposed on the holders of share capital. In fact, the 
profit of which it is deprived is not the ordinary modest 

4 In the United States a few of the agricultural marketing associa 
tions have lately been able to get such help from the federal govern 
ment or from one or two of the states, but the consumers' societies 
still have recourse only to the private banks, two or three co-operative 
or labour banks, and individual co-operators. 


 l« ' 


114 CONSUMERS' CO-OPERATIVE SOCIETIES 

commercial profit of 10 or 12 per cent., but a profit of 30 per 
cent, or more. 

If the total profits of British co-operative societies, 
namely, £25,000,000, were given to share capital, which 
was (in 1920) £86,000,000, it would make 33 per 
cent. For some societies even higher rates could be found. 
It is only the old insurance company or the mining company 
which can afford us an example of equal or higher profits. 
These figures refer to the profits and capital of the retai] 
societies. It is a very different matter with the two British 
wholesale societies—£2,000,000 of profit for £4,000,000 of 
share capital, but it should be said that this share capital 
only represents a part of their total capital. Moreover, in 
1917, the profit decreased greatly, and in 1921 there was a 
great loss because the wholesales tried to fight against the 
increase in prices. 

When Fourier dazzled the eyes of the world with the div 
idends of his Phalanstère—24 to 26 per cent., as he said— 
he doubtless had a vague vision of consumers' societies which 
would realize them ! 

Moreover, it must be admitted that when the Rochdale 
Pioneers laid down their famous principle of distributing 
the profits among the consumers they thought that these 
profits would be of little importance and, perhaps, if they 
had suspected the rate which would one day be reached, these 
early shareholders would have hesitated to renounce them in 
advance. 

Thus is the question of profit settled; but there remains 
the question of interest, which is altogether another matter. 

Ought a society to pay interest to capital—either share 
capital or loan capital? The answer to this question does 
not seem to admit of doubt. In no case does interest 
upon capital appear to be more legitimate than in this one. 
It is, in fact, a question of capital which is undoubtedly the 
fruit of work and savings, and which the society received 


CAPITAL 


115 


from its own members. Further, it goes without saying 
that this capital is of great service to the society, it is fair 
that this service should be paid for. Moreover, the rate of 
interest is generally limited to 5 per cent., which is the rule 
in nearly all societies. It does not fail, however, to excite a 
fairly strong opposition, and not only from the socialist 
side. In Germany it is the rule not to pay interest on share 
capital. It may be said that if the share-holding member, 
or lending member, is loyal to the society he gains nothing 
by getting interest on his money, because he will get it in 
the form of an extra bonus on his purchases. He ought to 
see that if the social profits are to be as high as possible they 
should be free from all interest charges. If, on the other 
hand, the member does not use the shop, and so fails in his 
duty as a member, it is only fair to punish him by refusing 
him any interest on his shares. 

Tliis does not really get to the root of the question. The 
reasoning would be right if all the members had brought to 
the society an equal amount of capital—either in the form of 
shares or of loans—and if it were in their power to make the 
same amount of purchases ; in this case it would be of no 
importance whether they obtained their interest separately 
or as part of the dividend. But neither one nor the other of 
these conditions is, or can be, fulfilled, and therefore it 
seems fair that service rendered in the form of capital 
advanced, which is not of less value that that rendered in 
the form of purchases, should be rewarded. According to 
Professor Hall (quoted in the Co-operative News), half of 
the share capital is owned by one-tenth of the members. 
Half of the British co-operators do not own more than three 
shares. It is curious to observe that in the little world of 
co-operators the division of wealth is scarcely less unequal 
than in the great world of individualists. 

Is it necessary to say further, that, if the society does not 
allow any interest on capital, no member will subscribe for 


 116 CONSUMERS' CO-OPERATIVE SOCIETIES 

more than one share, since the possession of a single share 
entitles him to make all the purchases he desires and to 
gain the dividend, and that the subscription for a larger num 
ber of shares will not bring with it any advantage? By 
this course the society limits its share capital to a minimum 
incompatible with progress. This is exactly what happens 
in Germany. Each member takes up one share only. There 
fore, it is necessary to make the shares expensive—80s., and 
sometimes £8. 

Thus it happens that even those societies which wish to 
remain faithful to the principle of the abolition of interest, 
confine themselves to the formality of paying no interest on 
the first share subscribed for by each member, but allow 
interest on all further shares for which a member wishes to 
subscribe, and, in any case, on money which he leaves on 
deposit, or invests in the form of a loan. This was the rule 
in the Wholesale Society of the old French Co-operative 
Union (which has disappeared since the amalgamation), and 
it is the rule followed in the big "Produktion" society at 
Hamburg.6 

(3) The Use of Capital 

We have just remarked, that as soon as a consumers' 
society has succeeded in getting together a good number of 
members it does not know how to use such of its capital as 
is in the excess of the needs of its business, and it finds itself 
embarrased by its riches. Thus the British societies, both 
retail and wholesale, have in the form of shares and deposits 
nearly £60,000,000, but they only need at the most half 
of this as working capital. Therefore, the question arises 
how to employ the superabundant capital. 

E A few societies in the United States are able to follow this plan of 
paying interest only on shares subsequent to the first, but usually 
(except in the weakest societies where there is no money for payment 
of any interest at all) the current rate of interest is paid on all shares. 
Some of the more radical societies pay interest only on loan capital. 


CAPITAL ir? 

If the money be invested, as the bourgeois invest, in 
consols or other securities, it is giving to the capitalist 
organizations those very arms which have been forged for 
use against them ; it is helping those very businesses which 
it is sought to supersede. What is needed is that co-oper 
ation should use these resources for its own ends, namely, 
in building factories and buying farms, or helping workmen's 
productive associations; the question which of these two 
systems is to be chosen is so difficult that it will be the 
subject of a special chapter. (See below, Chapter, X, 
"Housing.") For such great enterprises as these co 
operation need not fear having too much capital. The 
English -and Scottish Wholesale Societies have invested 
in their productive enterprises more than £4,000,000 of 
capital, and the retail societies have invested half this sum. 
The late war will have the effect of giving a strong impetus 
to this movement, for the rise in prices has made co-oper 
ators feel the necessity of going back to the very sources 
of production and controlling raw materials first of all if 
they wish to remedy the position. (See Chapter XV, 
Production by Consumers' Societies.) 

There is yet another and less ambitious way of using it, 
but one which is of great use for the working, in fact, for 
all classes, and which offers the best possible security, that 
is the building of comfortable and cheap houses or flats. 
But these uses are far from absorbing all the available 
capital, so that more than a quarter of it is used in various 
other ways—public funds, mortgages, &c.—and sometimes 
goes even into industrial enterprises competing with co-opera 
tive ones. 

Still, partly by its use in production and partly by the 
building of workmen's houses, or by the increase in the 
range of a consumers' society's business, the greater part 
of the capital accumulated by co-operation returns to the 
people. In this way consumers' co-operative societies 


 118 CONSUMERS' CO-OPERATIVE SOCIETIES 

already do a better social work than the savings banks, 
because the millions paid into savings banks are nearly all 
invested in consols (above all, in France) or in capitalist 
securities. As M. Luzzatti says, with his usual eloquence, 
"In the savings bank the poor man's mite is lent to the 
rich, while in co-operation the poor man's mite is lent to 
the poor." 

In France, societies have not been so successful as to 
be much worried by the question of how to use their capital. 
As soon as they have sufficient capital their first thought 
is to build a fine shop, and many of them do not even wait 
to have enough, but borrow from their members for this 
purpose. This mania for building can be justified in part 
by the wish to show the strength of the society, and as an 
advertisement in rivalry to the big shops. However it is a 
dangerous thing, and has brought several big Parisian 
societies to ruin. For many of them, the day when they 
opened their "palace" has marked the beginning of their 
decay.6 

6 Such impatience is not unknown in the United States. The more 
common form of extravagance, however, is laying in excessive stocks 
of goods and over-furnishing the store or employing too many clerks. 


I 


CHAPTER X 

VARIOUS TYPES OF CONSUMEES* 
SOCIETIES 

A consumers' society, to fulfil completely the definition 
which we have given of it, ought to be able to supply its mem 
bers with everything they may require, so that the mem 
bers need not spend anything outside the co-operative store. 
But such a complete realization is impossible under the 
existing economic organization. There are some social re 
quirements which are supplied by the State, by municipali 
ties, by private monopolies, or by the liberal professions, 
which are not yet, and which never will be, supplied co-opera 
tively. We cannot, for example, go to the co-operative store 
to pay taxes, law costs, examination fees, or lawyers' or doc 
tors' fees, nor even to purchase tickets for the train, tram, 
or theatre, though, indeed, this ought not to be impossible 
with regard to these last-named items.1 But, making allow 
ances for all these expenses, which at best do not occupy an 
important place in the workman's budget—at the most 5 per 
cent., according to monographs published on the subject—a 
co-operative store should very easily supply everything else 
—food, clothing, housing, furniture, ornaments, books, even 
medicine, everything, in fact, a man needs from the cradle to 
the grave, from the layette to the shroud. We find all these 

1 There are great differences of opinion on this subject. Already 
there are co-operative medical societies in Europe and the excellent. 
sick and death benefit societies in the United States which supply 
doctors, nurses and hospital care to the members. We already have 
co-operatively owned and controlled moving picture theatres. And 
many of our co-operators look forward to the time when vast whole 
sale societies shall control the railroads, and when the activities of 
the co-operatives shall so encroach upon the domains of the State 
xhat its taxing power will be reduced to the vanishing point. 

119 


 120 CONSUMERS' CO-OPERATIVE SOCIETIES 

services are rendered by co-operative societies abroad, and 
even in France itself. 

There are two different forms of commercial co-operation, 
both of which have been tried with success. One is that of a 
universal supply store, where the consumer can obtain every 
thing he requires ; the other form is a specialized store, with 
a trade which is confined to some one branch, such as dairy 
ing, or the sale of wine, &c.* 

* Author's Note. The statistics of the Ministry of Labour give the 
following figures, which show how the consumers' societies in France 
(1914) are divided, according to their various functions:— 


Various retail societies (principally grocers) 

Bakers 

Butchers 

Wine 

Beer 

Restaurants ... ... ... ... 

Coal 


1,607 

1,300 

34 

48 

118 

18 

31 

3,1562 


All of the 1,607 societies classed as "various" sell groceries, but 
600 add bread, whilst 100 of them sell drapery, hardware, shoes, con 
fectionery, &c. 

The societies for the sale of wine do not undertake the making of 
it, therefore they must not be confused with the societies of wine 
growers for the manufacture of wine or for the sale of their grape 
harvest. The co-operative breweries, on the contrary, make the beer 
which their members consume, and thus, like the bakeries, participate 
both in consumers' and producers' co-operation. 

2 Figures for the number of consumers' societies in each class for 
the United States are not available. Certain rough estimates can per 
haps be given. Figures given below are very generous; probably they 
would be somewhat smaller in each case if the precise facts were known. 


Grocers 

Butcher Shops ... 

Bakeries 

Restaurants 

Laundries 

Dry goods, Gents F'shings, etc. 

Housing 

Milk Supply 


2,800 
25 
75 
15 
12 
IS 
25 
8 


To be sure there are hundreds of grocery stores which carry a 
line of dry goods, shoes, or other essentials, and other hundreds which 
carry meats and fish. 


TYPES OF CONSUMERS' SOCIETIES 121 

Up to the present, co-operative evolution tends to spread 
only in the former type; this is only to be expected, as 
the requirements of a workman's household are too few and 
the time at his disposal for making purchases is too limited 
for the members of it to roam from one shop to another. 
But this state of things might be altered if co-operation 
could gain headway among the middle classes. For example, 
in several large towns (London, Milan, &c.) co-operative 
automobile societies have been formed which are societies of 
consumers, and not of producers, that is to say, societies to 
furnish people who possess motors with all that is necessary 
for their upkeep, i. e., supplies and accessories. In many 
towns in the United States there arc also co-operative tele 
phone societies. In fact, among all the varied requirements 
of man, there is hardly one which could not be made the 
object of a special consumers' society. We cannot mention 
them all, but we shall name a few of the most important. 

(1) Groceries 

Most co-operative societies have started with the sale 
of groceries, after the example of the Rochdale Pioneers, and 
even today it is to this type of trade that the vast majority 
of co-operative societies adhere. It is not merely because 
this trade satisfies the most important need of man, but sim 
ply because it is the need easiest to satisfy. For example :— 

1. Goods sold under the head of groceries—which com 
prise not only foreign produce (coffee, tea, chocolate, pepper, 
&c.), but also jams, sugar, dried vegetables, confectionery, 
and everything required for the household, such as soap, oil, 
&c.—comprise almost the whole of the daily needs of the 

Also there are many hundreds of houses that are co-operatively 
owned; but the majority of them are unincorporated or are incor 
porated under the straight business corporation law. They are not 
projections of the co-operative idea, but are co-operative by accident 
and usually not strictly co-operative at that. 


 122 CONSUMERS' CO-OPERATIVE SOCIETIES 

working population, bread alone excepted. They are sold 
for ready money, and this is a great point. 

2. They do not need any skilled manipulation, except, per 
haps, in roasting the coffee or 'breaking up the sugar. 

3. They are easily stored and preserved, much more so 
than are meat, fruit, milk, butter, &c., and involve compara 
tively little wastage. 

4. By the variety of articles sold they insure against 
variations of prices, and the risks of goods remaining unsold. 

5. They only need a very small capital to begin with, 
although the trade is capable of being developed to large 
proportions. 

6. Finally, since it is in this department that goods are 
most often adulterated, it is not a difficult matter to gain a 
reputation for integrity. 

These are all distinct advantages for men who are novices 
in business, as are most co-operators. 

Furthermore, the best proof that this branch of trade is 
the most accessible of all is that of all trades that of the 
grocer is the commonest in every country. 

Grocery shops are. to be seen at every street corner, just 
because this is the venture every one makes who has neither 
the capacity nor the money to undertake another trade. 
Every servant, peasant, workman, discharged soldier, &c., 
who wishes to settle down and become a shopkeeper, begins 
by buying a small stock of groceries, at least, if he cannot 
manage to get a license for the sale of drink. It is none 
the less a curious fact that a type of trade which is every 
where considered the most commonplace, and which has al 
ways been a butt for those who wish to ridicule the 
middle-class mentality, is the very trade which has become 
the nest, as it were, of co-operation, whence this blue bird has 
taken its flight. 

The wine trade is sometimes the special object of a co 
operative society (of about 50 in France, not counting the 


TYPES OF CONSUMERS' SOCIETIES 123 

co-operative societies for the production or sale of wine, 
which are quite distinct), but as a rule wine is included in the 
sale of groceries and constitutes the most important line in 
many stores, especially in Paris. An unexpected result of 
this has been that during the wine crisis the enormous drop 
in price which prevailed in France from 1900 to 1910 
re-acted very considerably on the co-operative stores, many 
of which had to close in consequence. The effect of a fall in 
prices causes an appreciable diminution of the sale receipts, a 
relative rise in general expenses and a reduction of the 
profits. At the same time the facilities for traders to offer 
good wine at a lower price increases competition. 

(2) Bakeries 

Next to a grocery store, the most general form of co 
operative enterprise is a bakery. This is the form pre 
ferred by all the Belgian and by more than a quarter of the 
French co-operative societies (1,300 out of a total of 3,156). 
A bakery, however, is a more complicated business than a 
grocery store, in that it is an enterprise for production, 
and not merely for sale.* The baker not only sells the bread 
—he makes it. Of all forms of production, that of bread- 
making is the oldest, the most familiar, and it is still, so to 
speak, a domestic enterprise. It needs only a small capital, 
employs no machinery, and operating with raw material 
always more or less the same, the price of which varies but 
little, it has not many mishaps to encounter. On the con 
trary, it has many advantages superior to those of any other 
branch of commerce. It supplies a food of daily use nec 
essary to human life, at least among white races, which has 

* Author's Note. We must not, however, confuse the co-operative 
bakery for consumers with that for producers. In the former it is 
the people who eat the bread who get it made for themselves—as in 
the times when bread was made in the home; in the latter it is the 
working bakers who join together to become their own employers, and 
to sell bread to the public. These latter societies are very rare. 


 124 , CONSUMERS' CO-OPERATIVE SOCIETIES 

a large place—sometimes more than a quarter—in the work 
man's budget, and of which the consumption is so perfectly 
regulated by human needs that it hardly varies by a half 
penny a day. One knows beforehand—which cannot be said 
of any other kind of merchandise—what quantity of bread 
will be consumed in a year by each member and in total. And 
if the member fails for a single day to purchase at the shop 
his disloyalty is at once apparent, because it stands to 
reason that he has not gone for a whole day without eating 
bread. This is one of the principal reasons why co-operative 
societies in Belgium and the North of France prefer a bak 
ery ; it is because they have their members in this way under 
their thumb and under their eye. When they notice that 
a member has not bought bread for some days, they send 
round to his house to enquire the reason for his defection 
and, if necessary, to stimulate his zeal. 

Thus, it is impossible for a society which supplies the daily 
bread not to take an important place in the members' lives, 
and to create a solid bond between them; the various kinds 
of bread they eat form a sort of connecting link between 
them. Besides, in the event of a strike or some special mis 
fortune, the distribution of bread is an immediate and 
efficacious help. On the other hand, precisely because bread- 
baking is the most ancient form of production, co-operation 
can effect considerable reforms in it, as much from the point 
of view of production as of distribution. 

We give instances here of four defects which ought at 
all costs to be abolished in breaid-nraking, but which are 
perpetuated either by custom or sometimes by the self- 
interest of the consumer. And who is in better position 
to educate consumers than a consumers* co-operative soci 
ety? 

(a) Hand-krt>eadincf.—Kneading the flour by hand is not 
only fatiguing for the workman who has to do it (hence his 
name "geindre," meaning to moan), but it is also, as far as 


TYPES OF CONSUMERS' SOCIETIES 125 

the consumer is concerned, a disgusting operation, and per 
haps dangerous, where the workman is affected by tuber 
culosis or other disease, if the heat of the oven does not per 
meate the dough sufficiently to kill all the germs. Custom 

—that of the bakers themselves, as well as that of the public 

—has hitherto been opposed to the employment of machin 
ery, but the majority of large co-operative bakeries have 
succeeded in introducing it and accustoming their clientèle 
to its use. 

(fc) Night Work.—-Bread is made at night. Why? 
Simply that the public may have fresh bread for their break 
fasts. But night work is very exhausting, particularly when 
constant and performed in underground bakehouses and 
badly ventilated basements. How can we put a stop to these 
evils, and free these galley slaves ? Simply by the consumers 
being content to eat yesterday's bread for breakfast, which 
at any rate they could always use in the form of toast. It is 
not an easy matter for the law to prohibit night work in an 
industry which is more or less a domestic one. It lies, there 
fore, with the public to liberate these workmen, and in a 
large number of societies the consumers are always being 
educated in this respect. 

(c) Over-dressing of Flour.—In order to have the flour 
very white, as in Paris, it is "dressed" to 60 per cent.— 
even to 55 per cent.—which 'means that nearly half of the 
flour is thrown away with the bran, which is an enormous 
wastage. Moreover, this very white bread, though more 
pleasant to the palate when fresh, is hardly eatable when 
stale, hence another wastage, as pieces of bread left over 
from the day before are often put into the dustbin. A city 
workman throws away stale bread. An enormous economy, 
which would run into millions of bushels of wheat, and hun 
dreds of millions of francs,* would be to restore to the people 

* Author's Note. French people consume an average of 1 Ib. per 


 126 CONSUMERS' CO-OPERATIVE SOCIETIES 

(without taking us back to the black bread of our grand 
parents) the taste for bread from which raw material has not 
been so eliminated, and which would be yellower, of more 
pleasing flavour, richer in nutritious matter, and easier to 
keep in eatable condition. 

Co-operative societies have tried to educate the public 
in this respect. Perhaps they would not have succeeded, 
so strong was the opposition, had not the war come to teach 
the lesson. Leaving Germany out of the question, from the 
month of May, 1916, French law prohibited the dressing of 
bread below 77 per cent., and every one found the new bread 
excellent. In Italy the law has imposed a dressing of 85 per 
cent., which makes the bread quite brown. 

(d) Unecessary Producers and Retailers.—The organiza 
tion of the bread trade is very much out of date and puts 
a heavy tax on consumers, which must amount to hundreds 
of millions. If, however, modern and more perfect methods 
were employed in baking and in milling, and if these opera 
tions were undertaken on a sufficiently large scale, it would 
be possible to deliver bread almost at the price of wheat,* 
weight for weight, i. e., about 2%d. (price of wheat before 
the war). It was sold at from 3%d. to 4d. per kilo,3 which 
means an increase from 40 to 60 per cent, on the price of 
wheat. When we consider that there are seven milliards of 
kilos of wheat consumed annually in France we can calculate 

head daily, which means 7 milliards of kilos a year. These 7 milliards 
exact, if the dressing is done at 60 per cent., 117 millions of quintals 
of wheat, and if the dressing is done at 77 per cent., only 90 millions, 
which is a saving of 27 million quintals. As a matter of fact, the 
saving is probably not so great, as the flour was not universally dressed 
at 60 per cent., but even if the saving is less it is not negligible. (1 
quintal = 1.968 cwt.) 

* Author's Note. Wheat loses a quarter of its weight in the grind 
ing, but this is regained from the water and the salt necessary to make 
the dough, so that 1 Ib. of wheat gives 1 Ib. of bread. As to the ex 
penses of milling and bread-making, they are so insignificant with the 
modern machinery that the bran and the offals are almost- enough to 
cover them. 

s A kilo comes to about 2 Ibs, 2 oz. 


TYPES OF CONSUMERS' SOCIETIES 127 

how large a sum is needlessly squandered.* And let us remem 
ber that this enormous rise in the price of bread is not 
connected with the bakers' profits (these are generally very 
much diminished owing to the ridiculous multiplicity of bak 
ers, all in competition with one another), it is accounted 
for by the increase in general expenses and the decrease in 
demand which this very competition means to each producer. 
In Paris we reckon one baker per every 1,300 persons ; in 
Lyons, one per 600 ; and in St. Etienne, one per 380. Each 
•baker can only make from 200 to 600' kilos of bread daily. 
And upon that he must find means to live, and to pay the 
rent for his shop and oven, his taxes, his workmen, and his 
delivery men !4 

How comes it then that the law of concentration has not 
been effective in this domain, as is manifested in so many 
others, in groceries or clothes, for instance? It is not very 
easy to find an explanation. Probably we must look for it 
in the neighbourly relations which spring up between the 
baker and his customers, in the custom of delivering bread 
at the houses, perhaps also in the custom of giving credit. 
But all these obstacles are not insurmountable, and if 
capitalist enterprise has been unable to organize bread pro 
duction on a large scale, co-operative enterprises has 
succeeded in doing so. 

As soon as a co-operative bakery has assumed large 
enough proportions it is no longer content to buy flour for 

* Author's Note. One portion of the French rural population al 
ready receive the benefits which might accrue to them by co-operation, 
because they make their own bread. However, these people are gradu 
ally giving up home-baking, for even the peasants now buy their 
bread from the baker, except those who live very far away from any 
village. 

4 Some of the larger cities of the United States have co-operative 
bakeries. Always, however, thy find it difficult to compete with the 
small cellar bakery manned by the owner, an apprentice, and several 
members of the owner's family. The Jewish co-operative bakeries, 
compelled to pay high union wages to every employé find this com 
petition especially trying. 


 128 CONSUMERS' CO-OPERATIVE SOCIETIES 

making its bread; it buys wheat to convert into flour, i. e., 
it adds a mill to the bakery, thus fulfilling what is called the 
law of integration of industry. The Rochdale Pioneers took 
over a small mill soon after starting, but this premature 
venture nearly ruined them. 

A small co-operative bakery could hardly sell bread 
cheaper than the baker, it could only add to the weight of 
the loaf ; but when the co-operative bakeries have thousands 
of members they can work a veritable revolution in this 
primary branch of commerce. When, as in the co-operative 
bakeries of Glasgow, Lille, or Roubaix, they are able to sell 
from 20,000 to 40,000 kilos of bread daily, then they can, 
even while selling the bread cheaper, distribute about Id. 
dividend per kilo, that is to say, bring down the price of 
bread to 2%d. instead of 3%d. (current price before the 
war). There are a great many rural bakeries in France 
(more than 500) owned by peasants who harvest the wheat 
and transform it into bread. It is the ancient domestic in 
dustry of bread-making which exists, and is being gradually 
transformed under this collective system, which comes as 
much into the field of production as into that of consumption. 
Some of these societies own a mill and grind the wheat into 
flour themselves ; the maj ority deal with a miller. 

(3) Butchers' Shops. 

Of all branches of commerce it seems that this ought to 
be one of the best suited for co-operation, because the prices 
of meat are generally very high, particularly in France, 
resulting in the reduced consumption by French people, 
which is two-thirds that of the English (50 kilos a year in 
stead of 70) ; moreover, the retail price seems entirely dis 
proportionate to the price given for the animal, particularly 
just now when, consequent on the war, meat is excessively 
dear.* 

* Author's Note. Vegetarians say that this is a good and not an 


TYPES OF CONSUMERS' SOCIETIES 129 

Nevertheless, there are only a very few co-operative 
butcheries, about forty in France, and still fewer in other 
countries.6 Of all forms of enterprise, this is the most diffi 
cult to organize co-operatively. The following are some of 
the reasons for this—we need only mention them summarily, 
as they are sufficiently clear:— 

(«) Because meat is very difficult to keep and of irregular 
sale, and because the price of the raw material (the animal) 
is extremely variable, which often exposes the retailer to 
heavy loss. 

(b) Because meat is the commodity which least lends itself 
(by reason of the variety in quality of the cuts—meat is 
divided into 10 or 12 different categories—the prices of 
which vary enormously) to the maintenance of the equality 
which should naturally exist among members of the same so 
ciety ; this difference in quality may often lead to discontent 
among the members. 

(c) Because, contrary to what we might imagine, the 
butchery trade pre-supposes very special technical capacity, 
as much for the buying of the beast as for the manner of 
retailing the various portions—of including bone or fat, of 
passing them from one category to another—and in this last 
it is difficult to dispense with "the master's eye." 

evil, and that it is better not to increase the consumption of meat. 
We cannot discuss this question here. Vegetarianism is supported by 
very strong arguments, and we incline to the belief that it has a future; 
but it must be admitted that so far meat-eating people are at the head 
of the industrial movement. 

B There are more than this in the United States, but many of them 
are run in conjunction with grocery stores. Usually the Jewish people 
begin with bakeries or butcher shops rather than with the more diffi 
cult grocery. However, all societies find the butcher shop very diffi 
cult of control by the directors. A control committee knows exactly 
how much to expect from the sale of the product of a given number 
of barrels of flour in the bakery and it can foretell to a nicety the 
retail value of the contents of a grocery store; but even the skilled 
butcher cannot tell how much to expect to realize from the carcase 
of an ox or sheep. Therefore the directors have to trust to the honesty 
of the butcher they have hired. 


 130 CONSUMERS' CO-OPERATIVE SOCIETIES 

(d) Because a wide latitude is required in fixing prices, 
&C-, for each portion : a butcher will lower the prices or offer 
more advantageous terms for cuts still unsold towards the 
end of the day. These are liberties which »n owner can 
take, at his will, but which it is not always advisable to put 
into the hands of a paid manager. 

(e) Finally, because the butchers have an arrangement 
among themselves, whereby they can dispose of superfluous 
cuts, when there is no sale tor them among their customers— 
cheaper cuts to such a one—and choicer cuts to another, and 
so on. But a co-operative butcher would not have this 
resource, as the other butchers are always in a state of open 
or tacit coalition against him. And this coalition can even 
make the purchase of an animal a difficult and: onerous 
business for him. 

However, a butchery succeeds best when, instead of 
making it a self-supporting co-operative enterprise, it is 
merely a separate department in a general supply store. The 
general expenses are thus reduced and the risks are covered 
by the combined operations. 

For meat as well as for bread, co-operative shops have 
rendered an important service by the sale of frozen meat, 
which the agriculturists in France had succeeded in arrest 
ing, by prohibitive taxes and under vain pretexts of hygiene. 
The co-operative stores, however, would not have been suc 
cessful in this, had not the war and consequent lack of meat 
forced the Government to change its policy. 

But, as there was no organization, and as the butchers 
showed themselves disinclined to facilitate the sale, it was 
the co-operative stores which took up the matter in Paris, 
with the aid of the municipality of Paris, the Department of 
the Seine, and the State. It was the State, or rather the 
military authorities, which provided the meat bought in 
England. It was the town and the Department of Paris 
which provided the market places and the costs of their 


TYPES OF CONSUMERS' SOCIETIES 131 

installation. This meat could only be sold at the controlled 
price. Today, the use of frozen meat has become general in 
France, and it may be said that this beneficent revolution is 
solely due to the initiative of the co-operative societies. 

However, it is difficult to control the price of meat by 
governmental action (although it was permitted by French 
law even before the war), on account of the differences in 
quality. Municipal butcheries have been tried in small 
towns, and with success, but co-operative ones would be 
preferable. 

(4*) Restaurants and Licensed Cafés 

Why should not a consumers' society, instead of supply 
ing raw foods, furnish them ready prepared for consump 
tion? There is no doubt that this can be done, in which case 
the society becomes no longer a shop, but a restaurant, per 
haps independent, or perhaps simply an annex of the grocery, 
of the butchery, or the bakery. But such co-operative res 
taurants are still very rare; there are only about fifteen in 
France. Many of such restaurants have failed. This is, 
first of all, because their clientele is much too limited. 
Naturally thev have not the custom of any of their members 
who lead a family life—and these are the most numerous—or 
even of those unmarried ones who prefer to take their meals 
at home. And on the other hand, they cannot count on 
travellers, like ordinary restaurants, because these, who by 
definition are only casual passers-by, cannot form a co-opera 
tive society. So we see that co-operative restaurants can 
only supply a very restricted class, such as students going 
through courses of study,* workmen, and more particularly 

* Author's Note. Among these there is one in which we were per 
sonally interested, the "Restaurant Coopératif des Etudiants," of which 
we gave a very instructive account in the Rewie de l'Enseïffnement 
Supérieur, 1905. It came to an end after three years (1901-1904), but 
was started again in a very unassuming way, substituting a fixed price 
(Is.) for a meal, instead of service à la carte. The success of the 


 l ! 4 


132 CONSUMERS' CO-OPERATIVE SOCIETIES 

workgirls, obliged to work at a good distance from their 
dwellings, the midinettes, as they are called in Paris.6 For 
these last such restaurants would serve a useful purpose. 
The population of several French towns, such as Bourges 
and St. Etienne, was about doubled during the war, owing 
to the erection of huge factories with thousands of workers. 
This necessitated the building1 of large workers' restaurants. 
The Minister of Munitions, M. Albert Thomas—fortunately 
a most ardent co-operator1—gave a great impetus to this 
movement. The State furnished the necessary capital, and 
the French National Federation undertook the responsibility 
of working them. There were 119 restaurants and 813 stores 
established, which were managed by working men co-opera 
tors, with a turnover of £3,640,000 during the first quarter 
of 1918, during which period 161 restaurants and 320 shops 
were opened by the manufacturers themselves, but whose 
total businesses scarcely reached £640,000. Meanwhile, 
branches have sprung up all round Paris, which still exist 
(1921). 

This population is necessarily somewhat fluctuating and 
irregular; in any case, it changes Very frequently, and is 
not at all suitable for co-operative association, which re 
quires regularity and continuity. Moreover, the legal forms, 
with share subscriptions, gradual payments, the various 
responsibilities and consequent formalities, are ill-suited to a 
floating population. Thus in this case it seems preferable to 
employ the philanthropic form, i. e., the restaurant founded 

new restaurant for students seemed almost assured, but unfortunately 
the war came and put an end to it. 

«Many of the American cities have restaurants organized among 
the single men of a given community. In Brooklyn such a society 
also feeds many of the school children in instances where both parents 
are at work all day. A restaurant like this often provides for the 
needs of the whole family. There are a few colleges which have co 
operative dining halls among the students. One very successful cafe 
teria society is looking forward to the time when it can establish 
delicatessen departments. 


TYPES OF CONSUMERS' SOCIETIES 133 

with money furnished by some generous capitalists; the 
goods are thus delivered at cost price, but the consumers 
do not acquire the rights, nor do they undertake the obliga 
tions, of members. Such is the co-operative restaurant at 
Grenoble called "Association Alimentaire"—founded in 1801, 
the oldest and most prosperous of them all. It is co-opera 
tive in name only, because it serves the public rather than 
its members. To become a member an entrance fee of lOd. 
is all that is necessary. The only right which membership 
confers is that of taking part in the general meeting and in 
the election of the committee of management. There is no 
distribution of dividends, but the profits are placed to a 
reserve fund, which is drawn upon for the regulation of 
prices. This fund is added to when, owing to commodities 
being cheaper, the restaurant can make good profits, and in 
like manner the fund is resorted to when business is carried on 
at a loss, owing to the price of goods being high. 

It is quite possible, however, that the co-operative restau 
rant is destined to have a considerable development, both 
for middle-class housekeepers, owing to the increasing! diffi 
culty of obtaining servants, and for working-class house 
holds, consequent upon the distaste for cooking which their 
women will evince, in proportion to the spread of the feminist 
movement. But under these circumstances the co-operative 
restaurant will become rather an annex of the communal 
dwelling. This is the problem that arises in the United 
States. On the one hand, it is difficult to obtain domestic 
servants there, and they demand enormous wages. On the 
other hand, American women, even workgirls, are hardly ever 
inclined to do housework, and do not appear to have much 
aptitude for it. Under these conditions there is hardly any 
other prospect for middle-class households, but to live in 
hotels or as bachelors at clubs, and for workmen's families 
to buy ready-cooked food. Here we are on the road which 
must lead us sooner or later to the realization of Fourier's 


 134 CONSUMERS' CO-OPERATIVE SOCIETIES 

Pliarilanstere, the communal household talcing the place of 
the family dwelling. 

Co-operative cafés would seem to offer better prospects of 
success than restaurants, in so far as that their clientèle is 
more stable. In every town, more particularly in small 
ones, regular customers ("habitués") are always to be 
found. Then, too, an enormous economy would be realized, 
because the price of liquors has increased in formidable pro 
portions. But notwithstanding this, co-operative cafés have 
had even less success than co-operative restaurants. I may 
say I do not know of a single example in France of a genuine 
co-operative café. The explanation for this is simply that 
the habitués of a café do not go there as a rule either 
from a spirit of economy or to serve any social ideal. 

Attempts have been made to establish cafés, or wine shops, 
which would be both co-operative and non-alcoholic. But 
so-called temperance cafés have never had much success in 
France, and still less under a co-operative form. Up to the 
present the French working-class—even the most advanced 
—has been absolutely indifferent to the anti-alcohol cam 
paign. The majority of co-operative societies sell distilled 
liquor, and often find it the most profitable part of their 
trade. (See page 96, "Division of Profits.") Perhaps this 
will be otherwise after the war. How very different is the 
attitude of the Belgian socialist workmen, who, under the 
inspiration of their chiefs, and particularly of M. Vander- 
veldc, have banished alcohol from all their co-operative stores ! 
And it is noteworthy that in France it was only among the 
socialist group that a few societies followed this lead. 

We should mention a special type of co-operative re 
freshment house or café which has increased very much for 
some years past, and has caused a good deal of discussion, 
even in the Chamber of Deputies—we mean military co-opera 
tive cafés or canteens. These are not to be confounded with 
the large officers' clubs (see page 102), but are small clubs 


TYPES OF CONSUMERS' SOCIETIES 135 

started in barracks to supply soldiers with liquor at low 
rates, and with games and various kinds of recreation. 
Many of them do not exact any subscription, the pre 
liminary expenses of fittings and installation being paid, 
or at least advanced, out of the regimental funds. Some 
of them demand a contribution of from Id. to 2%d. per 
month for each member. The profits realized by these 
clubs are devoted to movements for education, for provident 
funds, or for "works of solidarity," such as libraries, benefit 
societies for soldiers' families deprived of their means of 
support, travelling expenses for soldiers on furlough who 
wish to visit their homes, or even a superannuation fund for 
discharged soldiers. 

These military co-operative clubs or cafés have been sub 
jected to many attacks, notably from "ccmtimers," who 
have naturally suffered serious loss through their existence. 
And formerly some commanding officers have been known to 
lend an ear to their complaints, and have consequently put a 
stop to these clubs, or at least have hampered their opera 
tions, as for example, by forbidding them to sell wine. 
Others have taken the pretext of some abuse, unfortunately 
only too frequent, to declare that these clubs only serve 
as a cheap means of getting drunk and that they were the 
cause of loss of time to the officers who organized them, 
who had something better to do than to become1 retail 
dealers. The war has had the effect of giving an unexpected 
advertisement to the military co-operative societies. In the 
French army there was one for each division, and they have 
been so useful to the soldiers that they were able to do with 
out the food which was sent by their families each week. 

Why should not this co-operative system extend to food? 
The men's canteens and the officers' mess are already, in 
fact, co-operative food suppliers. It would only mean giv 
ing them a better form of organization, and having them 
worked by the people interested and giving them the partie- 


 136 CONSUMERS' CO-OPERATIVE SOCIETIES 

ipation in the profits. In fact, some regiments have already 
begun to work their clubs in this manner. We can cite the 
co-operative societies of the Republican Guard at Paris, 
which in the first six months of 1907 had repaid the £1,280 
initial expenses, distributed £260 among their members, and 
[placed £400 to a reserve fund. 

(5) Pharmacies 

In Brussels, in Milan, in Geneva, and other places abroad 
there are co-operative pharmacies which have succeeded 
brilliantly, which is easy to understand, because not only 
do they sell medicaments at half-price, but they even reim 
burse to their members more than half the value of their 
purchases. The society "Pharmacies populaires" (People's 
Pharmacies) in Brussels, founded in 1882, sell at 50 per cent, 
below current price, and yet their profits were 60 per cent, 
in 1909 on the total sales, of which 56 per cent, were dis 
tributed among their shareholders. If we make a calculation 
we find that this represents a reduction of 72 per cent. 
These Brussels pharmacies are, in fact, mutual pharmacies, 
since all their shareholders are mutual aid societies, but they 
also have the right of selling to the public. 

We must admit that these enormous dividends are not 
due merely to the elimination of the excessive profits which 
chemists add to the prices of medicine, but also to the 
fact that these co-operative pharmacies sell to the public as 
well as to their members and distribute the dividends solely 
to their members, which almost doubles each member's share. 
But this system is, we are aware (see page 74) more commer 
cial than co-operative. 

But even by restricting the sales to members only, or by 
distributing dividends only on their own purchases, the econ 
omy effected would be considerable (from about 30 per cent, 
to 60 per cent, on current prices), more particularly if 
worked on a large scale, as in Brussels, with a central ware- 


TYPES OP CONSUMERS' SOCIETIES 137 

hoase for the manipulation and handling of drugs, &c. It is 
clear that these pharmacies would be extremely useful to 
people of small means, when they find themselves under the 
unfortunate necessity of having to send to the chemist. 
Moreover, these pharmacies could exercise a beneficent in 
fluence on the public health, by giving and prescribing 
treatment for the less dangerous maladies. 

This form of co-operation does not exist in France, be 
cause the law only permits certified chemists and proprietors 
of their own laboratories to sell medicines. It only excepts 
societies for mutual aid, which may sell medicines to their 
members, on condition that their manager has a pharmaceu 
tical diploma. Thus, the great society at Puteaux, "La 
Revendication" lias formed a mutual aid society composed 
of its own members. A monthly deduction of 5d. per mem 
ber (5s. a year) from the dividend is sufficient to start the 
society and to equip the pharmacy. 

The creation of these so-called mutual benefit pharmacies, 
which are in reality co-operative, has given rise to numerous- 
law suits, the chemists, enraged at this competition, having 
attacked the societies in court, as being contrary to law. 
The court decided in favour of the co-operative pharmacies 
(notably in the case tried before the court of the Seine, in 
re the "Revendication" of Puteaux). 

There were even some orders and some general administra 
tive regulations which laid it down that the exigencies of the 
law only apply to pharmacies which sell to the public and 
not where they sell" only to those who have created them for 
their own needs—co-operators or "mutualists," no matter 
which. But the law is not absolutely definite in this matter. 

French co-operative societies could, it is true, avoid this 
difficulty by transforming themselves into mutual aid socie 
ties, but this would only present fresh difficulties, such as 
the following: (1) In every case the laboratory for the sale 
of medicines must be completely separated from the other 


 138 CONSUMERS' CO-OPERATIVE SOCIETIES 

shops; (2) the capital required for establishing the phar 
macy (not very considerable, £250 to £300) can never be 
acquired in the form of shares, as in this case the society 
would be the legal proprietor of the pharmacy, and the law 
would thus be contravened; (3) sales to the public would 
be prohibited; (4) and, finally, if there are any profits, they 
may not be distributed among the members, but must go into 
the general funds of the society. 

It is only very flourishing co-operative societies which can 
open branch pharmacies, because it has been generally esti 
mated that about 2,500 is the minimum number of clients 
necessary to the successful existence of a pharmacy. But 
what small isolated societies are unable to attempt becomes 
quite possible if these societies federate in large co-operative 
unions, such as those of which we shall speak presently. 
However, as the majority of co-operators in France are 
already, or will become, shareholders in mutual insurance 
societies, and as such benefit by reduced tariffs at the ordi 
nary chemists, it cannot be said that the absence of co-op 
erative pharmacies is a great loss to the working popula 
tion. 

In Britain, co-operative stores have not these difficulties, 
and they are free to establish a branch or department for 
pharmaceutical as well as any other class of goods, but only 
on condition of having a qualified chemist at the head of 
this department. There are only very few, however, which 
have hitherto availed themselves of this opportunity. 

(6) Housing. 

We have said many times in our book—and we cannot re 
peat it too often—how great is the importance of housing, 
not only for the comfort of the individual and his family, 
but also from the point of view of hygiene and social mo 
rality, and of the campaign against tuberculosis, alcoholism, 
and prostitution, and, on the other hand, how very difficult 


TYPES OF CONSUMERS' SOCIETIES 


139 


it is for this urgent need to find a solution under present 
economic conditions. 

Of all expenses, that of housing is the most certain to in 
crease ; it is of the most rapid growth and the most dispro 
portionate to the working man's budget. 

This being so, why does not co-operation take up the mat 
ter of providing for this urgent need, as well as for others? 
In fact, it has not failed to do so, either in the form of a 
society specially constituted with the aim of providing this 
necessity, called a co-operative building society, or by includ 
ing house building in the general operations of a distributive 
society. In this case, the co-operative store will have a house 
agency department, in the same way as it has a furniture or 
a hardware department.7 

(1) Let us take the second system in the first place. For 
a distributive co-operative society to be able to add to its 
trade the letting, &c., of houses it must have attained very 
large proportions and very considerable capital. In fact, 
to build houses, and particularly to be able to build enough 
to meet the demands of its members, would necessitate very 
large capital, as each house costs from £200 to £280. 
(Now that the cost of building has nearly trebled, the 
problem is still further complicated.) And again, the 
capital sunk in this real property can only be re 
turned very slowly, as these houses may be sold to mem 
bers who can only pay by gradual instalments over a period 
of from 15 to 25 years ; or it may be that they are simply 
let, in which case the society must deduct from the rents the 
necessary premiums towards repayment of the capital ex 
pended. But if a distributive society has a large capital, 
which is not indispensable to its trade, then house building is 
certainly one of the best possible uses to which this capital 
can be applied. 

' The few housing co-operatives in the United States are for the 
most part organized as separate societies. 


 140 CONSUMERS' CO-OPERATIVE SOCIETIES 

The distributive societies in Britain have already reached 
this stage; many of them cannot utilize their capital to its 
fullest extent in their trade, in fact, so much is this so, that 
several of them pay it out to their members. Indeed, we 
have already said (page 116) that of the capital which they 
have acquired only about half is necessary to their trad 
ing operations; this leaves about £40,000,000, at their dis 
posal. However, about £8,000,000 only have been spent 
on buildings, that is about 40,000 houses, which, if they were 
put together would represent quite a large town. (Paris 
has less than 100,000 houses.) Only about one-third of the 
societies do any house-building. And among these societies 
there is only about one-third which do the actual building 
themselves. The others confine themselves to advancing 
the money for their members, so that they may get the 
building done themselves at their convenience. Members find 
this latter method more convenient, even though it is less 
economical. But British co-operators think that this is 
not enough, and they intend to pursue this matter further. 
One society, that of Woolwich, near London, lias decided 
to build 4,000 houses for itself, at the rate of 400 a year, 
on a vast property which it has bought, and this colossal 
undertaking is already well under way. 

In France there are, as yet, no consumers' societies which 
build houses to sell to their members, but there are some 
(the Familie de Saint-Denis) which, when they are erect 
ing premises for their shops, warehouses, &c., have flats 
built on the upper stories which they let to their mem 
bers. .,.^-n..^* 

(2) Co-operative building societies, i. e., -societies formed 
specially for the building of houses, have gone much further 
than this ; houses built by them may be reckoned by hundreds 
of thousands in the United States and in England, and in a 
lesser degree in Germany, but their organization is very much 
more complicated than that of an ordinary consumers' soci- 


TYPES OF CONSUMERS' SOCIETIES 141 

ety.8 The reason for this is very easy to understand. As 
these special societies, unlike consumers' societies, cannot 
dip into the reserves of a capital accumulated for other 
objects, and as they cannot hope to obtain the capital from 
their members—'because if the members had sufficient capital 
to build houses for themselves they would never dream of 
promoting a society for that purpose—they are obliged to 
procure capital in the form of a loan from the public : from 
the savings banks, as in Belgium, or from the municipalities 
as in Germany. Meanwhile they can do better; they can 
create a class of associates who will join the society simply 
to invest their savings, and not to get a house built, and 
consequently will furnish the necessary capital for supply 
ing applicants with houses. These lenders, however, are 
really members and not merely lenders of money: in fact, 
they must subscribe for shares, and it is just the successive 
•payments which they have to make in order to pay for their 
shares in full (generally, the fairly high sum of £200), 
which make them members and which have the advantage of 
making their savings regular and obligatory. Nevertheless, 
as the members' contributions will only be fully paid after 
a long time, it becomes essential to procure capital elsewhere, 
while waiting, in order to be able to provide houses immedi 
ately for those who demand them. This is why building 
societies are obliged to 'have recourse to the savings banks, 
or directly to the public, The members' contributions are 
then used merely to 'redeem these loans. It is this latter sys 
tem which is employed in England and the United States in 
their loan and building societies, which have .given wonderful 
results. But we cannot enter into details of these diverse or 
ganizations, which are very complicated.* In France there 

s See Editor's note on page 51 concerning these associations in the 
United States. 

* Author's Note. We may sum up as follows: the societies require 
contributions from their members in the form of share subscriptions, 
calculated so as to represent a sum equivalent to the value of the 


 142 CONSUMERS' CO-OPERATIVE SOCIETIES 

were in 1917 only 272 co-operative building societies, not in 
cluding 164 philanthropic or semi-capitalist ones.* They 
procure their capital fairly easily from the public, as they 
can offer the land and the houses as security. They would 
prefer to borrow it from the savings banks, or from the Gov 
ernment deposits and consignments office, because they would 
pay a smaller interest; but these, though authorized by law 
to lend the money, are not very enthusiastic in the matter. 

There is no form of co-operation which has been so 
favourably treated by the legislature in France. They have 
encouraged it in many ways : First of all by creating public 
housing offices, which should exist in every town, but which 
in reality exist in few. Second, later, by opening the public 
funds to these societies, savings banks, government deposit 
and consignment offices, even those of the asylums and hos 
pitals. However, the trustees of these funds must be willing 
to lend—but as a matter of fact they seldom do lend. 

Thirdly, the State grants fairly important exemptions 
from taxation to the building societies : ground rent, doors 
and window tax, registration and mortmain tax. 

house, but payable only by annual payments graduated over a period 
of IS, 20 or 25 years. The payments are simply credited against the 
cost of the house until the time when, the full amount having been 
paid (i.e., all the shares paid up), the tenant finds himself transformed 
into the owner. These delays are shortened because all the profits of 
the society being put to the credit of the members increase their con 
tributions and hasten the "maturity" of the shares, in the picturesque 
language of the Americans. 

One of the most ingenious devices in these American building socie 
ties is the auctioning of the houses as soon as they are built. It is 
the highest bidder who gets the property. Some people will say that 
this system is hardly fair. But it must be noted that the excess value 
paid by the bidder comes into the common fund, swells its receipts 
by so much, thereby profiting every one, even the dispossessed ones, 
who can console themselves by the receipt of larger dividends. 

* Author's Note. There are many more in Germany. But they are 
meant for a more well-to-do class of the population, as the average 
cost rises to £72 per house instead of from £40 to £48, as in France 
before the war. In Germany, the middle-class is very well catered 
for, but the industrial class is extremely badly housed. 


TYPES OP CONSUMERS' SOCIETIES 143 

In spite of all, the results are only very mediocre, because 
in 1913 the grounds laid out and buildings raised by the co 
operative societies only represented £1,320,000, which—at 
the rate of £240 per house or flat (land included)—would 
only mean the housing of 5,000 families. It is true, as M. 
Cheysson remarked in his annual report on the Cheap Hous 
ing Societies, that these expenses do not include those for 
houses already disposed of and paid for, nor those incurred 
by societies which were dissolved after having concluded their 
work. Nevertheless, even if these figures are doubled they 
are not sufficient for present needs. The results obtained 
by philanthropic building societies, and especially by em 
ployers for their workmen in their factories, are very much 
higher.9 

Whether it concerns consumers' societies which have un 
dertaken the building of houses, or special building societies, 
the question arises : Is it better to sell the houses, or merely 
to let them? 

For a long time the first method was the one taught and 
practised without discussion ; it was believed that the owning 
of a house had a good effect on a workman; that, at any 
rate, it constituted for him, on account of the gradual pay 
ments exacted, a method of investment and of compulsory 
thrift superior to any other. Even to-day nearly every 
building society practises this system. But the consumers' 
societies which do building tend rather to prefer the second 
solution, i. e., to keep the ownership of their houses them 
selves for the following reasons:— 

(1) To preserve the right of control over these dwellings 

8 Building has heen almost at a standstill for several years in the 
United States. Even special laws by several states exempting new 
buildings from taxation have not succeeded in accelerating the industry. 
Excessive building costs added to widespread evidence of grossest 
kinds of graft on the part of building contractors and dealers in build 
ing materials—these have discouraged private enterprise. Co-opera 
tors, faced with the same handicaps, and inexperienced in this form of 
activity, have not yet become aroused to the possibilities before them. 


 144 CONSUMERS' CO-OPERATIVE SOCIETIES 

in order to keep them in good hygienic condition, and thus 
to avoid the abuses which too often occur when the workman, 
having become proprietor of his house, degrades it, intro 
duces lodgers, or sub-lets it—exploiting perhaps his own 
comrades thereby, as he was formerly exploited—or re-sells 
it, perhaps, to a keeper of a tavern ! 

(2) To keep for themselves the enormous increases in value 
of houses, and also of land for building, in all growing towns 
—increases have been the source of colossal fortunes. These 
enormous increases in value are very difficult to justify 
on the grounds of justice, as they are due purely to social 
causes—explained by the terrible term of the economists, 
unearned increments. Henceforth these houses would no 
longer be swallowed up in individual ownership, but would 
remain the collective property of the society. If this system 
were to become general we might thereby have an economic 
revolution in urban property. 

(8) To allow workmen more independence, because to be 
the owner of a house may become somewhat irksome to a 
workman. It is a good thing, not only in the workman's 
interest, but also to prevent the general depression of wages, 
that labour should be mobile and able to move freely to wher 
ever there is the greatest demand for it. I must add, how 
ever, that societies which make a workman a house-owner 
have also discovered ingenious methods whereby he may re 
tire from his ownership should he so desire. 

In England, in addition to consumers' societies for supply 
ing houses, there have been formed associations of tenants 
called Tenant Co-partnership Societies, which aim merely 
at providing comfortable and cheap houses, but which differ 
from ordinary building societies in that their members do 
not desire proprietorship of the houses. Although they are 
of very recent date, there are today about fifty societies 
which have built more than 10,000 houses, valued at 
£1,800,000, grouped in charming little villages, generally 


TYPES OP CONSUMERS' SOCIETIES 145 

near large towns. They are, however, indirectly house- 
owners, being shareholders in the society which owns 
the houses. But they have at the same time security 
of tenure, as they cannot be turned out, nor can their 
rent be raised as long as they pay it regularly; they 
are also free to leave when they like, whether they give up or 
retain their shares. 

Tenant societies are generally found outside large towns, 
in order to gain more air and space, and in order that each 
house and the entire colony may be surrounded with trees 
and foliage ; therefore, they are called garden cities* Their 
aim and ambition is to start an entirely new era in the evolu 
tion of house-building. The views of the advocates of gar 
den cities may be summed up as follows :— 

Existing towns which have grown and expanded under the 
pressure of causes purely historical, political, and econom 
ical, must always remain under defective conditions from 

* Author's Note. The word "garden city" having become the fashion 
it is used even where it has no proper significance, as, for instance, 
where there are a certain number of cheap houses grouped by a build 
ing society round a mine or a factory. This word should really only 
be used where there is a "city," with all that is implied thereby: 
economic life, social life, civic life, &c. Up to the present there is 
only one which has the right to the title of garden city, the small town 
created in 1901, near Letchworth, not far from Cambridge. This little 
town, built by a society hoping to realize the program of Howard's 
book, "To-morrow," has from 8,000 to 10,000 inhabitants. It is not, 
iproperly speaking, co-operative, as it is open to any one who wishes 
to come and live there, and not only to members of the society; but 
it contains various independent co-operative associations, for building, 
for consumption, and also a tenants' co-partnership society. If all the 
members of this town were members of these associations for distribu 
tion and for housing, &c., which exist in it, Fourier's Phalanstère would 
be very nearly realized. Another garden city has just been formed 
(1918) at Welwyn. 

The small town of Milanino, founded in 1909, in the outskirts of 
Milan, by the large Co-operative Society of Milan, or, rather, by its 
director, Buffoli (now deceased), is also a remarkable example of a 
garden city—or, at least, of a society of tenants' co-partnership. The 
houses there are not exclusively reserved for members, but members 
have the right of preference, and have the sole right to the profits, 
which are very small up to the present (1.75 per cent, in 1915). 


 146 CONSUMERS' CO-OPERATIVE SOCIETIES 

the hygienic and assthetic point of view. Moreover, all the 
rent value of the land profits individual proprietors only 
and becomes a source of colossal and most unjustifiable 
fortunes. Every effort which is made by co-operative asso 
ciation and otherwise to change this state of things will 
inevitably be fruitless, as long as the house is in surroundings 
which must have a vitiating effect upon it. The only solu 
tion, therefore, is to go out of the towns and build new cities 
outside them in the country, on a rational plan. The land 
and the house will be the property of the co-operative asso 
ciation, or of the commune, here one and the same thing. 
Here again, the war will have served to popularize the idea 
of garden cities. The sad necessity of rebuilding towns 
•—several partly, at least, in France and Belgium, and 3000 
entire villages—has naturally evoked new plans of organiza 
tion in which hygienic and œsthetic considerations will hap 
pily have a large place. In May, 1916, in spite of the war, 
there was a Model City Exhibition opened in Paris to popu 
larize the teaching of this new science, town-planning. The 
teaching of "urbamsm" has just been started by the city of 
Paris. There are not yet any garden cities in France. 
There is, however, a co-operative housing society called 
"Jardin Paris." 

(7) Societies for Intellectual and Recreation Purposes. 

By this heading we mean co-operative societies whose aim 
is not the supplying of material, but of intellectual, spiritual, 
and artistic needs. We might have co-operative universities, 
co-operative journals, co-operative theatres, co-operative 
churches (these we have already where the separation of 
Church and State is effected), and co-operative cafés (we 
have these, particulary in our clubs and casinos). It is note 
worthy that these several requirements are precisely those 
best suited for co-operation, because though a man may be 
able to work, buy, or consume individually, it is a very 


TYPES OF CONSUMERS' SOCIETIES 

different matter when it comes to educating, improving him 
self, or amusing himself alone. It is not particularly enter 
taining to play solitaire or patience for any length of time ! 
However, these intellectual co-operative societies are only 
"desiderata" up to the present time. 

In a large number of universities in the United States 
there arc, among the students, co-operative societies for the 
sale of all the requirements of students, but chiefly for books 
and stationery. The Harvard University society had a 
turnover of £80,000 not long ago.10 There has been a sug 
gestion of introducing this practice into France, with 
the addition of the printing of theses—whicli is a heavy 
expense for students—but nothing has, as yet, been -at 
tempted in this direction. Even co-operative societies for 
the sale of text-books and so on, among teachers and among 
Protestant pastors, are only, as yet, projects. A society 
of readers might also be formed, not to buy books, but to 
borrow them in rotation for reading, which is also a form 
of consumers' co-operation. 

From time to time the question arises of co-operative news 
papers, but this may be taken in two different senses. We 
do not mean by this the newspapers published by large co 
operative societies or co-operative unions, which exist every 
where, and some of which have a circulation which might be 
envied by big political journals. (See page 97.) It 
may be a society for subscribers who join together to have 
a newspaper they like, or it may be a co-operative society of 
writers who combine to get the profits. In the first case it is 

10 Such societies, however, have not been of much value to the move 
ment generally. Most of these societies entirely neglect educational 
work, the students take almost no part in the management of the 
societies, and the average boy or girl in many of the universities of 
the country where such societies exist passes through his four years 
of experience knowing the "co-op" as nothing mare than a commercial 
establishment which rebates to its patrons each year a part of its 
profits. This is the writer's experience With one of the largest of 
these university societies. 


 il- 


148 CONSUMERS' CO-OPERATIVE SOCIETIES 

a society of consumers, in the second it is an association for 
production. Some attempts have already been made under 
the second form (notably with the Mercure de France), 
but none, as yet, under the first form; this is, in fact, much 
more difficult to realize. 

The same may be said of the co-operative theatre, which 
has already been essayed under the form of co-operative pro 
duction (the Comédie Française is an association for co 
operative production, the oldest of them all), but nothing in 
this way has been "attempted under the form of consumers' 
co-operation. However, as soon as enough subscribers can 
be found among the audience, these subscribers have but one 
step further to go in order to become co-operators.11 

One very interesting form of co-operation of the same 
kind—recreative, if not exactly intellectual—is that for pro 
viding a holiday in the country, or what the English call 
"co-operative holidays." This aims at procuring for people 
who could not otherwise afford it the means of passing some 
days of vacation in the country or at the seaside. With this 
object, houses are rented, or even built in suitable situations 
and the expenses of board and travelling are fixed at cost 
price. To be accurate, these efforts, as they are worked at 
present, are really more philanthropic ventures than genuine 
co-operative movements ; the initiative and the direction do 
not come from those most to be benefited. But there is no 
reason why they should not develop on more strictly co 
operative lines, or they might be attached to some co-oper 
ative consumers' society from henceforward. The English 
Association has already thirteen holiday resorts in England, 
Scotland, Germany, Switzerland, and France, some of which 

11 We have referred in a previous note to co-operative moving picture 
theatres in the United States. 

In Greater New York the three co-operative evening schools are 
organized, financed, and controlled by the adolescent and adult students. 
These tooys and girls, men and women, hire their own teachers, rent 
their own class-rooms, and publish their own little periodicals. 


TYPES OF CONSUMERS' SOCIETIES 


149 


are magnificently fitted up, where visitors are received, on 
terms somewhat variable, but always very moderate. 

We might point to analogous works in France. There 
are five vacation places organized, at the seaside or in the 
mountains. 

Co-operative holidays are obviously only possible for those 
persons who can get some days' vacation. But if the 
majority of clerks enjoy this permission there are still very 
few workmen who can claim the privilege, although certainly 
no social class has more need of it. However, it is certain 
that this demand will soon be enforced, as well as that for 
the weekly half-holiday. 

Cercles (clubs) may be considered as co-operative associa 
tions, in the sense that the members are also beneficiaries; 
but as these clubs are worked on contributions, not shares, 
they come rather under the category of mutual aid. It is a 
general rule among the societies affiliated to the National 
Co-operative Federation that each co-operative society has 
its club attached to the store, with dining rooms (non 
alcoholic liquors if possible), rooms for games (not for 
money stakes), rooms for reading and discussion, &c. This 
is a method of establishing daily intercourse among the mem 
bers; this intercourse induces closer and more cordial rela 
tions than any which might result from the annual or half- 
yearly general meetings, and, above all, keeps alive a certain 
social ideal. 

(8) Co-operative Insurance. 

There is one need which, while not belonging to a mate 
rial order, such as food and lodging, is none the less press 
ing; it is that of insurance. Of course it is not in our 
power to guarantee against the risks of life, but it is at 
least possible to make good their pecuniary consequences, by 
means of insurance. We know that this marvellous institu 
tion consists in consolidating the largest number of persons 


 150 CONSUMERS' CO-OPERATIVE SOCIETIES 

possible in the expectation of a certain risk in such a way 
that when it strikes one of them the blow so infinitely di 
vided will only inflict very slight injury to each individual. 

Every insurance enterprise is thus co-operative in the lar 
ger sense of the word. Nevertheless, the word is not used 
when the insurance is organized as a capitalist enterprise, as 
companies with fixed premiums as they are called, because 
the shareholders have no dealings whatsoever with the in 
sured, except to draw enormous dividends at their expense. 
Neither must we confuse mutual with co-operative insur 
ance. The first is formed without capital, makes no profits, 
receives nothing but contributions, and can only indemnify 
risks up to the limits of these contributions. The second 
is formed with a social capital, makes profits, and under 
takes to pay stipulated indemnities in full. The co-opera 
tive insurance company bears much more resemblance to an 
ordinary insurance company with fixed premiums, with the 
essential difference that the profits, instead of being distrib 
uted among the shareholders an proportion to their shares, 
are divided among the insured co-operators, in proportion 
to the premiums paid by them.* 12 

The genuinely co-operative insurance societies are very 
rare, doubtless on account of the great difficulty they would 
meet with in collecting the large capital which is indispen 
sable to their functions; and where there is no such cap- 

* Author's Note. There are still some insurance companies which 
resemble the co-operative system, inasmuch as they give their clients a 
part of the profits, which may go towards reducing their premium. 

12 The excellent insurance plan of the Jewish Workmen's Circle is 
on the mutual benefit model. The United States does not yet have 
any co-operative insurance against sickness, accident, or death organ 
ized on the Rochdale plan. 

Among the farmers of certain parts of the country, however, there 
are insurance companies for the protection of investment in buildings 
and other property; insurance against fire, lightning, hail, windstorm, 
etc. Some of the best known of these, among the Jewish farmers, 
instead of rebating surplus-savings directly to the members, deduct 
such savings from the assessment levied the following year. 


TYPES OF CONSUMERS' SOCIETIES 151 

ital we must fall back on mutual insurance. It is true that 
in Prance several of the largest insurance societies at fixed 
premiums began with a purely guaranteed capital, that is 
to say the full payment of the shares has never been de 
manded. But even under this form of guaranteed capital, 
though the money need not be paid up, there is still a pecuni 
ary responsibility to be assumed which is sufficient to scare 
away any subscribers from among the working classes. 

But why should we create special co-operative insurance 
associations? Would it not be much simpler if the con 
sumers' societies would add this service to those which they 
already exercise? We know that when these societies reach 
a certain point they have superfluous capital at their dis 
posal ; well, then, a co-operative insurance service would be a 
very profitable outlet for these reserve funds. In England, 
the Co-operative Insurance Society was founded in 1867. It 
insures against fire, accident, dishonesty of employés, and 
the breaking of windows, and, 'above all, does a life insurance 
business for more than 1,100,000 co-operators, and receives 
£312,000 in premiums. It is the consumers' co-operative 
societies which have supplied nearly all the capital (at least 
5 shares of £1 for each affiliated society, of which only £1 is 
paid up), and which constitute the whole of its clientèle. 
But this joint-stock company is undoubtedly destined to be 
soon absorbed by the English Wholesale Society, which 
opened an insurance department in 1913,13 which will prob 
ably grow as quickly as their bank. They might go much 
further. It is reckoned that the working-class in England 
pays annually £20,000,000 in insurance policies, and we ask 
why should this enormous sum not be paid into co-operative 
societies? The profits, instead of enriching various share 
holders, would be given back to the people insured. 

is The Co-operative Insurance Society was taken over by the Eng 
lish and Scottish Wholesale Society in 1913. 


 152 CONSUMERS' CO-OPERATIVE SOCIETIES 

This brings us to the end of our review of the various forms 
of consumers' societies. We leave on one side two classes of 
co-operative societies which are, nevertheless, closely related 
—societies for the purchase of raw materials and implements, 
and the credit societies and rural banks. Both these types 
are very numerous in agriculture, but they are still very 
rare in industry. Both kinds of society provide the supply 
of very urgent requirements, and by the same means, i. e., by 
association of those interested; but here we get into the 
domain of production rather than of consumption. Ferti 
lizers and seeds purchased by agricultural syndicates, and 
capital loaned by rural banks, have clearly no other object 
than to serve agricultural production. Therefore, these 
special types should be studied in a treatise on co-operative 
production.14 

14 In many of the larger cities in the United States and even in 
some of the towns, retail merchants are organized for collective buy 
ing. This, too, is producers' co-operation. We also have credit unions 
organized among small business men. 


C HAP TEH XI 
CO-OPEßATIVE FEDERATIONS 

As soon as co-operative movement in any country has 
reached a certain stage of development the co-operative 
societies begin to form federations, as do other types of as 
sociations, such as mutual aid societies and trade unions. 

There are two aspects of these federations, one social 
and the other commercial; one to develop the spirit of 
solidarity among the societies and to guide the co-operative 
movement; the other to bulk purchases, and, if possible, 
organize production ; and though these two aspects can be 
united in one organization (as in Switzerland and some other 
countries) the work is better divided if they remain distinct, 
like two houses in a parliamentary government. In any case, 
it is better to consider them separately. In France, the Co 
operative Federation and the Wholesale Society are two 
distinct organizations with separate offices, and even distinct 
committees, but it is significant that the two committees are 
formed of the same persons. 

Section 1.—Co-operative Unions 

These, as we 'have said, are formed with the sole object 
of developing the spirit of solidarity among the societies, of 
making them conscious of their place and their power; to 
get from them and to furnish to them statistical, legal, and 
economic information, to call periodical congresses, to pub 
lish periodicals and books, to organize all forms of propa 
ganda, and, if possible, programs of common action, to di 
vide into districts and quarters the area of each society so 

153 


 154 CONSUMERS' CO-OPERATIVE SOCIETIES 

as to avoid overlapping, and its resultant competition—in a 
word to exercise the functions of a government whose au 
thority, it is needless to say, is purely moral. 

Their function is very important, at least where 
co-operators are well organized and disciplined, and are not 
divided by bitter political and religious feuds. The services 
which the Co-operative Union at Manchester has rendered 
to British co-operation since its creation in 1869 are 
inestimable. Of Italy and Switzerland it may be said that 
their co-operative history dates from the formation of their 
Co-operative Union (1886 in Italy, 1890 in Switzerland). 
The British Co-operative Union embraces 1,300 societies with 
4,109,843 members, that is, almost all British co-operators. 
In Switzerland the Union embraces 400 societies out of the 
total of 400, though it is true that some of them are not 
consumers' societies. The new Union of German Consumers' 
Societies (created in 1902) numbers 1,300 societies with 
more than 2,800,000 members.1 

These Unions each year gain a fairly large number of 
new societies, which wish to profit by their advice, but it is 
too often the case that when the societies become strong thev 
seek to show their independence by leaving the Union, and 
attempt to prove that they have grown sufficiently to stand 
on their own feet.* Even if this were true they ought to real- 

i In 1921 there were more than 300 societies affiliated with The Co- 
operative League. These were all consumers' societies. There are 
hundreds of other societies which doubtless would have joined were 
it not for the fact that they were already affiliated with other federa 
tions or unions which gave them the advice and guidance that The 
Co-operative League offers its members. Most of the Jewish societies 
have been affiliated with the Federation of Jewish Co-operative Socie 
ties (recently merged with The Co-operative League). Hundreds of 
farmers' societies are affiliated with the Farmers' Educational and Co 
operative Union, the most progressive of the organizations among 
the farmers. 

* Author's Note. This is so in one of the biggest societies in Paris, 
the Bellevilloise, but is not peculiar to France. Big societies abroad 
sometimes do the same. Thus the biggest Italian society, the Unione 
Co-operativa of Milan, is not a member of the Italian National League. 


CO-OPERATIVE FEDERATIONS 155 

ize that it is precisely because they are strong and rich that 
they should be a support to the Union and to the small soci 
eties which remain faithful to it, and that in withdrawing 
their support they commit a grave sin against the duty of 
solidarity. 

In France, the old Unions which have since disappeared, 
did much, in spite of their weakness, for the development of 
the co-operative movement. 

The old Union Cooperative," which was founded by M. de 
Boyve, organized numerous congresses, published a bulletin 
and, after 1893, a year-book. It collected the first statistics 
of French co-operation; it organized the consumers' co 
operative section in the two Paris exhibitions of 1889 and 
1900, and in the maj ority of foreign exhibitions ; it took part 
in the formation of the International Co-operative Alliance ; 
directly, or by means of its legal committee, it gave advice 
on countless matters. It took part in the drawing up of 
many sets of rules, and defended a whole host of societies 
against the exactions of the Government. When it is real 
ized that its revenues hardly reached £600 a year it is won 
derful that it was able to do so much with so little money. 

The existing Fédération Nationale will do better still; 
the keen co-operators who direct its policy do not neglect 
anything that can help in the economic and moral develop 
ment of co-operation in France. Its activities include the 
publication of a newspaper and a year-book, the organization 
of periodical conferences and annual congresses, the appoint 
ment of delegations to the international congresses, and the 
relations with the Government. The war, which might have 
paralysed its activities, provided it, on the contrary, with 
i'n--pccted opportunities of extending its influence. The- 
new Federation Nationale âes Coopératives de Consom 
mation was formed by the fusion of two earlier federations, 
the "Union" and the "Bourse," which each, 'had 400 members 
(see above, page 43). The Federation includes a few more 


 (if, 


156 CONSUMERS' CO-OPERATIVE SOCIETIES 

societies than the totals of the two earlier federations added 
together. The amalgamation caused about 100 societies to 
leave the earlier bodies, but attracted between 200 and 300 
new members. This caused a small gain, but the membership 
is still far from wliat might be expected. Since the war 
progress has been made. The figures for 1921 are: societies 
belonging to the Union, 2,100 (out of 4,000') ; members, 
about 1,000,000 (out of 1,300,000). 

In Belgium, political differences have prevented the forma 
tion of strong unions. In Germany, there were ten co-opera 
tive federations, but they were as mixed up as were the States 
of the old German Confederation. All the forms of co-opera 
tive association—consumption, production, credit, building, 
&c.—are found mixed up pell-mell, and as they have oppo 
site ideals they injure more than they help each other. We 
mentioned (page 45) that a schism had occurred in the most 
important of these federations, that of Berlin, founded by 
Schulze Delitzsch, and that a new union formed of con 
sumers' societies only, and more especially of working-class 
societies, had been constituted at Hamburg. But this does 
not embrace all the German consumers' societies. 

All these unions are formed on a "parliamentary" model, 
yet with the difference that their "parliament," which is a 
congress, meets only once a year for a few days. Between 
the meetings they are represented by a permanent committee 
of delegates, elected by the societies for a certain number of 
years.* 

* Author's Note. The "Fédération Nationale" is governed by a 
Central Committee elected at the annual congress of the societies. Mem 
bers of this committee must be practising co-operators, i. e., they must 
belong to a consumers' society, and make a certain minimum of pur 
chases. The committee meets every month. There are three sec 
retaries, who are the executive officers. 

Besides the Central Committee there are special commitees which ben 
efit from the presence of a number of specialists in the various branches 
of work. 

Thus the secretary of the Technical Bureau for practical and eco- 


CO-OPERATIVE FEDERATIONS 


157 


The parliaments and committees of these unions have only 
moral authority over the societies. Would it not be possi 
ble to give them effective authority? It would, if the union 
became a national society, of which the local societies wei-e 
merely branches. This is the ambitious plan which Mr. J. C. 
Gray, the late General Secretary of the British Co-operative 
Union, proposed at the inaugural session of the Congress, 
held at Birmingham, in 1906. Not only would the local 
societies lose their autonomy, they would only have the dis 
posal of half their profits, the other half would be paid into 
the exchequer of the national co-operative society, which 
would use it as seemed best to it in the interests of co-opera 
tion. The committee of the national co-operative society, 
which would include the Wholesale Society would be elected 
by all the societies, on a basis which would have to be de 
termined. 

This proj ect has little chance of being realized for a long 
time, at least in France. Not only are the local societies 
very jealous of their independence, and disinclined to allow 
themselves to be absorbed in this collective organization and 
to give it half their profits, but even if they consented, it is 
feared that half their members would leave them. 

Obviously the work of these unions cannot be carried on 
without expenditure, and therefore they need a fund. This 
fund is furnished by the subscriptions of the societies, so 
that the development of the union, and therefore of the 

nomic questions was formerly M. Albert Thomas, later Under-Secre- 
tary of State for Munitions in the War Office. By a curious coinci 
dence one of the directors of the "Fédération Nationale Co-opérative," 
M. Auguste Müller, held high office in the German Ministry of Food. 

The Legal Bureau deals with the numerous legal questions sent in 
by the societies. 

The Educational Committee deals with clubs, excursions, and, above 
all, the education of children. 

Besides the National Federation, France is divided into regional 
federations, 17 in number, whose delegates meet in Paris every 
month. 


 158 CONSUMERS' CO-OPERATIVE SOCIETIES 

co-operative movement itself, depends more or less on the 
willingness with which the societies pay their contributions. 

The constitution of the British Co-operative Union is 
rather complicated. It is governed by a Central Board of 
67 members, elected by regional sections, which meets only 
twice a year. Next, there is a smaller committee, the United 
Board, formed of 14 members, which meets more often; and, 
above all, a general Secretary, who is, in fact, the head of 
the organization, the head offices of which are at Manchester. 

The expenses of these unions generally include the salary 
of at least one permanent secretary, and often other em 
ployés, the rent of offices for the meetings of the com 
mittees, and the expenses of correspondence and publish 
ing. In Britain these expenses amount to a large sum. The 
subscriptions of the affiliated societies, fixed at Id. per mem 
ber,2 though this rate is, in fact, often exceeded, produce 
more than £16,000 a year. Special donations and receipts 
from the sales of publications raise this to £20,000. 

In France, the turnover is taken as the basis of contribu 
tion, rather than the number of members, as it is more easily 
ascertained. The basis taken has been five centimes per 
100 francs turnover, of which one and one half centimes is 
for the regional federations. In fact, the average purchases 

g 
per member being 800 francs, that represents 800: x——=40 

centimes. The total comes to Fr. 380,000 or £7,400 in 
present currency, including the subscription from the 
Wholesale Society. 


Section %.—Purchasing Federations 
These have a purely economic object—the purchasing in 

2 According to Professor Hall of the British Co-operative Union, 
this rate has now been increased to 2d. per member, producing 35,000 
pounds annually. 


CO-OPERATIVE FEDERATIONS 159 

common of the goods necessary for supplying the affiliated 
societies. 

The federation of co-operative societies for purchasing in 
common has the following advantages :—3 

(1) It reduces the purchase price to each society, because 
the purchases are made in large quantities. It is clear that 
just as the grouping of individuals to make purchases in 
common enables them to reduce the price, so also does the 
grouping of societies. The federation is only a co-operative 
society of co-operative societies. 

(2) It facilitates the starting of small societies. It is 
obvious that the initial stage of any undertaking is the most 
difficult, and it is particularly so in co-operation. A young 
society which has only a few members and small capital, no 
experience of business, and which is the object of the hostility 
of all traders of the district, runs' a great risk of dying in 
infancy. The world laments the rate of infant mortality 
for about one-quarter of the babies born die during the 
year which follows their birth. Well, the rate of mortality 
among infant co-operative societies is as pitiable (see later, 
Chapter xm). 

But the existence of a purchasing federation is enough to 
alter this sad state of affairs, because it gives small socie 
ties the same terms as big ones. It sells them the goods 
they need at the same price. Not only does it give them the 
benefit of the same prices as their older sister societies pay, 
but it saves them from the blunderings and blind gropings 
common to first attempts, by giving them the necessary 
advice and sending them all they need on demand. Thus a 
society which is being started need not have any specialists 

3 All the following advantages accrue to societies affiliated with 
wholesale co-operatives in the United States except (5 (manufacturing 
of goods by the co-operators themselves). Our co-operative whole 
sales,—with the exception of the Co-operative Central) Exchange of 
Superior, Wisconsin, which has a biscuit works,—have scarcely pro 
gressed to this point. 


 160 CONSUMERS' CO-OPERATIVE SOCIETIES 

among its members. It need only write to the federation 
saying, "We are such-and-such a society, send us all we 
shall need." 

As for the big societies—which sometimes scorn to belong 
to federations, saying to themselves that they are strong 
enough to get the same terms from traders—they must 
understand that though they may make no money gain 
(which generally is not so) yet their development and their 
very existence are bound up with that of their little sisters 
in the great co-operative family. 

(3) It stops illegal commissions (commonly called pots 
de vin), and so raises the 'moral tone of co-operative trade 
and saves the societies from a vice that is already too com 
mon in business. When purchases are made through a 
wholesale society, the members of the committee of a society 
have no direct relations with the suppliers. It may perhaps 
be said that it is the managers of the wholesale society who 
will get the illegal commissions. Perhaps, but as they are 
better watched (to put the matter on its lowest grounds) 
and as they are only a few persons instead of a few thou 
sands, the evil will be lessened. 

(4) It prevents any boycotting by wholesalers and manu 
facturers. It sometimes happens that the wholesalers of a 
district make an agreement to refuse to sell to a co-operative 
society, in the hopes of killing it. This has been the case 
more than once in England, Sweden, &c. (See Chapter XII, 
The Conflict between Co-operative Societies and Traders.) 
This form of tactics becomes useless when the co-operative 
societies are backed by a federation which undertakes to sup 
ply them with all they need. What does it then matter to 
them if the local merchants refuse to supply them? They 
can afford to laugh at their opponents. In this way small 
co-operative societies have been able to bring their adver 
saries to their knees, for not only has the English Wholesale 


CO-OPERATIVE FEDERATIONS 161 

Society supported them, but it has voted £40,000 as a kind 
of "war chest" to fight such boycotts as may come in the 
future. 

(5) It enables goods to be manufactured by the co-opera 
tive societies. It is not easy for a single co-operative society 
to set up a boot factory, a soap works, &cr, for itself, be 
cause it is not large enough to guarantee sufficient sales, 
unless the society has a very large number of members, which 
few have. 

On the other hand, when a purchasing federation bulks 
the orders of hundreds of societies it can erect factories with 
the certainty of success, because it knows beforehand what 
sales it can count on. Thus the federation of English soci 
eties, the Co-operative Wholesale Society of Manchester, has 
been able to build flour mills, soap works, boot factories, 
and jam factories, which produced goods to the value of 
£12,000,000 in 1915.* 

What societies by themselves could possibly attempt 
similar enterprises ? And yet it is recognized that it is only 
by production that co-operation can change the present 
economic system. So, federation is necessary, because he 
who seeks the end must seek the means. 

(6) It makes possible the organization of works of general 
utility, and if it does not do educative work, as that is more 
the business of Unions, it renders at least such services as 
banking and insurance. If such work be left to the separate 
societies to organize, the dissipation of energy will prevent 
anything being done. 

There are three degrees in the grouping of societies for 
purchasing, indeed, one may say three stages. 

( 1 ) The first is the Agency* The agency confines its ac- 

* Author's Note. In 1919 the figure rose to £26,000,000 due largely 
to the rise in prices. 

*We do not know of American co-operative societies which have 
established anything corresponding to this agency, although we do 


 I 


1 


162 CONSUMERS' CO-OPERATIVE SOCIETIES 

tivities to obtaining quotations from wholesalers for the so 
cieties, and collecting and transmitting orders to the whole 
salers. 

This first is the simplest form, because no store is needed, 
but merely an office and no capital is required, as the only 
expenses are the small ones of advertisement and corre 
spondence. But if the expenses are very low the services it 
can render are very limited. It can hardly realize any of 
the 'great advantages which we have mentioned above; it 
can only obtain some reduction in price and guarantee of 
quality. 

Still, it is wise to begin by this unambitious form of or 
ganization. 

(2) The second is the Syndicate, which is not, like the 
first, merely an office for the transmission of orders, but does 
commission work. It bulks the orders of the societies and 
buys from the wholesalers on their account. This is the 
method adopted by most agricultural societies in dealing in 
seeds and manures. Sometimes, if the market is favourable, 
the Syndicate buys on its own account. 

This second form is stronger than the first, but it can 
hardly do without capital, or, at least, guarantors, if it is 
to deal directly with wholesalers. 

(3) The third is the Wholesale Society. This is the true 
co-operative society of co-operative societies, such as we were 
discussing a few pages back. It buys direct from the pro 
ducers, or itself manufactures all that is necessary to supply 
its members, and sells to them at wholesale prices, or, at 
least, at very slightly increased prices, to allow a margin for 
emergencies. In any case, if there be profits they are di 
vided, not among the shareholding but among the purchas- 

know of localities where such Agencies might profitably be established. 
Corresponding to the French Syndicate is what many American co- 
operators know as the Buying Agency. 


CO-OPERATIVE FEDERATIONS 163 

ing societies; thus, the same principle is applied to the so 
cieties, as they themselves apply to their members. 

For this, not only is it necessary to have a large capital, 
but huge stores and whole battalions of employés also. But 
it is possible to obtain an indefinite degree of power, as in 
England, where it is feared that the Wholesale Society may 
come to reign almost despotically over all English co-opera 
tion. 

The Rochdale Pioneers—who cannot be too much admired 
—foresaw everything, and created in their own society a 
wholesale store for helping others ; but it was not until 1864 
that the real wholesale society, the C. W. S., was started. 
It began with a membership of fifty societies, and a capital 
of £1,000, and in 1913 it had 1,200 societies * and a share 
capital of £2,131,000, over £4,000,000 loan capital, 21,000 
clerks or workers, huge warehouses where it does business, 
and more than 100 factories where it produces 
£9,000,000 worth of goods of every variety. This is the 
pre-war fi'gures for the English Wholesale, but the post-war 
figures enables us to measure the progress made in 1920: 
Sales, £104 million; production, £33 million; land cultivated 
in England, 32,500 acres.f The enormous increase in the 
C. W. S. funds is specially remarkable. It imports, partly 
in its own ships,J £8,000,000 worth of the products 

* Author's Note. That is to say, almost all the English societies. 
The Scottish Co-operative Wholesale Society, of Glasgow, Includes 
264 Scottish societies. 

^•Author's Note. In 1921, however, there was a notable decrease: 
only 80 million sales, 26 million production. 

Î Author's Note. To import the goods which it consumes it com 
missioned a fleet of six ships, which sailed under the house flag of the 
C. W. S. But it was found that the ships cost more than transport by 
the ordinary shipping companies, so four of the ships were sold to a 
big railway company having ships of its own. Only two ships were 
kept, which trade between Manchester and Rouen. This is a step back 
ward and an abandonment of co-operative principles. Besides, the 
financial loss was perhaps more than balanced by the added pres 
tige. 

One day is set apart each year (generally in October) for the sale 
Of fcajsius and ptjier dried fruits, which the C. W. S. buys in Greece 


 164) CONSUMERS' CO-OPERATIVE SOCIETIES 

of all countries; it bought at the price of £50,000 a 
large piece of land beside the Manchester Ship Canal to 
make docks. It has three establishments in Denmark (where 
it buys £4,000,000 worth of butter and bacon) one in the 
United States, one in Germany (at Hamburg), one in Swe 
den, two in France (at Rouen and Calais), one in Spain, one 
in Canada, and one in Australia. Besides these establish 
ments for purchasing abroad, it has a tallow factory in Aus 
tralia, and tea plantations in Ceylon and India of 40,000 
acres. In England itself it has six estates, where it grows 
strawberries and tomatoes, and where it has set up a 
convalescent home for its members and their families. It 
will soon own coal mines. During the war it received large 
orders for food and clothing from the English Government, 
and even from the Russian Government (notably for boots). 

The capital of the Wholesale is furnished partly by the 
shares which all the affiliated societies must subscribe for at 
the rate of fifteen £1 shares for every ten members, and 
partly by loans from the societies. 

It has a bank to regulate its huge operations, which does 
all the usual banking business of discounting, taking deposits, 
giving advances, &c., and thanks to which the smallest soci 
ety can obtain loans at lower rates than the largest capital 
ists can get from the Bank of England. During the crisis 
of 1907, when the Bank of England raised its discount rate 
to 7 per cent., the Wholesale Bank continued to lend at 
3% per cent. A short time ago the Scottish C. W. S. lent 
£500,000 to the municipality of Glasgow.* 

We have already mentioned that it has taken up insurance 
in all its forms. 

It does not try to make profits from its immense business, 
which is nearly £100,000,000. Still, as it cannot calculate 
the exact prices which should be charged it works on a small 

and Asia Minor. On this one day its sales reach or exceed £160,000. 
* Author's Note. The turnover of the bank in 1920 was 155 million 
pounds. 


CO-OPERATIVE FEDERATIONS 165 

margin which realized about £1,200,000 a year in 1916, 
but this margin of profit decreased greatly in 1917, and van 
ished altogether in 1921.5 

Its strength is so great that there is a fear that it will be 
abused, and co-operation turned into a big centralized bu 
reaucratic machine. We shall consider this matter later on 
(see Chapter XIV). 

Still, there remains a margin for development, because it 
is far from selling to the co-operative societies everything 
which they sell to their members. Its total sales can still 
increase greatly * when all the societies make it a rule to 

B During 1921 the C. W. S. lost 1,416,000 pounds. The loss 
is attributed to strikes, unemployment, depreciation in value of goods 
on hand. The reserve fund was ample to cover the loss. 

* Author's Note. It must not be thought that the sales of the Whole 
sale can ever equal the sales of the societies because:— 

(1) Retail prices are always from 15 per cent, to 20 per cent, above 
wholesale prices. 

(2) The distributive societies themselves produce part of the things 
they consume, notably bread, which is a big item, or they buy from 
the co-operative productive societies, as we shall see later. These two, 
added together, represent about 30 per cent, of the sales. 

The margin for extension of the purchases from the Wholesale is 
less than appears. Still it is large, and is still larger in other countries. 
The following table shows the proportion of sales by societies and the 
wholesale society in some countries. The relation, between the two 
figures is a sure index of the degree of co-operative organization. 

In this comparison the date of the establishment of the wholesale 
society must be taken into account, but the development of the whole 
sale society is not dependent only upon its age. This is shown in the 
following table (the figures are for 1914.):— 


Head Office 
and Date of 
Foundation. t\ 
Manchester (1864) .... 
Glasgow (1868) ...... 


Copenhagen (1888) 
Bale (1892) ........... 


Hamburg (1894) ...... 


Moscow (1898) ........ 


Helsingfors (1904) .... 
Paris (190T) .......... 


Sales of Sales of 
Wholesales. Retail Stores. 
£35,000,000 . . . £87,900,000 
9,435,000 ... 18,000,000 
3,920,000 . . . 6,000,000 
1,840,000 ... 5,760,000 
7,880,000 ... 26,360,000 
1,120,000 . . . 32,000,000 
440,000 . . . 12,840,000 
1,040,000 ... 2,520,000 


Proportion. 
... 50% 
... 52% 
... 65% 
... 32% 
... 30% 
... 3.5% 
... 3.5% 
... 41% 


Today all these figures are doubled, and in some countries quadrupled. 


L 


 166 CONSUMERS' CO-OPERATIVE SOCIETIES 

•supply themselves through the Wholesale only. It is certain 
that they would be rewarded for their fidelity by an increase 
in their profits. 

There is nowhere in the whole economic order anything 
comparable to the Wholesale Society, except the trusts and 
cartels. There are, however, notable resemblances between 
these two organizations. The federation of consumers' soci 
eties for producing are really consumers' trusts, and will per 
haps have the salutary effect of preventing the public and the 
markets from being delivered defenceless into the hands of 
the great federated capitalists.6 

It is true that the mammoth Co-operative Wholesale Soci 
ety is unique in the world. Still, in Glasgow (for Scotland) 
and in Hamburg (for Germany) there are already wholesale 
societies which do very large businesses. 

The Co-operative Wholesale Society of Glasgow, although 
much smaller than that of Manchester, judging by turnover, 
is not behind it in enterprise or ambition. It has a large 
number of factories, whose production reaches £6,000,000. 

The Wholesale Society at Hamburg has served as a rally 
ing point for the workers' societies .which broke off from the 
General Union at Berlin after the Congress at Kreuznach in 
1902. It is probable that the Hamburg federation will 
develop considerably, especially as the Germans are past 
masters in organization and federation. 

If its progress from its birth in 1894 to 1914 be compared 
with that of the English Wholesale Society for the corre 
sponding twenty years (1864» to 1884) it is seen that it is 
even more rapid, for in the twentieth year of its life the 
Wholesale of Manchester only did a business of £4,675,000, 

But these enormous increases mean nothing, on account of the depre 
ciation of the mark, crown, rouble, etc. For the two British whole 
sales the increase, though large, hardly exceeds the rise in prices. 
The same is true of France. But for Switzerland the increase is far 
greater than the rise in prices. 

6 Such powerful wholesales are needed in the United States to com 
bat the highly organized chain-store corporations. 


CO-OPERATIVE FEDERATIONS 167 

while the Hamburg Society at the same age did nearly £8,- 
000,000. 

It is noticeable that Belgium, in spite of its great co 
operative activity, does not appear in the list. There is 
however, a Belgian federation, created in 1900, but which has 
only a small number of affiliated societies, and does but a 
small trade. 

We in France are far behind. In 1887 the Central Com 
mittee, which has now disappeared, had succeeded with much 
trouble in establishing a wholesale society. It did not begin 
badly, since it had reached a turnover of £100,000 in 1892, 
but it failed, for various reasons, too long to set out here. 
This check retarded the co-operative movement a great 
deal. The first purchasing federation was established in 
1885, at the same time as the "Union Coopérative" under 
the humble name of the "Chambre Économique" (Economic 
Office). In 1888, the Chambre Économique took the title of 
"Federation Nationale des Sociétés Cooperatives" (the 
National Federation of Co-operative Societies), and acted 
at first as a purchasing agency. That is to say, it confined 
itself to buying to the order of the societies, many of which 
were slow in paying. It made the mistake of trying to form 
itself too soon into a real wholesale society with its offices 
at Charenton. The big Parisian societies abandoned it, 
alleging that they could buy better directly than through the 
Federation, and because of personal quarrels. The bad or 
ganization of the Federation justified these desertions to 
some extent. The Wholesale Society failed in 1895, leav 
ing big losses to be made good by the societies which had 
remained loyal to it and the Central Committee. 

Later, two distinct and even rival organizations were 
formed :— 

(a) The Office Coopératif" (the Co-operative Office), 
an annex of the Co-operative Union, was at first a simple 
agency, then a syndicate for grouping orders, and was at 


 168 CONSUMERS' CO-OPERATIVE SOCIETIES 

last transformed into the "Coopérative de gros" ( Co-opera 
tive Wholesale Society). It was formed in 1900, and had 
not reached a turnover of £80,000 in 1912, when it was 
amalgamated with the socialist federation. 

(6) The Wholesale Society (Magasin de gros) of the 
Socialist Bank, thanks to the stronger feeling of loyalty 
which inspires societies engaged in a class war, made more 
rapid progress. Formed in 1906, its turnover was £400,000 
when the amalgamation took place in 1912. 

Today, the two rival federations are united in the Whole 
sale Society situated at 29, Boulevard Bouddon, Paris. The 
great increase in turnover which was expected from this 
amalgamation was not realized immediately, and the Whole 
sale passed through some anxious moments. This state of 
things was, however, inevitable, considering its very small 
capital, £3,520. If the society had to deal with a trade of 
£400,000 a year it would therefore have been necessary for 
it to turn over its capital one hundred and thirty times in the 
year, or once every three days ! The Wholesale Society was 
obliged to obtain its working capital from deposits 
(£140,000), and this created a very difficult situation, indeed 
a highly dangerous one for an ordinary bank. Happily, the 
depositors in the Wholesale Society were either co-operative 
societies or trade unions which wished to help, not to embar 
rass it. Also, the C. W. S. generously came to the rescue 
of its young sister by lending it £24,000. Meanwhile, the 
war broke out and did on the whole more good than harm, 
for the local co-operative crisis was overwhelmed and almost 
forgotten in this great general crisis. After the war the 
Union has emerged from this test stronger than before. 
The sales are now more than £8,000,000. 

As regards production the French Wholesale Society had 
only preserve and boot factories, doing between them busi 
ness to the value of £600,000.7 

7 By 1921 the French Wholesale Society is also manufacturing under- 


CO-OPERATIVE FEDERATIONS 169 

There are also territorial district associations which have 
no right of sale or purchase, and whose one function is to 
send delegates to the quarterly meetings. Perhaps it would 
have been wise in a country with such varying forms of pro 
ductive activity as France—which in spite of its apparent 
unity, has kept distinct local characteristics—to have left a 
certain amount of independence to the district federations. 
As it is, there is a tendency to revive them in the form of 
agencies of the Wholesale Society. 

The causes which have made federations of societies, either 
for purchasing or simply for mutual defence, so difficult to 
form and so slow to progress, are worthy of careful study. 
It seems certain that the national temperament of France, 
which is not so much individualist as particularist, is largely 
responsible for it. There is also the question of vanity, 
which makes the members of a little society unwilling to give 
up their autonomy, and which makes the members of the com 
mittee unwilling to give up any of their power of control or 
of purchasing; they wish to deal directly with the whole 
salers. Worst of all, there is often the fear that certain 
abuses will be abolished to which they cling, and on which 
they live, such as illicit commissions from suppliers, which 
would have to be given up if orders passed through a central 
office or wholesale society. Some things which happened 
lately in England have shown us that English societies them 
selves were not wholly free from this plague, which has killed 
some French societies and contaminated many others.8 

clothing, chocolate, and operating a coffee roastery and a sawmill. 
The following figures show how rapidly the business of the Society is 
growing. 

Affiliated Share Cap. Turnover 

Societies & Reserve 

1914-16 425 £11,780 £548,800 
1920-21 1700 £200,000 £8,250,000 
(Figures quoted from People's Year Book of the C. W. S. and the 

S. C. W. S.) 
8 In such a large country as the United States there will, of course, 

lhave to be District Wholesales before wholesaling on a national scale 


 170 CONSUMERS' CO-OPERATIVE SOCIETIES 

Above the national federations there is room for an Inter 
national Federation ; in fact , such exists at least in embryo, 
under the name of the International Co-operative Alliance. 
One of its first initiators was M. de Boyve, who suggested 
it at the British Co-operative Congress at Plymouth in 
1886. It was not officially formed, however, until 1895, 
when its first Congress was held in London. Since then it 
has met every three years—at Paris, the Hague, Budapest, 
Cremona, Hamburg, and Glasgow—and its reports form a 
valuable contribution to the study of the co-operative move 
ment throughout the world. It has published a bibliography 
of co-operative literature in all languages, and publishes a 
monthly bulletin in English, French, and German, which was 
continued as well as possible in spite of the war. 

The Alliance is governed by a permanent committee, which 
formerly filled up its vacancies by co-option; but the mem 
bers are now elected by the federations of their respective 
(countries (except for M. de Boyve, who was given the 
title of perpetual honorary secretary, as the one still living 
founder of the Alliance.)* The number of members which 
each country has a right to elect is settled by the amount 
of its subscriptions (a contribution of £10 gives a right to 
elect one member, and £600 to elect seven members, which 
number may not be exceeded). Seven is the number of Brit 
ish representatives. Germany and France have four each; 
Switzerland and Hungary three each ; Austria, Russia, Fin 
land, Sweden, Denmark, Holland, and Belgium two each; 
Italy, Roumania, Serbia, and Norway one each.f An embar 
rassing question which arose before the war is that of recog- 

is attempted. Meanwhile, although we find all these factors which 
would restrict federations of societies for purchasing, the slow develop 
ment of co-operative wholesales among American societies is princi 
pally due to the fact that there are few sections of the country suf 
ficiently covered with co-operative stores to warrant such federations. 

* Author's Note. There are also honorary members named directly 
by the Central Committee. 

^ Author's Note. Since the Congress of Basel in 1921, the United 


CO-OPERATIVE FEDERATIONS 171 

nizing nationalities which claim independent representation. 
As is seen above, this was granted to Finland, but refused to 
Bohemia and Poland which aroused strong protests. Hence 
forth they will certainly get direct representation in the 
Alliance, but conflicts may be looked for about the numerous 
republics which will issue from the dismemberment of 
Russia. This electoral system, which seems. to us more 
fiscal than democratic, has not failed to provoke criti 
cism, yet it is the socialists who have supported it most 
strongly. 

The Alliance includes all forms of co-operative associa 
tion, i. e., consumption, production, credit, and agriculture ; 
but the first tends more and more to predominate. 

Originally, however, this association had for its chief 
object the safeguarding of the rights of producers, to the 
end that they should not be handed over to the despotic 
government of the consumers, as was foreshadowed by the 
great growth in power of the Wholesale Society; it was a 
sort of individualist revolt against what might be called 
co-operative collectivism. 

To effect this, the Alliance advocated, if not self-govern 
ing workshops, at least a share in the profits for all workers 
in the services of distributive societies engaged in produc 
tion. Article 1 of the Laws (now revised) said, "The Alli 
ance has for its aim ... to hasten, by all the means of 
propaganda at its disposal, the moment when all associations 
called co-operative shall organize in favour of sharing the 
profits with all the employés without exception." But 
this early ideal was bit by bit thrust aside, as profit-sharing 
had not succeeded to any great extent, and, as, moreover, 
the socialist element, which increased on the committee and 
in the congresses of the Alliance, was absolutely opposed to 
it. 

States and Czecho-Slovakia have representatives to the Central Com 
mittee of the Alliance. 


 172 CONSUMERS' CO-OPERATIVE SOCIETIES 

The Alliance has rallied to its support today all the big 
federations of all countries, besides a large number of indi 
vidual societies. Britain alone supplies about half of the 
subscriptions; but Germany and Austria were rapidly in 
creasing their subscriptions and influence, and before the 
war it was seen that ere long the control of the Alliance 
would be transferred from London to Hamburg. 

The program of the Alliance today, as recently laid 
down by its president, Sir William Maxwell, is:— 

(1) The moral and educative aim of putting the eo-oper- 
ators of different countries in touch with one another so 
that they can teach each other and help the co-operative 
movement by their union. 

(2) The practical and commercial object of bringing co 
operative societies in different countries into business rela 
tions so that the products of those which produce may find 
outlets in those which only distribute, and that the latter 
on their side can procure their goods under the best possible 
conditions. An international wholesale society has been 
pro j ected. 

(3) It has the yet higher aim of establishing peace be 
tween nations. At the Glasgow Congress (1913), notably, 
a solemn resolution against the folly of armaments was car 
ried. The German delegate, von Elm, supported the motion, 
and declared, amid applause, that in Germany all co-opera 
tors to the number of four million eight hundred thousand 
heads of families in 80,555 societies strongly demanded 
peace. "I know," he added, "that the rulers of the world 
pay little attention to the wishes of co-operators, but it will 
not always be thus." If, in fact, as we believe, wars are 
caused above all by economic causes, and are continued in 
the struggle for profit would it be in vain to hope that co 
operation which has for its ideal the abolition of profit, could 
establish peace? 

Still, we must admit that of these three aims only the first 


CO-OPERATIVE FEDERATIONS 173 

has been realized to any degree. The realization of the sec 
ond is made difficult by the fact that the agricultural and 
credit societies, and even the productive societies, frightened 
by the imperialist ambitions of the consumers' societies, are 
gradually leaving the Alliance.* 

As for the third aim, one can hardly hope to see its 
accomplishment during the next generation. Nevertheless, 
the International Co-operative Alliance succeeded in living 
through the war, and its bulletin, published in three lan 
guages, English, French, and German, was a link between 
co-operators of the belligerent countries.8 

* Author's Note. For a detailed history of this institution see our 
prochure on the "International Co-operative Alliance," which has been 
translated into English. 

s A national union of the co-operative societies of the United States 
was represented by duly elected delegates for the first time at the 
Congress of the International Alliance held in Basle, Switzerland, in 
1921, by Dr. and Mrs. James P. Warbasse. It was at this Congress, 
also, that the co-operators of the belligerent countries of the Great 
War were once more united in genuine concord. The seating of dele 
gates from Russia was discussed at length and warmly, for it hod not 
yet been definitely established that the Movement in that country was 
entirely free from government control. Finally, however, the two 
delegates were given seats. The one other outstanding event of the 
occasion was the organization of the International Women's Co-opera 
tive Committee, of which Frau Emy Freundlich of Austria is Chairman. 

Since this Congress there have been committees at work studying the 
entire question of International Trading, the formation of an Inter 
national Wholesale, and the organization of an International Co-opera 
tive Bank. These are vexing problems in any event; they are made 
more vexing by the fluctuations in the rates of exchange between vari 
ous countries, and by the fact that economic resources in the co-opera 
tive movement are not at all evenly distributed between the various 
European countries: the Wholesales in England and Scotland are far 
and away the mare powerful of all the wholesales. Moreover, none of 
these problems can be solved separately. International Trading, In 
ternational Wholesaling and International Banking are all inextricably 
related one to another. If these committees do nothing more than 
study the ground, gather statistics, and bring the various movements 
into closer contact with one another during the next few -years, they 
will have rendered a wonderful service to the Co-operative Movement 
everywhere. 


 CHAPTER XII 

THE CONFLICT BETWEEN CO-OPERA 
TIVE SOCIETIES AND TRADERS 

It is obvious that the aim of co-operative consumers' socie 
ties gradually to absorb all branches of trade is not at all 
satisfactory to traders, particularly those who are menaced 
more directly thereby, i. e., the retail dealers.* In large 
towns, such as Leeds, Breslau, Bale, and in many other 
smaller towns, this evolution is well-nigh accomplished; 
that is to say almost the entire population makes its pur 
chases at the co-operative store. Thus, in every country 
the conflict is keen, more so in France than elsewhere, be 
cause France is, perhaps, the country in which small trading 
is the most developed, as are also small industries and small 
holdings. 

* Author's Note. Here is an amusing instance of the way in which 
traders write the history of co-operation, taken from the Commençai 
Journal of Amiens, June 1st, 1897. 

'"The idea of co-operation had its birth under the cloudy skies of 
aristocratic England. 

"About sixty years ago a group of workmen founded the first co 
operative society under the direction of several clergymen. 

"The powerful British industrialists saw in it a very practical means 
of keeping the workmen under their thumbs, and they subscribed 
largely to these growing societies. The idea very quickly penetrated 
to the continent and imperial France opened wide its doors to it At 
the present time, co-operative societies spring into existence so rapidly 
that they are a source of anxiety to all lovers of liberty and social 
well-being. 

"And, what will ensue if this goes on? It is easy to foretell. It 
will mean the advent of a regime similar to that under which our 
neighbours across the Channel live, where we can see every day work 
men bowed with years and infirmity holding out supplicating hands 
to the rich industrialists, who throw them coppers from their gilded 
coaches." 

174 


CO-OPERATIVE SOCIETIES AND TRADERS 175 

This question has often served as a platform in elec 
tioneering contests, particularly in municipal elections. In 
Paris, at the time of the municipal elections of 1910, the 
socialists suffered a relative defeat, which they attributed 
—not, perhaps, without reason—to the irritation of the 
traders against co-operative stores. M. Jaurès wrote as 
follows in "L'Humanité," after the elections: "The small 
trader has always regarded the custom of workmen as his 
special prerogative. In his opinion, the workmen commit 
almost a theft when they think of giving this custom over to 
their co-operative societies; therefore, he wished to punish 
them by letting them know the bitterness of defeat." 1 

(1) Methods of Conflict 

The methods which traders employ against co-operative 
societies are not of the most honourable kind. There is the 
system of sale on credit, particularly for the working class. 
There is either a system of a "handover" to the middle- 
class cooks, sometimes even to the housekeepers themselves, 
of the "sou par franc" (a halfpenny in the shilling), or that 
which has become a recognized institution in some countries, 
particularly in Switzerland, the system of "primes" (pre 
miums) and "timbre-rabais" (discount stamps), which aims 
at outrivalling the dividend of the co-operative shops. This 
system consists of giving each customer who pays ready 
money a token, worth ten per cent, of the value of goods 
purchased, which may be tendered in payment for other 
goods. This is, after all, only a caricature of the Rochdale 
system. This method of advertisement and warfare against 

i Some of the cities in the United States are peculiarly afflicted with 
the number of small tradesmen who belong to the Socialist Party 
and who demand the support of the organized workers on this score. 
Thousands of such petty merchants belong as well to co-operative socie 
ties and all too often serve on the Boards of Directors. The Co 
operative Credit Unions have been used frequently by grasping workers 
who avail themselves of such credit in order to set themselves up in 
business for private profit! 


till 


 176 CONSUMERS' CO-OPERATIVE SOCIETIES 

the co-operative societies was very common for some time, 
but it began to lose ground when it became clear that it of 
necessity meant either the exploitation of customers or the 
ruin of the shopkeepers. In Switzerland, there are what al 
most amounts to co-operative associations of traders, who 
have united for the distribution of these "discount stamps," 
each member undertaking to receive them. It goes without 
saying that they arrange among themselves to raise the 
prices in proportion to the value of the discounts. How 
ever, the traders find in this system a means of fighting 
against the abuse of the credit system.2 

But they do not stop here, often they have recourse to 
more open methods of warfare. 

The shopkeepers organize a boycott of the societies, that 
is, they undertake among themselves : ( 1 ) To break off re 
lations with manufacturers or wholesalers who sell to the 
co-operative societies, (2) to dismiss any of their employés 
who belong to a co-operative society. 

In 1909, the Lausanne bakers forbade the millers to sell 
to the co-operative societies, under penalty of exclusion from 
the markets. The same thing occurred in Sweden with the 
(manufacturers of margarine. In Scotland, in 1897, there 
was a great fight between the butchers and the Scottish Co 
operative Wholesale Society. The butchers boycotted all 
the merchants and stock-raisers who supplied the co-opera 
tive societies with meat, and extended their boycott to the 
United States, and to the ships which carried meat. They 
even succeeded, with the assistance of the Glasgow Munici 
pal Council, in shutting the public abattoirs against the 
Wholesale, an order to prevent it from carrying on slaugh 
tering on its own account. However, the farmers were dis- 

2 The "trading stamp" was once very popular among merchants in 
this country, but when the practice developed to such an extent that 
dozens of companies were manufacturing them and all stores carried 
them, their value disappeared, and we now see them only rarely. 


CO-OPERATIVE SOCIETIES AND TRADERS 177 

pleased at the boycott, and the only result of this campaign 
was to attract a large number of new adherents to the 
Wholesale Society, and to cause the raising of a Co-opera 
tive Defence Fund, which immediately received £16,000 from 
the British societies. 

More often the shopkeepers appeal to the Government 
and demand protection against the co-operative societies. 
This is achieved by some of the following methods, which are 
more or less identical in every country:— 

(1) They demand in the first place that co-operative 
distributive societies should be subject to all trade obliga 
tions, and should be liable to taxation from which they have 
been exempted hitherto, as not being formed of professional 
traders, as, for instance, the dealers' licence, commercial 
jurisdiction, bankruptcy proceedings, surveillance from the 
health authorities, examination of weights and measures, &c. 
What annoys the traders most in these exemptions is not so 
much the inequality of the money charges as the halo of 
philanthropy and disinterestedness with which these exemp 
tions surround the co-operative societies, and which, in their 
opinion, forms a very valuable advertisement. 

They have obtained satisfaction, however, on all these 
points. According to French law all co-operative societies 
formed by shares are subject to all the laws and customs of 
ordinary trade (Art. 68 of the law of 1867, and confirmed by 
the law of 1893). And, as regards trade licences, equality 
of the co-operative societies with the traders was assured by 
the law of 1905 (see later). Although this law might in 
justice be criticized, we have always held that co-operative 
societies would be wise to accept their trade licence with a 
good grace, not only that they may have freedom of action, 
but also because the public would always look upon this ex 
emption as a privilege, and every privilege in a country as 
jealous for equality as ours is a cause of unpopularity and 


 178 CONSUMERS' CO-OPERATIVE SOCIETIES 

consequent weakness. It is better that co-operative societies 
should fight the traders on equal terms.8 

(2) In some countries they demand that co-operative so 
cieties, even those which are subject to the same rules and 
taxes as the traders, should be prohibited from selling to the 
public. This means that when it is a question of paying the 
societies would be on an equality with the traders, but when 
it concerns selling they would be outside the pale of the 
common law ! And this claim, obviously so very inequitable, 
has been recognized by German law, as we have said before. 
In Hungary, traders have demanded not only that co-opera 
tive stores may not sell to the public, but also that they may 
not have shop windows in the street, so as to deprive them of 
this method of advertisement. They want co-operative 
shops to be hidden away ! In Hungary, too, they demanded 
that co-operative stores should only be formed with the com 
mon and unlimited liability of all the members. Of course 
this clause, in general use among credit societies, would not 
have the effect of rendering the consumers' societies weaker 
—quite the contrary! But the traders hoped thereby to 
frighten and turn away would-be members. At any rate, 
this clause would be absurd, because consumers' societies, un 
like credit societies, are scarcely ever insolvent. 

(3) In every country they wish to prohibit all State 
officials and municipal employés from belonging to co-opera 
tive societies, or at least from being members of their execu 
tive committees. The argument which they put forward is 
curious, namely, that Government employés, being paid by 
the taxpayers' money (and consequently in part by traders' 

s The federal laws in the United States exempt from taxation the 
surplus-savings of a society if such savings are rebated to the mem 
bers in proportion to their purchases. Such "profits" as a society 
makes on sales to non-members however, or such surplus as is not 
rebated to members,—these are subject to the same taxation as the 
profits of private corporations. The taxation laws of the various 
states do not, to our best knowledge, provide any exemption for co 
operative societies. 


CO-OPERATIVE SOCIETIES AND TRADERS 179 

money), have no right to bring this money to the shops of 
those who wish to do away with traders ! So the feudal 
obligation of serfs to bring their corn to the mill or to the 
oven of their lord has been revived in favour of the traders. 

This reasoning, however, has not up to the present con 
vinced the Governments, which in France and Switzerland,* 
and even in Germany, have on several occasions formally 
recognized the right of their functionaries (military, police, 
customs, post office, education, &c.) to join any distributive 
society, and even to take part in its administrative councils. 

However, in various countries—Germany, Switzerland, 
France—public offices have lent a complacent ear to these 
claims, and have prohibited officials, if not from joining a 
co-operative society, at least from belonging to the executive 
committee, giving as a reason that the exercise of a trade is 
not compatible with a public office, and that it might even 
prove for certain classes of employés (such as customs, 
excise, &c.) a temptation to misuse their functions in favour 
of their co-operative societies. 

Meantime, the co-operative stores in every country have 
protested vehemently, and by addressing their complaints 
to high authorities, have generally won their case. If it is 
indeed a regulation that an official may not indulge in com 
merce, it is because his time belongs to the State ; but he 
is not forbidden to be a shareholder, or even a director of 
a railway, or of a mining company, or of a credit bank. 
Then why should he not also be a member of simple co-opera 
tive societies, even though they sell to the public? 

Undoubtedly the late war will have the effect of definitely 

* Author's Note. This was by an order of the Federal Council of 
the 12th February, 1901. In Switzerland, the Federal Government, 
under the influence of the traders, forbade employés of the Post 
Office or the Customs to take office on the executive committees of 
co-operative societies for fear they might be suspected of certaiu 
abuses of confidence in the exercise of their duties. But under pres 
sure of public opinion this measure was not kept in force. 


 180 CONSUMERS' CO-OPERATIVE SOCIETIES 
putting an end to this campaign, because in the belligerent 
countries, and even in Germany, the Government is only 
anxious to take away all restrictions in the matter of officials 
joining co-operative societies. 

(4) Sometimes traders have pushed their extravagance as 
far as to demand that every one, except workmen, should be 
prohibited from joining a co-operative society, or at least 
that the power of purchasing should be limited to the modest 
sum of .£32 * for each member. Others demand that the 
formation of federations for purchase should not be per 
mitted to co-operative societies. But the Chamber of Arts 
and Crafts of Hanover took the palm in the way of demands 
when in 1912 it requested that the creation of any co-opera 
tive society "should be made dependent upon proof of the 
necessity for its existence." 4 

(2) Result of the Conflict 

It is a remarkable fact that during this' conflict public 
opinion is generally in favour of the traders, or at least of 
the petty traders, who are more directly affected by the 
competition of co-operative stores. People say: "What 
will become of them when co-operation, by its development, 
will have superseded them? Are the advantages to be gained 

* Author's Note. In a memorandum presented to the Senate by the 
"KyndHcat de l'Alimentation parisienne" during the debate on the law 
concerning co-operative societies. 

In Germany the Union of Discounting Societies demanded that co 
operative societies should be forbidden "to pursue any objects of 
public utility." 

4 Some other methods used by the private merchants in their war 
fare on the co-operatives are:—display of enticing "special bargains," 
several merchants sometimes uniting in such a campaign so as the 
better to cut prices on a large number of commodities; bribery of 
salesmen to induce them to sell to the co-operatives at a higher price 
or to give a poorer quality of goods; the spreading of malicious ru 
mours throughout the community so as to create distrust of the manager 
of the co-operative store; in some cases actual bribery of the manager 
himself, when this man is not a co-operator at heart, inducing him 
to ruin the business by one form or another of sabotage. 


CO-OPERATIVE SOCIETIES AND TRADERS 181 

by consumers such as make it worth while ruining millions of 
people who form the bulk of the middle classes ?" Recently 
in the Town Council of Manchester—the city par excel 
lence of free trade—during a debate on the taxation of co 
operative societies, one of the councillors declared that the 
development of co-operation "would be the ruin of the city," 
and another said that co-operation was "preparing to prac 
tise a most crushing tyranny." These questions can be an 
swered as follows:— 

(1) That the same complaint has been hurled in all times 
against all forms of economic progress—against railways, 
against machinery, against large banks, against trusts, and 
above all against large shops. But it ought to be under 
stood that all economic progress aims at doing away with a 
certain amount of superfluous labour, and at the same time 
rendering useless those who performed this labour. There 
are in France two millions of traders, as against 16 millions 
of producers, agricultural and industrial (workmen or mas 
ters) ; this means that the service of distribution of goods 
actually finds employment for one man in nine. It is clear 
that if a system can be found which will do the same service 
with one man in a hundred it will be progress worthy of con 
gratulation. Those who are freed are thus enabled to un 
dertake occupations more productive than the breaking-up 
of sugar, for example. 

(2) That shopkeepers are only servants of the public. At 
the same time, the luxury of keeping a large number of serv 
ants is a very expensive one, and one which is becoming 
more and more discredited; it is therefore clear that the 
number of paid intermediaries should be reduced, especially 
by the middle-classes. An Englishman, John Watts, said, 
"It is a strange thing that the poor have the largest num 
ber of servants, and must pay for them! If the people 
wish to become rich, the first thing is to get rid of these." 
We shall see (Chapter XVI) that co-operative societies only 


 182 CONSUMERS' CO-OPERATIVE SOCIETIES 

require one employé for about forty members; this shows, 
therefore, some degree of progress. Co-operative associa 
tion is the only means whereby the consumer can realize this 
economy, by doing away with this ruinous domestic expend 
iture. Of course, those who are thus condemned are to be 
pitied, and perhaps more particularly in this matter because 
shopkeepers, in spite of the abuses to which they have been 
forced—less perhaps by the desire for gain than by the pres 
sure of competition—constitute an interesting class of so 
ciety. They stand for some excellent middle-class virtues 
—independence, self-help, and thrift. They are the off 
spring, though in reduced circumstances, of the big mer 
chants who have been one of the factors of modern civiliza 
tion. From the political and social point of view they 
stand midway between the conservatism of the farmers and 
the revolutionary temperament of industrial populations.6 
But we should investigate and observe whether the traders 
(independent shopkeepers and individual commercial enter 
prises) could have held on, even had the co-operative move 
ment never existed. There is every reason to believe that 
they would have been eliminated all the same, only that their 
disappearance would have been to the profit of the larger 
shops and establishments with district branches. This state 
of things would be even worse for those who interest them 
selves in the welfare of the middle classes because co-opera 
tive societies on the whole support the middle classes rather 
than exploit them, as it is from them we get the numerous 
small shareholders, those who are too small to become per 
sons of independent means, but not too small to have an 
interest in property. 

B It is a significant fact that one can go before any kind of a liberal 
or radical audience and berate capitalism or condemn the system of 
business for private profit so long as one deals abstractly with those 
subjects; but few speakers can get away so easily before our liberals 
(or even before many of our "radicals" for that matter) if he dare 
question the ethics of the small business man, the retailer in his little 
shop. 


CO-OPERATIVE SOCIETIES AND TRADERS 183 

And if it were a collectivist régime which was driving him 
out the death of the petty trader would be more certain 
still! 

For the rest, it does not appear that the trade of the co 
operative societies constitutes an imminent peril to the shop 
keepers as yet, as statistics do not show a decrease in their 
numbers, even in the countries and towns where the co-opera 
tive movement is most developed.* But what about the fu 
ture? 

If the struggle were only between co-operative societies 
and petty traders, its issue would be certain, as the latter 
seem to be utterly condemned by economic evolution as an 
expensive mechanism, as a wastage of time and exploitation 
of the consumer. This condemnation, however, should not 
be pronounced, at least not so absolutely, on small work 
shops and small holdings. 

Perhaps, too, the small shopkeepers would be able to de 
fend themselves better if, instead of decrying co-operative 
association, they had the sense to utilize it, by combining for 
wholesale purchase, or even for manufacture, and by allowing 
their customers to benefit by the economies they were thus 
able to effect. As a matter of fact, they have tried to do 
this. In various towns in Germany they have formed pur 
chasing establishments, gigantic warehouses, from which to 
retail their goods collectively. And in Paris itself, in the 
interests of the grocery trade they have instituted a pur 
chasing agency in common and have built an enormous whole 
sale warehouse. But this latter enterprise failed, nor have 
the others succeeded any better. It seems that there is a 

* Author's Note. The number of licensed dealers of Class C. (which 
corresponds very nearly to small trading) increased from 1,176,140, in 
1852, to 1,477,851 in 1899, which represents a growth of more than a 
quarter in less than half a century. But the increase is much more 
striking if we consider the large towns, and it is the same abroad. In 
Bale there was in 1877 one grocery shop per 522 inhabitants; in 1900 
there was one per 413 inhabitants—and this in spite of the existence 
In Bale of the most powerful consumers* society in Switzerland S 


 184 CONSUMERS' CO-OPERATIVE SOCIETIES 

natural incompatibility between the co-operative and the 
individualist systems. 

But the large retail establishments constitute the most 
formidable adversary of the co-operative stores, especially 
since they do not limit themselves to trade in "novelties," 
but are now taking up the grocery and victualling lines. 
However, co-operative stores are not without certain very 
real advantages over the large shops, which might ensure 
their success, because, while offering their members equal 
advantages (cheapness, cash sales at fixed prices, economy 
in time for the purchaser by the grouping together of spe 
cialties) they are free from the grave handicaps of the large 
shops, such as unnecessary expenses for publicity, for ad 
vertisements, catalogues, shop windows, exhibitions, sales, 
sales on approbation and other inducements to expenditure, 
which have actually created a particular form of criminal pa 
thology among lady customers, which is called "klepto 
mania," the mania for theft. Perhaps there is an element of 
pride in this austerity of the co-operative shops, and in their 
contempt for all advertisement, and for everything which 
might attract the public. It is quite obvious that the ap 
pearance of the streets in our larger towns woud suif er badly 
were their brilliant shop-fronts to be replaced by the sombre 
windows of the co-operative stores. In this matter a reac 
tion has begun in England, and the co-operative stores are be 
ginning to decorate their windows. If the co-operative store 
wishes to become the shop of the people it must learn to make 
itself attractive. The question of publicity and advertising 
is at present being aired in the English co-operative press. 
There is reason also for the hope, in the matter of relations, 
not with the public, but with their employes and workers, 
that co-operative societies will not sacrifice the interests of 
these latter to mere cheapness, as the large warehouses are 
often tempted to do, and that they will refuse to offer for 
sale articles of underclothing which may mean a good bar- 


CO-OPERATIVE SOCIETIES AND TRADERS 183 

gain for the purchaser, but a wage of Id. an hour for the 
workwoman who has stitched them. Let us add that it is 
better to see the co-operative shops helping and easing the 
strain of life for a large number of small shareholders of £ 1 
than to see enormous establishments whose function is to 
create a few multi-millionaires. 

We are justified then in believing that consumers' co 
operation would enable us to escape from the alternative to 
which the consumer is otherwise exposed—either to continue 
to support the expenses of the out-of-date mechanism of 
small trading, or to submit to the bondage of commercial 
feudalism. 

But the new methods of commerce are somewhat disquiet 
ing for the future of co-operative societies, as much in the 
food as in the "novelty" line—we mean the establishment 
with branches, which might be called the "tentacular" shop, 
as Verhaeren has said of certain towns. In France there are 
20,000 branch establishments, belonging to 150 firms only, 
which are doing a trade of £48,000,000. Instead of concen 
tration, the new form is extension; instead of waiting for 
the customer to come, they go out to find him in his small 
town, in his district, in his village, or in his isolated farm, 
by employing perhaps the permanent shop, perhaps the cara 
van, or perhaps by correspondence. For instance, in 
France, the case of the grocery shop called The Planters of 
Caiffa, which had thousands of tricycle carts going through 
the country. 

Under this new system some of the advantages of concen 
tration must undoubtedly be sacrificed; for example, the 
expense of rent is greatly increased. But, on the other hand, 
there is a saving, first of all on wages and salaries (the em 
ployés being replaced by responsible managers, who, instead 
of being an expense, bring in more money to the enterprise) ; 
also on leakage and waste, for both of which these managers 
are responsible ; and lastly, on the expenses of advertising, of 


 186 CONSUMERS' CO-OPERATIVE SOCIETIES 

catalogues, &c. The manager of each branch must deposit 
security, which is utilized in the funds of the establishment 
and is often retained permanently if the manager does bad 
business and is obliged to quit, in which case he is replaced 
by a new manager who furnishes a new security. 

In order to cope more effectively with these formidable 
difficulties, co-operative stores have had to use the same 
weapons, that is, to multiply their branches, with managers 
responsible for each (as we shall see later, Chapter XVI), 
but not, however, without doing some harm to the co-opera 
tive principle. 

But must the struggle end in the extermination of one or 
other of the two adversaries? Is it not possible to effect a 
reconciliation between them ? 

Various pacifists have suggested solutions to this end. 
One method which has been proposed, and even tried, con 
sists in doing away with the co-operative shop and of dele 
gating to the merchants the duty of supplying the associa 
tions of consumers. The function of the latter is to con 
tract with the shopkeepers in the name of the members of 
the society and to obtain from them a discount as advan 
tageous as the society itself could give, offering the traders 
as a guarantee the loyalty of the members. Where it con 
cerns consumers who look only for economies it would seem 
that by this method they could obtain reductions not much 
inferior to those they might realize by becoming traders 
themselves and this, moreover, without any managerial wor 
ries or risk of exploitation, and without having either to 
open a shop or collect capital. In short, they need not or 
ganize themselves into a "co-operative society" in the legal 
sense of the word, but merely into a "consumers' league." 

This system has been tried, notably in 1901, in the 
"Coopération des Famàll-es." But it is rather military clubs 
and students' associations (which have nothing in common 
with co-operation) which put it into practice, such as the 


CO-OPERATIVE SOCIETIES AND TRADERS 187 

Touring Club with its 100,000 members. The Civil Service 
Employees of the Seine, some of the employés of the 
P.-L.-M. Company, that of Geneva, &c., also do trade with 
shopkeepers for certain classes of goods which, for some 
reason or other, they do not wish to stock in their own 
stores, i.e., meat or milk, ready-made garments, or medicines. 
Under these limited conditions this system might be useful, 
but it could not become general without definitely ruining 
co-operation.6 The great socialist leader Jaurès suggested 
another method of compromise in an article in L'Humanité. 
It was that the workmen's trade unions should make an ar 
rangement with the trader, whereby they guarantee the pay 
ment of a minimum sum for purchases, for their members. 
Thus, the traders, having an assured sale, and not having to 
run the risk of insolvency, would be able to lower their prices 
and to sell on credit. But to make this ingenious system 
workable it would first of all be necessary that the trade 
unions should show better pecuniary guarantees than they 
do at present. On the other hand, what traders would be 
chosen as suppliers and invested thus with a sort of mo 
nopoly ? 

In fact, co-operation will never defeat the traders until it 
is able to do without them. 

One other solution (which we only mention here as a 
cariosity, and because it is utterly opposed to the preceding 
one) is that suggested in Camille Sabatier's book on Mor- 
cellisme. This is the buying up of the private shops by co- 

6 At present there is in the United States among ex-service men an 
organization through which these men can buy at many of the large 
stores in all the larger cities and receive substantial discounts. The 
Y. M. C. A. has, in years past, procured the same benefits for its 
members. Other large organizations have followed this plan. 

For 25 or 30 years there has been a Consumers' League in the United 
States, and for many years its chief concern was that of "white-list 
ing" the best shops or putting its own label on the best goods. These 
activities have now been abandoned years since and the League con 
cerns itself primarily with legislative welfare work. 


 188 CONSUMERS' CO-OPERATIVE SOCIETIES 

operative societies. But what resources would they have 
for such a gigantic operation? They could do so by setting 
aside three-quarters of their profits for this purpose. And 
to help them the State would allow them a subsidy which 
(suggests the author), would be at least one-third of the 
profits, until the deed of purchase were concluded. Con 
sumers' co-operative societies would then be recognized as 
useful public establishments, and be subject to State control, 
which would have the effect of greatly increasing their pres 
tige, and their credit. It is hardly necessary to remark that 
if this purchase could be effected as easily as the author 
thinks, it is not at all likely that merchants would consent 
to lend themselves to it, nor that they would allow them 
selves to be persuaded that it would be better to sell out at 
once, as in any case they would be dispossessed, perhaps 
without any indemnity. Sabatier tells us that he submitted 
his scheme to a small referendum of grocers in Toulouse, 
where he lives, and the majority pronounced in its favour. 
Without contesting this fact we may conclude that the gro 
cers whom he consulted were either doing very poor business, 
or else that they were amiable philosophers. 

Moreover, even admitting that they were willing or con 
strained, the annual sum available for the purchase would be 
so ridiculously small—at least in France—that we can 
hardly estimate the number df centuries necessary for the 
complete realization of this dispossession. Also, we must 
consider that from the time the members of co-operative 
societies found themselves deprived of their full dividends it 
is probable that they would desert the society and thus 
it would not be commerce, but co-operation, which would find 
itself suppressed. 

In conclusion, any system of agreement between these two 
methods of enterprise, which by their very nature are an 
tagonistic, appears to us merely chimerical. But what is 
very possible, and even probable, is that little by little a 


ill 


CO-OPERATIVE SOCIETIES AND TRADERS 189 

division of labour will be effected between the two ; the trader 
undertaking the function of satisfying the requirements of an 
individual, temporary, and fanciful character—things which 
come under the designation of "la mode"—and the co-opera 
tive stores devoting themselves to the supplying of require 
ments which are of a general, homogeneous, and permanent 
nature. 


i1! 


 CHAPTER XIII 

CAUSES OF SUCCESS OR FAILURE OF 
C O N S U M E R s' SOCIETIES 

Of all the chapters in this book this should be the most 
important. Unfortunately, in order to get to the root of 
the matter the elaboration of a complete psychology of co 
operation would be necessary, and this would be a task far 
beyond the aim of this little volume, and for which, more 
over, sufficient information is lacking. Frequently we see 
certain co-operative societies developing in a marvellous 
manner, and other dragging along lamentably and failing, 
without any reasonable explanation. 

In France, this mortality is particularly striking. Sta 
tistics of consumers' societies published annually by the 
Board of Labour give the number of societies which have 
disappeared. For a period of ten years (1904-1914) the 
number rises to 802, or 80 per year, which, in a total of 
2,500 societies (average of their number between 1904 and 
1914) would represent a mortality of 32 per 1,000, being 
about double the rate of normal mortality in the population. 
But the official number of moribund societies is very much 
less than the real figure, which should be almost doubled, 
showing a rate of mortality of 60 per 1,000, that is, an 
average existence of from 16 to 17 years. According to the 
Departmental Reports, the number of births of societies in 
this period would be 1,457, and that of deaths 802. But 
according to these figures the number of increases during 
this period would only be 655, whereas in reality there 
was an increase of 1,326. Therefore the true figures, both 

190 


CAUSES OF SUCCESS OR FAILURE 191 
for deaths and births, should be about double the official ones. 
It is, moreover, easy to understand that many societies are 
completely unknown.1 

(1) Administration 

Whenever a society fails, there is always one explanation 
ready ; it is the fault of the management ! This is not the 
only explanation—there are so many ; but it is true that this 
complaint is only too often well founded, and this is but 
natural. In the first place, as might be foreseen, there is 
the incompetence of administrators who are ill-suited to and 
not fitted for business, who know nothing of the art of buy 
ing at the right time, the right place, &c., nor the method of 
fixing the cost price and the retail price, nor the examination 
and control of the goods, nor book-keeping. Of course, they 
employ a paid manager to look after all these matters ; but 
it is not easy to find a trustworthy employé, particularly in 
the early stages of the working of a society, because the 
capable men prefer to stay on in secure and well-established 
houses where they have more chances of advancement and 
larger salaries. It is generally only such men as are not 
wanted by the ordinary trade who offer themselves to the 
co-operative societies, so that, as M. Cernesson aptly ob 
serves, managers for co-operative stores are recruited in the 
wrong way, except, of course, in cases where societies find a 
man with combined business instincts and disinterested phi 
lanthropy—but the species is rare. The Remie des Deux 
Mondes, of October 15th, 1908, contains an article by Cer 
nesson on "Co-operative Consumers' Societies," in which will 
be found a picturesque description of the co-operative shops 

1 There are no figures available for the United States which show us 
the mortality rate among co-operatives. The rate is high here, but 
probably no higher than it was in most European countries before 
the movement was well established and national unions and whole 
sales were set up to support the infant societies until they could stand 
alone (if they chose). 


1(1111 


 192 CONSUMERS' CO-OPERATIVE SOCIETIES 

in the region of Paris, in which these faults of management 
are clearly set forth. And, even admitting that the society 
finds a capable or passable manager, there is always the fear 
that his work will be hindered by the meddling surveillance of 
the committee members, who, actuated probably by the worthy 
motive of taking their duties seriously, interfere in and out of 
season, often with disastrous consequences. If, as happily 
occurs sometimes, the efficiency of the manager is clearly 
shown by his capability, his experience, his services to the 
society, there is always the danger that sooner or later an 
opposition party to him will arise which will watch all his 
actions unfavourably, denounce his despotism, and finally get 
him dismissed. We have ourselves known the case of the 
manager of a society who had worked for twenty-five years 
with extraordinary success, resulting in enormous dividends, 
having to resign on account of calumnious insinuations which 
no one believed, but which, nevertheless, gave a sufficient pre 
text for putting an end to a reign which was deemed to be 
too long, so as to make room for some person eager to re 
place him—for there are such, even in co-operative societies ! 2 
John Stuart Mill, wrote : "The ideal of democracy is that 
the people shall be masters, but employ servants more ca 
pable than themselves." This is precisely the ideal of a co 
operative consumers' society; but, unfortunately, it is not 
easy to realize. We are thrown, as it were, between the two 
rocks of Scylla and Charybdis. On the one hand, it is de 
sirable and even indispensable that every person in the as 
sociation, administrators as well as ordinary members, should 
take an active part in the life of the society, even if the latter 
only do so by objecting when they are not satisfied, and by 
being present at meetings; it is essential that they should 

2 This often happens in American societies, too, but, on the whole, 
our movement is younger and the pioneer spirit is still active nearly 
everywhere. More of our failures are due to poor management, igno 
rance on the part of the directors, or lack of educational work among 
the members. 


CAUSES OF SUCCESS OR FAILURE 193 

feel that the society belongs to them. And on the other 
hand, they should not shackle the management by undue in 
terference. It ought to be possible to reconcile these con 
tradictory elements by establishing a well regulated division 
of labour, a separation of control and execution, various 
members undertaking these functions in rotation; but even 
thus a great deal of tact and goodwill is necessary to make 
everything work smoothly (see Chapter xvi, The Employés 
and Workmen in Co-operative Societies). 

The very constitution of a co-operative society as created 
by law and the nature of things (i. e., a society of shares) is 
bound to make good management difficult. These difficulties 
already exist in large capitalist companies, obviously inferior 
to individual enterprise from the point of view of initiative 
and control, but they become much more serious in a co 
operative society. In capitalist companies the executive 
committee is, as a matter of fact, omnipotent, if it were only 
because it often owns the large majority of the shares. 
They only have one annual general meeting, the shareholders 
do not attend in any numbers—indeed, in some companies 
only the large shareholders are admitted—they very seldom 
speak, and when they do they get little or no satisfaction 
from the chairman. 

Co-operative societies, on the contrary, are genuine 
miniature parliamentary republics, in which there are nearly 
always two parties, the one in power, and the opposition; 
and, naturally, the latter tries to upset the former, or at 
least to prove it in the wrong. At every general meeting 
—and there are at least two a year—there are numerous 
and vehement accusations, particularly if, for some reason, 
the profits have decreased. We do not mean to assert by 
this that there is great enthusiasm among the members about 
attending the meetings—there are societies with 20,000 
members, of whom only some 300 or 400 come to the general 
meetings—but it is precisely the turbulent ones who are 


 194 CONSUMERS' CO-OPERATIVE SOCIETIES 

most assiduous. And it is all the more difficult to maintain 
order in discussion because the chairman of the meeting is 
almost always ignorant of the administration of the society, 
being elected by the most energetic canvassers of some name 
or other. Thus it happens that very delicate questions, and 
even a complete policy which has been slowly and carefully 
built up by degrees, may be left to the mercy of an absolutely 
blind vote.* a 

* Author's Note. "Complaints increase, questions and challenges of 
various kinds are interchanged. . . . There comes a time when, tired, 
worn out, the mass of the people is incapable of doing any business, 
no matter how important it may be, perhaps the revision of rules, 
loans, or the building of some property. Dinner hour is passed, the 
housekeepers have gone away, and cries of protestations arise, both 
jocular and vehement. Dinner! . . . And, like an irresistible water 
spout, deaf to the entreaties of the authorities, this mass surges out 
side, heedless of the demoralization it leaves behind amongst the level 
headed co-operators and the personnel embittered by humiliations 
suffered." (Cernesson; article cited above.) 

According to Cernesson, in the article quoted, in the Parisian Work 
men's Co-operative Societies, "No one can be a candidate (for the 
executive council) if he has not made an official declaration of candida 
ture—an ingenious method of eliminating modest ones. . . . On his 
name being called, each one must rise, mount the platform, and him 
self expound his qualifications as administrator. ... It is easy to 
conceive that under such conditions the influx of serious-minded can 
didates will not be great—and in fact, there are often empty places 
which have to be filled by drawing lots. In the society la Prolétarienne, 
at Montmartre, drawing lots by a wheel of fortune is practised reg 
ularly according to the rules for the choosing of a certain number 
of the executive." 

s In the United States we see this kind of thing far oftener within 
the labor union than in the co-operative society. Such factional differ 
ences develop much more easily in the organization which has fewer 
actual accomplishments to engage it and is therefore compelled to live 
too much for the sake of future hopes or mere perfection of the organ 
ization machinery. We have seen many of these bitter internal schisms 
in labor unions or in political organizations, and they seem to be 
particularly virulent among the peoples who are of Latin origin. 

Unfortunately there has been, since the advent of Communism in the 
United States and the resulting cleavage in the ranks of the Socialists, 
a conspicuous exception to the general rule mentioned. The Finnish 
societies have been seriously split on this political rock in the major 
ity of the communities where they are organized co-operatively, and 
the co-operatives have suffered accordingly. 


CAUSES OF SUCCESS OR FAILURE 


195 


(2) Overlapping 

We have already remarked, apropos of international 
statistics of co-operation, that herein lies one of the most 
unfortunate characteristics of French co-operation—the 
number of societies is everywhere larger than formerly; 
but it is obvious that when we see in one town (some 
times a very small one) half-a-dozen, indeed up to twenty 
co-operative stores, it is a sign of weakness and not of 
strength to the movement. This overlapping has the very 
natural result that all the societies are eager to secure new 
members, thereby reviving all the evils inherent in competi 
tion, which co-operation by its very title is seeking to 
abolish. It is inevitable that societies should aim at attract 
ing new members, whether by swelling the dividends or by 
lowering prices—two inverse tendencies, equally undesirable ; 
add to these the increase of general expenses, whether it 
be due to the multiplicity of premises rented and of employes 
whose time is wasted in looking after rare customers, or 
whether it is by the delivery of goods to customers' houses. 

In this respect, we often see three or four vans in 
the same town overlapping each other in delivering goods 
to the various members, where one cart would be all suffi 
cient. Thus, the general expenses, according to Ccrnesson, 
amount to 13 per cent, on the sales in Parisian societies, 
while they do not exceed 8 per cent, in English ones. Add 
also to this that it is already a difficult enough task to find 
in the same locality enough capable men to form an efficient 
executive committee, and it is then highly improbable that 
good working committees could be found for so many over 
lapping societies. The 3,200 consumers' societies in France 
require a personnel of from 30,000 to 40,000 administrators. 
Where are these to be found? 

This state of things arises principally from the French 


 196 CONSUMERS' CO-OPERATIVE SOCIETIES 

character, which loves division, and it obtains not only in 
the small co-operative world, as it is the same in friendly 
societies and in all French associations. But in the co-opera 
tive movement this characteristic is accentuated:— 

(«) By the tendency to form professional co-operative 
societies. Thus we see in many towns a co-operative store 
for railway employés next door to the ordinary one ; we may 
even see (if the town is large enough to have two large 
railway companies), one store for the employés of the 
P.-L.-M. and another for those of the Midi. Sometimes to be 
merely professional is not sufficient for co-operative societies- 
—they must sub-divide into special departments. So we see 
at Avignon two or three co-operative societies for the 
P.-L.-M., including one for the traction department and 
another for the trade staff. 

(fe) By the introduction of politics, religion or socialism 
into the societies. This has occasioned severe censure on 
us from other countries, such as that recently pronounced 
by Mr. Mclnnes, a member of the Central Committee of the 
International Co-operative Alliance: "France is the only 
country which does not show the wished-f or progress ; but 
any one who is familiar with the co-operative movement in 
this country will know how very greatly it is split up by 
politics and religion." Where a society openly sets up the 
red flag, the inevitable result is that those who do not ap 
prove of this will start another society. In the large towns 
in Belgium there are often two distinct societies, the 
socialist and the Catholic, sometimes even a third, the 
Liberal. In the large industrial French towns in the depart 
ment of Nord, "red" and "yellow" stores are to be seen 
facing each other with alternating power. But we shall 
leave this important question of the introduction of politics 
into the co-operative movement to another chapter. 

(c) By the specialization of -societies—some limiting their 


CAUSES OF SUCCESS OR FAILURE 197 

activities to baking, others to the sale of groceries, and 
obhers to the sale of wines, &c. In this way there would 
have to be as many shops as specialties. 

As a reaction against this tendency the societies in any 
one town should be induced to unite as the English ones 
do, which explains the phenomenon already alluded to on 
page 56, namely, that the number of societies is diminishing, 
while that of the members is rising steadily. 

In Germany, it is by this system of amalgamating the 
existing societies in the same town that they have been able 
to create the colossal societies, of which we have spoken 
elsewhere. They are only at the beginning of this method in 
France, and are meeting with active resistance from socie 
ties, which the smaller they are persist so much the more 
in maintaining their independence, perhaps from some feel 
ing of pride. Each society has, of course, its own little 
history and, after all, it is pleasant to be among one's own 
friends. 

For the rest, it would be very imprudent, where this 
amalgamation has taken place, to proceed by closing all 
shops which have amalgamated, with the sole object of 
reducing general expenses and of concentrating all depart 
ments into one large bazaar; the remedy might be worse 
than the disease.* The building of this great edifice would 
either absorb all the society's capital, or necessitate a 
loan. On the other hand, many members, finding the central 
shop too far away from them, might leave the society. The 
society should not be out of reach of the members. What is 
required is one management but with branches in all dis- 

* Author's Note. It is a generally admitted law that the percentage 
of general expenses varies in an inverse ratio to the turnover, and this 
is verified in practice, but only to a certain degree of expansion. Be 
yond this point the law is reversed, and this is why there is generally 
a limit to the growth of any economic enterprise, which should not 
be exceeded. 


 198 CONSUMERS' CO-OPERATIVE SOCIETIES 

tricts where there is an adequate nucleus of members. The 
large Parisian society has 330 branches, and that of Bale 
more than 100. 

But the danger of centralization is not all, there is also 
the danger of concentration of administration. The large 
societies obviously require administrative capacity propor 
tionate to their importance, and also much more attention 
from those who undertake such work. They also offer more 
temptations to dishonesty and more difficulties in the matter 
of control; the members often do not know each other. 

For these various reasons it is possible that complete 
amalgamation should be deferred, and that it might be 
wiser to be content with abolishing competition by effecting 
an understanding among the societies—a cartel—each one 
undertaking to limit itself on some pre-arranged system, to 
establish the same rate of dividend and to do all purchasing 
in common. During the war the movement in France to 
wards amalgamation has greatly developed, and so far has 
given good results. Still we do not think that the advice 
given in the text is not wanted. The Union du Coopérateurs 
in Paris, which is the result of the amalgamation of a dozen 
societies, has today 184 stores. Now it is attempted to set 
up co-operative societies that are no longer local but 
regional, with branches in places where they respond to local 
needs. The reconstruction of the co-operative organization 
in the regions of France which were destroyed by the in 
vasion is the special work which will be done by the regional 
societies. 

(3) Character 

The degree of moral character of the members of a 
co-operative society is certainly one of the most important 
factors, if not the most important, in the success or failure 
of the store—(Robert Owen, not without reason, called his 
system "The New Moral World"). It is important for the 


CAUSES OF SUCCESS OR FAILURE 


199 


members of committee, because morality alone can preserve 
them for the temptation of demanding or accepting bribes, 
important for the ordinary members because this moral 
sense will help them to choose honest administrators, because 
it saves them from internal disputes and, finally, because it 
keeps before their eyes the essential duty of a loyal member, 
which is to purchase at his own store—even if the grocer's 
shop is more convenient, or offers such and such an article 
cheaper—and to participate in all the social life of the 
society. 

But, as we have remarked elsewhere (page 85) with 
regard to these elementary duties of solidarity, the members 
who scrupulously fulfil them are rare. 

We must admit that if the co-operative movement in 
France is very much behind that of other countries, 
it is partly because the standard of morality in co-operative 
societies, even though generally superior to that of ordinary 
trade, is not yet very high. It is not rare to hear of socie 
ties which have failed through the shameful practice of "com 
missions" and of many others which have not succumbed to 
it but which continue to foster this evil, doing nothing to 
cure it, even refusing certain remedies such as adhesion 
to purchasing federations, because this would suppress 
the evil too drastically. Undoubtedly it is a great danger 
for workmen who have never had more money than their 
weekly wage, to have to deal with a business of thousands or 
millions of francs. Besides, it is an easy and insensible 
descent from the small innocent present made by the whole 
sale traders in the shape of a box of oranges for madam, or 
some bon-bons for the children, to so much per cent, offered, 
and at times even impudently demanded, on each purchase. 
These wholesalers and their representatives are very clever 
in playing the rôle of tempters. And we must remember, too, 
that commissions are customary in trade, and it is difficult to 
draw the line of demarcation between the lawful commission 


 200 CONSUMERS' CO-OPERATIVE SOCIETIES 

which will benefit the society and the unlawful one which is 
put in the pocket. As an illustration to this chapter We 
should mention the melancholy history of the society "la 
Mmsson.evœe," founded in 1875, in the faubourg Saint- 
Antoine, Paris, exclusively of workmen, which had 16,000 
members, and which succumbed in 1903 owing to the mal 
practices and the vices of the executive committee.4 

Consumers' co-operative societies which have in their 
ranks employés of public services (such as post office and 
telegraphic officials), professors of colleges or of academies, 
soldiers, -small householders—in a word, what we call the 
•middle classes—are generally more free from this evil, 
because the members know each other better, and because 
of the habit they have acquired in their profession of keep 
ing accounts and managing money keeps them better 
on guard against temptation. We do not at all wish to 
say—far from it—that the workman's morality is naturally 
inferior to that of the middle classes, because, on the con 
trary, it is from the latter that workmen have learned the 
practice of bribes ; but we contend that where middle classes 
and workmen are associated in the same society they feel 
themselves under observation by each other and strive to 
behave well for the honour of their class. We cannot help 
regretting, therefore, from the point of view of successful 
business working, the exclusion of the non-labour element 
from the socialist societies. In any case, this is one proof 

4 Such practices are not common to the American societies, although 
there are too many failures that can be attributed in part to such 
causes in general. Many of the Societies which have had their origin 
in a mere desire for money-saving alone have begun their descent to 
ward failure by granting various fees to officers and directors. Com 
missions to the manager can easily be justified in such a society; and 
soon there is a scramble under way among the leaders, each of whom 
wants to profit more than the others. It is well that such societies are 
very short-lived. Some of them have been saved by the more honest 
and intelligent of the members who succeed in having the old Board 
of Directors thrown out, a new manager installed, and true co-opera 
tive principles put into practice. 


CAUSES OF SUCCESS OR FAILURE 201 

more of the need for co-operative education, as we have 
already remarked (see page 93). 

Moreover, when we speak of morality as a factor of 
success or failure, this word must not only be understood in 
the narrow sense of honesty. We must understand by it 
everything which strengthens the feeling of co-operative 
solidarity, everything which develops zeal in the members 
of a society to fulfil their duties as such, beginning by loyalty 
in their daily purchases. Even in English co-operation 
there is a matter far from gratifying, which is occupying 
the attention of the leaders of the movement. For thirty 
years the average of purchases made per member has re 
mained stationary, and this, be it noted, notwithstanding 
two things which should have raised it considerably, to wit, 
the rise in wages and the rise in prices. The present state 
of things is, therefore, a retrogression.6 

The causes of inferiority which we have just indicated 
do not apply in the same degree to co-operative societies in 
every country; the situation in English, German, and Swiss 
societies appears to be much better. Although the practice 
of illegal commissions has sometimes been touched upon 
in English co-operative papers, although it has often been 
denounced by traders (who are somewhat open to suspicion 
as witnesses) we may say that it is very rare, and it is 
severely repressed both by law and by custom. There is 
a special law called the "Bribery and Corruption Act," 
August 4'th, 1906, which enacts that any employé who ac 
cepts secret commissions can be dismissed without any in 
demnity, and that the bargain corrupted by any such 
commission may be rendered null and void. 

And here we are led to investigate the general causes 

5 In the face of the competition offered by the cut-price chain stores 
and the other stores which give unlimited credit, the co-operative in 
the U. S. must put its chief reliance in Education, convincing the 
membership generally that despite all appearances to the contrary, 
private business cannot do for them what co-operation can. 


 202 CONSUMERS' CO-OPERATIVE SOCIETIES 

which can be separated from the contingencies which govern 
particular cases. 

(4) Race 

Race, or at least the admixture of factors designated by 
this somewhat indeterminate word, exercises an undoubted 
influence on the co-operative movement. As proof of this, 
we need only compare the Anglo-German countries on the 
one hand, with the Latin countries on the other, looking back 
on the table we gave (page 49). It will be seen that while 
for Great Britain, Holland, Germany, Austria, and the four 
Scandinavian countries (Finland included), the proportion 
of co-operators to that of the total population is an average 
of 131 per 1,000; in France, Belgium, Italy, Spain, and 
Portugal, it is, on the contrary, only 65 per 1,000, just 
half. 

But here is a more striking proof, because it deals with 
the inhabitants of the same country, and thereby many dis 
turbing factors, such as inequalities of civilization, educa 
tion, wealth, &c., may be almost eliminated; let us look at 
Switzerland. In the German cantons the proportion of 
co-operators in relation to the population is about 7 per 100 ; 
in the five Latin cantons (four French: Geneva, Vaud, 
Neuchatel, Fribourg; one Italian: Tessino) it is 3 per 100. 
In the same way the Flemish provinces in Belgium show a 
great superiority to the Walloon provinces, though less than 
in Switzerland. However, co-operation seems to make the 
most rapid progress in the "Romanic" cantons, so that the 
proportion is becoming more equal. Thus, in the last edi 
tion of this book (1910) we remarked the fact that the co 
operative newspaper in the French language had only 17,00(1 
subscribers as against 123,000 for the same in the German 
language, which meant a proportion of 1 in 7. Then in 
1914 the number of subscribers to the newspaper in the 


CAUSES OF SUCCESS OR FAILURE 203 
French language rose to 59,000, and that to the newspaper 
in German to 183,000, which gives the proportion of 1 in 3, 
that is, more than that of the two languages in Switzerland, 
which is only 1 in 4. 

It appears obvious from these figures that the Anglo- 
Germanic race possesses exactly the virtues—perhaps the 
faults also—which tend most to the success of co-operation ; 
the love of order, the respect for discipline, the spirit ot 
solidarity, the passion for organization which helps towards 
the formation and the leading of large bodies of human 
beings. Trusts and cartels arc a manifestation of this same 
spirit. 

The Latin peoples seem to be more endowed than we are 
with the faculty of association. Italians have shown remark 
able aptitude for co-operative association, particularly 
in certain forms. What, you will say, is France then not 
Latin? By language and civilization, yes, undoubtedly, 
but not by blood. She is of Celtic race, of Gaulish blood, 
of those Gauls whose unruly clans Vercingetorix himself 
could not unite into a national federation. The Irish are 
our nearest relations from the racial point of view. Now, 
if we compare the development of co-operation in Ireland 
with that of the United Kingdom we shall be struck by the 
inferiority—at least as far as concerns the form of co-opera 
tion which is the subject of this study—consumers' co 
operation. Consumers' co-operation in Ireland only had 
17,000 members to 4,500,000 inhabitants—that is a propor 
tion less than 4 per thousand—while in England they run 
to 2,550,000 members in a population of 37,000,000 of in 
habitants, that is 70 per thousand. True, Wales, which is 
of pure Celtic race, and Scotland, which is partly so, have 
a proportion of co-operators equal to that of England, but 
they have been anglicized. 

Ireland, though poor in consumers' societies, is rich in 


 204 CONSUMERS' CO-OPERATIVE SOCIETIES 

agricultural producers' co-operative societies, but we shall 
explain later on (page 205) that this form of co-operation 
implies a very different type of mentality. 

(5) Environment 

Environment exercises a very strong influence on co 
operation. An industrial district is much more favourable 
to consumers' co-operation than an agricultural one; it is 
almost indispensable. It is only necessary to look back on 
the table already mentioned (page 49) to acknowledge that 
the development of co-operation in each country is almost in 
proportion to its industrial development. In Switzerland, 
the three largest co-operative stores, of from 20,000 to 
40,000 members, are in the three industrial centres, Bale, 
Zürich, and Geneva. In France, if we draw a line of demar 
cation from Lyons to Bordeaux we shall see that an immense 
majority of co-operative consumers' societies are in the 
northern half, very few being in the southern part. There 
are, however, large and important towns in the southern di 
vision, Toulouse, Montpellier, Nîmes, Marseilles, Toulons, 
Nice, but the industrial movement there is very weak. The 
explanation of this is simple. The industrial populations, 
grouped already by force of circumstances in their common 
workshops and in the quarters where they live, are 
ripe for grouping, as in a trades union or in a co-opera 
tive society. Moreover, the pressure of the cost of living 
inclines them towards co-operation. Country folk, on the 
contrary, have few wants, and those which they have are 
easily satisfied. To a large extent they are provided for by 
the produce of the farm itself, and the rest are procured 
through travelling salesmen. Country folk have either no 
time to go to a co-operative store or they prefer to do their 
purchases in the town on fair days. Further, their individ 
ualist temperament does not tend to association. True, in 
France the "syndicats agricoles," and abroad the rural 


CAUSES OF SUCCESS OR FAILURE 205 

banks, have succeeded brilliantly; but this is because these 
forms of association allow more independence to their mem 
bers ; they secure advantages for them without demanding 
from them, we may say, any sacrifice. On the other hand, 
agriculturists have very little sympathy with consumers' 
co-operative societies, because they think more of the in 
terests of the producer than those of the consumer. They 
are protectionists; they want high prices; they supply 
the middle class and the petty traders. And this is why 
we see the "syndicats agricoles" in France, while claiming 
the right to sell to their members all their agricultural re 
quirements, disapproving of those among them who sell goods 
and merchandise for their members' personal use, thereby 
becoming consumers' societies ; they do not wish to enter 
into competition with the locyal traders.f A proof that this 
antagonism is real is that every attempt made during the 
last thirty years to effect an agreement between the con 
sumers' co-operative societies and the agricultural societies 
has failed, though it would seem quite natural that the 
former should obtain from the latter all the food commodi 
ties they require. 

As industrial districts are more favourable for the 
development of consumers* co-operation than for agricul 
tural co-operation, it follows that consumers' societies thrive 
better in towns than in the country. They are products of 
urban life.* 

However, there is one notable exception to this rule. 
Consumers' societies are not really successful in very 

t Author's Note. It must be admitted, however, that in Denmark 
consumers' co-operative societies are very numerous in country districts. 

* Author's Note. This question arose recently, owing to a judg 
ment of the Court of Appeal, which prohibited the "syndicats agricoles" 
from selling goods to their members. This decision caused much 
perturbation in the syndical world. But the majority of syndicats 
adopted the distinction which We have indicated, namely, the right 
of the syndicats to sell all requirements for agricultural production 
but not for personal consumption. 


 206 CONSUMERS' CO-OPERATIVE SOCIETIES 

large cities, that is to say, in capital towns. We might 
assert that up to the present London is a desert as far as 
co-operation is concerned 6 and in Paris it is only in the 
suburbs that co-operative stores are to be found, and many 
of these are still only badly managed. 

As far as country districts are concerned, the explana 
tion is simple; in a sparsely populated neighbourhood the 
people cannot group themselves round a common shop, 
ever}" village has its small hucksters, or is satisfied with 
travelling salesmen.7 ' 

But as for the capital towns, the explanation is not clear. 
It may be, inversely, that the most powerful commercial 
oganizations are found in them; it is very difficult for 
co-operative stores to fight against the competition of large 
strongly organized businesses, whether it be for grocery, for 
fancy goods, or for furniture. It may, perhaps, also be that 
the inhabitants of a capital city often move from house to 
house, which renders it difficult to form the nucleus of 
crystallization which is indispensable to the prosperity of a 
co-operative society,8 

6 But this is no longer the case; in 1922 the three London societies 
have 300,000 members. 

7 The farmers have developed a good consumers movement in the 
United States and fully hold their own with the workers of the small 
towns. They are aided, of ccrurse, by the absence of much of the chain- 
store competition which the town worker has to contend with. And 
again, they have in many states a good buying agency in the farmers' 
central exchange. But in this country also, the farmers have developed 
their marketing organizations far heyond their purchasing societies. 
In the majority of cases the latter spring out of the former as the 
farmers realize it is just as important to control the spending of their 
money as it is to get that money in the first place. 

s New York, Chicago, and other large cities suffer from a dearth 
of co-operative societies. Much of this can be laid to the nature of 
the life which the city resident leads; the multiplicity of his daily 
contacts and the superficiality of his interests tear down within him 
those qualities that go to the making of a good co-operator. He 
develops the mental and spiritual life of the gambler. 


CHAPTER XIV 

THE RELATIONS BETWEEN CO-OPERATIVE 
SOCIETIES AND THE STATE 

[Author's Note.—This chapter, wMch does not ap 
pear under this title in the French text, takes the place of 
Chapters XIII and XIV in tlie French edition, which are 
entitled, "The Legal Aspect of Consumers' Societies" and 
"Taxation," respectively. These chapters are of little 
interest to American readers. We have retained those 
parts which are of general interest, and added a short sum 
mary of the new relations which have been established be 
tween the State and the co-operative societies as a result of 
the war\. 


The relations which can be established between co-opera 
tive societies and the State are manifold, and, at least as far 
as concerns Prance, tend to multiply. They may be grouped 
under the four following sections :— 

(1) Relations with the State in its capacity of legislator: 
The laws about co-operation can be more or less favour 
able. 

(2) Relations with the State as administrator: The 
Government can delegate the administration of certain 
public services to co-operative societies. 

(3) Relations with the State as regards taxation: The 
taxes which apply to co-operative societies can be more 
or less remitted. 

(4) Relations with the State as a lender of capital: 
The State may advance money to co-operative societies to 
help in their establishment. 

207 


y 


 208 CONSUMERS' CO-OPERATIVE SOCIETIES 

1. Legislation 

The legal conditions necessary for the formation and 
good administration of a consumers' co-operative society 
are as follows:—1 

1. A minimum of formalities and expenses in consti 
tuting the society. 

2. A minimum of liability on the part of the members 
for the engagements entered into by the society. This 
is the more necessary in that, since the liability would 
generally fall on workmen, who usually have no property, 
it would, in fact, be illusory. 

3. The division of the capital into very small shares, 
so that it can be subscribed by workers who have only 
small savings. 

4. The possibility of increasing the capital indefinitely 
in accordance with the possible extension of the society 
and the increase in membership. 

5. Civil personality allowing the society to act in its 
own name without having to bring in all its members. 
The different forms of contract of association which the 
law allows consumers' societies are far from satisfying all 
these desired conditions equally well. 

The form usually adopted is a society of shareholders. 
This offers many advantages:— 

(«) The capital is divided into shares which are within 
the reach of all purses. The value of the share, which for 

iThe United States is a federation of states, each having its own 
laws relative to business privileges and practices. Many of these 
states have enacted legislation favourable to the formation of co-opera 
tive corporations; other have given no attention whatever to co-opera 
tion (uuless it be to co-operative marketing among the farmers). 
Where there is no legislation providing for the formation of co 
operatives, these must be formed under the business corporation law, 
and such co-operative features as are desired must be written into 
the by-laws of the society (provided these do not openly conflict with 
the laws under which the society is incorporated). A good federal 
law or uniformity of state laws is much needed. 


CO-OPERATIVE SOCIETIES AND STATE 209 

ordinary companies is generally £20, can be reduced 
to £1 for co-operative societies. Further, it is not neces 
sary to pay the whole value of the share on subscribing 
(to "free" the share as it is called) : it is enough to pay 
one-tenth or the very small sum of 2s. 

It would be difficult to devise easier conditions for the 
formation of capital. 

(fe) The liability of each member is limited to the 
amount of shares subscribed for. It is thus reduced to 
the minimum, though the member is liable for the whole 
share subscribed for, and not only for the part paid up. 
In fact, if a society failed it would be very difficult to make 
workmen pay up the unpaid part. This is the reason 
why every society of this nature in England has to have 
following its name a word intended to warn the public of 
the non-liability of members, namely, the word "Limited." 

(c) A co-operative society should always keep its doors 
open to those who wish to become members or those who 
wish to leave. To this end it is necessary that the number 
of its shares (and in consequence the amount of its capital) 
can increase or diminish at any time. This is essentially 
different from an ordinary company where the capital and 
number of shares are fixed by its articles of association, 
and in consequence no one can become a shareholder until 
he finds an existing shareholder who consents to sell him 
his shares. Co-operative societies are known in French 
legal phraseology as societies "with variable membership 
and capital." The French word "société" is used both 
for companies and societies in the English sense of the 
word. 

(d) The society has legal personality, which means that 
it has an existence in law as distinct from its members. 
In England this legal personality was at first refused to 
co-operative societies, and the law allowed the treasurer 
to steal their cash without leaving them any remedy. The 


 I : 


210 CONSUMERS' CO-OPERATIVE SOCIETIES 

Act of 1852, which gave them a legal existence, was an 
event of capital importance in their development. Its 
passing was due to the generous campaign of the Christian 
Socialists, and also of John Stuart Mill (see above, page 
36). 

An important result of these conditions from the economic 
and social point of view is that the value of the share can 
never rise, however prosperous the society may be. (See 
above, page 101). How can it rise, since the shares register 
is always open to whoever may ask for shares ? The supply 
is always equal to the demand. There is besides another 
reason why the share can never rise in value, whatever 
profits the society may make, and that is, it carries no 
profit, but only a fixed interest. This is a characteristic 
difference from ordinary companies, whose shares, being 
limited in number, can rise indefinitely, and may be worth 
a fortune to the lucky original holders. 

A question with which co-operators are concerned is that 
of the eventual dissolution of the society, and what is to be 
done with the common funds in such a case. According to 
Common Law, if the society is in the form of a commercial 
civil company the common funds should be divided 


or 


among the members. This rule is repugnant to ardent co- 
operators, because they see in such division, and in the 
enriching of the individual which may come from it, a sort 
of bankruptcy of the co-operative idea, and they fear, not 
without reason, that the members, in their eagerness to 
gain this windfall, would themselves hasten the division by 
voting for the dissolution of the society. In order to stop 
such suicide it is often laid down in the rules : ( 1 ) That 
the society shall exist in perpetuity, and that its dissolution 
can never be declared. (2) That in the case of the extinc 
tion or dissolution of the society its assets shall be given over 
to another co-operative society, to a federation, or even to 
the commune, that is the local government body. 


CO-OPERATIVE SOCIETIES AND STATE 211 

As far as the first is concerned the law does not allow 
the members to prevent their successors from doing what 
they have done themselves, and if the members in the 
future are unanimous at any time in deciding on disso 
lution they will always have the right to dissolve. 
Further, if a member can discover and apply some reason 
for dissolution which has been laid down in law dissolution 
can always be ordered by the courts, any clause to the con 
trary notwithstanding. French law, in fact, does not allow 
that any person can bind himself by contract in perpetuity 
any more than it allows perpetual vows. 

As regards the second clause, it is valid in SO' far as it 
applies to acquired money and reserve, but it is not valid 
for capital that has been subscribed by shareholders, which 
cannot be taken from them. 

Those who do not know much of legal matters ask : Why 
so many difficulties ? Why are men not left free to associate 
as they like and to draw up their rules as seems to them 
good? 

The answer is that this freedom could be a great source 
of danger for strangers, and for the members themselves; 
for strangers, because they might become the victims of a 
society which only offered them an illusory security; for 
the members, because they might be robbed by an unscrupu 
lous minority of themselves ; and finally, it would be enough 
for companies to take the often untruthful title of "co-opera 
tive" to have the right to evade all laws. These dangers 
are so far from being unreal that in spite of the laws which 
ure found troublesome they are realized in the most seandu- 
lous way every day.2 

2 Because of the great number of promotion schemes which bear 
the name "co-operative," many states have begun lately to define the 
limits within which that word may be used by a corporation. Even 
these laws however, are for the most part insufficient, and The Co 
operative League has now drafted a Model Co-operative Law which 
is being presented to the various state legislatures. 


 212 CONSUMERS' CO-OPERATIVE SOCIETIES 

But one can at least improve the existing laws by making 
them more liberal. The distrust which the French State 
has always nourished towards all forms of associations still 
weighs on us. 

Up to last June there was no special legislation in France 
for co-operative societies; they were subject to the same laws 
as ordinary companies. Only in 1917 was there a special 
law published, but even this only affected those co-operative 
societies which wished to benefit by the State subsidy with 
which we shall deal later. The principal provision of this 
law of May 13th, 1917, was that only those societies should 
be recognized as co-operative which distributed their profits 
to the consumers, and not to the shareholders. 

We shall also mention the creation in France, in 1917, 
during the course of the war, of a High Co-operative Council, 
which is an official body, inasmuch as its meetings are held 
at the Ministry of Labour and its object is to prepare 
and discuss the legislative schemes which are of interest to 
co-operative societies. This Council is divided into two sec 
tions, one for the producers' and the other for consumers' 
societies. Two-thirds of its members are elected by the 
societies, and one-third are nominated by the Government. 

2 Public Services 

During the course of the war, for the first time in France, 
the State delegated to co-operative societies the manage 
ment of certain public services, that is to say, the socie 
ties were to administer them on behalf of the State or munici 
palities in the interest of every one, and not only of their 
members.3 

s Nothing similar has been done in America. During the war, how 
ever, there were many co-operative ventures among the civil servants 
in Washington and elsewhere. Almost all of these societies failed 
early; and the stores operated by the Post Office employés in New 
York City for several years were closed late in 1921 by order of the 
Government. There seems to be no place for co-operation under the 
Support or protection of the Government in the United States. 


CO-OPERATIVE SOCIETIES AND STATE 213 

This change of tactics began in 1916, when the Govern 
ment handed over to the Parisian co-operative societies the 
sale of frozen meat, the Government having the sole right 
to import this commodity. In the following year the Govern 
ment delegated to the societies the sale of various goods—• 
of which the right of importation was reserved to the State 
—and later they gave them the management and control of 
numerous co-operative restaurants for the working class {see 
pages 131, 132 ).4 

In addition to this, on all the new consulting committees 
which have been created for the consideration of food supply, 
the high cost of living, the struggle against alcoholism, &c., 
the Government has reserved a certain number of places for 
co-operative delegates, so that we may claim that the latter 
now rank among the official institutions of the State. 

3 Taxation 

Until lately the consumers' societies in France were 
exempt from the tax known as the "patente" or licence. 
The Council of State consistently took up the attitude that 
consumers' co-operative societies did not trade in the strict 
sense of the word. Co-operators do not buy for re-sale as 
do traders; they buy to divide among themselves the goods 
they need for consumption. This is so true that the 
employés in a co-operative store are generally called "dis 
tributors" (répartiteurs) not salesmen ("vendeurs). 

It is hard to believe what strong passions have been 
aroused by the question of the licence—on the one hand, by 
the co-operators who claimed exemption, and, on the other, 
by their competitors, the traders, who claimed that the law 
should be applied equally to all. This is the rock on which 
the project of a regular co-operative law split five or six 

* The Staff of the Co-operative Reference Library, Dublin, is author 
ity for the statement that similar action was taken by the German 
and Austrian governments. 


 i 
V 


214 CONSUMERS' CO-OPERATIVE SOCIETIES 

times and was at last completely wrecked, as the majority 
in the Senate were traders, that is to say, in favour of the 
imposition of the licence. 

The question is now solved. The Budget of April 19th, 
1905, brought all co-operative societies within the licence 
law, even those which sold to members only, on the same 
conditions as ordinary traders. The one exception is socie 
ties which have no shops (at least, shops for retail selling, 
but only depots for depositing their goods), and which con 
fine themselves to bulking the orders of their members. 
There are hardly any societies in a position to benefit by this 
exception. This exception was made in favour of agricul 
tural societies. The agricultural societies are co-operative 
purchasing societies, but they purchase for production, and 
not for consumption, and a large number of them are only 
depots which confine themselves to bulking their members' 
orders. They thus come under the exemption laid down in 
law. 

Thus have the traders triumphed. But have the co-opera 
tive societies suffered much by this law? We do not think 
What they feared most in the application to them of 


so. 


the licence was not the pecuniary charge easily com 
pensated for by the profits realized from sale to the public, 
liberty for which is implied in the licence, but the moral 
effect. Co-operators thought, as did their opponents, 
that the application of the licence would cause the co-opera 
tive societies to become like ordinary traders, and so become 
liable to a number of burdensome legal consequences, such 
as being subject to the commercial courts, which are com 
posed of traders, that is to say, their opponents. It also 
involves the civil and even penal responsibility of the officials 
of the society in case of infringement of the laws against 
selling adulterated goods. A more serious consequence is 
the incompatibility of the functions of managing a licensed 
society with the holding of any public offices, and even 


CO-OPERATIVE SOCIETIES AND STATE 215 

certain liberal professions, such as that of barrister-at-law, 
which will have the effect of depriving co-operative societies 
of the help of many persons who could render the most valu 
able service. 

We, however, were always among that small group 
who thought these fears ill-grounded, or at least greatly 
exaggerated, and who held, on the contrary, that co-opera 
tive societies would gain by paying the licence fees. They 
gain freedom of action—which is never bought at too high a 
price —freedom to sell to the public (though it is not neces 
sary to use this power the greater number of societies 
have hastened to use it, since, having to pay the cost, they 
wish also to make the profit) ; and liberty to use their 
profits as they wish. It is worthy of notice that, according 
to the law we have just been writing about, the payment of 
the licence duty not only confers the right of selling to the 
public, but also the power of using the profits for other 
purposes than the repayment of a bonus to the individual 
members, e. g., propaganda, insurance, &c. 

Even though the payment may induce many societies to 
sell to the public it does not necessarily follow that the 
co-operative ideal is debased, or that a trading spirit is 
introduced. The example of the English societies reassures 
us in this respect. It is well worth remarking that the 
socialist societies, which have undoubtedly a real feeling of 
solidarity and fighting fervour, have shown themselves 
strongly in favour of applying for the licence. We must 
remember, however, the rule referred to above (page 74), 
which is that the profits made from sales to the public must 
never be divided among the members, but must be devoted 
to some work of general utility. 

But now that we have the general tax on revenue, is the 
old discussion raised by the licence question to be re-opened? 

In England, the question of the tax on revenue called 
the income tax has been a matter of controversy for a long 


 t L 


216 CONSUMERS' CO-OPERATIVE SOCIETIES 

time. According to the law, joint stock companies have 
to pay a tax on their profits (Schedule D), and deduct it 
from the dividends paid to their shareholders. The traders 
demand that the co-operative societies should be subject to 
the same conditions, and recently (June 7tli, 1916) the 
Manchester City Council passed a resolution almost 
unanimously (except for half-a-dozen councillors, who were 
also co-operators) calling the attention of the Chancellor of 
the Exchequer to the injustice suffered by all who pay 
income tax, owing to the exemption enjoyed by the co 
operative societies. The question having become more acute 
since the war has caused a large increase in the income tax. 
The co-operative societies, however, on their side, have not 
ceased to protest against the payment of income tax, and 
so far the State has taken their view. Their arguments may 
me stated as follows:— 

Co-operative societies cannot be subject to the tax, since 
they do not make profits. Although the English word 
"dividend" seems to confuse the issue, the societies do not 
pay dividends, but, in the more accurate French expression, 
return the overcharge.* It is the rule in England that the 
revenue authorities do not demand the tax from the societies 
with an open share register, which is exactly the case of the 
consumers' societies. Nevertheless, English co-operative 
societies have submitted to paying the special tax on war 
profits. That they consider is a patriotic act on their 
part, but it may always be brought up against them as a 
precedent. 

But when it is admitted that the society is not subject to 
a tax on its income, one may ask whether its members, as 

* Author's Note. This argument always seems to lose its force as 
regards societies which sell to the public, as is the case with the major 
ity of English societies. Co-operators maintain it, however, even in 
this case, on the ground that the profits made by the sale to the public 
are not distributed among the shareholders. This, however, is open 
to argument (see above, page 74). 


CO-OPERATIVE SOCIETIES AND STATE 217 

individuals, should not pay it on their bonuses ? The answer 
is again in the negative, for the same reason as the former, 
namely, that the bonus is not income, but a repayment. 
Lately there was another reason why the tax should not be 
imposed on them. Income tax is not payable except by 
persons with an income of over a certain figure (before the 
war £160, and since the war £130). But the majority of 
the members of co-operative societies have a smaller income 
than this.* 

In France, the question is far more simple and would be 
even more surely answered in the negative for the following 
two reasons:— 

(«) All societies, associations, corporations, &c., are 
formally exempted from the general income tax, so that the 
question cannot be raised as regards the co-operative socie 
ties. The tax is applied to the individual only. 

(b) As regards the members, it would be possible to ask 
whether or not they are liable at law to pay the tax on their 
bonuses. Then the question arises, as in England, as to 
whether the payment is income properly so-called, or sim 
ply a repayment, and the question might be argued for an 
indefinite time. In fact, however, it has little real interest 
because the bonuses are almost negligible in France.-f 

During the war several belligerent countries, notably 
Germany and Italy, have limited the rate of interest which 
companies are allowed to pay to their shareholders, and the 

* Author's Note. But this argument is now ruled out, because since 
the war the exemption limit was reduced to £130. There can be rel 
atively few co-operators in England with an income below this figure, 
especially when we consider the great rise in wages since the war. 

t Author's Note. But the question arises now on the new tax im 
posed in 1920 of 1 per cent, on the turnover (all commercial sales, 
not agricultural ones). As this is a question of a tax on sales, not 
on revenue, consumers' societies, at least, consumers' stores, cannot 
evade it. As for the wholesale societies, the Government wished ' to 
exempt them because they do not sell to individuals. But owing to 
the protests of the traders, who are already working against this 
perfectly legitimate exemption, it will, probably, not be admitted. 


 218 CONSUMERS' CO-OPERATIVE SOCIETIES 

question therefore arises, does this apply to the co-operative 
societies? It has generally been decided that it does not, 
on the same ground that the bonuses distributed by co-opera 
tive societies are not profits. 

These are not the only taxes that may hit co-operative 
societies ; there are many others—all the ordinary duties, the 
tax on personal property, stamp duty on the shares issued, 
the mortmain tax, which falls on all bodies which do not die 
and therefore never pay death duties, and, if the society 
sells wine or alcoholic liquors, the spirit license. The posi 
tion of co-operative societies as regards taxes generally is 
unsettled, not only in France and England, but in all coun 
tries. A curious example of this is found in Switzerland, 
where a recent enquiry showed that the taxes paid by co 
operative societies vary in each canton in the most incredible 
way, from £7 in Bale to £385 in the Grisons ! 

4 State Subsidies 

We have already said (page 113) that in France the con 
sumers' societies, feeling more than ever the need of sufficient 
capital as they grew larger, turned to the government, 
following thereby the example given by co-operative credit 
and productive societies. And we see that the State did, in 
fact, create a fund for them of £80,000 which was distrib 
uted among them in the form of a loan. 

It is to be expected that this subvention will be enlarged 
by degrees (as happens with all such subsidies), but it will 
never be of great importance in comparison with the increase 
of consumers' societies, and above all of wholesale societies. 

During the war the State has given co-operative societies 
far more important advantages in the form of facilities and 
even privileges for the importation, transport, and sale of 
various products. 


CHAPTER XV 

PEODTTC^TIONi BY CONSUMER s' 
SOCIETIES 

Section I.—Stages on the Road to Production 

It is natural that as soon as consumers' societies have 
reached a certain stage of development they begin to consider 
production. This aim is shown in a remarkable degree by 
the name which one of the largest consumers' societies has 
taken, "The Produktion of Hamburg." 

They first consider production solely with the wish of 
economizing by getting food cheaper by producing them 
selves the articles which they used to buy from the manu 
facturer. The very simple notion occurs to them that, after 
they have absorbed the profit of the retail shopkeeper and 
then, through the wholesale society, that of the wholesaler, 
they can go further and absorb the manufacturer's profit by 
making their goods themselves. By this means, since they 
control the products in all their stages, they will reach the 
final limit of cheapness. 

But it is not only for the pleasure of reducing their prices 
that consumers' societies enter production; it is because 
they understand that only by this means can they transform 
the economic organization. Whether they are inspired by 
the collectivists' program—the socialization of all the 
means of production—whether they remain faithful to the 
old ideas of associationist socialism, or whether, without 
abolishing the wage system, they only propose to raise wages 
by giving back to the workers the portions taken from them 
by the landlords and the captains of industry, in every case 

219 


 220 CONSUMERS' CO-OPERATIVE SOCIETIES 

they feel the need of owning or at least controlling produc 
tion.1 It would be to stop half-way and leave their work 
unfinished and inefficient, if they confined themselves to dis 
tributing co-operatively the wealth which would continue to 
be produced under the competitive system. 

The humble Rochdale weavers clearly foresaw all this and 
pointed out the ultimate consequences of consumers' co 
operative association. Readers should remember their 
articles of association, which we have already quoted (page 
85), and particularly the second to last, viz.: ""that as 
soon as is practicable this society shall proceed to arrange 
the powers of production . . . and to establish a self- 
supporting home colony of united interests." They mark 
out for themselves two stages they would have to reach to 
gain this end: "(1) The manufacture of such articles as the 
society may determine upon; (2) To purchase or rent an 
estate or estates of land which shall be cultivated" ; in other 
words, the conquest of industry and then that of agriculture. 
It is true that the rules only contemplated a very modest 
form of production which would give employment to mem 
bers who were out of work, but it is only a question of first 
steps. We shall consider these two points in turn. 

(a) Industrial Production.—Industrial production, that 
is to say, the erection of workshops and factories, is diffi 
cult of achievement by an isolated co-operative society, at 
least unless it has many thousands of members, not only for 
want of the necessary capital (see page 112), but above all 
for want of sufficient outlet for the goods. 

If three hundred families are enough to maintain a 
bakery it is clear that many more are wanted to employ a 

i All these motives are prevalent among co-operative enthusiasts in 
the United States. Probably the commonest motive is the "absorbtion 
of private profits for the benefit of the workers," a direct attack upon 
small Capitalism. The more advanced and radical of co-operators, of 
course, are satisfied with nothing less than the ideal of an economic 
order directly under the control of the organized consumers. 


PRODUCTION BY CONSUMERS' SOCIETIES 221 
factory for making boots, soap, cloth, or cotton. It is only 
such household necessities as were formerly, and still are, 
made at home in country districts as domestic industries, 
such as bread and pastry, pork butchery, and jam-making,* 
which can be attempted with success by a society with a 
membership of only a few hundreds, or possibly a thousand.2 

But from the day when consumers' societies formed federa 
tions for purchasing, and were able to show a solid mass 
of several thousand purchasers, as in England, they were 
able to enter on large scale production without fear. The 
establishing of a purchasing federation or wholesale society 
is an almost indispensable preliminary step, and we have al 
ready pointed out, as one of its principal advantages, that 
it makes production possible. The English Wholesale So 
ciety, which is a unique institution, and perhaps the most 
remarkable economic phenomenon of the nineteenth century, 
has already started a number of factories, which produce 
articles of the most varied nature—flour, butter, bacon, bis 
cuits, sweets, jams, preserves, pickles, chocolate, tobacco, 
cigars, cigarettes, soaps, candles, boots, woollen and cotton 
clothes, corsets, bonnets, hats, brushes, and furniture. There 
is a bacon factory in Denmark, and one for the production of 
grease from sheep's wool in Australia, and forty creameries 
in Ireland.3 The Scottish Co-operative Wholesale Society 
has also important factories, which have furnished many 
goods to the Russian government during the war; the two 
together have produced goods to the value of £12,600,000. 

* Author's Note. It is curious that an essentially domestic and 
very important industry, the laundry industry, has never been under 
taken by consumers' co-operative societies in France. 

2 There are no wholesale productive works under the control of 
organized consumers in the United States except the biscuit works of 
the Co-operative Central Exchange of Superior, Wisconsin. Some 
societies have bakeries, creameries (where butter and cheese are 
made), etc. A few co-operatively hire a tailor to make them suits of 
clothes. Large scale production, however, is still in the future. 

3 The C. W. S. creameries in Ireland have lately been given over to 
the control of the Irish productive societies. 


 222 CONSUMERS' CO-OPERATIVE SOCIETIES 

Besides this, production by retail co-operative societies, 
which produce goods on their own accounts, reaches a total 
of £15,550,000, which means that goods to the value of 
nearly £28,000,000 are already produced by the federated 
or isolated consumers' societies of Great Britain (all these 
figures refer to 1914).4 * Doubtless, these figures, though 
they appear large, do not represent one-third of the total 
goods consumed by British co-operators, they have still 
a long way to go before they will fulfil the Rochdale pro 
gram of producing everything they consume and becom 
ing self-supporting. But still step by step they are ap 
proaching to this ideal, for the ratio between the total pro 
duction and the total consumption is rising regularly and 
fairly rapidly. If we take into consideration the fact that 
the total sales of co-operative societies (£88 millions in 
1914) only represents a bare £76,000,000 at wholesale prices 
(see above note, page 54), it may be said that British co- 
operators already produce nearly one half of what they con 
sume. Here are the comparative figures for 20 years 
(1895-1914):— 

1895. 


1914. 


Production ... ... ... ... £6,000,000 

Turnover ... ... ... ... £34,000,000 

Proportion ... ... ... ... 18% 

Production ... ... ... ... £32,200,000 

Turnover ... ... ... ... £88,000,000 

Proportion ... ... ... . . 37% 


* For 1918, the Staff of the Co-operative Reference Library gives 
the following figures:— 

The two Wholesales £33 millions 
Distributive Societies £23 " 
Productive Associations £ 3 " 

£49 millions 

* Author's Note. More than half this figure represents the produc 
tion of bread and flour which, in France, is not classed as production 
properly so-called, but as consumption. 

The total given does not include articles produced by self-governing 
productive associations, whose turnover reaches £1,800,000 (I should 
say that the figures vary greatly in different statistical tables because 
the definitions which are given of productive associations vary). If 
the figures for production by consumers' societies is added the grand 


PRODUCTION BY CONSUMERS' SOCIETIES 223 

Thus in a relatively short time production has increased 
more than five fold, while the turnover has not quite trebled. 
All the same, it is worthy of remark that even though 
production equals the turnover that will not mean that 
co-operation is entirely self-supporting. Industrial produc 
tion is the manufacture of raw materials purchased else 
where, the value of which naturally appears in the figures 
given in the table. This brings us to the necessity for co 
operative societies entering into the production of raw mate 
rial. 

(fc) Agricultural Production.—Industrial production has 
for its sole object the production of manufactured goods 
—clothes, furniture, hardware—or the preparation of food 
products, but these are only a part of the goods handled 
by consumers' societies. We know, in fact, that the greater 
number of these societies are grocers, bakers, or green-gro 
cers, which means that they deal chiefly (and often exclu 
sively) in the fruits of the earth, home-grown or imported. 

The sale of coal and oil, which are also products (if 
not of the soil, at least of the earth), also has an important 
place in their sales. Therefore, if they really wish to be 
self-supporting they must turn towards agriculture, and 
even mining, and that not only on British territory, but 
overseas also. The English co-operative societies already 
sell 16,500,000 bushels of wheat, and the wholesale societies 
sell 1,500,000 tons of coal and 7,500,000 Ibs. of tea. These 
figures would be more than trebled if each co-operator did his 
duty. 

Even before the day of the Pioneers, the Congress of 
1832, under Owen's inspiration, declared that it must be 
understood that the final aim of all co-operative societies was 
"community on land." 

total of British co-operative production rises to £30,000,000 for 1914. 
In 1920, the figure for the two wholesales is more than 40 mil 
lions. But this increase is due chiefly to the rise in prices. 


 224 CONSUMERS' CO-OPERATIVE SOCIETIES 

The late war has given a great impetus to this move 
ment, for the co-operative societies, in trying to fight against 
high prices and excess profits, have found themselves impo 
tent in so far as they do not control the very sources of pro 
duction—the soil and raw materials. ( See in the last chap 
ter, the tendency of co-operators towards agricultural social 
ism. ) It should be stated that this control is not only neces 
sary for the production of foodstuffs, but also to secure the 
raw materials which are necessary for industry, which also 
come from the soil. The English co-operative societies sell 
£1,000,000 worth of boots and shoes annually, but how 
can they reduce the price of them, since they depend on 
leather merchants and tanners ? And what use would it be 
to them to be curriers and tanners, if they could not supply 
themselves with hides by raising cattle? And how can they 
raise cattle without owning land? Thus we always come 
back to the land. 

From these considerations has sprung what is known as 
the Shillito League (from the name of one of the chairmen 
of the English Wholesale Society, who suggested it in his 
presidential address at the Co-operative Congress at Don- 
caster in 1903). The Shillito League, formed in 1915, thus 
defined its program. ' "It desires to crystallize the vague 
mass of thought in the movement, now in favour of co-opera 
tive ownership of the sources of. raw materials. It is in 
favour of the purchase of large areas of land in this coun 
try, in Canada, Argentina, India, or elsewhere, that may be 
found necessary and desirable for the production of cattle, 
wheat, tea, cereals, or other supplies. ... It recommends 
the purchase of coal mines or coalfields in this country, as 
and when favourable opportunities present themselves."B 

This ambition is not, however, confined to English co- 
operators. In Switzerland it is also manifest, as is shown 
by the program approved by the Congress at Schaffhausen 

5 The Shillito League has ceased to exist 


PRODUCTION BY CONSUMERS' SOCIETIES 225 

in 1916, by 256 votes to 105, and which is as follows:—• 
"This assembly, considering:— 

(1) That it is the duty of the Union in the interests of 
consumers to undertake production in all its branches, agri 
cultural as well as others ; 

(2) That this cannot be accomplished without the acquisi 
tion and working of agricultural lands ; 

(3) That this acquisition, if it is possible at a moderate 
price, does not involve heavy risks ; 

(4) That the Swiss Union is in a position to find the 
money for the purchase of one or more agricultural holdings 
without tying up its funds to the prejudice of its other 
branches of activity; 

Authorizes the Committee to acquire one or more agri 
cultural holdings on behalf of the Swiss Co-operative Union. 
For this purpose it authorizes the raising of the necessary 
credit up to a maximum of £14,000." 

The Shillito program has already caused projects to be 
formed, such as the purchase of 100,000 acres in Canada, 
which will cost £160,000, and may bring in about a million 
and a half bushels of wheat; the purchase of 25,000 acres 
of tea plantations in Ceylon, which will partly suffice for the 
present trade in tea of the Wholesale Societies ; and the pur 
chase of coal mines, which was the order of the day long 
before the war. 

The end is still far off, but the movement is slowly pro 
gressing in that direction. There are already more than 
one hundred societies in England which have bought or rented 
25,500 acres of land for agricultural purposes, and among 
them, naturally, is the C. W. S. which has seven estates 
(in all 32,000 acres, on which it already produces straw 
berries, gooseberries, tomatoes, &c. ). The farms are gener 
ally run as they were before being purchased by these co 
operative societies, as the co-operators did not wish to dis 
miss the farmer. But this is only a provisional arrange- 


 226 CONSUMERS' CO-OPERATIVE SOCIETIES 

ment. It has also eight tea plantations in Ceylon and 
India, with a total area of 18,000 acres, which already pro 
duce a large part of the tea consumed by the co-operative so 
cieties. To sum up, there are already a number of English 
co-operators who enjoy their own tomatoes and straw 
berries, and drink their own tea. Purchases of land are 
becoming more and more frequent. We should also mention 
the purchase by the Wholesale Society, five or six years ago, 
of a forest of palm trees in West Africa (Sierra Leone), 
which supply the raw material for making soap. By this 
means the C. W. S. was able to get behind the big soap 
Trusts. 

It cannot be said that these experiments have been very 
encouraging so far. The cultivation of the 14,500 acres 
held in 1916 yielded profits of £8,863 and a loss of £5,865, 
leaving a net balance of £2,998 profit, which, for a capital 
of £427,000, only represents % of 1 per cent., or 10s. 6d. 
per acre. The profits were higher in 1917, £32,000, and 
£26,000 in 1918 ; yet if we take into consideration the great 
increase in area of the estates which have nearly trebled, the 
results are not much better. But it is a question of net 
profit, which is to say, that the interest on the capital of 
purchased estates and the rent of leased estates appear on 
the debit side of the balance sheets. 

Nevertheless, we must acknowledge that, in all experi 
mental work, whether in the domain of sociology or of 
science, the average result is a very bad test. One single 
success would weigh more heavily in the balance than a hun 
dred failures. It was to be expected that the consumers' 
societies, formed entirely of town workmen and clerks, would 
be badly fitted to undertake farming. Anything else would 
have been astonishing; but all the same some attempts at 
agricultural development by consumers' societies have suc 
ceeded very well. Thus one small society with an estate of 
200 acres, made a net profit of £120, and £226 was set aside 


PRODUCTION BY CONSUMERS' SOCIETIES 227 
as a sinking fund. The tea plantations have also produced 
good results. 

There is reason for thinking that one of the causes of 
the ill-success of many of these farms is that, like their neigh 
bouring farms, they produce for sale instead of producing 
solely for their members' consumption. It is forgotten that 
if co-operators farm it should be not to sell the products but 
to eat them. The landowner who lives on his land and its 
products, even if he does not make much, does not lose, and 
lives well. This is what consumers* societies ought to do. 

It has been calculated that an estate of 1,000 acres should 
suffice for the needs of a society of from 2,000 to 3,000 
members. 

(c) Public Services.—Public services, such as the working 
of tramways, gas and electric lighting, and above all railway 
and water transport, seem altogether, and for ever out of 
the range of a consumer's society. But why ? Is it because 
of the large capital needed? It does not require more than 
the great co-operative federations possess. Is it because of 
their nature, which is that of service rendered, rather than 
the supply of material goods? Not so, for the telephone 
service, which is of the same nature, is worked co-operatively 
in many towns in the United States, as we have already 
said.0 Is it because it is the nature of these services to be 
offered to all, to be public in the broad sense of the word, 
and because it would not be morally or materially possible 
to reserve them for a group of associated persons? This 
reason seems no more conclusive, since we know that many, 
if not most, of the consumers' societies sell to the public. 

The true reason seems to us to be that the public service 
does not lend itself to the law of gradual expansion and prog- 

8 In instances where these telephone societies have proved that there 
>s a real desire or need for telephone service and that such service 
amply pays for itself, the private telephone corporations are now 
either attempting to huy up this service or they are opening up other 
lines in opposition to the co-operatives. 


 228 CONSUMERS' CO-OPERATIVE SOCIETIES 
ress—like that of all living bodies—which characterizes all 
forms of association. It must be born full-grown and fully 
armed. A tramway or city railway system is only useful if 
it embraces from the beginning all the principal streets of 
the town, and we cannot imagine it beginning in one street 
and then extending its lines according as members join it. 
This is why public services can only be created under the form 
of big capitalist or municipal enterprises. 

But, when considered carefully, is not this last form co 
operative? Is not its only object to supply as cheaply as 
possible the needs of consumers without seeking any gain, or 
if there are gains, are these not like the bonuses of co 
operative societies, in the sense that they are used for 
the purposes of general utility or even returned to the 
consumers, that is to say to the inhabitants of the town, in 
the form of a reduction of rates? For it is obvious that if 
a municipal authority gains money in the form of profits 
from public services it has so much less to collect from the 
ratepayers. 

We, therefore, are led to regard municipal enterprises 
as a form of co-operative association including all the in 
habitants of a town, as private co-operation developing into 
public co-operation. No doubt the difference exists, which 
economists and individualists maintain with some heat, that 
is, that the so-called association is compulsory, since each 
individual becomes a member by the simple fact of his 
residence, and his subscriptions, if they may be so-called, are 
taken in the form of taxation. 

We do not seek to dispute this distinction, nor to con 
sider it of little importance. Still, it may be said that there 
are many legal forms of contract recognized by jurists under 
the significant name of "contracts d'adhésion," in which 
free consent is presumed though not expressed ; for example, 
the implied condition that a tenant taking a house renders 
himself liable to all the rates aiyj ta,xes, qy a. member on 


PRODUCTION BY CONSUMERS' SOCIETIES 229 

joining a club to its rules. Can it not be said that the fact 
of going to live in a town or remaining in it (since it is 
always possible to move elsewhere), constitutes a sign of 
adhesion to an "implied contract" of association with the 
inhabitants of the town, and in consequence the difference 
between what is called the co-operative association and what 
is called the municipality is one of degree rather than of 
kind? 

This difference may well be justified by the fact that it is 
here a question of needs, such as light, water, and means of 
transport from the home to the place of work, of so universal 
a nature and so necessary that they may be said without 
exaggeration to impose themselves equally on all citizens. 
It is not possible to refuse them, and a refusal ought even 
not to be permitted. Strictly speaking, co-operation and na 
tionalization meet (as mathematicians say of parallel lines) 
at infinity—whether it be a consumers' society like the Bale 
Konsumverein, embracing nearly the whole population, which 
is a truly public service, or whether it be an undertaking, 
like the National Pire Insurance Company, of Saxony, ad 
ministered by the insured people, which makes it literally a 
co-operative society. 

Thus, one is led to distinguish two or even three forms 
of enterprise corresponding with three degrees of needs. 

(a) Individual enterprise for all new needs or those which, 
without being new, are matter of individual taste, such as 
artistic industries. 

(b) Co-operative enterprise for all needs of general 
consumption ; uniform, homogeneous, but still facultative. 

(c) Public municipal or State enterprise for all necessary 
or universal needs. 

In every case, even when these distinctions seem too 
subtle, it is certain that co-operative societies will tend more 
and more to look upon municipal enterprises as their close 
relations, and will insist on co-operatizing them and taking 


 230 CONSUMERS' CO-OPERATIVE SOCIETIES 

away from them their administrative and bureaucratic char 
acter so that they may be controlled by the consumers them 
selves outside of political influence (this will not be displeas 
ing to the liberal school of economists). Whenever possible, 
they will even call on the municipality to delegate to them 
the running of the enterprises. 

The same conflict which we shall next discuss in other 
branches of production will renew itself here, for the em 
ployés of public -services also seek to form themselves into 
co-operative associations, of production, not of consumption, 
and also demand that the municipalities, and the State should 
hand over to them the running of the enterprises. 

But perhaps it will be possible to reconcile these hostile 
demands by the same means which we shall consider later, 
and that in the future we shall see the association of con 
sumers controlling the industry for the working of land, but 
handing over its actual carrying out to workers' associations. 

Section II.—The Conflict between Consumers' Co-operation 
and Producers' Co-operation 

In taking up production, consumers' societies not only 
come into collision with private firms, but also with another 
form of co-operative enterprise, the industrial productive 
association, whidh maintains that this part of the work is its 
province. Here arise a conflict of rights which forms what 
is undoubtedly the most important question in our study and 
the most difficult to solve; for it goes to the very roots of 
economic science in propounding this question: "To whom 
does the profit taken from the capitalist belong? To the 
worker or the consumer?" 

This book does not deal with co-operative associations for 
production, but it is well known that under this title is under 
stood a grouping of workmen in the same industry who 
themselves produce certain goods or do certain work and 
divide among themselves the profits of their labour. They 


PRODUCTION BY CONSUMERS' SOCIETIES 231 

are businesses which sell to the public, like any form of 
privately-owned enterprise, but with this essential difference, 
that the master is eliminated and replaced by a little republic. 
The types of these republics are very varied. It is also well 
known that this particular form of co-operative association 
has created great enthusiasm, particularly in France and 
during the revolution of 1848, and also in England among 
the "Christian Socialists," and that for a whole generation 
it was looked upon as the solution of the social question. 

Finally, though they have not realized the great results 
expected, these associations have developed steadily, and 
have achieved some startling successes in various countries, 
particularly in France. The best known of these are the 
Familistère at Guise, the painting and decorating society 
known as Maison Leclaire, and the Joiners' Association in 
Paris. 

Such being the circumstances, it is easily understood that 
the productive associations—which already had sufficient 
work before them in ifighting the private firms—would not be 
very pleased to see the consumers' societies poaching on 
their preserves.* This so much the more since they have 
the same aim, namely, to gain the control of production. 
They further use exactly the same means as the consumers' 
societies, federating to suppress competition and in order 
to sell the goods they produce to more advantage just as the 
others are federated to produce better the goods they sell. 
This federation of co-operative productive societies already 

'Author's Note. It is amusing to see in France how the productive 
societies despise the consumers' societies. A few years ago the official 
paper of the productive associations, in reporting an interview with M. 
Doumer, à propos of legislation for co-operative societies, gave the 
words of M. Ladousse, director of the Association of Upholsterers, and 
formerly President of the Council Chamber, as follows: "Mr. Ladousse, 
interrupting M. Doumer, expresses the opinion that consumers' societies 
have a very limited social action, and that they can only be considered 
as a means of ameliorating the material condition of the workman by 
procuring goods for him, and groceries in particular, cheaper than 
the ordinary trader." 


 232 CONSUMERS' CO-OPERATIVE SOCIETIES 

exists in France under the name of "Chambre Consultative" 
(Advisory Chamber), and there was even an abortive attempt 
to create a retail store. 

These claims seem absolutely incompatible, and it is not 
easy to decide off-hand between the two systems, for each of 
the two has strong arguments to bring against the other. 

We shall first take the partisans of production by self- 
governing associations, which is called in England the indi 
vidualist system, although it concerns associated, not indi 
vidual enterprise. They say:— 

( 1 ) Associations of producers ought by their very defini 
tion to be more competent in matters of production than 
associations of consumers. To give over production to the 
consumers is asking people who know nothing to do every 
thing ; it is to do away with the laws of the division of labour 
and of the specialization of function, and to endanger all 
the economic progress which has resulted from them. More 
over, experience shows that the consumer is passive, inert, 
and a slave to routine, one who is backward in following 
technical progress and who never takes the initiative. 
Everything new in the industry and fashion has come from 
producers. 

(2) Co-operative productive associations are the only 
means by which one can hope to realize the emancipation of 
the working class from the wage system; they can enable 
the workers to become their own employers and to retain 
the whole fruits of their labour. On the other hand, the 
consumers' co-operative movement in taking production 
into its own hands will only perpetuate the wage system, 
for workmen in the employ of a consumers' society are not 
in any different circumstances from those working for an 
employer or a joint stock company. They are, and will 
always remain, wage earners. It is true that they will be 
wage-earners employed by other workers, but what will they 
gain by that? 


PRODUCTION BY CONSUMERS' SOCIETIES 233 

Is it freedom? Those who have experience of co-opera 
tive societies know that a worker finds in his fellows an 
employer worse than a bourgeois master. 

Is it pay? The worker will get no more than a private 
employer—perhaps a good employer—will give him. He 
certainly will not have the whole produce of his work, since 
from the work done by him a part equal to the employer's 
share will be taken from him, the sole difference being that 
the part which goes to the consumer will not be called a 
profit, but a bonus. Take, for example, a worker in a boot 
factory who produces goods of the selling value of £120. 
Whether he is working for a private employer or a co-opera 
tive society, in neither case will he get more than his wages, 
say, £80, while in a self-governing productive association 
he will gain the profit also. 

On the other hand, the partisans of production by means 
of federated consumers, i. e., wholesale societies (this is the 
system the English call federalist) have good replies to these 
two arguments:— 

(1) It is true that the consumer is incompetent from the 
technical point of view, but he is not asked to make his 
bread or his shoes himself; it is obvious that he will have 
them made by persons skilled in the work. The law of the 
division of labour, therefore, is not infringed. The new 
order will simply have the effect of giving the consumer the 
control of the production. Besides, the fact of having as a 
director a man who is not skilled in the particular business 
does not necessarily mean inferiority. This is not a paradox. 
To direct a business well, it is necessary to know what is 
wanted and whither things are tending, but a knowledge of 
the technical processes of manufacture is not indispensable, 
still more it is not necessary to be able to do the actual work 
of production. 

It must be admitted that in the present state of economics 
the consumer shows himself little apt to exercise the 


 234 CONSUMERS' CO-OPERATIVE SOCIETIES 

economic lordship which is proposed for him. But people, 
whether they are consumers or not, will do nothing so long 
as they are not called on to do anything. It is only now that 
the consumer is beginning to feel his rights and responsibili 
ties. The consumers' leagues formed some years ago in the 
United States, and recently introduced into France, are a 
striking proof of this. The entry of associated consumers 
into the realm of production will be the best way of educating 
them both economically and socially. 

(2) It is true that the consumers' society when it pro 
duces for itself does not do away with the wage system 
and in so far does not realize the dreams of the French 
socialists of 1848. But it at least abolishes the capitalist 
employer, and in reality that is all they wished for. The 
workmen employed by a consumers' society are not only in 
the service of their comrades, as a critic of the system said 
a short time ago; if they have the co-operative spirit they 
can become members of the society. Working for a society 
of which one is oneself a member is very like working for 
oneself; in any case it is very different from the old wage 
system, and it is worth noting that it has more resemblance 
to than difference from co-operative production, because this 
last nearly always finds it necessary to have resource to 
wage-paid work. 

It is said that the workman who is employed by a con 
sumers' society gets only his wage and not any part of the 
surplus, which goes into the total profit, and is then divided 
among the consuming members. But it is forgotten that if 
the worker is himself a member of the society, and if he 
there spends the whole or only three-quarters of his wages of 

In support of this theory he cites a curious proof found in the rules 
of a co-operative productive society at Sens—"la Laborieuse"—an as 
sociation of shoemakers, who decided that the manager should never 
be chosen from among the shoemakers! As a matter of fact he was 
ß compositor. 


PRODUCTION BY CONSUMERS* SOCIETIES 235 
£80 he can get a bonus of from £6 to £8, and so will find 
himself in the same position as a worker in a productive asso 
ciation, with the one difference that, instead of getting his 
profit in his capacity of producer he gets it in his capacity 
of consumer. But what does it matter whether he gets it with 
one hand or the other. Is it asserted that he would receive 
much more in a productive society? It is not certain. We 
see, for example, that in England, in 1902, the 92 self-govern 
ing co-operative productive societies sold £1,800,000 worth 
of goods, on which they made £102,400 profit. This 
does not give even 6 per cent. ; therefore, according to 
the example given above, the working shoemaker getting 
£80 salary, and producing to the value of £120', would only 
receive £6 odd as profit. Now, the average rate of bonus 
in English co-operative societies being 13^2 per cent, he 
would be entitled to a profit of £10 odd in a consumers' 
society, where he could spend his £80 of wages. In France, 
the general figures of the profits of industrial productive 
societies are not published, but it is unusual for their divi 
dends to reach 10 per cent, on the wages paid. 

On the other hand, the federalists, among whom are all the 
socialists, say contemptuously that the self-governing co 
operative productive association will always be powerless to 
achieve a social transformation of the magnitude of the 
abolition of the wage system, as it can only raise a few small 
groups of workers a few degrees. It can remove them from 
the wage-earning class of small associated persons, but these 
scattered and sporadic enterprises will bring no better con 
ditions to the working-class as a whole. What is even 
worse, it draws from the working-class movement its most 
intelligent and energetic members. And the history of co 
operative association for production proves its power- 
lessness. What has it done in the last sixty years, even 
in France, the country of its birth ? It has grouped together 


[II III 


 236 CONSUMERS' CO-OPERATIVE SOCIETIES 

20,000 members who produce goods to the value of £2,800,000 
(before the war). The results are hardly better in Eng 
land, and much less in all other countries. Mr. Shillito, 
the president of the Wholesale Society, at the congress at 
Doncaster in 1903, proudly contrasted the progress of pro 
duction by the federated consumers with that of production 
by the self-governing1 productive federations. If we take 
the last two decennial periods we shall see (replacing the 
figures [1895-191*] quoted by Mr. Shillito, by the later 
ones) that the production of the self-governing workers' co 
operative societies has only risen from £900,000 to 
£1,800,000,* which is an increase of 100 per cent., while 
the production of the two wholesales, the English and the 
Scottish, has risen in the same period from £157,000 to 
£12,608,000 which is an increase of more than 700 per cent. 
(See Reports of General Co-operative Survey Committee, 
1919, page 278.)7 

Even if it were admitted that the productive co-operative 
societies could develop until they had conquered all industry 
what sort of nation would be formed thereby and with what 
spirit would it be animated ? It would be solely animated by 
the individual trade interests; the general public interest 
would 'be sacrificed to the interests of the various corpora- 

* Author's Note. In these statistics of self-governing societies for 
production we do not include co-operative mills, as these are merely 
dependent on the distributive societies with the object of supplying the 
latter with flour. Besides, in the course of this decade, they have de 
creased in importance, owing to the competition of the mills belonging 
to the Wholesale. 

7 The producers' co-operatives in the United States have had even 
more trouble than the consumers'. At the present time there are a 
few of these in existence:—tailor shops, cigar factories, bakeries, etc.— 
but the number of failures seems to keep pace wth the number of 
new associations that spring up all over the country. The organizers 
find themselves very heavily handicapped from the beginning. They 
cannot raise sufficient capital, they cannot find a dependable market 
for their product, and they cannot find workers willing to work as 
hard for themselves as they are compelled to work for the private 
corporation. 


PRODUCTION BY CONSUMERS' SOCIETIES 237 

tions. It would be the reign of competition and the struggle 
for profits as today, with the only difference that there 
would be no big employers. The amount of progress would 
be very small. 

The federalist system has the rare advantage of being at 
once supported by the business men and the socialists; 
the business men support it because of the good results 
obtained, the socialists, because a social system where all 
production is in the hands of all the consumers associated 
together, and where production instead of being a separate 
enterprise will be organized in the form of "social service," 
comes at the head of all collectivist programs. If we 
imagine the Wholesale Society of Manchester enormously 
grown until it has absorbed all the manufacturing and agri 
cultural industry of England, owning all the means of pro 
duction, and elected by all the consumers (that is to say 
every one) we shall get a view of what a collectivist state 
might be, or, as the Germans call it, of a "Social Democ 
racy." 

That is why all the congresses of the socialist co-operative 
societies in France demand organization of production by the 
consumers' -societies.* In fact, since the socialists give to 
co-operation no other aim than the socialist aim of trans 
forming1 capitalist property into collective property, it is 
clear that a good way of coming together is for the produc 
tive co-operative societies to become the property of all the 
consumers. But this view is far from being pleasing to every 
one, and it is because of this dangerous resemblance between 
federalist co-operation and collectivism, and through fear 
of seeing co-operation end in a reign of bureaucracy and 
centralization, that many co-operators remain faithful to the 

* Author's Note. However this claim of the socialist co-operative 
consumers' societies to absorb the productive societies has caused 
quarrels with the latter, notably a disagreement with the wine sellers' 
associations, from whom the socialist co-operative societies purchased 
wine. 


 I. 


238 CONSUMERS' CO-OPERATIVE SOCIETIES 

old system in spite of its faults, that is of production by free 
associations of producers, federated as far as possible. 

Such is the opposition between the two systems. But is 
it irreconcilable so that one must choose the one or the other? 
Should it not rather be admitted that each has its merits and 
that each should find its place in a general co-operative 
organization? We hold this view, that even if it were 
assumed that the consumers' societies embraced the whole 
population of the country and furnished it with all the 
articles needed for household consumption (which is far from 
being realized), and that all they sold was produced by 
their members in their own factories, many thousands of 
workers would remain outside the co-operative consumers' 
ranks as producers, namely, all the workers employed in the 
service of the State, the municipalities, the railways, the mer 
cantile marine and sea fisheries, in manufacture for export 
and even in artistic and luxury industries which it is hardly 
possible, or even desirable, to bring into the co-operative 
form. Besides this, there are all the land workers and min 
ers, for it can be seen, from what we have already said, that 
it will be a long time before the co-operative consumers' so 
cieties have bought out the land and its minerals. There 
fore, in this great field outside the consumers' movement, 
why should not the productive co-operative societies have 
the right to set up an independent movement if they can? 
Even in those industries which may be considered as being 
by right inside the economic sphere of the consumers' socie 
ties, and destined one day to be absorbed by them, why should 
not co-operative production establish itself temporarily in 
such a way that when the time is ripe it will be absorbed as 
an organ of the Wholesale Society? 

In England, the conflict of systems which we have just 
considered does not prevent the most intimate relations being 
formed between producers' and consumers' co-operative 


PRODUCTION BY CONSUMERS' SOCIETIES 239 
societies. In fact, the producers' societies look to the con 
sumers' societies for :— 

(1) The capital necessary for setting them up—which 
they would have great difficulty in finding themselves—while 
the consumers' societies sometimes do not know what to do 
with their surplus capital. That is why half the shares of 
the Paisley Productive Society, one-third of those of the 
Hebden Bridge Society,8 and six-sevenths of those of the 
Airedale Society belong to consumers' societies. The same 
is true of the Scottish societies, of which it is hard to say 
whether they are independent or simply branches of the con 
sumers' societies. The German socialist, Lassalle, asked the 
State to provide 100 million thalers (£15,000,000) for 
workers' associations, and believed that with this sum he 
would be strong enough to realize social democracy. The 
consumers' co-operative societies could place about double 
this sum at the service of the workers' productive associ 
ations {see page 116). 

(2) Customers, which are even more indispensable to 
their existence than capital, and not less difficult to find. 
Thanks to the consumers' societies, a productive association, 
—(for example, one of working shoemakers—knows in 
advance how many boots it will have to supply, and can work 
with a certainty of a market. 

In France, things cannot be worked in the same way, for 
the two kinds of relationships which we have just pointed out 
are both almost impossible. The French consumers' societies 
have barely enough capital to supply their own actual needs, 
or else have too often locked up their capital in buildings 
and shops. If they are unable to supply the productive 
societies with help in the form of capital they are hardly in 

»The Hebden Bridge Society, which is, according to the Staff of 
the Co-operative Reference Library of Dublin, the oldest Producers' 
society in England, has recently been absorbed by the Co-operative 
Wholesale Society. 


 240 CONSUMERS' CO-OPERATIVE SOCIETIES 
a better position to provide them with customers, for the 
obvious reason that most of the French consumers' societies 
sell only groceries or bread. What then can they buy from 
workers' productive associations? 

This is why the understanding between consumers' and 
producers' societies, which has often been approved at con 
gresses, has remained until now a pious hope. One may, 
however, refer to a few isolated successful attempts. The 
workers' glass works at Albi, a workers' association manu 
facturing paper bags in Paris, and, in Belgium, the Weavers' 
Society at Ghent, have been formed by capital which has 
been supplied to them in part by the consumers' societies, and 
have more or less succeeded, thanks to the latter's pur 
chases. Certain consumers' societies had paid temporarily 
20 per cent, above current prices for bottles to keep the 
workmen's co-operative at Albi going when it started. 

Further, even supposing the collaboration between con 
sumers' and producers' societies were realized, this solu 
tion does not solve all the difficulties. If a sleeping partner 
ship is formed between any consumers' society and any 
individual producers' society it would mean the development 
of anarchy in production, which would perhaps be hardly 
better than the existing competitive system. On the other 
hand, if the sleeping partnership comes from a wholesale 
society, acting on behalf of the local societies, the produc 
tive societies would find themselves no less at the mercy 
of the formidable customer than do the small manufacturers 
who today work for the "Bon Marché" or the "Louvre" 

In short, this form of relationship necessarily implies con 
trol. The consumers' societies, in their double capacity of 
chief customers and chief shareholders of the producers' as 
sociations, would of necessity have a deciding influence on 
their actions. And though this influence might be very 
healthy, in that it would maintain in the workers' associa 
tions the administration they so often lack, it must still be 


PRODUCTION BY CONSUMERS' SOCIETIES 241 

recognized that the control would be such that it would make 
the self-government of the producers' associations almost 
illusory, and would end in a state of affairs very like feder 
alist co-operation if, for example, the consumers' societies 
were the sole customers of the producers' association. It 
is clear that this is the tendency in England, in spite of the 
efforts of Vansittart Neale and Holyoake in the last gener 
ation and of Aneurin Williams and the co-partnership 
school today. While this school wishes the consumers' so 
cieties to confine themselves to supporting the productive 
associations until the day when the latter are able to stand 
on their own feet,* the consumers'. societies have, in fact, 
reached a higher stage of organization and federation than 
the producers' societies, and more often strangle them than 
help them. Thus in England in 1910, one of the most 
powerful co-operative productive associations (that of the 
hosiery workers of Leicester) was bought by the Wholesale, 
and consequently ceased to exist as a self-governing body, 
becoming merely a factory belonging to the Wholesale. The 
workmen-members protested vigorously, but the distributive 
societies, who held two-thirds of the shares, and gave the 
largest orders, voted for the transfer to the Wholesale and 
the working-members, who possessed only one-seventh of the 
capital, were unable to prevent this absorption. It has been 
said that it would have been better if the English and Scot 
tish Wholesale Societies instead of building so many fac 
tories had used the same capital to finance producers' as 
sociations; but it is doubtful whether they would have ob 
tained the same results by this method. 

It seems, however, that agriculture ought to lend itself 
well to this form of understanding, for we have already seen 

"Author's Note. Mr. Vansittart Neale said at the Congress of 
1889, that the distributive societies should do for the productive socie 
ties "that which a mother does for her child—feed it, clothe it, and 
teach it to walk, until it is strong enough to go by itself." 


 242 CONSUMERS' CO-OPERATIVE SOCIETIES 

that consumers' societies have not succeeded very well in 
agricultural work. For this reason would they not do better 
to leave the cultivation of the -soil to workers' co-operative 
societies—either by letting the ground to workers who would 
become a farmers' co-operative society—or even by helping 
them to form themselves into co-partnership associations? 
There would still be a great difficulty to overcome, because if 
these agricultural co-operative societies had to send all the 
produce of their farms to the consumers' society they would 
be at its mercy, since it could fix whatever price it wished 
and if, on the other hand, the agricultural co-operative socie 
ties had the right to sell in the open market, the consumers' 
society would hardly have any advantage in supporting 
them.* 

What is to be done to settle this difficult question? Let 

* Author's Note. Co-operative societies for production, which are 
not at all numerous in industry, can, on the contrary, be counted by 
the thousand in agriculture, but they are very diverse in their nature. 
Thus, there are:— 

(a) Agricultural Credit Societies, which have no connection with 
the distributive co-operative store; 

(6) Agricultural Purchase Societies (called syndicats agricoles 
in France), which resemble the distributive societies in the sense 
that they also buy to distribute among their members; but that 
which they buy is destined for agricultural production, and not for 
personal consumption. They bear no relationship to our consumers' 
societies ; 

(c) Agricultural Societies for Production and Sale, which are 
still less common, except in the matter of butter production. It 
would seem natural that the distributive societies would combine 
with them by buying the food which they produce, butter, wine, 
vegetables, &c. Nevertheless, repeated attempts in this direction 
have failed. This may be explained by the fact that these co 
operative societies are composed exclusively of country landowners, 
and are thereby completely outside the industrial and co-operative 
movement ; 

(d) Co-operative Farming Societies, formed by agricultural 
labourers, who combine with the object of working collectively some 
land which they buy or rent. These are still in an experimental 
stage. However, these collective farms (affitenze collective), are 
fairly numerous in Italy. In England, there are also some hun 
dreds constituted under the recent legislation for the development 
of small holdings and allotments. 


PRODUCTION BY CONSUMERS' SOCIETIES 243 

producers' and consumers' co-operation develop freely, each 
in its sphere, even if the two spheres seem to overlap; by 
inter-penetration they will end by forming a single whole. 

It is noteworthy that, by following the natural law of 
their development, these two 'forms of co-operation approach 
each other so nearly that in the end it is hard to distinguish 
the one from the other. If, on the one hand, the consumers' 
societies open workshops for the production of their goods, 
productive societies also can open shops for the sale of their 
products. If the consumers' societies give their workers 
a share in the profits, producers' societies in England give 
their customers a share. Then, suppose on the one hand a 
consumers' society which halves its profits between its pur 
chasing -members and its workers—and on the other hand a 
^producers' society, which also divides its profits, half to its 
working members and half to its customers (which are per 
haps themselves consumers' societies)—are they not almost 
the same? It is on these lines of convergence that both 
producers' and consumers' societies should be guided. With 
regard to the workmen's share in the profits of consumers' 
societies, see the following chapter. As regards the partic 
ipation of customers in productive societies there are many 
examples in England. Besides, the large Insurance Com 
panies have led the way in this respect. In Ghent the produc 
tive society called "le Tiss'age (weaving) Coopératif" assigns 

In France there were none of these societies up to the time of the 
war, but a certain number have just been started in the regions 
invaded by the enemy and now liberated. In districts where the land 
has been so ravaged that no buildings remain, where even the bound 
aries of the fields cannot be distinguished, and, moreover, where 
capital and agricultural implements are very scarce, it is obvious that 
collective cultivation will be the most economical. 

Of these four forms of co-operative agricultural association it is the 
last which is aimed at in our text, as it is the only one which can solve 
the problem of an entente between the distributive co-operative society 
and the productive society in the domain of agriculture, if these pro 
ductive co-operative societies become purveyors for, and in some form 
the tenants of, the consumers' societies. The practical difficulty which 
we note above remains in any case. 


 244 CONSUMERS' CO-OPERATIVE SOCIETIES 

35 per cent, of its profits to the working members, and 

25 per cent, to its customers. 

Thus, these two great co-operative movements, although 
they have started from opposite poles, can unite on a higher 
plane which, while giving the consumer that control which the 
logic of his economic conditions assigns to him, will ensure 
to the working producers greater independence than they 
now have, and above all, the precious feeling that they are 
controlling themselves, that they are working for themselves, 
and that they gather all the fruits of their labour to which 
they are entitled. The realization of this harmony is the 
more probable, since there is no doubt that it will be the 
same persons who form both organizations, but in different 
capacities. 


CHAPTER XVI 

THE EMPLOYÉS AND WORKMEN IN CO 
OPERATIVE SO'CIETIES 

It might be supposed that this chapter deals only with 
questions of internal order which are merely of interest from 
the point of view of the good administration of societies. 
On the contrary, however, we have here one of the most vital 
points with regard to the future of co-operation, because 
herein are opposed two antagonistic conceptions, which 
may be called producers' socialism and consumers' socialism. 
This antagonism is manifested by the conflict, which exists 
in a more or less latent condition between the co-operative 
movement and the syndicalist. In her book "The Co-opera 
tive Movement in Great Britain" Miss Pötter (Mrs. Sidney 
Webb) foresees the advent of this régime, in the aspect of 
two federations, one, that of consumers in their co-operative 
societies, the other, that of producers in their trade unions, 
and the equilibrium maintained by the balance of these two 
antagonistic powers. We must add that this equilibrium 
would: be much better realized if every person were a mem 
ber of the two organizations, co-operation and trade union 
ism, as this conflict would therefore not be on the surface, 
but in the conscience of each individual. 

(1) Conflicts Between Co-operative Societies and their 
Employés 

The question of the relations between the societies and 
their employés does not become very acute as long as the 
societies limit themselves to retail trade and consequently 
employ only shop assistants, who are somewhat above the 

245 


 M 


246 CONSUMERS' CO-OPERATIVE SOCIETIES 
level of the ordinary working class. But from the time that 
societies engage in production, and have therefore to employ 
manual labourers (who are generally trade unionists), the 
situation becomes critical. In England the number of wage- 
earners in 1917 was 162,000, of whom 101,000 were em 
ployed in shops and 61,000 were employed in factories.1 If 
we only consider the shop employés, we see that the figure 
101,000 represents 1 employé for 37 members, i. e., for 37 
families and for £1,420 of annual sales. This proportion 
does not seem excessive, but it might still be reduced by the 
fusion of societies (see page 186). 

The problem presented here is similar to that of the rela 
tions between the State and its employés, which has already 
caused very grave trouble in France and elsewhere, and 
which will become increasingly menacing to the nation. 

Syndicalism regards every labourer as a person exploited 
and every employer as an exploiter, and the syndicalist is not 
disposed to make exceptions in the case of people employed 
by a co-operative society, or by a co-operative wholesale 
society. Syndicalism does not renounce for them either the 
class war or the weapon of the strike. It wants wages to be 
as high as possible, even though this rise in wages can only be 
procured by an equal rise in prices. 

Co-operation, on the contrary, regards the consumer as 
the person exploited, and wishes to free him. It recog 
nizes no class war, because in its very definition the function 
of the consumer is independent of all class distinction or of 
sex. It strives to realize cheapness by reducing the cost 
of production to a minimum. 

We might suppose that the relations between the co-oper 
ative societies and their employés would be facilitated by 
the fact that both belong to the working class and should 

i By the beginning of 1921 these figures had risen to a total of 
201,500, of whom 114,500 were employed in distribution and 87,000 in 
^production. 


EMPLOYES AND WORKMEN 


247 


therefore look upon one another as comrades. But such is by 
no means the case, as, on the one hand, labourers, when they 
have control of an enterprise, often display more harshness 
than middle-class employers, and, on the other hand, man 
agement committees of co-operative societies, being com 
posed of workmen absolutely ignorant of everything out of 
their own particular line, do not inspire their employés with, 
the same respect as a middle-class employer, whose capa 
bility is beyond question. This fact frequently results in 
strained relations. Moreover, those who are not well dis 
posed towards the co-operative movement do not miss a 
chance of stirring up the employés and the workmen against 
the societies. Thus, the important liberal and economic 
paper, Le Temps, in reporting the Co-operative Congress 
at Rheims in 1913, concluded as follows : "Seeing how co 
operative societies—which are the embryo of the new social 
order—treat their employés, workers can appreciate the 
degree of liberty which would be theirs, when these societies 
are firmly established." 

These two tendencies are antagonistic in their aim, and 
it is almost inevitable that this opposition should show itself 
in practice. 

Trade unions demand of co-operative societies:— 
( 1 ) The maximum wage for their workmen, that is to say 
the trade union wage. 

(2) The minimum working-day. 

(3) The exclusion of workmen other than trade unionists. 

They complain that these conditions are accepted by only 
a relatively small number of societies. 

However, co-operative societies as a general rule try to 
satisfy these claims—the first and second, at any rate. All 
those of socialistic tendency, and the majority, even when 
neutral, make a rule of ensuring to their workmen and em 
ployés the most favourable rate of pay suitable to the eco 
nomic conditions in which they are obliged to live. And 


 ' */f. 


h 'i ; 


248 CONSUMERS' CO-OPERATIVE SOCIETIES 

they almost always give a higher wage and fewer hours of 
work than their commercial competitors.2 Doubtless, there 
are some co-operative societies which are no better in this 
respect than private employers, but unjust generalizations 
are made, for example, that in a Congress of the Social 
League of Buyers (Ligue Sociale des Acheteurs) by M. 
Brunhes: "Co-operative societies do not trouble them 
selves with the conditions of work and workers' wages." 

Co-operative societies, however, cannot undertake to pay 
the trade union wage, or keep their shops open only eight 
hours a day, where such conditions would not permit them 
to compete with the ordinary traders and would oblige them 
to shut their shops. It would be acting contrary to the 
interests of the working-class to ruin co-operative societies 
by trying to obey the mandate of the trade union. Indeed, 
even in the cases where they are unable to pay the trade union 
wage, co-operators try at least to ensure the minimum 
wage. And they generally allow the same pay to women as 
to men for equal work. In England, the question of a mini 
mum wage has often been discussed at Congress, 24s. a week 
being proposed as reasonable, and this was a minimum fre 
quently applied in practice before the war. 

But if co-operative societies generally pay their lesser em 
ployés and their women employés higher than the current 
rate, they pay their higher officials very much less. Ccrnes- 
son has remarked, with reason, that this is a grave danger 
to the societies, because their higher employés are tempted 
to leave them and go to their competitors. But we can 
understand that workmen who are members of co-operative 

2 This is also true of the vast majority of the societies in the United 
States. There are enemies of the Co-operative Movement among 
syndicalists or communists who insist that the co-operatives exploit 
their employés after the fashion of the capitalists. But in the face 
of such keen competition by the private merchants, the co-operatives 
cannot always afford to improve upon prevailing wage rates, hours 
of labour, and all other conditions of employment at one and the same 
time. 


EMPLOYÉS AND WORKMEN 


249 


societies will not be willing to give tlieir employés higher 
salaries than they earn themselves. 

They consider it, then, very unjust that their workers should 
go on strike, particularly on sympathetic strikes, that is to 
say strikes declared without grievances against the co-opera 
tive societies, but merely to support a strike against traders 
or manufacturers. This is what happened in Paris a few 
years ago during a strike of bakers' -operatives. The work 
ing bakers of co-operative societies were forced to abandon 
their work, much to the indignation of co-operators. The 
latter said, quite rationally, that it was not only a blow 
against the interests of the working-class (as co-operative 
societies are formed, in fact, by workers for workers), but 
also an error in tactics, as it would have been of great serv 
ice to the strike itself for the co-operative bakeries to have 
remained open, if only to provide bread for the strikers. 

The third demand of the trade unions has been admitted 
by some socialist co-operative societies, but has been dis 
regarded as a rule. Would it suffice, then, to reply to the 
trade unions thus : Make it obligatory on every trade union 
ist to join a co-operative society if there is one in his vicin 
ity? Certainly not! Then why ask co-operative societies 
to do for the trade unionist what the trade unions will not 
do for them? 

The two organizations must recruit by their own methods, 
but they need not play the part of reciprocal recruiting 
agents. 

It goes without saying that if co-operative societies must 
not compel their employés to join a trade un