Coöperative Production in the British Isles

IT may be as well to observe that the term “ coöperative ” is applied, in Great Britain and her colonies, to two distinct methods of production : the one in which profits (after payment of interest, etc.) are divided wholly or in part amongst the workers ; the other in which they are divided amongst purchasers, in proportion to their purchases, generally on the basis of full profits to those who have contributed towards share capital, and half profits to those who have not. The two classes of bodies, together with those established for the purpose of coöperative consumption only, are registered under the same acts, and represented in a federation, itself a registered body, known as the “ Coöperative Union.” There was a time when the principle of the right of the worker to at least a share in the profits of his work was pretty generally recognized, if only as a pious opinion. But the enormous success of bodies formed originally for coöperative consumption only, and the ease with which these can slide into production without altering their methods of apportioning profits, have gradually created a very strong vested interest in the coöperative consumer as against the claims of the worker to anything beyond his wages, and able writers have not been wanting to justify the former, and to represent the method as that of a true democracy. Abundant details on societies of both classes are to be found in a work recently published by the London manager of the Cooperative Wholesale Society,¹ — a work which, I am persuaded, was intended by its author to be impartial, but which cannot be safely used without bearing in mind the necessary bias of his mind towards that form of coöperation on which he is employed. A well-got-up monthly journal, Labour Copartnership, published on behalf of the Labour Association, established for “the promotion of coöperative production based on the copartnership of the worker,” may serve as a corrective to Mr. Jones’s presentment of the case. Both forms of coöperative production, as well as the practice of profit-sharing between employers and employed, had their advocates before the late Royal Commission on Labour, whose conclusions are, morally at least, very favorable to coöperative production by and for the worker. Whilst, with strict impartiality, they say that “ such enterprises have shown in their early stages an even larger percentage of failures than other forms of coöperation in the same stages, and perhaps might appear to have little chance of succeeding in existing conditions except in industries of a very simple character, or when they possess some especial clientèle,” yet they admit that “ the recent history of the movement is not altogether discouraging. Besides many smaller societies, there are about a dozen, each of which produces from £20,000 to £80,000 worth of goods annually, has much expensive machinery, and employs a great deal of skilled labor.” To the moral value of such cooperation they bear emphatic testimony in one of the last paragraphs of their “ concluding observations : ” —

“ We have seen that industrial peace is promoted by the knowledge acquired by workmen and capitalists meeting in conference together, and we look for strong influences tending towards harmony from the investment by workmen of their savings in different enterprises, and the experience which they thus gain as capitalists on a small scale. Such teaching is, however, most efficiently and ’powerfully secured in the working of strictly coöperative associations, where the relative remuneration of labor and capital, and the conditions of employment, have to be settled by workmen themselves, who are both employers and employed. The influence of such, societies spreads far beyond those who are members of them , by producing among the industrial classes a common knowledge of the principles governing the remuneration of work. Similar effects to those to which we have last referred are caused by the extension of the principle of profit-sharing among many establishments, of which we had gratifying and encouraging testimony.”

Space would fail me here even to sketch the history of coöperative production in Great Britain. In a crude shape it dates back to the end of the last century, when the Hull Anti-Corn-Mill Society was established for corn-milling (1795), to last about a century, reaching its maximum of commercial prosperity in 1878, when its membership was 4797, and its sales were £71,744. These early societies were, so to speak, coöperative only in intention, and it was only in 1856 that the Hull Anti-Corn-Mill Society began to divide profits on consumption; it seems never to have allowed any share of the profits to workers. Indeed, the capital required for corn-milling, according to modern practice, is so large, compared with the number of men employed, that the claim of the latter to a share of profits is easily overlooked. The only milling society which recognizes the claim is an English one of comparatively early date (1816), the Sheerness Economical, which, by the last accounts, did during the year a business of £29,041, making a profit of £3483, out of which £43, or a trifle over one per cent, was apportioned to labor.

Let us now examine coöperative production as carried on for the benefit of the consumer under its most highly developed form, that of the Coöperative Wholesale Society. There are a large number of bodies, established originally as mere coöperative stores, to retail articles of consumption for the benefit of purchasers, which have, as we may say, drifted into production ; beginning, it may be, with the employment of a tailor or a shoemaker for supplying the wants of the members, or the setting up of an oven to bake bread for them, and which have ended by carrying on large manufacturing or baking businesses. But the two great coöperative wholesale societies (for England and for Scotland) tower so completely above all individual societies that it is not worth while, for the purposes of this short paper, to consider any other. The two, however, differ between themselves in one important feature,— the English society withholding from the worker, the Scottish allowing to him, a share in the profits which he has helped to create. Both societies are strictly federal; that is, composed only of other societies or companies recognized as being of a coöperative character.

The present Cooperative Wholesale Society Limited was founded in 1863. as the North of England Coöperative Wholesale Society Limited. For nearly ten years it confined itself to the business of purchasing articles wholesale, and selling them retail to coöperative societies and companies, whether members or not, at a small profit, which is divided half-yearly amongst all customersocieties in proportion to their purchases, mere customers receiving only half dividends, customermembers whole. Its sales in 1865 (the first complete year of its working) were £120,754. In 1872 these had reached £1,153,132. The society now began to turn its attention to production, purchasing some biscuit works, and starting in Leicester a boot factory in 1873, then soap works in 1874, other boot works at Heckmondwike in 1880. Leather-currying was entered on in 1886, a woolen mill taken over in 1887. Cocoa works were opened in 1887, a ready-made clothing department in 1888 (clothing having been already made up in two branches as an adjunct to the woolen cloth and drapery departments) ; a corn-mill was opened in 1891, jam-making entered on in 1892, and a printing department undertaken, besides building departments in the society’s three English branches, Manchester, London, and Newcastle (there is also a branch at New York). In addition to these there is a shipping department, the society having quite a little fleet of its own. During the quarter ending June 30, 1894, the society purchased a factory at Leeds for the manufacture of readymade clothing.

The success of the society as a whole has been prodigious. Its business in the distributive departments during the last quarter (ending June 30) was £2,272,946, or at the rate of upwards of £9,000,000 a year, making it one of the largest commercial establishments in the world ; although the quarter’s business was one per cent less than in the corresponding one of last year, and the profits were nearly eighteen per cent less. In its manufacturing departments the sales amounted for the quarter to £196,407, or at the rate of nearly £800,000 a year, an increase of not far from twelve per cent on last year. But the society has not been uniformly successful in its ventures upon the field of production, and a considerable loss incurred in the working of its flour-mill has reduced the net profits of the quarter by over seventy-nine per cent, on last year.

When production was first entered upon by the Coöperative Wholesale Society, care was taken not to interfere with the business of existing productive societies, and bonus on wages was to be given. In 1876 bonus was abolished, and gradually, with success, all consideration for existing coöperative bodies for productive purposes was swept away, as the instance of its printing department, set up in practical opposition to a well-established society carrying on business in the very same city in which the Coöperative Wholesale has its headquarters, sufficiently shows, — a proceeding which, Mr. B. Jones Candidly admits, 舠 will ultimately take a large amount of trade from the Coöperative Printing Society.” On the other hand, membership of the Wholesale has been refused to a society allowing a share of profits to labor, numbering many societies amongst its shareholders, and actually doing two thirds of its sales through the Wholesale, on the ground, amongst others, that some of its goods came into competition with those of the Wholesale, although it is alleged that in most cases the latter had actually followed the Sundries Society in undertaking the production of such goods. The Wholesale thus practically claims the right not only of crushing out by competition any society already existing for coöperative production, but of refusing membership to any society which does not give up whatever branch of production it pleases his Wholesale majesty to take up. Quia nominor leo. Nor is this all. Whilst the cry of “ loyalty to the Wholesale ” is raised at every meeting of the body against any society whose purchases show a falling off, or simply do not come up to a figure which satisfies its gigantic caterer, the Wholesale itself has set a signal example of disloyalty to the Coöperative Union to which it belongs, and which is considered to have the moral direction of the movement, in ignoring a resolution passed at the Bristol Coöperative Congress in 1893, reaffirming “ the principle of copartnership of labor as an essential of industrial coöperation,” and earnestly urging “ upon the English wholesale and other federal bodies to adopt a measure equally generous towards their employees 舡 with that of the Scottish Coöperative Wholesale, to be presently noticed. It is true that a somewhat similar resolution proposed at the Congress of 1894 was not carried, the show of hands being indecisive. One is indeed happy to say that although the Cooperative Wholesale has not been free from strikes, by all accounts its work is well done, in commodious and well-ventilated workshops, and at the best wages in the trade.

The Scottish Cooperative Wholesale Society was established in 1868. It entered upon production in 1880 with a shirt factory, followed in the same year by a tailoring department (the two were united in 1888), by a cabinet factory in 1884, boat works in 1885, currying works in 1888, a slop factory in 1890, and a mantle factory in 1891. A printing office had been opened in 1887, to which business ruling and bookbinding were afterwards added. Preserve-making and tobacco-cutting have also been entered on. Many of the productive departments have been grouped together on twelve acres of land at Shieldhall on the Clyde, about three miles from Glasgow. The requisite buildings have been put up by the building department of the society, as well as several of its warehouses; and latterly a large flour-mill at Chancelot, near Leith, I believe the latest productive venture of the society, has been built by it.

The Scottish Wholesale has paid bonus to labor since November, 1870. The principle on which such bonus has been granted has varied, but by an alteration of rules made in 1892 bonus is credited to all employed at the same rate on wages as on purchases, half the bonus remaining on loan at four per cent. What is more, a Coöperative Investment Society has been formed for enabling those who are employed, if over twenty-one, to become members of the Wholesale, taking from eight to twenty shares. The shares held by those employed, on their leaving the society’s service, have to be transferred to other persons in its employ. The worker shareholders have the right to send a delegate to the meetings of the society, and an additional one for every one hundred and fifty of their number who are shareholders. The claims of the worker to a share both in the profits and in the government of the society are thus distinctly recognized.

The business of the Scottish Wholesale is no doubt much less extensive than that of the English one. The sales for the quarter ending June 30, 1894, were, in the distributive department, £790,186, or at the rate of over £3,000,000 a year, a falling off of about one per cent on the corresponding quarter of last year, with a very trifling decrease of profit. The sales in the manufacturing departments were £82,120, or at the rate of over £328,000 a year, an increase of three and a half per cent, with an even larger increase of profit. Moreover, all the investments of the Scottish Coöperative Wholesale are themselves coöperative.

It is not to be concealed that the Scottish Wholesale has been subject to several strikes, and has had many difficulties with its workers ; nor yet that, like the English one, it has had no scruple in taking up a branch of productive business already carried on by a coöperative body, that of printing, — there being an important Edinburgh Printing Society, in existence since 1873, doing (by the last account) a trade of nearly £9000 a year, and paying bonus to labor at the rate of one shilling to the pound. But the views expressed by the president of the Scottish Wholesale, Mr. Maxwell (which stand in strong contrast to those of Mr. Mitchell, president of the English Wholesale), are entirely in favor of the producer ; his “ highest ideal ” of productive industry, as stated in evidence before the Labour Commission, is that of the producers being themselves the shareholders, and finding “the capital,” and taking 舠 as the reward of their industry the resulting profit.”

Such a form of coöperative production is no doubt far more difficult to carry on than that which simply grows out of consumption, hiring its labor like any other employer. That failure after failure should occur in such attempts need cause no surprise. But the number of such failures has been grossly exaggerated. According to a list drawn up in 1880, 163 productive societies, registered since 1862, had then ceased to exist, — a frightful mortality at first sight. But a careful analysis of the facts by Mr. E. O. Greening showed that only twenty-four of the number, by their rules, proposed to give any definite proportion of profits to the workers; two or three proposed to do something for them by education or other philanthropic means ; forty - four were based upon the division of profits with customers ; and all the others, so far as appeared, merely divided profits on capital. On the other hand, a table printed in the first number (August, 1894) of Labour Copartnership shows that eleven societies in England and four in Scotland (not reckoning the Scottish Wholesale), established between 1862 and 1880, still exist, and are every one of them making profits.

According to the last - mentioned authority, the societies allowing profit to labor rose from 15 in 1883 to 109 in 1893, their sales for the year from £160,751 to £1,292,550, their capital from £103,436 to £639,884, their net profits from £8917 to £64,679. These figures, however, appear to be a little misleading, as the Scottish Coöperative Wholesale is included only in the later ones, although, as has been seen, some sort of bonus to labor has been allowed by it almost from the beginning. The detailed table on the same page, for a somewhat earlier period, includes, besides, bodies reckoned by other authorities as merely profit-sharing establishments, and some (like the Sheerness Economical, already mentioned) in which the share of labor in profits is almost infinitesimally small. But in addition to the societies contained in the list there appear to be some eighty firms or companies which recognize the principle of giving a fixed share of profits to labor, to say nothing of those which merely allow a bonus not fixed beforehand.

Many interesting histories might be given of productive societies allowing profits to labor, but, for want of space, I will confine myself to one which has actually grown out of the English Coöperative Wholesale Society, and in opposition to its practice, and to a group of smaller bodies in the same trade which may be said to cluster round it.

The Leicester boot factory of the Coöperative Wholesale has been, commercially, a splendid success. It had in 1892 worked for fifty-nine quarters at a profit, for sixteen at a loss ; the total net profit, after deducting losses and providing for interest and depreciation, amounting to £55,654. It sold in the quarter ending September 30, 1892, 307,969 pairs of boots and shoes, of £68,769 value. The works have been repeatedly extended; new workshops were built in 1891 on six acres of land, besides a branch factory constructed in 1888 at Enderby. Starting with about 100 workmen, it employed 2249 in September, 1892. Two Strikes have occurred at the works : one only partial, in 1886, when about 200 men went out; the other in 1892, when all the workers left. Yet it was the partial strike which had the gravest consequences.

On this occasion, some of the men in the employ of the Wholesale Society, in order ” to share in the profits and the management of the business,” started a productive society on their own account, the Leicester Coöperative Boot and Shoe Manufacturing Society Limited (registered January 11, 1887). After payment of five per cent per annum on share capital, forty per cent of the profits was to be paid to the Workers in proportion to their earnings, twenty per cent on purchases, twelve per cent to the committee, ten per cent to a provident fund, the same to share capital, five per cent to a social and educational fund, and three per cent for special services by members. Three hundred and eighty pounds share capital was subscribed by working men and women, and £100 by the local branch of the trade union. The business commenced with the manufacture of women’s goods, and was extended after some months to those for men and boys. Except during the few initial weeks and one quarter of 1890, the society seems always to have worked at a profit. In February, 1891, it employed 170 persons, all shareholders, of whom 130 worked on the premises, and the rest at home. Two thirds of the committee were in the employ of the society. According to the table in Labour Copartnership, it had, by the end of 1892, £9451 capital, had done a trade for the year of £32,994, making a profit of £1379, out of which ninepence farthing on the pound had been allowed on wages. It has indeed been asserted by a writer of no mean authority (Mr. D. F. Schloss) that the men employed by the Leicester society have not earned, in wages and bonus together, more than they did in wages alone, working for the Coöperative Wholesale ; but this is denied on behalf of the men, except with respect to the “ early history of the society.”

Stimulated mostly by the example of the Leicester society, though two are of earlier date, a group of societies in the boot and shoe trade have sprung up, ten in all (besides one now winding up), winch allow profits to labor. These, according to Labour Copartnership, did (apparently), at the end of 1892, a collective trade of £42,954, and made, collectively, after deducting losses, a profit of £1682, out of which £659 was assigned to labor. If to these figures we add those of the Leicester society, we find that, in the boot and shoe trade, productive societies did a business of £75,948, and made a net profit of £3061. Poor as these figures are beside those of the Leicester boot and shoe factory of the Coöperative Wholesale, they show something of what can be done by labor in its struggle against capital within the coöperative movement. The whole group in turn supplies much of the business of another productive society, the London Leather Manufacturers’ Society, established in 1892, which indeed is also largely dealt with by the two wholesale societies.

The movement towards production in the coöperative world is, moreover, a growing one. According to the last published report (for 1893) of the Chief Registrar of Friendly Societies, “ of the societies registered in 1893 under the Industrial and Provident Societies Act, thirty-five were of the productive class ” as against forty “ ordinary distributive stores” (besides seventeen miscellaneous bodies), showing a near balance between production and distribution. It does not indeed follow that all productive associations registered are established for the benefit of the worker.

Great help has been afforded to the movement by the Labour Association, already referred to, established in 1884, which, after issuing, since January, 1893, a printed monthly letter to its members, has, within the last two months, begun publishing Labour Copartnership, besides providing lectures on subjects connected with coöperation. In conjunction with the Agricultural and Horticultural Association the Labour Association undertakes every year, at the Crystal Palace, a flower show, exhibition of coöperative productions, and coöperative festival, which have proved very popular. Again, a body called the Coöperative Institute Society Limited has established, in London, a depot for the sale of goods produced in coöperative workshops, where workers share in profits and management. With this has been connected a tailoring department, and the success of the establishment is such that the sales for the third quarter of 1894 almost exactly double those of the corresponding quarter of 1893, and that removal to larger premises must soon take place. Lastly, there is a Coöperative Productive Federation, to assist productive societies, through united action, to open up a market for the sale of their productions, and at its last meeting at the Crystal Palace, on August 20, 1894, seventeen societies were represented.

In short, everything tends to show that the British workman is bent on carrying out some form of coöperation in which he shall be no mere hired servant of capitalist or consumer, and that, in his dogged way, he is stumbling on, through failure after failure, to success.²

J. M. Ludlow.