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goods within reach of the consumer, and in return extracts a profit from the transaction. Merchants, manufacturers, and shopkeepers flourish out of the needs of society, drawing from the pocket of the consumer not merely a fair rate of pay for their personal services, but also as high as possible a rate of profit on the capital which they use. But if a few hundred consumers join hands and pool their savings, they can establish their own store, which will be able to buy butter, flour, meat, clothes, etc., at wholesale rates and sell the goods to them almost at cost price. When the hundreds become thousands, the consumers' capital may be sufficient to erect factories in which the goods required may be produced. And when the thousands turn to millions it becomes possible to establish depots, farms, plantations, etc., overseas, provide ships to bring the goods from these distant sources, and erect factories for turning all manner of raw materials into finished articles, which are then sold to the consumer at the lowest possible cost. This is co-operation of consumers; it gathers together the small savings of masses of people, and uses them for supplying these people with their requirements. It eliminates the private capitalist, and establishes the principle of production for use rather than for profit.

The Rochdale Pioneers. Co-operation of consumers has scored its greatest triumphs in the United Kingdom, where the movement successfully started by the 28 flannel weavers of Rochdale in 1844 had over 4,000,000 members and handled nearly £300,000,000 worth of commodities in 1919.

Co-operation, however, dates back beyond the Pioneers. It found one of its first advocates in Robert Owen, whose schemes for a new moral world were based on co-operation and the elimination of profit. The model communities were not the only attempt to translate his ideals into realities, for during the twenties and thirties small societies were established and retail stores opened. In 1833 over 400 were in existence, and co-operative congresses were held. But nearly all these ventures, ambitious or modest in aims, eventually collapsed. Lack of unity, education, capital, or experience, all were responsible for their failure, and this first era seemed to prove that co-operation was as useless and futile as trades unionism.

After this darkness came the dawn. Late in 1843 a few Rochdale flannel weavers met together to see what could be done to improve their miserable condition. Wages were low, food was bad and dear, strikes and lock-outs always ended in victory for the employer. What could be done? Chartism offered little immediate relief, teetotalism touched only one side of the problem. Unionism had failed, and the lofty schemes of Owen had left behind nothing but debris. Emigration was out of the question, acceptance of poor relief abhorrent. What then was left? Co-operation, starting from small beginnings and growing gradually in stature until it superseded tradesmen, mill-owners, merchants and financiers. Instead of courting failure by beginning on a big scale, or trying to establish an isolated community, a start was made in the smallest possible way by the establishment of a retail store. But even a store required capital, and so during the next twelve months the 28 members contributed by instalments £1 each. With this a few groceries were purchased, a room rented, and in December, 1844, the Rochdale Equitable Pioneers' Society took down its shutters.

Behind this small beginning was a vision of big things. The object of the society was "to form arrangements for the pecuniary benefit and improvement of the social and domestic condition of its members, by raising a sufficient amount of capital in £1 shares to bring into operation the

following plans and arrangements": (a) The establishment of a store for the sale of provisions, clothing, etc. (b) The securing of a number of houses in which those members desiring to assist each other in improving their domestic and social condition might reside. (c) The manufacture of such articles as might be decided on, for the employment of members who were out of work or in receipt of low wages. (d) The purchase or lease of land to be cultivated by unemployed or badly-paid members. (e) "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.'' This was pure Owenism. (f) The opening of a temperance hotel in one of the society's houses. Communism was not yet dead; from the small store progress was to go towards an ultimate self-sufficing community, where the members would have houses, factories, and land owned and worked by the whole community on the basis of each for all and all for each.

The Pioneers steered clear of two dangerous rocks-religion and politics. Co-operation was essentially an economic affair, and concerned all as consumers. Hence it would be fatal to allow any discussion of political or religious questions to creep into meetings. No member was to be catechized as to his political faith or religious creed. Free Trader and Protectionist, Whig and Tory, Quaker, Roman Catholic, and Atheist, all were equally welcome since they were all united by the common bond of material selfinterest. When we remember that Owen had wrecked many of his projects by ill-timed attacks on religion, and that socialism has been frequently checked because of the onslaughts made by its leaders on the churches, the wisdom of the Pioneers becomes more apparent.

Methods. The Rochdale weavers worked out a series of working rules, which have guided the movement to success from that day to this. Of these the chief were as follows: (1) Capital was to be provided by the members, and bear a fixed rate of interest. Membership implied the holding of one or more £1 shares, which might be contributed in small instalments. In addition to this minimum number of shares, a member might use the society as a savings bank, and deposit his spare money there, to be used as loan capital. But on share and loan capital alike only a certain fixed rate of interest was to be paid. (2) Only the purest provisions were to be supplied, and full weight and measure given. These rules were an innovation, and contrary to the practice of many manufacturers and retailers at the time. Flour was often adulterated with china clay, plaster of paris, etc., sand was mixed with the sugar, and the number of ounces to the pound or of pounds to the stone varied from shop to shop. (3) Market prices were to be charged, and no credit given or asked. For a time there was much dispute in the co-operative world on the question of price. Should the store sell at the wholesale rate, plus a small charge for distributing costs, or should it sell at the same price as prevailed elsewhere? The Pioneers decided on the latter course, and the whole movement has followed their example. "Cash or credit?'' was also a difficult question. If credit was allowed, then bookkeeping expenses would be heavy, bad debts might be incurred, and members would slide down into the bad habit of buying more than they could afford. Since most of the members received wages weekly, it would be best for them to buy their goods weekly, paying cash over the counter. The store would thus always have money coming in for goods going out; with this it would

be able to pay cash for the goods it bought, and get discount on its purchases. "No credit,'' therefore, became the rule of the movement in the United Kingdom, though in some other lands, where the credit habit is deeply ingrained, that rule has been deserted.

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The Dividend. (4) "Profits" (or, to be accurate, "'net surplus") were to be divided pro rata upon the amount of purchases made by each member. This dividend on purchases'' is the vertebral column of co-operation of consumers. Let us explain it by taking the case of a member spending £1 a week at his own stores. Of this £1, 12/- is the wholesale cost of the goods he receives; 4/- goes to pay rent, wages, light and heat, depreciation and other working expenses; another shilling is taken to pay the fixed interest on members' capital. The total cost to the store is therefore 17/-, and if the goods are sold at that price income would just balance expenditure; the store would pay its way. The 3/- left is net surplus; where is it to go? In a private shop it would go as profit on capital. In a co-operative store it is returned to the pocket from which it came. On every £1 he spends the member gets back this surplus on his purchases. He therefore receives two things-interest on his capital, and dividend on his purchases. This dividend may be paid quarterly or half-yearly. If the member desires he can receive it in cash. If the money is not wanted, it can be left in the hands of the society as new capital, thanks to which the society can extend its operations.

Democracy of Consumers. The Pioneers were democrats, imbued with Chartist ideas, and so they made their society democratic in form. They provided (5) "That the principle of one member one vote should obtain in government, with equality of the sexes in membership.'' The management was to be in the hands of officers and committees elected periodically at a meeting of all members, and frequent statements and balance-sheets were to be issued. The principle of "one member one vote" is directly opposed to the policy governing joint stock companies, where the rule is one share one vote." The grant of equal rights of membership to women shows the advanced views of the Pioneers; women were given a vote in the British co-operative movement 73 years before they were given it in the British state.

(6) The last article of the Rochdale creed shows that the Pioneers had no narrow material outlook. It stipulated "That a definite percentage of profits should be allotted to education." This was before the days of state education, university extension, Ruskin College, labour colleges, and the W.E.A., and it showed that if co-operation was to be a democracy it should strive to make itself an enlightened democracy.

Success. The Pioneers succeeded where hundreds of societies before them had failed. The Rochdale plan seemed exactly to meet all the requirements of its creators. The "divi" bound the wage-earners to the "'co-op. just as the friendly society benefits bound workers to unions modelled on the A.S.E. plan. From the sale of groceries the Rochdale society passed to sell meat and draperies; in 1850 it took an active part in establishing a flour mill; in 1852 it began making shoes, clogs, and clothes, and in 1855 attempted to set up a wholesale department to supply goods to neighbouring societies. Progress was steadily maintained; the 28 members of 1844 had grown in 1921 to over 26,000, the funds from £28 to nearly £470,000, and in 1921 540 employees in 71 branch stores handled sales amounting to about £1,000,000.

Where Rochdale led, other places soon followed. Leeds in 1847 established a society for "the redemption of labour," and began with a corn mill and store. In 1919 the Leeds Society had over 80,000 members, employed 3,000 people, and sold £3,750,000 of goods. Throughout the towns and villages of the Midlands and North Country societies sprang up, and in almost every instance adopted the Rochdale rules. In 1920 there were about 1,400 retail societies, with over 4,000,000 members, a capital of £70,000,000, 140,000 employees, and a turnover of £200,000,000.

Difficulties. The early societies still found obstacles in their path. Inexperience and lack of education were overcome in time, but others remained. The first was the absence of any legal status. Until the societies obtained legal recognition, they could not protect their funds or property. Recognition was secured largely through the assistance of the Christian Socialists. Kingsley, Maurice, Hughes, and Neale were all keen co-operators, and the two last-named gave their legal services to help in securing the Industrial and Provident Societies Act of 1852. By this act co-operative societies were given legal status as partnerships, and members were allowed to hold shares up to £100 each.

The next difficulty was economic. As the societies grew they naturally aroused the hostility of private dealers, whose trade they were appropriating. These men, therefore, put pressure on the merchants and manufacturers, demanding that they should not supply goods to the stores or should at least charge higher prices. Some societies had difficulties in securing supplies, and such goods as they did obtain were often heavily adulterated. Further, there was the unpleasant feeling that on such purchases the middleman was making a profit. Co-operators, therefore, began to face the problem of getting behind retailing, and securing control of merchanting and manufacturing. This could be done by any big society whose trade was sufficiently large to enable it to buy in bulk or manufacture the goods it wished to sell. Hence some retailing societies have done this: they have their own productive works, and the Edinburgh Society in 1913 employed nearly a thousand workers making or preparing commodities. In 1919 the retail societies produced or prepared about one-fifth of the goods they sold.

But this was not sufficient. For certain big lines, demanding importations or large-scale production, some central body was required to serve the whole movement. Co-operators realized this by 1860, and agreed that a wholesale organization must be established. Legal difficulties were removed when the Act of 1852 was amended in 1862. The amendments put societies on the basis of joint stock companies, gave them limited liability, allowed each member to hold shares up to £200, and permitted one society to take shares in another.

The Wholesale Societies. The way was now clear, and in 1863 the North of England Co-operative Wholesale Society (known later as the English C.W.S.) was established in Manchester, to be followed five years later by the Scottish C.W.S. The necessary capital was provided by the various retail societies, and on it a fixed rate of interest was to be paid. The C.W.S. then set to work to procure or make for its members (the societies) the goods they required. These it sold to them, and at the end of the year distributed any net surplus among the members in proportion to their purchases. The Rochdale plan of "dividend on purchases'' was applied to the wholesale as well as the retail trade.

The establishment of the C.W.S. meant the entry of the movement into

the wide field of world commerce. The necessaries of life of the British artisan were drawn from every corner of the globe, and the C.W.S. therefore had to scatter its depots and buying agents over every continent. The C.W.S. name-plate soon appeared on doors in Ireland, New York, Rouen, Copenhagen, Hamburg, Montreal, Gothenburg, Sydney, Colombo, etc., and in these offices vast purchases of materials were transacted. From purchase overseas to production overseas was a natural step. In 1902 two tea plantations were bought in Ceylon, and by 1920 nearly 20,000 acres of tea land were owned in Ceylon or India. A "concession" was obtained in Sierra Leone, and a palm-oil factory erected; 10,000 acres of corn land in Canada were acquired, and to-day the C.W.S. is seriously considering the acquisition of more wheat fields, cattle stations, and other sources of production.

The goods obtained from these distant quarters had to be transported to factories and warehouses in Great Britain, and the C.W.S. therefore deternined to secure a fleet of ships for its work. The first vessel was purchased in 1876, and many others were acquired during subsequent years. But the economies were so small that little shipping was done, except in the trade between England and the north-west coast of Europe. The really great success came in the preparation and manufacture of materials in factories scattered throughout the United Kingdom. In 1872 the directors were authorized to commence production; in 1873 the Crumpsall Biscuit Works were purchased and the Leicester boot factory opened. Then came textile, cocoa, chocolate, clothing, flour, soap, furniture, printing, butter, lard, jam, tobacco, bacon, drugs, hosiery, tinware, paint, and other works, fruit farms, a coal mine, a fish service, until to-day almost every article required by the working classes can be obtained from a co-operative factory. Some retail societies draw almost the whole of their grocery, drapery, shoes, and leather from the C.W.S. The English and Scottish wholesale societies in 1919 had a total share capital of about £30,000,000; with this they employed in production and distribution about 32,000 people, and sold £113,000,000 of goods, of which over a quarter was co-operatively manufactured.

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The activity of the C.W.S. was not confined to handling goods. early stage in its existence it realized the need for co-operative insurance and banking facilities. In 1872 the C.W.S. opened a loan and deposit department, which in 1875 became known as the banking department. By 1919 this bank kept current accounts for 1,116 societies and 3,347 trade unions, friendly societies and kindred bodies; its turnover was over £500,000,000. The net surplus was distributed on the co-operative plan-i.e., in proportion to the amount of custom, whether that custom was debit or credit. The retail societies have thus been freed almost entirely from dependence on private banks.

Insurance began in 1867, at first for fire, but gradually all other branches, including life, were established. The most interesting feature of co-operative insurance is the collective life insurance, established in 1904. Under it all the members of any society are automatically insured by their society, without any exceptions or medical examination. The society pays a lump sum annually as premium, at the rate of a penny in the pound on the aggregate sales for the year. When a member dies, benefits are paid based on his average purchases during the preceding three years, and since 1910 benefits have been paid on the death of the husband or wife of a member. By 1914 about 450 societies had adopted this scheme, and insured nearly a million members (one-quarter the total membership of the movement). In

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