industry. In 1903 the glass-blowers' union, after a big strike, decided to start its own glassworks. It purchased a factory, and its members worked very hard to ensure success. A capable business organizer was put in control, and soon the union owned five works, had 2,000 men employed there, and produced about 60 per cent. of the total national output of bottles and wine flasks. The most interesting experiments in Italy have been the "labour contracting societies," which, starting in 1886, in 1910 numbered 1,000, and had a membership of 95,000. These societies are entirely working-class in origin, and contract to supply gangs of workmen and implements for building, road construction, general labouring, work on wharves, paving, quarrying, irrigation, land reclamation, etc. They secure favourable terms in municipal and government contracts, but only shareholders may be employed, and the control of the society must be entirely in the hands of the workmen. The masons' society of Milan, between 1890 and 1900, did £260,000 worth of work for the municipality. Any profit made goes partly to reserve fund, and the remainder is distributed as a bonus on wages. one place a co-operative society owns a small branch railway built some years ago by its members, and has christened one of its three locomotives "Karl Marx.”

In

Co-operative Production in Great Britain. During the early part of last century many men endeavoured to find some alternative to the capitalist system which was so rapidly establishing its supremacy. Some of the small clothiers of Yorkshire, faced with the competition of the big mill, pooled their resources and established co-operative factories, in which they and their journeymen should work, enjoying all the benefits of machinery and steam-power. Late in the forties the Christian Socialists set out to find some scheme of social redemption. In 1849 Ludlow visited Paris and came back full of the idea of workmen's associations. A Society for Promoting Working Men's Associations was formed, and for two or three years earnest efforts were made to establish little self-governing workshops of tailors, shoemakers, smiths, printers, bakers, etc. The Association provided all or most of the capital, and then gave the workmen complete control. No attempt was made to exclude undesirables. Mismanagement soon became rife, quarrels broke out in every shop, order disappeared, and where a little success was achieved the members at once tried to exclude new members so as to keep all the benefits for themselves. The Association in 1851 had to deprive the shops of all self-government, and in 1852 the movement collapsed.

Since then hundreds of attempts have been made to establish similar enterprises. Individual workers have added their small savings together to establish printing, tailoring, and shoemaking shops of their own. Trade unions have used part of their funds to acquire engine works, mines, printeries, and carpentering plants. In Lancashire some textile companies have been largely financed by £1 shares taken up by working men and women, and for a time the Labour Co-partnership Association, founded in 1884, gave financial and other assistance to groups of workmen who wished to secure co-operative independence. Of all these ventures, scarcely one succeeded in retaining full self-government. Some of their capital is held by non-employees, co-operative societies, or by the C.W.S., and the tendency generally is for this external control to increase.

Failure and Success. The experience of co-operative production in industry is most depressing. The policy has been applied largely to occu

pations where labour is a more important factor than capital, and where small-scale production still holds its own. Yet the field is strewn with failures, and there are no big resounding successes. The societies start with high hopes and a fervid patriotism: within a few years they are dead, or have become dependent on consumers' societies for their markets, or have passed entirely into the possession and control of a capitalist or the C.W.S. Why this almost universal failure?

Three chief reasons can be indicated. (1) Problems of discipline have wrecked most ventures. So long as the workman is also owner, so long, human nature being what it is, will he regard the foreman and manager as his inferiors. In the workshop he is a servant, but in the committee room or general meeting he is master. This dual position has been fatal to success, and the position of the manager has rapidly become intolerable. Only where control has passed into the hands of the external shareholders has it been possible to institute such a measure of order and stability in management as is necessary for efficient work. (2) Too little attention has been given to the commercial aspect of the work. The average workman, specializing on some branch of production, tends to think that production is everything, sale nothing. He fails to realize the need for watching the market, whether for the purchase of raw materials or so that he may produce goods likely to sell. Success in industry depends quite as much upon commercial acumen as on good factory organization and efficient methods. The quality and quantity of the demand must be guaged, not so much the demand of to-day as that of six or twelve months hence. Co-operative producers have often thought that whatever they made would find a ready market. Their disappointment has been bitter. (3) Co-operative firms have become conservative, slow to move, and leisurely in adapting themselves to new possibilities or requirements. The capitalist is generally on the alert, ready to take up some new material, new process, new machine, or new commodity. The spoils go to the swift-and few co-operative groups have qualified for a share of those spoils. The skilled workman, trained for years to certain tasks and methods, will not of his own accord abandon them for something strange. What is new is bad-or, at least, dangerous, for it may deprive him of his job or cancel the value of his skill. Further, co-operative producers have frequently found that their own class the wage-earners-did not give them support, but went elsewhere for their goods, and but for the support of the C.W.S. or some public body co-operative production would have been a greater failure than it has been.

Agricultural Co-operation. All that has been said above applies only to industrial co-operation. In agriculture the conditions are different, as also are the results. In industry, the independent individual, working by himself with his own equipment, is comparatively rare. In agriculture, he is the rule in many lands. His central task is production; but before and after production there are commercial, financial, and industrial problems which affect very intimately the net return he is to get from his own labour. For his work he requires capital, machinery, seeds, manures, live stock, etc., and if he has to pay heavily for these things his income is reduced. In preparing his produce for the market there is often some necessary process of manufacture or packing (e.g., butter making, bacon curing, etc.) which is most economically done on a large scale with comparatively elaborate plant. The small man benefits by lower costs of production in so far as he can take advantage of up-to-date equipment, but he himself cannot afford

or find continuous full use for that equipment. Finally, the net income of the rural producer is determined partly by the price he has to pay for freight to the market, and the fees he is charged by agents who dispose of his goods for him there. The larger the amount for sale, the stronger will he be in bargaining with the carrier or agent; with a very big output he may even be able to employ his own seller. The small man, therefore, requires two things to make his labour of greatest value: (1) the benefits of largescale production or manufacture, (2) strength, control, or actual independence in buying, selling, and borrowing-i.e., integration.

These things, along with the limitation or abolition of competition, are secured by agricultural co-operation in one form or another, and such co-operation has therefore spread over the rural world rapidly during the last thirty years. We find it not merely in Denmark, Ireland, Russia, and Germany, but also throughout Asia, parts of America, Australia, and some of the Pacific islands.

The

Co-operative Credit Banks. One of the biggest difficulties of the small farmer has always been to obtain credit on reasonable terms. ordinary bank has usually either demanded strong material security and charged high interest, or refused to be bothered with small loans. Hence the peasant has been driven into the hands of the produce merchant or the money-lender, who may exploit him right and left. Meanwhile individual savings in country districts have either been hoarded or deposited with some branch of a big bank, which has sent them off to headquarters to be used for industrial and commercial purposes instead of for rural "accommodation.''

How to free and assist the peasant farmer was a problem which perplexed the mind of F. W. Raiffeisen, burgomaster of a group of Rhine villages. In 1849 he established a loan society for the benefit of the small farmers, with capital provided by rich philanthropists, but in 1862 another society was formed, of which the borrowing farmers were themselves the shareholders. Similar societies soon sprang up elsewhere, and the Raiffeisen Bank became the salvation of the German peasantry. It has been copied in part or whole in many other lands, and so is worthy of description. The object of the society was to improve the situation of its members, both materially and morally to obtain through the common guarantee the necessary capital for granting loans to the members for the development of their business and household, and to bring idle capital into productive use. The word "morally'' should be noted. Raiffeisen was an earnest Christian, and moral progress was to him as important as material. But moral and personal relationships could only be kept strong in a small society, in which the controlling body knew, and was known by, all the members. Therefore the area covered by any society was not to contain more than 1,500 people; the village was an ideal unit.

In this village the peasants would band together in a credit society. The share capital was very small, not more than 10/- per member, but behind this nominal amount stood the acceptance of unlimited liability by the members. If the bank failed, its creditors could recompense themselves by taking the property of the shareholders until that property was all gone or the debts had been fully repaid. The peasants backed their bank with all they had, and therefore dealt very cautiously with any money entrusted to them. A room was rented, an executive and accountant appointed, and the bank opened once or twice a week to receive deposits. These were drawn from

the savings of the villagers. The bank drew in the spare money of the district, paid a small interest on it, and kept it for the use of the district. In 1876 a Central Bank was established, which acted as a safe-keeper for the surplus funds of the local banks, kept current accounts for them, and built up a central reserve from which heavy credit calls could be met.

The local executive at its weekly meeting considered all applications for credit. Three conditions had to be met to the satisfaction of the executive. The applicant must possess a good character, and be known to be honest, sober, and industrious. He must be a capable person, skilful and efficient at his work. Finally, the plan for which he wished to borrow must be one likely to succeed. No drunkard, no careless farmer, and no wild-cat scheme had any hope of winning the approval of the executive. The applicant who satisfied the board got his credit at 4 or 5 per cent. per annum, and might have from a month to ten years in which to repay the loan. If the local bank had not sufficient funds for the purpose, it might obtain an advance from the Central Bank, and this bank could, if necessary, borrow at 3 per cent. from the Central Co-operative Bank, set up by the government in 1895 to lend money to unions of credit societies. If the loan required was to purchase land, the local bank would buy the land, and hand it over to the applicant, who would thus become the debtor to the bank instead of to the seller, land agent, or money-lender, paying the price in regular instalments. Some small banks in this way purchased whole estates and cut them up for sale to their members. Great strictness was displayed in enforcing the repayment of debt, and the defaulter was blacklisted, perhaps for the rest of his life.

The whole plan has worked very smoothly. Administration costs are low, for the only salaried person is the accountant. Priest and schoolmaster have given invaluable aid, the latter often acting as accountant. A spirit of mutual help and co-operation has been fostered, prosperity has replaced failure, and village life been freed from the grip of the big bank and the usurer. In addition to the Raiffeisen societies, similar groups grew up under the leadership of Dr. Haas. The Raiffeisen and Haas banks in 1910 numbered over 17,000, with a membership of over 1,500,000. Their chief strength lay in south-west Germany and the Rhine Valley. The returns for nearly 15,000 of these banks showed a turnover in 1910 of £262,000,000. All were based on unlimited liability, which in theory is a very unsafe foundation. But so cautiously were the societies administered that in sixteen years (1895-1910) there were only nineteen failures. In 1913 this excellent record was broken by the partial collapse of the Haas organization. The Haas Central Bank had been using the government Central Bank too freely, and had therefore become less cautious in making advances to small societies. The latter, finding they could get as much as they asked for, relaxed their vigilance, and soon found themselves with too much credit and bad debts on their books. The crash came in 1913, and a number of the Raiffeisen banks were also brought to grief. Recovery was slow, and the lesson sank deep into the minds of all-Beware of leaning on any outside aid!

Productive and Other Societies. German agricultural co-operation is not limited to credit work. Some of the Raiffeisen credit societies undertake buying, manufacturing, and selling for their members, and in 1913 nearly 15,000 other societies existed for such work as buying machinery, seed, fertilizers, etc., making butter and cheese, distilling and wine-making,

supplying electric light and power, breeding cattle, forestry, providing common pasturage, packing produce, and selling cattle, corn, eggs, wine, etc.

The experience of the German peasants resembles that of small farmers in many other lands. Russia in 1913 had 12,500 credit societies, 2,500 co-operative dairies, and 2,000 miscellaneous groups. The chief strength was in Siberia, where a vast butter industry had grown up, aided by Danes, a good railway service, and co-operation; the training which the Russian has received in the communal life of his village fits him well for successful co-operative effort. In India co-operation began about 1903, and by 1913 there were 12,300 societies in existence, with nearly 600,000 members. Their chief work was credit; but from credit they went on to silk-weaving, sugar works, dairies, and the co-operative sale of cotton. In Japan, where 70 per cent. of the cultivators hold less than 2 acres each, over 9,000 societies had emerged by 1913, of which over 7,000 did credit work. In Canada work began in Quebec, where Mr. Desjardins in 1900 began to preach co-operation and to found credit banks. In spite of strong opposition, progress was made, and by 1912 there were 110 banks with 30,000 members in Quebec. The United States became interested in co-operation about 1912, when the problem of conservation was being faced. A big commission of investigation was sent to Europe to study the matter, and its report was strongly in favour of the establishment of co-operative societies, especially among the small farmers of the country. Since then hundreds of societies have been established; but in some states, especially North and South Dakota, the farmers have organized politically in the Non-partisan League, and are looking to the State to deal with the problems of credit and distribution. Of Belgium, Holland, Denmark, and Italy one need only say that credit and other societies abound, and are generally very successful.

The movement has made some progress in Australia, though until quite recently it has been almost as neglected as co-operation of consumers. The habit of leaning on the state does not foster a corporate spirit, and where the state will not act the farmer is driven to depend on the private bank and merchant. Hence many big businesses have been built up simply by doing work which the farmers, acting in co-operation, could have kept in their own hands. This applies especially to the sale and export of wool, wheat, or fruit. Still, societies now exist for milling, dairy work, jam making, fruit grading and packing, as well as the sale of wheat and wool, and some of them have grown to great size.

The United Kingdom. The chief progress in the United Kingdom has been in Ireland. Some evil genius has held co-operation in check in England, and although the Agricultural Organization Society was formed in 1901 to foster co-operation, the results have been small. In 1918 there were 1,100 societies in existence, with a membership of 160,000. Credit work has been a failure, but productive and distributing societies can show a better record. The story of Ireland is one of great achievement. The Land Purchase Acts of 1885 and 1903 made it possible for Irish tenants to purchase their holdings, and Ireland rapidly became more and more a land of peasant proprietors. But ownership alone was not sufficient; education and co-operation were essential if the country was to scramble out of the slough of despond. Under the influence of Sir Horace Plunkett, co-operative propaganda began in 1889. Two years later sixteen dairy societies were formed, and within three years the number had doubled. In 1894 the Irish Agricultural Organization Society was formed, with Plunkett as its chair