The transformation in the rural life of more than one European community through co-operation has amounted to little less than a revolution. Higher standards of agricultural products and production have been set up and maintained, better methods of farming have been inculcated and enforced, and the whole social, moral, and civic life of the people has been raised to a higher level. From the viewpoint of material gain, the chief benefits of agricultural co-operation have been the elimination of unnecessary middlemen, and the economies of buying in large quantities, selling in the best markets, and employing the most efficient implements. As compared with farming conducted on a large scale, the small farm possesses certain advantages, and is subject to certain disadvantages. It is less wasteful, permits greater attention to details, and makes a greater appeal to the self interest of the cultivator; but the small farmer cannot afford to buy the best machinery, nor is he in a position to carry on to the best advantage the commercial features of his occupation, such as borrowing, buying, and marketing. Co-operation frees him from all these handicaps. "The co-operative community ... is one in which groups of humble men combine their efforts, and to some extent their resources, in order to secure for themselves those advantages in industry which the masters of capital derive from the organisation of labour, from the use of costly machinery, and from the economies of business when done on a large scale. They apply in their industry the methods by which the fortunes of the magnates in commerce and manufacture are made." These words, uttered by a prominent member of the Irish co-operative movement, summarise the aims and achievements of agricultural co-operation in every country of Europe in which it has obtained a strong foothold. In every such community the small farm has gained at the expense of the large farm system. Finally, agricultural co-operation reduces the burden of interest by eliminating some unnecessary capital, stimulates saving among the tillers of the soil by providing a ready and safe means of investment, and in manifold ways contributes materially toward a better distribution of wealth.
Co-operative Mercantile Societies
Co-operative stores are organised by and for consumers. In every country they follow rather closely the Rochdale system, so called from the English town in which the first store of this kind was established in 1844. The members of the co-operative society furnish the capital, and receive thereon interest at the prevailing rate, usually five per cent. The stores sell goods at about the same prices as their privately owned competitors, but return a dividend on the purchases of all those customers who are members of the society. The dividends are provided from the surplus which remains after wages, interest on the capital stock, and all other expenses have been paid. In some co-operative stores non-members receive a dividend on their purchases at half the rate accorded to members of the society, but only on condition that these payments shall be invested in the capital stock of the enterprise. And the members themselves are strongly urged to make this disposition of their purchase-dividends. Since the latter are paid only quarterly, the co-operative store exercises a considerable influence toward inducing its patrons to save and to become small capitalists.
In Great Britain the vast majority of the retail stores have been federated into two great wholesale societies, one in England and the other in Scotland. The retail stores provide the capital, and participate in the profits according to the amounts purchased, just as the individual consumers furnish the capital and share the profits of the retail establishments. The Scottish Wholesale Society divides a part of the profits among its employés. Besides their operations as jobbers, the wholesale societies are bankers for the retail stores, and own and operate factories, farms, warehouses, and steamships. Many of the retail co-operatives likewise carry on productive enterprises, such as milling, tailoring, bread making, and the manufacture of boots, shoes, and other commodities, and some of them build, sell, and rent cottages, and lend money to members who desire to obtain homes.
The co-operative store movement has made greatest progress in its original home, Great Britain. In 1913 about one person in every three was to some degree interested in or a beneficiary of these institutions. The profits of the stores amounted to about $71,302,070, which was about 35 per cent. on the capital. The employés numbered about 145,000, and the sales for the year aggregated $650,000,000. The English Wholesale Society was the largest flour miller and shoe manufacturer in Great Britain, and its total business amounted to $150,000,000. Outside of Great Britain, co-operative distribution has been most successful in Germany, Belgium, and Switzerland. It has had a fair measure of development in Italy, but has failed to assume any importance in France. "There is every sign that within the near future—except in France—the stores will come to include the great majority of the wage earning class, which is a constantly growing percentage of the total population."[155] Within recent years a respectable number of stores have been established on a sound basis in Canada and the United States. Owing, however, to the marked individualism and the better economic conditions of these two countries, the co-operative movement will continue for some time to be relatively slow.
As in the case of agricultural co-operation, the money benefits accruing to the members of the co-operative stores consist mainly of profits rather than interest. In the absence of the store societies, these profits would have gone for the most part to middlemen as payments for the risks and labour of conducting privately owned establishments. Forty-seven of the sixty million dollars profits of the British co-operative stores in 1910 were divided among more than two and one-half million members of these institutions, instead of going to a comparatively small number of private merchants. The other thirteen million dollars were interest on the capital stock. Had the members invested an equal amount in other enterprises they could, indeed, have obtained about the same rate and amount of interest, but in the absence of the co-operative stores their inducements and opportunities to save would have been much smaller. For it must be kept in mind that a very large part of the capital stock in the co-operative stores is derived from the members' dividends on their purchases at such stores, and would not have come into existence at all without these establishments. The gains of the co-operative stores, whether classified as profits or as interest, are evidently a not inconsiderable indication of a better distribution of wealth.
Co-operation in Production
Co-operative production has occasionally been pronounced a failure. This judgment is too sweeping and too severe. "As a matter of fact," says a prominent London weekly, "the co-operators' success has been even more remarkable in production than in distribution. The co-operative movement runs five of the largest of our flour mills; it has, amongst others, the very largest of our boot factories; it makes cotton cloth and woollens, and all sorts of clothing; it has even a corset factory of its own; it turns out huge quantities of soap; it makes every article of household furniture; it produces cocoa and confectionery; it grows its own fruit and makes its own jams; it has one of the largest tobacco factories, and so on." Obviously this passage refers to that kind of productive co-operation which is carried on by the stores, not to productive concerns owned and managed by the workers therein employed. Nevertheless the enterprises in question are co-operatively managed, and hence exemplify co-operation rather than private and competitive industry. They ought not to be left out of any statement of the field occupied by co-operative production. The limitations and possibilities of co-operation in production can best be set forth by considering its three different forms separately.
The "perfect" form occurs when all the workers engaged in a concern own all the share capital, control the entire management, and receive the whole of the wages, profits, and interest. In this field the failures have been much more numerous and conspicuous than the successes. Godin's stove works at Guise, France, is the only important enterprise of this kind that is now in existence. Great Britain has several establishments in which the workers own a large part of the capital, but apparently none in which they are the sole proprietors and managers. The "labour societies" of Italy, consisting mostly of diggers, masons, and bricklayers, co-operatively enter into contracts for the performance of public works, and share in the profits of the undertaking in addition to their wages; but the only capital that they provide consists of comparatively simple and inexpensive tools. The raw material and other capital is furnished by the public authority which gives the contract.
A second kind of productive co-operation is found in the arrangement known as co-partnership. This is "the system under which, in the first place, a substantial and known share of the profit of a business belongs to the workers in it, not by right of any shares they may hold, or any other title, but simply by right of the labour they have contributed to make the profit; and, in the second place, every worker is at liberty to invest his profit, or any other savings, in shares of the society or company, and so become a member entitled to vote on the affairs of the body which employs him."[156] So far as its first, or profit sharing, feature is concerned, co-partnership is not genuine co-operation, for it includes neither ownership of capital nor management of the business. Co-operative action begins only with the adoption of the second element. In most of the existing co-partnership concerns, all the employés are urged, and many of them required to invest at least a part of their profits in the capital stock. The most notable and successful of these experiments is that carried on by the South Metropolitan Gas Company of London. Practically all the company's 6,000 employés are now among its stockholders. Although their combined holdings are only about one-twenty-eighth of the total, they are empowered to select two of the ten members of the board of directors. Essentially the same co-partnership arrangements have been adopted by about one-half the privately owned gas companies of Great Britain. In none of them, however, have the workers obtained as yet such a large percentage of either ownership or control as in the South Metropolitan. Co-partnership exists in several other enterprises in Great Britain, and is found in a considerable number of French concerns. There are a few instances in the United States, the most thoroughgoing being that of N. O. Nelson & Co. at Le Claire, Ill.