The object of such associations is, primarily, not to declare a dividend, but rather to improve the conditions of the industry for the members. After an agreed interest has been paid upon the shares, the net profits are divided between the participants in the undertaking, to each in proportion as he has contributed to them through the business he has done with the institution. And the same idea is applied to the control of the management. It is recognised that the poor man's coöperation is as important as the rich man's subscription. 'One man, one vote,' is the almost universal principle in coöperative bodies.[5]
The distinction between the capitalistic basis of joint stock organisation and the more human character of the coöperative system is fundamentally important. It is recognised by law in England, where the coöperative trading societies are organised under The Industrial and Provident Societies' Act, and the coöperative credit associations under The Friendly Societies' Act. In the United States (I am told by friends in the legal profession), the Articles of Association of an ordinary limited liability company can be so drafted as to meet all the requirements I have named. Most countries have enacted laws specially devised to meet the requirements of coöperative societies. However it is done, the essential of success in agricultural coöperation is that the terms and conditions upon which it is based shall be accepted by all concerned as being equitable in the distribution of profits, risks and control. It then becomes the interest of every member to give his whole-hearted support and aid to the common undertaking. To accomplish this, it is necessary to explain and secure the acceptance of a constitution and procedure carefully thought out to suit each case. It will be readily believed that associations of farmers which will meet these conditions are not likely to be spontaneously generated; hence the necessity for a plan and for the machinery to carry it through.
In this matter I am here speaking from practical experience in Ireland. Twenty years ago the pioneers of our rural life movement found it necessary to concentrate their efforts upon the reorganisation of the farmer's business. They saw that foreign competition was not, as was commonly supposed, a visitation of Providence upon the farmers of the British Islands, but a natural economic revolution of permanent effect. Our message to Irish farmers was that they must imitate the methods of their Continental competitors, who were defeating them in their own markets simply by superior organisation. After five years of individual propagandism, the Irish Agricultural Organisation Society was formed in 1894 to meet the demand for instruction as to the formation and the working of coöperative societies, a demand to which it was beyond the means of the few pioneers to respond.
Two decades of steady development have confirmed the soundness of the original scheme, and a brief account of agricultural coöperation in Ireland will be of interest to any reader who has persevered so far. The conditions were in some respects favourable. The farms are small and their owners belong to the class to which coöperation brings most immediate benefit. The Irish peasantry are highly intelligent. They lack the strong individualism of the English, but they have highly developed associative instincts. For this reason coöperation, an alternative to communism,—which they abhor,—comes naturally to them. On the other hand, the ease with which they can be organised makes them peculiarly amenable to political influence. In backward rural communities the trader is almost invariably the political boss. He is a leader of agrarian agitation, in which he can safely advocate principles he would not like to see applied to the relations between himself and his customers. He bitterly opposes coöperation, which throws inconvenient light upon those relations. We are able to persuade the more enlightened rural traders that economies effected in agricultural production will raise the standard of living of his customers and make them larger consumers of general commodities and more punctual in their payments. But in the majority of cases the agricultural organiser finds politics in sharp conflict with business, and has a hard row to hoe. So, while we have advantages in organising Irish farmers, we have also, largely owing to well-known historical causes, to overcome difficulties which have no counterpart in the United States or England.
Nevertheless, we managed to make progress. We began with the dairying industry, and already half the export of Irish butter comes from the coöperative societies we established. Organised bodies of farmers are learning to purchase their agricultural requirements intelligently and economically. They are also beginning to adopt the methods of the organised foreign farmer in controlling the sale of their butter, eggs and poultry in the British markets. And they not only combine in agricultural production and distribution, but are also making a promising beginning in grappling with the problem of agricultural finance. It is in this last portion of the Irish programme that by far the most interesting study of the coöperative system can be made, on account of its success in the poorest parts of the Island. Furthermore, the attempt to enable the most embarrassed section of the Irish peasantry to procure working capital illustrates some features of agricultural coöperation which will have suggestive value for American farmers. I will therefore give a brief description of our agricultural coöperative credit associations.
The organisation was introduced in the middle of the last century by a German Burgomaster, the now famous Herr Raiffeisen. He set himself to provide the means of escape from the degrading indebtedness to storekeepers and usurers which is the almost invariable lot of poor peasantries. His scheme performs an apparent miracle. A body of very poor persons, individually—in the commercial sense of the term—insolvent, manage to create a new basis of security which has been somewhat grandiloquently and yet truthfully called the capitalisation of their honesty and industry. The way in which this is done is remarkably ingenious. The credit society is organised in the usual democratic way explained above, but its constitution is peculiar in one respect. The members have to become jointly and severally responsible for the debts of the association, which borrows on this unlimited liability from the ordinary commercial bank, or, in some cases, from Government sources. After the initial stage, when the institution becomes firmly established, it attracts local deposits, and thus the savings of the community, which are too often hoarded, are set free to fructify in the community. The procedure by which the money borrowed is lent to the members of the association is the essential feature of the scheme. The member requiring the loan must state what he is going to do with the money. He must satisfy the committee of the association, who know the man and his business, that the proposed investment is one which will enable him to repay both principal and interest. He must enter into a bond with two sureties for the repayment of the loan, and needless to say the characters of both the borrower and his sureties are very carefully considered. The period for which the loan is granted is arranged to meet the needs of the case, as determined by the committee after a full discussion with the borrower. Once the loan has been made, it becomes the concern of every member of the association to see that it is applied to the 'approved purpose'—as it is technically called. What is more important is that all the borrower's fellow-members become interested in his business and anxious for its success.
The fact that nearly three hundred of these societies are at work in Ireland, and that, although their transactions are on a very modest scale, the system is steadily growing both in the numbers of its adherents and in the business transacted is, I think, a remarkable testimony to the value of the coöperative system. The details I have given illustrate the important distinction between coöperation, which enables the farmer to do his business in a way that suits him, and the urban form of combination, which is unsuited to his needs. The ordinary banks lend money to agriculturists for a term (generally ninety days) which has been fixed to suit the needs of town business. Thus, a farmer borrowing money to sow a crop, or to purchase young cattle, is obliged to repay his loan, in the first instance, before the crop is harvested, and in the second, before the cattle mature and are marketable. Far more important, however, than these not inconsiderable economic advantages are the social benefits which are derived by bringing people together to achieve in a very definite and practical way the aim of all coöperative effort—self-help by mutual help.
Our coöperative movement, taken as a whole, is to-day represented by nearly one thousand farmers' organisations, with an aggregate membership of some one hundred thousand persons, mostly heads of families. Its business turnover last year was twelve and a half million dollars. In estimating the significance of these figures, American readers must not 'think in continents,' and must give more weight to the moral than to the material achievement. As I have explained, the coöperative system requires for its success the exercise of higher moral qualities than does the joint stock company. Once a coöperative society becomes a soulless corporation, its days are numbered. It requires also the diffusion of a good deal of economic thought among its members, and this, also, is no small matter in the conditions. The most striking fact about this work in Ireland is that while in its earlier years organisation consisted mainly in expounding and commending to farmers the coöperative principle, we now find that the principle is taken for granted and the only question upon which advice is needed is how to apply it. The progress of agricultural coöperation depends largely on the character of the community; its commercial value may be measured by the extent to which it develops in the community the mental and moral qualities essential to success.[6]