Page images
PDF
EPUB

died this year. It is known that most of the societies give no share of their profits to nonstockholding workmen; but the demand on the part of co-operators is rapidly growing. Of the 77 productive societies that had been in business or were just beginning in England, Wales, and Scotland at the close of 1887, 17 were in cotton, linen, silk, and wool, 12 in leather, 10 in metal, 9 in flour, 6 in farming, 4 in printing, and 19 in as many different kinds of manufacturing.

If the announced aims of the leaders of cooperation in England are realized in any such degree in the next twenty-five years as they have been in the past twenty-five, we may look for a great growth of that for which previous success has prepared the way, namely, co-operative production, wherein labor shall share in the profits of manufacturing, and, through the organization of consumers already secured to the extent of over 800,000 families, shall be able to deal a serious blow at the sweating system and other devices of those employers who, in the rage to produce more cheaply than their rivals, offer their employés ruinously low wages or unhealthful conditions of employment.

The great success in the United States has been in building and loan associations, which are as distinctively American as the creditunions are German. Still, there are some successful and now rapidly growing stores, and these as the simplest and historically the earliest form of co-operation in this country may be first considered.

Distributive Co-operation. The co-operative store, and much later the factory, were introduced and fostered for a long period by organizations of workingmen. Most of these organizations have given place to others having different objects, until to-day nearly all successful co-operative enterprises are carried on independently of any organization and even of each other. The first attempts at co-operation between 1847 and 1859 were made in New England by the New England Protective Union. Nearly all failed after a time, from lack of the co-operative spirit and from ignorance of the best methods. In trying to sell for cost, as did these union stores, the average manager is usually confronted with a deficit at the end of each year because of unexpected but inevitable depreciation of goods and from other losses. The bitter rivalry of private stores is also aroused. The latter will sell some staple article even below cost, and, by widely advertising this particular article, will draw off the trade of unthinking men from the co-operative store, which may, on the whole, be selling cheaper.

The next attempt at co-operation was made by the Patrons of Husbandry, known also as Grangers, and in the South recently as "The Wheel." (See " Annual Cyclopædia" for 1886, page 42.) This is often associated exclusively with the celebrated granger legislation against

the abuses of the railroads, but in reality it has accomplished a great deal for its members in education upon practical farm topics and in many other ways, not the least of which has been the result of its co-operative features. These features have been in part represented by purchasing agencies, which bought machinery, groceries, and dry goods for the farmers or sold their products in the large cities on orders from the local unions. Still more important and common has been the concentration of all the trade of the members of a local grange or even of a State grange on a strictly cash basis at such wholesale dealers and manufacturers as would sell at the lowest prices all things needed on the farm and in the home. In hundreds of cases, too, grange stores have been established on the faulty plan just described of the old union stores-that is, selling at or near cost. Some of these stores continue prosperous, as at Torrington and Lebanon, Conn., but most have failed from the same ignorance of approved methods, from inability to find managers who possessed the knowledge lacking in the members, and from the same absence of the co-operative spirit which caused the downfall of the union stores. Yet, aside from the great educational value even of failure, these grange stores, as well as the methods of concentrating trade upon establishments that would give special discounts, have been a great help to the farmer in forcing down in private stores the general level of prices, which in the seventies were often exorbitantly high.

To the now extinct order of the Sovereigns of Industry belongs the credit of having propagated extensively in this country the best methods of distributive co-operation embodied in the Rochdale plan. The essential superiority of this plan over others lies in its provision that goods shall be sold at regular retail prices, and any profits above what is sufficient for a reserve fund and interest on capital are paid to customers annually or semi-annually, in proportion to their trade for the period, though stockholders may receive a larger per cent. of dividend on their trade than outsiders. The other provisions, such as shares of small value, limitation of the number that one can hold, and the allowance of but one vote to a stockholder independent of his shares, are common to other systems. This is the plan on which most of the English and permanently successful American stores have been managed since it was introduced in England by the Rochdale Pioneers in 1844, and brought to general attention in this country thirty years later by the Sovereigns of Industry.

The latter organization, founded by William H. Earle, of Worcester, Mass., in 1874, devoted most of its strength during its six years' life to the spread of distributive co-operation. For two years paid lecturers, well acquainted with the most approved methods of co-operation, were kept in the field to organize local councils and help them to establish stores in the

right way. In 1875 the 310 councils reporting at the annual meeting of the order returned a membership of 27,984. Of these the majority went no further than to obtain discounts at private stores, and many stopped with merely the educational features; but in 1877, 94 councils, having a membership of 7,273, reported an average capital in their stores of $884, and a total business of $1,089,372, at an average saving to the members of 14 per cent., or an aggregate profit of $152,512, equal to a saving of $21 to every man and woman belonging to those councils. But the organization had its birth at the worst time for success in the past twenty-five years. It was during the prolonged financial depression following 1873, when thousands who had joined the order could not get work and felt obliged to resort to private stores that would trust. Then, too, the growth had been too rapid to permit of wise management; the knowledge of English methods was too little diffused at the start, and especially were there too few possessed of actual experience in the Rochdale stores who could be made managers of the new enterprises. Fortunately, all these difficulties time and education may remove, in fact are already removing, as appears from the considerable number of successful stores to be found in New England, New Jersey, Kansas, Texas, and in a less degree in some other sections and States. Several of the largest of existing stores are survivals of the Sovereign enterprises.

In 1866 there were 53 co-operative stores in New England, with an aggregate trade of $2,000,000 and a capital of about $210,000. In Texas there were 155 co-operative stores, all connected with a central association con

amounted to $296,576.12 in merchandise and 8,757 bales of cotton, an increase of over $100,000 during the year. Ten-per-cent. dividends were paid on stock, and the remaining two thirds of the $16,320.33 were in part placed in the contingent fund and in part divided among the 602 association and individual stockholders. The entire number of stockholders of the central and subordinate associations exceeds 6,000.

Next in size is the Johnson County Co-operative Association, of Olathe, Kansas, which has been in business since July, 1876, on the Rochdale plan of dividends on trade. Its sales in 1887 amounted to $245,000 and its capital to $66,000, if the surplus of $16,000 be in→ cluded.

The Philadelphia Industrial Co-operative Association, began in 1874 on the Rochdale plan, reported a trade in 1886 of $171,278.04, divided as follows: Groceries, $123,636.16; meat, $19,772.11; dry goods, $8,908.33; boots and shoes, $13,499.94; coal, $5,461.50; total, $171,278.04. The capital, in the hands of 2,355 members, and invested in a central and three branch stores, amounted to $40,000.

At Allegan, Mich., is a co-operative store with $30,000 capital and a trade in 1887 of $165,384.09, which sells everything at 4 per cent. above total cost, and keeps down expenses to 41 per cent. of the trade. This is the best showing made by any co-operative store as far as known in the United States.

Among the other large and vigorously growing co-operative stores of the country should be mentioned the ten next in size to the four already considered. For convenience, the entire fourteen are included in this table:

Capital.

No.

NAME.

1.. Texas Co-operative Association

2.. Johnson County Co-operative Association.

3.. Philadelphia Industrial Co-operative Association 4.. Allegan Co-operative Association.

5.. Beverly Co-operative Association

6.. Trentor Co-operative Society

7.. Arlington Co-operative Association. 8.. Sovereigns Trading Company. 9.. Sovereigns Co-operative Association 10.. Industrial Co-operative Association.. 11.. Riverside Co-operative Association.. 12. Hammonton Fruit-Growers' Union. 13.. Progressive Co-operative Association 14.. New Brunswick Co-operative Society.

[blocks in formation]

$63,885

245,000

66,000

171,278*

40,000

165,884

80,000

Beverly, Mass..

124,901*

7,000

Trenton, N. J.

[blocks in formation]

Lawrence, Mass.

[blocks in formation]
[blocks in formation]

ducted by the Patrons of Husbandry; the total capital of these stores in 1885 was returned at $744,500, and the trade was $1,977,579.90. The central association, called the Texas Co-operative Association Patrons of Husbandry, whose headquarters are at Galveston, reported at the tenth annual meeting, in July, 1888, a capital of $63,835, owned by 226 co-operative associations and 376 individuals, in all parts of the State. Each branch association trades and divides the profits on its own account. The trade of this central association

In order to determine the growth of cooperation in 1887 over that in 1886, when full returns from most of our co-operative enterprises were secured, circular letters were sent to the largest of these. Only two (and those were small enterprises) are known to have failednamely, an old store at Seneca Falls, N. Y., which committed the fatal mistake of selling on trust, and a new, poorly managed enterprise in Buffalo, N. Y. These failures are more than offset by the rapidly growing trade of several new stores, one of which-the Phillipsburg

Co-operative Store No. 1, of Phillipsburg, N. J.-reported a trade of $32,983 in 1887. Of the twenty stores, including twelve of the fourteen given in the table above, which made complete returns, only five reported a decrease in trade. Excluding the large Texas store, lest its size and success overbalance the rest, the business of the other nineteen amounted to $1,290,550, being an increase in one year of 24 per cent. If we include the Texas stores, the remaining thirty-nine in New Englandwhich did business amounting to more than $1,000,000 in 1886-and the twenty to thirty other successful stores in the country, we may safely estimate the entire distributive co-operation in the United States in 1887 at between $5,000,000 and $6,000,000. This is not a large sum in comparison with the figures in Great Britain; but, if the present rate of growth of 24 per cent. a year continues, co-operative distribution will soon assume an important position in our industrial life.

It is the common opinion that the price of goods to the consumer is raised by the retailer from 30 to 100 per cent. over the wholesale price. This is completely disproved, as far as co-operative stores are concerned (and other stores rarely charge over 5 to 10 per cent. more), by statistics, gathered by the writer, of ten large and successful co-operative stores, of which five are in Massachusetts, two in New Jersey, two in Pennsylvania, and one in New York. In these ten stores, which sold groceries and in some cases meat, and in 1886 did a business of $420,494.20, the retail price was only 17-27 per cent. above the wholesale. The expenses for wages, rent, teams, freight from the wholesaler, depreciation of stock, insurance, ice, water-rent, taxes, stationery, and all other incidental running expenses, exclusive of interest on capital, amounted to 12.74 per cent. of the cost price, or nearly three fourths of the entire increase in price. Interest at 5 per cent. on the capital employed, which was returned as $66,242 actually paid in, aside from surplus, would be $3,312.10; this is almost 1 per cent. of the wholesale price, leaving only an average of 36 per cent. on the wholesaler's price that can be credited to profits, and which admitted in these stores of an average dividend of not quite 4.5 per cent. on the retail price.

The greatest cause of disaster in most cooperative stores that fail, next to trusting, lies in a high ratio of expense to trade. In eleven successful co-operative stores especially studied with regard to this point, the average percent age of running expenses to trade was only 7-7, and in no case did it reach 10. Few stores can succeed whose running expenses are allowed to equal 10 per cent. of the trade. Lavish expenditure for rent, teams, numerous employés, and a "stylish" appearance, wrecks many a co-operative enterprise. The idea of co-operation is substance rather than shadow-the best and purest goods-not display. One of the greatest savings of co-operation comes from the fact that

costly plate-glass show-windows, location on a main street, employés enough to be able to wait at once on all customers in the busiest hours of the day, and teams to carry home every small article, are not necessary to attract custom. If such be necessary, the first steps in co-operation have not yet been taken. A good, clean, wholesome store, in a convenient location, and one or two teams to deliver heavy goods, are, of course, requisite. But where a market is already secured among those banded together in a co-operative experiment, the need of the expensive means of advertising just referred to should no longer be felt. The very essence of co-operative distribution is the dispensing with the wastes of competitive business.

Productive Co-operation. This is the ideal of all thinking co-operators, and the goal toward which their efforts are directed. But few steps toward it have been taken. The idea of its advocates is that the workmen in our manufacturing establishments should save money enough to establish factories of their own; should have the requisite knowledge of human nature to select able foremen and superintendents; and sufficient moral fiber to cooperate cheerfully and submit to the rigid discipline necessary in a successful manufacturing enterprise. The first requisite, capital, is more easily secured through the issue of stock in shares of $5 to $25 each than are the other conditions. But the few marked successes chronicled below indicate that the prospects of success are not as chimerical as has been supposed, and that, especially in enterprises like the making of barrels, boots and shoes, hats, watch-cases, and iron castings, where the zeal and efficiency of the workman count for more relatively to the capital and service of the manager than in other kinds of manufacturing, a considerable growth of co-operation may fairly be expected within the next twenty years. Through ignorance of men and methods, and lack of the moral qualities necessary to prevent all serious jealousies and dissensions, the vast majority of wage-earners are at present unfitted for productive co-operation.

The greatest success in this country is that of the co-operative coopers of Minneapolis. The oldest of the eight co-operative shops of that city, known as the Co-operative Barrel Manufacturing Company, was begun in 1874, and now has assets of $45,000, owned in equal amounts, as the constitution requires, by each of its ninety stockholders. Only one who is a journeyman cooper, and known to be of good moral character, can become a stockholder. If he is unable to pay the full value of a share at once, an assessment of from $3 to $5 is paid from his weekly wages, when the shop is running full time. Five per cent. interest is given on stock. The men work by the piece, and divide among themselves, according to their work, all the ordinary gains or losses of the business. But gains or losses coming from fire, from nonpaying creditors, from changes in the value of

real estate held, from the work of hired help, or from outside ventures undertaken by the association, are apportioned according to the stock-that is, equally among all the members. These eight companies, employing about two thirds of the 600 coopers in Minneapolis, are all organized on the same basis, and have been uniformly successful, having a steady local demand for their products from the largest flour ing-mills in the world, and, excepting one defalcation of a few hundred dollars, have lost nothing of the several million dollars that during the past fourteen years have passed through the bands of their more than fifty treasurers. Owing to less need of expensive foremen, merely to see that they attend to their work, and owing further to their readiness, when forced by competition, to work on half-wages rather than stop, these coopers are recognized as able to undersell any private shops in the city; but the latter are sustained by some of the millers to guard against any possible combination to raise prices among the co-operative companies. The effects of this form of organization upon the morality and thrift of the men are extraordinary. Most of the coopers are now strictly temperate, and they are worth, in a large majority of cases, from $2,000 to $4,000 each. The average wealth of the 90 members of the oldest company is at least $3,500. There is also a successful co-operative cooper-shop at Dundas, Minn., and one at Milwaukee. In the latter city is a flourishing co-operative association of plumbers which is increasing its capital in 1888 to $50,000. In 1886, the date of the latest full returns at hand, the business amounted to over $70,000, and included three fourths of all the journeyman-plumbers in the city. By dispensing with most of the foremen, these cooperators save nearly one third in the cost of plumbing. Profits have been largely divided on the basis of wages, but a part has gone to increase the capital. In 1886, the plumbers of New York city tried to organize co-operatively, and, according to one of their leaders, who has fallen heir to the business they were fast building up, they would have attained as great success as in Milwaukee, if they had only had the patience to wait a little longer and to work in harmony. At Lynn, Mass., is a cooperative shoe-factory, the Lynn Knights of Labor Co-operative Boot and Shoe Company, established in 1886, which is doing a successful and rapidly growing business with a capital of $8,000. After paying 5 per cent. interest on capital, and devoting 10 per cent. of the profits to a sinking fund, and as much more to a cooperative fund to assist other co-operative enterprises, the remaining profits are divided equally between capital and labor. Each workman gets his share of the labor dividend, in proportion to his wages.

Most of the other co-operative manufacturing companies, give no dividends to labor as such, but the stock is in many hands, and the stockholder has but one vote. The following

are the most successful, and from their history of five to twenty-one years, give evidence of reasonable stability: Stoneham Co-operative Shoe Company, Stoneham, Mass.; Wakefield Co-operative Shoe Company, Wakefield, Mass. ; Kingston Co-operative Foundry Company, Kingston, Mass.; Leonard Co-operative Foundry Company, Taunton, Mass.; Somerset Cooperative Foundry Company, Somerset, Mass.; East Templeton Co-operative Chair Company, East Templeton, Mass. These six companies, with a capital of $125,000, do a business of about $500,000. Outside of Eastern Massachusetts the most successful are the Solidarity Watch Case Company, in Hope Street, Brooklyn, with 110 employés and $67,000 capital, in 1887; the Fulton County Co-operative Leather, Glove, and Mitten Manufacturing Association, of Johnstown, N. Y.; the Co-operative Collar and Cuff Company, of Troy, N. Y., with a capital of $15,000, and business of nearly $40,000, in 1888; and the St. Louis FurnitureWorkers' Association. The sales of this latter in 1887-nine years after beginning businesswere $116,520, and the wages paid, mostly to stockholders, were $43,421.

Co-operative Building and Loan Associations.—By far the most important and successful form of co-operation in the United States is that of the Co-operative Building and Loan Association, sometimes called merely building association, or, as in Massachusetts, the co-operative bank. Beginning about fifty years ago in Philadelphia, and attaining to strength there in the decade of 1850-1860, they have been spreading rapidly since 1875 in Pennsylvania, New Jersey, Massachusetts, Western New York, Ohio, Illinois, Minnesota, and many other Western States, and are now reaching into the South. The capital of the co-operative bank is limited to $1,000,000, in shares whose full value is $200 each. The shares are not paid for at once, or within a short time of beginning business, as is usual with corporations, but are paid at the rate of one dollar a month, a new series of shares being issued semi-annually and annually. This would require two hundred months, or sixteen years and two thirds for the payment of a share, but for another feature of the system. The money accruing to the treasury from these monthly payments, and from all other sources, is loaned every month to such of the shareholders as offer the highest premium. The profits from these loans and premiums furnish the dividends, which usually amount to between six and seven per cent. Every one can borrow for aid in building or buying a home, to the amount of the par value of his share, but no more. As security he must offer his shares and such other property as may appear to the directors sufficient. They will lend nearly up to the full market value of such security, while the savings-banks are only allowed to lend to the extent of 60 per cent. of the assessed value of the real-estate security. It may be asked

how a poor man who has not real estate can borrow, even of a co-operative bank? The answer is, if he wishes to buy an estate he can borrow of the bank the greater part of the needed purchase money, and give as security therefor a mortgage of the property at the time he receives his deed therefor. Of course the bank can not furnish the whole amount of the purchase-money. But if one has a very little money and will subscribe to, say five shares, he can borrow $1,000. A man can thus build a house, mortgaging it as security to the co-operative bank. The would-be borrowers, as has been said, bid for the privilege. Premiums range from five to fifty cents a share, but rarely over twenty-five cents for any length of time. The by-laws of the cooperative banks usually require the successful bidder for a loan to pay one month's interest and premium immediately. If a loan is not approved, a month's interest and premium are forfeited. Successful bidders can always obtain shares for their loan. If one borrow $2,000 at fifteen cents premium a share (the average amount now prevailing in Massachusetts), he is subject to three monthly charges: First, a payment of ten dollars on his ten shares, which he had first to take before borrowing; second, a payment of one dollar and a half as a premium; and, third, a payment for interest, which, on $2,000, at 6 per cent. (the usual rate), is $10. In all, then, he pays $21.50 a month, until his shares mature in about eleven years, when the bank will hold his note for $2,000, and he will hold shares worth $2,000. The two accounts are canceled, and thus for a little more than the expense of rent in the mean time a man finds himself owner of a comfortable home.

Any one with sufficient security-which, be it observed, most workmen have not-might borrow the $2,000 of a savings-bank, pay 6 per cent. interest, the usual charge on such loans, or $1,320 during the eleven years, and then pay the debt, making $3,320. The same sum borrowed of a co-operative bank will involve a payment during the one hundred and thirty-two months, at $21.50 a month, of $2,835, besides the loss of, perhaps, $400 more in compound interest to the close of the eleven years on these payments. Two things are to be said: First, it is not always necessary in Massachusetts, where money is more plenty than in the West, for one to pay a fifteen cent premium for a very long time. Whenever the borrower finds it possible to bid off $2,000 for a lower premium, say five cents, he may do so, and with this loan pay off his other, borrowed at a higher rate, for one can repay his loan at any time, retaining his shares or not, as he chooses. The only charges are, that the borrower must pay double interest and premium for one month, and have a new mortgage made and the old one discharged. In some States, and occasionally in Massachusetts, the loans are bid off at so high a premium that the

actual payments, reckoning compound interest on them, are more than would be necessary if the money were borrowed from an ordinary savings-bank. But it may still be said that, human nature being as it is, scarcely one man in a thousand will make provision by constant voluntary monthly deposits in a savings-bank to repay his $2,000 mortgage at the end of the eleven years. This is the real justification for the existence of the co-operative banks. Their shareholders feel compelled to make their regular monthly payments. Before the man is aware of it, he has paid for his home and acquired the valuable habit of saving. The results are in every sense satisfactory, six to seven per cent. dividends being generally made. Again, these banks enable the depositors, who are in most cases wage-earners, to use their own deposits, whereas the money deposited in the savings-banks in Massachusetts-$300,000,000 in 1886-supplies the capital of the great employers of industry, and thus does not so directly promote the co-operative ideal - a larger share by the workmen in the profits of industry. In addition to nearly all the advantages of the justly famous postal savings-banks of Europe, the co-operative banks give much higher interest and keep the deposits for actual use among the lenders of the immediate neighborhood. By the Massachusetts law at least twenty-five persons must be associated together for organizing such a corporation, and no person can hold more than twenty-five shares, of the ultimate value of $200 each, in one corporation. No member can have more than one vote. A member may at any time, on thirty days' notice, withdraw any shares not pledged as security for loans, after paying any fines that may be due. By so doing he loses such portion of the profits as was previously credited to the share, and must bear such a proportion of any unadjusted loss as the bylaws may determine.

In most of the older building associations in the Middle and Western States the premiums are not paid monthly, but are deducted in a lump sum from the face of the loan to the borrower. For example, if a man, in order to borrow $1,000, offers ten per cent. premium, instead of receiving the $1,000 and paying monthly ten per cent. in addition to the monthly payments of one dollar a share, he will in many banks receive $900, but must take five $200 shares as security on which five dollars a month and interest on the $900 are paid. The Massachusetts plan, often called the installment plan, is now being adopted with increasing frequency by the new companies, and is simpler, and, many claim, more just to the borrower. Money is worth more and premiums much higher in Chicago and St. Paul than in Boston. Indeed, they seem unreasonably high, bringing in from fifteen to twenty per cent. profit to the depositors.

In the fifty-one co-operative banks of Massachusetts in 1887, the assets were $4,211,948 to

« PreviousContinue »