Co-Operative Industry (Routledge Revivals)

Ernest Aves

• Publisher: Routledge
• Year: 2014
• eBook ISBN: 9781317821359
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Ernest Aves (1857-1917) was an influential social analyst and civil servant. This title, first published in 1907, during Aves' work for the Board of Trade, investigates the different forms of industrial co-operation within Britain; the fundamental principle of this is stated as "equitable association", leading to increased profitability and the strengthening of industry. Chapters discuss such areas as centralisation, co-operative production and co-operative agriculture. This interesting reissue will be of particular value to students of economics with an interest in co-operative industry and the history of economic thought.

PART I—THE STORE

CHAPTER I

SOME GENERAL PRINCIPLES

Essentially voluntary in character—Encouragement of Self-reliance and Freedom—Influence on Economic, Ethical, and Social Relationships—Its complex character.

THE forms which the co-operative movement takes are the outcome of three main forces: the pressure of industrial life, leading to attempts to improve the conditions of employment, and to secure better value for money earned; the exacting conditions of trade and manufacture making it clear, sometimes by success and not infrequently by failure, that real betterment can only be secured by the adoption of sound business methods; and, lastly, the spiritual energy, varying in strength, but running more or less through all the responsible leadership of the movement, with its reminder that co-operation will miss its highest mark if the character of its adherents be not raised, and if the heart of man be not touched.

Co-operation is, and has been characterized by a great self-reliance, and as regards its individual members its basis is perhaps more essentially voluntary than that of any other organized industrial movement. “Freedom,” we know, is a question of degree, and organized social life is for ever nibbling at its edges; but in the co-operative life the limits of individual freedom are apt to be marked out moire liberally than elsewhere. In this fact has indeed lain one of its practical difficulties, since co-operators have often not known how to yield to guidance in management, and submission to accepted leadership is one of the lessons that they have often still to learn. The fact remains, however, that in spite of many practical failures to give it satisfactory expression, the principle of voluntaryism has underlain in an exceptional degree all healthy co-operative development. The element of coercion hardly enters either for the individual co-operator in connection with his fellows, or as regards his relations to those who remain outside the co-operative body, and in this fact lie elements of ethical superiority alike over militant trade unionism which, when strong enough, practically makes membership compulsory, or over any form of political propaganda that aims at power of some kind at the expense of others.

Alike in theory and in practice, co-operation aims at leaving unweakened the industrial and social freedom of the individual life. Every unit of the movement in taking the step that brings him within the ranks of the co-operators thus takes it as a free agent. In the vast majority of cases he takes it, it is true, because he considers that the step will bring him some personal advantage; but when this self-regarding freedom of action is combined with, or, as so often happens, leads to the belief that the co-operative principle is worthy of propaganda for the sake of others, we are then confronted with emanations of the co-operative faith, and of the spiritual impulse of a voluntary comradeship that is trying to give effect to the co-operative motto that bids each man take thought for the welfare of all. This is the “gleam” that the best leaders of the past, and many in the present, would fain have seen, and see the rank and file follow, and the greatest failures of the past, and the greatest dangers of the present, have been, and are, connected with blindness to this light, which to-day prosperity, and the maintenance of prosperity, no less than difficulty, sometimes overclouds.

The most abiding interest of the movement, however, is due to the demand that it is still apt to make upon all who join it that some effort shall be made, so that all men may be able to look more courageously and more self-reliantly towards the future. For the movement is a hopeful and progressive one, and as demonstrating a great reserve of social force, capacity, and good will, it is perhaps able to establish a firmer hold upon the public imagination than by its power to make for a more widely spread security and comfort, by its merits as an industrial system, or by its power to increase the economic usefulness of the individual life.

In all of these ways, however, industrial co-operation is important. In spite of its manifest limitations, alike in aim and in achievement, it is able to exercise a distinctive influence in such very different fields as the conditions of economic and social well-being, the ethics of industrial relationships, and the national welfare.

It is, however, in itself, a very complex affair. “Co-operation” is always “more” or “less” completely co-operative, and the examination of the various forms it takes makes it clear that one or other of its manifold applications exercises also some special form of influence—social, ethical, or economic. Such examination would, however, show but ill-defined boundaries, for the forms of influence mentioned are themselves overlapping forces in life, often inextricably interwoven. Although no such analysis as that suggested is possible, therefore, it may be noted that co-operative distribution, undertaken as it is “in the interests of the consumer,” bears most directly upon the questions of material and domestic well-being; the applications of co-operation to productive enterprise bear most directly upon the questions of industrial ethics and industrial relationships, while the application of co-operation to agriculture and the various forms of profit-sharing in what is for the most part capitalistic enterprise, gives rise to the greatest economic questions that affect the national welfare. It is to the consideration of the first of these that the following section is devoted.

CHAPTER II

THE DISTRIBUTIVE STORE

Conditions of Membership—Shares—Fixed Rate of Interest—Supply of Capital—The Committees of Management—Staff—Prices and Profits—Dividend—Credit—Competition—High Dividends—Non-co-operative Sources of Supply—Their Increasing Efficiency—Differences in Size of Societies—Inception—Examples of Growth—London—The Number of Societies—Recent Growth—The Danger of Overlapping—“Loyalty”—Gain and Loss—Purchases per Member—Examples—The Influence of Local Conditions—Average Earnings—The Margin of Non-co-operative Expenditure—Table—Effects of Wages and Price Movements—Expansion and its Limitations—Comparative Table

THE Co-operative Stores, in the form that may be said to have started some sixty years ago, now represent, so far as Great Britain is concerned, the most flourishing side of the co-operative movement, and some of their leading features may now be briefly described.

Membership is open practically to every one of either sex over sixteen years of age. The constitution is thoroughly democratic, and the most exacting qualification required to give voting power for the executive committees, by which the societies are governed, is that of holding a fully paid single one-pound share.

This share may be paid for by easy instalments, but a common practice is to pay a shilling on application, and to leave the dividends on subsequent purchases to accumulate, no further calls being made.

By the Industrial and Provident Societies Acts, under which almost all the societies are now registered, no member can hold shares for a nominal value of more than £200; but when this sum is reached, the society, if it can use the money, can borrow it as loan capital. The supply of sufficient capital is no longer a difficulty, and in the case of some societies the maximum of share capital per member is voluntarily fixed at a smaller amount than the legal limit of £200 in order to keep the supply within manageable and safe bounds.

No member has more than a single vote, however many shares he may hold, and with the occasional exceptions of the first, the shares are withdrawable but not transferable. This arrangement is the simplest, and appeals most to the great mass of those whom the stores attract and desire to attract; but in the case of any special adverse circumstances leading to something of the nature of a panic, in the case of any widespread local depression in trade and employment, or if any considerable section of the members become for some reason disaffected and leave the society, it is evident that this power of easy withdrawal may at any time become a source of danger. The provision of adequate reserve funds, and proposals to give greater power to the committees to suspend the right of withdrawal “whenever circumstances arise that make this step imperative in the interests of all the members,” were among the subjects most seriously discussed at the Congress of 1904, and a resolution was passed then advising the societies to take the matter into their serious consideration and to secure any necessary amendment of their rules.

Interest, always fixed, is generally paid at the annual rate of 5 per cent., a rate that is somewhat abnormally high in these days, and the tendency is to reduce it.

By the automatic accumulation of dividends, added to the attraction of a substantial rate of interest, the capital of the stores often outgrows needs, and the utilization of these surplus resources is a practical problem that has found its chief solution in investment in one of the great Wholesale Societies, and, to a still greater extent, in house property—the houses thus acquired, sometimes having been also built, and in many cases let to members of the society.* Another important outlet for the use of capital is found in the various branches of “productive” business sometimes undertaken by the stores.

Subject to the general supervision of the shareholders' meetings, generally held half-yearly, management is vested in the committee, and its officers are elected by the shareholders, and, as regards the actual conduct of the business of the store, in the manager, who is himself appointed by the committee, and thus by a process of indirect election. Subordinate employees are often appointed on the recommendation of the manager, and these, together with the manager himself, generally stand in the same relation to the committee as does the corresponding staff of ordinary joint stock companies or private employers.

The prices at which goods are sold are generally fixed at the general level of the district in which the stores are situated, and no attempts are made, as by such joint stock institutions, as the Civil Service, or the Army and Navy Stores, to attract members or custom by exceptionally low prices. The economic attraction of the working-class store is not found simply in a series of advantageous purchases, but in the knowledge that the profits accruing on the series, after allowing for all administrative and working expenses, will be at the disposal of the purchasing member in the shape of dividend.

It is in this way that the element of retail profit, and, so far as goods sold have been purchased from a co-operative Wholesale Society of wholesale profit too, is eliminated from the price basis of the store, and that the purchasing member may not incorrectly be described as ultimately getting his goods at cost price.

Purchases are recorded by giving a metal check or some other token, and upon these, when presented at the end of the quarter or half-year, representing as they do the total of the purchases made by the individual member, the share of the dividend that has been declared is paid, or, if not withdrawn in cash, is credited to him as additional share capital. Dealing in dividend-tokens between members is always deprecated, but, at a sacrifice, they can generally be presented at the office of the society and realized upon before the end of the half-year.* To non-members who deal at the stores, half the amount of the full members' dividend is generally paid.

The impression is widely prevalent that the “ready-money” principle is universally adopted at the stores, but this is erroneous, credit being given by a large majority of them—according to the figures presented at the Congress of 1904, by 1401 societies in the United Kingdom as against only 507 which worked exclusively on the cash principle. The practice is deprecated,† and the principle of cash payment is extolled by co-operators, but it is, nevertheless, unlikely to be made in any sense compulsory, even in the sense of not allowing the credit given to exceed the accumulated savings of the member. Not only is the practice very difficult to check, and much more so to abandon, when it has been once adopted, but many arguments are advanced in its favour. It is said; for instance, that a binding rule forbidding all credit would often involve unnecessary hardship, or drive the member away from the society altogether, while the special circumstances that may arise in the case of a labour dispute, of bad trade, or of irregular employment are urged, and it appears that all that can be hoped for is that credit will still be regarded as the exceptional method of buying to be claimed and sanctioned only when circumstances appear to justify departure from what is still regarded by the vast majority of co-operators, at least in theory, as the golden rule of cash payment. The increasing extent to which this rule is departed from is, however, a very serious matter, and one that, if not carefully watched and checked, may, in a few years, do much to imperil not only the financial stability of many of the societies, but, which is far more important, their power to safeguard the home by safeguarding the purse.*

The vast majority of co-operators belong to societies paying over 1s. 6d. and less than 3s. 6d. in the pound as dividend. Out of 1328 societies comprised in the Board of Trade returns* as to the dividends for 1905, only 2·2 per cent, of the total membership of over two millions belonged to societies paying 1s. in the pound or less, and only 9·3 to societies paying over 3s. 6d. in the pound. The average rate of dividend paid was 2s. 6¾d. in the pound—a figure from which there is little variation year by year, although the actual figure for 1905, it may be noted, shows a reduction of 1d. in the pound as compared with the years 1899–1902. This decrease is doubtless due to recent agitation in favour of lower prices and dividends, with the view of bringing in a poorer class of consumer.

The amount of dividend paid by individual societies varies roughly according to the margin of profit that the competition of the outside market makes possible, and the amount is thus generally lower in great centres of population where the consumer is catered for with every imaginable device and attraction — poster, advertisement, “leading lines,” bonus gifts on purchases, payment by instalments, or low ready-money prices, as the case may be—offered by the ordinary retailer, than in smaller places where competition is less keen, and where the individual rate of profit generally rules higher. In some small centres of population, most frequently in the North of England, the co-operative society may be so powerful as to be almost independent of outside competition, and it is under such circumstances that the highest dividends are most likely to be paid.

Great centres of wholesale exchange, of which London is the pre-eminent example, tend to keep down the level of retail prices and profits—and thus of dividends, and this affords one of the reasons that adds to the practical difficulty of the co-operative movement in the Metropolis. It is, however, only one, and the normal disintegration of the population there, combined with the difficulty of finding or creating the social or industrial bond that makes men know each other, and thus provides the personal basis upon which the movem...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Original Title Page
• Original Copyright Page
• Preface
• Table of Contents
• Introduction
• Part I.—The Store
• Part II.—The Workshop
• Part III.—The Farm
• Index