1. No credit is given; and, therefore, there can be no bad debts. The capital of the concern is much more frequently turned over, and consequently its productiveness, or, in other words, the profits realized, are much increased.

2. When a co-operative store is first

established, the shareholders form a nucleus of customers; and, therefore, purchasers need not be attracted by such expensive means as advertise

ments.

3. The expenses of management are extremely small.

These three causes combined are, I believe, sufficient to explain the unusually high profits realized by every successful co-operative store. In some respects, however, it must be admitted that a retail shop, conducted by an individual owner, possesses advantages over any business conducted on the joint-stock principle, such as a co-operative store. Again and again has the remark been verified, that an individual owner of a business, being more powerfully stimulated by the feeling of selfinterest, will show more energy and discrimination in business, than the manager of a joint-stock company. And the truth of this is illustrated by examining some of the business details of the Rochdale Society. Their last quarterly report shows that 30,000l. worth of grocery has been sold, and only 1,000l. worth of drapery goods. There must be some cause for such a difference. The Lancashire operatives, who are well, even expensively, dressed, certainly do not spend twenty times as much in grocery as in drapery goods; and, therefore, it would appear that those who supply themselves with grocery almost entirely from the Pioneers' Store, deal there only to a limited extent for drapery and clothes. I do not think it is difficult to suggest a reason for this.

The people of Rochdale have confidence that a co-operative store supplies them with such articles as tea and sugar unadulterated, and of the best quality; and since a person, when purchasing tea,

terated, he naturally feels the importance of dealing at a shop in which he can place confidence. But, when a person purchases articles of clothing, he is anxious to select them according to his own taste, and, therefore, wishes to have as large a choice as possible. Hence such a tradesman as a draper ought to be most scrupulously careful in studying the tastes of his customers. Minute attention to what may appear so trivial a matter as taste is not so likely to be exercised by a paid manager as by the individual owner of a business, who, perhaps, feels that his livelihood depends upon attending to such apparently small matters. A co-operative store, therefore, is likely to carry on a much larger business in food than in clothing. But, although a co-operative store, in common with every other joint-stock undertaking, may suffer from the energy and skill of a paid manager, not being stimulated by self-interest, yet this advantage can be amply compensated by the other advantages we have enumerated as connected with the co-operative system; for it has been conclusively demonstrated that, when ordinary care is taken to select a proper manager, a co-operative store is almost certain to succeed, that large profits will be realized, and that the most inestimable advantages are conferred upon the working classes. Any working men who intend to establish a co-operative store may insure success if they will only take the precaution of selecting a proper manager, and of strictly adhering to the principle that no credit shall be given. perience, perhaps, shows that it is prudent to commence by selling food only; afterwards almost every other business might be embraced, as at Rochdale. There need scarcely be any risk involved in the co-operative stores. It is not necessary to make any speculative purchases; and, as no credit is given, the business can be readily expanded or contracted. The more intelligent working classes, therefore, throughout the country may be confidently advised

Ex

savings' bank is now their only investment, and the interest they obtain is so small that they have little inducement to save. The impossibility of obtaining more than 2 or 3 per cent. for their capital most effectually discourages providence. A co-operative store, by offering a singularly profitable investment for the savings of the working classes, will most powerfully encourage increased prudence; and without increased prudence it is vain to hope that the condition of the poor can ever be ameliorated.

But the important question now arises -Is the principle of co-operation as certain of success when it assumes a higher development, and is applied to commercial undertakings? I will, in the first I will, in the first place, describe the origin of the Rochdale co-operative cotton manufactory; I will, next, trace its progress up to the present time; and I will then remark upon the danger which may imperil the future. success of this and similar institutions.

As an offshoot of the Pioneers' Store, a co-operative cotton mill was established at Rochdale in 1855. The Pioneers' Society has 5,000l. invested as capital in the undertaking. At first a portion of a mill was rented, and, in 1856, 96 looms were at work; the profits on the capital were 13 per cent. The labourers receive the wages current in the trade, and a uniform dividend of 5 per cent. is paid on capital. The remaining profits are divided into two equal shares; one of these is paid as an extra dividend upon capital; the other share is, at the end of each year, divided amongst the labourers. Each labourer's share is in direct proportion to the amount of wages he has received throughout the year. The most efficient workmen, therefore, not only receive, as in other employments, the highest weekly wages, but also obtain a corresponding advantage in the annual division of profits. The most skilled labour and the highest efforts of that skill are secured; and the concern, though in its infancy, has hitherto been able to compete success

enterprise has been most particularly developed.

This first great success induced a desire to extend the manufactory, and, as a mill sufficiently large could not be rented, it was determined to build one. The foundation stone was laid in 1856. The mill was opened in the autumn of 1860; its total cost was 45,000l.; and it is admitted on all hands that there is not in the country a better mill, or one more complete in every respect. All this was effected entirely by the joint earnings of the working classes; and so great was the desire to join the undertaking, that the capital account was obliged to be closed long before the mill was completed. The supply of capital, in fact, seemed to be so abundant, that it was at once resolved to erect a second mill. Others were anxious to follow the example of Rochdale; and, in Lancashire, numerous other co-operative manufactories have been commenced or projected.

The figures above quoted, no doubt, exhibit a striking success. The cooperative manufactory proved to be a lucrative speculation, and others of the working classes naturally felt anxious to participate in such large gains. I wish, however, dispassionately to consider whether, in the first place, this success was promoted by any exceptional circumstances; and, secondly, I wish to inquire what is the probability that the continuance of this success can be insured.

Now, it is well known that the cotton trade, until the commencement of the civil war in America, had been for some time extremely prosperous; in fact, during the years 1859-60, the profits realized by cotton manufactories were unprecedentedly high. The Rochdale co-operative manufactory, of course, shared the general prosperity in trade; but no one supposed that such extraordinary prosperity could be permanent, and, therefore, the profits of the co-operative cotton manufactory, as well as those of every other manufactory, could not continue to be what

if no other circumstances intervene, we may be certain that exceptionally high profits are sure, in the course of time, to be reduced by the competition of capital-for capitalists will compete against each other to appropriate to themselves as much as possible a profit so unusually high. The years 1859-60 cannot, therefore, be regarded as types of the normal condition of the cotton trade. The working classes, who supplied the capital for the construction of the cotton mills at Rochdale were, no doubt, doomed to disappointment, if they believed that the cotton trade would continue in the same thriving condition, unaffected by any reverses. But now a second question of the greatest possible importance arises-Is a co-operative cotton manufactory likely to succeed as well as a manufactory owned by individual capitalists who, in the ordinary way, employ simply hired labourers? It is often said that a cooperative manufactory is a joint-stock undertaking. It has, no doubt, been proved that a joint-stock trading company can seldom successfully compete with the individual trader; and hence it is concluded that a co-operative manufactory will, for similar reasons, fail to compete with the manufactories which are usually possessed by a few individual capitalists. But there is a fundamental difference between a co-operative company and an ordinary joint-stock company. In some co-operative trading companies the shareholders are alone employed as labourers; almost invariably a great portion of the labour is supplied by the shareholders; and the labourers who are not shareholders participate, as I have remarked in the case of the Rochdale manufactory, in a share of the profits. All the labourers therefore may be regarded as partners in the concern; labour and capital are both recognised as claims to share the profits; and, when a labourer is a shareholder, these claims become united in the same individual.

In this consists the fundamental difference between a co-operative com

pany. The advocates of co-operation justly maintain that, when the labourer receives a share of the profits, he at once becomes interested in the welfare of the concern, and that the highest efficiency of labour is thus secured. Few, perhaps, have adequately considered the pecuniary loss which is incurred from the listlessness and carelessness of the hired labourer, who has ordinarily no motive to do his work well. There is no greater defect in our social system than the absence of a mutual pecuniary interest between the employer and the employed. Ill-feeling is thus constantly engendered, which too frequently gathers sufficient strength to convulse by a strike. The managers of a co-operative manufactory can with truth say that, by making the labourers participate in the profits of the concern, the best labour, and the highest and most skilled efforts of that labour, are secured. We believe that an advantage is in this manner obtained which will amply compensate some of the disadvantages to which a co-operative trading company may be liable. We will proceed to notice some of the difficulties with which such a company will have to contend.

It is well known that the success of a large trading concern almost entirely depends upon the energy and ability of the managers. In the case of a joint-stock company these managers are usually paid by fixed salaries; and therefore it is maintained that such a manager will not have the same motive as the individual owner of the business to exert skill

and energy. But this difficulty may,

no doubt, to a great extent be overcome if a manager is partly paid by a share of the profits, for it will then be directly his interest to do everything in his power to promote the welfare of the concern. There is, however, perhaps a greater danger to be apprehended with regard to a co-operative trading company; for, when the shareholders have secured good managers, they may, perhaps, not place sufficient confidence in them. The success of a co-operative manufactory may at any time be jeopardised

We

minority of the shareholders of Rochdale, but which was happily prevented from being carried into execution by the good sense of the majority. The shareholders may at any time object to give labour a share of the profits. A party of the Rochdale shareholders wished to increase their own gains by depriving labour of any share of the profits. But, if this were done, the concern would at once lose the distinctive characteristic of co-operation; it would, in fact, at once be converted from a co-operative into an ordinary joint-stock company. Such a danger may with certainty be obviated if the shareholders are the only labourers who are employed in a co-operative trading establishment. This plan is almost invariably followed in France with the greatest possible success, for in France co-operative trading establishments are more numerous than in England. probably possess a greater number of co-operative stores; but in France the co-operative principle has been applied to many trades which in England have never been carried on by associations of labourers. A small society of co-operative masons was established in the year 1848, in Paris. This society was reproached for holding certain political opinions, and the Government attempted to discourage it by refusing to it any loan of capital. This intended hostility insured its future success; for the societies which were assisted by the Government in almost every instance proved to be failures. The co-operative masons endured many vicissitudes, and in the year 1852 they determined to reorganise their society. It then consisted of only seventeen members, and possessed no capital. They resolved to create a capital by depositing in a common chest one-tenth of their daily earnings. At the end of the first year a capital of 14. 10s. was in this manner created. At the end of the year 1854, the capital had increased to 6801.; and, in 1860, the society was composed of 107 members, and the capital possessed by them was 14,5007. The following are some of the important buildings which have been constructed in Paris by this

society-the Hôtel Fould, in the Rue de Berry; the Hôtel Rohes, in the Champs Elysées; the Hôtel Frescati, Rue de Richelieu; the Square d'Orléans, Rue Taitbout, &c. &c. And at the present time these co-operative masons are building an hotel for M. Girardin, on the Boulevard of the King of Rome, an hotel for M.Arsénne Haussage, on the Boulevard Beaujon; an hotel for Mdlle. Allier, on the Boulevard de l'Empereur; and an hotel at Montrouge, for M. Pacotte. As I have before remarked, no labourers, except the shareholders, are employed by this society. The labourers are paid the ordinary wages current in the trade, and the net profits realized are apportioned in the following manner :— Two-fifths of these profits form a fund from which the annual dividend on capital is paid; and the remaining threefifths are appropriated to provide an extra bonus on labour. The bonus which each labourer thus receives is proportioned to the amount of labour he has performed throughout the year. No arrangements that could be devised would more powerfully promote the efficiency of labour. This is the secret of the remarkable success achieved by this society. The co-operative masons of Paris have achieved their remarkable success by fairly entering into the great field of commercial competition; they have striven to do their work better and cheaper than others; and it is because they have proved that they can work better and cheaper that they have been employed to build residences for such persons as M. Girardin, and the others we have enumerated.

Co-operative trading establishments must be prepared to meet the reverses and difficulties to which all commercial undertakings are subjected. It is, perhaps, not altogether a fortunate circumstance that a co-operative cotton manufactory should in England be the first instance in which co-operation on a large scale has been applied to trade. The cotton manufacture has always been characterised by great variations in the profits realized. Three or four bad years are succeeded by two or three

if no other circumstances intervene, we may be certain that exceptionally high profits are sure, in the course of time, to be reduced by the competition of capital-for capitalists will compete against each other to appropriate to themselves as much as possible a profit so unusually high. The years 1859-60 cannot, therefore, be regarded as types of the normal condition of the cotton trade. The working classes, who supplied the capital for the construction of the cotton mills at Rochdale were, no doubt, doomed to disappointment, if they believed that the cotton trade would continue in the same thriving condition, unaffected by any reverses. But now a second question of the greatest possible importance arises-Is a co-operative cotton manufactory likely to succeed as well as a manufactory owned by individual capitalists who, in the ordinary way, employ simply hired labourers? It is often said that a cooperative manufactory is a joint-stock undertaking. It has, no doubt, been proved that a joint-stock trading company can seldom successfully compete with the individual trader; and hence it is concluded that a co-operative manufactory will, for similar reasons, fail to compete with the manufactories which are usually possessed by a few individual capitalists. But there is a fundamental difference between a co-operative company and an ordinary joint-stock company. In some co-operative trading companies the shareholders are alone employed as labourers; almost invariably a great portion of the labour is supplied by the shareholders; and the labourers who are not shareholders participate, as I have remarked in the case of the Rochdale manufactory, in a share of the profits. All the labourers therefore may be regarded as partners in the concern; labour and capital are both recognised as claims to share the profits; and, when a labourer is a shareholder, these claims become united in the same individual.

In this consists the fundamental difference between a co-operative com

pany. The advocates of co-operation justly maintain that, when the labourer receives a share of the profits, he at once becomes interested in the welfare of the concern, and that the highest efficiency of labour is thus secured. Few, perhaps, have adequately considered the pecuniary loss which is incurred from the listlessness and carelessness of the hired labourer, who has ordinarily no motive to do his work well. There is no greater defect in our social system than the absence of a mutual pecuniary interest between the employer and the employed. Ill-feeling is thus constantly engendered, which too frequently gathers sufficient strength to convulse by a strike. The managers of a co-operative manufactory can with truth say that, by making the labourers participate in the profits of the concern, the best labour, and the highest and most skilled efforts of that labour, are secured. We believe that an advantage is in this manner obtained which will amply compensate some of the disadvantages to which a co-operative trading company may be liable. We will proceed to notice some of the difficulties with which such a company will have to contend.

It is well known that the success of a large trading concern almost entirely depends upon the energy and ability of the managers. In the case of a joint-stock company these managers are usually paid by fixed salaries; and therefore it is maintained that such a manager will not have the same motive as the individual owner of the business to exert skill and energy. But this difficulty may, no doubt, to a great extent be overcome if a manager is partly paid by a share of the profits, for it will then be directly his interest to do everything in his power to promote the welfare of the concern. There is, however, perhaps a greater danger to be apprehended with regard to a co-operative trading company; for, when the shareholders have secured good managers, they may, perhaps, not place sufficient confidence in them. The success of a co-operative manufactory may at any time be jeopardised