among its members. It need only write to the federation saying, "We are such-and-such a society, send us all we shall need." As for the big societies-which sometimes scorn to belong to federations, saying to themselves that they are strong enough to get the same terms from traders-they must understand that though they may make no money gain (which generally is not so) yet their development and their very existence are bound up with that of their little sisters in the great co-operative family. (3) It stops illegal commissions (commonly called pots de vin), and so raises the moral tone of co-operative trade and saves the societies from a vice that is already too common in business. When purchases are made through a wholesale society, the members of the committee of a society have no direct relations with the suppliers. It may perhaps be said that it is the managers of the wholesale society who will get the illegal commissions. Perhaps, but as they are better watched (to put the matter on its lowest grounds) and as they are only a few persons instead of a few thousands, the evil will be lessened. (4) It prevents any boycotting by wholesalers and manufacturers. It sometimes happens that the wholesalers of a district make an agreement to refuse to sell to a co-operative society, in the hopes of killing it. This has been the case more than once in England, Sweden, &c. (See Chapter XII, The Conflict between Co-operative Societies and Traders.) This form of tactics becomes useless when the co-operative societies are backed by a federation which undertakes to supply them with all they need. What does it then matter to them if the local merchants refuse to supply them? They can afford to laugh at their opponents. In this way small co-operative societies have been able to bring their adversaries to their knees, for not only has the English Wholesale Society supported them, but it has voted £40,000 as a kind of "war chest" to fight such boycotts as may come in the future. (5) It enables goods to be manufactured by the co-operative societies. It is not easy for a single co-operative society to set up a boot factory, a soap works, &c,, for itself, because it is not large enough to guarantee sufficient sales, unless the society has a very large number of members, which few have. On the other hand, when a purchasing federation bulks the orders of hundreds of societies it can erect factories with the certainty of success, because it knows beforehand what sales it can count on. Thus the federation of English societies, the Co-operative Wholesale Society of Manchester, has been able to build flour mills, soap works, boot factories, and jam factories, which produced goods to the value of £12,000,000 in 1915.* What societies by themselves could possibly attempt similar enterprises? And yet it is recognized that it is only by production that co-operation can change the present economic system. So, federation is necessary, because he who seeks the end must seek the means. (6) It makes possible the organization of works of general utility, and if it does not do educative work, as that is more the business of Unions, it renders at least such services as banking and insurance. If such work be left to the separate societies to organize, the dissipation of energy will prevent anything being done. There are three degrees in the grouping of societies for purchasing, indeed, one may say three stages. (1) The first is the Agency. The agency confines its ac * Author's Note. In 1919 the figure rose to £26,000,000 due largely to the rise in prices. 4 We do not know of American co-operative societies which have established anything corresponding to this agency, although we do tivities to obtaining quotations from wholesalers for the societies, and collecting and transmitting orders to the wholesalers. This first is the simplest form, because no store is needed, but merely an office and no capital is required, as the only expenses are the small ones of advertisement and correspondence. But if the expenses are very low the services it can render are very limited. It can hardly realize any of the great advantages which we have mentioned above; it can only obtain some reduction in price and guarantee of quality. Still, it is wise to begin by this unambitious form of organization. (2) The second is the Syndicate, which is not, like the first, merely an office for the transmission of orders, but does commission work. It bulks the orders of the societies and buys from the wholesalers on their account. This is the method adopted by most agricultural societies in dealing in seeds and manures. Sometimes, if the market is favourable, the Syndicate buys on its own account. This second form is stronger than the first, but it can hardly do without capital, or, at least, guarantors, if it is to deal directly with wholesalers. (3) The third is the Wholesale Society. This is the true co-operative society of co-operative societies, such as we were discussing a few pages back. It buys direct from the producers, or itself manufactures all that is necessary to supply its members, and sells to them at wholesale prices, or, at least, at very slightly increased prices, to allow a margin for emergencies. In any case, if there be profits they are divided, not among the shareholding but among the purchas know of localities where such Agencies might profitably be established. Corresponding to the French Syndicate is what many American cooperators know as the Buying Agency. ing societies; thus, the same principle is applied to the societies, as they themselves apply to their members. For this, not only is it necessary to have a large capital, but huge stores and whole battalions of employés also. But it is possible to obtain an indefinite degree of power, as in England, where it is feared that the Wholesale Society may come to reign almost despotically over all English co-operation. The Rochdale Pioneers-who cannot be too much admired -foresaw everything, and created in their own society a wholesale store for helping others; but it was not until 1864 that the real wholesale society, the C. W. S., was started. It began with a membership of fifty societies, and a capital of £1,000, and in 1913 it had 1,200 societies * and a share capital of £2,131,000, over £4,000,000 loan capital, 21,000 clerks or workers, huge warehouses where it does business, and more than 100 factories where it produces £9,000,000 worth of goods of every variety. This is the pre-war figures for the English Wholesale, but the post-war figures enables us to measure the progress made in 1920: Sales, £104 million; production, £33 million; land cultivated in England, 32,500 acres. The enormous increase in the C. W. S. funds is specially remarkable. It imports, partly in its own ships, £8,000,000 worth of the products * Author's Note. That is to say, almost all the English societies. The Scottish Co-operative Wholesale Society, of Glasgow, includes 264 Scottish societies. + Author's Note. In 1921, however, there was a notable decrease: only 80 million sales, 26 million production. Author's Note. To import the goods which it consumes it commissioned a fleet of six ships, which sailed under the house flag of the C. W. S. But it was found that the ships cost more than transport by the ordinary shipping companies, so four of the ships were sold to a big railway company having ships of its own. Only two ships were kept, which trade between Manchester and Rouen. This is a step backward and an abandonment of co-operative principles. Besides, the financial loss was perhaps more than balanced by the added prestige. One day is set apart each year (generally in October) for the sale of raisins and other dried fruits, which the C. W. S. buys in Greece of all countries; it bought at the price of £50,000 a large piece of land beside the Manchester Ship Canal to make docks. It has three establishments in Denmark (where it buys £4,000,000 worth of butter and bacon) one in the United States, one in Germany (at Hamburg), one in Sweden, two in France (at Rouen and Calais), one in Spain, one in Canada, and one in Australia. Besides these establishments for purchasing abroad, it has a tallow factory in Australia, and tea plantations in Ceylon and India of 40,000 acres. In England itself it has six estates, where it grows strawberries and tomatoes, and where it has set up a convalescent home for its members and their families. will soon own coal mines. During the war it received large orders for food and clothing from the English Government, and even from the Russian Government (notably for boots). It The capital of the Wholesale is furnished partly by the shares which all the affiliated societies must subscribe for at the rate of fifteen £1 shares for every ten members, and partly by loans from the societies. It has a bank to regulate its huge operations, which does all the usual banking business of discounting, taking deposits, giving advances, &c., and thanks to which the smallest society can obtain loans at lower rates than the largest capitalists can get from the Bank of England. During the crisis of 1907, when the Bank of England raised its discount rate to 7 per cent., the Wholesale Bank continued to lend at 311⁄2 per cent. A short time ago the Scottish C. W. S. lent £500,000 to the municipality of Glasgow.* We have already mentioned that it has taken up insurance in all its forms. It does not try to make profits from its immense business, which is nearly £100,000,000. Still, as it cannot calculate the exact prices which should be charged it works on a small and Asia Minor. On this one day its sales reach or exceed £160,000. * Author's Note. The turnover of the bank in 1920 was 155 million pounds. |