But in trades that easily fall into a regular routine, so that the employers' work is chiefly mere Superintendence, co-operation can make great savings by preventing the greater part of this work from having to be done at all. For co-operators can keep one another to work, they can secure the efficiency of their own foremen and other subordinate managers, and they can prevent waste and mismanagement in many matters of detail. Thus co-operative workshops have the best chance of success in trades in which there is a steady demand, in which changes are slow, and fluctuations of price slight, and in which the capital is small in proportion to the labour employed. Cooperative work has succeeded in many trades that supply the ordinary wants of the working classes; and seems likely to succeed in many more: and it has done well in small trading ships and whale ships and other fishing vessels.

Co-operation has hitherto made but little progress in agriculture; although most of the conditions for its success are present there. But agricultural labourers, even if they can get command over the capital required for stocking a farm, can seldom stand the brunt of several bad harvests in succession: and what is more important, their narrow school and social education unfits them to some extent for co-operative work: for co-operation is the child of confidence; and ignorance is the parent of mistrust. The "Communities" in America are chiefly agricultural, and many of them are very successful; but they own the land which they cultivate, and which supplies most of their simple wants; they have a good deal of practical ability, and a religious enthusiasm which includes a spirit of brotherhood and mutual trust.

§ 5. But even in trades the general management of which is beyond the reach of co-operative effort, workmen may co-operate in taking sub-contracts. When the sub-contractor is a middleman, skilled perhaps in little but hard bargaining and severe ruling, workmen complain that the system of sub-contracts, though it may cheapen production, often does much harm to the workman1. But trades unions do not oppose, and co-operators should do all that they can to extend the use of the plan in which a sub-contract is taken by a set of workmen, who supply their own tools, share the whole responsibility among themselves, and are under the orders of men chosen and paid by themselves. This system has long been in use among navvies and miners and quarrymen, and in the shipbuilding trades; and it seems capable of almost unlimited extension. "On a long line of railway every cutting, bridge, tunnel, embankment and station is executed by one or more separate sub-contractors;

1 See Howell, ch. VI. §§ 3, 4.

and thus the co-operative system may readily be applied to the construction of every section of the largest undertaking, after it has been sufficiently subdivided1.” And in many factories in which a room with all its machinery is let out to a middleman who hires the requisite labour, and contracts to do a certain piece of work for a given price, the middleman might with advantage be displaced by a co-operative gang.

§ 6. Co-operative credit associations have had great success in Germany; partly because the system of work in large factories has made much less progress than in England, and there are vast numbers of working men who require the use of some little trading capital. Groups of these workmen, with a few in other social ranks, have formed themselves into associations, each of which has a nucleus of capital of its own, and by pledging this as well as the whole property of all its members, borrows more capital at the market rate of interest. It then makes loans to its members at a rate which would seem high to the wealthy borrower, but which is very much lower than that at which a single working man can borrow in the ordinary course of business; for the risk, that the workman may get ill or abscond before the loan is repaid, prevents him from getting it at any moderate rate. The margin between the interest which the association pays, and that which it receives, is almost always sufficient to give very large profits on its capital, after allowing for all expenses and losses; and out of these profits fresh capital is accumulated, so that the association trades every year more with its own, and less with borrowed capital. The losses are not large, because the principle of co-operation is thoroughly applied in the constant testing of each member's character and conduct by the other members, many of whom are neighbours of his and know all about him. A high standard is maintained, not only when a man applies for admission, but afterwards when he wants to borrow; and, as no loan is made for more than three months, this process of testing is constantly going on. These associations did not grow spontaneously as the English workman's co-operative stores did; they were planned and in great_measure built up, by the foresight and energy of Dr Schulze-Delitzsch. He started the first of them in 1849 in the little town of Delitzsch, and in 1877 he reported that there were 1827 credit associations, that they contained over 1,000,000 members, that they owned £8,000,000 capital and had £20,000,000 more on loan; and that they did business to the amount of £110,000,0002.

1 Brassey, l. c. p. 137.

2 English readers may learn more of these Associations, and other co-operative movements in Germany from Mr R. B. D. Morier's paper

§ 7. Co-operation endeavours "to promote the practice of truthfulness, justice, and economy, in production and exchange. 1. By the abolition of all false dealing, either (a) direct, by representing any article produced or sold to be other than what it is known to the producer or vendor to be; or, (b) indirect, by concealing from the purchaser any fact known to the vendor material to be known by the purchaser, to enable him to judge of the value of the article purchased. 2. By conciliating the conflicting interests of the capitalist, the worker, and the purchaser, through an equitable division among them of the fund commonly known as profit1."

And we now pass to consider the work of co-operation in endeavouring to put the relations between retail dealer and consumer on a better footing. The work of co-operative stores is humbler than that of co-operative workshops; but, partly for this reason, its success has been greater. The way was pioneered by twenty-eight working men in Rochdale, who in 1844 subscribed a pound apiece to buy flour, oatmeal, sugar and butter at wholesale prices. One of their number acted as a salesman, and the profits went to increase the capital of the store. It grew steadily from this small beginning till in 1878 it had 10,187 members, £292,053 share-capital, and sold goods to the amount of £298,679. The example of the working men of Rochdale has been followed by working men in many other towns; and between them, these working men's stores own nearly £5,000,000 of share-capital, and do business amounting to about £14,000,000 annually. These figures do not include the stores started by the middle classes, which are indeed called co-operative, but in which there is very little of the true co-operative spirit.

§ 8. The workmen's stores have followed closely in the steps of the Rochdale pioneers, and one general description will serve for all. They charge the ordinary retail prices of the neighbourhood; from the gross profits at the end of each quarter are deducted interest on capital, and an allowance for depreciation and extensions; and, in the best stores, 2 per cent. is set by for reading-rooms, libraries, lectures, and educational purposes generally. The remainder would, if the leaders of the movement had their way, be divided among all the persons employed and members of the store in proportion to the amount in the appendix to the eleventh report of the Trades Union Commissioners, and from an appendix by Mr Neale to the report of the Co-operative Congress for 1879. The relations between co-operation and socialistic schemes for state aid and guarantee may be studied in Dr Schulze-Delitzsch's deutscher Arbeiter-catechismus; in Lassalle's answer Herr Bastiat-Schulze von Delitzsch; and in Schulze's reply Die Abschaffung des geschäftlichen Risico durch Herrn Lassalle.

Rules of the Co-operative Union.

of their wages or of their respective purchases during the quarter. But a movement begun with high aims often suffers from its own success; and even at Rochdale the new comers, who have been attracted to the store by the desire of gain, have outvoted the older members, and divide the whole net profits among the members without giving any share to labour.

Much of the good done by these stores is due to their plan of charging a full price at first, and returning to the consumer a share of the profits in a lump sum at the end of the quarter : for the workman is thus induced to put away week by week part of his earnings almost without knowing it. He may then withdraw his savings, perhaps to buy a sewing-machine, or some important piece of furniture; and thus he is often led to aim at having a well-ordered home in which to take pride. If he has already such a home, the best thing he can do with his "dividend" is not to withdraw it, but to take his part in "saving joint capital by joint action for joint purposes." In such stores there is much real co-operation: many of the members take an active interest in the way in which the business is carried on, are ready with help and advice whenever it can be useful, and take part in the selection and the supervision of the officers of the society. They themselves are educated by this work; and are led on to discuss and undertake bolder co-operative enterprises partly by the sense that they have funds at their disposal which may fitly be used for the purpose, partly by their intercourse at the stores with others in whom the Co-operative Faith is strong.

Their zeal is stimulated in annual Co-operative Congresses; a Co-operative Board, Union, and Gild are continually at work, endeavouring at once to consolidate and to broaden the great movement; and co-operators are learning that if "education is desirable for all mankind, it is life's necessity for co-operators1."

§ 9. The advantages which co-operative stores have in competition with shopkeepers may be classed thus:

i. They have adopted cash payments as a principle. No customer is offended at being refused credit at a store: but shopkeepers find that even if they start with the cash system, they can hardly avoid meeting exceptional cases by giving credit, and soon the exceptional cases become the rule. The credit system not only leads to many bad debts, but it inverts the natural order of loans. It is reasonable that the trader who expects trade profits on his capital should borrow directly or indirectly from the private individual who can only get interest on it. But on the credit system the customer borrows the use of capital from the shopkeeper.

1 This truth is ably worked out in Professor Stuart's address.

ii. The stores in which the co-operative element is strong, sell unadulterated goods; and others are believed to do the

same.

iii. A store can do a large business without spending much on advertisements, or on an expensive site. A large store likes to have an imposing front: but this answers for a great many departments one above the other.

iv. When competing with the small shopkeeper it has the advantage of buying in larger quantities, and therefore more nearly direct from the producer than he can.

V. Those who have an interest in the success of the store, will wait more patiently to be served than the customers at a private shop and therefore the amount of business done is larger in proportion to the number of those who stand behind the counter in the store than in the shop.

The great difficulty that the stores have to contend with in seeking the custom of the working classes, arises from the fact that a working man who is not a unionist generally wants to borrow from shopkeepers when he is out of employment; and that even unionists, when excited by a struggle for victory, are sorely tempted to accept the offer of friendly shopkeepers to advance the means of sustaining the strike for some time longer. And there are many in other ranks of life who cannot, or who think they cannot, avoid spending their income before they receive it.

§ 10. It is probable that there will always be some shopkeepers who will carry on their business on the old plan, and who will retain those customers who are willing to pay high prices, on condition of receiving credit, of having assistants always ready to attend on them without delay and to shew them innumerable things which they do not want to buy, and of having every little trifle which they buy delivered at their houses at once. But all these services cost more to the shopkeepers than they are really worth to the great majority of customers. And the success of co-operative stores has proved that there is a great demand for traders who will act on the business principle of not doing any thing for the customer which must in the long run cost the customer more than it is worth his while to pay for it. But there is no reason why shopkeepers who adopt this principle should not be able to hold their own against all stores except those in which there is so much true co-operation as to be a great source of strength. With equal advantages the professional trader with trained skill and specialised taste can hold his own against joint-stock companies managed by amateurs. And since in the long run the Earnings of Management of shopkeepers are governed by the Laws which were discussed in the second Book, they will, when the new system is fairly in