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Industrial Co-operation:

THE STORY OF A PEACEFUL REVOLUTION.

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CHAPTER XIII.

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Wholesale Co-operation   History.

J. T. W. Mitchell (1828-1895)

THE multiplication of isolated stores, each in its own area bearing the full brunt of the jealous opposition of the competitive world, could not long continue without the next step in the progress of co-operation — entrance to the wholesale markets — making itself apparent, and claiming the attention of co-operators.

Notwithstanding the fact that up to the passing of the Act of 1862 the law did not allow of federal action between societies, the need for wholesale buying, “to meet the requirements of the hundreds of societies then existing, was so great that a wholesale agency was formed as early as 1835.”  It failed, “principally through the legal barriers that then impeded the free action of all co-operative societies.” [1]

Immediately after the passing of the Act of 1862, a conference of representatives of co-operative societies was convened at Oldham (Christmas, 1862), when Mr. Abraham Greenwood laid before the delegates a scheme for the establishment of a “wholesale agency.”

Before developing the points of his scheme, Mr. Greenwood told the conference of the efforts made by the Christian Socialists to establish a “Central Co-operative Agency” (in London, 1850) “for the purpose of counteracting the system of adulteration and fraud prevailing in trade, and for supplying the co-operative stores with a quality of goods that could be relied upon, and in the highest state of purity.”[2]  This agency also proved unsuccessful, and amongst those of its promoters who suffered severe financial losses in consequence were E. V. Neale, Lloyd Jones, and Joseph Woodin.  The latter took up the remnant of the agency under the title of Woodin and Co., Wholesale Tea and Coffee Merchants, Sherborne Lane, London, and later near London Bridge. [3]

The Rochdale Pioneers made an effort in 1852 to establish a “Wholesale department,” [4] with the view of supplying stores in Lancashire and Yorkshire.  Mr. Greenwood tells at length how jealousy, indifference and lack of hearty support brought failure, but adds—

My opinion is, that had there been no other cause of failure than those mentioned, the Central Co-operative Agency and the Equitable Pioneers’ Wholesale Department must inevitably have failed, from their efforts being too soon in the order of co-operative developments. [5]

The Co-operator for October, 1862, gives a list of “above 300 strictly co-operative societies for the sale of food, clothing, &c., paying interest upon capital and giving dividend upon purchases generally to both members and non-members.”  It was calculated that about 120 of these would be able to avail themselves of the proposed agency.

THE NORTH OF ENGLAND WHOLESALE SOCIETY, 1864.

The plan proposed by Mr. Greenwood contained the following points: —

(1) That ready-money dealings be strictly adhered to;

(2) That none but co-operative societies should be allowed to join;

(3) That each store should pledge itself to deal exclusively with the agency in those articles which it supplied;

(4) That a small percentage be charged as commission on the amount of business done;

(5) That the capital be raised pro rata upon the number of members belonging to the agency;

(6) That stores pay their own carriage.

With the exception of the third and fourth proposals, which were early amended, the constitutional basis of association thus laid down has remained practically unchanged to the present time.  It was found impracticable to extort the pledge of loyalty suggested in point (3), but the exhortation to “loyally support your own Wholesale” has been a familiar phrase on the lips of co-operative advocates from Christmas Day, 1862, onwards.

The “North of England Co-operative Wholesale Industrial and Provident Society Limited” was registered in August, 1863, and business was begun in Manchester in 1864.

The romance of the wholesale side of the movement is not in its inception, but in its marvellous growth and expansion, and in the possibilities that yet lie before it.  But for being illuminated by the co-operative spirit and enthusiasm of its founders, its origin might almost be counted a commonplace evolution of sound commercial practice.  It would, perhaps, be claiming too much to credit the promoters of the Wholesale Agency with any clear perception of what is now termed the “federal ideal” of co-operation, just as it would be an exaggeration to credit the Rochdale Pioneers with a complete basis of theory for the ideals they put into active practice.  At the same time, in an early statement made by the committee of the North of England Wholesale Society, we are able to trace a distinct feeling after an ideal which has since grown into the faith of a considerable majority of co-operators.  This statement reads as follows :-

“By securing societies against imposition in the days of their infancy and inexperience, and enabling them to purchase on more advantageous terms than the largest societies have hitherto done, we shall ensure the healthy extension and consolidation of our movements.” [6]

In the concluding words we find the keynote of the wholesale movement and of the federal ideal, which later became crystallised in the following expression of the aims of co-operators set before the student in Working-men Co-operators: —

The general purpose of the societies . . . . is, that the business and the work done shall be done not in the interests of, nor in order to enrich, one individual, or a few, but in the interests of the general body of those who are concerned, both  workers and as consumers of the ordinary necessaries of life. [7]

Within six months of starting, the method of charging a commission on cost price was discarded, being found unworkable in practice, and the method followed by retail distributive stores, of selling at the ordinary current market price, was adopted instead.  The Rochdale plan of dividing profits on purchases was also applied as a necessary point of harmony with the ideas of their constituent members.  “Non-shareholding societies were not at first allowed to share in the profits; in 1865 they were allowed half dividend under certain conditions, and in 1867 they were allowed it unconditionally.” [8]

CHANGE OF NAME TO THE CO-OPERATIVE WHOLESALE SOCIETY.

In 1873, the name “North of England Co-operative Wholesale Society” was changed for the shorter but all-embracing one of “The Co-operative Wholesale Society,” and as such it will be designated in all future references in this book, although some events that must be mentioned took place before the change of name was effected.

As early as 1866, two years after the registration of the Wholesale Society, a butter branch was opened in Tipperary, a step which carried to Ireland a co-operative influence which has since gone far to create a direct market between the Irish farmer and the British consumer.

STARTING OF SCOTTISH WHOLESALE SOCIETY, 1868.

In 1868 the Scottish Wholesale Society was founded.  The experience of the Co-operative Wholesale Society was utilised by the Scottish Wholesale Society; and if there was not a legal union of the two bodies, there was then formed a union of hearts and heads that has continued to grow stronger and stronger as time has rolled on.  The English helped the Scotch, and the latter generously recognised the help so given, the Scottish Co-operator saying: —

The Scottish Wholesale Society will commence business with advantages which the North of England had not; for, in a truly co-operative spirit and unselfish disinterestedness, the directors of the “North of England Society” have kindly offered to instruct us by giving us the benefit of their experience in management and in buying, a boon the value of which no true estimate can be formed, and which ought to produce among societies an amount of faith in the working out of our proposed society sufficient to make its inauguration a successful reality. [9]

Henceforth it has become the habit of co-operators to count these two societies as stepping together in the path towards the complete realisation of the federal ideal.  The Co-operative Congress was for many years annually reminded, in a humorous passage of arms between the late J. T. W. Mitchell, the President of the English Wholesale Society, and Mr. William Maxwell, the President of the Scottish Wholesale Society, that this “union of hearts” resulted in the consolidation of “British” co-operation.

POINTS OF DIFFERENCE BETWEEN ENGLISH AND SCOTTISH WHOLESALES.

It is not possible for the moment, however, to consider the two societies as one except in this sympathetic sense, since the acceptance of the “theory of profit-sharing” by the Scottish Society, and its rejection by the English Society, as well as some other constitutional divergences, make it important that the student should clearly distinguish between the two.  Both societies trade only with registered co-operative societies.  Both derive their capital from their members — the co-operative societies, but the Scottish admits its adult employees to membership, allowing them to take up shares to the amount of 50 each.  Both are democratically governed by the vote of their members, but with certain differences in the allocation of voting power.  The voting power in the English Wholesale resting on the numerical strength of members; in the Scottish, mainly on the volume of trade done.

In the English Wholesale Society, a system of “bonus to employees” was instituted in 1874, and given up in 1876 as unsatisfactory.  In the Scottish Wholesale Society, bonus to employees has been in force under varying conditions since 1870.  (See page 118.)  The main points of constitutional difference between the two societies are compared in greater detail on page 125.

As before indicated, the rapidity with which the agencies for wholesale co-operative supply and manufacture have grown is one of the most striking features of the movement.  The tables (5) and (6) in the Appendix express in round figures the onward march of the two Wholesale Societies, but the outline of the expansion of their varied activities, given in Chapter XVI., will serve to show how far-reaching are the ramifications, and how deeply the roots of co-operative trade and industry have entered the commerce and industries of the world.

“Now, however humbly co-operation may begin, it must go on to manufacturing, and so to the possession of land,” [10] said John Holmes, a stalwart among co-operative pioneers, and both Wholesale Societies speedily found themselves in a position to “go on to manufacture.”  As in distributive co-operation, so in wholesale co-operation, the existence of conflicting theories regarding the organisation of production became of paramount interest when the entrance of the Wholesale Societies into manufacturing enterprises became imminent.  Out of the fierce controversy of many years have grown the two definite theories which necessarily find frequent mention in this book.  The “theory of co-partnership production” is brought out in Chapter XVII., while the “theory of consumers’ production” is shown in Chapter XV. as finding its chief stronghold in the federation of stores in the English Wholesale Society.


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NOTES

1. Co-operative Wholesale Societies’ Annual, 1896.

2. Co-operator, March, 1863.

3. NOTE. — Co-operative Societies drew their supplies of tea and coffee from this firm for a number of years, until the tea trade of the Wholesale Society — for whom Mr. Woodin acted as agent — grew large enough to demand separate management and separate quarters of its own.  At this point, in 1882, after having served the Wholesale Society loyally during the years through which he had handled its tea business, the strong co-operative sympathies of Mr. Joseph Woodin led him to retire from business entirely, leaving the non-co-operative portion of his trade in the hands of some nephews.

4. See Co-operative Wholesale Societies’ Annual, 1896, page 202, and Co-operator, March, 1863.

5. Co-operator, March, 1862.

6. Co-operative Wholesale Societies’ Annual, 1896, page 215.

7. Working-men Co-operators, chapter 1, pages 9-10 (revised edition).

8. Working-men Co-operators, page 89 (revised edition).


9. Quoted in the Co-operative Wholesale Societies’ Annual, 1896, page 217.

10. Co-operation, May, 1862.