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Industrial Co-operation:

THE STORY OF A PEACEFUL REVOLUTION.

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CHAPTER XV.

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Wholesale Co-operation  Organisation, Government and Theory.


THE organisation of the English Co-operative Wholesale Society is that of a pure federation of consumers’ associations, including in its membership only registered societies or bodies corporate, and trading only with such societies.  The control is entirely in the hands of its constituent members, democratically exercised through accredited representatives sent to general meetings of the society.

The following extracts from The Wholesale of To-day give the essential points of the principles upon which the constitution of the English Wholesale is based [1]:—

“To consider the economic character of the Co-operative Wholesale Society, we cannot isolate the society from the whole scheme of co-operation in England, and discuss it as we might a single distributive society.  In the latter case operations are confined to a definite small area, and the policy of the society is absolutely controlled by an arbitrary body of members with only a moral dependence on the rest of the movement, and such a society is capable of independent existence if all similar institutions ceased to exist.  The Wholesale, however, occupies a totally different position, being unlimited as to the extent of its operations, but restricted as to the nature of them, being incapable of separate existence, and essentially dependent on the rest of the movement.

“Serving all co-operative societies alike in all parts of the country, being criticised by all, owned and controlled by all, it becomes, as it were, a focus of the ideas common to all the Co-operators of England.  Its policy becomes an indicator of the state of economic thought among co-operators in general.

“Co-operation as we have it in England to-day presents the spectacle of millions of persons combining together to supply themselves with the commodities they require in order to prevent the waste and loss caused to them when the various services of distribution are performed by irresponsible individuals. Just as local associations of co-operators undertake this work for the final or local distribution of goods by employing persons at fixed wages to issue the goods from shops and stores belonging to the community, so they undertake the work of wholesale supply and distribution by employing persons to obtain for them at home or abroad the goods they require, and to arrange for their distribution.

GENERAL MEETINGS.

At the general meetings of the society, the report, statement of accounts, and other business on the agenda are first discussed at the branches, and at “divisional meetings” held at various centres, and finally discussed at the central meeting, held in Manchester.  All the votes cast at the several meetings are reckoned together, and the matter under discussion is decided by a majority of votes.  No new rule can be made, nor any of the rules repealed or altered, except by a vote of a majority of two-thirds of the members voting at a general meeting of the society.

BOARD OF DIRECTORS AND THEIR POWERS.

The management of the society is in the hands of a General Committee of Directors sitting at Manchester, and of Branch Committees and Sub-Committees which meet locally, weekly or oftener, and report to the General Committee.  The full Board consists of thirty-two members — sixteen elected for Manchester, and eight each for Newcastle and London Branches.  The sixteen Manchester members and two representatives each from the branches form the General Committee, which has a veto and jurisdiction over the affairs of the whole, appointing, apportioning salaries, and dismissing all officials of the society.  The general powers exercised by the Committee are practically the same as those exercised in the management of retail societies. [2]  It is one of the remarkable facts about the Wholesale Societies that the men to whom is entrusted the executive control of this vast organisation are all workers who have risen from the ranks of Co-operation, having won the respect and confidence of the Movement by years of service, and, once elected, a director is rarely unseated in subsequent re-elections.  It is also interesting to note that cases are on record of a director having become an employee of the society, and of an employee having been elected a director. [3]

THE LATE J. T. W. MITCHELL.

Although admittedly standing high above his colleagues in force of character, the late J. T. W. Mitchell — for twenty-one years the President of the English Wholesale Society (1874-95) — may be regarded as the type of man who has made the directorate of the Wholesale the most honourable official position within the movement to which the co-operator may aspire.  Born at Rochdale in 1828, of humble parentage, and struggling to manhood through many disadvantages, Mr. Mitchell joined the Pioneers’ Society in 1854, early taking office on the committee, and serving as secretary for a time.  He served also on the educational committee of the society, and devoted every moment of his spare time to furthering the movement, and that of the Sunday School and temperance cause, with which his whole life was closely connected.  His character was strongly influenced by deep and sincere religious feeling, and it has been said of him: “Plain living, hard work, love for the children, purity of motive, love of God, and kindness to his fellow-men, marked and ennobled his whole life.”[4]  An appreciation of Mr. Mitchell, written after his death by Mr. William Maxwell, President of the Scottish Wholesale Society, contains the following graphic picture of the man and his methods [5] :—

Alike in committee as in the great meetings of shareholders, his conduct was impartial, his temper equable, his tact and resource unlimited, his replies straight, and his general demeanour tolerant in the extreme . . . . His power of explaining intricate and difficult questions gained for the institution over which he presided, confidence and respect . . . . He could not be corrupted . . . . All those who differed from him most in co-operative policy now recognise how sincere he was.  In business he was punctuality itself, his firm grasp of the financial position of the Wholesale was always remarkable, . . . . and it may not be too much to claim that he was largely instrumental in placing the Wholesale Society in the secure financial position it occupies to-day.

THE THEORY OF CONSUMER
S PRODUCTION.

As indicated in Chapter XIII., the importance of the Theory of Consumers’ Production, as carried out by the Co-operative Wholesale Society, makes it necessary that a clear statement should be presented to the student in this chapter.  The following authoritative passages are, therefore, quoted from the Co-operative Wholesale Societies’ Annual (1982) in order that the attitude of the society towards this question may be fully understood.

“As co-operators engage in commerce and manufacture solely to supply their own needs, the open market and foreign trade being unknown to them, they may be regarded as a close community buying and manufacturing goods for themselves.  They do not buy to make profit by selling to others than themselves; that the ordinary retail store is open to the general public is merely evidence that co-operators are anxious that everybody should join them, and non-members’ trading is a most efficient system of propaganda.

“While considering co-operative production as carried on by the Wholesale Society, certain general facts must be noticed.  Co-operators have undertaken production solely to supply certain of their own needs.  The goods made by the Wholesale are made not to be sold for profit, but to be consumed by the proprietors of the factories where they are produced.  Though one hears of Wholesale goods being bought and sold, and of profits made on them, it is of the utmost importance in studying certain aspects of the Wholesale Society’s production to remember that neither in the Wholesale Society nor in the distributive store are the goods “sold” to the members at a “profit” as these terms are understood in the World of competitive trade.  When the Wholesale sends boots made at Leicester to a society, and the latter hands them to a member, there is no “sale” in the economic sense, but merely a process of distribution.

“In the Co-operative Wholesale Society, production has developed, one might say, along the lines of least resistance.  The capital of its members has been put into industries where there was least likelihood of failure . . . . Thus we find the Wholesale engaged in the manufacture of goods that are in great demand, as well as in minor industries where great injustice to both consumers and producers is done outside.

THE CONTROL OF INDUSTRY BY THE COMMUNITY.

“This leads us to consider briefly the advantages of the control of industry by the community . . . . The advantages are two-fold; they concern the consumer and the producer.  The consumer gets the goods of the nature and quality he wants.  His ignorance of technical points in manufacture cannot be used to defraud him.  If he desires the Wholesale Society’s pure cocoa, he gets pure cocoa; if he desires cocoa mixture, he pays a lower price consistent with the lesser cost of manufacture . . . . The workman who makes the goods works under better conditions than prevail outside, and gets a better return for his labour.  His work is more regular and permanent, since he works to meet a known and certain demand . . . . In the Wholesale Society’s factory the remuneration of labour and the conditions are the subject of a direct and simple contract between a body of organised consumers who want certain work done, and a body of workers who also are presumably organised through their trade union . . . . The real reason why the control of industry, as regards the owning and managing of factories, should be in the hands of the “consumers” is because they are ultimately the whole community, and they work for the interest of all.” [6]

This fundamental principle, that “the control of industry . . . should be in the hands of the ‘consumers,’ because they are ultimately the whole community,” is that upon which the Scottish Wholesale is also based, with the difference before noted that here the worker is admitted to a share in both “profit” and management.  In all other respects the constitution and government of the Scottish Wholesale Society follows closely upon the lines of the English.  Such divergences as are important can be more clearly seen in the following table of comparisons: —

POINTS OF DIFFERENCE
BETWEEN

THE
English Co-operative Wholesale
Society.
——:0:—---
AND THE
Scottish Co-operative Wholesale
Society.
-—-:0:-——
MEMBERSHIP.—Societies or bodies corporate registered under the Industrial and Provident Societies Act, or Companies Act, with limited liability, or under any law of any country giving right to trade as bodies corporate
with limited liability.

CAPITAL.—Societies who are members must take up not less than three 5 shares for every twenty [7] individual members, and increase annually as members increase. Every society on its admission shall pay one shilling on each share, dividend and interest not being withdrawable until the allotted number of 5 shares are fully paid up.
MEMBERSHIP.-Societies registered under the Industrial and Provident Societies Act, and any employee over 21 years of age admitted by committee.
Exception: No society trafficking in intoxicating liquors shall be eligible for membership.

CAPITAL.—Societies who are members must take up 1 shares for every additional member, and
Employees are not admitted as members.Employees admitted as members may take up from five to fifty shares of 1 each. Each employee must apply for five shares and pay not less than ls. per share. Bonus may go to pay up shares.
VOTING POWER. — One vote for every 500 members, or fractional part thereof.VOTING POWERS. — Society members. One vote in right of membership, one for the first 1,000 worth of goods bought, and one other additional vote for every 2,000 of goods bought during the half-year.
Employee members jointly have one vote, and one additional vote for every 150 employees who become shareholders.
DIVISION OF PROFITS. — As dividend on purchases of members. Half dividend to non-members. For any purpose which the general meeting may direct, whether charitable, philanthropic, of public utility, or within the objects of the society or not.DIVISION OF PROFITS. — As dividend on purchases of members. Half dividend to non-members. As bonus to employees; at same rate on wages as dividend on purchases. One-half of each Worker’s bonus is retained and put to “Bonus Loan Fund.” [8]
MANAGEMENT. — Committee elected by vote of members. Now 32 in all, in following proportion:—
Manchester . . . . . . . 16
Newcastle Branch. . . 8
London Branch   . . . . 8
Total                               20
Various sub-committees.                      
MANAGEMENT. — By committee of 12, elected by vote of members.

Various sub-committees.
PRESIDENT. — Elected by committee.PRESIDENT AND SECRETARY. — Elected by vote of members.

LIMITATION AND WEAKNESS.

The student can hardly contemplate the organisation of this vast federal movement weakness without some speculation regarding the possible limitations and weaknesses which must surround it, as all other human enterprises.  Some of the limitations noted in Chapter XII., as restricting the expansion of distributive co-operation, apply necessarily to the Wholesale movement as well, since the latter is dependent upon the former.

The competition offered to retail societies by local tradesmen, is repeated in the case of the Wholesales by traders and merchants — sometimes with practices that are discreditable alike to all parties.  The enormous wealth and commercial position attained by the Wholesales bring them into relationship with the competitive markets of the whole world, wherein it may possibly occur that the ideals and principles which should govern co-operative dealings may seem to handicap the co-operative buyer — as, for instance, in the purchase of cheap goods having a suspected origin in the sweater’s den, but for which there is a demand in retail societies.

The power and influence acquired by the Wholesale Societies within the movement itself lead critics, and sometimes friends, to wonder whether there is not some danger of the free democratic constitution of the societies being overborne by the weight of autocratic officialism.  These dangers — if they exist in any literal sense — can only be guarded against by the exercise, on the part of the movement, of its full responsibility and control over the policy and practice of the societies; and by electing as directors men of high character and ability.



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NOTES

1. Co-operative Wholesale Societies’ Annual, 1902, page 337.

2. See Chapter XII., page 93.

3. Mr. W. Strawn, 1882, and Mr. Isaac Mort, 1904.

4. Rev. J. Hirst Hollowell, quoted by Mr. Maxwell in Co-operative Wholesale Societies’ Annual, 1896

5. The late J. T. W. Mitchell J.P., by William Maxwell, Co-operative Wholesale Societies’ Annual, 1896.

6. Co-operative Wholesale Societies
Annual, 1902, page 397.

7.  Ed. — the original owner of the book that was used to make this Internet transcription has inserted a manuscript change to effect that “three 5 shares for very twenty” should read “1 share for every member”. I cannot say which is correct.


8. See Appendix, table (12).