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Chapter IV.

From Distributive to Wholesale and Productive Co-Operation.

As distributive societies, formed on the Rochdale plan, increased and multiplied and felt each other's presence and influence, the same simple motive which formed the raison d'être of the co-operative distributive store asserted itself in moving several of the societies to co-operate with each other in order to establish a central wholesale purchasing agency, so as to avoid competition amongst themselves in the wholesale market, and to secure, by collective purchases of considerable volume, greater benefits than each society could command by purchasing on its own individual account.

With this object in view, we are informed that "the Christian socialists started a Central Co-operative Agency in London in 1850," and that the Rochdale pioneers opened a wholesale department in 1855, but that neither of them proved successful.

These efforts were not quite on systematic co-operative lines, although, if successful, they might have proved great conveniences to many of the societies, and might have worked by degrees into organic form. A co-operative wholesale society, to be the centre of a complete system, must needs be the act of a federation of individual societies themselves, moved by an impulse identical with that which, in the first instance, caused individual citizens to form co-operative distributive societies. Things sooner or later must have developed in that direction, and the impulse was accelerated by the marked hostility displayed towards the co-operative societies by private shopkeepers, who threatened to withdraw their custom from such wholesale merchants and manufacturers as supplied the societies with goods to the injury of page 42 private retail traders. In the endeavour to establish a central co-operative wholesale society, an illustration is given of the power possessed by organised numbers to promote schemes productive of mighty results by monetary contributions of the most minute and insignificant value per individual, which is worthy of attention. Holyoake says:—"At a conference of delegates from provident and industrial societies, held at the King-street Stores Meeting Rooms, Oldham, on 25th December, 1862, it was resolved—' That all cooperative societies be requested to contribute one farthing per member to meet the expenses that may arise.' The purposes for which the money is required are—to meet the expenses of the committee in carrying out the resolutions of the conference, viz., to remedy a few defects of the Act 1862 in the present session of Parliament; to prepare plans for a central agency and wholesale depot; and consider plans for insurance, assurance, and guarantee in connection with the co-operative societies. Therefore your society is respectfully solicited for the above contribution of one farthing per member." At this conference—financed by the farthing contribution of members of co-operative societies—a plan was submitted by Mr. Abraham Greenwood, of Rochdale, for establishing a wholesale society, which was adopted. The society was enrolled in 1863, and commenced business in Manchester on 14th March, 1864, under the title of "The North of England Co-operative Wholesale Industrial and Provident Society Limited," afterwards changed to its present title of "The Manchester Co-operative Wholesale Society Limited."

A number of distributive societies federated to form the wholesale, providing capital at the rate of £5 for every ten of their members. One shilling per share was to be paid upon application, leaving it optional to pay up the balance in cash or out of accruing dividends upon purchases as societies might find most convenient. In this way the wealthier societies helped the smaller and weaker ones, and the wholesale got the business on cash terms.

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This was but the application to co-operative wholesale trading of the plain and simple principle of collective purchasing, and distribution of profits as savings on members' purchases, discovered by the Rochdale Pioneers, the adoption of which by other societies made distributive co-operation such a signal success, and now destined to vindicate itself on the more extended field. Social reformers were beginning to perceive possibilities of greater and still greater triumphs for the movement by the extension of principles in co-operative economics which had for its objective the welfare of consumers—that main body into which all other classes must merge and lose themselves, as rivers are lost in the sea—and they proceeded with care and "the taking of infinite pains" methodically to develop them. The history of the Co-operative Wholesale is similar to that of each of the societies which combined to start it—a small beginning, steadily gaining ground by patient, prudent, intelligent attention to the business and active propaganda work among the societies to induce them to join and strengthen the federation. This was the great idea now—federal co-operation by the development and ramifications of which the whole social world could be conquered, a system, inaugurated by the help of people's farthings, yet calculated in course of time probably to render powerless the syndicates, trusts and combines promoted by J. D. Rockefeller and Pierpont Morgan millions.

Although there were over 500 co-operative societies in Great Britain at the time the Wholesale was started, only a small number, having a total of 18,337 members, entered the federation. The business was started in an office in Manchester, significantly described as "obscure," with a capital of £2455. For the first thirty weeks the turnover was £51,857, on which a profit of £267 was realised.

In 1869 the members of the combined societies numbered 74,737, providing the Wholesale with a capital of £32,062. The sales for the year were £412,240, and the net profits £4862.

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In that year the business was removed to the situation in Balloon-street, Manchester, now occupied by the Wholesale Central Buildings. The new premises covered about 230 square yards, and altogether could afford but spare accommodation for anything like a large business, yet one or two of the directors felt so apprehensive lest the forward step which had been taken might prove risky that they suggested the propriety of letting off a portion of the building as a matter of precaution. This pessimism the more clear-headed of the members of the board overruled, and circumstances very soon justified their confidence. The business increased at such a rate that in 1871 a branch had to be opened at Newcastle to accommodate societies in that district. In 1874 a branch was opened in London, and so on to the opening of branches, depots and salerooms at various co-operative centres.

In 1874, when the London branch was opened, the number of members belonging to the societies which constituted the Wholesale were 168,985; the share and loan capital was £200,044, the year's sales £1,153,132, and the net profits £11,116. This was ten years after the Co-operative Wholesale Society's "obscure" beginning, and five years after the removal of the business to the Balloon-street premises—a step which some of the directors regarded with apprehension and anxiety. In 1904 the number of the federated societies was 1150. The capital of the Wholesale in shares and loans was £2,965,709, the trade for the year was £19,809,196, and the net profits £386,074.

Immense as these figures are, they are not nearly the whole. The Scottish Co-operative Wholesale Society Limited—an independent, but affiliated, institution—was started in Glasgow in 1868 by twenty-seven shareholding societies with £900 capital. After thirteen weeks' trading the capital increased to £1795; the sales for that period were £9697, and the net profits only £48. The society, however, prospered rapidly, and branches were opened at Edinburgh, Dundee and London, and at Enniskillen in Ireland. In 1904 page 45 the number of the societies forming the Scottish Wholesale was 279. The share and loan capital was £2,130,225, the sales for the year were £6,801,272, and the net profits £256,910. The statistics of the English and Scottish Wholesale Co-operative Societies combined run into stupendous figures, and it is in this light of oneness that they are considered in the co-operative organisation. In 1904 1429 societies were federated in the two Wholesales, with a share and loan capital of £5,095,934. The combined sales for that year were £26,610,468, and the net profits £642,984.

As the Co-operative Wholesale Societies prospered productive and other forms of co-operative enterprises were entered upon, line by line, and many difficulties have been overcome which, at one time, were thought to place a bar against the development of the movement beyond its organisation as a wholesale purchasing and distributing agency. The Manchester Wholesale has large capital invested in biscuits and sweets works, boot and shoe works, soap and candle works, woollen cloth works, flour mills, clothing factories, cocoa and chocolate works, shirt, mantle and underclothing works, flannel mills, &c. It has purchasing agencies in Cork, Limerick, and Armagh in Ireland, also in the United States, Canada, Australia, France, Spain, Denmark, Germany and Sweden, and a fleet of eight steamers trading between English and Continental ports. It has thirty-nine creameries, with fifty-one auxiliary ones in Ireland.

The Scottish Co-operative Wholesale has established numerous and highly-prosperous industrial concerns. At Shieldhall, near Glasgow, it has factories for boots and shoes, leather currying and tanning, cabinet works, brushware, ready-made clothing, preserves and confections, coffee essence, drug and drysaltery, hosiery, pickles and sauce, printing and bookbinding, tobacco, tinplate, artisans' clothing, building and mechanical works. At Glasgow it has factories for bespoke clothing, mantles, underclothing, shirts, umbrellas, waterproofs, boots and shoes, aërated waters, sausages, bacon-curing, saddlery, building and electrical fit- page 46 tings. It has large flour mills at Edinburgh—one not long ago purchased at a cost of £80,000—flour mills and dress factory at Leith, aërated waters at Stirling, soap works at Grangeworth, tweed and blanket mills at Selkirk. At Enniskillen, Ireland, it has a ham, butter and egg. depôt and a creamery—the first in that county to use electricity for power—and six creameries and seven auxiliary ones in other localities. The English and Scottish Wholesale conjointly own cocoa works in Bedfordshire, a tea and coffee department in London, and two tea estates—one at Nugawella and one at Welliganga—in Ceylon. Banking forms a great feature of the Manchester Wholesale business, and has attained vast proportions. A "loan and deposit department" was opened in 1872, and was classified in 1876 as the bank department. For 1883 the turnover in this department was £9,000,000, for 1902 the receipts were £42,376,364, and payments out £42,268,675. The profits on the latter year's transactions were £18,708. A paragraph in a pamphlet, called "The Wholesale of To-day," issued by the Manchester C.W.S. in 1903, says:—"The number of retail societies having their accounts with it (the bank) are 694. A number of trade unions, friendly societies, building societies, and productive societies have placed their accounts with the bank."

1844—hardly more than sixty years ago—was the year of "The Discovery which Created Co-operation" made by twenty-eight half-starving flannel weavers in Rochdale at a time of great trade depression and want of employment. On the 25th April, 1844, these poor men commenced business with a capital of £28, saved up by painful self-denial in two penny instalments, catering for themselves as consumers and dividing the surplus takings, usually denominated "profits," amongst members as savings, and not as dividends upon capital—a radical economic distinction and difference. Can this really be the origin of the wonderful movement represented by the above formidable statistics? It is, beyond a doubt, and, by observing the original economic page 47 principles and practical methods the adoption of which made the Rochdale experiment so signal a success co-operators, under pressure of increasing numbers and collective wealth, are forced on to develop phase after phase of the movement-distributive, wholesale, productive, educational, social—until, step by step, the tapping of every source of supply, near and far, comes to be included in a comprehensive scheme of economic reform, presenting a remarkable illustration of the Spencerian theory of "Society as a Growing Organism."