Chapter II.

Early Propaganda Work and the Rochdale Experiment.

This, in juvenile phraseology, gives a very fair idea of what went down at New Lanark before those enemies of commercial morality and social justice—unscrupulous trade competition and the sordid greed of the owners of industrial capital, and William Allanism—that kind of thing which has prevented the citizens of Melbourne for such a length of time from enjoying access to their own splendid possession in the Public Library on the only day of the week on which most advantage could be taken of it. Owen performed wonders when he tamed the cruel trade notions and heartless individualism of his time into some semblance of civilised regard for moral and humane principles, but the brutal and sordid elements eventually broke away from the restraints which Owen for so long managed to place upon them, and quickly destroyed the beneficent, and in every way successful, work of thoughtful and laborious years. The lesson, however, lived to give illustration to the new doctrine of society of which thenceforth Owen became the apostle, and with which his name has become permanently associated.

The New Lanark experiment, and the possibilities suggested by it, was a never-failing source of encouragement to the followers of Owen in their zealous endeavours to establish similar works with co-operative capital. To provide this capital was a formidable undertaking. The most sanguine enthusiast could not expect working men to save out of their earnings the amount of capital per head required for such a purpose. But Robert Owen taught more than one important lesson by his experiment. By means of a co-operative page 21 store which he organised for his workers, he enabled them to purchase their goods at prices which practically added 20 per cent, to their earnings, a form of co-operation which was adopted in other instances with sufficient success to prove its possession of great economic value. From this the idea came to be formulated that the profits of a co-operative store might be devoted to the creation of capital whereby workers could gradually employ themselves in the manufacturing industries, without feeling that any portion of their earnings were sacrificed in the process.

In theory the scheme looked plausible enough, but success did not attend its working. It was a radical mistake to look upon distributive co-operation as means to an end instead of making it a complete and perfect end in itself, to which all other forms of co-operation were but tributaries. It was a subversion of the economic order of things to make co-operative production the final cause of co-operative distribution, probably preventing the promoters of the movement from making an earlier discovery of the principle which made the Rochdale experiment the pioneer co-operative success. When the goods of a co-operative store were distributed at prices as near cost as could safely be determined upon, members were enabled, there and then, to make savings as purchasers of what, under ordinary circumstances, would have been dealt with as traders' profits. It, therefore, seems strange when co-operative societies adopted the practice of charging members such prices as were current with private traders that the amounts taken for goods, over and above cost of purchase and distribution, should have been divided upon share capital as trade profits, and not upon purchases as savings belonging to consumers—the primary object of distributive co-operation. The capitalistic idea of dividing profits upon shares still prevailed, and, notwithstanding the limitation put to the number of shares which any one member of a co-operative society could hold, the practice failed to comply with the demands of that strict equity which co-operators strove after. So long as members, page 22 whose interests in the share capital of a co-operative society would be high in proportion to the amount of their purchases from the store, were privileged to misappropriate any portion of the profits made out of trade with other members, the amount of whose purchases might be high in proportion to the value of their shares, there must be dissatisfaction. It would be tantamount to a miscarriage of justice and calculated to weaken the loyalty of the members upon whose trade the success of the business most depended. Until this was changed success did not attend the movement. Attempts to establish co-operative productive industries before the existence of an organised co-operative public to consume the products could not but fail to realise correct co-operative ideas. To induce wage-earners to tax their already too slender resources in order to establish a second New Lanark with co-operative capital was altogether hopeless, and the secret of creating co-operative capital out of the profits of co-operative distributive societies, and a co-operative community to utilise it in manufacturing goods for themselves, was yet to be discovered. The tendency of co-operative thought, inaugurated by the doctrines of society taught by Robert Owen, was in this latter direction, and "the silent tread of new ideas" set in motion by the Owenite and Christian socialist propagandists was preparing the way for the advent of the "New Social Order" so ardently hoped and worked for. The situation may be described in the words of a splendid passage from the writings of the First Lord Lytton, which that Grand Old Man of Co-operation, the late George Jacob Holyoake—the personal friend of the late Robert Owen, and whose death took place on the 22nd January, 1906, in the eighty-ninth year of his age, an active worker by voice and pen in the co-operative movement to the very last—adopted as the motto for the first chapter of the second volume of his History of Co-operation:—

"A new mind is first infused into society; it takes root, it expands silently, almost imperceptibly, for the surface of things remains the same; the same laws, the same form of page 23 government, the same acknowledged practices and customs still prevail. In the meanwhile the spirit that is abroad is breathed from individual to individual, from family to family; it traverses districts, and new men—men with new hearts and feelings unknown to each other—arise in different parts. A new people is dwelling with the old people, but their power is little, for they have no ties of association. At last a word is spoken which appeals to the hearts of all, each answers simultaneously to the call, a compact body is collected under one standard, a watchword is given, and everyone knows his friend."

It was in a "fulness of time" created by the missionary labours of earnest and unselfish social workers—always in the "fulness of time," or new movements do not take hold and prosper—that the "word" came to be spoken that was to collect all practical social reformers into one body, "under one standard," but not to be recognised all at once, for like "the word" in the sacred story, it came into its own—to those who, above all others, needed the social healing it was destined to bring them, and they knew it not. Born of abject poverty, and cradled amidst squalor, infant co-operation had no "shepherds" to tender it homage, nor "star-led magi" to offer it devotion and gifts. How could it be possible that this could be the infancy of that which social evangelists and co-operative prophets for so long worked and prayed for? that in a comparatively few years this weakling was to develop such magnitude and powers as to fill "shepherds" and "magi" with so much admiration and respect as to feel honoured by obtaining a footing on the platform it was destined to raise, and to covet the privilege and distinction of presiding over a session of one of the congresses which were annually to assemble in its name? Now, private traders in Great Britain, and recently here in Melbourne, like the silversmith' of Ephesus, perceive the danger of the movement to their calling, and, by a despicable attempt to establish a "boycott" against it, vainly endeavour to strangle that which their class failed to recognise, and induce some page 24 Herod or Premier of the time to strangle in its contemned infancy.

What the wisdom of men of learning and ability, possessing a sound knowledge of social and economic principles, profoundly in earnest and absolutely pure in motives, failed to accomplish for co-operation, was the discovery of a few impoverished and unlettered flannel weavers in Rochdale in 1843. These men did not trouble themselves with lofty ideals of social reform; they had to confine themselves to the solution of the smaller, but to them more immediately important, problem of how to economise the expenditure of their miserably low earnings so as to get a little more in return than could be obtained by dealing with the retail shopkeeper. This they calculated to accomplish by com-bining their resources for the purpose of purchasing at wholesale prices what little of life's necessaries their means could command and distributing them amongst themselves at cost. There was nothing new in this; the principles were well known, but the development of the hitherto undiscovered secret of successful practical co-operation had yet to come, and to come in so simple and natural common-sense a manner as to cause surprise that it did not disclose itself long before to some one or another of those who were so eagerly seeking after it.

"The Rochdale Pioneers" were twenty-eight in number They commenced business as a co-operative society with £28 capital, or £1 per head, put together with a great amount of patience and perseverance in two-penny instalments. For a store they rented a room in a dilapidated building in a dismal locality, appropriately enough called "Toad-lane," and from there, on appointed evenings, distributed their goods under conditions so poverty-stricken and mean as to excite the jeers and contempt of the inhabitants of that slum neighbourhood. Simple, common-sense rules were adopted for conducting the business. Credit they could not afford, as the cash must be turned over quickly in order to keep the concern going, and, in itself, was a thing uneco- page 25 nomical and demoralising which they decided neither to take nor give. Capital was to receive interest at the rate of 5 per cent, per annum, and nothing more, for these men were not trading as capitalists for profit, but to effect savings as consumers. In order to protect the store against working at a loss, it became the rule to distribute the goods at such prices as were current with private traders, and when a balance-sheet was made out—once a quarter being the period decided upon, a practice afterwards generally adopted by other co-operative societies—the surplus takings, after payment of all expenses, including interest on capital, and making provision for contingencies, were handed back to members, not as shareholders, but as consumers in proportion to the purchases of each from the store.

The retail prices, as already pointed out, were not fixed at rates current with private traders in order to make profits, but in order to avoid losses; but the practice of making what, in ordinary business, go under the name of profits, and distributing them at quarterly intervals amongst members upon their purchases gave them such palpable and gratifying evidence of the benefits to be derived from co-operation—an element in which schemes that failed were wanting—as to secure their firm loyalty to the store and to attract others to it. "This," in the words of Holyoake, "was the discovery that created co-operation," a sentiment fully confirmed by cooperative experience right through from the Rochdale experiment which inaugurated the movement to its latest development. To depart from it would not only be inviting disaster but insuring it.

Among the Pioneers Holyoake says "was an original, clear-headed, plodding thinker—if that conjunction of terms be intelligible—one Charles Howarth, who set himself to devise a plan by which capital could be obtained and the permanent interests of members secured." There was no idea of borrowing here; the capital has to be obtained by hoarding the savings of members and applying them to the purchase of more shares. In order to accomplish this a rule page 26 was adopted that the quarterly dividends upon members purchases be not withdrawn from the society until, in each; case, they accumulated to £5, when scrip would be issued for that amount.

The rule worked admirably, adding greatly to the power of the society as a trading and provident concern. At the outset the trade capital was barely sufficient to meet the requirements of members themselves, so that non-members who might be willing to make purchases at the store, but unable to contribute their individual proportion of share capital, could not for the time be accommodated. As the funds of the society increased per member the Pioneers could then extend helping hands towards their poorer neighbours. This was done humanely, as wisely, by admitting them as customers of the store, with the privilege of members as to dividends upon purchases, but not as to voting, until the savings of each amounted to £5, when scrip would be issued for the amount and the recipient registered as a full member.

The Pioneers, or, as the society was named, "The Rochdale Equitable Pioneers' Co-operative Society," commenced business on the 25th April, 1844, with twenty-eight members and £28 capital. In 1845 the members increased from twenty-eight to seventy-four, and the capital from £28 to £181, or from £1 per head to nearly £2 9s. The trade for the year was £710 and the net profit £22.

In 1850, or five years later, the membership increased to 600, and the funds to £2289; the year's turnover was £13,179, and the net profits £850. '

This was certainly an excellent six years' progress from a beginning so weak and unpromising, and a progress that went on increasing like the proverbial snowball. Suffice it to say that, in 1901, the Rochdale Equitable Pioneers had 12,447 members, and £286,868 capital. The turnover for the year was £283,310, and the net profits £44,221. From first to last more than £1,250,000 were distributed amongst members as dividends upon their purchases, which, but for co-operation, would all have gone into the pockets of private traders and middlemen.

Thus the Rochdale Pioneers, although not starting with the idea of making profits and hoarding them so as to accumulate capital—that being a subsequent development of the movement—nor with elaborate views, if any, respecting social reconstructioN. Yet, actuated by the primary and simple idea of combining their resources for the economical purchase and distribution of as much of life's necessaries as their extremely limited means could afford and capitalising their savings, they set such a train of ideas and circumstances in motion as promises, by the natural law of evolution, to realise all the ambitious projects which able thinkers and earnest social reformers had contended for in vain. From prudential motives goods were distributed (as already mentioned) at such prices as ruled with private traders, not for the purpose of making profits, but in order to avoid losses; and the restoration to members, as dividends upon their purchases, of such moneys as remained on hand after all expenses had been paid for, afforded facilities and created a desire for saving which led to the phenomenally rapid growth of the society in members and wealth, and to the spread of co-operation as a social movement. The propagandists had now a new experiment to work from that gave completeness to practical co-operation as a system of society. page 29 The New Lanark experiment answered a great purpose by supplying magnificent evidence of the enormous good that could be achieved by the co-operation of Capital and Labour in industrial enterprises, provided the conditions of success could be made stable. Enterprises of this character, however, would still be unco-operative, inasmuch as they would' have to exploit the general public for business in competition with other manufacturers and traders. On the other hand, the Rochdale experiment demonstrated how wage-earners could successfully co-operate to cater for themselves as consumers, and in the process create savings by means of which wholesale and manufacturing enterprises could be undertaken, not for the purpose of exploiting the general public for profit, but in order to supply the wants of members of co-operative associations, and it is from this point of view-that the movement has to be intelligibly regarded.