Consumers' coöperation

Foreword

Until the war, no speaker on Consumers' Cooperation could escape a question as pertinent as it was monotonous: " Why has success been so brilliant and continuous in England and other European countries while results are so meager in the United States?" For the first time this form of Cooperation has become a serious working class interest. Extensively and intensively it is on a scale which makes possible if not an answer, at least a more confident prophecy that we are to take our place in this world attempt to make " democratizing industry " something more than a phrase.

I am far from giving it as a primary or even a secondary reason why cooperation so long halted in this country, but it has been sorely hampered by muddling together economic activities which have very little in common. A state of mind in which Profit-sharing, Labor Copartnership, Citrous Fruit Companies, Cooperative Creameries and the like, are identical with Consumers' Cooperation, is one in which progress is embarrassed.

No one will read Mr. Sonnichsen's admirable study without gratitude that once for all he has cleaned up his subject. No American writer has done this with so much lucidity and finality. This is the distinction, as it is the excellence of the book. There is up-to-date information, with cheering accounts of the extraordinary growth, almost boom, of the movement. The

VI FOREWORD

volume would be well worth having for this alone. Its analysis and logical approach, hov/ever, are what students and those struggling with cooperative enterprises will find most illuminating. It is, moreover, on the side of its severe consistencies that it may be found open to criticism. Only as in England, where " production " has been brought definitely into the service of the store; only where goods are made not for profit but for consumers' use, have economic interests been in any real sense harmonized. Those who believe that Consumers' Cooperation is to conquer the world's industry find in that mastery the solution of conflicting business interests. Those of us who hold that private profit and interest on loans are still utilities and are to remain so for any calculable future will still think of Consumers' Cooperation as only a partner in making and distributing wealth. However powerful the partner becomes he will be beset by business interests which conflict as do those of borrower and lender — buyer and seller. To those of this opinion Mr. Sonnichsen's book is all the more welcome.

As a matter of fact, we are to struggle on in a most illogical and tangled world. Farmers' Elevators, Cooperative marketing and cheese factories are to remain. They are very awkward from Mr. Sonnichsen's point of view, but we must tolerate them as a part of the total Cooperative Movement. We have to do this in the teeth of inconsistencies as we do with other problems in practical life.

Economic organization and even economic theory which bring the interest of producer, necessary middlemen and consumers into final harmony are at a far and safe distance. Meantime the author has done something better than the impossible. More than any book since that of Beatrice Potter (Mrs. Sidney

FOREWORD VU

Webb) — which Schmoller called " road breaking " — ■ Mr. Sonnichsen has lifted Consumers' Cooperation into its ov/n clear light. This will win him the praise he deserves.

John Graham Brooks.

INTRODUCTORY REMARKS

It has only been within the past six or eight months that we Americans have begun taking stock of the economic results of the war. In Europe the peoples of the belligerent countries began contemplating costs after the first year or two of fighting, one by one, in the order in which they were later vanquished. Now we are all estimating costs — and find them appalling.

Among all the peoples involved in the war, directly or indirectly, there has developed a realization that the present industrial system is inadequate in repairing such damage as the war has caused. Never before have people felt so strongly that social need, rather than personal profit, should be the stimulus behind production. In proportion to the degree to which it has been stricken each nation has turned to more or less radical remedies, rangfing: from extreme Communism to government regulation. Russia and Hungary, in black despair, have resorted to what we call Bolshevism, not because the average Russian or Magyar has suddenly become imbued with an enthusiasm for social equity, but because collectivism seems to him to promise the quickest relief from his present economic misery. Even in England and this country the people have resorted to mildly Socialistic measures for relief; government control. Everywhere there has been the same realization of the inability of private industry to meet the needs of a critical situation.

When so conservative an institution as the Catholic Church in America officially recommends, however

X INTRODUCTORY REMARKS

vaguely, the democratic partnership of Labor in the industries of the country, it may safely be taken for granted that this loss of faith in private industry is fundamental; that, as Lloyd George once remarked during the war, things will never again be the same as they were before the war. Economic pressure is no less now than it was during the struggle. Without discussing the injustice, or justice, of it. people are going to become more and more discontented as they continue paying back the money which was advanced by the prosperous classes to meet the immediate expenses of the war, more often as a good investment than as an act of patriotic sacrifice.

In every country there is now an overhanging fear of Bolshevism, visible in the frantic endeavor to suppress '' propaganda." This is in itself nothing more than an admission on the part of the prosperous classes that the masses are, and have reason to be, discontented with conditions as they are, for no amount of argument can make suicide seem alluring to a contented man.

The masses are discontented. They are groping around for remedies. In proportion to the economic pressure which weighs them down they will act judiciously and carefully, or impulsively and quickly. In the latter case we shall have Bolshevism. \Ye shall have evolution, or revolution. There will be no standing still; even the masses of China have begun to move ahead.

Still another element besides economic pressure will influence the people in their choice between the two methods, and that is education, knowledge, To the ignorant mind the simpler method makes first appeal, and a blind upsetting of things that are is the essence of simplicity. The man who knows, from the expe-

INTRODUCTORY REMARKS XI

rience of history, that every political revolution brings its own reaction ; that permanent social changes for the better have invariably come about through evolutionary growth, will resort to violent revolution only under great pressure — or if the processes of evolution are arbitrarily checked by those in power. Let this man freely study the theories which the Bolshevist has to offer him. Let him compare them with the theories of the other propagandas which have as their object a radical change in the present social system. Then let him make a further comparison between the abstract theories and the practical results of concrete efforts in the same direction. Provided that present misery does not blind his judgment, this man will not decide in favor of overnight adventures. It is far more likely that he will put his shoulder to the wheel and push hopefully ahead, realizing perhaps that the ideal will not be attainable within his own lifetime, or ever, in all likelihood, but that over and over again he will meet on his way such minor triumphs as will not only afford him the desired relief in a generous measure, but will send the realization of legitimate conquest glowing through his being.

It is as such an alternative that Consumers' Cooperation presents itself. And let me here emphasize this point: that Cooperation is an alternative to revolutionary and political Socialism, not an antidote, or a compromise. For in its ultimate aims it is quite as revolutionary as Bolshevism, and much more so than the programs of the political Socialist parties. Even so conservative an exponent of its purposes as the late Earl Grey, formerly Governor-General of Canada, declared that ''it is in our power, if we are only sufficiently in earnest, to secure the triumphant realization of a future international, cooperative commonwealth

XU INTRODUCTORY REMARKS

which we beheve will one day be coequal and coextensive with the whole civilized world." Lenin himself has uttered nothing more radical than that.

It is in method that Cooperation is opposed to Bolshevism, nor is it improbable that many a sincere Bolshevist chooses violent or political revolution as a means to his end only because he can conceive of no other. The Cooperator, however, is opposed to such measures, not because they are morally wrong, for if there is an end which justifies war, there may also be an ideal which justifies revolution, but because he believes that they are economically wrong; that they cannot achieve the end they seek.

The masses are groping around in the darkness for remedies, a remedy. They have definitely turned their backs on the old order. Wholly, or in part, it is doomed; only the most ignorant and stupid reactionary can deny that. It is in the interest of all alike that they choose wisely.

It is with the firm conviction that the people will choose wisely that the Cooperator presents his plan for a regenerated world.

Though Cooperation is older than all the Socialist programs, it has only been within the past few years that it has become conscious of its own social significance, of its revolutionary tendency. Being a movement of spontaneous growth, it has had few exponents of its philosophy. In a certain sense it has no philosophy. It has steadfastly ignored all theories propounded for it and has continued on its way, bound by economic laws which may be defined only by deduction. Until recently its practical experience was too limited for this purpose. For this reason, too, writers on the subject have invariably confused its boundaries and extended them into other fields of joint action,

INTRODUCTORY REMARKS Xlll

associating the movement with enterprises thoroughly out of sympathy with it.

During the past few years, but especially during the war, Consumers' Cooperation has been sharply defining itself, and now it leaves no room in which to doubt its methods and ultimate purposes. From what it has already achieved materially we are able to deduce a theory of industrial reorganization complete within itself, slow and peaceful in its processes of formation, but definite in the end to be attained.

Nor should this subject be of merely abstract interest to us Americans, for already the Cooperative Movement has firmly established itself, not only in the United States, but throughout the two American continents. It is here, not only as a theory, but as an established fact, well emerged from the experimental stage of its development.

The present work makes no pretensions to being a complete history of the International Cooperative Movement. It does, however, outline broadly the significant events in the early development and recent growth of the movement, hitherto dispersed throughout a multitude of reports, pamphlets, year books, official organs, consular and government reports and numerous books devoted to other irrelevant matter. Some books there are, indeed, treating the subject from its modern point of view, notably Mrs. Sidney Webb's '* The Cooperative Movement in Great Britain," and Percy Redfern's " History of the C. W. S. (Cooperative Wholesale Society),"^ but these two

^ Two recent books, " Cooperation, the Hope of the Consumer," by Emerson P. Harris, and " Cooperation and the Future of Industry," by Leonard S. Wolf, are important contributions to the literature on Consumers' Cooperation, the first on account of its practical suggestions, the second because of its breadth of vision,

XIV INTRODUCTORY REMARKS

writers cover only a limited field. They do not present an account of the most remarkable achievement of Consumers' Cooperation; the part it has played in the war and the promise it gives of being perhaps the most important factor in reconstruction.

Contents

PAGE

Foreword v

Introductory Remarks . . ix

Chapter I

The boundaries of Consumers' Cooperation. Steam-driven machinery brings about a new system of industry. The evil conditions brought about by the new system. Many remedies advocated. Robert Owen leads the search for a solution. His schemes, and why they failed.

CHAPTER n

The working classes grope for remedies. They organize the first consumers' societies. The cooperative store in Fenwick, Scotland. The flour milling society of Hull. Dr. William King, the first prophet of the modern Cooperative Movement. His appeal to the working classes. He emphasizes the importance of organizing as consumers. His philosophy outlined.

CHAPTER HI

Chartism, the repeal of the corn laws — the period of nineteenth century Bolshevism. The masses again consider evolutionary methods. The weavers of Rochdale raise the banner of the modern Cooperative Movement. The plan which made Rochdale famous. Dr. King's idealism made practicable.

CHAPTER IV

The rapid growth of the consumers* cooperative store movement. The leaders discuss federation. The

XV

XVI CONTENTS

PAGE

fight against adverse legislation, and its success. The English Cooperative Wholesale Society is established. The obstacles confronting its early development. The British Cooperative Union, the educational federation of the British societies.

CHAPTER V

The necessity of obtaining control of a cooperative source of production. The Christian Socialists, and the plan they advocated. The Self-governing workshop. The English Wholesale Society embarks on manufacturing on its own account. The bitter struggle between the advocates of the two systems. The Christian Socialists appeal to the yearly cooperative congresses. The Wholesale Bank gives financial assistance to the self-governing workshop societies and is thereby brought to the verge of bankruptcy.

CHAPTER VI

Cooperation Spreads Abroad 55

The United States one of the first countries to imitate the example of the British Cooperators. The early societies in Switzerland — France — Denmark. Germany is hampered by the middle class preachings of Schulze-Delitzsch. The split in the German movement. Growth in Italy. Early societies in Russia. Organization of the wholesale societies.

CHAPTER VII

Tpie International 63

The community of economic interests of all nations, E. de Boyve, a French Cooperator, proposes an international federation. The British accept the idea. The Christian Socialists block the proposal to further their own theories. Attempt to organize an international organization independent of the British cooperative societies. Its conservative character. The British Cooperative Union's support is finally solicited. The first international congress, held in London, in 1895. The fight between the partisans of profit sharing and true Cooperation. Muddle headed reformers.

CONTENTS XVll

CHAPTER VIII PAGE

Evolution of the International Cooperative

Alliance 74

The International straightens its crooked back. The Socialists change their attitude in favor of Cooperation. The consumers' theory of cooperative production is justified. The International Congress at Buda Pesth ; its revolutionary declaration. The middle-class societies withdraw. Socialists attempt to capture the congress held at Cremona, in 1907. Aims of Cooperation, as voiced by Luigi Luzzatti, Italian statesman, and Earl Grey.

CHAPTER IX

The need of specially trained men for cooperative industry. The Scottish Wholesale Society initiates a big productive enterprise. Its factories at Shieldhall. The English Wholesale fights the private transportation lines. It takes up flour milling. Breaking the soap trust. The bitter fight between the Scottish wholesale and the Scottish traders. Swedish wholesale smashes the sugar and margarin trusts. The Swiss Wholesale buys out the Swiss meat trust. The English Wholesale begins agricultural production. Cooperative production by local societies. The United Cooperative Baking Society of Glasgow. Cooperative housing. Status of the Movement in 1914.

CHAPTER X

The " Maisons du Peuple " of Belgium . . . 107 Early failure of Belgian Cooperation. Eduarde Anseele's proposal to the weavers' union of Ghent. The Vooruit baking society. Surplus savings devoted to social benefits. The fight with the Catholic Church. The Belgian pleasure palaces. The Vooruit captures the Royal Clubhouse of Ghent. The cooperative pedestrian clubs. Interchange of children between Flemish and Walloon Cooperators. The Maison du Peuple of Brussels saves a quarrymen's strike. Belgian movement handicapped by alliance to Socialist party and lack of cooperative production.

XVlll CONTENTS

CHAPTER XI PAGE

Cooperators fear the war. The food panic in Great Britain, and how the cooperative societies stabilized the situation. The rush on the cooperative stores. New members excluded. Tremendous growth in trade and membership at the end of the year. Abnormal development in other belligerent countries. German soldiers refuse to shell French cooperative store buildings. Growth of the Cooperative Movement during the whole war period. German Cooperators denounce the war. Development in the neutral countries. The Cooperative boom in Russia. The Russian Cooperators and the Bolsheviki.

CHAPTER XH

Early societies in New England. The First movement ends with the Civil War. Materialistic spirit of the Granger movement. The Sovereigns of Industry ■and their temporary success. The Knights of Labor. The revival in California. The movement in the Northwest. The East Side Jews of New York spread the idea. What came of their efforts. The Cooperative League of America. The stores in southern Illinois. The Tri-State Cooperative Society of Pennsylvania. The Seattle cooperative society buys out the municipal market. The cooperative bakery which protested against the Government's high prices. The cigarmakers' cooperatives of Tampa, Fla., fight the wholesalers. American Federation of Labor indorses Cooperation.

Part II Cooperation As A Factor In The Social Revolution

CHAPTER I

Limiting the Field to Revolutionary Cooperation 171

Confusion between Consumers' Cooperation and other forms of joint effort. Fundamental difference

CONTENTS XIX

PAGE between Consumers' Cooperation and agricultural selling societies. The Jatter ptirely capitalistic. Bitter struggle between the two forms of cooperative organization in Switzerland. How the consumers* societies propose to conduct agricultural production. The anti-social character of the Schulze-Delitzsch credit unions. Workingmen's credit unions.

Chapter II

Cooperation and Socialist both demand industry for use instead of for private profit. Cooperation against state ownership. It does not recognize the " class struggle." Diversity of interests between capitalist groups. Social character of Consumers' Cooperation. Free will the basis. Cooperation in politics. But it is essentially an economic movement. Why Cooperation will probably never become universal. Room for personal initiative and invention. The psychological differences between Cooperation and Socialism. Cooperation is Anarchism rationalized.

CHAPTER HI

Affinity between ideals of the early Christian Socialists and modern Syndicalism. Labor under Cooperation. The natural sympathy of Cooperative organizations for Labor movements. English Wholesale sends shiploads of provisions to the Dublin strikers. Even Lenin recognizes Cooperation as a labor movement. A definition of a workingman. How Cooperation transforms the middle classes into workers. Workers and consumers identical. Syndicalism and Cooperation contrasted. Labor should be subservient to society as a whole. Consumption the basis of all industry.

PART I AN HISTORICAL OUTLINE

CHAPTER I

In tracing cooperation back to its origin there is danger of considering the word in its dictionary sense, which would send us groping about in the gloom preceding the dawn of history, when savages first began to organize raids on their neighbors. Broadly, cooperation means any kind of joint effort, for good or bad. The kind of cooperation we are considering does not even include every kind of good joint action. The movement is, in fact, unfortunate in its name in that it fails to limit it, or define it. One has only to run through the card index of any large library to see what a multitude of varying forms of human enterprise the name covers.

The specific kind of cooperation here considered has most commonly been called " distributive cooperation," but this gives a wholly erroneous impression, for it is production which has given it its significance. Also, it has been called the " store movement," for the reason that it had its origin in the cooperative-store societies. More recently the name '' Consumers' Cooperation " has been applied, and this does give a fairly correct impression, distinguishing it from those other forms of joint effort with which it has generally been lumped and with which, in methods, principles, and aims, it has nothing in common.

The conditions which gave birth to the Consumers' Cooperative ^lovement arose from the invention of steam-driven machinery. It was nursed in the same cradle with political Socialism and Trade-Unionism. Indeed, one man, Robert Owen, is credited with being the father of all three. The same cause, or causes, undoubtedly did create the three and the same conditions continued to develop them. For a while, in fact, all three forms of effort were included under the same name : Cooperation. Eventually Trade-Unionism and political Socialism acquired more definite forms of their own and were named accordingly. Cooperation, being the slowest to develop, retained the old confusing title. To-day, however, Cooperation stands forth very distinct from the other two movements. At first glance it may seem very closely allied with Socialism, but the two movements are widely different in their methods and, in so far as Socialism may mean state ownership, in their fundamental principles.

We need not go very deeply into the revolutionary changes wrought by the introduction of steam-driven machinery. There are sociologists who still look back rather regretfully to the preceding period of handicrafts industry, when every worker owned his own tools, when all things were handmade, and most men were, or eventually became, their own masters.

Then came the machines, one after another, in rapid succession. Beginning with weaving, they invaded one trade after another. The hand tools were scrapped and their owners were set to work feeding the raw material to the machines in big factory buildings. By far the most important machine that presently made its appearance was one which apparently produced nothing: the railway locomotive. By affording cheap transportation it opened up to each factory the whole world as a market, and gradually it enabled factory owners to concentrate production.

It would seem that the invention of machines which could perform the labor of men, which could increase the production of wealth many times over, must result in a great benefit to society as a whole. But that was by no means the immediate result.

The cost of production of all those commodities in whose manufacture machinery could be employed was indeed cheapened. Cotton, which had been more expensive than wool, now became so cheap that it no longer paid the housewife to spin and weave at home and the picturesque spinning wheel was relegated to the attic. Household furniture was no longer handmade, because steam saws could cut the timber and factory organization could nail it together at much less cost. And all the products of foreign countries, distributed all over the country by cheap railroad transportation, could now be had at continually decreasing prices.

But these advantages were more than offset by the fact that the machine which could do the work of ten men retained only one as its attendant, then threw the other nine out of employment. These nine could not continue with their hand tools because they could not sell their handmade products so cheaply as the machines could produce them, and still earn enough to Hve. Finally, it was discovered that a woman or a child could attend the machine as well as a man, and so the tenth man was also thrown out of employment. To save the family from starvation, his wife or one of his children took his place, more usually his child. And so began the evil of child labor.

The great saving in economy which the machines effected was reaped entirely by a Hmited class, by the men who owned them. These waxed rich and powerful and developed into the modern capitalists. The workers were left with nothing but their obsolete hand tools.

Thus, within the space of a comparatively brief period, in the early part of last century, a very critical situation was precipitated in England and Scotland, where the machines had been invented. Thousands and thousands of workers were finding themselves without employment, their numbers being increased by each new machine, and thousands of women and small children were compelled to enter the factories to save their menfolk and themselves from complete starvation. Skilled adults were not wanted, but cheap child labor was so much in demand that the orphan asylums, even the insane asylums, were being emptied.

Even the upper classes grew disturbed over the situation, some from a genuine sympathy for suffering humanity, others through fear of a popular revolution, as had occurred just previously in France. Then appeared the social philosophers, the scholars, who began studying causes and effects, that they might propound remedies for the internal convulsions threatening the nation. One of the most popular of these, among the machine owners, at least, was a clergyman by the name of Alalthus. Seeing so many unemployed, he drew the conclusion that there were too many people, so he advised the working classes to breed fewer children. Eventually the machine owners discovered that the working people were also consumers, and then Malthus lost his vogue.

The workers themselves, being more directly concerned, placed the blame nearer to the true source of the trouble. Instinctively they felt that the machines were somehow the cause of their deepening miseries and blindly they attacked them. All over the country mobs rioted, and sometimes they even succeeded in burning factories, destroying machines, and assaulting their owners. All over, among the working people, rose a cry for the destruction of the machines and a return to the good old days of hand industry, when all had at least an assurance of daily bread.

The rioting and violence being futile, the workers organized secret societies, whose purpose was to limit the machines. The machine owners, who were now becoming politically predominant, responded by having the anti-combination laws passed by Parliament, which forbade the workers to organize. Thus began the Trade-Union Movement and the eternal struggle between Capital and Labor.

Out of all this mad muddle rose a few clear minds, a few men who, by intuition rather than by reason, grasped at fundamental causes. One of the foremost of these was Robert Owen.

Child labor especially roused his deepest indignation and he raised his voice in violent protest. And, curiously enough, he was himself a machine owner, one of the fortunate ones who had secured ownership. Thus he had come into very close contact with the situation and knew it at firsthand.

" Robert Owen," says an old edition of " Chambers' Encyclopedia," *' was a man whose life will go down to posterity as one long absurdity." These words represent, not the opinion of posterity, but the opinion with which the upper classes of his own times regarded Owen. At first they laughingly listened to him and humored the schemes which he proposed as remedies. He was very intimate with the lords and ladies of that time ; probably no single man was personally acquainted with so many people in high places as he. The Queen's father, the Duke of Kent, was so intimate with him that he often borrowed money from him, which the Queen scrupulously repaid after her father's death. Probably this may account for the very friendly attitude which the royal family ever afterward maintained toward anything that went under the name of Cooperation.

But in later years Robert Owen fell from the grace of the great majority of people in high places, and from being an '' absurd " person he became the incarnation of evil, and his disciples were sent to prison and otherwise persecuted.

Owen was part owner and manager of the New Lanark Twist Company, in New Lanark, on the Clyde, in Scotland. On taking over the management of this manufacturing enterprise, in 1800, he found five hundred children employed there, chiefly recruited from the workhouses and orphan asylums of Edinburgh, ranging from six to eight years of age, their working hours being from six in the morning till seven at night. The adults, mostly women, worked under even harder conditions.

Owen at once raised wages, reduced the hours of labor, and created an establishment not unlike the Ford automobile factories of our day. For the little children he established schools in which corporeal punishment, even harsh words, were forbidden, and games, singing, and dancing were considered more important than book lessons. He was, at any rate, the father of public education and, to no small degree, he anticipated Dr. Montessori.

Gradually Owen began to evolve schemes for the amelioration of the working people on a much more extensive scale. One of the first of his bigger ideas was the formation of communistic colonies, where the colonists should own the land and work the machinery of production in common. The first experiment of this kind under his patronage was undertaken in this country, in New Harmony, Indiana, in 1825. It failed eventually ; such enterprises seem to succeed only when the colonists are united by a common religious fanaticism. But isolation did not seem to be a necessary condition in Owen's mind, for a similar communistic colony was founded later near London. Fourier, over in France, was also advocating similar, though more complicated, enterprises, and his writings may have influenced Owen, but the latter was by far the more practical.

The idea of separate communities gradually gave way to plans for organizing cooperative groups of producers who should own the machinery of single factories in common and sell their products directly to the pubHc, at first through " labor exchanges," stores to which anybody might bring things to be sold, in payment for which they would receive script representing the value of the actual time spent in producing the goods. These labor checks could then be used in purchasing other commodities in the exchange. The fallacy of time as a measure of value was speedily demonstrated and a more practical system of valuation was adopted.