CHAPTER VI.

CO-OPERATION AND INDUSTRIAL PARTNERSHIP.

AMONG the means by which the relations of workmen and capitalists may be put on a sounder footing, much has been hoped from co-operation. The name co-operation has indeed been used in so many and such vague senses, that it has come to mean little or nothing beyond some novel form of association. Before we can say anything about it, we must distinguish at least three different classes of co-operative associations, which again in their details admit of much variety. Thus we may enumerate

(1.) The co-operation of retail purchasers to buy their household supplies on the wholesale scale, and thus avoid the profits of the middleman.

(2.) The co-operation of workmen who form jointstock companies for the carrying on of manufacturing or agricultural industry independently of large capitalists.

(3.) The co-operation of employers and employed in any scheme of partnership which admits the employed to a share of the ultimate profits, in addition to the wages advanced.

Of these forms of co-operation the first has little or no direct connection with the subject of this volume. There is of course not the least reason why any body

of persons, whether working-men, or civil servants, or merchants, or others, may not associate themselves together to procure supplies at the lowest rates. Such associations are, or at least were, experiments, the failure of which can hardly injure any but the members. Their success, on the contrary, may lead to extensive social advantages of a kind not strictly coming within the scope of this work. The State, too, has little to do with the matter beyond allowing the utmost possible legal freedom and facilities to such associations. There is nothing whatever in the legal position or the actions of such societies, with the trifling exception of their disputed exemption from the necessity of giving receipts with penny stamps, to threaten any other industrial bodies or institutions unfairly.

Indirectly, however, co-operative associations have considerable bearing on trade questions, because they offer the most ready and engaging mode of investment for small sums of capital. Half the bitterness of trades union disputes arises from the anti-capitalist feelings of the workman, who believes that he is by the nature of things cut off from the possession of capital, and even looks upon it as contrary to the esprit de corps of his order to own capital. Nothing can tend more to break down this most mistaken and lamentable feeling than the insidious way in which capital accumulates in a wellmanaged co-operative society. Almost without knowing it, the workman finds himself a small capitalist, and when the balance has once begun visibly to grow, it is strange if the love of accumulation is not at length excited. The balance not only grows, but its growth excites the more interest because the owner, as a customer,

a member, or even a committee man, assists in its growth, and may take part in the management of the affair. savings bank deposit pays very low interest, and that interest is perfectly fixed. The depositor is entirely passive, and is in respect of it a powerless dependant of the State. But savings deposited in almost any form of co-operative company tend to excite the instincts of the capitalist, and to acquaint the owner with a new view of the labour question.

It may almost go without saying that the second form of co-operative undertaking, the joint - stock association of workers, is highly desirable as far as it can be carried out. The law for so many centuries practically prohibited joint-stock enterprise that we can hardly wonder at the small progress which has yet been made in this direction among the working classes. The breakdown of the Ouseburn Co-operative Society and other hasty experiments shows that time is needful for learning the conditions of success in this direction. The Oldham Joint-Stock Mills, however, are now earning profits, and by the periodical publication of their accounts are probably preparing the way for new phases of the labour question. The law, at any rate, does not now stand in the way. The old mistaken law of unlimited liability is sufficiently set aside by the Companies Acts of 1862 and 1867, and also by the Partnership Law Amendment Act of 1865 (28 and 29 Vict. cap. 86), which allows any trader to give an employee a share of profits without thereby rendering him liable as a partner, or giving him right to demand an account. We proceed to consider the new form of industrial association which will probably emerge in time from these changes of the law.

Industrial Partnership.-It has been seen that the value of a workman's services depends not only upon his technical skill and the quantity of goods which he has helped to produce, but also upon the price at which those goods can be disposed of. Owing to unavoidable commercial fluctuations the price obtained varies from time to time in a manner defying precise anticipation. It follows that there is a large margin for loss or gain, which must fall upon the employer if the interests of the workman are to be closed by the weekly or fortnightly payment of wages. The operative, in short, is a partner who is being continually paid out of the firm, as it were, because he will not or cannot await the realisation of his labours.

There can be no doubt that the soundest possible solution of the labour question will eventually be found in such a modification of the terms of partnership as shall bind the interests of the employer and workman more closely together. Under such a system the weekly wages would be regarded merely as subsistence money, or advances which the employer would make to enable the labourer and his family to await the completion of the interval between manufacture and sale. The balance of the value produced would be paid at the end of the year or half-year in the form of a dividend or bonus, consisting in a share of all surplus profits realised beyond the necessary charges of interest, wages of superintendence, cost of depreciation of capital, reserve to meet bad debts, and all other expenses of production for which the employer can fairly claim compensation. Under the name of Industrial Partnership such an arrangement has been experimentally tried in England,

and has been subject to a good deal of adverse discussion. The outlines of the scheme are familiar to all who have read with proper care John Stuart Mill's Principles of Political Economy. I need not repeat here the details of the success attained by Leclaire, the house-decorator of Paris, in organising a partnership on this basis, including 200 employees. Nor need I do more than refer to the Paris and Orleans Railway Company, which long made a practice of distributing a bonus to its employees.

It would probably be impossible to get back to the first origin of this system. The primitive form of industrial organisation within the family, the family tribe, or the village community, was not very different. It is said that at the present day there is a system of social partnership in Hindu villages in which the division of the aggregate profits is made according to the work, ability, or capital which each individual contributes. Brentano quotes an ancient record showing that at Bruges and Ypres the masters and servants in the woollen trade divided the profits according to a fixed scale. In the herring fishery, whaling adventures, Cornish mining, and some other branches of industry, it has always been usual to make the workman's share depend partly at least upon the results. The extension of a similar system to manufacturing industry in general was until recent years practically impossible owing to the law of partnership. But it is a very remarkable fact that nearly a hundred years ago (1788), an Act was passed by the Irish Parliament to promote trade and manufacture by regulating and encouraging partnerships. It allowed

1 Book IV. chap. vii. sect. 5. People's Edition, pp. 461-465.