Cornell University Library 
 HD2961.L84 
 
 Co-operation, distributive and productiv 
 
 3 1924 013 767 359 
 
< umber to be qaoted in ordering, 10. 
 
 ..i^MONOGRAPHS FOR MEMBERS OF PARLIAMENT, 
 
 m 
 
 m Parliamentary Candidates, and Other 
 Speakers and Workers. 
 
 No. 10. 
 
 0-OPERATION, DISTRIBUTIVE & PRODUCTIVE. 
 
 Co-operative Production 
 
 compared with 
 
 Production under Private Employers. 
 
 SECOND EDITION. 
 Oct., 1911. 
 
 iiv 
 
 ^hese Monographs are not for Sale, but will be supplied, on 
 iplioation, to Subscribers to the DEPARTMENT OF SOCIAL 
 ECONOMICS of the London Municipal Society, 
 38, Tothill Street, Westminster, S.W. 
 
Cornell University 
 Library 
 
 The original of this book is in 
 the Cornell University Library. 
 
 There are no known copyright restrictions in 
 the United States on the use of the text. 
 
 http://www.archive.org/details/cu31924013767359 
 
Number to be quoted in ordering, 10. 
 
 Monographs for Members of Parliament, 
 
 Parliamentary Candidates, and Other 
 
 Speakers and Workers. 
 
 No. 10. 
 
 GO-OPERATION, DISTRIBUTIVE & PRODUCTIVE. 
 
 Co-operative Production 
 
 compared with 
 
 Production under Private Employers. 
 
 SECOND EDITION. 
 Oct., 1911. 
 
 These Monographs are not for Sale, but will be supplied, on 
 
 application, to Subscribers to the DEPARTMENT OF SOCIAL 
 
 ECONOMICS of the London Municipal Society, 
 
 33, Tothill Street, Westminster, S.W. 
 
GO-OPERATION, DISTRIBUTIVE AND 
 PRODUCTIVE. 
 
 Co-operation and Socialism. 
 
 The attitude of Socialists towards Co-operation is 
 one of curious hesitation and embarrassment. In so far as 
 Co-operation aims at modifying the prevalent system of 
 employer and employed, they can hardly refuse it their 
 approbation, but elements of individualism are involved 
 in it which Socialists affect to repudiate, and its progress 
 seems to excite in them more jealousy than satisfaction. 
 
 Co-operation, however, in the distinctive sense of 
 the word, agrees with Socialism in seeking to obliterate, 
 to a greater or less degree, the line which ordinarily 
 separates the employed classes from the employing, and to 
 
 secure for the former a measure of active partnership 
 in the profits of industrial undertakings, and also 
 In their business management. 
 
 It is therefore highly desirable that anti-Socialist 
 workers should possess some accurate, if only a general, 
 knowledge of what the broad results of co-operative 
 enterprise are. Co-operators, it may be remarked, are 
 most honourably distinguished from Sdcialists in that they 
 have the courage and energy to test their economic 
 principles by putting them into practice, and are willing 
 to be judged by the results. 
 
The following summary is based ou latest Government 
 Reports relating to "(Jo-operative Distribution and Pro- 
 duction," as given on pp. 183-206 of the "Abstract Of 
 Labour Statistice," issued by the Board of Trade, for 
 the year 1910. 
 
 Contrast between Co-operative Distri- 
 bution and Co-operative Production. 
 
 The most important fact which the official figm'es 
 illustrate is one which has been long notorious, namely, 
 the vastly superior success exhibited hy (Jo-operative 
 Distribution, or in other woi'ds by Co-operative Shop- 
 keeping, as compared with that exhibited by CO-operatJve 
 Production or Manufacture. Tims, in 1907, the year 
 to which our figures refer, the value of goods sold by all 
 the Co-operative Societies as distributors was £101,500,000. 
 The value of the goods produced by Co-ojDerative manu- 
 facture was only £f?2,000,000. Itrrs thus apparent that 
 the Co-operative Societies as a whole liardly produce 
 
 more than one-fifth of the goods they sell, whilst 
 
 the distributive profits, including interest on share capital, 
 are £11,500,000, and the corresponding profits on 
 production are less than £400,000 (excluding retail 
 societies). {See foot-notes to p. 185 of the Abstract.) 
 
 On the whole it must bo admitted that Co-operative 
 Distribution or Shopkeeping has vindicated the vitality ot 
 whatever special principles may be involved in it by the 
 manner in which it has held its own against competitors 
 of the ordinary kind, though there are many reasons for 
 holding that its possibilities are limited^ This only makes 
 
4 
 
 ihc difference between the results of Co-operative 
 
 Disiributiuu and Production the more. remarkable, and 
 
 it is the results of co-operation in Production tliat mainly 
 call for consideration on the part of the. anti-8ocialist. 
 
 Co-operative Production. 
 
 When Co-operative Production is said to be a failure 
 as compared with Co-operative Distribution or Shop- 
 keeping, this must not be tal<en to mean that it has 
 met with no success at all, or that so far as it has 
 
 gone hitherto it has not paid its way. A group of pro- 
 ducers,whosc sales amounted to £18,500,000 in 1906, and 
 
 to £22;000,000 in 1907, whilst its profits increased appre- 
 ciably, though in far smaller proportion, has at all events 
 
 achieved a success Sufficient tc demand study, nor 
 
 does its relative failure, as compared with the fortunes of 
 the Co-operative Distributors, tell us anything definite 
 until we have examined the matter further. In order to 
 arrive at an}' conclusion definitely valuable, we must 
 
 compare Go-operative Production, not only with Co- 
 operative Distribution but also (and primarily) with 
 
 production carried on by ordinary methods, and we 
 
 must begin by analysing carefully the various figures 
 relating to it. 
 
 The Productive Business of the two 
 Greatest Societies analysed. 
 
 Apart from Agricultural Societies, whose business is 
 uumparatively small, ihe Co-operative Associations en- 
 
gaged in production or manufacture are divided in the 
 Board of Trade Report into four groups : — (1) 921 Retail 
 Societies ; (2) 2 Wholesale Societies ; (3) 35 Corn-milling 
 and Bread-baking, &c., Societies ; (4) 114 " Associations 
 of Workers." The total sales of all these productive 
 groups amounted to £19,400,000. 
 
 Tire manner in which the figures are given for the 
 various groups individually is not altogether uniform. 
 The group with regard to which the figures are most 
 complete is that consisting of (he tWO " WholSSalO 
 Societies" — the English and the Scottish; but though 
 these Societies are only two out of more than a thousand, 
 
 tliey do between them nearly half the business of 
 
 the whole. They may therefore be taken as repre- 
 sentative, and we will confine our attention to these. 
 
 Their joint SaleS — id- the gross total received for 
 products sold — amounted in 11)07 to £8,103,000, the share 
 of the English Society being about £5,800,000, and that 
 of the Scottish about £2,300,000. The number of WagO- 
 earners employed by them was a little over 17,000. 
 
 The total receipts of the two Societies^-£8,103,000 — 
 were spent aiaproximately as follows : — 
 
 Wages ... ■■■ •■■ ■•• £920,000 \ Described m Boara of Traile 
 
 fsloA AA/'l I -'^^PO''*' as " Expenses, exclud- 
 
 Interest on Loan Capital ... £l4v,0\jv V in^ cost of materiaiB used." 
 
 Management £350,000 1 Total £1,390,000 
 
 Cost of Materials bought ... £6,713,000 
 
 Total of receipts and payments £8,103,000 
 
The Magnitude of a Productive Business 
 IVIeasurabie by the Value it adds by 
 Manufacture to the Value of Mate- 
 rials boug^ht. 
 
 The first point liere forced on our attention is one 
 which is often neglected — namely that when we are 
 asked to judge of the extent and prosperity of a business 
 by the gross amount of its sales, the test suggested 
 is really nO test at all. A dealer in plate, for 
 example, specially expert in engraving crests and mono- 
 grams, might yoav by year buy goblets and other 
 vessels worth £99,000 ; and enriching each with some 
 ornament of his ovvn design, sell the whole for £100,000 ; 
 but though his SaleS amounted to £100,000, the extent 
 of his own trade — of the values produced by himself and 
 perhaps three or four assistants — would not be more than 
 £1,000. Similarly with regard to production of all kinds, 
 
 the magnitude of any industrial business is mea- 
 surable, not by the gross value of the products sold, 
 but by the value added by the process of manufacture 
 
 to the original value of the raw materials bought. 
 
 Value Added to Value of Materials by 
 ordinary Productive Enterprise and 
 by Co-operation. 
 
 The necessity of bearing this fact in mind has been 
 brought out signally by the new Census Of Production 
 
issued by the Board of Trade. The principal Industries 
 
 of the country have there been taken One by One, and 
 ill each case has been given (1) The total value Of 
 goods produced as sold by the producers ; (2) The GOSt 
 
 Of the materials used ; (3) The net value of the 
 
 jDroducts after the cost of the materials has been deducted, 
 this last sum representing the value added to the 
 materials by the process of manufacture or uther pro- 
 ductive process. It is this last sum alone that 
 indicates the magnitude of any individual productive 
 business or group of businesses. 
 
 The following are the figures as given in the Census 
 01 Production for nine of the most important industries, 
 arranged according to the values of produce sold : — 
 
 
 Gross Output, 
 Selling Value. 
 
 Cost of 
 
 Mfiterials 
 
 used. 
 
 Value added 
 by Process of 
 
 Mauufaeture. 
 
 Cotton 
 
 £ 
 177,000,000 
 
 £ 
 
 130,000,000 
 
 £ 
 47,000,000 
 
 Coal and Coke 
 
 133,000,000 
 
 24,000,000 
 
 109,000,000 
 
 Iron and steel 
 
 105,000,000 
 
 74,000,000 
 
 31,000,000 
 
 Engineering 
 
 101,500,000 
 
 52,000,000 
 
 49,500,000 
 
 Woollen 
 
 70,500,000 
 
 51,000,000 
 
 19,500,000 
 
 Ships 
 
 41,500,000 
 
 24,000,000 
 
 17,500,000 
 
 Chemicals 
 
 23,500,000 
 
 14,000,000 
 
 9,500,000 
 
 Bricts 
 
 7,700,000 
 
 2,600,000 
 
 5,100,000 
 
 China and earthenware 
 To which add— 
 
 Co-operative wholesale 
 producers 
 
 7,500,000 
 8,103,000 
 
 2,900,000 
 6,713,000 
 
 4,600,000 
 1,390,000 
 
8 
 
 It is obvious that the magnitude of each of these 
 industries depends, not on the gross value of the goods 
 sold by each, but on the value which has been added by 
 each to the value of the materials bought. Thus our 
 cotton industry is great, not in proportion to its purchases 
 of raw cotton from other countries, but in proportion to 
 the value added to these purchases by the process of 
 turning them into usable textile fabrics, for it is Olit Of 
 
 this added value, and out of this alone, that the 
 
 wages of the British operatives, the upliOep and renewal 
 of plant, rates on manufacturing premises, and the 
 profits of the owners, come. 
 
 Let us, then, compare the proportion borne by cost 
 of materials to the total selling value of the finished 
 products in each case, and see what the percentage of 
 value added to the former is. 
 
 Percentage of thu Value of Materials added to 
 THIS Value of the Peocess of Manufactuee, in 
 
 ORDER to yield THE SELLING VaLUE OF FINISHED 
 
 Goods. 
 
 Coal mines 
 
 add to cost of matej.:ial 454 
 
 Brick works 
 
 
 71 n 
 
 II 
 
 196 
 
 China works 
 
 
 )) !) 
 
 ,. 
 
 158 
 
 Shipbuilding- 
 
 
 )) )! 
 
 
 73 
 
 Engineering works 
 
 )) !i 
 
 
 95 
 
 Chemical works 
 
 
 J) )' 
 
 
 68 
 
 Iron and steel 
 
 
 )) 5? 
 
 
 42 
 
 "Woollen 
 
 
 )) '1 
 
 
 38 
 
 Cotton 
 
 
 !7 VI 
 
 
 36 
 
 Co-operative pre 
 
 ducers ,, ,, 
 
 
 21 
 
It will thus be seen how small is the real bUSilieSS 
 
 of co-operative production, (a) in comparison with the 
 industries of the country generally ; (h) in respect of the 
 percentage of value which it adds to the value of the 
 raw materials used by it. In the latter respect it stands 
 at the bottom of the scale, and, in respect of its magnitude, 
 if we add to the net value produced by the two Wholesale 
 Societies that produced by all the others, the net total, 
 instead of being more than £19,000,000, will not amount 
 to more than £4,600,000. 
 
 The Various Industries to wliicii Co- 
 operative Production has been applied. 
 
 It is instructive to consider the kinds of businesses 
 in which Co-operative Production has been able to 
 maintain and extend itself. 
 
 Out of the £19,400,000— the total seUing value of the 
 products of all the co-operative producers (other than 
 the farming societies) — £10,200,000 was represented by 
 
 the milling of flour and bread-making; £2,400,000 
 by slaughtering'; £1,500,000 by tailoring: and the 
 making: of garments generally; and only £750,000 
 
 by manufacture of the stuffs out of which the garments 
 are made. 
 
 In this way nearly £15,000,000 is accounted for out 
 of a total of £19,400,000. 
 
 Of the remainder the most iiliportant items are 
 preparation of tObacCOj £775,000 ;• and the manufac- 
 ture of boots, £1,700,000, and of soap and candlesj 
 
 £770,000. The remaining businesses, printing, wood- 
 work, engineering, &c., are so small as to be negligible. 
 
10 
 
 Summary of Sales according to Indus 
 tries and Value of Goods. 
 
 Preparation of flour, bread, and meat ... 12,600,000 ) 14 iqO 000 
 Catting out and sewing of clothes, &c. ... 1,500,000 j ' ' 
 (-Textile stuffs 750,000] 
 
 Manufacture of Sac^f.. '=.'"''". Z ^m ''''''''' 
 
 (.Boots and shoes ... 1,700,000 ) 
 Printing, engineering, woodwork, &c 1,310,000 
 
 Apart from food-preparation, tailoring, and semp- 
 stress's work, the total net value produced by .the whole 
 body of productive co-operators in the year 1907 appears 
 to be about £1,300,000. 
 
 The Earnings of the Productive Workers 
 under Co'Operation. 
 
 Tiie main idea animating the co-operative movement 
 has been (so far as Distribution is concerned) that of 
 
 eliminating; the profits of the private shopkeeper 
 
 by giving tliem back to the customer, and (so far as 
 
 Production is concerned) that of eliminating or 
 lessening the profits of the private employer by 
 
 securing them for the workers in the shape of augmented 
 earnings. 
 
 How far has this idea in either case been realised ? 
 
 That the CUStomors of the distributive societies 
 have been substantial gainors is true ; but what has 
 been the ease with the productive employees in respect 
 
 of earnings ? 
 
11 
 
 The Wholesale Societies, as we have seen, employ 
 about 17,000 productive workers, paying them in w'ages 
 £920,000, The Retail Societies, employing 21,000 
 workers in production, pay wages to the amount of 
 £1,210,000. The associated workers, with 7,300 pro- 
 ductive employees, pay in wages £368,000. This gives 
 us for these three groups respectively an average wage per 
 head of about £54 4s., £67 12s. and £5.0 8s., an additional 
 30s. being paid in the last case as a bonus, thus bringing the 
 total earnings up to £51 18s. These averages are certainly 
 
 not in excess of those earned by the employees of 
 private firms or of companies. It seems, indeed, 
 
 that a recent Socialist critic is correct in observing that 
 productive wages, under co-operation, are actually leSS 
 
 than those paid by private employers. For example the 
 average earnings per head of the employees of the British 
 railway companies amount to £65, as against £51 18s.- 
 £57 128., the rate obtaining under Co-operation. 
 
 What, then, is the moral to be drawn from the 
 fortunes of Co-operative Production, as compared with 
 those of ordinary private enterprise ? 
 
 In the first place the facts show that by eliminaciog 
 to a greater or less degree the profits of the capitalistic 
 
 employer, no new fund Is secured available for 
 distribution amongst the employees. 
 
 In the secoud place the facts show that Co-operative 
 Production, whilst exhibiting within certain limits a 
 certain measure of vitality, exhibits this within narrow 
 limits only, and that, even within these limits, the 
 
 vitality is of a feeble liind when compared to that of 
 
 ordinary individualist enterprise. 
 
12 
 
 ' The Socialist statisticians of the Laboiir Party, jealous 
 of any movement which, without .being Socialistic, 
 embodies some of the ideas of Socialism, are wrong in 
 declaring, as they do (see " The Case for the Labour 
 Party," p. 104), that the Co-operative movement as a 
 whole is altogether insignificant. Co -operative Distri- 
 bution or Shopkeeping does not deserve that name,, but 
 it is a name which may, from an industrial point of view, 
 be fairly applied to Co-operative Production. 
 
 Issued by the Lonflon Municipal Society, Department of Social Economics, 
 
 33, Tothill Street, Westminster, 8.W., 
 
 and Printed by George Berridge & Oo , 174, Upper Thames Street, London, E,C.