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 Cornell University Library 
 HF5431.R5 
 
 Co-operative stores, their history, orga 
 
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/cu31924013885623 
 
OS' 
 
 XyYtiRATf 
 
 P. 
 
 ST O RES. 
 
JUST PUBLISHED. 
 
 Marriage in the United States. Trans- 
 lated from the French of Auguste Carlier, by Dr. B. 
 Joy Jeffries. 16mo, price, $1 25. 
 
 " M. Carlier is an tntellisent French writer who has travelled ex- 
 tensively in the United States with a view of studying the institu- 
 tions of this country. He has paid especial attention to American 
 history, on which subject he has produced one or two valuable 
 works. . . . The author points out With unshrinking fidelity 
 the faults of which he has been cognizant in American domestic 
 life; he treats of delicate subjects in. a delicate manner. . . . The 
 work will well reward an attentive study." — Tribune. 
 
 " He is severely critical of the easy methods of divorce in the 
 "Western States, and attacks De Tocqueville's deductions on the 
 subject of marriagu. Some of his trenchant criticisms upon our 
 manners and customs will serve a useful purpose. His analysis of 
 our divorce laws is peculiarly worthy of attention."— .AT. Y. Evening 
 Post. 
 
 Copies sent by mail, post paid, on receipt of the price. 
 
 LEYPOLDT & HOLT, 
 
 451 Broome Street, N. Y. 
 
Co-operative Stores 
 
 THEIR 
 
 HISTORY, ORGANIZATION, AND MANAGEMENT 
 Based on the recent Gentian work of 
 
 Eugene Richter 
 
 With annotations and amendments rendering the work 
 
 SPECIALLY ADAPTED FOR USE IN 
 THE UNITED STATES 
 
 ' NEW YORK 
 
 LEYPOLDT & HOLT 
 
 1867 
 
J£./$',6/f 
 
 Entered according to act of Congress, in the year 1867, 
 
 Br LEYPOLDT & HOLT, 
 
 In the Clerk's Office of the District Court of the United States for the 
 Southern District of New York. 
 
 Little, Rennie & Co., 
 
 PRINTERS AND STEREOTYPEK8, 
 430 BKOOME 6TBEET, N. T. 
 
CONTENTS. 
 
 CHAPTER PAGE 
 
 I. — History of Co-operative Stores in England 1 
 
 II. — Nature and Object of Co-operative Stores in England 10 
 
 III. — Formation of Co-operative Stores in Germany 15 
 
 IV.— Nature and Object of Co-operative Store Societies in 
 
 Germany 19 
 
 V. — How to start a Co-operative Store 24 
 
 VI. — Constitution and Laws of Co-operative Store Societies. . . 29 
 
 VII. — Different kinds of Business, and their Peculiarities 57 
 
 VIII. — Establishment of Business and Accumulation of Capital . . 62 
 
 IX.— Purchase of Goods 71 
 
 X— Sale of the Goods 79 
 
 XI. — Book-keeping in. Co-operative Stores 89 
 
 XII. — General Hints for Management of Business 121 
 
 Index 129 
 
Co-operative Stores. 
 
 CHAPTER I. 
 History of Co-operative Stores in England. 
 
 ON a gloomy November day, in the year 1843, under a cold 
 rain, there assembled in the back room of a mean inn at 
 Rochdale — one of the centres of woollen manufacture in 
 North Lancashire, England — a dozen poor weavers, to consult 
 together concerning ways and means for raising themselves out 
 of their wretched poverty into a comfortable existence. As is 
 usual in such cases, a good deal was said on one topic and 
 another without reaching any result. One speaker was of 
 opinion that they ought to seek through political agitation for 
 the universal right of suffrage. If they could but have repre- 
 sentatives of their own class in parliament, it would be easy to 
 obtain help through them. To most of them this seemed an 
 excellent prqposition. But one man rose and said, ' ' that lit- 
 tle could be hoped from political agitation : even if they 
 should succeed, by means of universal suffrage, in being re- 
 presented in parliament, there was a greater question than 
 whether parliament would help them — namely, whether it 
 could help them. For the government was even worse in 
 debt than they themselves. It could give nothing to the citi- 
 zen except what it had received from him, either in the form 
 of taxes or otherwise. They must not look for aid to parlia- 
 ment, sitting away off in London, but seek it at home, in their 
 own employers. These men must pay them higher wages ; 
 
2 Co-operative Stores. 
 
 and if they Tefused, they must be forced to it by strikes.'' This 
 speech pleased the younger part of the company particularly. 
 But an old weaver answered, "that he had already gone 
 through enough strikes ; they were gotten up often, but 
 nothing ever came of them. The matter stood this way, as it 
 seemed to him : If, at a certain time, or in a particular dis- 
 trict, the wages seem disproportionately low, it is seldom to 
 be laid to ill-will on the part of the employers, but is because 
 these employers can obtain but a low price for the products of 
 the labor which they employ. So that, before they can agree 
 to pay higher wages in the face of this low selling-price, they 
 have to reckon whether there will remain sufficient proceeds 
 to remunerate them for their own time and care, and for the 
 capital embarked in the enterprise, estimated at the market 
 rate of interest. If, now, the reckoning shows a loss, the em- 
 ployer has no alternative, instead of agreeing to pay higher 
 wages, but to close his business and employ his capital other- 
 wise ; for instance, by a safer investment in the public funds. 
 In which case, the quondam employer is relieved of all labor, 
 except the snipping off of his semi-annual coupons, while the 
 workmen, mean time, are without bread. In order to live, 
 these latter would find themselves forced ■ to underbid their 
 comrades, employed elsewhere, to such an extent that wages 
 would on all sides fall to a lower mark than they had held be- 
 fore the strike. " 
 
 While they sat helplessly casting about for some better pro- 
 ject, one of their number, who had gained considerable expe- 
 rience of the world, and had become acquainted with men 
 whose attention had been given to this subject, spoke in this 
 way : " If we cannot get higher wages, the only thing to be 
 done is to make what we do get go further. If we cannot in- 
 crease our in-come, let us manage our out-go more economi- 
 cally. It may be that, with what we thus save, we may com- 
 mence an undertaking which shall give us an income in addi- 
 tion to our wages. No doubt each one by himself can do but 
 little ; yet what if we set back to back, and join hands, as to- 
 day we have joined speech, for the improvement of our con- 
 dition f ' What is impossible for one man is easy for three, ' is 
 a truth that is as old as the world. Only look around in the 
 world to-day ! Here are railroads built, canals dug, under- 
 
History in England. 3 
 
 takings of every sort commenced, which would be hopeless 
 for a single individual's strength, but which are easy enough 
 for many united. I know very well that none of us now is 
 rich enough to buy up railroad stock. But need we begin at 
 once with building railroads ? Could we not commence with 
 small things, were it nothing more than the furnishing of the 
 most indispensable necessaries of life? Our savings might 
 even now be sufficient for that, if we put them into the pot to- 
 gether I" 
 
 Not all could see what this would lead to ; but having no 
 other proposition, and knowing the speaker for an honor- 
 able man, they agreed to his plan. There was, at least, no 
 possibility of their losing any thing in the business. 
 
 They immediately proceeded to work, and that same evening 
 a paper was drawn up, on which twelve men set their names to 
 an agreement to pay twenty pence a week into a common 
 stock. Only a few out of the twelve were able to pay that sum 
 the same evening, but they proudly named this novel associ- 
 ation, "The Rochdale Society of Equitable Pioneers." Our 
 weavers assumed this name of ' ' Pioneers, " as significant of 
 their purpose to break, through the tangled thicket of distress 
 and want which encompassed them, a new path for their , 
 brethren of the working class, along which their feet might find 
 the way to a better condition of life. They at once issued a 
 programme for the new Society, which read substantially thus : 
 
 "The object of this Society is to devise such expedients as 
 shall bring pecuniary profit to its members, and at the same 
 time result to their advantage as individuals, and as members 
 of the Society. In pursuance of this object, the Society levies 
 contributions from its members, with which to carry out the 
 following designs: 
 
 "1. The erection of a store for provisions, groceries, and 
 clothing-materials ; 2. The building, or otherwise obtaining, 
 of a number of houses, in which such members may dwell as 
 shall find it easier or pleasanter to dwell together ; 3. The adop- 
 tion of rules, agreed upon by the Society, for the assistance of 
 such members as are out of employment, either on account of 
 an unjust lowering of their wages, or from any other, cause ; 
 4. The renting or possession of a farm, or several farms ; like- 
 wise for the purpose of furnishing employment to such mem- 
 
4 Co-operative Stores. 
 
 bers as are out of work ; 5. The Society will use every 
 endeavor to increase and to profitably employ its capital, to 
 educate the children, and, above all, to advance the power and 
 prosperity of the community. " 
 
 Any one comparing these great ends with the small 
 means which our few Pioneers had at their command, could 
 not but be impressed with the seemingly romantic audacity of 
 their undertaking ; but let him wait and see what comes of it, 
 after only a year's trial ! 
 
 In the evening of the 21st of December, 1844, we find our 
 Pioneers again assembled. Their number is now increased 
 from twelve to twenty-eight, who have gathered with their 
 wives and children at a grain-store in Toad-lane, Rochdale. A 
 sort of expectant enthusiasm which pervades the little assem- 
 bly, shows that something of great importance is going for- 
 ward. To them it is indeed an important matter. In the 
 course of a year the Pioneers have got together, by great effort, 
 a capital of £28 ($135). They have rented the building, 
 where they are assembled, for a store, which is now to be 
 opened for the sale of provisions, clothing, &c. A portion of 
 their capital has gone for paying the rent of the building in 
 advance, on which terms alone the owner would let them 
 have it. 
 
 After fitting it up in the plainest possible manner, they have 
 remaining only a little more than £15 (about $75),' — merely 
 sufficient for the purchase of a small stock of flour, butter, and 
 sugar. 
 
 This evening the store is to be opened for trade, and the as- 
 semblage stays till the signal is given by throwing open the 
 window-shutters. For this there was a particular reason : in 
 some way the news had got out among the retail dealers of the 
 town, that on this, the shortest day in the year, their new com- 
 petitors, the united weavers, were to commence business ; and 
 many curious eyes were on the watch in Toad-lane, to see 
 what would happen. 
 
 A group of shopkeepers had collected before the door, and 
 about them stood the ' ' Doffers, " the street-boys of Rochdale, 
 always ready to hoot and jeer at any mark which might present 
 itself. They were even now making derisive propositions to 
 bring a wheelbarrow and wheel away the entire trumpery of 
 
History in England. 5 
 
 these Bedlamite weavers ! But men who had set such ends 
 before them as our Pioneers had, were not to be turned aside 
 by any hooting of street-boys. They quietly went ahead, and 
 opened their trade unmolested. 
 
 And now, after twenty-two years, what has resulted from the 
 supposed crack-brained enterprise of those few weavers ? All 
 over England, France, and Germany, the Rochdale Pioneers 
 are famous as the men who, true to their name and their pro- 
 gramme, have given the world a splendid example of the great 
 results which even the humblest laborers may bring about 
 without any external aid, merely by co-operation, if only they 
 are animated by the right spirit, and hold fast together. The 
 consequences which have followed from the undertaking of 
 that handful of poor flannel-weavers certainly deserve the 
 world's attention. In 1865 this "Rochdale Society of Equit- 
 able Pioneers" had increased to 5,326 members, and during 
 the first quarter of 1866 its sales amounted to £52,870 
 ($255,890) ; on which the profit was £6,516 ($31,540), 
 or 1 1^- per cent. The stock of the members in the Society 
 amounted to £78,610 ($379,472), or about £15 ($72.60) 
 each. 
 
 Edward Pfeiffer, in his work on Co-operative Societies, 
 gives a statement of this Society's condition in 1862, as fol- 
 lows : 
 
 In Toad-lane, which is the centre of the Society's operations, 
 and where the Office and Library are, stands a large, roomy 
 building, among others which contain the goods belonging to 
 the Company, whose exterior only attracts the notice of the 
 passers-by from the fact that, instead of the customary show- 
 windows, there appears simply the inscription, "Store of the 
 Society of Equitable Pioneers."* This store contains a full 
 
 * Let us glance at the manner of doing business at the co-operative store. The 
 shop is open all day, but is most frequented in the evening, being generally- 
 crowded on the Saturday night. As every thing has to be paid for in ready-money, 
 all purchasers must, of course, bring their cash with them. Whatever be the 
 amount a customer lays out, he or she receives a tin ticket, on which is stamped 
 the sum paid— such tickets being vouchers for the receipt of the money. The 
 buyer preserves these tickets until the expiration of the current quarter, when 
 he brings them to the store, and for whatever amount of them he can produce, he 
 is entitled to a proportionate share of the profits of the concern during the quar- 
 ter. The whole or his purchases in the time may amount, perhaps, to five or six 
 pounds : if the profits averaged ten per cent., he would be entitled to ten or twelve 
 shillings : and he might either receive the money in cash, or have the same trans- 
 ferred to his account credit in his pass-book, in which case it would go to increase 
 
6 Co-operative Stores. 
 
 assortment of all needed articles, and has no fewer than eight 
 branch establishments scattered through the town, which to- 
 gether have a yearly sale of more than £120, 120 ($581,380). 
 
 A rich assortment of every kind of goods invites those disposed 
 to buy. From crinoline to artificial flowers, from carpets to 
 calico, all manner of goods, selected with the utmost care, are 
 piled up ; but here, as in all the Society's stores, nothing is 
 displayed in the windows, to be ruined by dust and sun. Their 
 customers are to be gained by no trickery or huckstering de- 
 vices. Three shoe-stores exhibit a complete stock of boots, 
 shoes, clogs, &c. , and in the last year did a business amount- 
 ing to over £3,000 ($14, 520). 
 
 A clothing-store offers to every one the most modern fashions 
 of garments, all made of good, solid stuff. Nothing is selected 
 for its mere cheapness, but every article is of genuine, reliable 
 material. 
 
 In the five butcher-shops belonging to the Society, there 
 were bought and disposed of during the year 1861 the follow- 
 ing amount of cattle : 
 
 447 Beeves, from which were sold 292,449^. meat. 
 1013 Sheep, " " " 76,093 " 
 
 674 Hogs, " " " 150,884 " 
 
 324 Lambs, " " " 12,592^ " 
 
 95 Calves, " " " 7,897 
 
 in all, 2,553 head of cattle, or 539, 86i^lbs. meat. 
 
 Finally, there is also a room belonging to the Society, 
 which is open to all its members the whole afternoon, where 
 they have all the most readable English newspapers, and chess 
 and checker boards for such as like to play. Near by stands 
 the Library, with its treasures of more than 5,000 well-selected 
 volumes. 
 
 All this is owned by the Society, and is free to each of the 
 Pioneers and to his family. Two and a half per cent, of the 
 profits are annually devoted to educational purposes. Last 
 year, for example, this amounted to about £300 ($1,450), 
 which was expended for newspapers, microscopes, globes, 
 
 the deposits on which he receives Interest. The shop being open to the public, 
 and the tin tickets being issued to all customers alike, non-members are in the 
 habit of disposing of them to members, who are credited for their value on pro- 
 ducing them.— People's Magazine, February, 1867. 
 
History in England. 
 
 and other educational apparatus, and the increase of the 
 library.* 
 
 How the Pioneers have worked up to this condition in the 
 course of twenty years, is shown by the annexed table. The 
 amounts are given in English money, f 
 
 i 
 
 §1 
 
 AMOUNT 
 
 
 
 
 OF PKOPERTT. 
 
 AMOUNT OF SALES. 
 
 PHOFITS. 
 
 
 
 £ 
 
 8. 
 
 D. 
 
 £ 
 
 s. 
 
 D. 
 
 £ 
 
 s. 
 
 D. 
 
 1844 
 
 28 
 
 28 
 
 
 
 
 
 
 — 
 
 
 — 
 
 — 
 
 
 
 45 
 
 74 
 
 l8l 
 
 12 
 
 5 
 
 710 
 
 6 
 
 5 
 
 32 
 
 17 
 
 6 
 
 46 
 
 80 
 
 252 
 
 7 
 
 1 
 
 1,146 
 
 17 
 
 1 
 
 80 
 
 16 
 
 6 
 
 47 
 
 no 
 
 286 
 
 15 
 
 4 
 
 1,924 
 
 13 
 
 10 
 
 72 
 
 2 
 
 10 
 
 48 
 
 140 
 
 397 
 
 — 
 
 
 2,276 
 
 6 
 
 5i 
 
 117 
 
 16 
 
 io£ 
 
 49 
 
 39° 
 
 i,i93 
 
 *9 
 
 1 
 
 6,6ll 
 
 18 
 
 — 
 
 561 
 
 3 
 
 9 
 
 5° 
 
 600 
 
 2,299 
 
 10 
 
 5 
 
 13,179 
 
 17 
 
 — 
 
 889 
 
 12 
 
 5 
 
 51 
 
 630 
 
 2,785 
 
 — 
 
 i* 
 
 17,638 
 
 4 
 
 — 
 
 990 
 
 19 
 
 84 
 
 52 
 
 680 
 
 3,47i 
 
 — 
 
 6 
 
 l6,352 
 
 5 
 
 — 
 
 1,206 
 
 15 
 
 24 
 
 53 
 
 720 
 
 5,848 
 
 3 
 
 n 
 
 22,760 
 
 — 
 
 — 
 
 1,674 
 
 18 
 
 "4 
 
 54 
 
 900 
 
 7,172 
 
 15 
 
 7 
 
 33,364 
 
 — 
 
 — 
 
 1,763 
 
 n 
 
 24 
 
 55 
 
 1,400 
 
 11,032 
 
 12 
 
 ioj- 
 
 44,902 
 
 12 
 
 — 
 
 3,166 
 
 8 
 
 4 
 
 56 
 
 1,600 
 
 12,920 
 
 13 
 
 i£ 
 
 63,197 
 
 10 
 
 — 
 
 3,921 
 
 *3 
 
 14 
 
 57 
 
 1,850 
 
 15,142 
 
 1 
 
 2 
 
 79,788 
 
 — 
 
 — 
 
 5,47.0 
 
 6 
 
 84 
 
 58 
 
 1,950 
 
 18,160 
 
 5 
 
 4 
 
 71,689 
 
 — 
 
 — 
 
 6,284 
 
 17 
 
 44 
 
 59 
 
 2,703 
 
 27,060 
 
 14 
 
 2 
 
 104,012 
 
 — 
 
 — 
 
 IO,739 
 
 18 
 
 64 
 
 60 
 
 3,45° 
 
 37,7io 
 
 9 
 
 — 
 
 152,063 
 
 — 
 
 — 
 
 15,906 
 
 9 
 
 II 
 
 61 
 
 3.9 00 
 
 42,961 
 
 14 
 
 1 
 
 176,206 
 
 14 
 
 8 
 
 l8,4I3 
 
 11 
 
 7 
 
 62 
 
 3,5oi 
 
 38,436 
 
 12 
 
 3 
 
 154,168 
 
 12 
 
 8 
 
 17,228 
 
 9 
 
 10 
 
 63 
 
 4,013 
 
 49,3i 6 
 
 6 
 
 7 
 
 158,632 
 
 5 
 
 11 
 
 19,670 
 
 4 
 
 9 
 
 J64 
 
 4,580 
 
 55,840 
 
 — 
 
 : — 
 
 174,206 
 
 8 
 
 4 
 
 22,163 
 
 9 
 
 9 
 
 Total 
 
 1,294,830 
 
 n 
 
 4* 
 
 130,300 
 
 14 
 
 ioj- 
 
 * The Pioneers farther like to be charitable and helpful to those who need their 
 aid ; and it is a common thing at the quarterly meetings for the members to vote, 
 out of their own pockets, a handsome subscription to some useful public institu- 
 tion in need of funds, or to some co-operative society that has suffered loss. 
 
 t 1 £ — $4.84. 1 s. — 24 V. cents. 1 d. — 2 Viop cents. 
 
 % A few items from the Eighty-eighth Quarterly Report of the Equitable 
 Pioneers, bringing up the accounts of the Society to the 18th of December, 1866, 
 from the quarter preceding, will further sh6w the large proportions which this 
 tree of small beginnings has assumed, and how, by time, care, attentipn, a good 
 
8 Co-operative Stores. 
 
 With this great co-operative store, however, the Pioneers did 
 not rest contented. Though not under the same name, 
 the same individuals established, in 1851, the Rochdale 
 Corn-Mill Society, which in 1864 was running fifteen stones, 
 with a capital of over £49,000 ($237, 160), and a business of 
 £141,741 ($686,026.44). During 1865, the co-operative 
 steam corn-mill, with a capital of over £58,000, had a busi- 
 ness of £148,533, with a profit of £12,511. 
 
 Yet more! In 1855 the Pioneers established a cotton-fac- 
 tory which employs three hundred hands and two hundred 
 and fifty looms. The capital (of over £68,000), during 1863 
 and 1864, gave no dividend, in consequence of the cotton- 
 panic, but the looms were never wholly stopped, working at 
 least half the time.* Since the year 1863 a building associ- 
 ation also has arisen employing a capital of over £52,500, 
 which furnishes its members with good houses at a reasonable 
 cost. A life insurance and burial society has a capital of over 
 £15,760. So that the entire working-capital, which has arisen 
 from the original £28, now amounts to more than £215,000, 
 or over $1,000,000. 
 
 It could not fail to happen that the results of the Rochdale 
 Pioneers soon became known in the neighborhood, and thence 
 spread through constantly wider circles. Everywhere men 
 emulated their example, till a network of similar societies 
 spread, one after another, all over England. The greater 
 number of them are co-operative stores, some having in addi- 
 tion flour-mills and factories. All of them are prosperous, 
 and steadily increasing. 
 
 soil, and the sunshine of favor, the little acorn has grown into a goodly tree. The 
 committee reports that the affairs of the Society are in a prosperous condition : 
 that the number of members steadily increases ; that the total names on the roll 
 at the close of the quarter were 6,246 ; that the amount of cash received for goods 
 sold during the quarter was £68,216 18s. 3Jd., being an increase on the correspond- 
 ing, quarter of the year 1865 of £13,042 8s. OJ-cl. ; that the profits for the quarter 
 were £9,281 16s. 9d ; that after the usual deductions for educational and other pur- 
 poses, there would he left a balance allowing a dividend of 2s. 5d. for every one- 
 pound cheque (or tin ticket) brought in— upwards of twelve per cent. ; and that 
 the gross profits for the year were £31,934 3s. 9id. These are magnificent profits, 
 and prove not only the abundant gains of ordinary shopkeepers, hut the immense 
 advantage to poor people, such as the Pioneers are as individuals (though they 
 may be rich as a body), in diverting such gains into their own pockets. The prin- 
 ciple of co-operation needs no more signal example to prove its value.— Black- 
 wood's Magazine, March, 1867. 
 
 * At the present time their capital is about £91,000, and they received cash for 
 goods during the year 1865 to the amount of £133,895. 
 
History in England. 9 
 
 Prof. Huber, who has travelled throughout England and 
 given much study to these organizations, estimates their present 
 number at one thousand. The number of members of co- 
 operative stores amounts to over 200,000, -with a working 
 capital of over \\ million pounds, and an annual business of 
 about \\ million pounds. 
 
 From an official report which was laid before the British 
 Parliament, it appears, that in 1863 there were already 460 
 such associations at work in England, whose membership 
 amounted to nearly 109,000. Their sales were over £9,000,- 
 000, their own property was £600,000, while the profits, 
 shared among the members, for the year 1863, amounted to 
 more than £200,000. In 1865 the eight societies alone 
 of Rochdale, Bacup, Halifax, Oldham, Bury, and Manchester 
 numbered 24,414 members, with a property of over £200,000 
 and a business of over £700, 000. 
 
 Of the whole 460 societies only about an eighth part were 
 commenced before the year i860, and scarcely 30 before the 
 year 1856, while the great majority of them have had to struggle 
 with the inevitable difficulties of starting. Considering these 
 facts, it may be deemed certain that in a short time their busi- 
 ness and property will have increased many fold. 
 , In 1 86 1 the members of these associations had already estab- 
 lished and brought into partial operation three large factories. 
 Their capital exceeded £1,000,000, of which about £600,000 
 was invested by shareholders ; the remainder was raised from 
 bonds and mortgages. 
 
 The co-operative store association of the north of England 
 have created a central association, for the purchase and sale of 
 merchandise at wholesale. This is managed by the Rochdale 
 Pioneers, and in 1865 disposed of goods to the amount of 
 £142,000 to 165 co-operative stores (£55,000 more than in 
 1864). 
 
 This method of association has at last found its way even 
 into the English colonies, where it is applied in the cultiva- 
 tion of the very cotton which is woven in the co-operative 
 factories at home. 
 
 1* • 
 
CHAPTER II. 
 
 Thk Nature and Object of the Co-operative Stores in 
 England. 
 
 THE results of the co-operative societies in England are as 
 comprehensive as their rules are simple. The societies 
 have a public store, where goods are sold even to those 
 who are not members. The condition of membership is the 
 payment of a few pence. At certain intervals, further payments 
 of a few pence are required from the new member (in most cases 
 i\ pence a week, or 10 pence a month), until their aggregate, 
 together with the interest and dividends placed to his credit, 
 amount to the prescribed minimum share in the undertaking. 
 The sum in Rochdale was at first £4 ($19.36), afterwards 
 ^5 ($24-3o) ; in Manchester, however, only £1 ($4.84). 
 Each member has the privilege of letting his share increase to 
 £100 ($484) ; although, in case of an excess of capital, 
 the society can diminish the amount. Each member can, 
 after previous notice, demand that his share, over and 
 above the minimum share, be paid back to him, after an in- 
 terval varying according to the amount ; the minimum share 
 itself, however, is not paid back to the member when he re- 
 signs, but may, with the approval of the society, be carried over 
 to the credit of another, who thus becomes himself a member. 
 A distribution of the net profits is made quarterly. After 
 an interest at the rate of five per cent, per annum has been 
 deducted from the shares of the members, and 2-J per cent, of 
 the profits have been applied to the educational fund men- 
 tioned in the last chapter, the balance is placed to the credit of 
 the members, in proportion to the purchases that each has 
 made at the store during the preceding three months. The 
 members are liable for no losses beyond the value of their re- 
 spective shares. This right of allotment is governed by a 
 special statute of the seventh of August, 1862, which secures 
 to the companies the same legal rights possessed by an indi- 
 vidual. 
 
Their Nature and Object. n 
 
 Every month there is a general meeting, in which every 
 member has a vote. By this meeting, an Executive Com- 
 mittee of twelve is elected to manage the business of the Society 
 for one year, which holds a weekly session. This is the gist 
 of the rules of the English societies, which differ only in minor 
 particulars. 
 
 And yet in these rules lies only a small part of their strength. 
 Here once again it is true, that the spirit, not the word, makes 
 alive ; and the spirit that has transmuted the copper of the poor 
 Rochdale weavers into gold, is no other than the spirit of fru- 
 gality and fair dealing. 
 
 The frugality of the Rochdale Pioneers showed itself at the 
 outset in not disdaining to save a penny because it was only a 
 penny. Well aware that dollars grow from pence, the Pioneers 
 put by two pence a week, until they had a pile of dollars, and 
 with these savings they founded a business of their own, instead 
 of depositing them in a Bank and putting them into the hands 
 of rich men to be managed at a low interest. In this business 
 the productive power of their judgment could be joined to that 
 of their money. They wisely chose as the object of their un- 
 dertaking the thing most nearly affecting them, the supply of 
 necessaries for daily consumption, and guaged the extent of 
 their trade to their capital as well as to the degree of their com- 
 mercial foresight. Their profit in the business was twofold ; 
 for besides the gain in money, they were certain to receive for 
 consumption the goods they liked best ; and the gain in money 
 they could count upon with more certainty, since the profit de- 
 pended in reality upon , the diligence they displayed in their 
 enterprise. In order to make this profit more sure, they did 
 not endeavor to undersell the shopkeepers, but returned to the 
 purchaser, at the end of the quarter, a large share of the gains 
 as a premium, in proportion to the extent of his purchases. 
 In letting these premiums remain in the business, the mem- 
 bers benefited both themselves and the society : for on the 
 one hand, they abridged their consumption in order to increase 
 the cash deposits ; on the other, they increased, by their con- 
 sumption, their own portion of the profits. * The mental busi- 
 
 * How easy it is to lay tip a considerable sum in this way, let the following ex- 
 ample suffice, taken from the records of the Eochdale Society, and published in 
 the English pamphlets ; by which it appears that without paying out a farthing be- 
 
1 2 Co-operative Stores. 
 
 ness capital also increased in a similar proportion. The very 
 untoward circumstances under which the Pioneers began 
 
 yond the first shilling, and exclusive of a withdrawal of £6, a man realized in ten 
 
 years £98 13s. 4d. ($477.50), simply by making his purchases at the stores of the 
 association. 
 
 The laborer, whose account with the society is here given, was admitted in 
 1850. 
 
 1860. £ a. d. 
 
 Nov. 1. Paid in cash 10 
 
 Dec. Dividend 10 6 
 
 11 5 
 1851. 
 
 March. Dividend 1 11 2 
 
 2 2 7 
 
 June. Interest and dividend 2 2 
 
 4 2 9 
 
 Fine...... 3 
 
 4 2 6 
 Sept. Interest and dividend 1 17 
 
 5 19 6 
 Dec. " " " 1 16 11 
 
 ~~7 16 6 
 1852. 
 
 March. " " " 2 3 2 
 
 9 19 7 
 
 June. " " " 1 19 3 
 
 11 18 10 
 
 Sept. " " " 2 2 2 
 
 14 1 
 
 Dec. " " " 2 1 7 
 
 16 2 7 
 In Dec. 1853. Interest and dividends, with 
 
 principal, amounted to 24 14 6 
 
 In Dec. 1854. " ." .... 33 10 
 
 " " 1855. " " .... 42 3 11 
 
 " " 1856. " 1 " .... 52 5 2 
 
 " " 1857. " " .... 62 2 10 
 
 In Feb. 1858. Withdrawn 6 
 
 Leaving balance of 66 2 10 
 
 In Dec. 1858. Interest and dividends, with 
 
 principal, amounted to 67 8 3 
 
 In Dec. 1860. " " .... 79 14 9 
 
 " " 1860. " " .... 90 11 7 
 
 InMarch, 1861. Interest and dividend alone.. 4 3 5 
 
 94 15 
 
 In June, 1861. " " " " .... 3 18 4 
 
 98 13 4 
 
Their Nature and Object. 13 
 
 their undertaking, called out their utmost energies and 
 tested their power to command success. After they had 
 fully mastered the limitations of their business in its narrow 
 sphere, on which its existence and continuance depended, they 
 could enter without much risk upon larger operations. In 
 their smaller field, they had, in the mean time; found out the 
 persons to whom they could safely Intrust the superintend- 
 ence of the affairs of the Society, in their details; and these 
 faithful men had also familiarized themselves with the techni- 
 calities of business. The discipline acquired in the general 
 discussion and management of the partnership matters of 
 dozens and hundreds, soon fitted these men to administer the 
 affairs of thousands. In this way at last, after having done 
 business by their grain-mills with the neighborhood, they were 
 enabled to go further, and by erecting a cotton-mill, to compete 
 in the market of the world. 
 
 The Pioneers would, moreover, hardly have accomplished 
 the great results they did accomplish, if they had not, in ad- 
 dition to the above qualities, put into their business, from the 
 very first, the vast moral capital of fair dealing. That they 
 had outstripped the competition of the Rochdale tradesmen, 
 even when their business had hardly filled an ordinary store, 
 was due simply to the fact that they were fairer in their deal- 
 ings. The old proverb, ' ' Fair dealing has the longest life, " 
 was observed by them as the best motto for augmenting their 
 resources. They really aimed at fairness in their operations, 
 both as buyer and seller, and were compelled so to do, if they 
 would not cheat themselves. Just measure and weight, and 
 just prices for goods of all sorts, was their first rule, and for 
 this purpose they felt the main help to be, invariable and im- 
 mediate payment in cash. Inasmuch as in the plan of keeping 
 credit-accounts, a tendency lurks to consume future earnings 
 beforehand, as well as to spend more than one hopes to get, 
 the Pioneers dared not put so great a temptation before their 
 brethren, since it would have been peculiarly difficult for labor- 
 ers with unchanged wages to restore the disturbed proportion 
 between receipts and expenses, and to settle punctually for the 
 goods bought on credit : the Society, too, would not have been 
 able to procure their supplies at the most advantageous times 
 and places, and consequently would have had either to put up 
 
14 Co-operative Stores. 
 
 with smaller profits, or to resort to the ordinary expedients of 
 inferior goods and unjust weight and measure. 
 
 The fate of several English co-operative societies has shown 
 the wisdom of the Pioneers in founding their business on the 
 basis of cash payments. This basis, whereby all buyers are 
 alike to the seller, enabled the Pioneers to adhere to another 
 equally important principle — that of selling at fixed prices, 
 previously agreed upon ; and this again made possible a very 
 exact adjustment of prices, enabled the Society to watch their 
 sellers, and purged their trading of haggling of every kind. 
 Besides, the buyer, greedy for a bargain, could no longer pre- 
 tend to claim a reduction in price on account of the bad quality 
 or short measure of the things sold. Thus, while it was in the 
 power of the Society to pay back to each of its customers, at the 
 end of every quarter, a part of the price in the shape of divi- 
 dends, the latter willingly did without those non-essentials 
 through which ordinary merchants try to attract the majority of 
 those inclined to buy. Among the Pioneers there was no need 
 of adorning or adulterating their articles, or of setting them up 
 in gorgeous show-windows ; and as the savings inured to the ■ 
 advantage of the buyers in the end, the Society saw itself in 
 possession of a permanent patronage, and able promptly and 
 securely to dispose of its stock on hand. * 
 
 * V. A. Huber'B " Xeisebriefe aus England im Sommer 1854" (Hamburg, Agentur 
 des Earthen Eauses, 1855). "Me gewerblici\enundwirt/isoi\aftlichenGenossenschaflen 
 der arbeUenden Classen in England, Frankreich und Deutschland" by the same 
 author, in the Tubingen Journal of general politics for 1859 ; " Concordia, Bei- 
 trage zur Listing der sozialm Frage, by the same author, (Leipsic, 1861) ; " Die 
 geuossenschaftlic/ie SeXisthiUfe der arbeUenden Classen" (Elberfela, 1865, published 
 by Fridrichs), by the same author; Edward Pfeiffer's " Ueber Genossenschqfts- 
 wesen" (Leipsic, 1863, by G. Wigand) ; " The Co-operator," the weekly publication 
 of the English Associations ; "Self-help by the People : History of Co-operation 
 in Eochdale," by G. J. Holyoake: and "The Rochdale Co-operative Society a 
 Study for Workingmen," by _D»niel Stone. 
 
CHAPTER III. 
 
 Formation of Co-operative Store Societies in Germany. 
 
 GO-OPERATIVE store societies made their appearance in 
 Germany much later than in England. The first move- 
 ments toward their establishment did not proceed, as in 
 England, from the laborers themselves, . but from men who 
 belonged to the educated class, and had attempted the practical 
 amelioration of the life of the laboring classes. The intelli- 
 gence of Germany has, especially, during the last ten years, 
 considered it as its noblest office to extend, help and sympathy 
 to all the exertions of the laboring classes founded on self-help. 
 It is in this beneficent activity, better for the beneficiaries than 
 the loans without interest from the numerous State institutions 
 for relief, that the community receives interest for the talent it 
 intrusted to the possessors of its intelligence in its public 
 schools — schools supported by the taxes of the laboring classes 
 themselves. 
 
 Hermann Schultze, of Delitzsch, formerly District Judge, 
 and at present Prussian Deputy, is considered the author and 
 controller, for the most part, of the German industrial and 
 economical associations. Since about 1850, he has sought, 
 with voice and pen, in constantly increasing spheres, to direct 
 all effective zeal for the improvement of the mechanic and 
 laborer, toward the more perfect social union of those to be 
 benefited. The movement earliest affected those small, inde- 
 pendent tradesmen who were trying, by aid of societies for 
 cash advances for the wholesale purchase of raw material and 
 supplies, f to maintain competition with the growing prosperity 
 of the manufactories. This movement for confederation to- 
 day extends over all Germany and through all classes of its 
 people. The associations that in 1850 numbered only a half- 
 
 + Pull accounts of these and all other kinds of co-operative societies will be 
 given in other works, which Messrs. Leypoldt <fc Holt now have iD active prepara- 
 tion. 
 
1 6 Co-operative Stores. 
 
 dozen, now have multiplied into more than a thousand, with 
 not less than 350,000 members, an annual business of at 
 least eighty-five million thalers* ($59,500,000), and nearly 
 5,500,000 thalers ($3,850,000) as private property. 
 
 The co-operative store societies began to appear in Germany 
 still later than the credit and labor associations. The factory 
 employees, who were those mainly interested in their formation, 
 had little experience of societies in 1850. Indeed, owing to 
 the comparative novelty of their branch of industry, no con- 
 sciousness of joint interests had made itself felt in many districts. 
 
 It was not till the birth of the educational societies that a 
 change took place, and the so-called working classes were 
 drawn into it. These educational societies s sprang up as late' as 
 i860, when the apathy consequent upon the political reaction 
 began to yield to a stronger interest in public matters. This ex- 
 plains the fact that, in his yearly report for i860, which appeared 
 in 1 86 1, Schultze-Delitzsch was able to show, among associa- 
 tions founded on self-help, but fourteen co-operative store socie- 
 ties, compared with 116 societies for wholesale purchase of raw 
 materials, and 257 societies for cash advances. Among these 
 fourteen, the largest were the company founded at Hamburg in 
 '1856 for distributing the necessaries of life, and the co-operative 
 store founded at Zurich in 1852. The latter, made up of all 
 callings, with 2,400 shares of three francs (less than sixty 
 cents), had in i860, through its seven stores and a bakery of 
 its own, a sale of 180,000 thalers ($126,000). The one in 
 Hamburg, besides which one yet older has existed since 1852, 
 commanded through its seven places of sale, a business of 70,000 
 thalers ($49,000). One that Schultze founded in Delitzsch 
 during 1852, met with no success in that small agricultural 
 village, and died out in 1,861. The rest mentioned in the 
 above report were either at that time in process of formation, 
 or shortly after were abandoned, before they had produced any 
 noteworthy results. There arose in 1861 and 1862, principally 
 at the suggestion of C. Riepen of Kiel, quite a troop of co- 
 operative store societies in Holstein — namely, at Kiel, Neu- 
 munster, Neustadt, Oldesloe, Itzehoe, and Preetz. That at Kiel 
 acquired in the first six months of its existence a business of 
 
 * The Thaler equals about 70 cents, specie. 
 
Formation in Germany. 17 
 
 20,000 thalers ($14,000); and the united societies of Holstein, 
 assembled by deputies on June 29, 1862, in Neumunster, 
 under the presidency of Riepen. The association movement, 
 however, received a powerful check from the agitations of 
 Ferdinand Lassalle, begun early in 1863. His representations 
 concerning the possibility of ameliorating the condition of the 
 working classes by means of State institutions for relief, brought 
 into the societies everywhere questions of economy whose 
 thorough discussion led to practical arrangements which, in 
 opposition to Lassalle, but agreeable to the view of Schultze, 
 were founded on the self-help of those assisted. Thus in 
 Berlin, a large number of co-operative societies sprung out of 
 those suggestions which, afterwards published as the working- 
 man's catechism, Schultze had made to the societies of laborers 
 in that city. At present there are in Berlin about twenty co- 
 operative store societies, which together have a monthly sale of 
 12 to 16,000 thalers. Nearly all of the Berlin societies are 
 closely united, and form by themselves a sort of sub-association 
 in the great union of German associations. In 1863 a yet 
 greater number of co-operative store societies were formed on 
 the Lower Rhine and the neighboring portion of Westphalia. 
 Two were formed as early as 1862 among the Elderfield dyers 
 and weavers. At the suggestion of the Elderfield society, the 
 delegates of eleven co-operative store societies celebrated their 
 society day on the 3d of" October, 1863, in Barmen, the very 
 place where, but a few days previous, Lassalle had made his 
 fruitless attempts at agitation. During the spring and autumn 
 of 1864 such festivals were again observed, and in the summer 
 of that year it was estimated that the sixteen societies of 
 Elderfield, Cologne, Keilbeck, Witten, Duisburg, Barmen, 
 Dusseldorf, Wilhelmsthal, Ludenscheid, Horde, and Suchteln, 
 together numbered 4, 000 members, with 8, 000 thalers in their 
 own right, and were doing an annual business of 160,000 
 thalers ($112,000). Besides the Rhenish- Westphalian and 
 Berlin societies, societies in the same year were established in 
 Celle, Chemnitz, Finsterwalde, Dirschau, Kotzenau, Konigs- 
 htttte in Upper Silesia, Frankenberg, Linz in Austria, 
 Vienna, and elsewhere. Respecting the endeavor to form 
 these societies now displaying itself on all sides, Shultze was 
 able, in his report for 1863, to estimate the number already 
 
1 8 Co-operative Stores. 
 
 existing in Germany at two hundred, sixty-six of which were 
 expressly referred to in his report. In the course of the next 
 year, new ones arose in Magdeburg, Mayence, Munich, 
 Darmstadt, Neustadt-Magdeburg, and Stuttgart ; while those 
 formed the year before, further developed themselves. In 
 1865 they multiplied most rapidly in the south of Germany, — 
 in Wurtemberg alone twelve, and an equal number in Baden, 
 Hesse, and Nassau. The report' for 1865 mentioned 157, 
 where in 1864 were 98, and published the balance-sheets of 34. 
 The aggregate of these, many of them quite small, amounted 
 to 6,647 members, 24,993 thalers (about $17,500) in their 
 own right, and a trade of 308,461 thalers (about $216,000). 
 The report added that the political disturbances of the summer 
 of 1866 had prevented a thorough canvass for facts. We are 
 notwithstanding able to ascertain that both the store and the 
 credit societies took a sturdy stand in the period alluded to, 
 and in many places, by reducing prices as much as possible, 
 considerably alleviated the distress of the laborers. 
 
 It would be hardly worth while to attempt a definite state- 
 ment of the statistics of these societies, which are growing so 
 rapidly ; yet it may not be far from the truth to set them down 
 as three or four hundred, and their members at forty or fifty 
 thousand. The one at Zurich continues to be the largest, 
 doing, in 1864, at its eighteen stores, a business of 328,063 
 thalers, and selling at its bakery during the same year 
 1,265,640 pounds of bread. Besides its fund of 42,669 tha- 
 lers, the real estate of the company is valued at 165,955 thalers, 
 on which the bakery and a vast central store are situated. 
 Next comes the " First Co-operative Society for Civil Officers 
 of Vienna," with a business in its three stores, during 1864, 
 of 103,020 thalers; and next to this is the Hamburg com- 
 pany, already mentioned, for supplying the necessaries of 
 life, which sold, during 1865, goods worth 75,602 thalers to 
 its 1,916 members. Among the other societies known to us, 
 whose trade exceeds that of the largest retail dealers (probably 
 about 2,000 thalers a month), are those of Celle in Hanover, 
 Dusseldorf, Duisburg, Kiel, Konigshutte, Rosdzin in Upper 
 Silesia, Magdeburg, Mayence, and Munich. The one in 
 Mayence, at present most nearly corresponds to its English 
 prototypes. Established in 1863, it now works with three. 
 
Nature and Object in Germany. icj 
 
 stores, has 436 members, and the receipts of the first six 
 months of 1866 (41,360 florins)* exceeded the total receipts 
 of 1865 (39,165 florins). During the first half-year, the so- 
 ciety declared a dividend of 1 if per cent, on the receipts, 
 although it put by a reserve of 647 florins, in view of the 
 troubled times. 
 
 CHAPTER IV. 
 
 Nature and Object of Co-operative Store Societies in 
 Germany. 
 
 THERE are three essential differences between the English 
 societies and those of Germany. In the first place, those 
 of Germany seldom carry on a public business, but 
 confine their trading to their own members. Since 1859, 
 the only exception among the larger societies has been that of 
 Zurich ; the others have simply aimed to provide for their 
 own consumption more advantageously than the regular 
 retail trade allowed, and not to seek gain by stock in a joint 
 retail business of their own. In the second place, the ab- 
 stemiousness of the Rochdale Pioneers in allowing their pro- 
 fits to accumulate into dividends, is too severe for most of the 
 German societies. The largest of them, as those at Zurich, 
 Hamburg, Munich, Kiel, Dusseldorf, and Linz, sell according 
 to regulation at the easiest price : the others, as those of May- 
 ence and Duisburg, declare their dividends immediately after 
 the settling of accounts. It is only of late that some of the 
 smaller societies have given signs of retaining the dividends 
 longer, for the purpose of gaining general capital and enlarg- 
 ing the sphere of their business. In the third place, there is 
 among the German societies, not only trade with the company, 
 but also the so-called ticket trade, markengeschafle ; that is, 
 the societies make agreements with certain tradesmen that they 
 shall sell to the members. The name arises from the mem- 
 ber's identifying himself generally by a ticket, with which he 
 
 * The florin i9 worth about 40 cents, specie. 
 
20 Co-operative Stores. 
 
 pays for the article purchased, and on which a certain stipu- 
 lated discount is made in favor of the society or the individual 
 member. The general society in Berlin, the society at Frei- 
 burg in Breisgau, and that at Stuttgart, do a large business 
 through these tickets, the first-named during 1865 selling to 
 the value of 14,694 thalers. The large societies at Zurich, 
 Hamburg, Vienna, and Munich, as far as we are acquainted 
 with them, have not engaged in this sort of trading ; and it 
 may be said in general, that the ticket-trading forms no such 
 bond between the members as grows out of owning a store of 
 their own and supplies of their own, and the mutual attendant 
 risk. 
 
 With respect to the classes participating in the German socie- 
 ties, it may be stated, that, while the societies were gotten up al- 
 most wholly by workmen or for them, they count among their 
 members many from other classes, especially from the class of 
 civil officers. In No. 1 5 of "The Brotherhood of the Future" for 
 1865 it is stated, with reference to the Munich society, that to 
 the astonishment of its seven founders, the society after the first 
 three months numbered 1000 members, — among them all the 
 civil officials, many military officers and nobles, few laborers, 
 and at most but a half-dozen other citizens. The Dusseldor. 
 society, also, reports a similar participation of the civil officers, 
 containing among its members, post-office officials, military 
 officers, and even artists. It is the same with the society at 
 Mayence, and at Lintz in Austria, where the entire garrisons 
 take part in them. Concerning the Co-operative store for the 
 Germans in St. Petersburg,. "The Brotherhood of the Future," 
 in No. 18 for 1865, remarks as follows: "The store has found 
 its heartiest friends and patrons among the German families of 
 the highest distinction. One of the members of its active 
 committee is a General. German ladies come in their carriages 
 to the store, in order to select their purchases themselves." 
 On the other hand, the majority of co-operative store societies 
 in Berlin are composed of workmen (as "The Bee" and "The 
 Trial," chiefly made up of machinists, and "Self-Help," made 
 up of cabinet-makers). The same 'is true of'those in Upper 
 Silesia, Elberfeld, Duisburg, and the smaller manufactories on 
 the Lower Rhine. The participation of all classes in the so- 
 cieties, is a proof that a necessity is felt throughout all Germany 
 
Nature and Object in Germany. 21 
 
 for a reform in the retail trade, and that no social pique or 
 pride will be permitted to stand in the way of satisfying this 
 general need. 
 
 On this account, let us observe the faults of the German 
 retail trade, and their relation to the co-operative store. The 
 number of those engaged in this branch of industry is in an 
 inverse ratio to those who engage in it with judicious economy, 
 yet it must be confessed that the retail dealers are led to such 
 imprudent folly solely by the public — the consumers, who 
 urgently insist upon it. We have already shown in the chapter 
 on the English stores (Chap. II. ) to what a degree the retail 
 trade in England has been drawn from a solid basis through 
 the practice of giving credit. The direct consequence of this 
 habit is a disproportion between receipts and expenses in the 
 consumer's household. This occasions want of punctuality 
 in paying the bills, and the tradesman, in want of money, 
 falls back upon the wholesale dealers, who charge a premium 
 on the credited goods. The gain of the wholesale dealer from 
 the embarrassment of the retail dealer, the latter tries to get 
 back from his customers, and so on both sides legitimate busi- 
 ness degenerates into extortion. In spite of all this, how- 
 ever, |" account-books" continue in favor, partly in conse- 
 quence of having no system in the household, partly out 
 of convenience or habit ; and a request on the part of the 
 tradesman for immediate payment, is taken as an almost in- 
 sulting want of confidence. Aside from this evil, the buyers 
 generally know little of the goods they buy, arid usually judge 
 by external superfluities — as, for instance, by the color ; and 
 why then should not merchants, in danger of having the gen- 
 uine articles on their hands by reason of a slight dulness in the 
 color, so far accommodate the public as to color their vinegar, 
 their coifee, and their butter ? The public cares more for cheap- 
 ness than quality, disregarding the fact that the articles abso- 
 lutely most expensive, are relatively the most reasonable ; and 
 the merchant more and more exerts himself to make goods 
 appear cheap by having their appearance better than their actual 
 quality. More than this, the public is not accustomed to fixed 
 prices, and many a housekeeper thinks she has done great 
 things in the way of economy when she has made out to save a 
 few farthings from the extra penny that the merchant, aware 
 
22 Co-operative S lores. 
 
 of her haggling propensity, had beforehand added to the price. 
 The bestowing of fees, likewise, has much to do with the busi- 
 ness, and servants are made careless of the interest of their 
 employers, through small presents which they expect and re- 
 ceive from the retail dealers, whether with or without the con- 
 sent of their employers. The instability produced by all these 
 things induces persons of shiftless character to try their fortune 
 at it. With the exception of liquor-dealing, there is scarcely 
 a means of subsistence .in which so many seek employment, 
 merely because they have not found success in pursuits de- 
 manding a more stable management, and hope in this, by low 
 trickery rather than honorable exertions, to eke out a liveli- 
 hood. 
 
 Even with the best resolutions, an individual customer can 
 do little to rectify this defect in the retail business. The custom- 
 er who pays cash, rarely, according to my experience, receives 
 a proper discount ; for the tradesman, whose whole business 
 is conducted on a basis of credit, makes it a rule to make the 
 good customers pay for bad debts. In the same way, the 
 customer who enters a store where cheapening is common, 
 though he himself may have no purpose to cheapen, seldom 
 fares better than others, since the seller cannot help supposing, 
 when he names the price, that an attempt will be made to 
 beat him down ; and for the same reason the tradesman, most 
 of whose customers ask for cheap goods, even- though of in- 
 ferior quality, cannot keep on hand a special assortment for 
 those few customers who trade sensibly. 
 
 But the aspect of things is entirely changed as soon as some 
 of the consumers determine to apply the principle of co-opera- 
 tion to the abatement of these irregularities, and unite them- 
 selves into a co-operative society for carrying out a reform in 
 the retail trade. In a society of this kind, not only do its mem- 
 bers make their equitable demands upon the tradesman with 
 a new efficacy, but they, on the other hand, fortify themselves in 
 the determination, as customers, to manage their consumption 
 with increased foresight. ' This general movement secures 
 to the individual the advantages of the new order of things, 
 and the obviousness of them prevents a relapse into the old 
 bad habits as soon as the first impulse of determination has 
 become exhausted. 
 
Nature and Object in Germany. 23 
 
 While now the formation of co-operative stores is regarded 
 in Germany as a subject concerning all classes of the' people, 
 we ought not to undervalue their great and peculiar importance 
 to the working classes. It is no question of whether they 
 shall have goods of a better quality, that is getting tested : one 
 cannot help but see that the question whether they shall deny 
 themselves credit in the purchase of the day's necessaries, is 
 one on whose practical solution all further efforts for the 
 improvement of their domestic or social condition entirely 
 depend. Abundant proof of this is found in the separate 
 manufactories of Upper Silesia, Westphalia, and the Lower 
 Rhine country, where the claims of the shopkeeper on the 
 wages of the workman, occasioned by the credit system, serve 
 as the prolific source of both domestic and moral disorganiza- 
 tion. The practice of cash payment, however, while it brings 
 about an accurate proportion between receipts and expenses, 
 also enables the artisan to save up something against the fluc- 
 tuations of wages, and cheers him with the hope of rising by- 
 and-by into an independent position in the State and in society. 
 
 In the last chapter we saw how in Germany the educational 
 societies paved the way for the erection of the co-operative stores. 
 It has been the lot of the latter to requite this service by being the 
 cause of the formation ofmoreofthe former. Since co-operative 
 societies touch on the questions most nearly affecting all men, 
 they are eminently adapted to awaken a spirit of association in 
 places- barren of united efforts of any kind. Nothing is easier 
 than to join to the general plan of a c<3-operative store society 
 projects of a different character. It is not long, for example, 
 before a reading-room is added in the neighborhood of the 
 store, next a library, then a piano, and all the appliances of 
 an educational society. As the development progresses, it 
 will gradually bring moral power capable of higher ends, and 
 finally culminate in productive associations, or societies for 
 promoting industry in its various departments. 
 
 The path thither is certainly long and toilsome. What we 
 call the "Social Question" cannot be solved by the formulas 
 of the philosopher or the enactments of the legislator, but 
 solely by the earnest united endeavors of mankind. What, 
 indeed, is this ' ' Social Question" but the ever-advancing culture 
 of human society ? 
 
CHAPTER V. 
 Establishment of a Co-operative Store. 
 
 THE best time to open a co-operative store seems to be the 
 latter end of Autumn, since at that time the institution 
 can prove its efficiency in the laying in of winter supplies, 
 and during the succeeding months trade is especially lively. 
 
 Before its establishment, there should properly be a public 
 meeting, in which the nature and purpose of such an associa- 
 tion may be brought plainly to view. 
 
 At this meeting some such preamble as this should be 
 adopted: "The undersigned propose to establish a co-oper- 
 ative store for this locality. Agreeably to this end, and accord- 
 ing to the well-approved principles of the founders of these 
 organizations, we undertake to provide our households with all 
 necessaries, of good quality, and by just measure and weight ; 
 and from the profits of the business to pay a quarterly dividend 
 to the buyers, in proportion to the amount of each one's trade 
 with the store. A committee shall be chosen to report a set of 
 rules (at some stated time and place), after which a complete 
 statement of the designs and character of the society will be 
 given. All persons who are interested in the foregoing ob- 
 jects, and especially the honored women of our households, 
 are urgently invited to be present at the meeting. " 
 
 The women cannot be too early interested in the under- 
 taking, since its object is so intimately related to their 
 especial domain — house-keeping. It is best that they should 
 understand thoroughly the principles on which the society is 
 founded, and that in its infancy it should be made their 
 peculiar charge, in order that after the opening of the store 
 they may be the more ready to do away with the old system of 
 orders and petty charges. Housewives will commonly be 
 found to be strongly conservative with regard to all innovations 
 in their domestic economy, especially if these originate with 
 
How to Start Them. 25 
 
 their husbands.* On the contrary, if the wives are once 
 interested in the objects of the society, one can count on their 
 willingness to make light of all those difficulties which are 
 apt to stand in the way of such associations at the outset. 
 Often, from skeptics they become enthusiasts for the under- 
 taking, laboring with unwearied zeal among their friends and 
 acquaintances for its success. 
 
 There will be no lack of customers for the store, not only 
 from the working class, but among all persons who are 
 dependent on a fixed income, and who consequently are glad 
 of anything which will make their expenses lighter. The 
 invitations to such meetings should be circulated not only 
 through the newspapers, but also in all places of resort, and 
 in offices and counting-rooms. Since the manufacturers, 
 when they come to understand its bearing on the improvement 
 of the workingman's condition, must necessarily take a ; lively 
 interest in the project, and since they have it in their power to 
 help its development in many ways, it is best to extend the 
 invitation to each one of them in person. Many co-operative 
 stores owe their existence to the suggestion of manufacturers. 
 In the educated classes there is to be found much aid and 
 encouragement, not so much from motives of self-interest in 
 the improved condition of the laborer, as from pure benevo- 
 lence ; and the minister, the teacher, the physician, and the 
 lawyer are found to be firm friends of such associations. But 
 little aid is to be expected from independent mechanics, hotel- 
 keepers, &c. , in the smaller towns, since these are likely to be 
 in league with the competitors of the store, the grocers, against 
 it. In like manner, the small tradesmen, although they may 
 have no direct personal interest in opposition to it, yet are 
 apt to oppose such associations in the abstract, as an encroach- 
 ment on the rights of trade, especially as the principles and 
 methods of the co-operative store make such a contrast with 
 business as ordinarily carried on. 
 
 Fortunately, it will always be found that a community having 
 already in operation other similar societies, for education, aid 
 to the sick, &c, can easily be interested in the establishment 
 
 * Our author, it must Tie remembered, is speaking of Ms German country- 
 women. Can any one suspect such an imputation to be true of American house- 
 pers? 
 
e6 , Co-operative Stores. 
 
 of a co-operative store ; for in that case you have a body of 
 men who are schooled to working in concert, and understand 
 the common interest which unites them. 
 
 Two of the persons calling the meeting should conduct it, 
 one of them taking the chair, and one giving the statement 
 concerning the object and intention of the co-operative store. 
 In this statement, the foregoing chapters will be found useful, 
 with such additions as the particular time and place may 
 demand. The first and second chapters are particularly 
 applicable to a laboring community : the third and fourth, are 
 more suited to a mixed population. 
 
 After the general statement, an opportunity must be given for 
 the correction of errors, the clearing up of particular points, 
 and so on. It often happens that there will be tradesmen 
 present, to 'speak against the proposed object. After listening 
 to what they have to say, attention must be called to the fact, 
 that the co-operative store can hope to prosper only by 
 managing its business with more skill and prudence than shop- 
 keepers generally have shown. Then those tradesmen who 
 allow the success of the co-operative store to serve as a spur 
 to their own enterprise, would have little to fear from it, since 
 a single head in any business can get on better, as a rule, than 
 a many-headed society. Those, on the other hand, who go 
 along in the old way without improvement, have no right to 
 complain if they must make way for the march of Progress ; — 
 any more than copyists had, in their day, when the printing- 
 press appeared ; or spinners, who had to yield to the loom ; or 
 wagoners, when the railroad interfered with them. 
 
 Next comes the selection of a committee to form rules for 
 the guidance of the society. This should not be composed 
 of too many persons, lest it prove unwieldy, and make their 
 work slower and harder. It is only essential that it should 
 have a representative from each of those branches of employ- 
 ment which are most interested in the meeting, and whose 
 participation in the society can be relied on ; and that these 
 representatives should be men of standing and influence 
 among their fellows. From five to seven persons will be 
 amply sufficient. The participation in the voting for this 
 committee cannot of course be considered as binding a person 
 to join the co-operative society when established. 
 
Haw to Start Them. 27 
 
 The next chapter contains more minute directions with re- 
 gard to the formation of rules. The consideration of these, 
 and whatever other deliberations are necessary, should follow 
 as quickly as possible after the first meeting, in order to "strike 
 while the iron's hot. " At the next following meeting ' ' for the 
 purpose of establishing a co-operative store," there should be 
 some such statement as this : "In consequence of the gen- 
 eral interest which has been shown in the project of establishing 
 a co-operative store for this place, a committee was appointed at 
 
 the meeting which was held at , on the — th of -. , to 
 
 report a set of rules for its direction. This report declares the 
 objects of the proposed society to be — (here that portion of 
 the report should be read. ) All persons who are interested in 
 
 the matter, men and women, are requested to assemble at , 
 
 on , for the purpose of adopting rules and electing officers 
 
 for the society. " 
 
 At this meeting the rules should be read by one of the com- 
 mittee. It is best to have as short a discussion as possible 
 with regard to officers, and to bring it at once to a vote. Then 
 comes the voting on the adoption of the rules, participation in 
 which is not to be considered as binding any one to join the 
 society. The object of all this is not so much to alter the 
 form of the rules, as to have their contents well understood by 
 every one present. Those having reference to the duties of the 
 members especially, cannot be too clearly defined and fami- 
 liarized. 
 
 After the adoption of the rules, an invitation should be given 
 to all present to enroll themselves and pay the first assess- 
 ment. 
 
 Finally, the committee who drew up the rules should be 
 charged with the duty of admitting new members, receiving the 
 dues, printing the rules, and attending to other necessary 
 matters. When, after a time, the persons who have joined the 
 society come to ,be better known, those rules are to be carried 
 out which provide for the election of a new committee at a 
 general meeting for the specified time. 
 
 Soon after the meeting at which the rules were adopted, an 
 announcement of some such kind as the following should be 
 published : 
 
 The recently organized co-operative society has a membership 
 
28 
 
 Co-operative Stores. 
 
 of (here insert the number) households. Its object is as 
 
 follows : (Here that part of the rules may be quoted which re- 
 fers to this. ) The obligation of the members is confined to a 
 
 cash payment of (quoting the rules as to this. ) The 
 
 society proposes to carry on a trade in groceries, produce, &c, ' 
 through its own stores, and is prepared besides to make such 
 contracts with other parties as shall promise special advantage 
 to its members. 
 
 Applications for membership will be received at [time 
 
 and place], where also copies of the rules may be obtained at 
 
 [price] apiece. 
 
 [Signed], Provisional Committee. 
 
 [Names.] 
 
 The rules are to be printed in an octavo book, which will 
 serve as each member's account-book, the rules occupying 
 some six leaves. One or two of the leaves should be headed, 
 " Receipts for membership payments," and the page should 
 be divided into about eighteen divisions, on which are to be 
 pasted the receipts for membership payments, referred to in the 
 chapter concerning the keeping of the books and accounts, 
 Section I. , B. The four or five remaining leaves of the book 
 are to be ruled, and filled in with entries of the shares, and 
 the amounts credited from the account of profits mentioned in 
 the above chapter, Section III. , 4, and also with entries of any 
 money drawn out by the member, according to the following 
 table: 
 
 Date. 
 
 Dr. 
 
 Cr. 
 
 1 st April. 
 1 st July. 
 20th Aug. 
 
 Amount of Shares. . 
 Interest to be added 
 
 Dividends 
 
 Amount of Shares . . 
 Interest to be added 
 
 Dividends 
 
 Amount drawn out . 
 
 These account-books are to be given free to members, and 
 sold to others at a moderate price ; the proceeds being entered 
 
Constitution and Laws. 29 
 
 on the credit side of the expense account and the debtor 
 side of the cash account. On the debtor side of the expense 
 account, however, and the credit side of the cash account, is 
 to be entered the expense of getting up these books, as well 
 as all outlay up to the time of opening business, for publica- 
 tion, advertisements, &c. 
 
 Opportunity should be offered to the public as often as 
 possible to register their names in the roll of members, and to 
 pay in the dues. It is especially to be seen to, that, so long 
 as the society has no store of its own, the roll should be kept 
 open in the stores of other kindred societies, and dues received 
 there at stated times. 
 
 CHAPTER VI. 
 Constitution and Laws of Co-operative Store Societies. 
 
 BEFORE we minutely consider the subject of the formation 
 of rules, there is a preliminary question which demands 
 our attention — whether the sale of goods should be 
 exclusively to members of the society, or should be general ?, 
 
 In the case of such societies as have in view, not so much 
 the accumulation of capital, as to secure a low price for the 
 necessaries of life, this question is at once answered. For 
 to sell to every person at a price which would give no profit to 
 the society, would be simply making a present to the public, 
 •without any return. The great Zurich co-operative store has 
 pursued this plan since 1859, according to its rule to "sell 
 to every one at a low price," but to just that extent it has 
 become no longer an association for mutual advantage, but 
 a charitable institution for cheapening the necessaries of life. 
 Especially does it take that character, since it has, for some 
 years, paid back to the 2,350 stockholders their original 
 payment of three francs, with two francs interest, out of the 
 profits accumulated in spite of the low selling-prices ; and 
 has promised, besides, that so soon as the property of the 
 society amounts to 200,000 francs, the interest of five per cent. 
 
30 Co-operative Stores. 
 
 shall be wholly applied to the benefit of the members. Under 
 these circumstances, we can hardly give more than a general 
 answer to the question of exclusive or general sale, and must 
 allow it to be decided according to the exigencies of each 
 particular case. 
 
 If one argues in favor of general sales on the ground of the 
 greater profit to each member, I answer that it seems to me 
 very questionable whether the mere inducement of a profita- 
 ble investment for money could prove universally effective in 
 awakening an interest in the establishment of co-operative 
 stores. Hitherto these societies (as has been shown in Chapter 
 IV), in Germany, at least, have been associations for saving 
 expense, and not, as in England, for making money. In 
 Germany, persons have joined them in order to share the 
 advantages of the society in lessening their daily expenses, 
 and not in order to invest capital in a profitable trade. This 
 refers especially to co-operative store societies among the 
 wealthier classes, without some aid from whose business 
 experience, and some effort on whose part to instruct the 
 German working-men in the principles and duties of such 
 associations, they could scarcely, in many instances, have been 
 established at all. 
 
 But aside from the question, whether the greater profits 
 accruing to each member, as a return for capital invested in 
 the society, would prove much of an inducement for joining 
 it, we are to consider that there has been much error with 
 regard to the increase of profits by making the sale general. 
 The idea of this increase goes on the assumption, that with 
 sales to the public at large, each member would receive divi- 
 dends not only on the profits arising from the consumption of 
 the society, but also from the sale to all other persons. But it 
 must not be forgotten, that an extended custom can be ex- 
 pected only on one of two conditions — either that prices are kept 
 bdlow the . prices at other stores, and consequently the profits 
 proportionately lessened, -or that outside customers also are 
 allowed to receive a share of the apportioned profits according 
 to the amount of their purchases. In one or the other of 
 these ways an inducement must be offered to outside customers 
 to buy at the society's counter rather than at other stores, and 
 to submit to the terms of the society — as for instance, to the 
 
Constitution and Laws. 31 
 
 requirement of cash-payments. In England, so far as we are 
 informed, the outside customers also receive dividend-tickets. " 
 The idea that these are different in any respect from those 
 of members — as for instance, in calling for a smaller share of 
 the profits — appears to be erroneous ; for it is just as impos- 
 sible to have two sorts of dividend-tickets at the same counter, 
 as to have two prices for each article sold there. * 
 
 A truer view of the result of sales to the general public is 
 gained, if we look for the individual member's larger profit, in 
 the increased trade of the store resulting from the general sale, 
 and consequently its increased profits. It is no doubt true 
 that the obligations arising from membership prevent many 
 from bringing their custom to the store. But this will not be 
 found to be a serious difficulty, if the joining of new members 
 be facilitated as much as possible by making the payments 
 light, doing away with all entrance fees, and admitting per- 
 sons without any unnecessary forms. It must be remem- 
 bered, too, that the restriction of the sale to members does not 
 at all necessitate that the trade of the store shall be limited to 
 the amount consumed by members. The society, it is true, 
 delivers the articles only to members, but it is none of its con- 
 cern into whose hands they afterwards come. The result is, 
 that, in many societies, the members get things from the store 
 for such persons as from one cause or another prefer not to 
 join the society, or who choose to make trial of the articles 
 sold there, before joining. Members are particularly inclined 
 to get things in this way, if they are allowed to receive divi- 
 dends on these purchases as well as on those for their own use. 
 But admitting that a general sale will increase the amount of 
 trade, and thus hold out prospects for larger profits, it must be 
 borne in mind that this possible or even probable advantage is 
 almost counteracted by the increased responsibility of members 
 to the society. It cannot be denied that the portion of the 
 trade which is with outside customers is less steady than that 
 with members. The greater the proportion of outside trade, the 
 harder will it be for the managers to keep in view the harmony 
 of interests between buyer and seller, and the easier will it 
 
 * This remark is open to question. There seems to be nothing to prevent the 
 issae of two kinds of " tin-tickets," one kind to receive a smaller percentage of 
 dividend than the other. ' 
 
32 Co-operative Stores. 
 
 be for bad methods of management to creep in. In con- 
 sideration of all these points, the general convention of so- 
 cieties at Stetten answered this question as follows : "Although 
 the trade with outside customers increases the business of the 
 store, yet in all cases it makes the risk of each individual mem- 
 ber greater, and requires very skilful management. Besides 
 the greater risk, there is also to be considered the possibility of 
 an increased outlay of capital from each member. If the 
 plan of general trade has anything more in view than the mere 
 object of disposing of the stock of goods on hand, then the 
 larger sale necessitates a greater capital. Consequently the 
 share of each member must be greater. Then the question 
 arises whether this necessity will not narrow the circle of mem- 
 bers, and so make the obligations of each individual heavier." 
 
 Consequently, we will not go on to discuss more particularly 
 those portions of the rules which relate to a general trade, since 
 this treatise is specially designed for the use of newly-estab- 
 lished societies ; but the remainder of this chapter will be de- 
 voted to such stores as propose to have dealings only with 
 members. 
 
 We have thought it the best plan, in order that the whole 
 matter may be brought out in the clearest light, and that the 
 questions may he most easily understood, and their consider- 
 ation be most useful to persons who are called upon to draw 
 up rules for a society, to point our discussions to a particular 
 set of rules, which will be given in paragraphs, and to whose 
 formation we will suppose ourselves called. We have drawn 
 them up specially for the purpose, instead of taking the actual 
 rules of any existing society, because in any such set of rules 
 there are more or less special points, which only relate to those 
 particular societies, and would therefore be out of place; here. 
 
 In general principles, the rules of the larger societies have 
 been taken as a model, in the annexed scheme; but it is 
 made shorter than most of them, by leaving out whatever is 
 not essential to the nature of a society, as well as all specifica- 
 tions which are only applicable to a particular business, with 
 its modifications as governed by circumstances. 
 
 The shorter and more to the point a rule is, the more cer- 
 tain it is to be understood and kept in mind by the members. 
 Of course,, the annexed scheme does not claim to be a perfect 
 
Constitution and Laws. 
 
 33 
 
 model, or the only scheme which could be successful. It is 
 easy to. foresee that no single society will adopt it without alter- 
 ations ; yet we may be permitted to warn them against changing 
 it, merely for the sake of peculiarity. The development of the 
 society will furnish enough peculiarities in the rules, from day 
 to day : at its establishment, when it is impossible to foresee 
 just the course of this development, it is best to make the rules 
 as general as possible, to prevent future expense in the print- 
 ing of new rule-books. 
 
 This set of rules treats— in section i, of the object of the 
 society ; in sections 2 to 8, of the privileges of members ; in 
 sections 9 to 19, of the officers and management; in section 
 20, of the dissolution of the society. 
 
 § 1. Object. — The Co-operative Store Society has for 
 
 its object, to furnish its members, for the use of their house- 
 holds, with the necessaries of life, unadulterated and of good 
 quality, for immediate cash-payment ; and from the profits of this 
 sale to accumulate capital for each individual member. 
 
 This form leaves the broadest freedom in every direction for 
 the development of the society, and sets only such limits to 
 the business of the store, as are essential to its very nature. 
 Liberty is therefore given to the society to satisfy all the actual 
 needs of its members, as well in the preparation and putting 
 up of articles, as in their mere distribution. This distribution 
 can be managed either by the ordinary methods, or by the so- 
 called ticket-method. 
 
 The action of the Society will now be set forth in five par- 
 ticulars. 
 
 A. The society shall only furnish goods to its members. 
 
 The* chief reasons for this have already been given. Accord- 
 ingly, goods must be delivered from the store only to persons 
 who are known to belong to a member's household, or can 
 identify themselves as such. 
 
 B. The object of the society is to furnish goods for house- 
 hold use. 
 
 The carrying on of a wholesale trade is therefore excluded. 
 Such a trade would lead the society into speculation, and 
 moreover establish an unjust relation between the participation 
 
34 Co-operative Stores. 
 
 iif the profits and the responsibility of single members, accord- 
 ing to their respective retail or wholesale transactions with the 
 store. 
 
 The exclusion of wholesale trade does not at all imply that 
 individual members shall be prevented from buying as largely 
 as they please, or that their purchases must be traced up, to 
 ascertain whether they are used in their own household ; but 
 merely that they shall buy at retail price, and not at wholesale 
 price. In this way the proper limits will b'e set to the business. 
 It does not follow from this restriction, that there shall not be 
 a discount, where considerable quantities are purchased, pro- 
 portionate to the trouble saved to the seller — as, for example, in 
 buying a loaf of sugar, or a box of cigars, and so on. 
 
 C. The society shall sell unadulterated articles of good 
 quality. 
 
 Unadulterated articles are such as have no admixture of 
 foreign substances for the purpose of deceiving the public as 
 to their nature. From the prohibition to sell adulterated arti- 
 cles, follows the duty of the society to truthfully inform the 
 public as to the origin, condition, &c, of all their goods. By 
 articles of good quality, we are to understand such as are what 
 they ought to be, considering their price— as, for example, 
 pure oil, matches that will ' ' go, " sound vegetables, &c. 
 
 D. The society can only sell for immediate cash-payment. 
 As we have shown in a former chapter, in comparing the 
 
 Co-operative Stores of England and Germany, cash-payment 
 is the life of the institution. Without it, such a store is not 
 worth keeping up ; the business had better be left to the small 
 dealers who had it before. This cash-payment,, moreover, 
 admits of no exceptions. Once allow a man to take a few 
 cents' worth of goods from the counter without paying down 
 the cash, and there is no- limit to the crediting. For this 
 reason we must declare ourselves entirely opposed to the prac- 
 tice of giving a customer credit up to a certain amount of his 
 ' stock. 
 
 Not to mention the fact that a part of the capital of the 
 society is in this way made to lie idle, the least crediting 
 makes all check on the storekeeper impossible, and prevents 
 any exact keeping of the accounts. Many co-operative stores, 
 for lack of attention to this point, have gone to the ground, 
 
Constitution and Laws. ■ 35 
 
 and many more for the same cause are leading a sickly life. 
 The General Convention of Societies at Stettin, in 1865, on 
 motion of the delegate from the society at Witten, which 
 soon after died out in consequence of this credit-system, de- 
 clared as follows : " 1st. That the credit system in co-operative 
 stores already is a great hindrance to that progress in house- 
 hold thrift, which these associations must everywhere labor for 
 by doing away with the practice of trusting ; 2d. That it in- 
 creases the labor of managing the business, and makes prices 
 higher, as well as absorbs the profits through the unavoidable 
 losses it. occasions, and threatens the very existence of the 
 society ; 3d. That, by overstepping the established amount of 
 credit, it gives rise to trouble and dissension in the manage- 
 ment, and, by the refusal of larger or longer credit, thus caus- 
 ing complaints, it breeds discord and ill-will among the mem- 
 bers. The facts above stated indicate that through these 
 direct and indirect evils of the credit-system, the business pros- 
 perity of the society is lost, and all harmony, and happiness, 
 and enthusiasm is destroyed both in the management and 
 among the members, and consequently the unfolding of the 
 society to greater and higher attainments is stung in the bud. 
 Therefore the General Convention hereby warns the Co-opera- 
 tive Store Societies against the credit system, and urges the 
 adoption, wherever it is not now in force, of the cash-payment 
 system, and the altering of all provisions in the rules which 
 are inconsistent with it." 
 
 E. The Co-operative Store Society has for an object, to_ac- 
 cumulate capital for each individual member, out of the profits 
 gained by the sale of necessaries. 
 
 This provides 'that the advantage of the store shall not come 
 to the members in the form of the lowest possible price of all 
 articles purchased, but, as in the English societies, the divi- 
 dends, which are paid in by the members, shall be allowed to. 
 accumulate after a certain amount is reached. As was stated 
 in the chapter concerning the nature of these societies in Ger- 
 many, many of the larger ones among them do not act in 
 accordance with this principle. Such societies are narrowed 
 down to a mere company for carrying on a retail business, and 
 giving to such business proper and honest methods ; whereas 
 the English societies, working according to the above princi- 
 
36 Co-operative Stores. 
 
 pies, strive to employ the profits of their trade to the perma- 
 nent improvement and prosperity of their members. Aside 
 from its bearing on a true domestic economy, and on social 
 morals, such a society profits greatly in its own business opera- 
 tions also by the principle of accumulated dividends. Those 
 societies which care only to sell as cheaply as possible, grow 
 up rapidly, but as soon as they reach a certain point in their 
 development, are at a stand-still or break down when the first 
 enthusiasm has died away. Each member is only bound to 
 the rest by the mere advantage which the low prices afford him ; 
 and his steadiness as a customer varies according as this is 
 greater or less, or is more or less appreciated by him, nor does 
 he take any more lively interest in the society, or its manage- . 
 ment, than in any other establishment which is useful to the 
 public. Where, on the other hand, the profits of the business 
 are accumulated for dividends to each individual member, 
 there is but one noticeable hindrance to the growth of the 
 society — viz., that the man does not constantly have his profit 
 in his pocket, where he can lay his hand on it, but must trust 
 it, till settlement day, out of his sight, where it is growing to a 
 principal till then invisible to him ; but when once he has seen 
 the books balanced and the amount in his favor, then the 
 growth of the society goes on all the more surely. For this 
 profit of his in the business looks more precious in the shape 
 of a good round sum, than in the successive driblets which 
 might come to him in pennies. Besides, the use of these divi- 
 dends in the mean time gives the society a larger working 
 capital, and allows of a breadth of operations which would be 
 otherwise impossible except by greater payments from the 
 members. 
 
 In consideration of all these facts, the General Convention 
 at Stettin, in 1865, passed the following : " Those co-operative 
 societies which afford their advantages to their members, not 
 by the lowest possible prices, but in the form of dividends, 
 which are riot paid out till a certain amount.is accumulated, 
 assist each member in acquiring capital, and at the same time 
 furnish themselves with the means to enlarge their effectiveness 
 more and more. The increase of capital is in all cases more 
 . desirable, both for the society and for its members, than a 
 system of selling without regard to profits, or one of depriving 
 
Constitution and Laws-. 37 
 
 itself of the profits by paying out the dividends to its mem- 
 bers. " 
 
 The intention of this rule is by no means that the society 
 should always sell at the same prices as the retail dealers. It 
 only demands that the prices shall be kept within those limits 
 which will show the largest profits on balancing the accounts. 
 But this profit does not depend solely on the question of prices, 
 but also on the extent of the sales as determined by the prices. 
 It must be borne in mind, that the running expenses, salaries, 
 storage, loss through drying, &c, do not increase in the same 
 ratio with the extent of sales. If, for example, by means of 
 two per cent, diminution of prices, a business is gained which 
 will decrease the expenses four per cent., it .is evident that 
 lower prices are more profitable. If, in pursuance of the 
 dividend principle, one considers how large a price can be 
 asked from each member, without detriment to the extent of 
 business, the prices will perhaps be found to have been put 
 too low at the commencement of the trade, and as its develop- 
 ment goes on there will be an effort to bring the prices nearer 
 to those of the retail dealers. 
 
 The prices of particular articles should be governed by this 
 rule : that a low price produces an extended trade only in 
 reference to those articles which are in most demand, as coffee, 
 sugar, oil, flour, and the like. In the case of things which 
 are bought for a few cents, or seldom called for, a low price 
 will have but little effect on the trade. They would be bought 
 at the store where most of a man's trading was done, to save 
 steps. With regard to all articles, the price must never fall 
 below the cost — i. e. their cost as delivered at the counter, 
 taking into account the first-cost, the transportation, loss by 
 injury, waste, &c. Special goods, which are not dependent 
 on the general state of trade, are to be considered as profitable, 
 only when they pay, besides their cost, something toward, the 
 running expenses in general, as wages, salaries, &c. 
 
 In considering the privileges of members, sections 2 and 3 
 will treat of their admission and resignation ; sections 4 and 8, 
 of the receipt and payment of shares ; sections 5, 6, 7, of the 
 apportionment of profits and losses. 
 
 § 2. Admission. — Any person may be received as a member. 
 
38 Co-operative Stores. 
 
 § 3. Resignation. — A resignation may take place after the third 
 settlement subsequent to a member's written notice of intention to 
 resign. An immediate resignation may be received by a vote of 
 the Society, either in case of some violation of the member's obliga- 
 tions to the Society, or in case there is some other person who is 
 ready to become a member and assume 'all the rights and obliga- 
 tions of the one resigning. 
 
 To leave their roll open for all persons to join, must be a 
 first principle with every society, which does business only, or 
 chiefly, with its own members ; since on this depends, the 
 possibility of larger sales and more extensive operations. To 
 limit the' membership to persons of a particular craft or occu- 
 pation, is opposed to the community of interest which every ' 
 man in the society feels that he has with every other. So far 
 as the society, in the natural course of its development, tends 
 to especially promote the interests of any particular class, of 
 course the membership will naturally, and by choice, be 
 mainly composed of that class. To limit a society to the 
 workmen of one particular establishment, is only to be thought 
 of in cases where those who own or carry on the establish- 
 ment offer certain peculiar advantages, free of expense, to the 
 society, and exercise a certain control over it. Such associa- 
 tions, not being founded on self-help, of course lie outside of 
 our subject. 
 
 Women, also, married as well as single, should be allowed 
 a place in the society, as in our English models. Although 
 the former cannot bind themselves legally,* this makes no 
 difficulty in actual practice ; for the husband will always exert 
 himself to the utmost to pay his wife's dues, lest she be dis- 
 graced in the society. 
 
 Though, according to section 2, no kind of person is to be 
 excluded from membership, yet the society is not bound to 
 admit every one who chooses to apply. The poverty of a man 
 can never be a reason for excluding him, since nothing can 
 be taken from the store without being paid for in cash ; but 
 it is possible that a person should be refused admission on the 
 
 * They can in several of the United States. 
 
Constitution and Laws. 
 
 39 
 
 ground that his manner of life makes him unworthy to take 
 part in the general meetings. 
 
 Resignations can take place either at the member's own de- 
 sire, or that of the society. The society must be empowered 
 to cut off a member for violation of his duties, such as tardi- 
 ness in paying his dues, disturbance at a meeting, &c. A mem- 
 ber can resign, according to the custom of the English socie- 
 ties, as contained in the rule under consideration, only on one 
 condition — viz. , that he make over his share in the society to 
 some other person, with the society's consent. The object 
 of this is, that the capital of the society may increase, but may 
 not be lessened by the withdrawal of members. In this way 
 the business of the society, as well as its credit, maintains a 
 solid basis. In the German societies the instability of the 
 capital is in part compensated by the liability, according to 
 law, which remains even after a member's leaving the society, 
 for those debts of the society which were incurred previously. 
 But since this liability is practically made of but little impor- 
 tance, and as it seems desirable to do away with it altogether 
 in such associations, there must be the more earnest effort to 
 hold securely the capital already accumulated, and in every 
 way to maintain the proper position of a stock company. Yet 
 to go as far as the English societies do, and have no share 
 whatever subject to recall, would, in small societies, be likely 
 to result in great inconvenience. In these the opportunity for 
 transfer of shares is small, and the public would be deterred 
 from joining the society by the impossibility of recalling their 
 investments. For such societies the middle path, as expressed 
 in the above rule, seems preferable. Here a member can 
 leave the association, and either receive back the value of his 
 share of stock after having given reasonable notice of his in- 
 tention, or transfer his stock to some other person. This 
 other person must be some newly-entering member. If it 
 were permitted to transfer the stock to another member, al- 
 ready holding a share, then the regulations concerning the 
 amount to be held by each, and the dividends to be declared 
 on the stock, would be impracticable ; and one of the first 
 principle of the society, which requires that there shall be an 
 equality among members in their representation by votes, 
 would be overturned. 
 
40 Co-operative Stores. 
 
 The person to whom the stock is to be transferred must 
 have been voted upon by the society and accepted as a mem- 
 ber. This corresponds with section 2, which reserves to the" 
 society the right to refuse admission to persons who, for par- 
 ticular reasons, are not deemed worthy. The transfer of the 
 stock includes the transfer of all privileges, and obligations 
 which its holder had in the society. The stock must be en- 
 tered in the account of the new member to exactly the same 
 amount as it stood before on the account of the retiring mem- 
 ber, with all the credits and debits belonging to it up to the 
 time of transfer. 
 
 We now come to the regulations-, concerning the payments 
 and dividends on the stock. For the better understanding of 
 these, the intervening sections are given, relating to the settle- 
 ment of accounts, and the apportionment of profits and losses. 
 
 § 4. Payments. — Each member shall pay the sum of (say 50 
 cents) per week' till the payments amount io a share of (say 
 $5.00). The first payment shall be made on -entering the society. 
 
 § 5. Balancing Accounts. — A balancing of accounts shall take 
 place four times per annum, on the first (Saturday) after the 
 end of the quarter. 
 
 § 6. Distribution of Profits. — -The profits, as ascertained on 
 balancing the books, shall be divided into two shares as follows: I. 
 (Say 2)* per cent, on the amount of capital {both permanent and 
 subject to withdrawal) standing to the credit of each shareholder 
 at the last preceding settlement, shall be credited io such share- 
 holder's account. If the profits are not large enough io admit of 
 (say 2) per cent, being thus credited, there shall be a credit 
 given of such smaller percentage as will consume the entire 
 profits. II. If, after crediting (say 2) per cent, on the capital 
 of each shareholder, as ascertained at the last preceding settle- 
 ment, any portion of the profits shall remain undisposed of, such 
 remaining portion shall be credited to the shareholders in propor- 
 tion to the amount of each member 's purchases during the quarter 
 in which said profits were accumulated. , 
 
 § 7. Apportionment of Losses. — If, on balancing the books, 
 loss shall appear to have occurred, it shall be charged io all of 
 
 * This means two per cent, quarterly, or eight per cent, per annum. 
 
Constitution, and Laws. 41 
 
 the shareholders equally ; and if such charge shall make the bal- 
 ance standing, to the credit of any person, less than the amount 
 required for permanent share of slock (say $5.00), he shall 
 at once begin weekly payments in the same manner as a new 
 member, and shall continue them until the balance to his credit 
 shall equal the amount required for a permanent share of stock 
 (say $5.00). 
 § 8. Returns.- — Whenever a share reaches the amount of (say 
 $10.00), Us holder shall receive, three months after the settlement 
 next ensuing, the sum of ($5.00). When a member resigns, 
 not transferring his stock to a new member, the full amount of 
 the stock shall be paid to him, if his resignation was caused by 
 any urgent necessity ; but if otherwise, 25 per cent, of the slock 
 shall be retained to the society's capital. 
 
 The equality of the members in their relation to the so- 
 ciety, is, as has been said, a first principle of. the co-operative 
 system. 
 
 In harmony with this are section 1, in which the, adoption 
 of wholesale prices is forbidden, and section 3, which provides 
 that no member shall hold more than one share, on which de- 
 pends their equality with regard to votes. Consistently with 
 this, also, it is desirable that the amounts of the separate shares 
 should not greatly differ from each other. In the foregoing 
 sections the way is left open only in two directions for an ine- 
 quality of shares. 1st. It is allowed to newly-entered mem- 
 bers to pay in their share by instalments. This is to make it 
 easier for persons of small means to join the society ; which in- 
 crease of membership, so far from injuring the already estab- 
 lished business of the store, helps turn the capital over more 
 quickly and profitably, since in every new member the store 
 gains a new customer. 2d. This exception, also, is made to 
 the equality of the shares, that when the normal share (of, say,> 
 $5. 00) is reached, the further dividends are paid out to the 
 member in cash, whenever the surplus above this share 
 amounts to a certain sum (say' $5.00), and only when this 
 surplus has reached the said sum. This is to correspond with 
 the expressed object of the society, as given in section 1 — 
 ' ' To accumulate capital for each member out of the profits of 
 the business." The above regulation aims at allowing the 
 
42 Co-operative Stores. 
 
 profits of each member to so far accumulate, that its amount 
 will, in some degree at least, dispose him to turn it towards 
 the formation of a steady capital, instead of spending it at 
 once. 
 
 Accordingly, the General Convention, held at Cassel the 
 present year, on motion of the United Societies of Berlin, made 
 the following declaration: "Following the example of the 
 English societies, it is recommended that no member shall be 
 entitled to withdraw the accumulated profits credited to -his 
 account until they have reached the sum of (say $5.00), and 
 shall draw them only in sums of (say $5.00)," — on the princi- 
 ple expressed under section I., E. 
 
 As we see from this declaration, the main principles con- 
 cerning the amount of the shares are borrowed from the uni- 
 form practice of the English societies, which make a distinc- 
 tion between transferrable shares and those not subject to re- 
 call. Each member must hold one of the former, and his 
 stated payments go to the acquisition of this. The shares sub- 
 ject to recall arise from the accumulation of dividends, and a 
 member can obtain a share of the latter kind, paid out by the 
 society at the appointed time, as soon after gaining the per 1 
 manent share (of say $5.00) as his declared profits amount to 
 the required sum (say $5.00). 
 
 And now in regard to each member's share in the perma- 
 nent capital, which cannot be returned to him while he is a 
 member of the society. This depends upon the amount of 
 profits which must accumulate to the credit of each member 
 before he can draw any' profits whatever. If this amount is 
 fixed at a high figure, the share of capital to be permanently 
 retained may be low ; for as the members will not all draw 
 their profits at the same time, there will always be a portion of 
 profits on hand which can be used as capital in conducting the 
 business, and the amount of permanent capital needed outside 
 of this portion of accumulated profits always on hand, will be 
 proportionally small. 
 
 To set at the highest figure the amount of profits necessary 
 to accumulate before a member can withdraw any, is likewise 
 favorable to the accumulation of individual capital ; yet it 
 must not be forgotten, on the other hand, that the larger the 
 required share, the longer the member is obliged to wait be- 
 
Constitution and Laws. 43 
 
 fore he receives money for any fraction of his interest in the 
 society. If, howewer, a member lacks confidence in the ad- 
 vantages thus held out, or if his domestic concerns lead him 
 earnestly to desire p. smaller payment in cash, care must be 
 taken that the desire to have the individual lay up capital be 
 not injuriously preferred to the desire to have the whole 
 society enlarge its business. Still further, by too large 
 shares, the society may be placed in the dilemma of not being 
 able advantageously to invest its hoarded profits, or of sud- 
 denly withdrawing from the business a large number of 
 these large shares, which chance to fall due at the same time. 
 It is for these reasons that, in the plan here suggested, the 
 value of the movable share of profits should not be less than 
 the permanent share of capital. 
 
 The sum not payable to the individual during membership 
 depends on the extent of the society's business, as well as on 
 the size of the shares required to be credited before payment 
 of dividends. At the founding of the organization, the initi- 
 atory share should not be made very large, both because heavy 
 operations are not befitting a young undertaking (a matter 
 that will be considered in the next chapter), and because the 
 need of the capital becomes less pressing as the membership 
 increases and the sales are brisker ; the size of each will evi- 
 dently be in an inverse ratio to the number of those who may 
 think it advisable to join the society. This view has been 
 confirmed by the General Convention of Societies, held during 
 the present yeart at Cassel, where, on motion of the United 
 Berlin Societies, it was resolved, ' ' that it is expedient to fix 
 the value of the permanent unreturned shares at a low figure, 
 imitating the example of the English associations, where such 
 shares do not exceed £1 sterling." The co-operative store 
 at Zurich was established on three-franc shares (less than 
 sixty cents), and the society of Hamburg on thirty-cent shares ; 
 and the stock of the store at Mayence originally called for 
 three florins (about $1.25), although afterwards raised to 
 five.* 
 
 It may be proper to subjoin some explanatory remarks to 
 
 * It will not do to lose sight of the fact that prices in Europe are vastly lower 
 than in the United States. The arrangements of societies must, of coarse, be 
 adjusted accordingly. 
 
44 * Co-operative Stores. 
 
 sections 4 and 8 of this plan. Section 4, respecting the sum 
 to be paid in, requires each member to pay over to the asso- 
 ciation not less than (say fifty cents a week), until he is en- 
 titled to stock to the amount of (say $5.00) — -the first payment 
 to be made when he enters the society. The member is not 
 hereby obliged to pay (say $5.00) all at once, but only to 
 pay (say fifty cents) so many times, week after week, as, with 
 the first payment and the credited profits, may be requisite to 
 make (say $5.00). If the credited profits are large, the gen- 
 eral sum to be paid in diminishes, and this makes the new 
 member more ready to give the store his undivided support. 
 All that has been said respecting the adjustment of the por- 
 tions, applies to the individual shares, both with respect to 
 their value and their time of payment. In estimating how 
 much the members can do, we should take into account the 
 fact that nearly all of them contribute to societies for different 
 purposes outside of the store, to a sick-fund, a savings-society, 
 or an educational society. The English societies levy on 
 their members an assessment of only two pence a week ; and 
 in Germany the highest tax allowable is but two and a half 
 silver groschen (about ten cents) a week, or 10 silver groschen 
 a month. 
 
 The rule established in the above sections does not hinder 
 any member from paying more than (say 50 cents), or even 
 the whole sum at once, but it does forbid him to pay more 
 than (say $5.00) on a single share, or to continue paying his 
 monthly assessments for the acquisition of other shares than 
 the one of (say $5.00) he has already acquired. To sanction 
 this would be to turn the store into a savings-society, and to 
 draw outside capital into the association, for which no remu- 
 nerative investment could be easily found. Consequently, if 
 no check upon continuous contributions were imposed (and no 
 German society is without such checks), many persons, whose 
 circumstances do not admit of such contributions, would be 
 debarred from membership, and the real purpose of the co- 
 operative store would be imperilled for the sake of something 
 else. 
 
 The section under consideration does not exclude members 
 from making a special agreement with the society in their indi- 
 vidual capacity, for payment of certain sums of money, should 
 
Constitution and Laws. 45 
 
 the society see fit to strengthen its business in this way ; but 
 such payments are not to be considered shares, but loans 
 (just as if from an outside party), the amount of whose inter- 
 est and the time of whose final return can be fixed by special 
 stipulation. 
 
 The first payment on the share must, according to the para- 
 graph already quoted, be paid on joining. The object of this 
 is, to deter persons from being enrolled in the books of the 
 society by reason of occasional purchases at the stores, who in 
 reality have never intended to become actual members. Such 
 a practice would be substantially keeping a public store, and 
 render the society liable to prosecutions under the statute con- 
 cerning the transaction of business without a license. 
 
 The requirement from applicants of an extra • initiation fee, 
 a sum which is not to be credited on their share, we are not 
 prepared to advise. There exists no good reason for it, and 
 every such exaction is an obstacle to membership. As for the 
 account-books furnished the new member, their cost is so 
 trifling, that it is hardly worth while to make any charge for 
 them. 
 
 The first proposition in section 8 declares, that as soon as any 
 business share shall have reached the sum of (say $10.00), 
 $5.00 thereof shall be paid to the holder of the share, three 
 months after the next balancing of accounts. Further increase 
 of the share is excluded for the same reasons that suggest the 
 equality of the shares. Yet this does not prevent the holder 
 of the amount due from returning it to the association under 
 express stipulations — not as a share indeed, but as a loan. All 
 payable snares, not otherwise disposed of by the members, 
 are looked upon as loans to the society. 
 
 The time of three months after the next balancing of ac- 
 counts, was indicated as the interval before payment of the 
 profits, lest by a large number of heavy payments falling due 
 before the society has had time enough to prepare for them, 
 the society may be seriously embarrassed. 
 
 The second proposition of sect. 8, respecting the payments, 
 says, that when a member resigns, and no substitute appears 
 to take his share, the full value of his share is paid to the re- 
 signing member, provided his withdrawal is occasioned by 
 some outside circumstances beyond his control, such as death 
 
46 Co-operative Stores. 
 
 or unavoidable absence ; otherwise 2 5 per cent, of his share 
 is withheld for the capital of the society. This reservation is 
 necessary to prevent members from handing in their resigna- 
 tions, merely in order to receive the amounts of their shares; 
 and then joining again on the payment of the usual first instal- 
 ment. The 25 per cent, retained must be credited to the 
 profit and loss account of the society. 
 
 There yet remain to be considered sections 5, 6, and 7, 
 concerning the balancing of accounts, and the equitable allot- 
 ment of profits and losses, which see on pages 40 and 41. 
 
 According to sections 6 and 7, the entire profits of a quar- 
 ter are to be added to the amounts subject to withdrawal, and <• 
 the losses are to be charged against each shareholder. It will 
 be noticed that those who have not yet made enough deposits 
 to constitute them shareholders, do not participate in profits 
 or losses. This, of course, 7 can be changed when it is thought 
 desirable. 
 
 This method of disposing of profits and losses does not 
 provide for the accumulation of any reserve fund. For the 
 formation of such a fund three reasons have been assigned. 
 In the first place, it is alleged that the association thereby 
 provides itself with a permanent capital, unaffected by 
 changes in the membership. The advantages of a permanent 
 capital of this kind have been enumerated in discussing the. 
 paragraphs concerning the entrance and withdrawal of mem- 
 bers, and we have there given it as our opinion, that not a 
 fraction of the society's wealth (and a reserve fund would re- 
 present no more than this), but the whole of it, should be 
 made permanent, by the policy of declaring the shares perma- 
 nent and not subject to withdrawal. In the second place, it 
 has been urged that it would constitute a sort of indemnity 
 fund, from which. to make up for any discrepancy which may 
 be found to exist between the actual value of the assets of the 
 society, and the figures by which they are represented on tak- 
 ing the stock account of the concern. 
 
 Such precautions may not be out of place for a credit 
 society,* the assets of which consist for the most part of out- 
 
 rnwS"?vF« r ? tive -°^ aniz ^ io J 1 for fondaMng its members loans, &c. Afullac- 
 count of these societies will be given in the work on " Co-ODerative Credit So- 
 cieties," soon to be published byllessrs. Leypoldt fc Holt 0per T ,ve Lte<Xlt 80 
 
Constitution and Laws. 47 
 
 standing claims. The stock-capital of a co-operative store, on 
 the contrary, consists of the amount of cash on hand, the 
 actual value of the appurtenances of its business, and the mar- 
 ket value of its stock of goods. The Store-fixtures account, 
 by being originally charged with the actual purchase cost of 
 the articles, and by being credited at the end of each quarter 
 with the customary percentage for wear and tear, must very 
 nearly represent the value of the articles in use. The pur- 
 chase-value of the goods on hand, at which figure they must 
 invariably be set down on taking inventory, is almost always 
 realized by a co-operative store, which engages in no specu- 
 lation and aims at quick sales. Trifling occasional losses 
 would not justify the creation of a special reserve-fund. 
 
 In the third place, the reserve fund has been called by its 
 advocates a sort of insurance fund, whose office it is to distri- 
 bute heavy losses over several periods of account, and thus to 
 make them less severely felt. To this it may be answered 
 that the co-operative society does net, like a credit society, 
 follow a business involving risk, nor even a credit business, 
 but simply a cash business. Large losses can come upon it 
 only through the unfaithfulness' of its officers. To protect 
 itself in a special way against such losses by a reserve fund 
 is not without its difficulties. One is, that a fund designed to 
 make these losses less felt is eminently adapted to slacken and 
 paralyze the vigilance of the administration in the control of 
 its officers. Besides, it would be found very hard to arrive at 
 a correct estimate of the necessary size of such a fund, and to 
 name the extent to which each quarter's business should be 
 made to contribute to its accumulation. A loss, too, may pos- 
 sibly occur just when the fund has not the wherewithal to re- 
 imburse it, and so the purpose of protection is defeated. It 
 is unquestionably true, that in case of disaster, the members 
 would deem a deduction from their shares less agreeable than 
 the protection of a reserve fund ; but this exceptional case 
 should not obscure the fact that forming a reserve fund neces- 
 sarily involves a systematic deduction from the profits, and 
 a further initiation fee from each new member, in order to 
 entitle him to the privileges of the fund already amassed. 
 This consideration will have special weight with the society, as 
 the existence of the society essentially depends on a large mem- 
 
48 Co-operative Stores. 
 
 bership, and hence, upon the absence of all obstacles to ad- 
 mission. 
 
 The_example of stock companies cannot be adduced, inas- 
 much as with them, their shares not being subject to withdrawal, 
 the reserve fund is nothing but the result of profits, added to 
 the shares reserved for the business capital. If a shareholder 
 in a joint-stock cbmpany sell or transfer his share, his in- 
 terest in the reserve fund is likewise transferred, as is clearly 
 proven by the ever-changing value of shares on the Stock Ex- 
 change ; but the member withdrawing from a co-operative 
 society receives no remuneration for his interest in the reserve 
 fund. 
 
 The English co-operative stores, as far as we know, have no 
 reserve fund, and it is found only in those German societies 
 which are least developed. A few of the smallest seem bent 
 on the immediate establishment of a fund, and in so doing, 
 follow a policy contrary to that of the large industrial societies. 
 While with the latter the founders of the society enjoy certain 
 privileges not extended to, and not enjoyed by, members ad- 
 mitted at a later period, the former, on the contrary, demand 
 from their original members the creation of a fund to which 
 members subsequently admitted hardly ever contribute. The 
 Union of Berlin societies has declared against the formation of 
 such a fund, and in the General Convention at Cassel, the con- 
 sideration of a motion in its favor was indefinitely postponed. 
 
 In the distribution of profits, a fixed sum is applied to pay 
 interest on the shares, and the rest of the profits are divided in 
 proportion to the goods purchased from the store. We have 
 had many opportunities of calling attention to the excellence 
 of this method of distribution, which originated with the Eng- 
 lish societies. On the one hand, the payment of interest fur- 
 nishes some compensation for the inequality of the shares sub- 
 ject to withdrawal ; and on the other, by basing a part of the 
 distribution on the purchases of goods, it prompts each mem- 
 ber to extend his purchases as much as possible. But since, 
 according to section i, this account is to be confined to sup- 
 plying household wants, care has been taken that purchases 
 by members for outside parties do not make the distribution 
 depart too widely from the principle of equality among the 
 members. In a similar spirit, the General Convention at 
 
Constitution and Laws, 49 
 
 Mayence, in 1 864, refused to entertain a motion, resolving that 
 the award of dividends should be made, not on the total of the 
 purchased goods, but on the amount due to members. 
 
 In the allotment of losses, however, the same principle does 
 not work. If there should be reason to apprehend losses, 
 each member would abstain from taking goods, in order not 
 to increase his share in the same ; and in case of heavy losses, 
 he could prevent any correct estimate of the total of his pur- 
 chases, by destroying or not presenting the tin-tickets which 
 were delivered to him at the time of purchase. The allotment 
 of losses must therefore be made in the manner of a poll-tax, 
 the method most closely corresponding to the distribution of 
 profits, and to the character of the society. This method can 
 be the more readily resorted to without any scruple, as losses, 
 necessitating a reduction from the members' shares, hardly 
 ever occur ; and it may be remarked, that hardly any existing 
 societies have found it necessary to make any provision for 
 losses in their by-laws. 
 
 The English societies pay an annual interest of five per 
 cent, on the shares. This rate is fixed in consideration of 
 the fact that deposits in the savings-banks, with less risk, 
 draw three and a half per cent, interest. In the. plan pro- 
 posed above, it is fixed for easier calculation at two per cent, 
 a quarter, equal to an annual rate of 8 per cent. ; and as the 
 reckoning of these accounts will in any case be long and 
 tedious, it is proposed to cast interest only on the whole dol- 
 lars. Moreover, these dollars must have been available for 
 business purposes during the whole of the business quarter ; 
 that is to say, they must have been placed to the credit of 
 the member at the time of the last quarterly, balancing of 
 accounts. 
 
 On the distribution of the remaining profits in proportion to 
 the purchases, all the goods which the member has obtained 
 from the store are taken into account, as well as those which 
 he has obtained outside by means of tickets. In those socie- 
 ties which do business by tickets alone, a separate calculation 
 is generally made on each kind of ticket, corresponding to the 
 discount made on it ; but in other societies, not only would 
 such a method of calculation be impracticable, but absolutely 
 unjust, since in all societies but ticket-societies, the business 
 
 3 
 
50 Co-operative Stores. 
 
 is simple, and the various articles reciprocally adjust themselves 
 in their sales. 
 
 On the practical working of this mode of distributing profits, 
 and especially on the appraising and adjustment of the total of 
 goods bought by any member in the store, see the chapter on 
 book-keeping and cash accounts, and more particularly sec- 
 tions I., C, and III., D. 
 
 The losses are divided among the whole number in equal 
 portions. But should the assessment of loss exceed the share 
 and interest of some member, then an equal re-division must 
 be made among the shareholders whose shares have not been 
 exhausted ; and so on, until either the losses have been allotted 
 or all the shares exhausted. For this last contingency, we 
 have not thought it worth 'the trouble to devise remedies in our 
 schedule of rules. 
 
 Section 5 says that the balancing of accounts shall take place 
 four times a year, on the first Saturday after the end of the quar- 
 ter. In all the English societies with which we are acquainted, 
 the settlement takes place quarterly. With the ready sales of 
 a co-operative store, a stable business, and an absence of all 
 those more intricate operations which are inseparable from a 
 system of credit, these brief periods of settlement seem quite 
 admissible. In practice, these frequent settlements involve 
 much labor, but they involve a greater security for upright 
 management, and a clearer oversight of the expansion of the 
 business. They were made indispensable, in Germany, by 
 the acceptance of the English principles concerning the distri- 
 bution of profits, and the method concerning their computa- 
 tion. The oftener the time comes round when each member 
 ascertains the profit on his share, the stronger will be his desire 
 to augment his capital by laboring for the prosperity of the 
 store ; and, indeed, it would be almost impossible, without a 
 quarterly settlement, to determine the share of the profits, 
 based on the total amount of the goods purchased by each 
 member. 
 
 Further particulars are given in the chapter on book-keep- 
 ing and cash accounts, paragraphs I. , C, and III. , D. 
 
 We next come to the rules concerning the administration of 
 the society, and set down the paragraphs relating thereto in 
 their proper order. 
 
Constitution and Laws. 
 
 5i 
 
 § 9. General Conventions shall be tailed by posting notices, eight 
 days beforehand, in the stores, 'and by publishing, forty-eight 
 hours beforehand, in the principal newspaper, a statement of the 
 matters to be discussed. In the. Convention every member present 
 has a vole, and a majority of voles decides a measure. 
 
 §10. Executive Committee. — The Convention shall intrust the 
 
 ■ management of affairs for a year to an executive committee of 
 fifteen members, chosen by ballot. 
 
 § 11. Matters requiring the Action of the Convention. 
 — The Convention shall deliberate over amendments or alterations 
 of the rules ; allotment of profits and losses ; number of stores ; 
 investment of ■ capital outside of the business ; receipts and 
 expenditures of more than (say $100) / unperformed con- 
 tracts ; amount and conditions of loans received ; the caulipns 
 to be observed by the treasurers and store-keepers, and the condi- 
 tional confirmation of those incautiously chosen for such positions ; 
 and indemnification of the members of the committee for all 
 trouble. 
 
 § 12. Privileges of the Convention. — The Convention has 
 supreme control of the business, and is the highest tribunal for 
 all complaints. It chooses, for each settlement of accounts, cer- 
 tain auditors, who must lay their report before the Executive 
 Committee. 
 
 § 13. Committee and Officers. — One-half of the members of 
 the Executive Committee shall constitute a quorum, and a majority 
 of votes shall decide. It shall choose, a president and a vice- 
 president. It shall be the president s duty to call a meeting of the 
 Committee at least once every month ; and, in addition, as often as 
 any three members may desire it. 
 
 § 14. When Meetings are to be called. — The Executive 
 Committee shall issue the call for the Convention, and its presi- 
 dent shall preside. The call must be within three weeks after 
 the close of the last settlement, and as often besides as twenty-five 
 ordinary members, or five members of the Committee, shall ex- 
 press a desire for such meeting, and give a written statement of 
 their reasons therefor. 
 
 § 15. Board of Directors. — The Executive Committee shall 
 choose from their number a Board of Directors, consisting of 
 one Director, a vice Director, and two assistant Directors. No 
 store-keeper, contractor, or agent shall be a member of this Board. 
 
52 Co-operative Stores. 
 
 § 1 6. Functions of Directors and Functions reserved to 
 Committee. — The Commilke shall intrust to the Board of Di- 
 rectors the further management of the business, but shall reserve 
 to itself the final decision in — I. The expulsion of members, 
 which shall require a unanimous vole ; 2. Receipts and ex- 
 penditures of over (say $100) ; 3. Unfulfilled contracts ; and, 
 5. The methods of keeping the books of the society. 
 
 §17. Further Functions or the Committee. — The Executive 
 Committee shall exercise superintendence over the Board of Direc- 
 tors, and decide all appeals from it. It cdn at any lime institute 
 an investigation of all business operations, and is empowered to 
 remove Directors from office, subject to the decision of a convention to 
 be immediately called; and to appoint members from its own body 
 for the occasional performance of current business. In the decis- 
 ion of mailers not herein mentioned, the Committee shall lake no 
 part. 
 
 § 18. Special Duties of Directors. — The Board of Directors 
 shall meet at least once a week, and shall decide, by majority of 
 votes, on the receiving or distribution of goods ; all receipts and 
 expenditures arising, not already determined or brought before 
 the Convention and Committee ; the admission of members ; and 
 the care of the store, either through members of the Board or per- 
 sons appointed for the purpose. 
 
 § ig. Legal Signature of the Association. — The legal signa- 
 ture of the association shall consist of the signatures of the Di- 
 rector and Vice-Director, or of one of these with thai of one of 
 the dssisianl directors. 
 
 The present plan assigns as administrators, of the society, the 
 Convention, 'the Committee, the Auditors of Accounts, and the 
 Board of Directors. The first three bodies are clothed with spe- 
 cified authority. The care over all other business matters is ex- 
 ercised by the Board, either through its individual members or 
 those whom it appoints. The contrary principle, that all things, 
 not explicitly assigned to some particular-body, shall be referred 
 to the Convention, is not practicable in the arrangements of a 
 co-operative store. Provision has to be made for so many un- 
 important things, which can only be provided for at the time 
 of their occurrence, that to refer them to the Convention would 
 lead to incessant interruptions ; there would be room too for the 
 
Constitution and Laws. 53 
 
 apprehension that such an impracticable interpretation of the 
 rules would violate the privileges of all of them, and finally 
 become exceedingly arbitrary. 
 
 In the adjustment of privileges, besides its duties as a tri- 
 bunal of appeal, of supervision and award, the Convention is 
 vested with the power to make laws, to amend the by-laws, to 
 allot the gains and losses, and to make such other decisions as 
 tend to restrict the sphere of the society's activity and the ex- 
 tent of its business. Generally the duty of determining how 
 many stores there shall be, and the investment of the moneys 
 received or deposited, also devolve upon it. That the ratifica- 
 tion of contracts which necessitate a reciprocal duty on the 
 party of the societ (as contracts for service, leases, and the 
 like), should be brought before the Convention, we hold 
 to be unadvisable. As regards leases of houses and busi- 
 ness localities, an acquaintance and familiarity with the situ- 
 ation, dimensions, etc. , of such buildings would be indis ■ 
 pensable, but it can hardly be looked for among so numerous 
 a body as the Convention. To lay the award of contracts for 
 services before it for approval, we deem equally unadvisable, 
 as also to refer to it the selection of the Board of Managers. 
 The servants of the society must not only have the general 
 confidence and good-will, but must also be versed in the 
 technicalities of their several positions ; and not one in a hun- 
 dred, perhaps not one in a thousand, of the members is quali- 
 fied to judge accurately of their capacity. Still more difficult 
 would it be to deliberate, in such a large assembly, on the pro- 
 priety of dismissing one of them from office. The Conven- 
 tion, should therefore content itself with enacting, that no em- 
 ployee be chosen for more than three months without its con- 
 sent, and that the auditors and store inspectors chosen by the 
 Executive Committee, must receive their confirmation from its 
 hands. For the same reason that it is hazardous to debate the 
 dismission of its minor officials in the Convention, it seems 
 also unwise to deny to the Committee the power of expelling 
 members, subject however to appeal ; since, in this way, the 
 question of expelling the member does not come before the 
 Convention, until he has m,ade a formal motion for readmis- 
 sion. 
 
 On the other hand, it is expedient that all compensation 
 
54 Co-operative Stores. 
 
 due the members of the Executive Committee should depend 
 on the decision of the Convention, since in this way the Com- 
 mittee is saved from outside slanders and quarrels amongst its 
 own members. In regard to the minor officials, however, it 
 would be useless for the Convention to act on each separate 
 demand for compensation ; but the rate of compensation for 
 each class of service should be definitely announced before- 
 hand. 
 
 If it is proper that important matters should be brought before 
 a Committee from the main body, it is proper, too, that this 
 Committee should hold office but for a short time. Choosing 
 its members for only a single year, enables the growing soci- 
 ety to substitute more experienced persons, should any pre- 
 sent themselves. This Committee should not only decide all 
 issues of a personal character, like those already mentioned, 
 but it should previously arrange the matters about to be 
 brought before the Convention. It is desirable for all 
 parties that the number of its members should be large 
 enough to insure judicious and impartial decisions ; yet not 
 so large as to be unwieldy. The number fifteen seems to 
 meet these requirements ; yet this would be much too large if 
 the arrangement of all current business, particularly the pur- 
 chase of goods and the prices of sales, should be included in 
 their duties. Only the approval of unusually large pur- 
 chases and expenditures should be brought before the entire 
 Committee, for such can generally be postponed awhile ; and 
 by such presentation to the Committee, speculations on the 
 part of the Board of Directors may be avoided. 
 
 Some societies have put the other duties in the hands of a sin- 
 gle director ; but this seems to be giving to one an amount of 
 power inconsistent with the spirit of the society, and liable, espe- 
 cially in the purchase of goods, to the grossest abuse. The 
 form of the Board, likewise, befits the character of a co-opera- 
 tive society — its abstinence from speculation and its promptness 
 in transaction of business. Nevertheless, this Board must be 
 the only subdivision of the Committee. Special commissions, 
 as for purchase, control of funds, or representation abroad, 
 are impracticable, and lead either to interruptions or arbitrary 
 encroachments. The Board should consist of certainly not 
 more than four persons. That of the Credit Societies, indeed, 
 
Constitution and Laws. 55 
 
 has a greater number, but for the reason that a more exten- 
 sive acquaintance with those seeking credit is thereby secured. 
 The members of the Board, though selected from the Execu- 
 tive Committee, still retain their places on the latter. It 
 would be absurd to exclude those intrusted with the details 
 of the business from all voice in its management and direc- 
 tion. Nothing hinders the officials subordinate to the Board, 
 with the exception of store-keepers, from being chosen as mem- 
 bers of it. , In the larger associations the store-keepers, also, 
 might be chosen ; but in smaller ones they might, in their 
 double capacity, acquire an influence dangerous to the general 
 prosperity. Nor can any contractor or agent belong to it. No 
 one can serve two masters. For a similar reason, such per- 
 sons ought to be ineligible to the position of member of the 
 Committee ; but here their influence would be so reduced 
 that their selection need not be expressly forbidden by rule. 
 
 The Board cannot delegate to others the powers delegated to 
 itself. Decisions respecting the accounts of goods or their 
 distribution, respecting receipts and expenditures not brought 
 before the Convention or the Committee, and respecting the 
 amounts received from the members, must be rendered by the 
 Board at a regular meeting. The legal signature of the society 
 consists of the signatures of the director and vice-director, or 
 of one of these and an assistant-director. In other respects, 
 the matters committed to the Board have not been particularly 
 defined. For instance, all correspondence concerning the ac- 
 counts of goods, or the book-keeping, may be intrusted to one 
 or two persons, members of the Board or outside of it. This 
 ihdefiniteness gives a flexibility beneficial to the society in all 
 the stages of its development, and does away with the necessity 
 of amending the rules nearly every six months. The expansion 
 of business will itself bring about a greater division of duties, re- 
 quiring a larger corps of assistants to the Board. As at Zurich, 
 besides the corps of salesmen, an additional corps of agents, 
 clerks,, and others will be employed under the direction of the 
 Committee, and the Committee will itself gradually become a 
 board of inspectors. Such a Board should always stand be- 
 tween the Board of Directors and the Convention, as this latter 
 cannot be readily assembled. It would make the organization 
 too complicated to create a department besides the Committee, 
 
56 Co-operative Stores. 
 
 and it therefore would seem as if this last ought to be a com- 
 mittee of inspectors, whose orders the directors must obey. 
 Such power does lie with the Executive Committee, yet it is 
 not so unbounded that it may not itself be under the super- 
 vision of the Convention. Moreover, the choice of auditors of 
 the quarterly settlement lies with the Convention, and nothing 
 hinders it from choosing those in whom it has confidence, 
 whether on the Committee or not. These auditors hand in 
 their report directly to the Convention, but are obliged 
 previously to submit it to the Committee, that its errors may be 
 corrected, or a rebutting statement prepared. 
 
 The Cornmittee also has the power to regulate the methods 
 of keeping the books, and to authorize certain of its members 
 to inspect the books, and the cash and ticket accounts. It can 
 hinder the execution of arbitrary or hurtful measures on the 
 part of the Board by removing the members of it from office, 
 and laying the matter before the Convention for final decision. 
 On the other side, the Board can render all injurious decisions 
 of the Committee nugatory, by referring them to the Conven- 
 tion, and leaving them unenforced until its decision is had. 
 Thus each is a check upon the other. 
 
 The foregoing arrangement for the government of a co- 
 operative society seems, in our opinion, to give the widest 
 opportunity for the self-government of the individual mem- 
 bers, without burdening the operations with too complicated 
 machinery. While it is certain that no society can long exist 
 without such self-government, it is also true that too precise 
 regulations may easily obstruct the business. 
 
 With respect to section 19, which treats of representing the 
 society in public, it may be remarked that the power therein 
 delegated to the Board to appear for the society in all legal 
 actions, is of little practical importance. In any suit, its au- 
 thority is liable to be disputed by denying the authority of its 
 rules, as well as the authority of elections under those rules, and 
 it'would not be easy to establish the proof of their validity. 
 
 Sdiultze-Delitzsch advised the credit societies, living under 
 the Prussian code, notwithstanding the risk of invalidity, to 
 draw up, among their regulations, a power of 'attorney for 
 legal causes in the following manner: "The President, 
 Cashier, and Chief Accountant, each on his own responsibil- 
 
Different Kinds of Business. 57 
 
 ity, is empowered to sue in the name and by the authority of 
 the society, to join issue, to carry on the suit, to ratify con- 
 tracts therewith connected, to give and demand oaths, to re- 
 ceive the final decision, to avail himself of all legal remedies, 
 and even to substitute in all such transactions another at- 
 torney. " 
 
 § 20. Of Dissolution. — The dissolution of a society may follow 
 a decision to that effect given by two Conventions assembled with 
 an interim 'of four weeks. Such a decision shall require the votes 
 of three-fourths of the members present. Any surplus or deficit 
 remaining at liquidation shall be apportioned equally among the 
 members. 
 
 It is expedient, through a laborious routine, to render a pre- 
 mature dissolution of a society a matter of difficulty. Equal 
 apportionment of surplus or deficit among the members, fol- 
 lows naturally from the constitution of a society which is 
 grounded on an equality of rights and duties. 
 
 CHAPTER VII. 
 Different Kinds of Business, and their Peculiarities. 
 
 THE Co-operative Society may employ itself not only in 
 furnishing, but also in manufacturing goods. 
 
 With regard to its principal object — the distribution of 
 raw materials, this can be managed in three ways — at the risk 
 of the contractor, at the risk of the member purchasing the 
 goods, or at the risk of the society itself. In the following 
 sketch we distinguish three principal methods — ticket-trade, 
 1 commission-trade, and store-trade. 
 
 I. The ticket-trade of a Co-operative Society. The peculiarity 
 of this is, that in case the members receive their goods through 
 a contractor, the society makes a special arrangement with the 
 contractor, which usually stipulates a stated deduction to the 
 society from the selling price of articles. The contractors 
 
 3* 
 
58 . Co-operative Stores. 
 
 look for their remuneration to the prospect that the society, 
 by recommending them to its members, may afford them a 
 large and steady custom. This ticket method has this advan- 
 tage over a business carried on by the society on their own ac- 
 count—that, according to the principle of division of labor, 
 each individual's operations are carried on in accordance with 
 his own particular calling, and that for the establishment of 
 such a society scarcely any capital is required from the mem- 
 bers. On the other hand, it is to be considered that the 
 ticket-trade is by no means so well adapted to unite the mem- 
 bers firmly together, as the common possession of their store 
 and stock of goods, and the consequent common risk. In the 
 ticket-trade there is the more need of firm union among the 
 members, since therein lies their only security that the trades- 
 man will abide by his agreements. Often it becomes difficult 
 to determine whether he takes merely the profit agreed upon, 
 or whether he seeks to make up for the discount on his prices 
 by the inferior quality, or unfair measurement of articles. 
 For this reason the ticket-trade is to be discouraged, unless 
 the contractors enter into an agreement beforehand to have 
 the same price for all customers. Especially is great caution 
 requisite in adopting this method, in cases where the article to 
 be purchased is not kept on hand ready for sale, but furnished 
 to order. Even in the case of articles whose quality is con- 
 stantly varying, as for instance fresh meat, the ticket-trade has 
 not always been found profitable. On the other hand, with 
 articles which maintain a fixed price, as fuel, potatoes, bread, 
 smoked or salt meat, this method has led to good results. 
 Particularly with bread, the producer can afford to allow a con- 
 siderable discount as a consideration for the large and steady 
 sales resulting from his business- intercourse with the society. 
 In 1865 the General Co-operative Society of Berlin did a 
 ticket-trade of 14,694 thalers. Of this amount, 3,448 thalers 
 was for bread, on which there was a discount of 568 thalers. 
 The bakers made an agreement to deliver the bread at the 
 members' houses, and allow a discount of about sixteen per 
 cent. For fuel (principally coke from the city gas-works), 
 there was paid 3,312 thalers, with a discount of over 78 thalers. 
 The remaining 7, 934 thalers was for meat (with from 6| to 8£ 
 per cent, discount), groceries (4 per cent. ), trimmings and 
 
Differ e7it Kinds of Business. 59 
 
 linen goods (4 to 6| per cent.), cloths (6| percent.), trade at 
 eating-houses, bookbinders, hatters (8-j- per cent.), &c, &c. 
 The members of the United Berlin Societies now procure coke 
 directly from the city gas-works, by tickets, at 25 per cent, 
 discount. 
 
 II. Commission-trade is often carried on by the societies, in 
 furnishing its members with a winter's supply of fuel. The 
 coal can be brought from the mine by railroad, and as it 
 passes through no intermediate hands, a large advantage may 
 be thus secured. The Dusseldorf Society supplies its members 
 in this way, by the car-load, at nearly the same price which it 
 costs at the mine. 
 
 Sometimes the co-operative societies find opportunity to 
 make special bargains at their own risk, without the use of 
 their store or warehouse. Thus, for example, a ship's cargo 
 of coal was bought in Magdeburg, and sold to the members, in 
 small parcels, directly from the vessel. 
 
 III. Store-trade. — The commodities which have proved to be most 
 advantageous for the society's own store, are such as are universally 
 and constantly wanted, occupy but little room, and can be kept for 
 a considerable time without injury. 
 
 Such are, in particular, groceries, as coffee, tea, sugar, rice, 
 raisins, spices, &c. ; and produce, as flour, meal, peas, beans, 
 dried fruit, oil, &c. Also butter, cheese, and salt ; and of 
 manufactured articles, tobacco, vinegar, soap, soda, chocolate, 
 starch, &c. , as well as dried fish, &c. 
 
 The Zurich co-operative store, in 1864, sold as follows : 
 
 628,065 
 
 lbs 
 
 flour, 
 
 29,235 lbs. candles, 
 
 20,996 
 
 a 
 
 oat-meal, 
 
 29,-399 pints salad-oil, 
 
 29,5 21 
 
 a 
 
 barley, 
 
 172,007 " lamp-oil, 
 
 59,373 
 
 a 
 
 pastry, 
 
 27,511 lbs. tobacco, 
 
 45.i5i 
 
 ct 
 
 succory, 
 
 544,650 cigars, 
 
 176,148 
 
 tt 
 
 loaf-sugar, 
 
 16,366 qts. vinegar, 
 
 24,987 
 
 ct 
 
 candy, 
 
 45,234 boxes blacking, 
 
 183,227 
 
 tt 
 
 butter, 
 
 30,045 lbs. petroleum, 
 
 43,^38 
 
 it 
 
 lard, 
 
 136,660 boxes matches, 
 
 124,666 
 
 tt 
 
 cheese, 
 
 1 90 lbs. tea, . 
 
 121,413 
 
 tt 
 
 soap, 
 
 349 " chocolate, 
 
 97,6i6 
 
 it 
 
 soda, 
 
 4,857 " spices. 
 
60 Co-operative Stores. 
 
 Of the above articles, the largest profit in proportion to the 
 money invested, will be made on the so-called produce, and 
 on the manufactured articles ; less on groceries, and least of 
 all on butter and cheese, which involve most trouble in buying 
 them, and are most difficult to preserve in good condition. 
 Yet it will, perhaps, hardly do for a store to be without these, 
 and in many cases bread also, since people are in the habit of 
 buying them at the same time with the other things mentioned 
 above. It is decidedly a bad plan for a co-operative store to 
 deal in other market commodities, such as vegetables, fruit, 
 eggs, and the like, for they are troublesome to procure, and 
 their risk of loss by decay is out of all proportion to the small 
 profits of their sale. Potatoes, also, take up a great deal of 
 room, decay easily, and cause the seller much trouble. Li- 
 quors should only be sold in quantity, and not to be drunk at 
 the store. Beer, even when bottled, is subject to loss by 
 spoiling. The Dusseldorf Society does a considerable busi- 
 ness in the sale of light white wines and cheap red wines, but 
 this requires special cellar-room. For two years past the 
 Zurich Society also has been engaged in the wine-trade. Sev- 
 eral societies have done a paying business also in the sale of 
 manufactured Seltzer-water. The keeping of fuel demands a 
 great deal of storage-room, and one or more special employees 
 to attend to its sale. To deal in materials for clothing and 
 bedding demands great discretion, on account of the variety 
 in kind and quality needed by the different members ; and 
 this discretion is only gained after long experience. There 
 may be, at special times, an opportunity for particular classes 
 of articles, as before Christmas, especially in those societies 
 where the customers are-mainly of one class, and will demand 
 the same sort of goods. This is true, also, of household 
 stuff, such as crockery, &c, which, it is to be considered, 
 takes up a good deal of room. As for trimmings and tassels, 
 writing materials, &c. , the demand for them is too irregular to 
 pay for the labor of procuring, and selling, and burdening 
 the account-books with them. 
 
 Every society should be careful to keep as few sorts as pos- 
 sible of things which serve the same purpose. The fewer the 
 kinds, the smaller need be the stock on hand, and the greater 
 will be the profit, on account of their quicker sale. A real 
 
Different Kinds of Business. 6 1 
 
 diversity in the wants of the customer must of course be pro- 
 vided for by a variety in the stock ; but to keep a variety 
 merely for the sake of it, or to boast of, is unworthy of.a co- 
 operative society. It can only take into consideration the taste 
 of the great majority of its members, and not attempt to suit 
 every individual. In the matter of cigars, for instance, it is 
 impossible to do a paying business, if the stock, for the sake 
 of variety, must be a very large one. Out of many sorts of an 
 article, let those be chosen which are the best for their purpose ; 
 for instance, of all the kinds of oil, choose that which gives 
 the best light. As a rule, it will be found, that without too 
 much regard to a low price, those sorts which best answer 
 their purpose are in the end the cheapest. 
 
 With regard to the preparation of necessaries of life by co- 
 operative societies : this has, so far as we know, been hitherto 
 confined to the baking of bread. Such bakeries have been 
 established, or are on the point of being, at Zurich, Berlin, 
 Braubach in Nassau, Duisburg, Petersdorf, and various places 
 in England and the United States. A French Society is in 
 operation in New York. 
 
 In Berlin, the United Societies failed in their attempt to 
 follow a plan of buying flour according to the weekly orders 
 of the several societies, and paying a baker a certain price for 
 baking the bread and delivering it at the Separate stores or in- 
 dividuals' houses ; but they have just established a bakery 
 which is to be managed by a society organized for the purpose.' 
 Concerning the Zurich Society's bakery, their annual report 
 makes the following statement : "The bakery is in active 
 operation, and with better results than before. We have been 
 enabled through the year, with a few exceptional cases of 
 failure, to supply our customers regularly with fine bread, 
 light and sweet, and the extent of our sales shows that the 
 public is satisfied with its quality." 
 
 The contract of the Zurich Society with the baker is this : 
 the society shall furnish work-room, ovens, and all necessary 
 apparatus, flour, salt, and fuel ; the baker is to receive a 
 stipulated price on every hundred weight of flour that is baked, 
 and is to furnish workmen, pile and chop the firewood, unload 
 the flour and fuel, bake and load the bread, light and take 
 care of the shop. If the baker fails to make from a cwt. of 
 
62 Co-operative Stores. 
 
 flour.the stated number of loaves of a certain weight, or if he 
 uses more than the stated quantity of fuel in baking a certain 
 amount of flour, he is to make up the difference to the society. 
 Damaged flour, and whatever fuel is saved, are to remain the 
 property of the society. 
 
 CHAPTER VIII. 
 Establishment of Business and Accumulation of Capital. 
 
 IN societies which transact business with their own members 
 only, there is no need of any license from the authorities 
 nor of any information to them. For since the operations 
 of such societies cannot be legally considered public traffic, 
 and while their managers are only acting as the head of a 
 household does for the members of his family, the laws con- 
 cerning license do not apply. In Prussia, it is true, several 
 attempts have been made to subject the societies to the law 
 concerning business licenses, or that concerning the retailing 
 of liquors ; yet the higher courts have hitherto sustained their 
 petition to be exempt from all such laws, putting them on an 
 equality, in this respect, with club-houses or private societies 
 for recreation. 
 
 As there exists no legal obstacle, there can be no material 
 one to the formation of a co-operative society, as long as its 
 operations are limited to the ticket and commission trade. 
 This assumes- no particular number of members, and requires 
 only enough capital to buy the account-books, tickets, etc. 
 But a co-operative association does not begin an efficient exist- 
 ence until it opens a store ; for even to a ticket-trading society, 
 a store of their own forms a closer bond between the officers 
 and members. Two things, however, must be well consid- 
 ered before opening a store — the prospective amount of cus- 
 tom and the requisite amount of capital. On entering upon 
 a closer examination of these two requisites, we take " for 
 granted that the new society, following in the footsteps of all 
 
Establishment of Business. 63 
 
 others, will open stores with a stock composed of groceries 
 and country produce. 
 
 Keeping a store requires a place of business and a sales- 
 man. The expense of these varies so much, according* to 
 locality, that no specific estimates can be given. As a general 
 rule, in the United States, it would not be profitable to con- 
 duct a store unless the amount of sales, at retail rates, could 
 be made at least ten times as large as the amount of running 
 expenses. The average need of a laborer's household, in the 
 articles mentioned in the last paragraph, would be, say five 
 dollars in gold a week ; so that on estimating the running ex- 
 penses, multiplying them by ten, and dividing this result by five 
 (or, to shorten the process, multiplying the number of dollars 
 of estimated expense by two), would give the number of mem- 
 bers needed for a profitable society among laboring men. Now 
 we are well aware that several large societies began with slim 
 sales. They took a single room for a store, had short business 
 hours, and their salesmen either worked gratuitously or for 
 small wages. But such limitations always presuppose a very 
 generous spirit on the part of employees, and a lively interest 
 in the buyers. Even if these virtues are present with the 
 founders of the society, it is very questionable whether, with 
 such a scanty beginning and so little inducement held out to 
 buyers, a material increase of custom and a corresponding 
 addition to the roll of members could safely be calculated 
 upon. Many men are inclined to judge of a principle by the 
 external appearance under which it goes into practical opera- 
 tion. Too often the zeal of the founders will suddenly grow 
 cold if too great sacrifices are demanded from them individu- 
 ally, without a prospect of corresponding success. Still, it 
 cannot be said that no store should be opened until the full 
 number of members, as estimated, is obtained. A person's 
 membership implies his promise of custom . rather than the 
 custom itself. A large part of the public will not join^jindl 
 aflerjhe storehasT5een 6^eTra3~a^^the^l3^£agg^TThe_plan 
 ^£^ed : _J^N^r^few,"~teo7^^^rI61e — residing in theTmmediate 
 neigriborhood .of the store, will patronize the store on its own 
 account, and not to support the principle on which it rests. 
 All these facts should be considered, in calculating the custom 
 the store is likely to receive. 
 
64 Co-operative Slores. < 
 
 Respecting an increase of custom after the store is opened, 
 it may be remarked that one of the obstacles often in its way 
 in large cities, is the difficulty of getting it fairly before the 
 public. This may be avoided by a free distribution of printed 
 lists of prices, and short notices in the papers. The public is 
 pleased by the lists of prices all the more, because it gets few 
 of them from the retail dealers. In this list, the design of the 
 society may be stated in something like the following way : 
 ' ' The design of the Co-operative Store Society is to furnish 
 necessaries of life of a good quality to the families of its mem- 
 bers on immediate cash-payment, and from the profits thus 
 gained, to save up capital for each of its members. For this 
 latter purpose, every purchaser receives dividend-tickets, indi- 
 cating the value of his purchases : these are handed in on the 
 last Saturday of every quarter, and on them the profits are dis- 
 tributed in due proportion. The duties of the members of 
 this society consist in a weekly payment of (say fifty cents), 
 until a share in the undertaking to the value of (say $5)'has 
 been thus bought. The shares receive, every quarter, a 
 premium of (say two per cent. ) 
 
 ' ' Any person can become a member by paying the first instal- 
 ment of (say fifty cents), and by signifying his intention to 
 join, in the store itself, at any time of the day. He actually is 
 a member, and is at once admitted to the privileges of the 
 store as soon as a vote, favoring his admission, is cast by the 
 Board of Directors." 
 
 The expressions, ' ' immediate cash-payment, " and ' ' sales 
 only to the families of its members, " will be particularly likely 
 to strike the public eye. The price-current should ' also an- 
 nounce from whom tickets available at other stores (if any are , 
 used) may be obtained. Every two months a new price-cur- 
 rent should be circulated : during the interval notices of 
 changes in price may be posted in the store. The shprt notices 
 in the papers may appear either as advertisements or as items 
 of local news. The prices of particularly cheap articles should 
 likewise be advertised from time to time. Tljere ought to be 
 sent to editors, for free insertion, a brief statement of the num- 
 ber of members, the increase of the sales, and the dividends 
 declared, together with some remarks as to the conditions of 
 admission. The assembling of a convention affords a good 
 
Establishment of Business. 65 
 
 chance for making the society more widely known, and the 
 papers will readily make a shorf report of the proceedings, if 
 they are notified beforehand. 
 
 All societies, imitating those of England, have refrained 
 from the exposure of goods in the shop-windows for attract- 
 ing customers. The goods so exposed w,puld be likely to be 
 damaged before they were tried. There should be on the 
 outside of the store merely'the sign, the price-current, and a 
 neat and conspicuous copy of the regulations. 
 
 The second requisite for a store business is, as we have al- 
 ready remarked, a sufficient capital. This should be both 
 fixed and circulating ; the fixed capital is represented by the 
 appurtenances of the store and warehouse, and the circulating 
 by the cash on hand, and the stock of merchandise. The 
 fixtures of the Zurich Society were estimated, on the 31st of 
 December, 1864, at only 7,500 francs ($1,425), distributed 
 among sixteen stores and the bakery, although the account 
 had been charged for wear and tear, during 1864 alone, with 
 2,911 francs. Apart from this, there were 622,332 francs 
 ($118, 243 ) in real estate. The warehouse supplies had an aggre- 
 gate value of 229,488 francs ($45,897), being about 19 per 
 cent, of the year's sale, which amounted to 1,230,239 francs, or 
 $233, 745. In the new Hamburg Society, the value of the stock 
 of goods on hand, on January 1, 1866, was equivalent to $8, 2 50, 
 or about 1 1 per cent, of the ye.ar's sales, the aggregate of which 
 was equal to $78,350. In the Dusseldorf Society the gross 
 proceeds of sales (17,713 thalers) showed a profit of 15 or 16 
 per cent, on the prime cost ; in Mayence about the same, the 
 net proceeds being 52,382 thalers. In Magdeburg, the pro- 
 ceeds were 15,326 thalers, and the profit only 7 per cent. In 
 "The Bee," in Berlin, the proceeds were 11,472 thalers, and 
 profit only 6 per cent. In the smaller Berlin societies, as 
 "The Schultze-Delitzsch" and "The Trial," the profit fell 
 to three or four per cent. ; but in the very smallest, with annual 
 . sales of from one to three thousand thalers, it rose to 40 per 
 cent. This great disparity is explained by the different 
 methods of purchase, and the distance the goods are brought 
 from — the latter being naturally the least in the large trading- 
 towns. The minimum of the warehouse supplies depends on 
 the smallness of the number of articles dealt in, the mini- 
 
 <t <ij» 
 
66 Co-operative Stores. 
 
 mum of the quantity of each article on hand, and the mini- 
 mum quantity which can be Thought at wholesale prices. With 
 a brisk business, the stock on hand no longer equals the quan- 
 tity originally purchased ; for while nearly the entire supply of 
 one article is yet on hand, hardly any thing is left of another. 
 
 For the reasons ^fiven, it. Cannot be calculated what is the 
 smallest circulating capital that a society needs to begin with. 
 With regard to the fixed capital, it may be determined with 
 more accuracy, and it may safely be assumed that from $i 50 to 
 $250 is requisite for the plain but suitable shelving of a store, 
 and the other necessary fixtures and tools. 
 
 It should never be forgotten, that the whole of the fixed 
 capital and a portion of the circulating capital should be 
 made up by the -regular shares of stock of the members. 
 Enough of the latter should be held in reserve to protect the 
 society against embarrassment in times of temporary stagna- 
 tion of business, or whenever much-needed articles cannot 
 be bought but for ready cash, and this has not sufficiently 
 accumulated from recent sales. Schultze-Delitzsch has recom- 
 mended that the stock capital of a credit society be 20 or 25 
 per' cent, of its borrowed capital ; and this is not too high a 
 figure in determining the relative proportion of the share 
 capital and the circulating capital of a co-operative society. * 
 
 In the 34 societies, whose balance-sheets were published in 
 the annual report for 1865, the private capital was 24,993 
 thalers, and the borrowed capital was 35,477 thalers, or in the 
 ratio of five to seven. The ratio would have been yet more 
 favorable if several of the societies, as some at Berlin, and 
 those at Rosdtzin and Konigshutte, in Silesia, had not required 
 a large capital on account of goods credited to their members ; 
 and if the Hamburg Society, already mentioned as the largest 
 in Germany, had not reported the ratio of its private capital to 
 its borrowed capital as 1,336 thalers to 14,792, a very unfavor- 
 able proportion. 
 
 * In the United States a higher proportionate share of stock capital, say from 
 forty to fifty per cent., would probably be desirable. In fact, inasmuch as sales 
 are made exclusively for cash, there seems to be nothing to prevent purchases 
 being conducted on the same principle, in case the society is willing to wait for 
 enough capital, to start the store, to accumulate. Probably enough discount 
 could be obtained on goods purchased for cash to make itv the cheapest way. 
 There ought to be no reason to ask credit when there is no occasion to give any. 
 
Establishment of Business. 67 
 
 We would earnestly advise every society not to open a store 
 until the shares amount to at least the value of the entire 
 store-appurtenances, and to enough besides to defray the ex- 
 penses of the first quarter, for rent and salaries. The Roch- 
 dale Pioneers even put by their savings for a whole year before 
 they opened their store. Even should wealthy men offer to 
 make up by a loan the deficiency in the capital, it would be 
 better to stick to the maxims of frugality and caution. Other- 
 wise the society is not founded on self-help, but on the benevo- 
 lence of others, and is not thoroughly independent. The 
 diminished self-dependence of the members is in itself suffi- 
 cient to impair the chances of success. The members feel 
 much more interest in the store, if they can say to themselves 
 when they enter it, that in its shelves and counters lie property 
 of their own. They have something to lose, too, from the 
 start, and will watch their officers with a stricter eye, than if 
 the want of proper management only endangers the prompt 
 return of borrowed money ; and it has been found by experi- 
 - ence that where the opening of business is made to depend on 
 prompt payments toward the shares, the dues are paid with 
 greater readiness than after the store is in operation. 
 
 Outside capital can be acquired by the society in a twofold 
 manner — by raising loans or by purchasing goods on credit. 
 Ofthe 35,477 thalers of foreign capital employed by the thirty- 
 four societies mentioned in the annual report, 16,529 thalers 
 were in the form of loans, and 18,948 thalers in the form of 
 goods bought on credit. The Hamburg Society operates with 
 loans amounting to 9, 734 thalers, and with goods bought on 
 credit worth 5,008 thalers. The Zurich Society, at the close of 
 1864, had a foreign capital of 771,282 francs, all in loans, ex- 
 cepting a sum of 10,594 francs credited on the books to 
 "various creditors." 
 
 The method of loans is indisputably the best. Getting 
 goods on credit makes the price depend on the seller's opinion 
 of the solvency of the society. Purchasing on credit can work 
 to the detriment of the society by cutting off its connection 
 with dealers who sell for cash only, and may, in some in- 
 stances, even serve as a pretext to the party who agrees to sell 
 on credit, for short measure and weight. Cash purchases, 
 like cash sales, are the most remunerative in the end, and the 
 
68 Co-operative Stores. 
 
 societies must use every endeavor to avoid the' Credit system 
 either way. 
 
 If at the time of making a purchase of goods, the buyer is 
 not in a condition to pay ready cash, but claims a credit of say 
 from three to six months, goods are sold him on the credit 
 scale of prices, and a certain rate of discount is stipulated in 
 the invoice, of which discount he may avail himself if he 
 succeeds in procuring the funds necessary to pay the bill on 
 delivery of the goods or shortly after. In deciding the point 
 whether purchases effected in this way are more profitable than 
 cash dealings, due consideration ought to be given to the fact, 
 that the dealer is apt to overestimate the risk he runs, which 
 will be greater or smaller according to the buyer's standing, 
 and that, consequently, the invoice prices, even after deducting 
 the stipulated discount, will still be above what he sells at for 
 ready cash. 
 
 Frequently a part of the discount is lost in the inferior quality 
 of the goods, in unfair weights, or in the general calculation 
 of the price. This is rendered probable by the fact that many 
 contractors make a still greater deduction for cash payment 
 than is generally named on their lists, or allow the stipulated ' 
 discount even on payment a few weeks after the delivery of the 
 goods. The rate of discount granted must decide the prac- 
 ticability of borrowing money to enable the society to pay cash 
 for what they buy. 
 
 Should the society seek still larger loans, it may fall into 
 greater embarrassment than through buying goods on credit. 
 This follows, from the fact that offers of loans to the retail 
 trade are rare, since credit on goods is considered safer than a 
 loan of equal amount. In favor of taking small loans from 
 a larger number, is the fact that an opportunity for the satis- 
 factory investment of small sums is, nowadays, not always at 
 hand ; and with small sums the facility ,of making a conve- 
 nient investment is a consideration second only in import- 
 ance to its safety. 
 
 The confidence felt as to the security of small deposits with 
 the society is all the greater, since in the stock of goods on 
 hand which the creditor uses every day, he sees a guarantee 
 for his claim. The large Zurich Society, in 1864, received 
 loans from 765 creditors ; and the Hamburg Society, at the 
 
Establishment of Business. 69 
 
 end of 1865, had acquired loans to the amount of 9,734 
 thalers, by the establishment of a safety fund, into which 
 deposits could be made of even a fraction of a thaler. 
 
 The Convention, according to our rules, must determine 
 the total amount of the savings, deposits, and the conditions 
 of their acceptance. The total amount will follow from the 
 rules given above for the ratio of actual to borrowed capital. 
 
 Should more money be offered to the society than it has 
 use for, it can then exact better terms of deposit. For the 
 simplification of the accounts, it can reject all sums under 
 one dollar, lower. the rate of interest, and, what is more to the 
 interest of its business, lengthen the notices of withdrawal of 
 deposits. For deposits with credit societies, L. Parisius, in the 
 eighth number of the Brotherhood of the Future for the year 
 1865, fixed the time of notice for sums of five thalers at three 
 days ; for those of 10 at eight days ; for those of 50 at one 
 month ; and for larger amounts at three months. The Ham- 
 burg Society requires an eight-day notice for all sums under 
 25 marks ($7.20), and one of four weeks for all larger sums. 
 . In general, it may be said that the length of notice should be 
 governed by the ratio of the amount of the deposits to the 
 proceeds of sale ; that where the deposits; for example, are 
 $500 and the monthly sales are $1,000, the average length of 
 notice should be two weeks. It is assumed throughout, that 
 the society has -no creditors outside of the depositors, and 
 buys no good^s on credit. 
 
 Every depositor is to be furnished with an account-book, 
 which contains a statement of the society's debts and the con- 
 ditions of deposit prefixed, substantially as follows : 
 
 (name), in (place of residence), loaned this 
 
 society on the day herewith given — (the sums credited in the 
 books of the cashier). The undersigned, members of the 
 Board of Directors, hereby promise, in the name of the soci- 
 ety, to refund the sums thus loaned, either in whole or in 
 part, on the order of the depositor ; subject, however, to the 
 annexed conditions, by which he is bound in every particular. 
 
 " (date). 
 
 Signed, N. N. \ Directors of the 
 
 O. P. j Society." 
 
70 Co-operative Stores. 
 
 Conditions.— The regulations respecting the acceptance, 
 interest, and refunding of loans to the society may read as fol- 
 lows. 
 
 § i. Sums not less than $i, and not exceeding $50, will be 
 received on deposit at all the society's stores by the cashier. 
 Interest on such sums will be paid at the rate of (say i£) per 
 cent. , each quarter, on every whole dollar. 
 
 § 2. Every depositor shall receive a book, under the stamp 
 of the society, in which the general promise to refund on the 
 part of the society must be written by the Director and Vice- 
 Director, or by one of these, and an assistant Director. 
 
 § 3. Every deposit and every repayment of the same, in 
 order to be valid, must be entered in this account-book by the 
 cashier, with his signature and the proper date, together with 
 the counter-signature of a member of the Board of Directors. 
 
 § 4. The society will return the deposits, through its cashier, 
 only on presentation of the account-book given to the original 
 creditor or his lawful representative. It has a right to ask 
 that the party shall identify himself; but need not exercise the 
 right except where a protest against payment has been made 
 by the holder of the book, his heir, or other lawful repre- 
 sentative. 
 
 § 5. When an account-book has been lost, its owner must 
 at once inform the cashier. The authorities thereupon adver- 
 tise it, at the loser's expense; in a town or county paper* twice, 
 with an interval of 14 days, specifying the number, name, and 
 amount ; and requesting the finder to present himself before 
 the cashier within a month. If nobody appears, the book 
 shall be null and void, and a new one given to the owner of 
 the first ; but in no case can the society be held responsible. 
 
 § 6. Interest shall be cast at the expiration of every quarter, 
 and be credited as a deposit- Interest shall be paid only at 
 the expiration of the quarter. A lower rate of interest must 
 be agreed to by the creditor, provided two notices thereof 
 have been published six weeks previously in a newspaper. * 
 
 § 7. The return of deposits can be demanded at any time, 
 in whole or in part. The society can claim a previous notice 
 
 * In large towns, it would, of course, lie well to have some special paper or 
 papers designated as the vehicles of the society's regular advertising. 
 
Purchase of Goods. 
 
 71 
 
 of three days for all sums of ($5) ; of eight days for sums of 
 ($10) ; of 14 days for sums of ($25) ; and of one month for 
 sums of ($50). Every notice must be handed to the cashier 
 in writing. If the society desire to refund to a creditor, it 
 must give him notice at least 14 days before. 
 
 § 9. Repayments, as well as notices of withdrawal, and all 
 other transactions of the creditor, must take place at the office 
 of the society, and during business hours. 
 
 The smaller the aggregate of the deposits, the simpler the 
 conditions may be. The following form may be found con- 
 venient for the cash-book : 
 
 Date. 
 Month. 
 
 Day. 
 
 Payments. 
 
 Deposits Amounts 
 and Interest. Withdrawn. 
 
 Sl&NATURE OF 
 
 Cashier. Director. 
 
 CHAPTER IX. 
 Purchase of Goods. 
 
 BEFORE we proceed to treat of the laying in of goods by 
 the store, something should be said in relation to the 
 manner in which the ticket-trade is carried on. The 
 contractor, as has been explained, agrees, in return for the 
 increased custom which the recommendation of the society 
 
72 Co-operative Stores. 
 
 gives him, to sell to members of a society at a discount from 
 his ordinary prices. It is evident that the profits of the con- 
 tractor will be lessened, and consequently the discount to 
 members must be less, if the society enters into such an 
 arrangement with several rival tradesmen. This should never 
 be done, except as the circumstances of the case may make it 
 necessary; as, for example, where the members live too far 
 apart to trade at the same store. The identification of mem- 
 bers, and the settlement of the discounts, can be managed in 
 two ways- — by means of purchase-tickets, or by certificates of 
 sale. The first method is most common, and consists in this : 
 the members procure goods from the contractor, for which 
 they pay by tickets of a fixed value, which they have* previ- 
 ously obtained from the society. These tickets are redeemed 
 by the society, at which time the discounts are reckoned. * 
 The method of certificates consists in this : the tradesman makes 
 out and gives to the purchaser a certificate for the amount paid 
 him ; and at stated times the society receives from the trades- 
 man the fixed discount on the whole amount of these certifi- 
 cates. This method has the threefold advantage, that the 
 members do not need to procure tickets before making their 
 purchases ; the society is spared the cost of the tickets and the 
 risk of large money-transactions ; and the tradesman is not 
 obliged to give credit to the society for the amount of the 
 tickets received from members until their redemption. On 
 the other hand, there is this disadvantage in the method of cer- 
 tificates : the making out of these is a great trouble to the 
 tradesman, especially when numerous small amounts are pur- 
 chased by different members. Consequently he is tempted 
 to persuade a customer whom he knows to be a member of 
 the society, to allow him to throw off the discount on the 
 spot, to save him the trouble of making out a certificate. In 
 
 * The system above proposed makes all the members share equally the advan- 
 tages of the discount allowed on each member's purchases. It seems more in 
 accordance with the general principles, for each member to have the benefit of all 
 the discount ou his own purchases, be they great or small. This could be accom- 
 plished by the society selling to the members, at a discount, tickets available at 
 the outside stores. The outside tradesmen should take these tickets at their face 
 value, and the society should redeem them from Mm at the same rate of discount 
 that they allowed the member originally purchasing them. In a society doing an 
 exclusively ticket-business, a fund to pay the expenses of management could be 
 accumulated by selling tickets to members for a little higher price than that paid 
 for their redemption from the tradesmen. 
 
Purchase of Goods. 73 
 
 this way the intervention of the society between the customer 
 and the contractor is lost ; and by frequently resorting to this 
 plan, the trader may succeed in destroying the entire organi- 
 zation of his custom obtained through the society, and thus 
 subvert the very foundation of the ticket-trade. The general 
 ticket-trade society at Berlin seems to leave its members the 
 choice between the use of purchase-tickets or of certificates. 
 In the annual report of that society, it is stated that the 
 method at first applied only to the trade in wood and peat— of 
 allowing the members to pay the contractor on receipt of his 
 certificate of sale, and to bind the contractor to allow the dis- 
 count agreed upon on presentation of such certificates by the 
 collector of the society — has worked well in all respects, and 
 has consequently been extended to almost all other branches 
 of their business. 
 
 With regard to the purchase-tickets, this caution is necessary : 
 there must be special, tickets, not for each contractor, but for 
 each particular rate of discount. Otherwise, those contractors 
 who had agreed upon a large discount, would be tempted to 
 redeem their tickets through others whose rate was smaller. 
 
 The tickets may conveniently be of pasteboard. Some of 
 the South-German societies use them with bronze facing, hand- 
 somely stamped, very neat, but somewhat costly. 
 
 The contract with the tradesman requires, besides the fixing 
 of a rate of discount, only an agreement concerning the time 
 for redemption of the tickets, or the settlement of the certificates. 
 
 Some time for notice of dissolution of the agreement be- 
 tween the society and the tradesman is generally fixed upon. 
 This, however, is of small importance, practically, for the 
 whole arrangement is, on the society's part, so much a matter 
 of trust that it is better to break off with a tradesman entirely, 
 if he is not disposed to continue the connection on the basis 
 fixed. In the case of certificates, it is advisable that the con- 
 tractor should make a written agreement with the cashier of 
 the society, something after this form : "I, the undersigned, 
 
 dealer in , pledge myself to pay, on the first day of 
 
 each month, to , cashier of the Co-operative 
 
 Society, cents on every dollar which has been paid me 
 
 by members of the society, as shown by the certificates made 
 out by me. " 
 
 4 
 
74 Co-operative Stores. 
 
 The most important question concerning the purchase of 
 goods by the society is the quantity of each separate purchase. 
 The minimum of supply ought to be set down at a figure deter- 
 mined by the usual demand for the article ; and the supply of 
 all goods which cannot be bought ready made, but which are 
 manufactured to order, must be such as to hold out until a 
 new order can be given and filled. Many societies go far 
 beyond this minimum, because they erroneously suppose that 
 they must look for their advantage, and take their pride in the 
 greatest possible invoices. This idea is a false one, as the 
 advantage of co-operative societies over individual retail-dealers 
 is not secured by the amount of their purchases so much as by 
 the manner in which they dispose of their goods. In every 
 case the society must make a careful calculation of the maxi- 
 mum of stock which is safe for it, and weigh the inducements 
 for exceeding the minimum, and purchasing up to this maxi- 
 mum. 
 
 The maximum of purchase must be in proportion to the 
 available means, whether these be cash or credit. It must also 
 be influenced by the greater or smaller lapse of time within 
 which there is no probability of a considerable advance or 
 decline in prices. So soon as a store makes the amount of its 
 purchase greater in expectation of a rise in prices, it has gone 
 into speculation, and speculative operations are not within the 
 sphere of a retail business, and should especially be avoided 
 by a co-operative society. One may speculate with his own 
 money, but not with other people's. He who does the latter 
 is too much inclined to look'- only at the chances in his favor, 
 and not at the risk, and so fails. To carry on a speculative' 
 business with safety, moreover, requires a quickness of decision 
 and suddenness of action impossible to the managers of a society, 
 unless the whole weal and woe of the society were to be placed 
 in the hands of one man. It is necessary, too, that the persons 
 who are to decide on the amount of purchase, in such a busi- 
 ness, should be familiar with its minutest details, so as not to 
 overlook the causes which tend to produce a change of whole- 
 sale price, nor to trust blindly, in regard to the probability of 
 such a change, to the statements whispered in their ears by 
 interested contractors or agents. Between the maximum of 
 
Purchase of Goods. 75 
 
 purchase, limited by the temptation towards speculation in 
 changing prices, and the above-mentioned minimum, lies, in 
 most cases, a wide margin for careful calculation. A low cost- 
 price tempts to an increased purchase, and is, perhaps, for this 
 reason, too much sought for. The difference in price between 
 a large and a small purchase, available for the store, is at the 
 point where the unit of measurement or weight of goods at 
 wholesale begins. For most commodities, this unit is the hun- 
 dred-weight. In many cases, the unit for packing and trans- 
 porting is larger than that used in reckoning. For instance, the 
 price of coffee is reckoned by the pound, while it is purchased 
 by the sack. Sugar is reckoned by hundred-weights, but pur- 
 chased at wholesale by the cask. In such cases the cheaper 
 price commences with the so-called original package, since 
 every repacking involves greater labor, more waste, and a 
 greater number of packages continually. The difference in 
 the original cost of an article, whether bought at wholesale or 
 in small quantities, is not always clearly established by the 
 price charged in the invoice, but is, in many cases, to be found 
 in the increased charges for boxing, cooperage, cartage, &c, 
 and in the difference in terms of payment. 
 
 Beside the unit of purchase, in wholesale transactions, the 
 unit of transportation is to be considered. This is usually 
 the hundred-weight ; so that even a less weight than this pays 
 the same freight. 
 
 Whether you buy one, two, or three units at once — for 
 instance, one, two, or three sacks of coffee — makes no differ- 
 ence in the price, as a general rule. You can only make a 
 difference by buying ten or twenty sacks, casks, &c. In like 
 manner, freight becomes cheaper only by the wagon or car 
 load. 
 
 Over against the abatement of price obtained by the pur- 
 chase of large amounts, is to be set the greater loss in interest 
 on the capital invested in the goods, and in their deteriorated 
 quality from the time of purchase to their sale. The loss 
 in the goods themselves is especially great with those com- 
 modities which dry up while lying in the warehouse ; as, for 
 instance, soap, cheese, and fruit. Such things as butter are 
 rendered wholly unfit for use by keeping on hand too long. 
 
7 6 Co-operative Stores. 
 
 The loss of interest on goods lying in the warehouse, must 
 be reckoned as at least 10 per cent, per annum.* If, for in- 
 stance, a co-operative store use every month ten loaves of 
 sugar, these ten loaves of sugar, if purchased in one lot, remain 
 stored during an average of one half of a month, and thus in- 
 volve a loss of interest (assuming the invoice cost of a loaf of 
 sugar to be $3.50, and the annual rate of interest 10 per cent., 
 as above indicated) of a trifle over 14^ cents. But if the society 
 purchase 50 loaves at once, the average time they remain on 
 hand unsold will be 2\ months, which would imply a loss of 
 interest on each dollar invested of z\ cents ; and as 50 loaves at 
 $3.50 cost $175, the loss of interest would amount to $3.64^; 
 so that the discount allowed by the dealer on the wholesale 
 purchase of 50 loaves, must be at least $3.64^ less xt,\, or 
 $3.50, in order to warrant the wholesale investment. Irre- 
 spective of this, however, the loss by waste and the deteriora- 
 tion of quality ought to be taken into due consideration. 
 
 Another point of almost equal importance with that of the 
 quantity to be purchased is, the place of purchase — i. e. , the 
 more or less direct obtaining of the goods. Here, too, it is 
 difficult to lay down general rules, and it must be left for care- 
 ful consideration in each particular case. The advantage 
 gained by direct purchase is often overestimated. The cost 
 of the intermediate operations through which the goods have 
 passed in indirect purchase, does not wholly fall on the sell- 
 ing price : part of it is covered by the discount at which the 
 intermediate operator got them by taking wholesale quanti- 
 ties ; part by the less freight paid in transporting them by the 
 car-load, and so on. In order to judge of this question cor- 
 rectly, it is necessary to consider as a part of the real cost- 
 price in direct purchases, all the particular expenses of the 
 goods till they reach the store — the increased freight, &c. 
 The difference in favor of the direct purchase, after including 
 all these, is to be offset by the greater trouble, risk in trans- 
 portation, loss of interest, and injury to the goods involved in 
 the larger purchases by the direct method. The more active 
 the local trade of a place is, either in consequencee of lively 
 
 * It must be borne in mind that money when employed in business is worth 
 more interest, tha;i when simply invested by a capitalist in some perfectly secure 
 manner. 
 
Purchase of Goods. 77 
 
 competition or the important dealings of single merchants, the 
 more these latter considerations will balance the difference 
 otherwise existing in favor of direct purchases. For co-opera- 
 tive societies in large cities, therefore, it will not perhaps prove 
 as much a matter of importance and advantage to make direct 
 purchases, as it must be for those started in small out of the 
 way places. 
 
 In classifying the different kinds of goods which are most pro- 
 fitably bought by direct purchase, we put down, first, all ' ' man- 
 ufactured articles ;" then, "country produce and provisions ;" 
 and lastly, the so-called ' ' foreign produce" and general grocer- 
 ies. The places for the most direct purchase are — for manu- 
 factured articles, the factories ; for country produce and pro- 
 visions, the principal market in the part of the country where 
 stock, grain, &c. , are raised for export ; and for ' ' foreign pro- 
 duce, '"' the seaports into which it is carried by the cargo. Cur- 
 rent wholesale prices can be obtained from the newspapers. 
 
 As regards the proper parties with whom to enter into 
 business connection for the purchase of goods, it will be 
 advisable to select the largest and most respectable firms, as 
 fair dealing on their part may be almost invariably relied 
 upon. Should any doubt arise as to the character and stand- 
 ing of a commercial firm located at a distant place, it would 
 be best to request the desired information through a co-opera- 
 tive society (if any such is in existence at the place in ques- 
 tion), or to open business intercourse through their introduc- 
 tion. No society, knowing its own dependence on such in- 
 formation and aid, will refuse such a service to another. 
 
 The contractor should in no case be a dealer who is at the 
 same time carrying on a retail trade, since this would injure 
 the society in the eyes of the public ; and, moreover, the re- 
 tailer is the natural enemy of the co-operative store, and a con- 
 nection with him is not likely to be of real service. With re- 
 gard to articles for which there is a special demand at particu- 
 lar seasons of the year, the time for first ordering should be at 
 the point where the price has become settled for the season. 
 Except for peculiar reasons, the society should not change its 
 contractors. 
 
 As to the manner of ordering goods, it is not customary for 
 societies to order through a travelling agent ; for the time of 
 
78 Co-operative Stores. 
 
 ordering must not depend on the interval at which the agent 
 happens to come round, but upon actual need, and a previous 
 resolution by the Board of Directors. For the form of the 
 order, see Chap. XII. 
 
 No goods should be received unless accompanied by a bill 
 of lading giving at least the gross weight of the whole. Be- 
 fore opening the packages, &c, the correctness of the gross 
 weight must/ be proved. If the goods have been sent from 
 some other town, they should be examined as soon as possi- 
 ble (consistently with orderly business arrangements), and if 
 they are found not according to contract, the seller should be 
 at once advised of it. If this is neglected, the goods must be 
 considered as accepted, so far as any defects are concerned 
 which could be discovered by ordinary examination on their 
 arrival. If other defects subsequently appear, notice must be 
 given to the seller immediately on their discovery ; otherwise 
 the goods are held to be accepted, even in regard to these. 
 If the purchaser does not accept goods sent from another place, 
 he is bound to take care of them for a reasonable time, till they 
 can go back. 
 
 The payment for all goods ordered should be made punc- 
 tually, fully, and by safe means. If one expects good faith, 
 he must show good faith. The payment is remitted at the ex- 
 pense of the creditor. 
 
 In many cases the contractor takes his pay by drawing on 
 the society. In this case the money is paid when the draft is 
 presented. If it is presented before due, the cashier must hon- 
 or it with his acceptance. In sending a remittance through 
 the post-office, post-office money-orders are vastly preferable 
 to cash. 
 
 A favorite point of debate with co-operative store societies, 
 is in regard to the feasibility of combination of several socie- 
 ties for the more advantageous purchase of goods. Practi- 
 cally, such combinations have been chiefly confined to the re- 
 ciprocal interchange of information regarding the best markets 
 for purchase, and recommendation of dealers. In case a 
 society make use of the recommendation of another, it is 
 best to expressly mention this in making an order. For if the 
 wholesale dealers understand that there is such a combination 
 among the societies, they will be the more anxious to secure 
 
Sale of the Goods. 79 
 
 the custom of each particular one. Where there are several 
 societies located in one town, near each other, one of them 
 has sometimes bought particular articles for another, at the 
 same time with its own purchases. But, as a general rule, 
 such common purchases are found to be inconvenient on 
 account of the different times of needing things. The attempt 
 to avoid this difficulty by establishing a central warehouse, has 
 not been successful, owing to the cost of such storage-room 
 and its care, and also the inconvenience to the separate socie- 
 ties of being obliged to take what they need from this place. 
 A great objection to having a central warehouse for several 
 societies in different towns, is, that the most natural and 
 cheapest points from which to obtain goods, are often in quite' 
 different directions for the different societies. The societies 
 of the North of England have, however, as was mentioned in 
 Chap. I. , successfully established a central society for procur- 
 ing goods, and for their distribution at wholesale, which had, 
 in 1865, with a capital of about £9,200, a sale of about 
 £142,000, which was a great advance over that of the previous 
 year. 
 
 The store should present an attractive appearance, outside 
 and in, and invite custom by its neatness and order. Con- 
 cerning its exterior, and especially the undesirableness of 
 show-windows, see Chap. VIII. 
 
 CHAPTER X. 
 Sale of the Goods. 
 
 THE details of the sale of goods present countless oppor- 
 tunities for the display of judgment in the arrangements 
 of the store. As far as the quantity for sale is concerned 
 (by which we mean the smallest quantity of any article sold), 
 it is evident that the smaller the quantity the greater the labor 
 and expense for unpacking, and the larger the percentage of 
 waste of various kinds. The bad economy of the public, and 
 the lack of system both in selling and in the management of 
 
80 Co-operative Stores. 
 
 household expenses, are to blame, if, notwithstanding the dealer's 
 loss in those goods needed in every family, sales adapted only 
 to the moment's requirements are desired, as a couple of 
 ounces of coffee or sugar, or a half-pint of oil or vinegar. It 
 often happens that women, without thinking how much time 
 they lose, go to the store several times a day to make penny pur- 
 chases. The smallest quantity of the most common articles 
 kept on hand by co-operative societies must depend on their 
 minimum consumption in a family for one week. The weekly 
 payment of wages gives, even the humblest laborer, the ability 
 to buy meal by the pound or quart, coffee and sugar in 
 quantities of a quarter of a pound at least, and oil by the 
 pint. At the Zurich Store, coffee, sugar, rice, barley, grits, 
 and pastry are not sold in quantities less than a pound. Such 
 things as sausages should be sold by the piece, on account of 
 avoiding injury to what remains. Another advantageous 
 habit connected with trie sales, is to parcel out the different 
 articles before the customers begin to arrive, inasmuch as it 
 can thus be done with more exactness and less trouble. 
 The hurry usually inevitable at such times tends, in no small 
 degree, to augment the wastage. Instead of every moment 
 changing weights and measures according to the wants of the 
 customers, the clerk can, with the same weight or from the 
 same bin, take out, measure, and weigh off a great number of 
 quantities of different size, according to the customary demand 
 for the articles in question. This parcelling out beforehand is 
 all the more necessary since the throng of customers is not 
 uniform on all days, or at all hours of the day. 
 
 It may be urged, perhaps, against this plan, that it excludes 
 the buyer from satisfying himself of the fairness of the sales- 
 man. But this advantage is only nominal. The unfairness 
 must be very gross that can be detected by the buyer, in the 
 rapid movements of the salesman, while customers are pressing 
 up toward the counter. A previous apportionment is rather 
 the means by which the supervisors of the store can discover 
 any unfairness. Supposing a dozen pound-packages to be 
 lying on the scales, the slight errors that might occur in weigh- 
 ing them one by one will now balance each other, and any 
 considerable deficiency yet remaining is evidence of a pre- 
 meditated attempt to cheat. In confirmation of this, it may 
 
Sale of the Goods. 8 1 
 
 be stated that an examination of articles previously measured 
 out, in a store with which the writer was connected, led to the 
 dismissal of a salesman who had been in the employ of the 
 society ever since its establishment. 
 
 Although previous measurement is more difficult in the case 
 of liquids purchased by the jar, bottle, or glass, which had 
 been guaged beforehand, the difficulty may be obviated by re- 
 quiring the customer, on his second purchase, to bring back 
 the measure first taken, in return for the new one. This plan 
 has been found to work well in sales of wine, seltzer-water, 
 kerosene, and mustard. In the matter of kerosene especially, 
 it can be at once seen how greatly the sale is facilitated by this 
 method, how the disagreeable smell of the oil is to a large 
 extent avoided, and the danger of fire diminished. 
 
 Boxes and wrapping materials should be bought in quanti- 
 ties from the manufactories or larger trading-houses. 
 
 Measuring out the articles, as has been suggested, makes it 
 likewise possible not to weigh the wrappers with the goods, 
 but to rest the price solely on the net weight. This is the 
 only way by which the buyer can have any decided influence 
 over the salesman. We give, in this place, a schedule of 
 rules to be observed by the buyer and seller, which it would 
 be well to have posted in the store. 
 
 § i. Business Hours. — The store is open during the win- 
 ter, from 7 a. m. to I p. m., arid from 2 till 8 p. m. ; during 
 the summer, from 6 a. m. to 1 p. m., and from 2 till 8 p. m. 
 On Saturdays, till 10 p. m. 
 
 § 2. Cleanliness. — The salesman and his assistants shall 
 appear in the store cleanly and decently clothed at all times. 
 The children of the salesman shall not be allowed in the store, 
 unless on business. 
 
 § 3. Attention to Customers. — The salesman shall wait 
 on all customers with courtesy, in the order of their arrival. 
 Fees to the salesman are expressly forbidden. 
 
 § 4. Identification. — Each customer is required, when 
 requested by the salesman, to show, by exhibiting a member's 
 card, that he belongs to the family or household of such mem- 
 ber. 
 
 § 5. Selling-Prices and Quantities. — The selling-prices 
 of each article, and the minimum quantity which can be pur- 
 
82 Co-operative Stores. 
 
 chased, shall be stated on a price-current posted in the store. 
 The price shall depend in every instance upon the net weight, 
 no box or wrapper being weighed with the article purchased. 
 
 § 6. Apportionment. — Buyers have a right to demand that 
 the various articles shall be weighed or measured out in their 
 presence. 
 
 § 7. Payment. — The salesman shall allow no article to 
 leave the store until its price has been paid in cash. Govern- 
 ment coin, and the paper-money received at the public banks, 
 shall alone be received in payment. When a deduction is 
 made on a large purchase, a receipt shall be given therefor 
 by the buyer, according to a form furnished by the salesman. 
 
 § 8. Dividend Tickets. — The salesman shall give the cus- 
 tomer dividend tickets equal to the total amount of his purchasfc. 
 
 § 9. Complaints of the salesman, or of the quality or price 
 of the goods, may be verbally made directly to the under- 
 signed members of the Board of Directors ; or in writing, by 
 means of the complaint-box, to the President of the Execu- 
 tive Committee. 
 
 (Date and signatures of the members of the Board). 
 
 In relation to the hours of business, no general objection 
 has been made to the plan of closing in the afternoon on holi- 
 days, and of giving the salesman and his family a rest of an 
 hour in the afternoon on working-days, and of two hours in 
 the evening on holidays. No difficulty has been found in 
 carrying this into effect, and it has caused no detriment to the 
 business. 
 
 Another regulation, very beneficial for the retailer, concerns 
 the non-acceptance of foreign notes, notes of private banks, 
 and interest-coupons. Receiving such representatives of value 
 causes great annoyance, and often absolute loss to a retailer, 
 in getting rid of them again. In this, as in other respects, it 
 behooves the co-operative society to be pioneers of reform. 
 
 Societies, whose members live in distant parts of the city, 
 have sdmetim.es agreed to call for orders once a week, and to 
 take the goods to the houses of the members. In such cases, 
 the goods are weighed and done up in the store, and sent to 
 the customers in close hand-carts built for the purpose. 
 Agreeably to the principle of cash payment, no goods will be 
 
Sale of the Goods. 83 
 
 delivered by the messenger until the price charged in the 
 order-book has been paid in full. 
 
 The warehouse and sale-rooms should not be together, so 
 that the latter may not have supplies for more than two days 
 arranged so as to expedite the sales. As the business expands 
 the warehouse should be entirely separate, and from it a 
 second store, in, another part of the city, may be supplied. 
 If several stores are needed, a central warehouse should be 
 established. In this way the warehouse will need separate 
 books, and a particular overseer. The apportionment and 
 wrapping up of the articles will then be done at the ware- 
 house, so that certain goods will be delivered to the salesmen 
 only in sealed packages. The erection of a central ware- 
 house especially facilitates a closer watch over the salesmen 
 and the corps of employees ; for exact account is kept of all 
 goods that are sent out, and it can thus be determined how 
 much a package loses by storage and by measurement in 
 retail dealings. 
 
 This plan has been best carried out by the large Zurich 
 Society. Here, in 1864, nineteen stores and a bakery were 
 supplied from one great central warehouse. Independent of 
 the supplies thus furnished to their own retail stores, the whole- 
 sale dealings from the central warehouse to outside dealers, 
 during the same year, amounted to 278,215 francs (about 
 $50,000). Its stock, on the 3 1st of December, 1864, amounted 
 to 114,013 francs (over $20,000), while that of the nineteen 
 stores amounted only to 56,590 francs ($11,000), an average 
 of less than 3,000 francs to each. Here coffee, sugar, rice, 
 barley, grits, and pastiy were put up in pound packages by four 
 weighers. Soap,, too, was weighed, and the price marked on 
 each bar. Flour, butter, cheese, oil, and soda were sent to the 
 store by the hundred pounds. Thus it is explained how, in 
 each of several ■ stores, the work could be performed by one 
 woman, although the sales, in some months of 1864, rose to 
 8,800 francs. In the central warehouse a separate book is 
 kept, in which the invoice weight of each package is entered, 
 together with the aggregate weight obtained by weighing out 
 and doing up in smaller quantities. The waste in doing up 
 coffee, sugar, barley, grits, and pastry in pound packages 
 amounts to one or two per cent. The salesmen make known 
 
84 Co-operative Stores. 
 
 their wants to the warehouse inspector by entering them in an 
 order-book, and afterwards in another book acknowledge their 
 receipt. Flour and corn-meal are delivered in 200-pound 
 sacks, and reckoned at 198 pounds; wheat-flour in 100-pound 
 sacks, and reckdned at 99 pounds ; lamp-oil and soda are de- 
 livered at 101 pounds, and reckoned at 100 pounds. A waste 
 of 2 per cent, in butter and 3 per cent, in cheese is also al- 
 lowed. At the end of each week, the inspector of the central 
 warehouse makes out bills of all goods delivered to the differ- 
 ent stores during the week, and, after getting them signed by 
 the respective salesmen to show their correctness, sends them 
 to the counting-house. The warehouse inspector has under 
 him four weighers, two stevedores, and two draymen. 
 
 The particular arrangement of the warehouse-rooms must, 
 of course, depend upon the goods to be stored in them. 
 Flour, and other such things, must be kept in a dry and well- 
 ventilated place ; while casks should lie in a damp place, to 
 prevent them from becoming leaky. The inspector ought to 
 examine the condition' of the goods frequently, and at once 
 make known any damage to them. The very smallest society 
 should furnish its warehouse with scales for ascertaining the 
 weight of articles when brought for storage. Finally, a moder- 
 ate insurance against fire should never be forgotten. 
 
 The first rule in the arrangement of the store is to separate 
 the space devoted to the act of selling from the goods them- 
 selves, so that the salesman, in his busy moments, may not be 
 compelled to trust too much to the honesty of his customers. 
 All things should be placed in ways most convenient for the 
 salesman, in order that as large an amount as possible may be 
 sold by one man. The money-drawer, and the drawer of divi- 
 dend tickets, should also be near at hand. In many stores 
 there are open bins for flour, &c. ; yet all such contrivances to 
 attract customers are injudicious, since the articles are exposed 
 to dust and waste. 1 
 
 Societies ought to be on their guard against buying second- 
 hand store-furniture because it is cheap. 
 
 The store need not be situated on a principal business street, 
 since it is not to depend on the custom of chance passers-by. 
 Yet, in large towns, where the proverb, ' ' Time is money, " is 
 especially true, it should be easily accessible to the members ; 
 
Sale of the Goods. 85 
 
 if possible, near the central point of their homes, or in the 
 neighborhood of some frequented market-place. It is well, 
 moreover, to locate the store in some new portion of the 
 town where a rival retail-trade is not much developed. A 
 back room is a bad place for it, especially if the passage through 
 the front part of the building is none too clean or convenient. 
 
 The multiplication of places of sale should be made a spe- 
 cial object. A great portion of the public will only be won to 
 the cause of the society by the convenience of having a 
 society-store near at hand. The increased sale consequent on 
 this multiplication will often enable the society to buy in 
 larger amounts and more profitably, to pay better wages to its 
 employees, and to have the benefit in many ways of a division 
 of labor. These advantages are by no means offset by the in- 
 crease of expenses in proportion to the sales, which sometimes 
 shows itself on the first opening of a new store. 
 
 It is, of course, of the greatest importance to select the right 
 persons for employees. A single mistake in this particular may 
 be the death-blow to a young society. The first requisite is 
 that they shall be persons of integrity and honor. Even with 
 those who are already employed by the society, the utmost 
 strictness must be used, and the first sign of anything dishon- 
 orable should be the signal for dismissal. The employees 
 must be active physically, quick and sure at figures, especially 
 at mental arithmetic, and used to intercourse with the public. 
 It is not important that they should be familiar with any branch 
 of trade : the experience demanded by their particular position 
 soon comes. Persons who have been long engaged in ordi- 
 nary retail-trade are seldom desirable for a co-operative store : 
 they are likely to be too independent of the regulations, and 
 they bring with them bad habits of business, which are hard 
 to shake off. It is well for a new society to choose for store- 
 keeper a married man, with not too large a family, so that his 
 wife can help him at times when there is an unusual press of 
 customers. It would be cheaper to employ unmarried women 
 in the store, but this is only practicable where, as in Zurich, 
 the heavy work is done at a central warehouse. The store- 
 keeper should not be a near relative of any of the officers of 
 the society, especially of the president or cashier. On en- 
 gaging a salesman or store-keeper, the society must demand 
 
86 Co-oper alive Stores. 
 
 security from him. Several societies have sustained heavy 
 losses by not strictly adhering to this rule. The security 
 should be given either in cash or in values which can be 
 readily converted into cash, or else in a bond from thoroughly 
 reliable parties. In Zurich, the salesmen have to give security 
 to the extent of 3000 francs, every laborer in the central ware^ 
 house 500 francs, and the clerk or inspector of the ware- 
 house 5/000 francs. 
 
 The greater the necessity of strict integrity in those employed 
 •in the store, the more does wisdom demand that these persons 
 should receive sufficient salaries, and not be tempted to make 
 up their proper wages from their opportunities in the store. 
 Nothing has been more clearly proved by experience than the 
 miserable economy of stinted wages. Those members of the 
 Board of Directors who are from the laboring class, and have 
 but a small income themselves, are specially liable to err on 
 this point. The salary of those in the store had best be given 
 in the shape of a fixed monthly sum, with a percentage on the 
 amount of sales. This percentage, proportioned to the extent 
 of the person's duties, makes it the seller's interest to properly 
 treat and deal with his customers, and thus secure an increase 
 of sales. To make the whole salary consist of such a per- 
 centage, is to make the seller share the risk of the business. 
 This risk, as a general rule, no one will be inclined to assume, 
 except on condition of a higher percentage than he would 
 otherwise demand. 
 
 The plan of allowing the store-keeper to live in the same 
 building has its advantages in securing the goods against bur- 
 glars ; but on the other hand, the household affairs are apt to 
 encroach on the space devoted to business, and the family 
 kettles are brought into too tempting proximity with the pro- 
 visions of the store. 
 
 In case of the dismissal of the store-keeper, a longer notice 
 than four weeks is not desirable, since it is bad policy to have 
 a man giving only half his energies to his work during a longer 
 time than that. As a rule, it will pay to give him his salary 
 for the whole four weeks of the notice, and discharge him as 
 soon as a person has been found to take his place. 
 
 In cases of dispute between the society and the store-keeper 
 at his departure, the points in dispute should be left to the 
 
Sale of the Goods. 87 
 
 arbitration of two persons mutually agreed upon, whose known 
 character and discretion are such as to insure justice. 
 
 The contract between the store-keeper and the society 
 should be something like this : 
 
 ' ' The following contract is concluded between A. B. , Di- 
 rector of the ■ Co-operative Store Society ; C. D. , Vice- 
 Director of the same ; and E. F. , the store-keeper of the same. 
 
 1. E. F. assumes the management of a store of the society 
 from (date. ) 
 
 2. In this office he pledges himself to take good care of the 
 goods and tickets which he shall receive from the society, to 
 manage the sale of same in all respects as directed by the 
 officers, and to pay over the proceeds of such sales. 
 
 3. He is further pledged to receive the applications for 
 membership, the dues and other moneys paid in, and to make 
 payments, as ordered by the cashier, from the cash of the 
 store. 
 
 4. For every injury which the society incurs from the ne- 
 glect of duties prescribed in sections 2 and 3, he shall be 
 held responsible to the society. He shall receipt for all goods, 
 tickets, moneys, and fixtures given into his charge ; and in case 
 of any defect in or injury to them, he shall be held re- 
 sponsible, except it be a matter over which he had no control, 
 as the loss by drying up, and other things dependent on the 
 nature of the articles. For such he is not to be responsible, 
 unless the loss exceeds a certain percentage to be specially 
 agreed upon. 
 
 5. He shall keep the store open in the winter from 7 a. m. 
 to 1 p. M. ; and in summer from 6 a. m. to 1 p. m. ; and in 
 the afternoon from 2 to 8 ; and on special days, as holidays, 
 at such hours as are customary on those days. 
 
 6. He shall see that the floor, counters, windows, and all 
 parts and appliances of the store are kept clean, and that it is 
 properly lit and warmed. Materials for cleaning, lighting, 
 
 •and warming shall be furnished by the society. 
 
 7. For all goods taken by him from the stock of the store 
 he shall pay the ordinary price, and keep account thereof in a 
 separate book. He shall not receive for such purchases any 
 share in the dividends on sales. 
 
 8. He shall receive a monthly salary of $ , together with 
 
88 Co-operative Stores. 
 
 per cent, of all the proceeds from the sale of goods, and 
 
 other receipts of the store as managed by him, whenever such 
 proceeds and receipts exceed the sum of $ quarterly. 
 
 9. He shall receive no gift from any member or contractor 
 of the society ; and his doing so shall be looked upon as evi- 
 dence of some dishonesty on his part. 
 
 10. Either the society or the store-keeper may annul this 
 contract at the expiration of a month, after giving written no- 
 tice of such intention on the first day of that month. But 
 should he at any time be guilty of dishonesty, he may be dis- 
 missed at once. If the society suspect any dishonesty or 
 notable dereliction of duty on his part, it may suspend him 
 from his office till the matter can be investigated : another per- 
 son filling his place. In case he is proved innocent, the cost 
 of such investigation shall be borne by the society : otherwise, 
 by himself. 
 
 11. He shall deposit with the society, as security for the 
 
 proper discharge of his duties, the sum of $ (or such other 
 
 security as may be agreed upon). This shall be held for all 
 deficiencies, losses, injuries, &c. , sustained through him. This 
 sum shall have an interest of — — per cent. , and shall be paid 
 back at the end of two months after the expiration of the con- 
 tract. 
 
 12. Wherever in this contract the society, or the Board of 
 Directors, or the Director and other officers are mentioned, 
 the store-keeper shall consider as such those persons who are 
 named to him as such by the above parties to the contract, A. 
 B. and C. D. To these latter he is responsible for all the 
 duties undertaken in the contract ; and they are to hold him 
 bounden to them for all the obligations which he assumes 
 toward the society or its managers. In case either of these 
 two parties resigns his office or dies, they, or the remaining 
 one of them, shall indicate to the store-keeper the person who 
 will take the vacant place. In such a case, the store-keeper 
 shall make a written addition to the contract, including this' 
 new person therein. For a failure to do so, he may be dis- 
 missed from his position. 
 
 13. If, while this contract is in force, there shall be a dis- 
 pute between the contracting parties, concerning the salary, or 
 the inventory, or any part of the business, the store-keeper 
 
Book-keeping. 89 
 
 shall have the right of appeal to the Board of Directors. He 
 shall submit unconditionally to its decision, without any liti- 
 gation. If at the expiration of the contract there shall be any 
 dispute concerning the settlement of accounts, or the paying 
 back of the security, &c, it shall be decided, without litiga- 
 tion, by arbitrament. Each of the disputing parties shall 
 choose an arbiter from among the members not belonging to 
 the management of the society, or from among the officers of 
 some other society. These two arbiters shall agree upon an 
 umpire, not necessarily from the members of the society. 
 These three persons shall give a decision which shall be final. 
 Should either of the disputing parties (after the other has 
 selected his referee) delay to select one on his own part, then 
 the referee already selected shall demand that another be named 
 within three days : if this be not done, he himself shall name 
 the second referee from among the officers of some other 
 society. If these two cannot agree upon an umpire within 
 three days, his selection shall be left to" the Executive Com- 
 mittee. 
 
 14. This contract is executed by both parties, in one origi- 
 nal and one duplicate. 
 
 Witness : 
 
 (Here follow date, signatures, and seals. ) 
 
 CHAPTER XI. 
 On Book-keeping in Co-operative Stores. 
 
 THE following rules for the keeping of books are intended 
 to serve as a guide for a small co-operative society trans- 
 • acting business in one or two stores only. As the funda- 
 mental principle remains the same everywhere, however, these 
 regulations may prove instructive for those also to whom the 
 books of a larger concern are intrusted. The author himself 
 has become familiar with book-keeping in the store of a co- 
 operative society, and has endeavored to harmonize the mer- 
 cantile way of keeping books, by double entry, with the special- 
 
90 Co-operative Stores. 
 
 ties which experience has proved to be particularly adapted to 
 such societies. The following method has been practically 
 and successfully tested in co-operative stores, and its simplicity 
 makes it intelligible even to those who have not previously 
 received any commercial training. 
 
 In laying down this system, it is presupposed that the 
 sale of goods, the manual labor in the store, and the keeping 
 of the books, are attended to by separate persons. With- 
 out this strict division of labor, an efficient control of the 
 business would prove impossible. In smaller stores, how- 
 ever, the accounts of the society may be properly kept without 
 requiring the constant attention of the accountant ; and while 
 he can make himself useful in the store during the greater 
 part of the day, an hour or two in the afternoon will be found 
 sufficient for the posting of his books and the discharge of his 
 other office-duties. On the other hand, we must earnestly 
 protest against all portioning out of the book-keeping proper, in 
 large societies, among different employees, as this precludes 
 all possibility of the punctual and orderly discharge of the 
 duties requiring attention in a counting-room. It is equally 
 out of place to appoint a special superintendent for the con- 
 trol of the book-keeper, inasmuch as it is made the distinct 
 duty of the Director to exercise such control. Ample oppor- 
 tunity for it is given him through the abstracts from the books 
 which he is bound to make at the end of each month, and 
 which, as specified below, he has to submit for approval to 
 the members of the society at their regular monthly meetings. 
 
 I. On Book-keeping in the Stoke and Warehouse. 
 
 A. The Store-keeper' s Account. 
 
 The store-keeper can only receive such goods into the store 
 and warehouse as are accompanied by an invoice, or bill of 
 lading, in which their quantity, at least, is stated. Immedi- 
 ately on arrival of the goods, he should see that they tally with 
 the packages mentioned in the bills of lading, and that their 
 gross weight and measurement also correspond with the 
 accompanying documents. This proving correct, he may 
 open the packages, examine the quality and description of 
 the goods ; and if he find no reason to take exception to the 
 
Book-Keephig. 9 1 
 
 same, he can either assign them a place in the warehouse, or 
 if immediately needed, deliver them to the store for distribu- 
 tion. Should he find them short in weight or measurement, 
 damaged, or of a quality inferior to what they are represented to 
 be, he should call one of the Board of Directors to his assist- 
 ance, and not remove the goods until the amount to be claimed 
 on account of the discrepancies has been properly estimated, 
 and a memorandum made on the bill of lading or invoice. 
 
 It is the duty of the book-keeper to visit the store and ware- 
 house daily, at a time when there is usually no rush of cus- 
 tomers, so that the sale of goods may be in no way interfered 
 with by his presence, and the employees be at leisure to receive 
 instructions and give the information he may require. The store- 
 keeper hands him the invoices and bills of lading of all goods 
 received during the day : these are examined and entered on 
 the store-keeper's account in duplicate, one of the books re- 
 maining in the hands of the salesman, while the other is taken 
 in charge by the book-keeper or cashier. The net quantity of 
 the goods, if it can be immediately ascertained, is entered on 
 the books. But, in case an article is retailed out of the original 
 package, the net weight or measurement of goods is entered 
 according to the invoice, and the adjustment of any difference 
 between actual tare and the tare allowed on such invoice, is 
 provided for by subsequent special entry on the books as soon 
 as the empty package may have been weighed. Corrections 
 on the books must never be made by erasures, but by a correct 
 _entry on the same side of the book on which the erroneous 
 entry stands, and by a counter balance of said erroneous entry 
 on the opposite side of the account. The net weight of the 
 goods being charged on the store-keeper's book, the percentage 
 of weight to be allowed for drying up, waste, and loss in meas- 
 urement in retailing, has to be stipulated, with the express 
 understanding that the deficit resulting from the above causes 
 has not to be accounted for by the salesman when an inventory 
 of stock is taken. In cases where the wrapping-paper is 
 weighed with the goods sold, there is probably no cause for 
 such an allowance : but this practice of counting wrapping- 
 paper as merchandise is not advisable. 
 
 Some societies make an average allowance on all goods in- 
 discriminately, even on those where no loss can actually occur — 
 
92 Co-operative Stores. 
 
 as, for instance, on cigars, matches, &c. This average per- 
 centage varies in the different establishments from i to i£ and 
 even 2 per cent.; and, as its allowance is always more or 
 less arbitrary, it must appear preferable to grant such a per- 
 centage on only those articles which actually lose in retailing. 
 The rate of percentage covering, or at least approximating the 
 loss incurred, will be easily ascertained by experience. On 
 coffee, rice, flour, and sago, 1 per cent, will have to be allowed,; 
 on oil, from 2 to 3 per cent. ; on lump-sugar, 3 per cent. 
 The loss on some articles is materially affected by their being 
 systematically measured out in a number of portions (pound 
 packages, for instance) at one time, or being hurriedly put 
 up piecemeal as called for. On this point, see preceding 
 chapter. To estimate the loss incurred by drying up, is more 
 difficult, as it is materially influenced, first, by the length of 
 time the article remains on hand ; then, also, by the more or 
 less dry condition of the goods at the time of delivery to the 
 society ; and, finally, by the dryness of the atmosphere in the 
 store and warehouse. Losses from drying up are more par- 
 ticularly incurred on butter, cheese, and soap. On butter, if 
 remaining on hand during an average of three days, 3 per 
 cent, will have to be allowed ; on cheese and soap from 5 to 
 10 per cent. It is recommended to cut cheese, soap, and meat 
 in salable pieces as soon as delivered by the contractor, and to 
 mark on such pieces their weight and corresponding value. 
 The loss by drying up has, in such cases, to be sustained by the 
 purchaser. By deducting the aggregate quantity of losses 
 allowed, from the aggregate quantity of goods delivered to the 
 store, we ascertain the quantity of goods which is to be 
 charged to the salesman at prices stipulated by the Board of 
 Directors. As often as a page on the debtor-side of the store- 
 keeper's book is filled by such entries, the salesman has to 
 certify their correctness on the duplicate book, which con- 
 stantly remains in the hands of the book-keeper. During his 
 daily visits to the store, the book-keeper charges all goods re- 
 ceived to the store-keeper's account; the store-keeper then hands 
 him receipts for all disbursements the salesman may have made 
 from the drawer. The salesman is not allowed to pay any bills 
 of consequence, unless they are receipted by the party to whom 
 the money is due. If no bill is presented, and no receipt given, 
 
Book-Keeping. 
 
 93 
 
 on account of the insignificance of the amount claimed, the 
 salesman should make a memorandum of such payments on a 
 slip of paper, which he hands to the book-keeper after certifying 
 the correctness of the claim on which payment was made. The 
 salesman is not allowed to make any but small and necessary 
 payments, unless previously authorized by the cashier. Any 
 goods taken from the store for office or store use have to be 
 considered just as if purchased from another establishment, and 
 a receipt has to be made out for the quantity taken, and handed 
 in to the cashier. The total amount of disbursements, as 
 shown by the receipts, is added by the cashier to the aggregate 
 of money which he takes out of the drawer, and entered on 
 the credit-side of the Store-keeper's account as ' ' cash. " At 
 the bottom of each page on the credit-side of the Store-keeper's 
 account, the cashier gives a receipt for the aggregate of entries 
 on that page. 
 
 To keep a more detailed account of the goods brought into 
 and sold from store has been found of little value as a check 
 on the salesman, and, with considerable sales, becomes practi- 
 cally impossible. 
 
 We now subjoin a schedule of a store-keeper's account : 
 
 Debtob. 
 
 Date. 
 
 Description of 
 Goods. 
 
 q5 
 
 u 
 
 a 
 
 CO 
 V 
 
 CD 
 03 
 O 
 
 3 
 
 CD 
 
 Deduction for 
 loss. 
 
 c3 CD 
 
 Si 
 
 O CD 
 
 3 B 
 
 CD'S 
 
 July. 
 
 Per 
 
 centage 
 
 Total. 
 
 2 
 3 
 4 
 
 Butter-tubs 
 
 Tickets 
 
 pound 
 piece 
 
 pound 
 
 pound 
 bunches 
 of 25 
 
 105 
 
 200 
 100 
 
 100 
 
 200 
 98 
 
 30 
 
 3 
 
 'i 
 
 3 
 
 3 
 
 0.98 
 0.9 
 
 97 
 
 1 
 
 2.00 
 
 97.02 
 
 29.01 
 
 40 
 
 $0.32 
 40 
 10 
 07 
 
 2 
 
 1.25 
 
 $31.04 
 
 40 
 
 20.00 
 
 6 
 
 7 
 
 8 
 
 Advance in price 
 
 of butter 
 
 Cigars— Ambrosia 
 
 '6.79 
 
 58 
 
 50.00 
 
 Cbeditok. 
 
 Date. 
 July. 
 
 
 
 2 
 
 
 $50.00 
 
 3 
 
 Cash 
 
 30.00 
 
 6 
 
 7 
 
 Reduction in price of Butter, 30 B> less •/,„ B— 39 Vio », @ 2 cts.. 
 
 58 
 6.79 
 
 8 
 
 
 60 
 
 8 
 
 Discount allowed on sale of 500 Cigars (Member No. 180, C. Schmitz). 
 
 25 
 
94 
 
 Co-operative Stores, 
 
 The following remarks are explanatory of the preceding 
 account. 
 
 i. All cases, boxes, tubs, &c, in case they are to be sold 
 and not returned to the dealer, are charged on the account 
 at their selling value as merchandise. 
 
 2. Purchase-tickets for dealers with whom the society has 
 entered into an agreement for the ticket-trade, are charged to 
 the salesman like any other merchandise, at the price which 
 members have to pay for them. 
 
 3. If any change takes place in the selling-price of an arti- 
 cle before the supply entered on the book at previous figures 
 is entirely exhausted, the difference in the selling value of the 
 quantity remaining on hand, is entered either on Dr. or Cr. 
 side of the account, according to the advance or decline. 
 
 4. If a discount is granted to buyers of quantities, the 
 salesman has to demand from the purchaser a certificate speci- 
 fying such allowance, the amount of which is entered to credit 
 of the salesman on the store-keeper's book. 
 
 In case a society has several stores, all transfers of goods 
 from one store to the other, made to prevent the exhaustion of 
 supplies, are booked as if the goods were sold to outside 
 dealers. 
 
 B. Book of Contributions by Members. 
 
 The salesman should receive payments from members on ac- 
 count of their shares in the society. The sums thus paid should 
 be kept separate from the money in the drawer, and handed 
 over to the cashier. The members enter the instalments paid 
 on a book kept in the store for that purpose. The store- 
 keeper gives a receipt for such payments by stamps which he 
 pastes into the account-book of the member, just as postage- 
 stamps are pasted on a letter. (See Chapter V. ) 
 
 These stamps may be of the following size and description : 
 
 50 cents. 
 
 
 One dollar. 
 
 
 
 
 July 
 
 7 th, 
 
 1866; ' 
 
Book-Keeping. 95 
 
 The amount of the instalment is printed on the stamp : the 
 divisions on the lower part of it are filled up by the store-keeper 
 with the date of payment, as will be seen on the second 
 stamp. In his daily visits to the store, the cashier copies the 
 amount of contributions from the book in the store into his 
 memorandum-book, states in both books the amount received 
 from the store-keeper from contributions, as also the nominal 
 value of the stamps which he delivers to the salesman from 
 time to time. 
 
 C. Dividend-Scrip. 
 
 Different methods have been adopted to estimate the aggre- 
 gate value of a member's purchases of goods from the store 
 during a quarter, with a view to estimating the dividends. Ex- 
 perience has shown that entering all single purchases on a 
 member's pass-books, in order to record his share of dividends, 
 interferes with dispatch of business, and necessitates a double 
 number of salesmen. To buy tickets of the cashier in ad- 
 vance, and to have them entered on the dividend account of 
 members, has the same disadvantage, even to a greater degree, 
 inasmuch as the members cannot be prevailed upon to buy 
 in advance several tickets at once. Such an investment 
 changes cash payment into payment in advance, which the 
 means at the disposal of members do not always justify. The 
 only practical plan for the adjustment of dividends, is the 
 one resorted to by the English societies, and especially by 
 the Rochdale Pioneers. According to this plan, the salesman 
 gives the purchaser dividend tickets of exactly the nominal 
 value of his purchase. These dividend tickets may be of 
 printed pasteboard or stamped tin, which latter will prove to 
 be the cheapest and best. The stamp ought to show the 
 initials of the society's name, and the number of cents or dol- 
 lars which the ticket represents. If the intrinsic value of the 
 ticket is greater than the proportion of dividend which its 
 possession secures, it may not be presented for payment, but 
 converted into a plaything for children, or done away with in 
 some other manner. It is advisable to make each ticket of a 
 size corresponding with its nominal value. The greater the 
 variety of tickets, the easier it will be for the salesman to make 
 the quick and exact return for the value of purchases. Thou 
 
96 Co-operative Stores. 
 
 sands of these tickets may be made for a few dollars. The 
 salesmen become easily accustomed to the handling of them, 
 and soon handle them as rapidly as type-setters handle types. 
 A sufficient supply of these dividend tickets ought to be handed 
 to the salesman, and their receipt and aggregate nominal value 
 certified to by the store-keeper. 
 
 D. Deposit-Books. 
 
 The savings intrusted by members to the society have to 
 be kept separate from the proceeds of sales, and from the 
 contributions or instalments on shares. (See B. ) The con- 
 trol of these deposits is indicated in Chapter VIII, where it is 
 stated that a receipt must be given to each depositor, signed 
 by the cashier and the director of the society. If, therefore, 
 the depositor feel disinclined to intrust his deposit to the. 
 salesman, on a receipt ad interim, he should inform the cashier 
 of his intention to deposit, upon which the latter hands a 
 receipt, in due form, to the salesman for delivery. On next 
 visiting the store, the cashier must either find this receipt, or 
 the corresponding amount of money, in the drawer specially 
 kept for that purpose. Returns of deposits are paid out of 
 the store-drawer like other disbursements. The Director has 
 to keep for the cashier a memorandum of all deposits, and 
 can easily take.such memoranda by comparing the entries in 
 the store with the receipts he has countersigned. 
 
 E. Various special Memorandum-Books. 
 
 Besides the books mentioned under A and D, the following 
 should also be kept in the store : 
 
 1. An inventory of all tools and fixtures used in the ware- 
 house and store. 
 
 2. A day-book, on which the salesman enters the aggregate 
 sales of the day, independently of the entries made by the 
 cashier on the Store-keeper's account, to which we have alluded 
 under A. These entries on the Day-book serve to record the 
 fluctuations in sales. 
 
 3. The roll, on which application is made for admission 
 into the society, with record of name, occupation, and resi- 
 dence. 
 
 4. A salesman's memorandum of such goods as he may 
 take from the store for his personal use. 
 
Booh-Keeping. 97 
 
 II. On Book-keeping in the Office. 
 
 The book-keeper, after having posted the' books in the 
 store and warehouse in the manner already indicated, returns 
 to the office and begins by copying the entries made on the 
 debtor-side of the Store-keeper's account, on to the creditor- 
 side of ,the Merchandise account, in the Ledger. The strict 
 adherence to this and the other fundamental principles of 
 double-entry book-keeping, can alone secure an efficient and 
 complete control of the business, and afford a chance to 
 readily ascertain the amount of profit realized. The purchas- 
 ing-tickets given to the store-keeper for sale to members, are 
 not entered on the, Merchandise account, but are brought to 
 the credit-side of a separate Ticket account. This Ticket 
 account must be open for every description of tickets, for 
 which a special rate of discount has been agreed upon. The 
 entry on the Store-keeper's account for tickets delivered, is 
 made on the credit-side of the Ticket account as follows : 
 
 July 7. By Store-keeper's account $20.00. 
 
 On the debtor-side of the Merchandise account entries have 
 to be made of all items which were previously transferred 
 from Store-keeper's account to its creditor-side, but at their 
 cost prices. Entries have likewise to be made on the debtor- 
 side of the Merchandise account of all items which figure on 
 th6 creditor-side of the Store-keeper's account, provided they 
 have no reference to Cash account; as, for instance, from 
 above schedule of the Store-keeper's account, the item on 
 reduction of price on butter, the returned wheat flour, and 
 the discount on cigars. 
 
 We now submit a schedule for the Debtor-side of the Mer- 
 chandise account ; 
 
98 
 
 Co-operative Stores. 
 
 
 Description or Goods 
 
 AND 
 
 Name of Seller. 
 
 Quantity of 
 Goods. 
 
 Estimate of Cost. 
 
 COK- 
 
 & 
 
 « 
 
 Meas- 
 ure. 
 
 Gross 
 
 Net. 
 
 Unit 
 
 of 
 
 Calcu'n 
 
 Cost 
 
 per 
 
 Unit. 
 
 Total 
 Cost. 
 
 Okeditb. 
 
 3 
 
 Freeh batter, from N. 
 Bird 
 
 lb. 
 Piece 
 
 lbs. 
 
 Piece 
 
 105 
 
 100 
 1,000 
 
 100 
 1 
 
 98 
 
 1,000 
 
 per lb 
 
 Cwt. 
 do 
 
 1,000 
 
 $0.25 
 
 5.00 
 1.20 
 
 42.00 
 
 $25.00 
 
 .75 
 
 4.90 
 1.20 
 
 42.00 
 
 .58 
 
 6.10 
 .25 
 
 Sundry Cred. 
 
 S 
 
 Btitter-fub 
 
 do 
 
 3 
 6 
 
 Freight on above butter 
 Wheat flour (I), from 
 
 Cash, 
 do 
 
 6 
 
 8 
 
 Freight on above flour.. 
 
 Cigars (Ambrosia), from 
 
 J. C. Baker 
 
 do 
 
 6 
 
 Reduction on price of 
 
 Stor'keeper* 
 
 do 
 do 
 
 7 
 8 
 
 Wheat flour, of July 6, 
 
 The following remarks serve as explanations of the above 
 schedule. 
 
 i. The name of the dealer is mentioned, as this side of 
 the Merchandise account is not only referred to in the meet- 
 ings of the managers for the adjustment of selling prices, but 
 also serves as a guide for future orders of goods. 
 
 2. All boxes, cases, casks, &c. (in this schedule the butter- 
 tub), are to be entered on this account without affixing any 
 value, unless the dealer has made a separate charge for them. 
 
 3. Freight, duties, and postage are to be charged on Mer- 
 chandise account, whenever they are occasioned by orders of 
 goods. 
 
 4. The last column of the schedule shows the accounts to 
 the credit of which the respective items have to be placed. As 
 we have remarked before, book-keeping by double entry has 
 been so called because, for every entry made on one account 
 on either debtor or creditor side, a corresponding entry has to 
 be made on another account on the opposite side. 
 
 The Merchandise account, in its relation to the Store-keeper's 
 account, as above mentioned, is arranged on the supposition 
 that all goods are first sent into a central warehouse, and are 
 thence delivered to the store-keeper at selling prices, just as to 
 
 * Compare page ! 
 
Book-Keeping. 09 
 
 an outside customer. The Merchandise account serves the 
 special purpose of showing the gross profits by comparison of 
 its debtor and creditor side. 
 
 After posting up the Merchandise account, the book-keeper 
 proceeds by making an entry of every item which is on its debtor- 
 side, upon the creditor-sides of the respective accounts to which 
 such entries properly belong. In the above schedule the last 
 three items are previously credited to the Store-keeper's account, 
 and do not require any further entry. As regards the other 
 items, the last column refers to either individual creditors or to 
 the Cash account, according as the purchase value of the goods 
 was already paid, or still due, to the dealer at the time of entry. 
 On the Sundry Creditors account, the entry on creditor-side 
 simply consists of the name of the respective party, reference to 
 Merchandise account, and the amount due. It would be ad- 
 visable to number all bills and invoices not paid, and to enter 
 the corresponding numbers on the Creditors account as 
 vouchers. The items to be entered on the creditor-side of Cash 
 account must have a similar voucher corresponding with the 
 numbers on the receipts. These entries on the Cash account 
 must always correspond with the receipts given at time of pay- 
 ment ; and these receipts are either delivered to the book-keeper 
 directly, or whenever payment has been made out of the drawer 
 in the store through the store-keeper. In the latter case, 
 their aggregate is added to the money in the drawer, and the 
 sum total entered on the Cash and Merchandise accounts 
 as proceeds of sales. All receipts are entered according to 
 their running number to credit of the Cash account, with a 
 reference to the account to which they have to be charged. To 
 find the right account on which the latter entries have to be 
 made, we have to distinguish : 
 
 • 1. Receipts for Payment of Goods bought. — Whenever 
 such goods, or the freight and duty on the same, have been 
 paid for immediately on receipt of the goods, the correspond- 
 ing charge will be found on the debitor-side of Merchandise 
 account. But if the item has been previously placed to credit 
 of the dealer from whom the goods were obtained, the pay- 
 ment made for them has to be charged to the same account, 
 which is thus balanced as far as this item is concerned. Such 
 entries have to be made with a reference to the Cash account, 
 
ioo Co-operative Stores. 
 
 and with a mention of the date of the original entry to the 
 credit of the dealer. 
 
 2. Receipts given by Dealers for the Redemption of 
 Purchase-Tickets. — The receipts for the amount of money 
 actually paid the dealer are charged on the Ticket account. A 
 second entry has then, to be made on the line below the first, 
 stating the amount which the dealer has agreed to be deducted 
 as discount from the nominal value of the tickets redeemed, 
 and has to run thus: "To (the same) Profit and Loss Ac- 
 count." This latter amount should be simultaneously placed 
 to the credit of either the Discount and Interest account, or 
 directly to credit of Profit and Loss account, using the words, 
 
 ' ' By Ticket Creditors account. " The discount obtained on 
 an invoice of goods has to be dealt with in exactly the same 
 manner. 
 
 3. Receipts for Payment of Contingent Expenses, as 
 rent, salary, percentage, cooperage bills, writing material, &c. 
 — These items are either charged to the Expense account, or 
 directly to the Profit and Loss account. 
 
 4. Receipts for Disbursements for Permanent Appur- 
 tenances, as for store-fixtures, printing of laws and by-laws, 
 purchase of blank-books for the counting-room, &c, should 
 be charged to the ' ' Fixtures account, " with due particulars. 
 This account comprises all disbursements made for articles 
 which remain in use for the benefit of the society, not during 
 one quarter only, but for an indefinite and much longer time. 
 It is evident, therefore, that the expense incurred for them 
 should not be saddled on the business transactions of one 
 quarter, but should be borne by them only in proportion to the 
 actual wear and tear, and consequent depreciation of the articles. 
 
 5. Receipts for Dividends paid. — These are entered on 
 the debtor-side of the dividend account of each member, 
 while all returns of deposits^are similarly charged on the Sav- 
 ings account of such member. If, on paying a dividend to a 
 member, a deduction is made (compare § 8 of the General 
 Laws), such deduction is charged to the Shares account, and 
 placed to credit of Profit and Loss account. When all entries 
 for which the receipts serve as vouchers have been made, the 
 book-keeper should enter the amount of cash received from 
 different sources. These entries all belong to the debtor-side 
 
Book-Keeping. 101 
 
 of the Cash account, and have to be made with references to 
 the accounts on which they have been credited. Of one item 
 placed to credit of the Store-keeper's account, namely, the cash 
 sales of the day, the book-keeper has already made a memo- 
 randum during his presence in the store. He also carries with 
 him, on returning from the store, the duplicate book of con- 
 tributions by members. These contributions have to be 
 placed, each one separately, to the debtor-side of Cash ac- 
 count, and to the creditor-side of the Shares account of the 
 respective members. In exactly the same way the deposits 
 made are charged on the Cash account, and carried to credit 
 of the Savings account. Receipts from other sources seldom 
 occur. The amount of a loan, or of security paid in cash, 
 would have to be placed on the credit-side of the Sundry Cred- 
 itors account, while the purchase price for store-fixtures disposed 
 of, would have to be carried to credit of Store-fixtures account. 
 The accounts above mentioned would then stand as on the 
 following four pages. 
 
102 
 
 Co-operative Stores. 
 
 Cash Account. 
 Dehor. 
 
 Date. 
 July. 
 
 4 
 8 
 8 
 12 
 13 
 
 To Storekeeper's account* 
 
 " do do 
 
 " Shares account (C. Mueller, No. 183) 
 
 " Store-keeper's account 
 
 " Snares account (F. Ganser, No. 10) . 
 
 " Store-fixtures account 
 
 " Savings account (N. Weber) 
 
 $40.00 
 80.00 
 1.25 
 15.00 
 1.00 
 3.75 
 5.00 
 
 Cr editor. \ 
 
 Date. 
 July. 
 
 Numbers of 
 Receipts. 
 
 12 
 14 
 14 
 15 
 17 
 19 
 20 
 21 
 
 Merchandise account 
 
 Merchandise account (Lee & Co) 
 
 Merchandise account 
 
 Sundry Creditors account (N. Bird) 
 
 Sundry Creditors account (J. C. Baker). . 
 
 Ticket account (Meyer) 
 
 Expense account (Smith) 
 
 Expense account (C. Mueller) 
 
 Fixtures account (Henry) 
 
 Shares account (C. Mueller) 
 
 Savings account (No. 182, N. Weber) 
 
 78 
 79 
 80 
 81 
 
 84 
 
 87 
 
 $0.25 
 4.90 
 1.20 
 24.60 
 42.00 
 18.20 
 20.00 
 3.00 
 8.00 
 5.15 
 10.10 
 
 * In practice, it is superfluous to use the word " account" in each entry. It is 
 inserted here for the sake of clearness. Other abbreviations will suggest them- 
 selves ; but the book-keeper should be very careful to adopt none which may lead 
 to obscurity. 
 
 t In practice, the debtor and creditor divisions of the accounts should stand 
 side by side, as on page 113. The plan used above was necessitated by the space 
 at command. 
 
Book-Keeping 
 
 103 
 
 Sundry Creditors Account. 
 Debtor. 
 
 Date 
 July. 
 
 Date of 
 Purchase. 
 
 12 
 12 
 14 
 
 Cash account (N. Bird) 
 
 Discount on above (2 per cent) 
 Cash account (J. C. Baker) . . . 
 
 July 3 
 July 8 
 
 $24.50 
 
 60 
 
 43.00 
 
 Creditor. 
 
 Date. 
 July. 
 
 3 Merchandise account (N. Bird) 
 
 8 Merchandise account (J. C p Baker) . 
 
 Number of 
 Bill. 
 
 $25.00 
 42.00 
 
 Ticket Account. 
 Debtor. 
 
 Date. 
 July. 
 
 14 Cash account (Meyer) 
 
 14 Discount on above tickets. , 
 
 $18.20 
 1.80 
 
 Creditor. 
 
 Date, 
 July. 
 
 Store-keeper's account I $20.00 
 
104 
 
 Co-operative Stores. 
 
 Profit and Loss Account. 
 Debtor. 
 
 Date. 
 July. 
 
 15 
 17 
 
 Cash account (Smith, rent for two quarters) 
 
 Cash account (Mueller, Postage on letters and packages concern- 
 ing lawsuit). ■ .'. 
 
 $30.00 
 3.00 
 
 Creditor. 
 
 Date. 
 July. 
 
 12 
 
 14 
 
 Sundry Creditors account (N. Bird) 
 
 Ticket account (Meyer) 
 
 Shares account (Mueller) 
 
 $0.50 
 1.80 
 1.25 
 
 Fixtures Account. 
 Debtor. 
 
 Date. 
 July. 
 
 19 
 
 Cash account (Henry. 1 Iron Stove) . 
 
 Number 
 in list of 
 Fixtures, 
 
 120 
 
 $8.00 
 
 Creditor. 
 
 Date. 
 July. 
 
 
 Number 
 in list of 
 Fixtures. 
 
 
 12 
 
 
 15 
 
 $3.75 . 
 
 
 
 
Book-Keeping . 105 
 
 Shares Account.* 
 Debtor. 
 
 Date. 
 July. 
 
 Membee, No. 182— C. 
 
 Mueller. 
 
 
 20 
 20 
 
 Profit and Loss account. (25 per cent.) . . 
 
 
 1 1.26 
 
 Creditor. 
 
 Date. 
 July. 
 
 > 
 
 8 
 
 Cash account. (Payment of instalment) . 
 
 
 | $1.00 
 
 
 
 
 Savings Account. 
 Debtor. 
 
 Date. 
 July. 
 
 
 SI 
 
 Cash account. (Deposit returned) 
 
 ($10.10 
 
 Creditor. 
 
 Date. 
 July. 
 
 
 13 
 
 
 ...1 *s.nn 
 
 
 
 Almost all the preceding accounts may admit of subdi- 
 visions : with increasing transactions such subdivisions will 
 become more and more desirable. Instead of keeping one 
 general Merchandise account only, it may not be out of place 
 to open separate accounts for each of the more important . 
 
 * This is but a specimen of the account. The Shakes account contains the 
 account of all the members, kept in the same way as the specimen given-. 
 
 5* 
 
106 Co-operative Stores. 
 
 articles, as Butter, Coffee, Sugar, Tobacco, &c. In the same 
 manner, as soon as the parties of whom purchases are made 
 on credit become too numerous, it becomes advisable to open 
 an account for each one of the principal dealers separately, 
 instead of crowding them into a Sundry Creditors account, 
 as has been done in the preceding schedule. Even the Fix- 
 tures account may be properly subdivided. The practicability 
 will be easily perceived by a person who has once made him- 
 self familiar with the fundamental principles of book-keeping. 
 As regards the cash on hand, the cashier should take 
 particular care that its volume does not attain too high a 
 figure ; and whenever this figure remains for any length of time 
 above what is actually needed, the cashier must call the at- 
 tention of managers to the fact, so that some disposition may 
 be devised for the surplus. 
 
 III. The Inventory. 
 
 This must be taken at the end of each quarter, and must be 
 made as rapidly as may be consistent with its accuracy. It is 
 divided into five parts : 
 
 A. The Revision of Securities. 
 
 The investigatibn into these is made by three auditors, ap- 
 pointed for that purpose in a meeting of the Convention. 
 They should examine whether the security given by employees 
 of the concern, as for instance, by the cashier and store* 
 keeper, is still sound and valid, so that it may be made avail- 
 able in case of fraud or defalcation. The result of their 
 investigation is to be communicated to the members at their 
 next meeting. 
 
 B. Inventory of Cash. 
 
 To facilitate this, the store-keeper has to deliver to the cash- 
 ier all moneys he may have in his possession, in the drawer 
 and otherwise, so that the examination of the cash may be 
 made exclusively with the cashier. This investigation is like- 
 wise intrusted to a committee appointed by the Convention, 
 and its result should be communicated to the Convention as 
 soon as possible. 
 
Book-Keeping. 107 
 
 C. Inventory of Tickets. 
 
 Tickets are of three different classes : purchase-tickets, 
 stamps to certify contributions, and dividend scrip or tickets. 
 Previous to the inventory, the store-keeper must return to the 
 cashier whatever purchase-tickets he has on hand unsold. 
 The cashier must give credit to the store-keeper's account for 
 the aggregate value of tickets returned, and charge an equal 
 sum to the Ticket account in the Ledger. Thus the cashier 
 alone has to account to the committee for the amount of pur- 
 chase-tickets on hand, while the amount of contribution- 
 stamps and dividend-tickets on hand is ascertained both from 
 the cashier and the store-keeper. The balance of dividend- 
 tickets on hand must be locked jrp until the members have 
 handed in all their tickets for payment. 
 
 D. The return of Dividend-Tichets by Members. 
 
 This must be made on the day the inventory is taken ; and 
 in order to enforce their prompt delivery, stipulation must be 
 made that only such tickets as are handed in that same day, 
 shall count in the apportionment of profits on the transactions 
 of the quarter. Some of the managers must assist the cashier 
 in receiving and counting the tickets, and members must be 
 enjoined to previously assort and count them. The experience 
 of the English societies, who have adopted this plan, and of 
 several German societies who have followed their example, 
 proves that the delivery can thus be made in a single day. ' To 
 allow a longer term retards the quarterly balance of the books 
 indefinitely. Besides, members would have a chance to 
 add to their returns such tickets as have been sold them since 
 the commencement of the new quarter. For these they are 
 not entitled to any share in the dividends of the quarter just 
 closed. By permitting the return of tickets after their sale to 
 members has been resumed, the store-keeper would have a 
 chance to do away with quantities of them, and use them for 
 his own profit. Before the tickets are handed in, the book- 
 keeper must prepare a schedule like the following, of the 
 dividend declared, with interest, at the close of the quarter. 
 Immediately on delivery of tickets, and in the presence of the 
 holder, the amount should be entered in the column left open 
 for that purpose : 
 
io8 
 
 Co-operative Siores. 
 
 Members' 
 
 numbers on 
 
 the roll. 
 
 m 
 
 ■ ! 
 
 a 
 
 © 
 
 1 
 
 •■s . 
 
 ■s-a 
 |l 
 
 •a 
 1 
 
 '%i 
 ft i 
 
 |s 
 
 o 
 
 §• 
 
 I 
 
 5 8 
 || 
 
 CD+J 
 
 Is 
 8° 
 
 OQ 
 
 ! 
 
 o 
 <u 
 
 u 
 
 "o 
 
 C 03 
 03 O 4 
 
 "S.S 
 
 1° 
 
 i 
 
 oTtS 
 5 PI 
 
 *l 
 
 I! 
 I 73 
 
 10. 
 18%. 
 
 F. Ganser, 
 Unr. Mueller 
 
 $74.40 
 49.80 
 
 $3.72 
 2.46 
 
 $0.10 
 0.16 
 
 $3.82 
 2.62 
 
 $5.33 
 8.06 
 
 $9.15 
 10.68 
 
 It will be seen that in the preceding schedule a quarterly 
 dividend of 5 per cent, on purchase-tickets is assumed, and 
 interest on the amount due at the close of the preceding 
 quarter at the rate of 2 cents on each whole dollar. 
 
 After delivery of the purchase-tickets, a certain quantity of 
 them is immediately handed over to the store-keeper for sale 
 during the quarter just commencing. Of this, as well as of 
 the aggregate of tickets which were delivered up by members, 
 a memorandum should be taken. 
 
 E. Inventory of Merchandise on hand. 
 
 During this inventory, as well as during the delivery of 
 tickets by members, the store ought to be closed to all pur- 
 chasers. It is advisable to intrust the taking of the inventory 
 in each store-room or warehouse to not more than two persons; 
 one of whom ought to be a member of the Board of Directors, 
 while the other should be specially appointed, and act as 
 auditor. One of these should weigh, count, and measure the 
 goods, and the other make the entries on the inventory-book: 
 
Book-Keeping. 
 
 109 
 
 For the latter purpose, the book-keeper must have on hand 
 schedules made out on the following plan : 
 
 Description 
 
 of 
 
 Goods. 
 
 Quan- 
 tity 
 ou 
 
 hand. 
 
 Cost Price. 
 
 Total 
 cost. 
 
 Sapposed 
 
 loss on 
 
 goods until 
 
 sold. 
 
 Net sale- 
 able 
 quantity 
 on hand. 
 
 Mo3' 
 
 3'S. 
 
 02 
 
 03 
 
 
 *3 
 
 
 
 Fresh butter 
 
 60 lbs 
 
 lb. @ $0.28 
 
 $16.80 
 
 3 
 
 1 V. ")9. 
 
 58V 6 lbs 
 
 $0.33 
 
 $19.21 
 
 Cigars (Amb'sia). 
 
 600 
 
 M@ 34.00 
 
 20.40 
 
 - 
 
 
 
 600 
 
 42.00 
 
 25.20 
 
 Butter, Tubs.... 
 
 10 
 
 
 
 
 
 
 
 10 
 
 -.25 
 
 2. B0 
 
 Wheat flour 
 
 50 lbs. 
 
 cwt.@ 5.25 
 
 2.62 
 
 1 
 
 ilb. 
 
 49} lbs. 
 
 <* 
 
 [3.22 
 
 For the right understanding of the preceding schedule the 
 following remarks may be necessary. 
 
 1. In taking inventory of merchandise, only the column for 
 quantity is filled up. The same entries are then made on a 
 duplicate schedule which contains only this column, and 
 which remains in the hands of the store-keeper. When the 
 inventory is taken, the member of the Board of Directors and 
 the store-keeper certify the correctness of both schedules by 
 affixing their signatures to them. 
 
 2. The different kinds of goods are not entered on the 
 schedules in accordance with their natural connection, but 
 they are taken in the order they stand in the store, so that the 
 inventory ends next to that part of the store where it was begun. 
 
 3. All boxes, cases, &c, which have been charged on the 
 store-keeper's account must be entered on the inventory of 
 Merchandise ; not so, however, such as are in daily use in 
 the store and not to be disposed of either by sale or for pack- 
 ing of goods sold. 
 
 4. The remaining columns are filled up by the book-keeper 
 as soon as the- quantity and description of goods on hand has 
 
no Co-operative Stores. 
 
 been ascertained. The cost-price includes freight, duty, and 
 other expenses on the goods. The percentage of loss must 
 be deducted in calculating the selling-price, as the articles re- 
 main subject tQ this loss, especially to the loss incurred in 
 measuring out at retail. In all cases where goods liable to 
 heavy loss by drying up have already been stored a consider- 
 able time, a lower percentage than that originally entered on 
 the Store-keeper's account should be allowed. 
 
 IV. Balancing the Books. 
 
 The balancing of the books must be commenced immedi- 
 ately after the inventory, and completed in as short a time as 
 possible, so that the final balance-sheet may be in possession 
 of the committee of auditors (appointed for that purpose by 
 the Convention) at their next meeting. The closing of the 
 books must be preceded by an investigation both of the 
 amounts due, according to the books, and of the aggregate 
 value of the goods of which inventory was taken. 
 
 A. Examination of the Inventory. 
 
 i. The amount of cash on hand must be equal to the dif- 
 ference between the debtor and creditor side of the Cash 
 account. Any trifling difference, which cannot be adjusted by 
 revision, must be entered as loss or gain on Cash account, 
 and be placed on the opposite side of the Profit and Loss ac- 
 count. 
 
 2. The purchase-tickets on hand, if added to the balance 
 in favor of the creditor-side of the Ticket account, must give 
 the aggregate nominal value of all the tickets the society has 
 ever bought, provided that all dealers have been previously 
 settled with. 
 
 3. The supply of dividend-tickets, in the hands of the cash- 
 ier, must be equal to the aggregate nominal value of all divi- 
 dend-tickets stamped, less the amount handed to the store- 
 keeper since the last inventory as shown by his receipts. The ; 
 amount of dividend-tickets in the hands of the store-keeper 
 must be equal to the amount of the tickets delivered to him, 
 added to the selling-value of the goods taken without issue of 
 
Book-Keeping. 1 1 1 
 
 tickets for his own personal use, or for store and office use,* 
 less the aggregate amount of cash credited to the Store-keeper's 
 account. 
 
 4. The nominal value of the dividend-tickets ought to be 
 equal to the amount of cash entered to the credit of the Store- 
 keeper's account during the quarter. But this can seldom 
 tally, inasmuch as many of the tickets get lost, and also be- 
 cause some members may not be in time to hand in their 
 tickets. As it would cost too much to have new tickets made 
 for each new quarter, nothing can prevent those who have 
 been too late in the delivery of their tickets, from handing 
 them in at the next ensuing term, and thus securing their par- 
 ticipation in the profits of the new quarter. Thus it may 
 occur that the quantity of tickets delivered by members at the 
 end of a quarter surpasses the aggregate amount of tickets 
 received by them during the quarter. 
 
 5. The aggregate value of the contribution-stamps in the 
 hands of the cashier and store-keeper must be equal to the 
 amount at the last inventory, less the amount of contributions 
 paid during the quarter, as seen on the book kept in the store 
 for that purpose. 
 
 6. We have previously remarked, that it is the duty of the 
 book-keeper to calculate cost and selling price of all the goods 
 on the inventory. The total selling-value must then be placed 
 to the creditor-side of the Store-keeper's account, and a com- 
 parison made between the two sides of the account. The two 
 sides cannot be expected to balance exactly, inasmuch as the 
 percentage of losses can never be fixed beforehand with entire 
 accuracy. The trifling difference which may exist must be 
 carried to either debtor or creditor side of the account, as the 
 case may warrant, and a similar amount entered on the oppo- 
 site side of the Profit and Loss account. 
 
 B. The Balance-Sheet. 
 
 All differences in the Cash account, Ticket account, and 
 Store-keeper's account which cannot be adjusted by examina- 
 tion of the books and inventory, are entered on Store-keeper's 
 
 * Both of these classes of goods should be settled for in cash before the final 
 settlement. 
 
112 Co-operative Stores. 
 
 i 
 account as surplus or deficit, as the case may be, and balaneed 
 by another entry on the opposite side of Profit and Loss ac- 
 count. Then a transfer has to be made of the amount of cash 
 on hand from creditor-side of Cash account to debtor-side of 
 Balance account ; and also one of the selling-value of the goods 
 on hand from creditor-side of the Store-keeper's account to the 
 debtor-side of the Merchandise account. Then the selling-value 
 of the goods on hand, as established by the inventory, has to 
 be placed to the creditor-side of the Ticket account and to the 
 debtor-side of the Balance account. The difference then ex- 
 isting between the debtor and creditor side of Merchandise 
 account must be placed to the debtor-side of said account, and 
 counterbalanced by an entry of the same amount on creditor- 
 side of Profit and Loss account, as profit on merchandise dur- 
 ing the quarter. Now follows the closing of the Fixtures 
 account. The first entry to be made here is on the credit-side, 
 for wear and tear during the quarter, for which we may safely 
 assume 3 per cent. This 3 per cent, ought not to be calcu- 
 lated on the cost-value of the articles on hand, but on their 
 estimated value at the close of the preceding quarter. To act 
 on the former plan would be difficult, on account of the differ- 
 ence in the dates of purchase ; and it would be contrary to the 
 well-established fact, that the diminution in the value of such 
 articles is always greater during the time immediately following 
 their purchase than at later periods. The amount to be thus 
 placed to the credit of the Fixtures account must be charged 
 on the debtor-side of the Profit and Loss account. The Fix- 
 tures account may then be closed by adding the difference 
 between the debtor and creditor side to the latter, and by then 
 entering the same amount to the debtor-side of the Balance 
 account. These would be all the entries to be made on the 
 debtor-side of the Balance account, unless the society has out- 
 standing claims on individual book-account, and wishes to 
 balance the debtor-side of such account, or its surplus, as 
 compared with the creditor-side, by a transfer to the debtor-side 
 of the Balance account. Let us now proceed to the creditor- 
 side of the Balance account. 
 
 The first accounts to be closed are the "Sundry Creditors" 
 account and the "Ticket" account. ' This is done by placing 
 the difference between the debtor and creditor sides of these 
 
Book-Keeping. 
 
 "3 
 
 accounts to their debtor-side, and by transferring the same 
 amounts to the creditor-side of the Balance account as "Sun- 
 dry Creditors" and "Circulating Tickets." Considerable trouble 
 then arises for the book-keeper, from the balancing of the 
 separately kept Shares accounts of members. These are bal- 
 anced on the debtor-side of the accounts, and the amounts 
 transferred into the corresponding column of the schedule 
 which has been previously prepared for the delivery of divi- 
 dend-tickets. The total sum of dues from members found 
 there must be transferred to the creditor-side of the Balance 
 account as "Shares of Members." The sum of deposits is 
 dealt with in like manner by transfer to the Balance account. 
 Before this is done, however, the interest accrued on deposits 
 should be credited. The amount of each member's interest is 
 placed to his credit on the Deposit account, and the aggregate 
 is then charged on the debtor-side of the Profit and Loss ac- 
 count. Then the Profit and Loss account must be balanced, 
 and the difference transferred to the creditor-side of the Balance 
 account. This is the last entry to be made, and unless an 
 error has been made in posting, the aggregate amount entered 
 on the debtor-side of Balance account, must agree to a cent 
 with the aggregate on the creditor-side. Supposing all the 
 entries to have been made in accordance with the above in- 
 structions, the different accounts would stand as follows. 
 
 Note. — The only column filled out and figuring in the 
 following accounts is that of dollars and cents ; the others are 
 of no importance. ' ' Amount forward" means the sum total 
 of entries made in each account previous to balancing the 
 accounts. 
 
 Dr. 
 
 (i) Cash Account. 
 
 Cr. 
 
 To amount forward 
 
 $3,600 
 
 3,600 
 
 18 
 
 18 
 
 By amount forward 
 " Balance Account 
 (amount on hand) 
 
 $3,460,20 
 
 139 98 
 
 3,600 18 
 
ii4 Co-operative Stores. 
 
 Dr. (2) Store-keeper's Account. 
 
 Cr. 
 
 To amount forward 84,008 10 
 
 4,008 
 
 10 
 
 S 
 
 By amount forward . . 
 
 Mdse (Selling val- 
 ue of Goods on 
 hand as per In- 
 ventory) 
 
 Profit and Loss 
 (Deficit) 
 
 $3,060 
 
 943 
 5 
 
 4,008 
 
 10 
 
 Dr. 
 
 (3) Merchandise Account. 
 
 Cr. 
 
 To amount forward . . 
 
 " Store-keeper's ac- 
 count 
 
 " Profit and Loss 
 account .. 
 
 
 $3,530 
 
 11 
 
 
 
 
 942 
 
 19 
 
 
 
 
 390 
 
 10 
 40 
 
 
 
 4,852 
 
 
 By amount forward . 
 ' ' Balance Account 
 (Cost of Goods 
 on hand as per 
 Inventory) . . . 
 
 $4;032 
 
 n 
 
 Dr. 
 
 (4) Fixtures Account. 
 
 Cr. 
 
 To amount forward . 
 
 By Profit and Loss 
 Account (Reduc- 
 tion of 3 per ct. 
 for wear and tear 
 from last Balance 
 
 of $290.00) 
 
 " Balance Account 
 (Value of Fix- 
 tures on hand) . . 
 
 70 
 
 Dr. (5) Sundry Creditors. Cr. 
 
 
 
 To amount forward . . 
 " Balance Account 
 
 
 $1,620 
 410 
 
 10 
 00 
 10 
 
 
 
 By amount forward . . 
 
 
 $2,030 
 2,030 
 
 10 
 
 
 2,030 
 
 10 
 
 
 
 
 (6) Ticket Account. 
 In same manner as above (No. 5). 
 
Book-Keeping. 
 
 "5 
 
 Dr. (7) Shares Account. 
 
 Account of No. 172, Charles Miller.* 
 
 Cr. 
 
 To amount forward 
 " Apportionment of 
 Dividend 
 
 16 
 
 By amount forward . 
 " Balance Account. 
 
 $10 
 6 
 
 Dr. (8) Deposit Account. 
 
 Account of No. 734, S. Smith. * 
 
 Cr, 
 
 To amount forward . . 
 " Balance Account 
 
 10 
 
 10 
 
 By amount forward 
 " Profit and Loss 
 (Interest) 
 
 $10 
 
 10 
 
 00 
 
 Dr. 
 
 (9) Profit and Loss Account. 
 
 Cr. 
 
 To amount forward j . 
 " Deposit Account. 
 " St ore -keeper's 
 
 Account 
 
 " Fixtures Account 
 " Balance Account 
 
 666 
 
 By amount forward . 
 " Mdse Account.. . 
 
 $176 
 390 
 
 566 
 
 11 
 
 Dr. (Assets.) (10) Balance Account. (Liabilities.) Cr. 
 
 To Cash Account . . .. 
 " Mdse Account.... 
 " Fixtures Account 
 
 $139 
 
 By Shares Account. . 
 " Deposit Account 
 " Sundry Creditors 
 " Circulat'g Tickets 
 " Profit &X0S8 ac't 
 
 $553 
 
 30 
 
 410 
 
 106 
 
 170 
 
 1,2 
 
 After closing the Balance account, the book-keeper should 
 make out a schedule for the apportionment of profits, as fol- 
 lows. 
 
 * Only one member's account given as a specimen. The aggregate balances of 
 all of these accounts are supposed to be entered in the Balance account, as ex- 
 plained on page 113. 
 
n6 Co-operative Stores. 
 
 Debtor. 
 
 i. Interest at 8 per ct. per annum on 496 whole 
 dollars $9. 92 
 
 2. Dividend-tickets, handed in, $2,871.54 : dividend 
 declared, 1 cent on every 1 8 cents I 59- 53 
 
 3. Surplus of dividend for next quarter 75 
 
 Total ,; $170.20 
 
 Creditor. 
 Balance account $170.20 
 
 Auditing the Accounts. 
 
 The committee of auditors must carefully examine whether 
 the books have been kept strictly in accordance with the rules 
 laid down by the society, and whether all disbursements and 
 claims have their corresponding vouchers in receipts and bills. 
 The correctness of the calculations should be tested, and the 
 deficiencies investigated. Deficiencies in cash, and in the 
 amount of purchase-tickets and deposit-stamps on hand, are 
 hardly excusable ; whereas small defects in the amount of 
 dividend-tickets on hand and of merchandise in store, can be 
 explained by the excess of actual loss over the percentage 
 allowed. Any deficiency which cannot be satisfactorily ex- 
 plained, should be deducted from the security given by the 
 employee in whose account the deficiency occurs ; and if such 
 ,3. deficiency should have been previously charged to Profit 
 and Loss, the amount collected to cover the same should be 
 placed with the assets on the Balance account. The auditors 
 should finally examine whether the Board of Directors has 
 acted arbitrarily with regard to any disbursements and pur- 
 chases which have not yet been sanctioned by the : society ; 
 and if such action has been taken, it must be submitted for 
 subsequent approval. If such approval should not be 
 obtained, the engagements entered into must be broken off, 
 and all damage sustained, or indemnity paid the respective 
 contractors, must be reclaimed from the Board of Directors. 
 
Book-Keeping. i 1 7 
 
 The auditors should also compare the memorandum-book of 
 the deposits made and withdrawn, kept by the Director, with the 
 entries made on the Cash account. All these investigations, 
 although they must be minute and careful, ought to be made 
 without any unnecessary loss of time, as it is advisable that 
 the books should be in the hands of the book-keeper for the 
 entry of current transactions within three days from the com- 
 mencement of the examination. 
 
 A liberal compensation for the trouble and labor of the 
 auditors should be allowed once for all by the members 
 in Convention. In fixing the rate of this, it must be con- 
 sidered that the thorough examination of a set of books, 
 even if well and regularly kept, will occupy at least an entire 
 day. Moreover, as one of the auditors participates in the pre- 
 vious taking of the inventory he should be separately com- 
 pensated for that trouble. 
 
 The auditors first make a verbal report to the Board of 
 Directors, and submit to them whatever they intend to com- 
 municate at the next meeting of the members of the society. 
 Opportunity is thus given to correct any mistakes on the part 
 of the auditors, and, especially, to refute unjust accusations 
 before they obtain greater publicity. 
 
 In the Convention, the condensed quarterly report of the 
 Director precedes the report of the auditors. If in the latter 
 report any member of the Board of Directors has been men- 
 tioned in a disparaging manner, he should, as soon as the read- 
 ing is concluded, have the floor for his defence and justification. 
 Should any doubt arise as to the substance of the accusation, 
 the Convention may defer action in the premises until their 
 next meeting, and may cause a second revision of the books 
 and store to be made by another committee. Should the Con- 
 vention finally resolve to relieve a member of the Board of 
 Directors of his functions, or to discharge any of the employees 
 for misconduct or for loss sustained by the society through 
 mismanagement, such resolution should be sent in to the 
 Board of Directors, accompanied by the arguments which tend 
 to justify the action of the members, and by a stipulated claim 
 for damages to be recovered. The Board of Directors then act 
 in conformity with the resolution, and must recover the amount 
 of damage claimed, from the security given by the employees. 
 
n8 Co-operative Stores. 
 
 VI. - Re-establishment of Order in Disarranged Books and 
 
 Accounts. 
 
 Whenever the books and accounts of a society have become 
 out of order, and so entangled and mixed up that a revision 
 of previous entries does not suffice for the restoration of a bal- 
 ance-sheet fit to serve as a basis for the continuation of busi- 
 ness, it will be advisable to adopt the following plan. 
 
 As a basis for future operations and the opening of a new 
 set of books, the assets of the society should be carefully 
 appraised. It is best to begin by regulating the Shares accounts 
 of the members through comparison with their pass-books con- 
 taining certificates of contributions. It will next be advisable 
 to ascertain the actual value of all real estate of which the 
 society may be possessed, the value of goods on hand, as also 
 of fixtures and utensils. The amount of circulating purchase 
 and dividend tickets should then be ascertained. If the 
 amount of tickets originally issued is not known, the amount 
 in circulation can only be ascertained by the calling in of the 
 tickets, and by the issue of new ones in exchange. If these 
 points, as well as the aggregate of claims and indebtedness of 
 the society, are once clearly established,- a new inventory 
 can be taken conformably with the plan indicated in Sec- 
 tion III. ; as an inventory taken on closing the books, con- 
 formably with Section IV., A, cannot be properly made. 
 The striking of a balance (IV, B), must consequently be made 
 by transfer of the balance of cash, the purchase-value of the 
 goods on hand, and the aggregate of circulating tickets directly 
 from the inventory to the balance-account. The Fixtures 
 account, the Shares account, and Sundry-Creditors account 
 may then be closed according to the rules laid down. The 
 excess of assets over liabilities is then balanced by Profit 
 and Loss account. 
 
 VII. Apportionment of Profits and Opening of New Accounts. 
 
 As soon as the balance in favor of the society has thus been 
 clearly established before the Convention, the book-keeper 
 should transfer the profits from the Balance account to the 
 
Book-Keeping. 119 
 
 creditor-side of the Profit and Loss account, for the ensuing 
 quarter ; and the share of profit of each member in the appor- 
 tionment of dividends, should be calculated on the schedule 
 made out for that purpose, and thence transferred to the cred- 
 itor-side of the Share account of each member. The aggre- 
 gate of these apportionments of interest and dividend, must 
 then be placed , to the debtor-side of the new Profit and Loss 
 account. If, for example, the plan for distribution shown in 
 the schedule on page 108 should be adopted, the new Profit and 
 Loss account would begin in this way : 
 
 Debtor. Creditor. 
 
 Interest $9. 92 Balance account $1 70. 20 
 
 Dividends 160.28 
 
 Total $170.20 
 
 The list containing the apportionment of profits has then to 
 be posted in the store for the inspection of the members, who 
 can proffer complaints on account of unjust distribution, at 
 the next Conventipn. It is the store-keeper's duty to enter 
 the share of profits accrued to each member, as seen on the 
 list, into the latter's pass-book. 
 
 The profits- thus realized having been transferred and dis- 
 posed of, the other items on Balance account are transferred 
 to the corresponding side of the new accounts as follows : 
 The amount of cash on hand, to the debtor-side of Cash ac- 
 count ; ( the cost-value of the goods on hand, to the debtor-side 
 of Merchandise account ; and the estimated value of fixtures 
 and utensils, to the debtor-side of Fixtures account. In the 
 same manner the items of sundry creditors and the aggregate 
 amount of circulating tickets are transferred from creditor-side 
 of Balance account to the creditor-side of Sundry-Creditors 
 account and Ticket account respectively. Finally, the selling- 
 value of the goods on hand, corresponding with inventory, has 
 to be placed to the credit of the new Merchandise account, and 
 to be entered on the debtor-side of the new Store-keeper's 
 account. The new Merchandise account (in conformity with 
 
120 Co-operative Stores. 
 
 the schedule of Balance account on page 115) would open 
 as follows : 
 
 Debtor. Creditor. 
 
 Balance account $830. 17 | Store-keeper's' account. $94 2. 19 
 
 VIII. Position of the Book-keeper and Cashier. 
 
 Until the annual transactions of a society reach an aggregate 
 of about 50,000 dollars, the keeping of the books and cash 
 niight be attended to by some member of the society during 
 his leisure hours. But as he must visit the store and ware- 
 house at least once every day, no matter how trifling the trans- 
 actions, he should have a compensation for loss of time in the 
 shape of a small monthly salary. Or if this should not prove 
 practicable, the book-keeper might be allowed a share in the dis- 
 count realized by prompt payment of claims against the society. 
 By this arrangement he would have an interest in the claiming 
 of discount from dealers, which would operate to the advantage 
 of the society. In appointing a book-keeper, care should be 
 taken to select no person who would be apt to intrust the care 
 of the books and accounts to a third part}* say to one of his 
 clerks. Where the keeping of the books and Cash ■ account 
 can be done during the leisure hours of thei incumbent, it 
 might be well to make a selection from among the members 
 of the Board of Directors, or the Committee. 
 
CHAPTER XII. 
 
 GENERAL HINTS FOR MANAGEMENT OF BUSINESS. 
 
 THE formal rules for the management of business are, to 
 a great extent, laid down in the preceding chapter on 
 Book-keeping and the Cash account. We add the fol- 
 lowing set of rules, which we have drafted for the co-operative 
 store society, " Friedrichstaedtische Genossenschaft, " in Berlin. 
 
 Rules for the Management of the Society. 
 
 § i. Government. — The Trustees of the Association, con- 
 sisting of the Director, Cashier, and the two Assistant Directors, 
 shall have the entire management of the concern, subject to 
 the resolutions of the Convention and Committee, on the fol- 
 lowing points : 
 
 a\ Distribution of profits and losses among the members. 
 
 5) Contracts creating future obligations on the part of the 
 association ; such as engagements of employees, and leases. 
 
 c) Receipts and expenditures in amounts greater than (say 
 $100). 
 
 d) Amounts and conditions of loans to be raised. 
 
 e) Compensation to the members of the Managing Com- 
 mittee for all services. 
 
 f) Method of keeping the accounts. 
 
 g) Expulsion of members. ^ 
 
 § 2. Meetings of the Board of Directors. — The Board of 
 Directors shall meet regularly at least once a week at a regular 
 time and place. Extraordinary meetings can be convened by 
 the Director at any time. Three members of the Board con- 
 stitute a quorum. 
 
 § 3. Proceedings at the Meetings of the Board. 
 
 a) The Director communicates the transactions of each day 
 since the last meeting, as shown by statements to be made out 
 by the Store-keeper every evening. 
 
 6 
 
122 Co-operative Stores. 
 
 b) The Director submits to the Board the names of those 
 wishing to join the Association, causes votes to be taken on 
 them, and enters the names of those admitted on the roll of 
 members. 
 
 c) The Cashier communicates, by extracts from the Merchan- 
 dise account, a statement of goods purchased since the last 
 meeting. Should any of these goods have been bought without 
 the authorization of the Board, its consent and approval 
 must be asked for. 
 
 d) The Director proposes new purchases, proves their ex- 
 pediency from the Store-keeper's statement, issues the orders 
 for such as may be agreed to, and signs them conjointly with 
 one other member of the Board. 
 
 e) The Cashier announces the disbursements and receipts 
 since the last meeting. In case any disbursements have 
 been made without previous authorization, the consent of the 
 Board must be asked for. The Director and one other mem- 
 ber of the Board countersign all receipts for approved disburse- 
 ments. 
 
 /) Votes shall be had on alterations in selling-prices, 
 general orders for purchases, purchases of utensils, authoriza- 
 tion for future disbursements, especially for the redemption 
 of shares. 
 
 § 4. Minutes of the Meetings of the Board. — This 
 document must contain : 
 
 The transactions of the week (according to § 3, a), the 
 name and number of each newly admitted member, the pur- 
 chases and disbursements agreed upon, and the resolutions 
 passed in accordance with § 3, f. The Minutes must be 
 signed by all the members present, and read at the next meet- 
 ing of the Board. 
 
 § 5. Assistant Directors. — Outside of the meetings of 
 the Board, the two Assistant Directors shall transact only such 
 business as may be specially intrusted to them by resolution 
 of the Board. 
 
 § 6. Cashier. — The Cashier shall have sole and entire charge 
 of the books and cash, to be kept in accordance with the rules 
 
General Hints. 123 
 
 established by the Board of Directors. He shall visit the store 
 every day, with the exception of Sundays and holidays, per- 
 sonally enter the accounts of the store-keepers, and take charge 
 of the cash not immediately required, as also of all invoices 
 and receipts in the hands of the store-keepers. All books 
 shall be posted daily, so that they can be fully closed each 
 day. The Cashier can only make such disbursements as are 
 approved by resolution of the Board of Directors, or such as 
 the Director has agreed to be responsible for to the Board. 
 He shall attend to the prompt and punctual payment of all 
 accounts audited. In case of payment in advance, he shall 
 claim the customary discount. 
 
 § 7. Director. — The Director shall visit the store at least 
 once a day, to secure cleanliness and order, as well as the 
 . suitable storage of the goods and the proper disposal 
 thereof. It is his duty to find and buy in the cheapest 
 market, and to properly dispose of all packing material : he 
 is responsible for prompt action on resolutions concerning 
 purchases, as also for a constant supply of goods sufficient to 
 meet the demand of customers. 
 
 He shall have charge of all documents of the associa- 
 tion not directly referring to the books and cash. 
 
 He shall represent the association externally. To lawfully 
 bind the association, his signature and that of the Vice- 
 Director, or the signatures of either of them and one of the 
 Assistant Directors, is required. 
 
 The Director casts the vote of the association in the Union 
 of the Co-operative Societies, and is obliged to regularly at- 
 tend the meetings of said Union. 
 
 It is the duty of the Director to submit to the Board of Trus- 
 tees, at the end of each calendar month, a written report of the 
 state of the business. It must contain a statement of the sales 
 of the month compared with that of the preceding month, 
 the number of new and of expelled members, the number of 
 members actually constituting the association, the amounts of 
 payments by members and disbursements to them, the total 
 amount of claims on the society, the value of merchandise on 
 hand according to the store-keeper's account, the amount of 
 cash on hand, the amount of claims due the association, the 
 
124 Co-operative Stores. 
 
 amount of contingent expenses during the month, and the 
 entries on the Fixtures account. These statements shall be 
 taken from the books by the Director himself. 
 
 § 8. Vice-Director. — In case of the absence of the Di- 
 rector, the oldest Assistant Director acts as Vice-Director, and 
 assumes the functions of the absentee. The Director shall in- 
 form the Board, whenever his absence from a meeting may 
 become necessary. 
 
 The Board of Directors should have authority to issue a set 
 of rules similar to the above. This one contains substantially 
 the paragraphs from the constitution relative to the functions of 
 the Directors. The monthly compilation and issue of a short 
 report of transactions, compels the Director to make a minute 
 investigation into the condition of the concern, and affords 
 him ample opportunity to inform himself regarding the proper 
 keeping of the books. In order to attain this, he is obliged 
 to make the necessary extracts from the books himself. 
 
 The following schedule may serve as a guide for the prepara- 
 tion of this report on business. 
 
 Report of the Director for October, 1866. 
 
 Sales. 
 
 Proceeds of sales for October $1, 710. 50 
 
 Proceeds of sales for September 1,460. 25 
 
 Increase of sales on preceding month 250.25 
 
 Proceeds of sales for October, 1865 1,020.75 
 
 Increase of sales of October, 1866, on correspond- 
 ing month of 1865 689.75 
 
 Number of Members. 
 
 Actual number of members at the end of September 420 
 
 Newly accepted during October 34 
 
 Total 454 
 
General Hints. 125 
 
 Total members as per last page 454 
 
 Number of members stricken from the list, without 
 
 transfer of shares, during October 6 
 
 On account of death 2 
 
 " " change of residence 3 
 
 " " resignation 1 
 
 Number of members stricken from the roll during 
 
 October with transfer of shares 4 
 
 Total stricken from the rolls — 10 
 
 Actual number of members on the roll Oct. 3 1st . . . . 444 
 
 Value of Shares. 
 
 Value of shares at the end of September $1,120.00 
 
 Profits for the third quarter added to Shares account. 320. 50 
 Received from members during October 80. 50 
 
 Total $1,521.00 
 
 Disbursements to members in sums ofi 
 
 $5.00 $175.00 
 
 Disbursements to six members discontinued . 26. 50 
 Deduction of 25 per cent, from one mem- 
 ber stricken from roll (resigned) 1.25 
 
 202.75 
 
 Balance on hand October 31st .$1,318.25 
 
 Stock on hand. 
 
 Amount of goods on hand, as per Store-keeper's ac- 
 count, on November 1st $1,220.50 
 
 Cash on hand November 1st 140. 33 
 
 Indebtedness of the Association on November isi. 
 
 Due on loans $1 80. 00 
 
 For goods bought on credit 80.33 
 
 Contingent expenses for October 5 I - 2 5 
 
 Entered on account of utensils and fixtures. 10.25 
 
 November 1st, 1866. 
 
 (Signature of the Director. ) 
 
126 Co-operative Stores. 
 
 The roll of members mentioned, § 3, b, contains the num- 
 ber of the member (which is also his number in the Account 
 of Shares), his name, business, residence, date of admission, 
 and date of separation from the association. 
 
 Concerning the orders for goods alluded to § 3, d, it will be 
 found expedient to' procure printed forms, two on a leaf. On 
 issuing an order, both forms are filled in the same manner ; 
 one of them is cut out and sent to the party of whom the goods 
 are to be bought, while the other remains on file as a voucher. 
 
 The minutes of the meeting of the Board of Directors, men- 
 tioned in § 4, may be made out in the following shape : 
 
 Amount of sales from October 2d to October 9th, $280. 12. 
 Members admitted, Nos. 320-325, inclusive. 
 
 Resolved to purchase : 
 
 2 bales Java coffee of C. Schmitzhere, at — per lb. 
 1 bale rice of C. Huttemann. 
 
 1 bbl. white sugar. 
 
 2 M. Ambrosia cigars. 
 
 Consent given to previous purchases of pepper, Prussian blue, 
 and salt, in usual quantities, of our regular dealers. 
 
 Previous disbursements consented to : 
 
 For postage on October 3d, 4th, and 6th $0.75 
 
 Authorization giveti for the printing of 300 prices-current, 
 for the white-washing of the store, for the varnishing of fix- 
 tures, and for the purchase of a round table for the meetings of 
 the Board of Directors. 
 
 Reduction of selling-price of wheat flour from 24 to 22 cents 
 per lb. ; advance of price of oil from 25 to 30 cents. 
 
 The election of a well-qualified and suitable person as Direc- 
 tor is, of course, of the utmost importance for the growth and 
 prosperity of the association. The candidate for this position, 
 without belonging to the class of speculators proper, must, 
 nevertheless, possess undoubted business qualifications, and be 
 endowed with a quick and just perception of the means 
 apt to further the interests and enlarge the business of the 
 association. It is his duty to find the best and cheapest mar- 
 
General Hints. 127 
 
 ket for the purchase of goods, to look into the expediency of 
 extending the business of the concern to articles not hith- 
 erto dealt in, to make proper arrangements for the ticket-trade 
 with other stores or dealers, to facilitate and improve the 
 arrangements for the sale of goods, to fix a proper scale of 
 selling-prices, to advertise the object and the principles of 
 the association, &c, &c. Strict and conscientious attendance 
 to all these matters requires frequent and careful thought, 
 rather than time-engrossing correspondence or other office- 
 labor. The position of Director of a co-operative society 
 ought not to be expected to secure the incumbent a living ; 
 but, in societies whose sales are not very large, ought to be co- 
 existent with the incumbent's attendance to his regular business. 
 It will therefore be advisable to elect a person whose attention 
 is not too much absorbed by his own business. Retail dealers 
 are apt to be unfit for the position, for although their tech- 
 nical capabilities cannot generally be disputed, they are unable 
 to divest themselves of the business notions acquired in the 
 narrow sphere of their own calling. A co-operative society 
 cannot be considered entirely independent, until it is able to 
 remunerate the services of the Director in a liberal and befit- 
 ting manner. The office-work to be done by him is not the 
 only thing to be taken into consideration. The best way to 
 fix a proper compensation of his services (especially for socie- 
 ties which aim at high selling-prices and at correspondingly 
 high dividends) would be to allow him a certain percentage 
 on the net earnings of the society. In small societies, 10 per 
 cent, of the net profits as shown by the balance-sheet of the 
 concern, would not be too much. 
 
 For Assistant Directors it would be well to select men of 
 undoubted technical knowledge of goods. As the only ser- 
 vice rendered on their part consists of assisting at the meetings 
 of the Board of Directors, it would not be advisable to vote 
 them a compensation for their trouble — at least, not until the 
 society does considerable business. 
 
 In the Committee of Managers, all classes of members ought 
 to be represented. As the Committee meets at long intervals 
 only, it is not requisite to allow its members any compensation 
 for trouble and loss of time. No fixed remuneration, at least, 
 should be decided upon until the transactions of the society 
 
128 Co-operative Stores. 
 
 reach such a scale as to require time enough to seri- 
 ously interfere with the personal business of the members 
 of the Committee. The President of the Committee must 
 be capable of presiding over an assembly, and conducting 
 its business according to parliamentary rules. It is his 
 especial duty to use all his influence and moral weight in 
 favor of the election of fit and capable men for members of 
 the Board and as employees of the society. He should see 
 that the business be transacted in accordance with the rules 
 laid down for that purpose, and that the Minutes of the 
 proceedings at the meetings of the Board, as well as the Di- 
 rector's monthly reports, be regularly read and submitted for 
 approval. Every member of the Committee has a right to 
 watch over the operations of the society, the Board, and the 
 employees, but should carefully abstain from all direct inter- 
 ference with the course of business. 
 
 It is the duty of the Board of Directors to prepare and bring 
 into clear and proper shape all matters to be submitted to the 
 Committee of Managers, so that the Director can always make 
 a distinct and precise motion to be acted upon. 
 
INDEX. 
 
 Admission — Conditions of, 37. 
 Auditors, 116. 
 Auditing Accounts, 116. 
 Accounts, 50. 
 
 Auditing, 116. 
 
 Cash, 113. 
 
 Fixtures, 114 
 
 Goods, 93, 94. 
 
 Merchandise, 114. 
 
 Store-keepers, 90. 
 
 Sundry Creditors, 114. 
 
 Ticket, Creditors, 114. 
 Account-Books for Members, 
 
 28. 
 Apportionment of Profits, 
 118. 
 
 B. 
 
 Books (full particulars in Chap. 
 XI.)— Balancing, 109. 
 
 Deposit, 96. 
 
 Dividend, 95. 
 
 Of Contributions by Members, 
 94. 
 
 Various special, 96. 
 Book-keeper — Account of, 99. 
 
 Duties of, 91. 
 
 Position of, 120. 
 Business — Ends of, 57.- 
 
 Management of, 121. 
 
 C. 
 
 Capitai, — Accumulation of, 35, 
 
 36. 
 Fixed and Circulating, 65, 66. 
 Hcsw much necessary, 65. 
 Outside, how to be acquired, 
 
 67-71. 
 
 Cashier— Duties of, 122. 
 
 Position of, 120! 
 Cash Payment? — Importance of, 
 
 14, 21, 34, 35. 
 Cash Account, 113. 
 Contract — With Dealer, for 
 Ticket-Trade, 73. 
 With Store-keeper, 87. 
 Credit, 13, 21, 34, 35. 
 Credit System, a great hin- 
 drance, 35. 
 Credit Society, 46. 
 Conventions— General, 51. 
 How called, 51. 
 Powers of, 54. 
 Convention at Stettin — Res- 
 olutions of: 
 On Credit System, 35. 
 On Dividends and Increase of 
 Capital, 36. 
 Combination of Societies for 
 
 Purchase of Goods, 78. 
 Committee — Executive Powers 
 
 of, 51-57. 
 Customers — Outside, 30. 
 
 D. 
 
 Deposit Books, 71, 96. 
 Dissolution of Societies, 
 
 57. 
 Directors, 51, 52. 
 
 Duties of, 123. 
 
 Election of, 126. 
 
 Meeting of, 121-123. 
 
 Report of, 124. 
 Dividend — Schedule of, 108. 
 
 Scrip, 95. 
 
 Tickets, 107. 
 
130 
 
 Index. 
 
 E. 
 
 Employees in Store, 85. 
 
 Salaries of, 86. 
 Educational Societies in Ger- 
 many, 16. 
 England. See BocJidale. 
 Equality of Members, 41. 
 
 F. 
 Fund — Reserve, 46-48. 
 
 G. 
 
 Germany — Statistics of Societies 
 
 in, 18. 
 Goods — Account of, 93, 94. 
 
 Combination of Societies for 
 purchase of, 78. 
 
 How to purchase, 74, 75. 
 
 Losses on, 92, 93. 
 
 Payment for, 78. 
 
 Prices of, 37. 
 
 Purchase of, 71-74. 
 
 Reception of, 78. 
 
 Sale of, 79-81. 
 
 Selling Prices and Quantities 
 of, 81, 82. 
 
 To whom furnished, 33, 34. 
 
 What kind best, 60. 
 
 I. 
 
 Inventories — Various, 106-116. 
 
 Examination of, 110. 
 Interest — On Shares, 49. 
 
 On Deposits, 70. 
 
 L. 
 
 Losses — Apportionment of, 40- 
 49. 
 
 On Goods, 92. 
 Loans — Conditions of, 70. 
 
 Raising, 67-71. 
 
 M. 
 
 Managers — Committee of, 127. 
 Meetings — Preliminaries to Or- 
 ganization, 24. 
 
 Of Board of Directors, 121-123, 
 
 Of Committee, 51. 
 
 Of Convention, 51. 
 Members — Equality of, 41. 
 
 Who may be, 37-40. 
 
 Women to be, 38. 
 Memorandum-Books — "Various 
 
 special, 96. 
 Merchandise — Account of, 114. 
 
 Inventory of, 168. 
 Minutes' of Meetings of 
 
 Board, 122-126. 
 
 O. 
 
 Outside Capital, 67. 
 Outside Customers, 20, 30-33. 
 Outside Ticket-Trade, 19. 
 
 P. ' 
 
 Payments of Members, 40-45. 
 
 By Instalments, 40. 
 
 For Goods bought, 78. 
 
 Limits to, 44. 
 
 When must be made, 45. 
 Payment, Cash — Importance of, 
 
 14, 21, 34, 35. 
 Prices — Regulation of, 37, 81, 
 
 82. 
 Profits — Accumulated, 42. 
 
 Distribution of, 40, 48. 
 
 Distribution of, in English So- 
 cieties, 10. 
 
 Withdrawal of, 42. 
 Purchase— of Goods, 71-74. 
 
 Combination of Societies for, 78. 
 
 From whom to, 77. 
 
 Place of, 76. 
 
 R. 
 
 Receipts — for Contingenf Ex- 
 penses, 100. 
 
Index. 
 
 I3i 
 
 Receipts {continued). 
 For Deposits made, 96. 
 " Disbursements, 100. 
 " Dividends paid, 100. 
 " Payment of Goods bought, 
 
 99. 
 " Payments made by mem- 
 bers, 28, 94. 
 " Redemption of Purchase 
 Tickets, 100. 
 Reserve Fund, 46-48. 
 Resignation of Members, 38. 
 Rochdale Society — Origin of, 1. 
 Design of, 3. 
 
 Establishment of Stores by, 4. 
 Frugality of, 11. 
 Present Condition of, 5-8. 
 Rules — Adoption of, 26-28. 
 For Management of Society, 
 121-124. 
 
 S. 
 
 Salaries op Employees, 86. 
 
 Sales, 79-81. 
 Schedules — of Accounts, as 
 
 opened, 102-105. 
 Of Accounts, as balanced, 113- 
 
 116. 
 Of Apportionment of Profits, 
 
 116. 
 Of Debtor-side of Merchandise 
 
 Account, 98. 
 Of Inventory, 109. 
 Of Quarterly Dividends, 108. 
 Of Store-keeper's Account, 93. 
 
 Shares — How paid in, 41. 
 
 Initiatory, how much, 43. 
 
 In permanent Capital, 42. 
 
 Interest on, 49. 
 
 Transfer of, 39. 
 Securitdsb — Revision of, 106. 
 Signature— Legal, of Society, 55. 
 Stettin — General Convention 
 
 at, 35, 36. 
 Stock— Members' transfer of, 40. 
 
 Purchase of, for Store, 68, 75. 
 
 What kinds best in Store, 60. 
 Store — Arrangement of, 81-84. 
 
 Employees in, 85. 
 
 Fixed and Circulating Capital 
 in, 65. 
 
 Hours of Business in, 81-82. 
 
 How to keep a, 63-64. 
 
 Situation of, 84. 
 Store-keeper, 85-89. 
 
 Account of, 90. 
 
 Contract with, 87. 
 
 Schedule of his Accounts, 93. 
 
 T. 
 
 Tickets, 57-58, 72-73. 
 
 Dividend, 95-107. 
 
 Inventory of, 107. 
 
 Outside Trade with, 20. 
 
 Purchase, 73. 
 
 Trade, 57-58, 72. 
 Trade — Commission, 59. 
 
 Store, 59. 
 
 Ticket, 57-58, 72. 
 Warehouse — when needed, 83. 
 Women — to be Members, 38. 
 
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