PRODUCTIVE' 
 
 CO-OPERATION. 
 
 A PAPER 
 
 By Mr. JOHN ALLAN, of , GLASGOW, 
 
 Read at a Meeting of the Scottish Co-operative Convention , 
 held at Stirling , September. 24, 1887 • 
 
 ISSUED BY 
 
 The Central Co-operative Board, City Buildings, 
 Corporation Street, Manchester. 
 
 1887, 
 
UNIVERSITY OF ILLINOIS 
 LIBRARY 
 
 Class Book Volume 
 
 3M.S A\SZp 
 
 (bMWCS 
 
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 Ja 09-20M 
 
PRODUCTIV E ; 
 CO-OPERATION. 
 
 A PAPEE 
 
 By Mr. JOHN ALLAN, of , GLASGOW, 
 
 Read at a Meeting of the Scottish Co-operative Convention 
 held at Stirling , September. 24 , 1887 • 
 
 ISSUED BY 
 
 The Central Co-operative Board, City Buildings, 
 Corporation Street, Manchester. 
 
 1887. 
 
A Paper read by Mr. John Allan , at a Meeting of the Scottish 
 Co-operative Convention , held at Stirling, Sept . 24, 1887 . 
 
 T the outset of my endeavours to prepare this paper, I have been 
 
 deeply impressed with my incapacity to submit for your considera- 
 tion and discussion, anything more instructive or suggestive than has 
 been embodied in many elaborate and able papers on the same subject, 
 already submitted to the co-operative movement from time to time at 
 kindred gatherings ; but as a keen desire prevails in our ranks to study, 
 to deliberate, and to arrive at sound conclusions on this all important 
 subject, it may serve a good purpose even to reiterate our views on 
 some of the principles of success, the difficulties to encounter, and the 
 benefits derivable, that are wrapped up in the bundle labelled “ Pro- 
 ductive Co-operation;” with the hope that our deliberations thereon 
 may tend to give a more comprehensive understanding of what is “the 
 possible future of labour.” 
 
 With the intelligent observer of the times, or careful student of 
 social and political questions, there can, I think, be but one opinion, as 
 to the prominence which social subjects now command. It is seldom 
 you will look over a newspaper, or scan the pages of a magazine, but 
 your eye will catch, either a petty paragraph or an elaborate treatise, 
 critically examining or suggestively expounding matters that relate to 
 the social elevation of the labouring classes. Indeed it is obvious that 
 the press in general now give a great deal of attention to these things. 
 Neither is this friendly interest confined to one class or community : 
 many of the most eminent in either ecclesiastical, philosophical, or 
 political circles, vie with each other in enlarging on the various phases 
 of the labour question : and this interest is extending geographically as 
 well as classically; for there can be no doubt that the Nihilism, 
 Communism, and Socialism of continental countries — however much 
 we may deprecate the pernicious methods they apply to redress 
 their grievances — have their inception in the injustice dealt out, and 
 the degrading position assigned to labour by many of the dominant 
 classed In the same category may be placed the Knights of Labour 
 in America, who, by the way, have recently revised their rules 
 with the object of encouraging co-operative enterprise. These are 
 “each and all” unmistakable forms and phases of the diversified 
 efforts that are being put forth to raise the social position of those 
 who labour to live and live to labour. Thus it is evident that this great 
 question has a wide-spread importance ; indeed the ramifications which 
 it is now assuming at home and abroad show that there is a deep- 
 seated dissatisfaction prevailing; consequently it is obviously neces- 
 sary that we examine carefully into the relative part that labour plays, 
 and the return it receives, in contributing to build up the vast stores 
 of wealth that have and now are being accumulated in the coffers of 
 the proprietors of our manufacturing establishments ; so that we may 
 be able to devise and carry into practical effect some means whereby 
 there shall be a more equitable distribution of the wealth acquired 
 
from the industrial operations in which labour' form^^tJie^most .Impor- 
 tant factor, by successfully establishing co-op era ti\d ;flianufa’§turmg 
 works, where a mutual combination of labour and capital is found in 
 the self-same persons, thus fostering and promoting "<a t spirit of 
 fraternal interest that shall sweeten and hallow othb^h^lu opera- 
 tions of industrial life. To render even a modicUm of. help,** in 
 attaining a satisfactory solution of the labour problem, is about as 
 commendable an exercise in connection with the temporalities of life 
 as the mind and energy of man can be engaged in ; but it is a task 
 that must be entered on in no half-hearted manner. If we mean to 
 overcome our difficulties, we must contend manfully in the struggle 
 that capitalists will fiercely make for their assumed class privileges, 
 vested interests, and trade rights ; and conquer obstacles — probably no 
 less formidable in our own ranks — of ignorance, and of prejudice, the 
 offspring of ignorance, and of jealousy and envy, the progeny of sordid 
 selfishness. Therefore, with that end in view, I will endeavour to 
 submit a few suggestions, based on certain guiding principles, that 
 I fondly hope may ultimately overcome the baneful effects of the 
 retarding influences referred to, believing that time, care, and experience 
 shall enable the coming generation to see productive enterprise, estab- 
 lished on true co-operative lines, as successful and consolidated as the 
 distributive phase of our movement has now attained. 
 
 It is well known to those who take an interest in this question that 
 there are various forms in which it is promulgated. There is no need 
 to describe every form, but I will briefly define the three principal 
 ones : (1) The system of production carried on by the wholesale 
 societies, termed the federal system ; (2) the system of a number of 
 societies becoming federatively associated to start and conduct flour 
 mills, bakeries, and such like; (3) the system composed of societies, 
 workers, and other individuals as shareholders. Now I believe there 
 are several commodities that the wholesale societies can make with 
 advantage to themselves, and with benefit to their members, from their 
 commercial status and experience, their intimacy with the quotations 
 of the leading markets of the world, and the certainty of securing the 
 custom of those whom they supply in their distributive capacity. I 
 think the method mentioned second can be applied ’ in a limited way, 
 safely and profitably, but it is never likely to become very extensive or 
 useful in the way of supplying co-operative labour for a large number 
 of workers. In the other (the third) system there is great scope for 
 establishing works in various directions, and this system seems to me 
 the most likely to enable us to reach that goal so much aspired after, 
 where co-operators shall become their own employers by supplying 
 both the capital and the labour. I think it will be most successful 
 where promoted by experts in the particular trade and in localities 
 where workmen have been trained to it, and the manufactures of the 
 district are proverbial for excellence in style and workmanship. A 
 judicious arrangement of manufactories of that kind would also pre- 
 vent the tendency to centralisation, so much objected to by many 
 influential co-operators. 
 
 I do not consider these systems antagonistic to one another. We 
 have them at present in operation, doing useful work. Each should 
 get a fair field, their respective supporters every legitimate facility to 
 push their method to success in an honourable way. Time and expe- 
 rience will ultimately prove which is the best, and it is very probable 
 that the most successful will be the one that will be generally adopted 
 in the future. Thus, we should strive to avoid wrangling about the 
 
system we may be most in favour of, and be impressed with the utility 
 of letting our personal opinion be subordinated to whatever is most 
 beneficial to*the co-operative movement, and to what is most conducive 
 . to the social elevation of the toiling masses. That grand object, I main- 
 ' tain' 'cafe he most efficiently and permanently accomplished if we strictly 
 a(^hei&t©,$he tenet that one of the fundamental principles upon which 
 every co-operative productive business should be based is the elevation 
 of labour. For labour is the source of all wealth; it is the most 
 essential factor in every industrial operation; it can be actively engaged 
 with little or no capital, but capital is useless in manufacturing without 
 labour. Therefore I hold that, in virtue of its utility, it should be 
 recognised in the distribution of the surplus profits that are made 
 through the operation of labour and capital in combination. 
 
 I will endeavour to show that there are a few rules that are quite 
 applicable to any one of the systems mentioned, and ought to be 
 incorporated into them all, and I am confident if we come to a general 
 understanding to insist that these general rules should be universally 
 adopted, we would prevent a great amount of unpleasant controversy, 
 and secure far greater interest in the propagation of co-operative 
 productive establishments. There is considerable diversity of opinion 
 in co-operative circles on what is the proper rate of interest that 
 should be paid to capital invested in co-operative undertakings. Now, 
 as capital cannot be said to be scarce with us now, and we all know 
 that its increase is going on more rapidly than we can find safe and 
 profitable investments for, would it not be highly advantageous in 
 various ways if we could come to a general understanding or agreement 
 that capital should not be paid more than five per cent. ? That is a 
 general rule that can be applied to any phase of co-operative enter- 
 prise. It is a good interest under the ordinary co-operative conditions 
 of security. It will not be so heavy a drain on the profits as the 
 excessive sums now paid in several business concerns designated 
 co-operative ; and certainly be more equitable and satisfactory than the 
 various methods now carried on. There is another matter on which 
 a mutual arrangement would prevent many unseemly bickerings and 
 animated personal altercations : could we not amicably arrange that a 
 general rule favourable to profit-sharing should be incorporated into the 
 rules of every co-operative productive institution, without defining 
 what is an equitable division, or how it should be carried out, leaving 
 these details to be arranged mutually by the shareholders in the 
 interests of all concerned ? As profit- sharing is embodied in one of the 
 leading rules of the Co-operative Union, we are warranted in inferring 
 that every member connected with that Union is ostensibly engaged 
 to support its practical application, and from the fact that a very large 
 majority of the societies in the United Kingdom are affiliated with the 
 Union, we may safely assume that the general body of co-operators 
 are in favour of profit-sharing ; therefore on these grounds the proba- 
 bility of its being adopted as one of our fundamental principles seems 
 to me quite feasible. But as this theme has lately become a burning 
 question, I may be permitted to go a little farther into the matter, and 
 state that I strongly advocate its general application even on higher 
 grounds than those just stated — viz., the rights of labour, and of com- 
 mendable business policy. If, as I have already endeavoured to show, 
 labour is pre-eminently the most essential factor in the production of 
 wealth, it is surely fair that it should be plaeed co-equal with capital, 
 in the allotment of the profit that may remain after the usual charge 
 for depreciation, the stipulated per-centage has been given to capital, 
 
5 
 
 and the stipulated wages paid to labour. If you investigate into the 
 results attained through this feature in the division of profit, in 
 establishments where it is faithfully carried out, (for which I refer you 
 to Mr. Sedley Tayior’s work on profit-sharing, and to his Congress 
 address at Derby,) you will find it proved to a demonstration that it acts 
 as an efficient lubricant, in keeping the wheels of capital and labour 
 running smoothly and satisfactorily. The personal care and attention 
 thus stimulated secures greater economy by preventing waste of time 
 and material ; and it is the very best inducement for the workers to 
 exert themselves with that skill and energy that will give the goods 
 made in co-operative manufactories an excellent character and com- 
 manding name, in the markets of the world. 
 
 There is still considerable diversity of opinion on the best plan of 
 carrying out profit-sharing. This is made a great bugbear of by many 
 opponents, who have not the courage to avow themselves its open 
 enemies. As in any other feature of co-operative practical arrange- 
 ments, there is a difficulty in the want of a scheme on which there 
 will be complete agreement, or which will provide for every possible 
 contingency ; but the same quibble can be raised as forcibly in every 
 department of co-operative business. After having carefully considered 
 this point in the light of some new but too elaborate methods, I am 
 still in favour, for its comprehensiveness and simplicity, of the plan of 
 dividing it ratably on the wages earned by the respective workers. I 
 would also empower a small committee — whose functions I will allude 
 to further on, and who I would designate the arbitrating council — to 
 allot special awards in money to any employe who has benefited the 
 society in any special way by introducing any appliances whereby the 
 production of the goods can be accelerated or improved in quality, or 
 for preventing waste of time and material, or for displaying ability in 
 securing profitable sales, or in making advantageous purchases of the 
 raw material — indeed, for anything whereby the financial interests 
 have been specially benefited. I consider it my duty to state here 
 that I am not in favour of the profit-sharing bonus being paid over in 
 cash each balancing period, for I believe it would be more beneficial to 
 the recipients if these sums were duly entered in a pass-book kept by 
 each worker, and when they have accumulated to the value of a share 
 I would have it transferred to the share list, and so on until they had 
 £5 of share capital. I would give the arbitrating council power to 
 arrange for paying part or the whole of the amount in the workers’ 
 bonus books in cases of urgent necessity or of anyone leaving. Then, 
 regarding the giving of the purchaser a share of the profits, it will 
 be obvious that, in the first and second systems before-mentioned, 
 he receives the dividend in the ordinary way ; but it appears to me to 
 be entirely different in the third system. In this case 1 fail to see the 
 utility of recognising that the purchaser here has any legitimate claim, 
 and, I fear, to admit him would complicate the divisional arrangement 
 without any satisfactory equivalent. He will reckon his gain entirely 
 by the lowness of the rates he can get the goods made for, and will 
 rely wholly on the keen competition manifested by manufacturers for 
 securing to him all the benefits of the transaction. Therefore, I don’t 
 think it would be judicious to allow the purchaser anything except the 
 ordinary trade discount. 
 
 Great care and discrimination should be exercised in selecting the 
 committee of management, in order that you may elect men of sterling 
 integrity, sagacity, and good common sense — those who have frequently 
 displayed an aptitude for administering business affairs. I am very 
 
6 
 
 much in favour of the committee being small in number ; to my mind, 
 seven is quite enough. They will get through their arduous duties 
 more rapidly and satisfactorily, will work more in harmony, and will 
 be more impressed with their respective duties and responsibilities than 
 where the number is larger. I think it would be a great mistake to 
 encourage any desire to have such a committee mathematically divided 
 to represent various localities ; be assured that it is assiduity, ability, 
 and probity in the highest degree attainable that should be represented 
 thereon. About the propriety or expediency of the worker being on the 
 committee of management, I have seriously examined into the matter, 
 and I have grave doubts on the utility of such an arrangement ; for I 
 am certain — speaking of mankind in general — that, where any man is 
 personally interested in a small way as a proprietor and in a large way 
 as a worker, there is every likelihood that in every case where these 
 two interests clash the result of his deliberations thereupon will be in 
 favour of the one in which he will derive the most benefit. I know 
 cases where a worker and director were combined in one person; 
 there was an obsequious deference paid in the boardroom and other 
 places to the suggestions of officials, especially those who had the 
 giving out of the respective classes of work. These observations of 
 the failings that are inherent to common humanity make me appre- 
 hensive that it would neither be prudent nor judicious to have the 
 workers on the committee of management. But, as an equivalent to 
 that, and practically more serviceable, I would appoint what I have 
 already termed the arbitrating council, which I think should be com- 
 posed of three of the workers from different departments, elected by 
 the whole of the employes, and three ordinary directors, and the chair- 
 man. Its functions would be to arrange the bye-laws or rules, that 
 would constitute the regulations by which the w T orks would be con- 
 ducted, and to settle any disputes about wages or rates of payment for 
 work done, and to decide on the matter of special awards already 
 referred to. I have no hesitation in stating that the most important 
 task in commencing works of this kind is that of securing a thoroughly 
 efficient manager, for I am convinced that the “ weal or the woe ” of 
 such a venture very much depends on the ability and faithful attention 
 to duty displayed by him. When such a one is found do not scruple 
 to remunerate him well with a good salary, and that implicit confidence 
 that will avoid frivolous interference in matters of technical details. 
 
 A word now about what scale to commence on. I am an ardent 
 believer in the advantage of beginning on a moderate or small scale, 
 for I am certain we shall be more able in that way to withstand the 
 trials and troubles that we must pass through before we get a firm 
 footing in commercial circles, and we will gather the experience and 
 confidence requisite in the new condition of things. Thus our capacity 
 to cope with business difficulties will grow in an equal ratio to our 
 increasing trade and enlarged responsibilities. A good number of 
 co-operative manufacturing ventures have come to grief by starting 
 too ambitiously, while some have been greatly injured through 
 being inaugurated with extravagant pretensions and too sanguine 
 expectations. A serious obstacle to success at the commence- 
 ment is the strong prejudice that prevails amongst trading 
 merchants against the products of co-operative manufacturing 
 societies. We must strive to overcome that opposition by a persistent 
 course of courteous importunity on the part of those entrusted with 
 finding proper markets for the disposal of the manufactured goods, and 
 by making a strenuous effort to place goods in the market of a superior 
 
7 
 
 quality, which workers who are personally interested in the profits 
 would be most likely to produce. The way the Oldham mills have 
 succeeded in the open market, warrant us in thinking that difficulties 
 of that kind are not so formidable now as they once were. Greater 
 stability and progress would be imparted to productive co-operation if 
 the working class in general clearly comprehended the hazard and 
 responsibility that invested capital of any kind is liable to, and that no 
 successful achievement in business enterprise can be accomplished, 
 without being to some extent perilous, having the risks of loss and 
 failure as well as the prospects of gain and success. If we desire to 
 secure some of the vast wealth that is being acquired through 
 trading and manufacturing, we must make up our minds to the 
 well known fact, that we are venturing on a path that, although 
 it has many inducements, is not quite free from peril; but such 
 can be minimised by taking proper precautions, some of which I 
 have herein tried to counsel you upon. To be forewarned is to be 
 forearmed. Therefore, it is incumbent on all that we watch atten- 
 tively the operations of those establishments where our money is 
 invested. The history of the world and of the struggles of our fore- 
 fathers abundantly testify that perseverance in the course that is 
 right, persistent attachment to a truly good cause, is always ultimately 
 crowned with success. Our desire to become our own employers by 
 associated effort is truly a grand object to aspire and work for. 
 Difficulties and discouragements may retard, but they can no more 
 dam up the flow of social progress than you could stop the ceaseless 
 flow of the rolling tide. Our onward progress in the development of 
 industrial associations may be slow, but if each and all will only do 
 their little best to make it expand at a rate that is steady and safe the 
 victory will come in time. We need not be disconcerted, although 
 there are frequent attempts by the trading classes (who consider they 
 have a prescriptive right to every wealth-producing agency or appliance, 
 and will spare neither their purse nor their person) to stop our advance 
 on what they consider their special patrimony ; but our condition for 
 meeting these assaults will be as impregnable now as formerly, if we 
 are in a position to make it manifest to friend or foe that unity and 
 mutual forbearance permeate the ranks of the co-operative movement. 
 
 Permit me to state that. I firmly believe that the retarding influences 
 which we have to contend with amongst ourselves can be much miti- 
 gated, by you, who are the leaders in your respective districts, 
 endeavouring, in season and out of season, to have this vital question 
 submitted in all its bearings at your conference meetings, not, I hope, 
 to be discussed in a contentious spirit, but rather to carefully investi- 
 gate into and calmly deliberate upon the difficulties, the best means of 
 overcoming them, and the grand results that will flow to the toiling 
 masses through the solution of the great labour problem. And allow 
 me to hope that the special feature of this question, that is to be 
 brought prominently before the next Co-operative Congress by Mr. 
 Hughes, will receive a fair share of consideration at your periodical 
 gatherings, and that the outcome may be a host of delegates going to 
 Dewsbury to give their votes and influence in support of those who 
 hold that the elevation of labour should be one of the primary objects 
 in the extension of co-operative industrial institutions. Let everyone 
 in our great movement who claims to be sincere in his efforts to 
 extend and consolidate co-operative enterprise, who desires to see 
 co-operative production established throughout the country, who wishes 
 to see the existing position of political economy so altered that capital 
 
8 
 
 shall be hired by associated labour, instead of being, as has been too 
 long the case, its avaricious task master, ask ourselves, What have I 
 done, and what can I uow do, to promote a peaceable, social revolution 
 that will enable the wage-receiving classes to obtain an equitable share 
 of the wealth acquired from the fruits of their labour ? It does seem 
 to me that a little reflection will show that none of us have really done 
 what we might have done to bring about the general extension of 
 productive co-operation. Then let us buckle on our armour and strive 
 for more unity of aim, and more concerted action, to keep that aim ever 
 prominently before us ; let us endeavour to make co-operative education 
 a practical feature in every society, that we may become familiar with 
 the duties and responsibilities that are inseparably connected with the 
 carrying on of trading and commercial affairs ; and impressed with the 
 necessity for enforcing as strict discipline in co-operative workshops as is 
 practised in similar works belonging to private firms. And let us 
 embrace every opportunity of cultivating the faculty of discriminating 
 character with accuracy, that we may be able in making important 
 appointments to distinguish between the man of superficial audacity 
 and the man of sagacity and moral rectitude, that we may thus be 
 guided safely through the quicksands that intercept our onward pro- 
 gress to the commanding position aspired after, where co-operative 
 .‘ndustrial enterprise shall become permanently established. 
 
 Now that the very air may be said to be impregnated with demo- 
 cratic influences, and that we are surrounded with an atmosphere 
 saturated with the activities of social progress, clearly indicating that 
 the dawn of a better day has arisen for the hard-yoked sons of toil, we 
 are surely warranted in indulging in the expectation that the grand 
 effulgent day is not very far distant when labour shall be assigned its 
 due position and receive its juet reward. 
 
 Co-operative Printing Society Limited, 92, Corporation Street, Manchester.