Page:Encyclopædia Britannica, Ninth Edition, v. 6.djvu/369

Rh CO-OPERATION 339 in the sentiment of a universal happiness or good, and remodel all the existing rights, laws, and arrangements of society on a basis deemed consonant to this end, co-opera tion seeks, in consistency with the fundamental institutes of society as hitherto developed, to ameliorate the social condition by a concurrence of increasing numbers of asso ciates in a common interest. The co-operative societies, springing from this idea, though attended with the most varied fortune, have greatly increased in number and in amount of business in recent years. The form, particular objects, and organic rules of these associations are by no means uniform. But, as we find them iu the principal countries of Europe, they may be divided into three general classes : 1. Societies of consumption, the object of which is to buy and sell to members alone, or to members and non-members under differing conditions, the necessaries of life or the raw ma terials of their industry ; 2. Societies of production, the object of which is to sell the collective or individual work of the members ; 3. Societies of credit or banking, the object of which is to open accounts of credit with their members, and advance them loans for industrial purposes. There are numerous modifications of the principle, such as friendly societies, burial societies, societies of workmen which undertake the execution of work by contract, arrange ments of private firms by which the workmen share in the profits of the employers, and building societies, now rife in most large towns, the object of which is to enable members to become owners of dwelling houses. But the above three categories define the distinguishing cha racteristics of the co-opsrative society proper; and it is some what remarkable that the three kinds of association have attained marked success in three different European countries. England stands at the head in societies of con sumption ; France, in societies of production ; Germany, in societies of credit. With reference to this variety of result it may be observed that the social equality resulting from the great Revolution, in connection with the character of much of the manufacturing industry of France, has given that country a larger number of artizans who work in their own houses, and have a passion for independence in their handicraft, than is to be found in any other country. On the other hand, the masses of opera tives in the factories and other great works of England, while retaining their position as wage-earners, have put forth most energy and attained their highest co-opera tive success in societies for the purchase, and in some degree the production, of their own immediate necessaries of life. The less abundant capital, and the want of banks and other institutions of credit in the smaller towns and remoter parts of Germany, may explain in some measure the notable development of societies of credit in that country. But no account of the phenomena in Germany would be satisfactory without placing at the head of influences the personal agency of one man M. Schulze, of Delitzsch (a town of only GOOO inhabitants) who had the sagacity to perceive that societies of credit were the necessary foundation of the co-operative system, and who reasoned out principles, planned, and laboured with a skill, disinterestedness, and perseverance which have crowned his idea with remarkable success. The Credit Society of M. Schulze is practically a bank, but a bank organized on principles specially adapted to the working classes within certain limits of transaction, to which it is strictly confined. The members of the society must be men of &quot; self-help,&quot; able to work and in regular employment, and they must hold each one equal share of the stock-capital of the society, which may be paid up in full, or by regular instalment. Dividends are only paid to the members who have paid in full, the profits due on the partly-paid shares being added to these till they reach their full amount. It follows from the principle of the society &quot; in proportion to the chance of gain the risk of loss &quot; that when the share-capital has to be called upon to liquidate the debts, it is the capital actually paid in that loses. Equality of shares and equality of advantages and risks are thus attained. But in addition to the share-capital there is a reserve fund formed out of entrance fees and a per centage of the net profits. The order of liability for deficits in the balance sheets is thus (1) reserve fund, (2) paid-in capital, and (3) private property of the members the final principle being that of unlimited liability. Every member is responsible for the debts of the society, and the society for the debts of every member. It is obvious that a company thus constituted, and composed of the most saving and industrious workmen of a town or district, offers a solid security, and consequently the share-capital is sup plemented by loans for given periods of time, debentures, and savings deposits, the last having to be guarded by conditions as to notice of withdrawal. At the beginning of a society the paid-up share-capital may not be more than the proportion of 10 to 90 of borrowed funds, but it has to be brought up as rapidly as possible to 25 per cent., and should reach a maximum of 50 per cent. The share-capital, as originally fixed, has also to be increased as the business, and the amount of funds necessary for its transaction, increase ; so that the amount of each share has thus to be supplemented plus the increase of business minus the increase of members. By these means the society is protected from too small a share-capital for its liabilities, and from the temptation of appropriating large dividends out of the surplus profit, accruing from borrowed funds. Another peculiarity of the German &quot; credit union &quot; is that it makes advances of the funds of which it is possessed to its own members only. The two great ends to be secured being the minimum of risk and the maximum of responsibility, the first is promoted by advancing money only for industrial purposes, within due limits, among borrowers whose requirements and circum stances are or may be thoroughly known to the society, and the second by the fact that every member of the society is unlimitedly liable for any errors or looses that may arise in the administration. The advances are made in the usual forms of promissory notes with the indorsation of sureties, ordinary bills of exchange, and occasionally mortgages over real property in current accounts. Advances are not made for longer periods than the society can itself borrow ; partial repayment at dates is sometimes conditioned within the period of advance; and the interest charged follows the public money-market rate. It is thus that M. Schulze, through a series of skilful regulations beyond our space to follow, solved the problem, which vexed and puzzled the socialists of a past generation, of bringing capital direct to the workman or &quot; immediate producer.&quot; When the little &quot;credit union&quot; of Delitzsch was fully organized in 1852, popular opinion was so well prepared and enlightened on the subject by M. Schulze s efforts in the Prussian Parliament and on the platform, that similar societies vere rapidly organized in other parts of the country. While each society had full powers of self-regula tion, they were all much on the Delitzsch model, and a general affiliation was brought about for mutual counsel and encouragement. M. Schulze then applied in the legislature for corporate rights and legal status to the associations, and after tedious labours obtained them. In 1865 he established a central credit bank at Berlin, by which the societies, while depending mainly on local credit supplies, might have access, in case of need, to the general loan market. The &quot; credit unions,&quot; though now numerous, are only a section of the co-operative movement in Germary.