iHAUaURAL AdDRISS 
 
 DELIVERED AT THE 
 
 TWENTY-FIRST ANNUAL 
 
 JILFRED JWJlRSJiJILL 
 
 PROFESSOR OF POLITICAL ECONOMY, CAMBRIDGE UNIVERSITY, 
 
 ISSUED BY 
 
 The Central Co-operative Board, City Buildings 
 Corporation Street, Manchester. 
 
 
 
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 sponsible for its return to the library from 
 which it was withdrawn on or before the 
 Latest Date stamped below. 
 
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INAUGUEAL ADDEESS 
 
 DELIVEKED AT THE 
 
 TWENTY-FIEST ANNUAL 
 
 ► 
 
 HELD AT IPSWIGH, JUNE 10,11, & 12,1889, 
 
 BY 
 
 « 
 
 ALFRED MARSHALL, Esq., M.A., 
 
 Professor of Folitical Economy, Cambridge University. 
 
 ISSUED BY 
 
 The Central Co-operative Board, City Buildings 
 Corporation Street, Manchester 
 
m—i 
 
. 
 
 W ”3 \ 
 
 CO-OPERATIVE CONORESS, 1889. 
 
 INAUGUEAL ADDEESS, 
 
 Delivered on the occasion of the Twenty-first Annual Co-operative 
 Congress, held at Ipsivich, Whitsuntide, 1889, 
 
 By Professor A. MAKSHALL. 
 
 Gentlemen, —Your two last annual Congresses were opened 
 by two veteran co-operators—Mr. Holyoake and Mr. Neale. 
 They have spent long lives in the centre of your movement; 
 they have cared for it, and worked for it; they have earned 
 your affection and your gratitude; and they could speak to 
 you words of wise counsel, based on thorough knowledge. 
 But I cannot do that. I can do nothing more than lay before 
 you a sample of the way in which your movement presents 
 itself to an academic economist, and trust to your kind 
 indulgence to pardon my lack of special knowledge of the 
 subject of which I have to treat. 
 
 Co-operation is many sided, and can be looked at from 
 many points of view. There are, in consequence, many 
 definitions of it, all having much in common, but each 
 bringing into special prominence some aspect of it which 
 appeals with special strength to some one or other of the 
 many different classes of minds who are attracted by it. It 
 is of course necessary to agree provisionally on some formal 
 definition of a co-operative society for administrative pur¬ 
 poses. But a movement which, though so great, is yet so 
 young, is in danger of being cramped by the too rigid 
 insistence on any hard and fast formula; and I would 
 wish, instead of defining it, to describe the general 
 notion which I have formed of it. I regard it as the typical 
 and most representative product of the age; because it 
 combines high aspirations with calm and strenuous action, 
 and because it sets itself to-develop the spontaneous energies 
 of the individual while training him to collective action by 
 the aid of collective resources, and for the attainment of 
 
4 
 
 collective ends. It has points of affinity with many other 
 movements; but it is like no other. Other schemes for 
 developing the world’s material resources are equally 
 practical and equally business-like, but they have not the 
 same direct aim to improve the quality of man himself. 
 Other schemes for social reform have equally high aspira¬ 
 tions, but they have not the same broad basis of patient 
 action and practical wisdom. What distinguishes co-operation 
 from all other movements is that it is at once a strong and 
 calm and wise business, and a strong and fervent and 
 proselytising faith. 
 
 The cardinal doctrines of its faith are, as I have said, not 
 peculiar to it: they are shared more or less bj’' other move¬ 
 ments. They are, I take it:—Firstly, the production of fine 
 human beings, and not the production of rich goods, is the 
 ultimate aim of all worthy endeavour. Secondly, he who 
 lives and works only for himself, or even only for himself and 
 his family, leads an incomplete life ; to complete it he needs 
 to work with others for some broad and high aim. Thirdly, 
 such an aim is to be found in the co-operative endeavour to 
 diminish those evils which result to the mass of the people 
 from the want of capital of their own; evils which take the 
 two-fold form of insufficiency of material income, and want 
 of opportunity for developing many of their best faculties. 
 Lastly, the working classes, though weak in many ways, are 
 strong in their numbers. They have a great power in their 
 knowledge of one another, and their trust in one another ; 
 and they can much increase this force, for by joint action 
 they can make their little capital go a long way towards 
 getting a free scope for their activities, and towards emanci¬ 
 pating them from a position of helpless dependence on the 
 support, and the guidance, and the governance of the more 
 fortunate classes. And though the beginning of such a 
 movement may be small, it has in it the seeds of growth, 
 because it will educate the working classes in business 
 capacity, and in the moral strength of united and public 
 action for public purposes. 
 
 Now this co-operative faith, as I understand it, differs from 
 the faiths of many social reformers in two respects. On the 
 one hand it is more prosaic, and more ready to take facts as 
 
5 
 
 they are, it does not substitute for them brilliant products of 
 a poetic imagination. And on the other hand, the virtues to 
 which it appeals are the virtues of those who hold the faith. 
 It is not a claim that the virtues of others should induce them 
 to divide equally all round the advantages which they have 
 already acquired. 
 
 I do not mean that the co-operator is very likely to con¬ 
 sider the existing arrangements with regard to property as 
 the best possible. He may probably think, as I myself 
 certainly think, that the rich ought to be taxed much more 
 heavily than they are, in order to provide for their poorer 
 brethren the material means for a healthy physical and 
 mental development; and he may think, as I certainly do, 
 that the rich are in private duty bound to contribute freely 
 to public purposes far more than the taxgatherer ought by force 
 to take from them, and to confine within narrow bounds their 
 expenditure on their own personal enjoyment, and that of 
 their families. But the point I want to insist on is that any 
 beliefs which the co-operator may hold on questions of this 
 sort do not enter into the co-operative faith, because that 
 relates to the duties of co-operators themselves, and not to 
 the duties of others towards co-operators. The co-operative 
 faith is a belief in the beauty and the nobility, the strength 
 and the efficiency, of collective action by the working 
 classes, employing their own means, not indeed suddenly to 
 revolutionise, but gradually to raise, their own material and 
 moral condition. 
 
 But now let us turn to the other side of co-operation, and 
 regard it as a business. As a business it has succeeded, by 
 economising the efforts required to obtain certain desirable 
 ends, and by utilising a great waste product. For in the 
 world’s history there has been one waste product, so much 
 more important than all others, that it has a right to be called 
 The Waste Product. It is the higher abilities of many of the 
 working classes ; the latent, the undeveloped, the choked-up 
 and wasted faculties for higher work, that for lack of oppor¬ 
 tunity have come to nothing. Many a fortune has been 
 made by utilising the waste products of gas works and of 
 soda works; it has been very good business. But a much 
 greater waste product than these is at the foundations of the 
 
6 
 
 fortunes of co-operation. Let us then take stock of the 
 resources of co-operation in this country. 
 
 The habit of association is specially characteristic of the 
 Teutonic race; and our historians are proud to show how 
 those who settled on these shores were, in this respect at all 
 events, among the most Teutonic of the Teutons. But the 
 exclusiveness of [our claims has been somewhat lessened by 
 recent studies of association in the form of village communi¬ 
 ties, &c., among other races, and especially among the Sclavs, 
 and our own near cousins and fellow-subjects in India. And 
 quite recently we have been told that those associations for 
 co-operative production, in which, if liberty is a little 
 wanting, yet law and order are most perfectly developed, are 
 to be found among those extremely distant relations of ours, 
 the Chinese in California.'-' 
 
 The fact is that the co-operative productive society in its 
 rudimentary form is a product of all ages, and all races, and 
 all places ; and the independent productive societies, which 
 we find now scattered sporadically over the whole of Great 
 Britain, are representatives of a very ancient race. In a few 
 cases, as, for instance, in some local institutions connected 
 with quarrying and with fishing, they have an unbroken 
 descent from remote antiquity till now. 
 
 But much that is most interesting in the recent history of 
 productive co-operation comes from France, America, and 
 other countries. Those features of it which are most charac- 
 teristically'^British are found in its relation to the other sides 
 of the co-operative movement. No other country has anything 
 to compare with our great distributive retail and wholesale 
 societies, or with that great central Co-operative Union, the 
 Congress which I have the honour to address to-day. And 
 I will, therefore, begin at that end. 
 
 You know well, and the whole world has heard the figures 
 that tell the growth of the trading business done by 
 co-operation. But I may notice in passing that your figures 
 are a little too modest. They record the number of 
 sovereigns or counters that you have used in your sales ; 
 but they take no account of the fact that a thousand of these 
 
 * See the “ History of Co-operation in the United States,” published for 
 the John Hopkins University, pp. 478-481. 
 
7 
 
 counters represent a great deal more business than they did 
 a few years ago. The real growth of your trade is the 
 increase in the volume of groceries and draperies, and other 
 things that you have sold. Suppose now that the gold mines 
 had given a richer yield, and the use of bank notes and 
 silver and other substitutes for gold had increased faster than 
 they have, in that case more counters would have been used 
 in your trade: and if there had been just so many more used 
 that £1,000 would have bought throughout the whole period 
 the same amount of goods in general—taking one thing with 
 another—then the figures which you publish would have 
 shown the real growth of your business, and not, as they do 
 now, much less than the real growth. 
 
 Using Mr. Sauerbeck’s figures, which are fairly applicable 
 to this case, we find that if £1,000 counted for only as much 
 now as it did in the average of the years 1867 to 1877, the 
 sales made by the English Wholesale Society last year would 
 amount, not to six-and-a-quarter millions, but to nearly nine 
 millions, while the sales of all the co-operative societies in 
 the United Kingdom for 1887 (the last year for which I have 
 the figures) would amount to fifty millions, and not merely 
 to thirty-four, as your figures show. But the strongest case 
 is got by comparing 1873, when prices were highest, with 1887. 
 In those fourteen years the sovereigns or counters which 
 represent the total sales of your societies had only a little 
 more than doubled; but the amount of commodities sold had 
 been multiplied by three-and-a-half, and, in the same time, 
 the sales of the English Wholesale had been multiplied 
 nominally by three-and-a-half, but really by five-and-a-half. 
 
 Well, what is the explanation of this huge trade ? It 
 lies chiefly in the fact that more effort was wasted in doing 
 things that it was not worth while to have done at all, in the 
 old-fashioned retail trade, than in any other business to which 
 working men had access. It is possible that if a co-operative 
 society of working men had been able to penetrate the 
 mysteries of the trade of law in its application to real pro¬ 
 perty, and had been able to cut away all those complications 
 that are more trouble to everyone, and more cost to everyone 
 but the lawyers, than tliey are worth, there might have been 
 an even more striking curtailment of wasted effort. But 
 
8 
 
 however that may be, retail trade was the one accessible 
 business in which there were great economies to be effected. 
 Retailers, as a body, kept far more shops than was necessary, 
 spent far too much trouble and money on attracting a few 
 customers, and then in taking care that those few customers 
 paid them in the long run—the very long run—for those 
 goods which they had bought on credit, or in other words, 
 had borrowed; and for all this they had to charge. The 
 smallest shopkeepers were those that spent most of their 
 time in looking after their customers, and least in handing 
 goods over the counter. It was those who were nearest the 
 condition of the working men who performed the most unneces¬ 
 sary services for them, and charged them the most for so doing. 
 In some cases a retailer would sell at long credit what he 
 himself bought at long credit from a wholesale dealer, who 
 himself perhaps bought at credit from the ultimate producer. 
 The manufacturer had to charge high for the risks and 
 trouble, as well as the locking-up of the capital; the 
 wholesale dealer, starting from this raised platform of high 
 prices, piled up a good percentage more for a similar cause; 
 the intermediate dealer did the same, and perhaps, finding 
 the retailer in his power, added a little adulteration extra ; 
 the retailer, having the workman in his power, added on, 
 perhaps, a little more adulteration, and, anyhow, a great 
 increase of price. 
 
 Now the co-operative store bought for cash, and as nearly 
 as possible at the fountain head ; it required no advertise¬ 
 ments ; in its earlier stages it paid next to nothing for shop 
 front; and in its later stages when it had a somewhat expen¬ 
 sive shoiD front, it put a great many businesses behind it, or 
 in successive stories over it. Its customers, regarding it as 
 their own, would not mind mounting many stejDS, or waiting 
 a little for the assistants on a Saturday night, or at any other 
 time, when there happened to be too few to get through the 
 business quickly. The customers were the proprietors, and 
 had no inducement to adulterate their own goods; and the 
 time which they spent on attending meetings of the society 
 and managing their own business was in a great measure 
 saved from the time that used to be spent in considering 
 whether it would not be better to change their shopkeeper, 
 
9 
 
 , or perhaps in lamenting that they were in his power and 
 could not do so. 
 
 Now, my object in dwelling on this oft-told tale is to show 
 that the success of distributive stores does not prove that 
 • there is any magic in co-operation which will enable the 
 working classes to undertake difficult businesses without the 
 aid of picked men of a high order of business ability. Those 
 whom the stores have thrust to the wall are chiefly men who 
 did not get very high earnings, although they charged high 
 prices. The system of co-operative retailing has such great 
 inherent economies that it is likely to succeed if carried out 
 with good faith and honesty and average good sense: the 
 more business genius it has the better it will succeed, but it 
 can flourish fairly well without business genius. 
 
 And now let us pass to the Wholesale Societies. The 
 Scottish Wholesale is larger relatively to the population of its 
 district than the English; and it has special claims of its 
 own on our admiration, especially in the matter of bonus 
 to labour. But Ipswich is a long way from Scotland; and 
 it will be simpler that I should speak of the Wholesale in 
 the singular number, and refer always to that with which 
 most of those present are directly connected—the Wholesale 
 which has its head-quarters at Manchester. 
 
 Well, the Wholesale has inherent economies almost as 
 powerful as those possessed by the retail stores. For though, 
 by buying for cash, they may get a little nearer to the original 
 producer than can the small shopkeeper who buys for credit, 
 the Wholesale can get much nearer. Its purchases are on 
 so vast a scale as to command every concession and every 
 attention from producers and importers. And while thus 
 buying cheaply, it probably has less expenses in selling, in 
 proportion to the work done, than any other trader in a 
 similar position. For, while every other trader has to con¬ 
 vince his customers that it is worth their while to deal with 
 him, the Wholesale Society is owned by its customers. They 
 have the power of deciding how much shall be added to the 
 original cost of the goods before they are sold to themselves, 
 and if the goods are priced too high there is only so much 
 more profit to be divided among themselves at the end 
 of the quarter, in proportion to their own purchases. 
 
10 
 
 And, therefore, the retail societies would run no great risk 
 if they shut their eyes and bought what the Wholesale 
 offered at the Wholesale’s prices wdthout demur. It is true 
 that there are exceptional cases in which the retail so¬ 
 cieties’ buyer can consult the caprices of local taste better 
 by buying elsewhere, and others in which accidents of 
 time and ifface and opportunity may enable him to buy a 
 particular lot of goods as cheaply as the Wholesale’s buyer 
 could have done, or even a little cheaper. And it is true 
 that that self-confidence which is inherent in human nature, 
 and which is a factor in many of our bad deeds and nearly all 
 our good ones, may sometimes lead him to buy elsewhere 
 when he should not. All this may be admitted ; but it still 
 holds good that there is no large trader whose way is made 
 as smooth for him in finding a custom for his goods as the 
 Wholesale Societies. 
 
 But the advantages of the Wholesale are still further 
 increased, when it produces in one of its own departments 
 the goods which it sells itself to the distributive stores. Such 
 a department as the boot works at Leicester, or the biscuit 
 works at Crumpsall, can avail themselves of the splendid 
 resources of the Wholesale for buying much of their material. 
 The department has a supply of capital which is at once 
 unlimited and never too large; for the great bank in which 
 the Wholesale keeps its own reserves, and those of many 
 distributive societies, will always allow to it as much 
 capital as it wants, and never force it to pay for more. 
 It can offer practical constancy of employment to its 
 workers, for when trade is slack the Wholesale will, of course, 
 give the preference to the goods of its own department, 
 and leave the other producing firms with which it deals to 
 bear their fretting under the ragged edge of inconstant work 
 as best they may. Again, the department need have no very 
 great anxiety about those fluctuations of prices which make 
 the career of most of its rivals so full of strain and stress. 
 If one year it makes a fortunate purchase of raw material, 
 and the Wholesale can credit it with a sale price for its 
 finished commodities, pitched on a much higher basis, the 
 gains all go into the common purse of the Wholesale; and if, 
 at another time, the markets go against its buyers, so that 
 
11 
 
 when wages and all other expenses have been paid, and a 
 fixed 5 per cent, allowed for capital, the balance sheet shows 
 a loss, there is no disturbance of the ordinary routine. De¬ 
 partments which, if they had been independent businesses, 
 would have been sunk by accumulated losses in their early 
 years, have been carried through the waters by the strong 
 hand of the Wholesale; and, having emerged safely, with 
 their lessons of failure behind them, are in fair years making 
 high net profits : these profits go to strengthen still more the 
 already strong hand, and enable it to undertake new tasks, 
 and to help other struggling departments through their 
 temporary troubles. 
 
 With these advantages the Wholesale has risen to a position 
 unique amongst all the achievements that have been wrought 
 by the working classes in the history of the world. The 
 mere size of the business which they have to control gives 
 a largeness to their ideas. It compels them to extend the 
 range of their thought over the whole country, almost over the 
 whole world. It is an education in itself to any member of a 
 local society to have to consider whether his representative on 
 the Wholesale is to advocate a forward policy—whether, for 
 instance, he is to support a proposal for starting one more 
 new line of ships of their own, or for opening a new foreign 
 depot in addition to those at Calais and at Kouen, at Copen¬ 
 hagen, and Hamburg, and New York. He feels a healthy 
 pride as he turns over the pages of his “Annual,” and sees 
 prints of one splendid building after another of which he is 
 part owner; as he reckons up the acres of flooring in his 
 warehouses at Manchester, or asks whether there are many 
 buildings in the city that are finer than his London branch, 
 with its high clock tower. 
 
 And when he looks forward, his ambition may reach out 
 a long way unchecked. He may reason that if the belief 
 should extend that all goods sold in the stores, whether 
 high class or low class, are honestly what they pretend to 
 be ; that they are sold at least as cheaply as the tradesman 
 can sell them ; and that there is a dividend of, say, 2s. in the 
 pound thrown in at the end of the quarter, the sales of the 
 retail stores may perhaps grow to three or four hundred 
 millions a year. Every increase in their sales would increase 
 
12 
 
 their power of consulting the tastes of a great variety of 
 customers, and so retaining those who are now drawn off to 
 shops that follow special lines of their own ; and it would 
 increase the variety of the orders which they could give to 
 the Wholesale. And if the growing loyalty to co-operative 
 principles, which induced individuals to buy more largely of 
 the stores, induced the retail stores to buy more largely 
 of the Wholesale, they would by their very increased custom 
 enable the Wholesale to extend its operations, to sell to them 
 more cheaply, to provide them with a larger choice of goods, 
 and thus to increase their inducements to buy almost every¬ 
 thing from it. 
 
 The powers of the Wholesale as a dealer would therefore 
 be increased much; but its powers as a producer would be 
 increased out of all proportion. For now, though it can vie 
 with any in buying direct from the packing houses of Chicago 
 and the flour mills of Minneapolis, it cannot enter upon any 
 manufacture for which there is not a very large working class 
 demand ; since many purchasers when buying manufactured 
 goods prefer the variety offered by a long street of shops to 
 the charms of the dividend at the stores. Not being able to 
 sell largely, the retail stores do not buy largely; and being 
 themselves compelled to seek for variety, they will, as a rule, 
 buy only very small quantities of any one particular pattern, 
 whether it is a co-operative product or not. Co-operative 
 manufacture on a large and varied scale is thus like a cocoa- 
 nut : it has a very hard shell; but when the shell is broken, 
 there is plenty of good food to be got within. There is a 
 charmed circle to be entered if individual co-operators would 
 buy manufactures so largely from their stores, and their 
 stores would buy so largely of co-operative manufactures, 
 that co-operative manufactures became so various, and the 
 stocks of them held by the distributive stores became so 
 large, that there would be scarce any temptation to seek 
 variety in the outside shops. 
 
 It is a most fascinating picture. The retail societies, if 
 properly supported by the private individual, and the 
 Wholesale, if properly supported by them, have within them 
 greater economies than have ever been claimed by the 
 plausible promoters of those Trusts of which we have heard 
 
13 
 
 SO much lately. But while the purpose of those Trusts was 
 to increase the fortunes of the rich, by means which perhaps 
 might be fair, and perhaps might incidentally benefit the 
 consumers, this further development of the great co-opera¬ 
 tive federation would be a means by which the working 
 classes would help themselves. Its strength would be a 
 moral strength ; would rest on a broad basis of democracy 
 and of equity; its gains would be divided out among all 
 consumers, those consumers being in great part the producers 
 themselves, consuming in proportion to their earnings, and 
 earning in proportion to their efidciency. Raising its high 
 head far beyond all other business undertakings, it would 
 stand forth to challenge the admiration of all ages, the 
 glorious product of working men’s hands and working men’s 
 heads, of working men’s providence and working men’s 
 enthusiasm for a great and good cause. It would, in a 
 greater or less degree, act up to all the cardinal principles of 
 the co-operative faith, as I understand it. 
 
 And yet, magnificent as this scheme is, there are many 
 ardent co-operators who feel that it falls short of their 
 fondest hopes. It would be strong and vast, and would con¬ 
 form to the principles of the co-operative faith more or less ; 
 but their most cherished hopes, their vrarmest affections, go 
 out towards productive societies, which are less completely 
 under the management of a central control, and which are, 
 therefore, in some respects less strong, and which can offer 
 less resistance to the blows of an adverse fortune ; but which 
 yet seem to point more directly towards the true aims of the 
 co-operative faith, because they make the ordinary working 
 man to get nearer to responsible work, because they tend 
 more directly to utilise the great waste product—the higher 
 abilities that are latent among the working classes. It is 
 bold and hardy indeed for an outsider, such as I am, to ex¬ 
 press an opinion on a question on which those are not agreed 
 who have borne the burden and the heat of the long day of 
 co-operative work ; but I shall ask your kind forbearance 
 while I lay before you the reasons which have led me to think 
 that extreme centralisation, though it might quicken and 
 strengthen the growth of your great movement for the 
 present, would not really conduce to its highest and most 
 
14 
 
 permanent interests ; and that in the long run your movement 
 will prosper best if care is taken that its more independent 
 parts are not crushed out, but are enabled to survive and to 
 supplement—not to conflict with—the central kernel of the 
 Wholesale. 
 
 Perhaps I may explain my position more clearly if you 
 will allow me to digress a little. It is common to hear it 
 said that England is divided into two nations—the rich and 
 the poor. I am not sure that it would not be in some 
 respects better for the poor if that statement were strictly 
 true. I will admit that if everyone born of rich parents 
 were able and virtuous, and everyone born of poor parents 
 were stupid and vicious, the poor would lose much and 
 gain nothing from being isolated from the rich. But un¬ 
 fortunately for the poor, they have to make room among 
 their ranks for a large accession every year of the most 
 stupid and profligate of the descendants of the rich; and 
 in return they every year give over to the ranks of the 
 rich a great number of the strongest and ablest, the most 
 enterprising and far-seeing, the bravest and the best of those 
 who were born among themselves. Now, it is true that a 
 system of caste so rigid that every one has to stay 
 always just where he is born is a desolating system. 
 Hope and ambition, and some scope for the play of 
 free competition, are conditions—necessary conditions so 
 far as we can tell—of human progress. But that 
 great evil of our present system, which it is one chief 
 aim of co-operation—as I take it—to remove, lies in the fact 
 that the hope and ambition by which men’s exertions are 
 stimulated have in them too much that is selfish and too 
 little that is unselfish. After a man’s income has put him 
 beyond the fear of pressing want, any further increase adds 
 to his happiness less than he thought it would before he got 
 it. The direct increase of happiness that results from 
 increasing wealth becomes less and less as the wealth 
 increases ; and a person who has already a few hundreds a 
 year may, so far as material wealth has anything to do 
 with it, be nearly as happy as he chooses to be. The 
 pleasure derived from any further increase is chiefly the 
 pleasure of acquisition, of victory over rivals, of a conscious- 
 
15 
 
 ness of the proof of one’s own strength, of being admired and 
 envied by those whom one has left behind, and of being 
 wondered at and tolerated by those into whose society one 
 has risen. 
 
 And if the rise is very rapid, it is apt to be very bad for a 
 man, and even worse for his children, as our experience at 
 the Universities shows. A working man who, by brilliant 
 genius and strong energy, has heaped up a large fortune, is 
 likely to send his sons there ; and one might have expected 
 that coming from such splendid stock they would have had 
 noble ambitions, and helped to raise the tone of the Univer¬ 
 sity. And sometimes they do that; but in too many cases 
 their influence is in the opposite direction : too often their 
 parents have been too busy in struggling with their new 
 social di£B,culties to instruct them as to the importance of 
 anything higher than mere money; and when I see such 
 cases, I am filled with regret that most excellent material 
 has been wasted. 
 
 It might have been better for himself, for his children, and 
 for the world, that the father should not have moved so far 
 away from his early associations; that he should have found 
 scope for his strength and a goal for his ambition in working, 
 at the head indeed of his comrades, but among them ; and 
 should not have suddenly passed over to dwell among 
 strangers, the large capitalist employers of his old friends. 
 His rank in the social scale would have been nominally lower, 
 but really it would have been much higher. Occupied less 
 with adapting himself—and his wife—hurriedly, and therefore 
 awkwardly, to new conditions, he would have been more truly 
 refined. The able working man who is in no great hurry to 
 terminate his connection with his own class is more often than 
 not a perfect gentleman; and that is what a man cannot be, 
 whatever his nominal rank in life, if he is over-much hasted to 
 get riches. A leader of a great trades union, who has earned the 
 esteem, and confidence, and affection of those around him, 
 has got more of those things for which wealth is really to be 
 desired, than if he had accumulated a. large fortune; and 
 every sensible man would rather have him for a companion 
 and a friend just as he is, than if he had become a great iron 
 master or cotton lord. 
 
16 
 
 However, those working men who rise to be rich, generally 
 do some important service. If they do nothing else, they 
 increase the volume of production; and when their rise is 
 due to their power of originating new ideas and new methods, 
 their own fortunes represent but a small part, often not a 
 thousandth part of the increase of material well-being that 
 results from their efforts. And though some of them may 
 have developed their intellects at the expense of their 
 other faculties, the harm done is not to be compared with 
 the waste of latent abilities on the part of that very much 
 larger number of the working classes, who with fitting 
 opportunities might have been educated to do work as difficult 
 and important as that of the average member of the middle 
 classes, but who have no special genius and no faculty for 
 pushing themselves. 
 
 Now, these men want three things—education to fit them 
 for doing higher work ; opportunity to do it ; and the 
 spur of ambition to rouse them to use the opportunity. 
 This ambition need not' be chiefly one for material gain. 
 Theoretically, it might be a mere ambition to be good; but 
 with human nature as it is, those cases in which men are 
 capable of good actions, but require some other stimulus than 
 the mere desire to be good, are too numerous to be neglected 
 by the practical politician. For practical working there 
 should be added a position recognised as one of trust and of 
 honour; and with every increase in the importance of the 
 work there should be some increase of pay, though it need 
 not always be a very great increase. 
 
 Now, there have been at various times a good many 
 schemes proposed for supplying these three wants of educa¬ 
 tion, opportunity, and ambition. Some of these schemes 
 have more poetry than common sense, and some are more 
 violent than just. They are all both entertaining and in¬ 
 structive reading; most of them tend to edify and to elevate 
 the reader. But there is, to my mind, some fatal jiractical 
 objection to all of them, bar one; and that one is co-opera¬ 
 tion. As I said just now, other movements have a high 
 social aim, and other movements have a broad and 
 strong business basis. Co-operation alone has both. For 
 it has a broader scope than trades unions or provident 
 
17 
 
 societies, or those building societies, which, as your excellent 
 Tenant Co-operators know, are so nearly akin to your own 
 movement. All of these can do something towards bringing 
 out the higher and more unselfish ambition of working 
 men, towards educating and utilising their latent faculties, 
 but it is co-operation alone which has a sufficiently broad 
 business basis to be able to do this great work on a great 
 scale. 
 
 It can, however, discharge this high function only by 
 bringing the administrative work close to the people who are 
 to do it. If it organises itself into a vast centralised institu¬ 
 tion, on the model of a great bureaucratic government, it 
 may have a great force, as such governments often have, but 
 it will miss its highest aims. Looking at the question 
 in this way, we find small profit in the fact that each 
 of the 600,000 co-operators who belong to societies that are 
 members of the Wholesale has an equal vote in determining 
 its policy and that of its productive departments. For, 
 in his capacity of citizen, each* "has already his voice in 
 controlling the policy of the State. If the co-operator 
 owns a six hundred thousandth part of your warehouses 
 at Manchester, and of the co-operative ship that goes to 
 Hamburg, he also owns a share of all our public build¬ 
 ings and institutions, and of a great navy. The vote 
 which he gives for electing a representative either on the 
 Wholesale or in Parliament has undoubtedly an educating 
 effect; the broader the issues on which his vote depends, the 
 higher is the educative value to him of his vote, provided he 
 knows well what the issues are. But if the issues are so re¬ 
 mote that he does not attempt properly to grapple with them, 
 the volume of his education is but slight. It is a better 
 training in seamanship to sail a fishing-boat, than to watch a 
 three-masted ship, the tops of whose masts alone appear 
 above the horizon. 
 
 I do not overlook the fact that even under a centralised 
 co-operative system, there would be a great deal of local 
 government. Of course, every distributive store would retain 
 its autonomy; and though the Wholesale would aim at saving 
 it all trouble in deciding as to the ultimate source from which 
 its various supplies should come, its management would offer 
 
18 
 
 a good deal of work for a good many active minds ; it would 
 continue to give education and opportunities, and a scope for 
 a worthy ambition to the ordinary co-operator. That is true— 
 may the retail store thrive, and continue this good work; 
 there is nothing to be said against it except that it does not 
 give scope for all kinds of business ability, and that there is 
 not enough of it. 
 
 But you may say the local store would still be able to start 
 productive departments of its own, such, for instance, as the 
 little farm which our Ipswich friends have here close by. 
 That brings administrative work to the doors of the private 
 co-operator—work which concerns him nearly, and in which 
 he takes a keen interest; he watches it carefully, and learns 
 a great deal from it, even though he may have no direct part 
 in its management. And further, if little movements of this 
 sort are multiplied, they may become fairly numerous relatively 
 to the whole body of co-operators, and so a considerable part 
 of those who have faculties above the average may find the 
 education and the opportunity and the spur to a worthy 
 ambition of which they are in need. That is true; and local 
 stores can enable splendid results of this kind to be attained 
 in spite of a certain amount of centralisation : all I wish to 
 point out is that they vary in inverse proportion to the 
 extent to which centralisation is pushed. 
 
 And when we come to look at the centralised part of a 
 centralised system of co-operation, we find that the opportu¬ 
 nities which it offers to people for doing what I am doing 
 now—making speeches—are out of all proportion to those 
 which it offers for any other work except manual work, i 
 am not one of those who think that the tone of politics is 
 lower than it was ; but I do think there is one growing evil 
 in the fact that statesmen have to spend so much time in 
 convincing others of the correctness of their views, and the 
 excellence of their administration, that they have not enough 
 time for administrative work, and for studying carefully the 
 matters committed to their trust. And I gather that your 
 general committee, on whom everything would depend, has 
 a great deal of talking to do. Its present members, including 
 its most able president, were educated under a less cen¬ 
 tralised system. But I cannot help asking myself whether 
 
19 
 
 there is adequate security that in the competition for a 
 post on the committee a man of great administrative 
 force, hut not a fluent speaker, would always be sure to 
 get the better of a less able man who had a great faculty 
 • of persuasiveness, and had perhaps learnt a thing or two 
 about the great machine which American politicians are 
 perfecting. 
 
 But, suppose that danger to be avoided, and your central 
 committee to remain as able, as energetic, and as upright as 
 they are now. It would still be true that when once elected 
 their powers and their procedure would necessarily resemble 
 more or less those of the directors of a large joint-stock 
 company ; and if those methods should prevail, which I 
 understand to be most in favour with the advocates of cen¬ 
 tralisation, the resemblance would be very close. There 
 would be heads of departments, as in any ordinary business, 
 responsible to them and to no one else; and with high 
 authority in matters of detail. There would be, as I have 
 said, a strong executive. Moreover, many of these leading 
 officers probably would have been educated in the co-opera¬ 
 tive movement. Their abilities, which might otherwise 
 have remained latent and been wasted, would have been 
 turned to good account. So far good. But there is one flaw, 
 a grave flaw from my point of view. It is that the total 
 number of men of that kind—the total number of men to 
 whom the system so organised could point proudly as the high 
 products of co-operation—would be very small in proportion 
 to the capital employed. 
 
 There are, then, three reasons for my venturing to hope 
 that co-operators will hesitate before they accept the 
 argument, that the right way of deciding whether the 
 centralised system of production under the auspices of the 
 Wholesale or the independent system is the better, is to let 
 the two have a fair field and no favour, and to cry at the 
 end, “The devil take the hindmost!” First, I feel sure 
 that the centralised system is stronger than the independent 
 system, with its present organisation, or lack of organisation; 
 and that, with a fair field and no favour, the former would 
 win. Secondly, the more loyal the retail societies are to the 
 Wholesale, the more difficult will it be to arrange a field 
 
20 
 
 which is quite fair, and in which the independent societies ’ 
 are not at some disadvantage. And, lastly, if success in the 
 struggle for survival in a fair field is the sole test of 
 excellence, what is the use of co-operation at all ? Surely 
 the direct effect of the struggle for survival in the animal 
 kingdom is to cause those animals to flourish which are fittest 
 to derive benefits from the environment, and so strengthen 
 themselves ; not those which are fittest to confer benefits on 
 the environment. It is true that in the higher world of man’s 
 action, those plans which benefit the environment most are 
 likely to have a moral strength which vdll enable them to 
 prevail in the long run. But is it not the special function of 
 co-operation to give them a helping hand, and enable them 
 to prevail early, or at all events to secure that their career is 
 not cut so short that they have no “long run” in which to 
 prevail ? 
 
 Let us then turn to the independent productive societies. 
 There is no doubt that they labour under great difficulties. 
 
 The management by working men of the businesses in which 
 they are themselves employed is neither as efficient nor as free 
 from friction as it would be if we social reformers had been able 
 to arrange the world just to our own liking. It has often been 
 said that an army led by a capable general can give odds of 
 twenty per cent, and a beating to one managed by a committee 
 of able men, if they commit the one folly of discussing at length 
 all details. The worst of several possible manoeuvres, if adopted 
 promptly, will often turn out better than the best of them if 
 it is delayed till its pros and cons have been well talked out. 
 
 And the fact that the employes on the committee of such a 
 co-operative business are able to hold their own against their 
 managers in matters of the minutest detail, may often go a 
 good long way towards wrecking the concern. Moreover, 
 there is a good deal of human nature in most men, working men 
 not excepted: and most men’s eyes can see pretty keenly 
 when they are looking in the direction of their own merits. 
 
 The manager and a committeeman may occasionally 
 differ a little about the merits of the committeeman, even 
 though they don’t say so; and then it is not always well for the 
 manager. And if the manager and the committeeman happen 
 to be agreed on the point, but some of the committeeman’s 
 
21 
 
 fellow workers take a different view of his merits relatively to 
 their own, then they are likely to remark that a committee 
 is a very good thing, at all events, for those who are on it: 
 and the remark, even though it may be true, does not help 
 the concern to work smoothly. 
 
 Then, again, managing a business is a very difficult matter. 
 There are some people who think it easy, and are constantly 
 telling us that there is nothing much that the employers as 
 a class do for industry that the working people properly 
 organised could not equally well do for themselves. Such 
 people remind me of Charles Lamb’s friend, who complained 
 that too much fuss was made about Shakespere; “he could 
 have written that sort of thing himself if he had had the 
 mind.” “ Ah ! ” said Charles Lamb, “ I supposed it was only 
 the mind that was wanting.” To carry on a great business 
 nothing much is wanted except to organise it properly ; but 
 then that is just the difficulty. It is as easy as beating the 
 big drum in an orchestral concert. Nothing more is needed 
 than that you should do the right thing at the right time, 
 but there are not many people who can do it. 
 
 I have already laid stress on the fact that the success of the 
 distributive societies is no proof of the efficiency of working 
 men as undertakers of business enterprises. Their inherent ad¬ 
 vantages are so great that they may sometimes prosper fairly 
 even though their management is but second-rate; and there 
 is no question that some of them have done so. Their success 
 gives no ground for anticipating that a productive society 
 would succeed when it had to run the gauntlet of competition 
 with private firms managed by business men quick of 
 thought and quick of action, full of resource and of inventive 
 power, specially picked for their work and carefully trained. 
 And of men thus picked a great number fail; it is said that 
 in some businesses more than half of those who start fail 
 within the first five years. Some of them come to the surface 
 again, but many sink altogether; the waters close over them ; 
 everyone takes it as a matter of course; they are heard of 
 no more; but no fuss is made about them. When, however, 
 a co-operative society undertakes a business harder than it 
 can manage, the trumpets which sounded at its christening 
 sound again a little louder at its funeral; and some faithful 
 
22 
 
 friend writes out a tender obituary notice, which the careful 
 historian of co-operation epitomises for his necrological 
 chapter—a perpetual warning as to the vanity of human 
 hopes. 
 
 And then there is another difficulty. Nearly every kind of 
 business requires every year a larger capital to carry it 
 on; and the working man has seldom much capital. It 
 has been commonly said that in competition capital 
 employs labour and pays it a fixed wage; but that in 
 co-operation labour employs capital, and pays it a 
 fixed rate of interest. But that is more easily said than 
 done. It is easy enough to borrow a thousand millions at 
 four per cent., if the four per cent, is sure—quite sure. But 
 it is not nearly so easy to borrow £1,000 at ten per cent., if 
 the ten per cent, is only moderately sure. And most of us 
 know the sorrows of that society of which all co-operators are 
 so fond and proud, the fustian society at Hebden Bridge, 
 which borrowed at 7^ per cent, when its security was not so 
 good, and the current rate of interest was higher, but now 
 finds itself much hampered by having to pay so high a rate. 
 
 But, in fact, it is not true that under competition labour 
 is hired by capital; it is hired by business ability in 
 command of capital: and it is not true that in co-operation 
 capital is hired by labour; it may be hired by the business 
 ability that lives in the heads that the working men have on 
 their shoulders ; but if they have not much business ability, 
 they will not get much capital, either of their own or of any¬ 
 one else’s; and if they get it, they will not keep it long : and 
 it all comes back to that. 
 
 Next, after the difficulty of making things is overcome, 
 that of selling them begins; and often the latter is the 
 greater of the two. To say nothing of advertising, private 
 firms spend a great deal of their energy on getting hold of 
 the right kind of travellers and agents for pushing their 
 goods, and a great deal of money on paying them ; and this 
 is a thing that co-operative societies cannot do very well; 
 and there is much of it to which, to their credit be it said, 
 they do not take ver}^ kindly. 
 
 Lastly, a productive society often owes whatever success 
 it has had almost entirely to a few men, perhaps to one man. 
 
23 
 
 • of exceptional ability, fervent and strong in the co-operative 
 faith. And then it is constantly at the mercy of cruel Death. 
 He snaps the threads of a few lives, or perhaps only of one, 
 and the society dwindles and decays, or is converted into a 
 greedy joint-stock company; and so cherished hopes are 
 once again disappointed, and the proud boasts of confident 
 co-operators are brought to naught. 
 
 Well, then, productive co-operation is a very difS.cult thing, 
 but it is worth doing. When I was an undergraduate, I once 
 took to my mathematical tutor a long face and an unfinished 
 problem. I told him I had worked at it the whole of the 
 preceding day, and yet not done it, though the day before I 
 had done twenty that did not look a bit harder. He was a 
 wise man—Dr. Parkinson was his name—and he looked at 
 me cheerily and said, “ Well, then, yesterday’s work 
 probably did you much more good than that of the day 
 before. There is not much good in doing things you can do; 
 but there is great good in trying to do those that you can’t 
 do, but that are worth doing.” And it seems to me that the 
 difficulties of non-centralised co-operative production are just 
 those at which it is best worth while to take a long pull, and 
 a strong pull, and a pull all together. I believe that some of 
 them are not so tough as they look, and can be broken 
 through; and that those which are very tough have a corner at 
 no great distance, which you can turn, and so get round them. 
 
 In this matter you have a very great advantage from the 
 elasticity of index)endent productive societies. There must be 
 one spirit in them all, they must all rest on a common 
 principle ; but they may have the largest variety of detail. 
 Sometimes, for instance, it may be best not to have employes 
 on the committee at all; but even then the employes may 
 attend the general meetings of the society, and may be re¬ 
 presented on the committee by others who are and have been 
 employed in the same or in allied trades. My friend Mr. 
 Jones intends, I believe, to call your attention to the co¬ 
 operative element in the Oldham spinning mills; and I may 
 well leave that subject in his most able hands. But I should 
 like to point out that those mills owe a great deal to the facts 
 that Oldham is the chief centre for manufacturing cotton 
 spinning machinery, and that many of those interested in the 
 
24 
 
 mills are or have been mechanics engaged in making that ^ 
 machinery. And there are many cases in which the advice 
 of a workman engaged in an allied trade is of great use 
 to a co-operative society, while the opportunity for giving it 
 is a gain for him. 
 
 It is a subject on which I must speak with very great 
 diffidence. But after hearing a good deal of what can be said 
 on both sides, I incline to think that the real advantages of 
 having employes on the committee are greater, and the disad¬ 
 vantages less, than they are likely to appear at first both to the 
 shareholders and the manager. I think that in this matter the 
 co-operative spirit has a high, though difficult duty, the brave 
 performance of which would ultimately bring its own reward. 
 
 One reason for thinking that the difficulties arising from 
 having employes on the committee are not so great as they 
 look, is that though they have had much to do with wrecking 
 many enterprises, that has been because, m any new under¬ 
 taking, people are apt to misunderstand one another at first. 
 Partly it is that the wrong people are apt to be put on the 
 committee at first; partly that there is no tradition or 
 precedent to which to appeal in disputed cases, but every 
 difference of opinion has to be fought out; partly that some 
 of those who are most quick to start a new movement are 
 least able to bear and forbear when the time of pressure 
 comes. Experience, I believe, shows that difficulties of this 
 kind, if once tided over, are likely to recur, if at all, in a some¬ 
 what milder form : they are rather like measles. Difficulties 
 of this kind need not discom’age us: they rather show that 
 many of the failures of independent productive societies are 
 due to causes which can be removed by co-operative aid and 
 guidance. They are arguments against the complete isolation 
 of such societies, but not in favour of their being consolidated 
 under a rigid centralised government. 
 
 And in much the same way with regard to the other diffi¬ 
 culties. No doubt many productive societies have failed 
 through engaging in unsuitable businesses ; but co-operative 
 experience may guide them away from tasks in which it is 
 necessary to run great risks, to act with great vigour and 
 decision, to have a wide range of technical and commercial 
 knowledge, to be well posted in the latest news and to get it 
 
25 
 
 nearly at first hand, to be constantly devising new schemes 
 and new methods of manufacture, and appealing to and 
 creating new tastes. Co-operative production may occasion¬ 
 ally come across a man who has the rare qualities required 
 for such work. But unless his co-operative virtue is very 
 strong, the large gains which he can make in the outside 
 world will draw him away. And for the present, at all 
 events, productive societies need to be guided towards those 
 industries that do not require rare talents ; towards indus¬ 
 tries in which punctuality, and order, and neatness, and 
 careful economy in matters of detail, and a steady resolute 
 tread along a well-beaten path, are the things chiefly wanted. 
 There are plenty of men latent among the working classes, 
 who have the capacity required for this work, and who would 
 be content with a moderate income and a good position 
 among those who know them. 
 
 Industries which satisfy these conditions seldom want a 
 very large capital. Such as do, must of course be avoided; 
 and no doubt many productive societies have failed partly 
 through under-estimating the capital required for what they 
 have undertaken. Here co-operative counsel on the one side 
 and co-operative capital on the other will be of good service. 
 Productive societies that are in other respects on the right 
 lines can generally get what capital they want at a reasonable 
 rate of interest: though I do not say that distributive 
 societies can make a good business by undertaking to pay five 
 per cent, on an unlimited number of new shares, and lending 
 out the money at a moderate rate to a more or less risky 
 business. But I would venture to ask in passing whether 
 there is not a pressing need for prompt action in the matter 
 of accepting new capital at five per cent. ? Is it not an 
 anachronism ? 
 
 Here, then, we see again an argument against the isolation 
 of productive societies. And we find still another argument 
 in the difficulties that they have in marketing their goods; 
 and another in the need for continuity of management. For 
 marketing is just the business in which co-oj^eration is most 
 effective ; and the crisis through which a society passes when 
 its best members are removed by death or in other ways may 
 often be tided over by a little co-operative aid from outside. 
 
26 
 
 Does not all this point to the conclusion that in order to 
 give co-operative production in this country a fair chance of 
 doing its best, there is required some broad-based organisa¬ 
 tion for helping it? I say in this country, because the 
 industrial qualities of this country are peculiar, and not like 
 those of any other. Englishmen are not particularly quick¬ 
 witted, or specially adapted for contriving sporadic pro¬ 
 ductive associations, each fighting entirely for itself, each 
 trying some new experiment, depending on its own resources, 
 and heedless of what others have done or are doing. 
 
 And, on the other hand, Englishmen have no liking for 
 -things controlled and drilled by a central government. What 
 suits their character best is to have a broad and solid 
 association based on many smaller associations, not con¬ 
 trolling and directing them, not interfering with their 
 freedom without absolute necessity, but acting as a 
 common centre for help and advice ; serving as a channel by 
 which any member that is in special need may receive the 
 aid of others, and taking perhaps an active part in adminis¬ 
 tering that aid and the wholesome advice by which it may 
 perhaps have to be accompanied. It seems to me that the 
 three great features of English social life, trades unions, 
 provident societies, and co-operation, owe their success to 
 adopting this plan. Broad-based, highly-organised freedom 
 of action, is characteristically English : and the true future 
 of English co-operation lies, I am convinced, in adhering to 
 these lines. 
 
 If co-operation, which has made its great position by 
 fostering freedom, should throw its strength into developing 
 departments of the Wholesale governed by a central 
 authority, is there any certainty that this new departure, 
 so seemingly at variance with the traditions of the Enghsh 
 people, would be supported by them permanently ? I spoke 
 just now of the great strength of a productive department 
 of the Wholesale ; but does not the permanence of the 
 strength of the Wholesale itself depend upon its adhering to 
 English traditions of freedom and local autonomy. Eveu 
 though centralised departments may be the strongest and 
 fittest to thrive on their environment for the present, are 
 they the fittest to benefit it, are they even the surest to flourish 
 
27 
 
 themselves in the long run ? And would it not be, on the other 
 hand, equally un-English to continue to allow the indepen¬ 
 dent productive societies to fight their hard fight, to struggle, 
 and too often to die an early death, for the want of a guiding 
 and a helping hand, for the want of those advantages, those 
 economies, and those powers which come from broad-based 
 association and co-operation ? Do not many of your dis¬ 
 cussions point in this direction ? Your schemes for propaganda, 
 and the cordial reception given to Mr. Gray’s excellent papers 
 on “ Co-operative Production,” seem all to do so. Your 
 Co-operative Guild, your Co-operative Aid Association and 
 your Labour Association are evidences that you recognise 
 a want of this kind. 
 
 Is not, however, your Co-operative Union itself the right 
 body for the work ? But is it at present strong enough ? 
 Ought you not to develop it and to put more of your funds at 
 its disposal ? I speak here with the greatest hesitation. I do 
 not mean to suggest that the funds for this purpose should 
 be levied compulsorily on all societies, whether in favour of 
 the movement or not; but I think that many societies would 
 favour it. And it is just that part of the movement in which 
 outsiders would be most willing to help, if they were sure 
 that the funds contributed would be spent under the authority 
 of the Union, and therefore wisely. I do not know whether 
 anyone would raise an objection on the ground that the con¬ 
 stitution of your Union permits joint-stock companies and 
 other external associations to become members of it, though 
 none have yet done so. In that case you might perhaps think 
 it best to create a new body for the purpose; but it is to be 
 hoped that this would not be necessary. Might you not 
 give to your Union the means and the duty to help produc¬ 
 tive societies with guidance and with funds, leaving them 
 the greatest liberty of detail, subject to the condition of their 
 adhering closely to high co-operative principle, under which 
 of course would be included securing a full share of the pro¬ 
 fits to the workers ? Might not it further undertake to act as a 
 common centre of information as to their special wants, and to 
 warn them against pressing into a field that was already full; 
 to take part in acquainting distributive societies with wdiatthey 
 are doing; in acquainting them with the needs of distributive 
 
28 
 
 societies ; in organising arrangements for depots, exhibitions, 
 commission agents, and travellers; and, lastly, might it 
 not act as a kind of board of arbitration and conciliation for 
 troubles that may arise either within a society, or between 
 it and others ? 
 
 It would, of course, nominate members on the committees 
 of those associations which sought its pecuniary aid ; but 
 probably many other societies would ask it to do this, just as 
 many schools and local colleges are glad to have members on 
 their councils nominated by the Universities, partly because 
 they can give good advice, partly because they bring an 
 impartial judgment to the decision of any internal difficulty 
 that may arise, and, not least, because their presence gives 
 prestige and attracts the confidence of the outside world. 
 And might it not be instructed to choose these representa¬ 
 tives from as wide a circle as possible, and so to give to many 
 men the opportunity of showing what they are worth as 
 administrators ; not, of course, putting untried men into 
 responsible posts, but always finding for a man who had done 
 one task well something more responsible to go on with ? 
 Is this a Utopian dream ? Is not the tendency of your whole 
 movement really in this direction ; and has not the time now 
 come, not, indeed, for prompt action, but for steadfast de¬ 
 liberation, that may prepare the way for resolute action ? And 
 the last question of all—can you forgive me, an ill-informed 
 outsider, for my presumption in asking these bold and 
 intrusive questions ? 
 
 I have come to the end of my time, and yet have touched 
 the fringe of only a small part of the great problems which 
 you have set yourselves to solve. The days of romantic 
 chivalry are past. Knights-errant no longer rescue imperilled 
 maidens from the castles of terrible giants, or slaughter 
 dragons that vomit volcanoes of flames; but there is as loud 
 a call as ever for courage and a chivalric self-sacrifice for 
 great and worthy ends. Those who are full of the co-operative 
 faith have to endure the disappointment of seeing themselves 
 out-voted by numbers who care for little that is co-operative 
 except the dividend ; and still they have to keep their courage, 
 and to keep their temper, and to fight the good fight time 
 after time till they win. I am told by those who know, what 
 
29 
 
 I should have otherwise expected, that there will be in this 
 ^ hall to-day many of the truest and bravest knights of that 
 great order of modern chivalry—co-operation; and they must 
 sometimes wish that the doors had not been held so widely 
 > open for those worshippers in their great temple whose 
 devotions are exclusively paid at the shrine of dividend, who 
 stay eagerly watching to see whether the golden image that 
 dwells there will hold up its fingers at the end of the quarter 
 to signify 2s. 3d. or 2s. 4d.; and care for very little else. But 
 to them I would repeat the noble motto of the English 
 Wliolesale: “ Labour and Wait.” 
 
 They and others who are not here to-day may wonder 
 that I have not put more into the foreground the great 
 issue as to whether the employes of a co-operative 
 society should share in its profits. I have not done so, 
 partly because my time was short, partly because 
 there seems some danger of its overshadowing what I regard 
 as a still more fundamental question. Profit-sharing is 
 a great end, but it is also a means to an even greater end. It 
 certainly tends to award to the worker a better and juster 
 share of his work than he would otherwise get; but, taken 
 by itself, it does not go very far towards that end. Unless it 
 is used also as a means towards a better organisation of 
 industry it is apt to become little more than a change of 
 form, nearly as much being taken off wages at one end as is 
 added on at the other under the name of profit-sharing. But 
 even so it compares not unfavourably with the best result 
 that can be reached without it, even if the spirit of the 
 employers is liberal, and they try to pay not as low wages as 
 they can, but as much as the business will bear; and if as 
 their business extends they promote their old employes as 
 rapidly as possible to higher posts at higher salaries. It 
 is true that those employes who have been more than five 
 years with one firm are, taking all England together, much 
 better off than they would have been if the firms for which 
 they had worked had barely kept their heads above water; 
 and there is much more indirect profit-sharing, and solidarity 
 of interest between employer and employed in the non¬ 
 co-operative world than at first sight appears. And I must 
 further confess that when any abstract or “metaphysical” 
 
30 
 
 principle—the term is not mine—is applied to settle rigidly 
 what share of the profits should go to labour and what 
 to capital, and what to the consumer, I find myself unable to 
 follow it; whether it is put forward in the interests of labour 
 or of the consumer. Nevertheless, I regard the movement 
 towards the direct participation by the employe in the profits 
 of the business as one of the most important and hopeful 
 events of modern times, and as one of the best and most 
 valuable fruits of the co-operative spirit. 
 
 It is the most convincing outward sign and symbol, and the 
 most eflQ.cient means, of a true desire to associate the worker 
 in the business, to keep warm his interest in it; to induce 
 him to take a pleasure in advancing its prosperity by all 
 means, whether they fall within the technical limits of his 
 ordinary work or not; to offer him, as far as may be, 
 education, and opportunity and scope for a worthy ambition 
 to act not merely as a hand, but as a thinking and thoughtful 
 human being. Profit-sharing is a good means towards this 
 great end; and he has not lived in vain who has helped to 
 overcome the obstacles which impede its general adoption. 
 
 The term profit-sharing is, however, sometimes applied to 
 the case in which labour, or rather “ the business ability that 
 lives in the heads that working men have on their shoulders,” 
 endeavours to hire capital at a fixed rate of interest, and in 
 favour of that I have nothing to say now, because I have been 
 speaking for it all along. I must, however, confess to some 
 j)artial agreement with the advocates of the i^resent system 
 of the Manchester Wholesale, when they argue that their 
 employes in any productive department cannot be regarded 
 as hiring capital on these terms. They argue that the Whole¬ 
 sale undertakes to market their goods for them, as well as to 
 superintend their general management, and that an arbitrary 
 element is introduced in the charge which has to be made for 
 their services, and therefore that the profits to be divided 
 among the employes, if that system were adopted, could not 
 be determined by any abstract principle. I admit it; but I 
 still vush that the Manchester Wholesale would follow the 
 example of its Scottish sister ; and accepting the fact that 
 there is an arbitrary element, calculate it as best it can, and 
 share the net profits with the employes. As, however, I have 
 
31 
 
 already said, I should much prefer that the Union should 
 perform for the independent co-operative societies many of 
 the services -which the Wholesales perform for their produc¬ 
 tive departments. Then the societies could approach as near 
 as existing conditions will allow to the ideal of “ labour 
 employing capital.” 
 
 This is, however, only one of many tasks that lie before the 
 true knights of co-operation. There are others in which the 
 path of duty, if not more easy, seems yet more clearly 
 marked in its general outline, though even in them there is 
 a fringe of debatable ground. 
 
 You have, for instance, still to fight the old fight against 
 giving credit. The wily trader is developing a fresh line of 
 attack, by new modifications of the old plan of payment by 
 instalments. He claims to give his dividend at the beginning 
 instead of the end; and I am told that there are a great 
 many silly flies who walk into the pretty parlour of that 
 shrewd spider. 
 
 Again, you have the old battle for honesty in dealing. You 
 have been hampered a good deal by the reaction against 
 undiscriminating attacks on adulteration. That term is often 
 used so as to include open and undisguised changes in the 
 character of goods to suit the wants and the tastes of con¬ 
 sumers. But you seem to me to have a clear duty ; it is to 
 explain to consumers what things are cheap and what things 
 only appear to be cheap ; to give them for their money as high 
 class goods as you can afford, and as much truthful informa¬ 
 tion about them as you possess. Gradually they will care 
 less and less to buy show instead of substance. 
 
 And you have—the most difficult task of all, because that 
 in which you are most likely to be suspected of jealous 
 motives—to keep the field clear of those who would use it for 
 their own selfish purposes. Co-operators may be as generous 
 as they please; but they must not be merciful either to 
 wrong-doing or to incompetency. They should try to give to 
 every man a better scope for his abilities, and therefore the 
 opportunity for earning a better income than he would have 
 got if his best faculties had not been turned to account; but 
 they must not allow people to prey on the movement. If the 
 manager of a store does his business so negligently or with so 
 
32 
 
 little skill that he could not keep his customers together 
 were it not for the prestige which his store derives from 
 co-operation, he must take a lower place. This is your 
 hardest and most bitter task : there is none more repugnant 
 to the spirit of the true co-operator; but there is, I believe, 
 none which it is more imperatively his duty to perform, none 
 which is more vital to the continued prosperity of the move¬ 
 ment. 
 
 It is also a duty to pay to those who are doing their work 
 with exceptional ability salaries high enough to prevent any 
 excessive strain on their allegiance to co-operation arising 
 when they receive tempting offers from outside. This is a 
 pleasant, but not an easy task. It is said that successful 
 business men owe much to their knowing when to pay very 
 high salaries ; and co-operators must keep their wits well 
 about them in order to find out when to do it. 
 
 Thus, in every direction there is plenty of work for the 
 heads as well as for the hearts of co-operators. They hold a 
 most responsible position ; it lies with them to control the 
 future of that scheme for social reform which is the greatest 
 because its business basis is the strongest; and of that 
 business undertaking which is the greatest because its aims 
 are the noblest and the most asinring. Those co-operators 
 , who, caring little for themselves, labour hard and earnestly 
 to turn to good account the knowledge that working people 
 have of one another, their power of wise trust and sober 
 confidence in one another, their sympathy and affection ; 
 those who work steadfastly towards the aim of giving 
 education and opi^ortunity and spur of a worthy ambition 
 to that latent ability of the working classes which is the great 
 waste product of the world ; they will 
 
 “ Live 
 
 In pulses stirred to generosity, 
 
 In deeds of daring rectitude, in scorn 
 
 For miserable aims that end in self, .... 
 
 Enkindle generous ardour, feed pure love, 
 
 Be the sweet presence of a good diffused. 
 
 And in diffusion ever more intense. 
 
 So shall they join the choir invisible, 
 
 Whose music is the gladness of the world.” 
 
 Co-operative Printiug Society Limited, 92, Corporation Street, iJanchester. 
 
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