Under the old gild conditions, when each man rose successively from apprentice to journeyman, and from journeyman to employer, when the relations between the employing master and his journeymen and apprentices were very close, and the advantages of the gild were partic.i.p.ated in by all grades of the producing body, organizations of the employed against the employers could hardly exist. It has been seen that the growth of separate combinations was one of the indications of a breaking down of the gild system. Even in the later times, when establishments were still small and scattered, when the government required that engagements should be made for long periods, and that none should work in an industry except those who had been apprenticed to it, and when rates of wages and hours of labor were supposed to be settled by law, the opposition between the interests of employers and employees was not very strongly marked. The occasion or opportunity for union amongst the workmen in most trades still hardly existed. Unions had been formed, it is true, during the first half of the eighteenth century and spasmodically in still earlier times. These were, however, mostly in trades where the employers made up a wealthy merchant cla.s.s and where the prospect of the ordinary workman ever reaching the position of an employer was slight.

The changes of the Industrial Revolution, however, made a profound difference. With the growth of factories and the increase in the size of business establishments the employer and employee came to be farther apart, while at the same time the employees in any one establishment or trade were thrown more closely together. The hand of government was at about the same time entirely withdrawn from the control of wages, hours, length of engagements, and other conditions of labor. Any workman was at liberty to enter or leave any occupation under any circ.u.mstances that he chose, and an employer could similarly hire or discharge any laborer for any cause or at any time he saw fit.

Under these circ.u.mstances of h.o.m.ogeneity of the interests of the laborers, of opposition of their interests to those of the employer, and of the absence of any external control, combinations among the workmen, or trade unions, naturally sprang up.

*79. Opposition of the Law and of Public Opinion. The Combination Acts.*--Their growth, however, was slow and interrupted. The poverty, ignorance, and lack of training of the laborers interposed a serious obstacle to the formation of permanent unions; and a still more tangible difficulty lay in the opposition of the law and of public opinion. A trade union may be defined as a permanent organized society, the object of which is to obtain more favorable conditions of labor for its members. In order to retain its existence a certain amount of intelligence and self-control and a certain degree of regularity of contributions on the part of its members are necessary, and these powers were but slightly developed in the early years of this century. In order to obtain the objects of the union a "strike,"

or concerted refusal to work except on certain conditions, is the natural means to be employed. But such action, or in fact the existence of a combination contemplating such action, was against the law. A series of statutes known as the "Combination Acts" had been pa.s.sed from time to time since the sixteenth century, the object of which had been to prevent artisans, either employers or employees, from combining to change the rate of wages or other conditions of labor, which should be legally established by the government. The last of the combination acts were pa.s.sed in 1799 and 1800, and were an undisguised exercise of the power of the employing cla.s.s to use their membership in Parliament to legislate in their own interest. It provided that all agreements whatever between journeymen or other workmen for obtaining an advance in wages for themselves or for other workmen, or for decreasing the number of hours of labor, or for endeavoring to prevent any employer from engaging any one whom he might choose, or for persuading any other workmen not to work, or for refusing to work with any other men, should be illegal. Any justice of the peace was empowered to convict by summary process and sentence to two months' imprisonment any workmen who entered into such a combination.

The ordinary and necessary action of trade unions was illegal by the Common Law also, under the doctrine that combined attempts to influence wages, hours, prices, or apprenticeship were conspiracies in restraint of trade, and that such conspiracies had been repeatedly declared to be illegal.

In addition to their illegality, trade unions were extremely unpopular with the most influential cla.s.ses of English society. The employers, against whose power they were organized, naturally antagonized them for fear they would raise wages and in other ways give the workmen the upper hand; they were opposed by the aristocratic feeling of the country, because they brought about an increase in the power of the lower cla.s.ses; the clergy deprecated their growth as a manifestation of discontent, whereas contentment was the virtue then most regularly inculcated upon the lower cla.s.ses; philanthropists, who had more faith in what should be done for than by the workingmen, distrusted their self-interested and vaguely directed efforts. Those who were interested in England's foreign trade feared that they would increase prices, and thus render England incapable of competing with other nations, and those who were influenced by the teachings of political economy opposed them as being harmful, or at best futile efforts to interfere with the free action of those natural forces which, in the long run, must govern all questions of labor and wages. If the average rate of wages at any particular time was merely the quotient obtained by dividing the number of laborers into the wages fund, an organized effort to change the rate of wages would necessarily be a failure, or could at most only result in driving some other laborers out of employment or reducing their wages. Finally, there was a widespread feeling that trade unions were unscrupulous bodies which overawed the great majority of their fellow-workmen, and then by their help tyrannized over the employers and threw trade into recurring conditions of confusion. That same great body of uninstructed public opinion, which, on the whole, favored the factory laws, was quite clearly opposed to trade unions. With the incompetency of their own cla.s.s, the power of the law, and the force of public opinion opposed to their existence and actions, it is not a matter of wonder that the development of these working-cla.s.s organizations was only very gradual.

Nevertheless these obstacles were one by one removed, and the growth of trade unions became one of the most characteristic movements of modern industrial history.

*80. Legalization and Popular Acceptance of Trade Unions.*--During the early years of the century combinations, more or less long lived, existed in many trades, sometimes secretly because of their illegality, sometimes openly, until it became of sufficient interest to some one to prosecute them or their officers, sometimes making the misleading claim of being benefit societies. Prosecutions under the combination laws were, however, frequent. In the first quarter of the century there were many hundred convictions of workmen or their delegates or officers. Yet these laws were clear instances of interference with the perfect freedom which ought theoretically to be allowed to each person to employ his labor or capital in the manner he might deem most advantageous. Their inconsistency with the general movement of abolition of restrictions then in progress could hardly escape observation. Thus the philosophic tendencies of the time combined with the aspirations of the leaders of the working cla.s.ses to rouse an agitation in favor of the repeal of the combination laws. The matter was brought up in Parliament in 1822, and two successive committees were appointed to investigate the questions involved. As a result, a thoroughgoing repeal law was pa.s.sed in 1824, but this in turn was almost immediately repealed, and another subst.i.tuted for it in 1825, a great series of strikes having impressed the legislature with the belief that the former had gone too far. The law, as finally adopted, repealed all the combination acts which stood upon the statute book, and relieved from punishment men who met together for the sole purpose of agreeing on the rate of wages or the number of hours they would work, so long as this agreement referred to the wages or hours of those only who were present at the meeting. It declared, however, the illegality of any violence, threats, intimidation, molestation, or obstruction, used to induce any other workmen to strike or to join their a.s.sociation or take any other action in regard to hours or wages. Any attempt to bring pressure to bear upon an employer to make any change in his business was also forbidden, and the common law opposition was left unrepealed. The effect of the legislation of 1824 and 1825 was to enable trade unions to exist if their activity was restricted to an agreement upon their own wages or hours. Any effort, however, to establish wages and hours for other persons than those taking part in their meetings, or any strike on questions of piecework or number of apprentices or machinery or non-union workmen, was still illegal, both by this statute and by Common Law. The vague words, "molestation," "obstruction," and "intimidation," used in the law were also capable of being construed, as they actually were, in such a way as to prevent any considerable activity on the part of trade unions. Nevertheless a great stimulus was given to the formation of organizations among workingmen, and the period of their legal growth and development now began, notwithstanding the narrow field of activity allowed them by the law as it then stood. Combinations were continually formed for further objects, and prosecutions, either under the statute or under Common Law, were still very numerous. In 1859 a further change in the law was made, by which it became lawful to combine to demand a change of wages or hours, even if the action involved other persons than those taking part in the agreement, and to exercise peaceful persuasion upon others to join the strikers in their action. Within the bounds of the limited legal powers granted by the laws of 1825 and 1859, large numbers of trade unions were formed, much agitation carried on, strikes won and lost, pressure exerted upon Parliament, and the most active and capable of the working cla.s.ses gradually brought to take an interest in the movement. This growth was unfortunately accompanied by much disorder. During times of industrial struggle non-strikers were beaten, employers were a.s.saulted, property was destroyed, and in certain industrial communities confusion and outrage occurred every few years. The complicity of the trade unions as such in these disorders was constantly a.s.serted and as constantly denied; but there seems little doubt that while by far the greatest amount of disorder was due to individual strikers or their sympathizers, and would have occurred, perhaps in even more intense form, if there had been no trade unions, yet there were cases where the organized unions were themselves responsible. The frequent recurrence of rioting and a.s.sault, the losses from industrial conflicts, and the agitation of the trade unionists for further legalization, all combined to bring the matter to attention, and four successive Parliamentary commissions of investigation, in addition to those of 1824 and 1825, were appointed in 1828, 1856, 1860, and 1867, respectively. The last of these was due to a series of prolonged strikes and accompanying outrages in Sheffield, Nottingham, and Manchester. The committee consisted of able and influential men. It made a full investigation and report, and finally recommended, somewhat to the public surprise, that further laws for the protection and at the same time for the regulation of trade unions be pa.s.sed. As a result, two laws were pa.s.sed in the year 1871, the Trade Union Act and the Criminal Law Amendment Act. By the first of these it was declared that trade unions were not to be declared illegal because they were "in restraint of trade," and that they might be registered as benefit societies, and thereby become quasi-corporations, to the extent of having their funds protected by law, and being able to hold property for the proper uses of their organization. At the same time the Liberal majority in Parliament, who had only pa.s.sed this law under pressure, and were but half hearted in their approval of trade unions, by the second law of the same year, made still more clear and vigorous the prohibition of "molesting," "obstructing," "threatening," "persistently following,"

"watching or besetting" any workmen who had not voluntarily joined the trade union. As these terms were still undefined, the law might be, and it was, still sufficiently elastic to allow magistrates or judges who disapproved of trade unionism to punish men for the most ordinary forms of persuasion or pressure used in industrial conflicts. An agitation was immediately begun for the repeal or modification of this later law. This was accomplished finally by the Trade Union Act of 1875, by which it was declared that no action committed by a group of workmen was punishable unless the same act was criminal if committed by a single individual. Peaceful persuasion of non-union workmen was expressly permitted, some of the elastic words of disapproval used in previous laws were omitted altogether, other offences especially likely to occur in such disputes were relegated to the ordinary criminal law, and a new act was pa.s.sed, clearing up the whole question of the illegality of conspiracy in such a way as not to treat trade unions in any different way from other bodies, or to interfere with their existence or normal actions.

Thus, by the four steps taken in 1825, 1859, 1871, and 1875, all trace of illegality has been taken away from trade unions and their ordinary actions. They have now the same legal right to exist, to hold property, and to carry out the objects of their organization that a banking or manufacturing company or a social or literary club has.

The pa.s.sing away of the popular disapproval of trade unions has been more gradual and indefinite, but not less real. The employers, after many hard-fought battles in their own trades, in the newspapers, and in Parliament, have come, in a great number of cases, to prefer that there should be a well-organized trade union in their industry rather than a chaotic body of restless and unorganized laborers. The aristocratic dread of lower-cla.s.s organizations and activity has become less strong and less important, as political violence has ceased to threaten and as English society as a whole has become more democratic. The Reform Bill of 1867 was a voluntary concession by the higher and middle cla.s.ses to the lower, showing that political dread of the working cla.s.ses and their trade unions had disappeared. The older type of clergymen of the established church, who had all the sympathies and prejudices of the aristocracy, has been largely superseded, since the days of Kingsley and Maurice, by men who have taken the deepest interest in working-cla.s.s movements, and who teach struggle and effort rather than acceptance and contentment.

The formation of trade unions, even while it has led to higher wages, shorter hours, and a more independent and self-a.s.sertive body of laborers, has made labor so much more efficient that, taken in connection with other elements of English economic activity, it has led to no resulting loss of her industrial supremacy. As to the economic arguments against trade unions, they have become less influential with the discrediting of much of the theoretical teaching on which they were based. In 1867 a book by W. T. Thornton, _On Labor, its Wrongful Claims and Rightful Dues_, successfully attacked the wages-fund theory, since which time the belief that the rate of wages was absolutely determined by the amount of that fund and the number of laborers has gradually been given up. The belief in the possibility of voluntary limitation of the effect of the so-called "natural laws" of the economic teachers of the early and middle parts of the century has grown stronger and spread more widely. Finally, the general popular feeling of dislike of trade unions has much diminished within the last twenty-five years, since their lawfulness has been acknowledged, and since their own policy has become more distinctly orderly and moderate.

Much of this change in popular feeling toward trade unions was so gradual as not to be measurable, but some of its stages can be distinguished. Perhaps the first very noticeable step in the general acceptance of trade unions, other than their mere legalization, was the interest and approval given to the formation of boards of conciliation or arbitration from 1867 forward. These were bodies in which representatives elected by the employers and representatives elected by trade unions met on equal terms to discuss differences, the unions thus being acknowledged as the normal form of organization of the working cla.s.ses. In 1885 the Royal Commission on the depression of trade spoke with favor cf trade unions. In 1889 the great London Dockers' strike called forth the sympathy and the moral and pecuniary support of representatives of cla.s.ses which had probably never before shown any favor to such organizations. More than $200,000 was subscribed by the public, and every form of popular pressure was brought to bear on the employers. In fact, the Dock Laborers' Union was partly created and almost entirely supported by outside public influence. In the same year the London School Board and County Council both declared that all contractors doing their work must pay "fair wages," an expression which was afterward defined as being union wages. Before 1894 some one hundred and fifty town and county governments had adopted a rule that fair wages must be paid to all workmen employed directly or indirectly by them. In 1890 and 1893 and subsequently the government has made the same declaration in favor of the rate of wages established by the unions in each industry. In 1890 the report of the House of Lords Committee on the sweating system recommends in certain cases "well-considered combinations among the laborers." Therefore public opinion, like the formal law of the country, has pa.s.sed from its early opposition to the trade unions, through criticism and reluctant toleration, to an almost complete acceptance and even encouragement. Trade unions have become a part of the regularly established inst.i.tutions of the country, and few persons probably would wish to see them go out of existence or be seriously weakened.

*81. The Growth of Trade Unions.*--The actual growth of trade unionism has been irregular, interrupted, and has spread from many scattered centres. Hundreds of unions have been formed, lived for a time, and gone out of existence; others have survived from the very beginning of the century to the present; some have dwindled into insignificance and then revived in some special need. The workmen in some parts of the country and in certain trades were early and strongly organized, in others they have scarcely even yet become interested or made the effort to form unions. In the history of the trade-union movement as a whole there have been periods of active growth and multiplication and strengthening of organizations. Again, there have been times when trade unionism was distinctly losing ground, or when internal dissension seemed likely to deprive the whole movement of its vigor.

There have been three periods when progress was particularly rapid, between 1830 and 1834, in 1873 and 1874, and from 1889 to the present time. But before the middle of the century trade unions existed in almost every important line of industry. By careful computation it is estimated that there were in Great Britain and Ireland in 1892 about 1750 distinct unions or separate branches of unions, with some million and a half members. This would be about twenty per cent of the adult male working-cla.s.s population, or an average of about one man who is a member of a trade union out of five who might be. But the great importance and influence of the trade unionists arises not from this comparatively small general proportion, but from the fact that the organizations are strongest in the most highly skilled and best-paid industries, and in the most thickly settled, highly developed parts of the country, and that they contain the picked and ablest men in each of the industries where they do exist. In some occupations, as cotton spinning in Lancashire, boiler making and iron ship building in the seaport towns, coal mining in Northumberland, gla.s.s making in the Midland counties, and others, practically every operative is a member of a trade union. Similarly in certain parts of the country much more than half of all workingmen are trade unionists. Their influence also is far more than in proportion to their numbers, since from their membership are chosen practically all workingmen representatives in Parliament and local governments and in administrative positions. The unions also furnish all the most influential leaders of opinion among the working cla.s.ses.

*82. Federation of Trade Unions.*--From the earliest days of trade-union organization there have been efforts to extend the unions beyond the boundaries of the single occupation or the single locality. The earliest form of union was a body made up of the workmen of some one industry in some one locality, as the gold beaters of London, or the cutlers of Sheffield, or the cotton spinners of Manchester. Three forms of extension or federation soon took place: first, the formation of national societies composed of men of the same trade through the whole country; secondly, the formation of "trades councils,"--bodies representing all the different trades in any one locality; and, thirdly, the formation of a great national organization of workingmen or trade unionists. The first of these forms of extension dates from the earliest years of the century, though such bodies had often only a transitory existence. The Manchester cotton spinners took the initiative in organizing a national body in that industry in 1829; in 1831 a National Potters' Union is heard of, and others in the same decade. The largest and most permanent national bodies, however, such as the compositors, the flint-gla.s.s makers, miners, and others were formed after 1840; the miners in 1844 numbering 70,000 voting members.

Several of these national bodies were formed by an amalgamation of a number of different but more or less closely allied trades. The most conspicuous example of this was the Amalgamated Society of Engineers, the formation of which was completed in 1850, and which, beginning in that year with 5000 members, had more than doubled them in the next five years, doubled them again by 1860, and since then has kept up a steady increase in numbers and strength, having 67,928 members in 1890. The increasing ease of travel and cheapness of postage, and the improved education and intelligence of the workingmen, made the formation of national societies more practicable, and since the middle of the century most of the important societies have become national bodies made up of local branches.

The second form of extension, the trades council, dates from a somewhat later period. Such a body arose usually when some matter of common interest had happened in the labor world, and delegates from the various unions in each locality were called upon to organize and to subscribe funds, prepare a pet.i.tion to Parliament, or take other common action. In this temporary form they had existed from a much earlier date. The first permanent local board, made up of representatives of the various local bodies, was that of Liverpool, formed in 1848 to protect trade unionists from prosecutions for illegal conspiracy. In 1857 a permanent body was formed in Sheffield, and in the years immediately following in Glasgow, London, Bristol, and other cities. They have since come into existence in most of the larger industrial towns, 120 local trades councils existing in 1892.

Their influence has been variable and limited.

The formation of a general body of organized workingmen of all industries and from all parts of the country is an old dream. Various such societies were early formed only to play a more or less conspicuous role for a few years and then drop out of existence. In 1830 a "National a.s.sociation for the Protection of Labor" was formed, in 1834 a "Grand National Consolidated Trades Union," in 1845 a "National a.s.sociation of United Trades for the Protection of Labor,"

and in 1874 a "Federation of Organized Trade Societies," each of which had a short popularity and influence, and then died.

In the meantime, however, a more practicable if less ambitious plan of unification of interests had been discovered in the form of an "Annual Trade Union Congress." This inst.i.tution grew out of the trades councils. In 1864 the Glasgow Trades Council called a meeting of delegates from all trade unions to take action on the state of the law of employment, and in 1867 the Sheffield Trades Council called a similar meeting to agree upon measures of opposition to lockouts. The next year, 1868, the Manchester Trades Council issued a call for "a Congress of the Representatives of Trades Councils, Federations of Trades, and Trade Societies in general." Its plan was based on the annual meetings of the Social Science a.s.sociation, and it was contemplated that it should meet each year in a different city and sit for five or six days. This first general Congress was attended by 34 delegates, who claimed to represent some 118,000 trade unionists. The next meeting, at Birmingham, in 1869, was attended by 48 delegates, representing 40 separate societies, with some 250,000 members. With the exception of the next year, 1870, the Congress has met annually since, the meetings taking place at Nottingham, Leeds, Sheffield, and other cities, with an attendance varying between one and two hundred delegates, representing members ranging from a half-million to eight or nine hundred thousand. It elects each year a Parliamentary Committee consisting of ten members and a secretary, whose duty is to attend in London during the sittings of Parliament and exert what influence they can on legislation or appointments in the interests of the trade unionists whom they represent. In fact, most of the activity of the Congress was for a number of years represented by the Parliamentary Committee, the meetings themselves being devoted largely to commonplace discussions, points of conflict between the unions being intentionally ruled out. In recent years there have been some heated contests in the Congress on questions of general policy, but on the whole it and its Parliamentary Committee remain a somewhat loose and ineffective representation of the unity and solidarity of feeling of the great army of trade unionists. As a result, however, of the efforts of the unions in their various forms of organization there have always, since 1874, been a number of "labor members" of Parliament, usually officers of the great national trade unions, and many trade unionist members of local government bodies and school boards. Representative trade unionists have been appointed as government inspectors and other officials, and as members of government investigating commissions. Many changes in the law in which as workingmen the trade unionists are interested have been carried through Parliament or impressed upon the ministry through the influence of the organized bodies or their officers.

The trade-union movement has therefore resulted in the formation of a powerful group of federated organizations, including far the most important and influential part of the working cla.s.ses, acknowledged by the law, more or less fully approved by public opinion, and influential in national policy. It is to be noticed that while the legalization of trade unions was at first carried out under the claim and with the intention that the workingmen would thereby be relieved from restrictions and given a greater measure of freedom, yet the actual effect of the formation of trade unions has been a limitation of the field of free compet.i.tion as truly as was the pa.s.sage of the factory laws. The control of the government was withdrawn, but the men voluntarily limited their individual freedom of action by combining into organizations which bound them to act as groups, not as individuals. The basis of the trade unions is arrangement by the collective body of wages, hours, and other conditions of labor for all its members instead of leaving them to individual contract between the employer and the single employee. The workman who joins a trade union therefore divests himself to that extent of his individual freedom of action in order that he may, as he believes, obtain a higher good and a more substantial liberty through collective or a.s.sociated action.

Just in as far, therefore, as the trade-union movement has extended and been approved of by law and public opinion, just so far has the ideal of individualism been discredited and its sphere of applicability narrowed. Trade unions therefore represent the same reaction from complete individual freedom of industrial action as do factory laws and the other extensions of the economic functions of government discussed in the last chapter.

*83. Employers' Organizations.*--From this point of view there has been a very close a.n.a.logy between the actions of workingmen and certain recent action among manufacturers and other members of the employing cla.s.ses. In the first place, employers' a.s.sociations have been formed from time to time to take common action in resistance to trade unions or for common negotiations with them. As early as 1814 the master cutlers formed, notwithstanding the combination laws, the "Sheffield Mercantile and Manufacturing Union," for the purpose of keeping down piecework wages to their existing rate. In 1851 the "Central a.s.sociation of Employers of Operative Engineers" was formed to resist the strong union of the "Amalgamated Engineers." They have also had their national bodies, such as the "Iron Trade Employers'

a.s.sociation," active in 1878, and their general federations, such as the "National Federation of a.s.sociated Employers of Labor," which was formed in 1873, and included prominent shipbuilders, textile manufacturers, engineers, iron manufacturers, and builders. Many of these organizations, especially the national or district organizations of the employers in single trades, exist for other and more general purposes, but incidentally the representatives of the masters'

a.s.sociations regularly arrange wages and other labor conditions with the representatives of the workingmen's a.s.sociations. There is, therefore, in these cases no more compet.i.tion among employers as to what wages they shall pay than among the workmen as to what wages they shall receive. In both cases it is a matter of arrangement between the two a.s.sociations, each representing its own membership. The liberty both of the individual manufacturer and of the workman ceases in this respect when he joins his a.s.sociation.

*84. Trusts and Trade Combinations.*--But the compet.i.tion among the great producers, traders, transportation companies, and other industrial leaders has been diminished in recent times in other ways than in their relation to their employees. In manufacturing, mining, and many wholesale trades, employers' a.s.sociations have held annual or more frequent meetings at which agreements have been made as to prices, amount of production, terms of sale, length of credit, and other such matters. In some cases formal combinations have been made of all the operators in one trade, with provisions for enforcing trade agreements. In such a case all compet.i.tion comes to an end in that particular trade, so far as the subjects of agreement extend. The culminating stage in this development has been the formation of "trusts," by which the stock of all or practically all the producers in some one line is thrown together, and a company formed with regular officers or a board of management controlling the whole trade. An instance of this is the National Telephone Company, already referred to. In all these fields unrestricted compet.i.tion has been tried and found wanting, and has been given up by those most concerned, in favor of action which is collective or previously agreed upon. In the field of transportation, boards of railway presidents or other combinations have been formed, by which rates of fares and freight rates have been established, "pooling" or the proportionate distribution of freight traffic made, "car trusts" formed, and other non-compet.i.tive arrangements made. In banking, clearing-house agreements have been made, a common policy adopted in times of financial crisis, and through gatherings of bankers a common influence exerted on legislation and opinion. Thus in the higher as in the lower stages of industrial life, in the great business interests, as among workingmen, recent movements have all been away from a compet.i.tive organization of economic society, and in the direction of combination, consolidation, and union. Where compet.i.tion still exists it is probably more intense than ever before, but its field of application is much smaller than it has been in the past. Government control and voluntary regulation have alike limited the field in which compet.i.tion acts.

*85. Cooperation in Distribution.*--Another movement in the same direction is the spread of cooperation in its various forms. Numerous cooperative societies, with varying objects and methods, formed part of the seething agitation, experimentation, and discussion characteristic of the early years of the nineteenth century; but the cooperative movement as a definite, continuous development dates from the organization of the "Rochdale Equitable Pioneers" in 1844. This society was composed of twenty-eight working weavers of that town, who saved up one pound each, and thus created a capital of twenty-eight pounds, which they invested in flour, oatmeal, b.u.t.ter, sugar, and some other groceries. They opened a store in the house of one of their number in Toad Lane, Rochdale, for the sale of these articles to their own members under a plan previously agreed to. The princ.i.p.al points of their scheme, afterward known as the "Rochdale Plan," were as follows: sale of goods at regular market prices, division of profits to members at quarterly intervals in proportion to purchases, subscription to capital in instalments by members, and payment of five per cent interest. There were also various provisions of minor importance, such as absolute purity and honesty of goods, insistance on cash payments, devoting a part of their earnings to educational or other self-improvement, settling all questions by equal vote. These arrangements sprang naturally from the fact that they proposed carrying on their store for their own benefit, alike as proprietors, shareholders, and consumers of their goods.

The source of the profits they would have to divide among their members was the same as in the case of any ordinary store. The difference between the wholesale price, at which they would buy, and the retail market price, at which they would sell, would be the gross profits. From this would have to be paid, normally, rent for their store, wages for their salesmen, and interest on their capital. But after these were paid there should still remain a certain amount of net profit, and this it was which they proposed to divide among themselves as purchasers, instead of leaving it to be taken by an ordinary store proprietor. The capital they furnished themselves, and consequently paid themselves the interest. The first two items also amounted to nothing at first, though naturally they must be accounted for if their store rose to any success. As a matter of fact, their success was immediate and striking. They admitted new members freely, and at the end of the first year of their existence had increased in numbers to seventy-four with 187 capital. During the year they had done a business of 710, and distributed profits of 22. A table of the increase of this first successful cooperative establishment at succeeding ten years' periods is as follows:--

------+-----------+-----------+----------+---------- | | | | Date | Members | Capital | Business | Profits | | | | ------+-----------+-----------+----------+---------- 1855 | 1,400 | 11,032 | 44,902 | 3,109 1865 | 5,326 | 78,778 | 196,234 | 25,156 1875 | 8,415 | 225,682 | 305,657 | 48,212 1885 | 11,084 | 324,645 | 252,072 | 45,254 1898 | 12,719 | -------- | 292,335 | ------- ------+-----------+-----------+----------+----------

They soon extended their business in variety as well as in total amount. In 1847 they added the sale of linen and woollen goods, in 1850 of meat, in 1867 they began baking and selling bread to their customers. They opened eventually a dozen or more branch stores in Rochdale, the original Toad Lane house being superseded by a great distributing building or central store, with a library and reading room. They own much property in the town, and have spread their activity into many lines.

The example of the Rochdale society was followed by many others, especially in the north of England and south of Scotland. A few years after its foundation two large and successful societies were started in Oldham, having between them by 1860 more than 3000 members, and doing a business of some 80,000 a year. In Liverpool, Manchester, Birmingham, and other cities similar societies grew up at the same period. In 1863 there were some 454 cooperative societies of this kind in existence, 381 of them together having 108,000 members and doing an annual business of about 2,600,000. One hundred and seventeen of the total number of societies were in Lancashire and 96 in Yorkshire. Many of these eventually came to have a varied and extensive activity. The Leeds Cooperative Society, for instance, had in 1892 a grist mill, 69 grocery and provision stores, 20 dry goods and millinery shops, 9 boot and shoe shops, and 40 butcher shops. It had 12 coal depots, a furnishing store, a bakery, a tailoring establishment, a boot and shoe factory, a brush factory, and acted as a builder of houses and cottages. It had at that time 29,958 members. The work done by these cooperative stores is known as "distributive cooperation," or "cooperation in distribution." It combines the seller and the buyer into one group. From one point of view the society is a store-keeping body, buying goods at wholesale and selling them at retail. From another point of view, exactly the same group of persons, the members of the society, are the customers of the store, the purchasers and consumers of the goods. Whenever any body of men form an a.s.sociation to carry on an establishment which sells them the goods they need, dividing the profits of the buying and selling among the members of the a.s.sociation, it is a society for distributive cooperation.

A variation from the Rochdale plan is that used in three or perhaps more societies organized in London between 1856 and 1875 by officials and employees of the government. These are the Civil Service Supply a.s.sociation, the Civil Service Cooperative Society, and the Army and Navy Stores. In these, instead of buying at wholesale and selling at retail rates, sharing the profits at the end of a given term, they sell as well as buy at wholesale rates, except for the slight increase necessary to pay the expenses of carrying on the store. In other words, the members obtain their goods for use at cheap rates instead of dividing up a business profit.

But these and still other variations have had only a slight connection with the working-cla.s.s cooperative movement just described. A more direct development of it was the formation, in 1864, of the Wholesale Cooperative Society, at Manchester, a body holding much the same relation to the cooperative societies that each of them does to its individual members. The shareholders are the retail cooperative societies, which supply the capital and control its actions. During its first year the Wholesale Society possessed a capital of 2456 and did a business of 51,858. In 1865 its capital was something over 7000 and business over 120,000. Ten years later, in 1875, its capital was 360,527 and yearly business 2,103,226. In 1889 its sales were 7,028,994. Its purchasing agents have been widely distributed in various parts of the world. In 1873 it purchased and began running a cracker factory, shortly afterward a boot and shoe factory, the next year a soap factory. Subsequently it has taken up a woollen goods factory, cocoa works, and the manufacture of ready-made clothing. It employs something over 5000 persons, has large branches in London, Newcastle, and Leicester, agencies and depots in various countries, and runs six steamships. It possesses also a banking department.

Cooperative stores, belonging to wholesale and retail distributive cooperative societies, are thus a well-established and steadily, if somewhat slowly, extending element in modern industrial society.

*86. Cooperation in Production.*--But the greatest problems in the relations of modern industrial cla.s.ses to one another are not connected with buying and selling, but with employment and wages. The compet.i.tion between employer and employee is more intense than that between buyer and seller and has more influence on the const.i.tution of society. This opposition of employer and employee is especially prominent in manufacturing, and the form of cooperation which is based on a combination or union of these two cla.s.ses is therefore commonly called "cooperation in production," as distinguished from cooperation in distribution. Societies have been formed on a cooperative basis to produce one or another kind of goods from the earliest years of the century, but their real development dates from a period somewhat later than that of the cooperative stores, that is, from about 1850. In this year there were in existence in England bodies of workmen who were carrying on, with more or less outside advice, a.s.sistance, or control, a cooperative tailoring establishment, a bakery, a printing shop, two building establishments, a piano factory, a shoe factory, and several flour mills. These companies were all formed on the same general plan.

The workmen were generally the members of the company. They paid themselves the prevailing rate of wages, then divided among themselves either equally or in proportion to their wages the net profits of the business, when there were any, having first reserved a sufficient amount to pay interest on capital. As a matter of fact, the capital and much of the direction was contributed from outside by persons philanthropically interested in the plans, but the ideal recognized and desired was that capital should be subscribed, interest received, and all administration carried on by the workmen-cooperators themselves. In this way, in a cooperative productive establishment, there would not be two cla.s.ses, employer and employee. The same individuals would be acting in both capacities, either themselves or through their elected managers. All of these early companies failed or dissolved, sooner or later, but in the meantime others had been established. By 1862 some 113 productive societies had been formed, including 28 textile manufacturing companies, 8 boot and shoe factories, 7 societies of iron workers, 4 of brush makers, and organizations in various other trades. Among the most conspicuous of these were three which were much discussed during their period of prosperity. They were the Liverpool Working Tailors' a.s.sociation, which lasted from 1850 to 1860, the Manchester Working Tailors'

a.s.sociation, which flourished from 1850 to 1872, and the Manchester Working Hatters' a.s.sociation, 1851-1873. These companies had at different times from 6 to 30 members each. After the great strike of the Amalgamated Society of Engineers, in 1852, a series of iron workers' cooperative a.s.sociations were formed. In the next twenty years, between 1862 and 1882, some 163 productive societies were formed, and in 1892 there were 143 societies solely for cooperative production in existence, with some 25,000 members. Cooperative production has been distinctly less prosperous than cooperative distribution. Most purely cooperative productive societies have had a short and troubled existence, though their dissolution has in many cases been the result of contention rather than ordinary failure and has not always involved pecuniary loss. In addition to the usual difficulties of all business, insufficiency of capital, incompetency of buying and selling agents and of managers, dishonesty of trusted officials or of debtors, commercial panics, and other adversities to which cooperative, quite as much as or even more than individual companies have been subject, there are peculiar dangers often fatal to their cooperative principles. For instance, more than one such a.s.sociation, after going through a period of struggle and sacrifice, and emerging into a period of prosperity, has yielded to the temptation to hire additional employees just as any other employer might, at regular wages, without admitting them to any share in the profits, interest, or control of the business. Such a concern is little more than an ordinary joint-stock company with an unusually large number of shareholders. As a matter of fact, plain, clear-cut cooperative production makes up but a small part of that which is currently reported and known as such. A fairer statement would be that there is a large element of cooperation in a great many productive establishments. Nevertheless, productive societies more or less consistent to cooperative principles exist in considerable numbers and have even shown a distinct increase of growth in recent years.

*87. Cooperation in Farming.*--Very much the same statements are true of another branch of cooperative effort,--cooperation in farming.

Experiments were made very early, they have been numerous, mostly short-lived, and yet show a tendency to increase within the last decade. Sixty or more societies have engaged in cooperative farming, but only half a dozen are now in existence. The practicability and desirability of the application of cooperative ideals to agriculture is nevertheless a subject of constant discussion among those interested in cooperation, and new schemes are being tried from time to time.

The growth of cooperation, like that of trade unions, has been dependent on successive modifications of the law; though it was rather its defects than its opposition that caused the difficulty in this case. When cooperative organizations were first formed it was found that by the common law they could not legally deal as societies with non-members; that they could not hold land for investment, or for any other purpose than the transaction of their own business, or more than one acre even for this purpose; that they could not loan money to other societies; that the embezzlement or misuse of their funds by their officers was not punishable; and that each member was responsible for the debts of the whole society. Eight or ten statutes have been pa.s.sed to cure the legal defects from which cooperative a.s.sociations suffered. The most important of these were the "Frugal Investment Clause" in the Friendly Societies Act of 1846, by which such a.s.sociations were allowed to be formed and permitted to hold personal property for the purposes of a society for savings; the Industrial and Provident Societies Act, of 1852, by which cooperative societies were definitely authorized and obtained the right to sue as if they were corporations; the Act of 1862, which repealed the former acts, gave them the right of incorporation, made each member liable for debt only to the extent of his own investment, and allowed them greater lat.i.tude for investments; the third Industrial and Provident Societies Act of 1876, which again repealed previous acts and established a veritable code for their regulation and extension; and the act of 1894, which amends the law in some further points in which it had proved defective. All the needs of the cooperative movement, so far as they have been discovered and agreed upon by those interested in its propagation, have thus been provided for, so far as the law can do so.

Cooperation has always contained an element of philanthropy, or at least of enthusiastic belief on the part of those especially interested in it, that it was destined to be of great service to humanity, and to solve many of the problems of modern social organization. Advocates of cooperation have not therefore been content simply to organize societies which would conduce to their own profit, but have kept up a constant propaganda for their extension. There was a period of about twenty years, from 1820 to 1840, before cooperation was placed on a solid footing, when it was advocated and tried in numerous experiments as a part of the agitation begun by Robert Owen for the establishment of socialistic communities. Within this period a series of congresses of delegates of cooperative a.s.sociations was held in successive years from 1830 to 1846, and numerous periodicals were published for short periods. In 1850 a group of philanthropic and enthusiastic young men, including such able and prominent men as Thomas Hughes, Frederick D. Maurice, and others who have since been connected through long lives with cooperative effort, formed themselves into a "Society for promoting Working Men's a.s.sociations,"

which sent out lecturers, published tracts and a newspaper, loaned money, promoted legislation, and took other action for the encouragement of cooperation. Its members were commonly known as the "Christian Socialists." They had but scant success, and in 1854 dissolved the a.s.sociation and founded instead a "Working Men's College" in London, which long remained a centre of cooperative and reformatory agitation.

So far, this effort to extend and regulate the movement came rather from outside sympathizers than from cooperators themselves. With 1869, however, began a series of annual Cooperative Congresses which, like the annual Trade Union Congresses, have sprung from the initiative of workingmen themselves and which are still continued. Papers are read, addresses made, experiences compared, and most important of all a Central Board and a Parliamentary Committee elected for the ensuing year. At the thirty-first annual Congress, held in Liverpool in 1899, there were 1205 delegates present, representing over a million members of cooperative societies. Since 1887 a "Cooperative Festival," or exhibition of the products of cooperative workshops and factories, has been held each year in connection with the Congress. This exhibition is designed especially to encourage cooperative production. At the first Congress, in 1869, a Cooperative Union was formed which aims to include all the cooperative societies of the country, and as a matter of fact does include about three-fourths of them. The Central Cooperative Board represents this Union. It is divided into seven sections, each having charge of the affairs of one of the seven districts into which the country is divided for cooperative work. The Board issues a journal, prints pamphlets, keeps up correspondence, holds public examinations on auditing, book-keeping, and the principles of cooperation, and acts as a statistical, propagandist, and regulative body. There is also a "Cooperative Guild" and a "Women's Cooperative Guild," the latter with 262 branches and a membership of 12,537, in 1898.

The total number of recognized cooperative societies in existence at the beginning of the year 1900 has been estimated at 1640, with a combined membership of 1,640,078, capital of 19,759,039, and investments of 11,681,296. The sale of goods in the year 1898 was 65,460,871, and net profits had amounted to 7,165,753. During the year 1898, 181 new societies of various kinds were formed.

*88. Cooperation in Credit.*--In England building societies are not usually recognized as a form of cooperation, but they are in reality cooperative in the field of credit in the same way as the a.s.sociations already discussed are in distribution, in production, or in agriculture. Building societies are defined in one of the statutes as bodies formed "for the purpose of raising by the subscription of the members a stock or fund for making advances to members out of the funds of the society." The general plan of one of these societies is as follows: A number of persons become members, each taking one or more shares. Each shareholder is required to pay into the treasury a certain sum each month. There is thus created each month a new capital sum which can be loaned to some member who may wish to borrow it and be able and willing to give security and to pay interest. The borrower will afterward have to pay not only his monthly dues, but the interest on his loan. The proportionate amount of the interest received is credited to each member, borrower and non-borrower alike, so that after a certain number of months, by the receipts from dues and interest, the borrower will have repaid his loan, whilst the members who have not borrowed will receive a corresponding sum in cash.

Borrowers and lenders are thus the same group of persons, just as sellers and consumers are in distributive, and employers and employees in productive cooperation. The members of such societies are enabled to obtain loans when otherwise they might not be able to; the periodical dues create a succession of small amounts to be loaned, when otherwise this cla.s.s of persons could hardly save up a sufficient sum to be used as capital; and finally by paying the interest to their collective group, so that a proportionate part of it is returned to the borrower, and by the continuance of the payment of dues, the repayment of the loan is less of a burden than in ordinary loans obtained from a bank or a capitalist. Loans to their members have been usually restricted to money to be used for the building of a dwelling-house or store or the purchase of land; whence their name of "building societies." Their formation dates from 1815, their extension, from about 1834. The princ.i.p.al laws authorizing and regulating their operations were pa.s.sed in 1836, 1874, and 1894. The total number of building societies in England to-day is estimated at about 3000, their membership at about 600,000 members with 52,000,000 of funds. The history of these societies has been marked by a large number of failures, and they have lacked the moral elevation of the cooperative movement in its other phases. The codifying act of 1894 established a minute oversight and control over these societies on the part of the government authorities while at the same time it extended their powers and privileges.

The one feature common to all forms of cooperation is the union of previously competing economic cla.s.ses. In a cooperative store, compet.i.tion between buyer and seller does not exist; and the same is true for borrower and lender in a building and loan a.s.sociation and for employer and employee in a cooperative factory. Cooperation is therefore in line with other recent movements in being a reaction from compet.i.tion.

*89. Profit Sharing.*--There is a device which has been introduced into many establishments which stands midway between simple compet.i.tive relations and full cooperation. It diminishes, though it does not remove, the opposition between employer and employee. This is "*profit sharing.*" In the year 1865 Henry Briggs, Son and Co., operators of collieries in Yorkshire, after long and disastrous conflicts with the miners' trade unions, offered as a measure of conciliation to their employees that whenever the net profit of the business should be more than ten per cent on their investment, one-half of all such surplus profit should be divided among the workmen in proportion to the wages they had earned in the previous year. The expectation was that the increased interest and effort and devotion put into the work by the men would be such as to make the total earnings of the employers greater, notwithstanding their sacrifice to the men of the half of the profits above ten per cent. This antic.i.p.ation was justified. After a short period of suspicion on the part of the men, and doubt on the part of the employers, both parties seemed to be converted to the advantages of profit sharing, a sanguine report of their experience was made by a member of the firm to the Social Science a.s.sociation in 1868, sums between one and six thousand pounds were divided yearly among the employees, while the percentage of profits to the owners rose to as much as eighteen per cent. This experiment split on the rock of dissension in 1875, but in the meantime others, either in imitation of their plan or independently, had introduced the same or other forms of profit sharing. Another colliery, two iron works, a textile factory, a millinery firm, a printing shop, and some others admitted their employees to a share in the profits within the years 1865 and 1866. The same plan was then introduced into certain retail stores, and into a considerable variety of occupations, including several large farms where a share of all profits was offered to the laborers as a "bonus" in addition to their wages. The results were very various, ranging all the way from the most extraordinary success to complete and discouraging failure. Up to 1897 about 170 establishments had introduced some form of profit sharing, 75 of which had subsequently given it up, or had gone out of business. In that year, however, the plan was still in practice in almost a hundred concerns, in some being almost twenty years old.

A great many other employers, corporate or individual, provide laborers' dwellings at favorable rents, furnish meals at cost price, subsidize insurance funds, offer easy means of becoming shareholders in their firms, support reading rooms, music halls, and gymnasiums, or take other means of admitting their employees to advantages other than the simple receipt of compet.i.tive wages. But, after all, the entire control of capital and management in the case of firms which share profits with their employees remains in the hands of the employers, so that there is in these cases an enlightened fulfilment of the obligations of the employing cla.s.s rather than a combination of two cla.s.ses in one.

With the exception of profit sharing, however, all the economic and social movements described in this chapter are as truly collective and as distinctly opposed to individualism, voluntary though they may be, as are the various forms of control exercised by government, described in the preceding chapter. In as far as men have combined in trade unions, in business trusts, in cooperative organizations, they have chosen to seek their prosperity and advantage in united, collective action, rather than in unrestricted individual freedom. And in as far as such organizations have been legalized, regulated by government, and encouraged by public opinion, the confidence of the community at large has been shown to rest rather in a.s.sociative than in compet.i.tive action. Therefore, whether we look at the rapidly extending sphere of government control and service, or at the spread of voluntary combinations which restrict individual liberty, it is evident that the tendencies of social development at the close of the nineteenth century are as strongly toward a.s.sociation and regulation as they were at its beginning toward individualism and freedom from all control.