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be seen from the following table, which deals with
816 limited liability societies existing in 1908 :



Number o, Societies. L Ml t, *jgg



366 (44-8 per cent.) ! i-io fold i 4-78 fold 350



l8o (22'I )

270 (33'i )


10-50 ,,
over 50 ,,


20-83
123


J 5

2 6



The membership of the societies averages about 100,
and the amount of business done by them averages
about 2,400 per year, of which 80 per cent, is repre-
sented by manure, feeding-stuffs, and seeds.

Many of the societies have a rule compelling their
members to purchase all their requirements in
certain lines from the society, but this is by no means
universal. The practice of selling to non-members
is not encouraged, although it is quite legal. The
committee of management fix the prices they charge,
which are usually based on cost plus a small per-
centage for management expenses and reserve fund.
Many societies, however, follow the safer plan of
charging the current prices, and paying a dividend
on custom at the end of the business year.

146



G E R M A NY

Many of the societies stipulate for payment within
thirty days from delivery ; others allow a credit of
three months, after which 5 per cent, is charged.
Most of them insist on full payment within nine
months. The federation strongly urges dealing on a
cash basis, but this has not been found practicable
in most cases. In cases where a person is a member
both of a supply and of a credit society, the credit
society pays his bills and debits his account with
the amount, thus ensuring cash payment to the
supply society, and reasonable terms for the borrow-
ing member.

Most of the societies are affiliated both to the
Central Supply Associations, and to a Central Bank,
and usually settle their accounts with their whole-
sale agency by means of an order on the bank, which
allows ihem an overdraft on favourable terms.
Full statistics as to the development of these societies
will be found in Mr. Cahill's Report, together with
a description of individual societies which he per-
sonally visited. 1

WHOLESALE SOCIETIES.

Federation has been thoroughly worked out in
Germany. Every Province of the State has one
or more Central Organizations, and these in their
turn are affiliated to bodies extending over the
whole of Germany. For example, in one year the
" Supply Association of German Farmers " pur-
chased 620,000 tons of basic slag, and in 1914 the
!< Potash Supply Company " made a five years'
contract with the " Producing Syndicate " and
1 Op. cit. pp. 161-79.
147



CO-OPERATION FOR FARMERS

purchased 120,000 tons of purified potash salts on
most advantageous terms. In some parts of Prussia
and Bavaria there is a good deal of overlapping ;
in the Rhine Province there are no less than four
Central Organizations.

Up till 1909 the Central Bank of the Raiffeisen
Federation did a large wholesale business all over
Germany ; but in that year the Congress of the
Federation voted to establish wholesale societies
in each Union area, and in 1911 seven bodies were
in existence. There were also various other pro-
vincial wholesale societies affiliated to one or other
of the National Federations.

The societies dealing with the whole Empire are
the Imperial Co-operative Bank (Haas Federation),
the Agrarian League (which is not strictly co-opera-
tive), the Supply Association, Potash Supply Com-
pany, and Central Machinery Purchase Office. The
last three societies include the Imperial, or Haas,
Federation among their shareholders, and are largely
controlled by it.

The tables in Mr. Cahill's Report * give in con-
venient form practically all the details required to
show the usual methods by which the various whole-
sale societies work.

It may be noted that most of these societies have
not any rules in force compelling the affiliated local
societies to deal with them, except occasionally in
certain classes of goods, such as basic slag and potash.
It seems that they suffer, to a large extent, from
lack of loyalty on the part of their members, which
considerably weakens their position. It may be
1 Op. dt. pp. 174-8.
148



GERMANY

noted from the tables referred to that the central
institutions require prompt settlement from their
customers ; and, furthermore, that most of them
oblige their members to pay up in full all the shares
which they take. In spite of this, however, although
they have built up considerable reserve funds, their
borrowed capital still amounts to nearly two and
a half times their owned capital. This money is
usually borrowed from the Central Co-operative
Banks, which allow them a fixed credit, based, as
a rule, upon the amount of collective liability of
their members. Some central societies also accept
deposits from members. Both the periods of credit
and the rates charged on overdue accounts correspond
closely with those of ordinary business firms.

DAIRYING.

Although co-operative creameries do not play as
prominent a part in the German co-operative move-
ment as they do in Denmark, they have, neverthe-
less, developed very rapidly. In 1912 there were
about 3,500 of these societies, with a membership
of over 300,000 persons, in addition to a considerable
number of unregistered societies. The value of the
produce sold by 1,525 societies reporting in 1910
amounted to over 11,000,000.

These dairies are of three kinds, the most numerous
being the usual type, which make butter and return
the separated milk to suppliers ; in the second type
the separated milk is made into cheese, and also
used for pig-fattening, while in some districts the
dairies only separate the cream and forward it either
to a central dairy or to a town.

149



CO-OPERATION FOR FARMERS

These societies differ from the Danish ones, in
that the capital required is partly raised by means
of shares, the usual provision being that members
should take a number of shares in proportion to
the number of cows owned by them. The initial
capital required for a large creamery is estimated
at from 1,500 to 2,400. This money is frequently
borrowed from the Central Bank of the Provincial
Union, on the basis of the liability undertaken by
members. There has been a tendency of recent
years to adopt limited, rather than unlimited
liability ; but, notwithstanding this, in June 1912
66 per cent, of the existing creameries still had
unlimited liability.

It should be noted that the Imperial Federation
recommends in its Model Articles that shares should
be fixed at no less than 50, and that the full amount
should be paid up within ten years. In actual
practice, however, this principle is hardly ever
carried out, and in 1909 there were very few societies
whose shares exceeded 5 in nominal value. Most
societies make their members give from eighteen
months' to two years' notice of withdrawal of share
capital, particularly in the period before there has
been time to accumulate large reserves. Reserve
funds are of the greatest importance to a creamery,
which may easily be crippled by the withdrawal
of a number of its suppliers, and most of these have
both special and working reserves, the former being
built up from entrance fees, which are frequently
as high as from 5 to 25 after the first few years.
The Imperial Federation recommends the placing
to reserve of at least 10 per cent, of the net profits

150



GERMANY

until the total amounts to 20 per cent, of the total
working capital.

Many Unions refuse to take part in organizing a
society while less than 300 cows are available. In
all cases members are bound, under penalty of fine,
to deliver to the dairy all their milk except that
required for domestic use. Collection of milk is
undertaken in some cases by the society ; in others,
it is delivered by the members themselves at stated
times. The milk is paid for in proportion to the
fat-content, and is regularly tested. Most dairies
pay their members once a month, but in many cases
payment takes place once a fortnight.

These societies often add many other forms of
business to their original functions. In districts
where there is no Supply Society they usually sell
farm requisites, and in 1911 there were 393 dairies
affiliated with Central Supply Associations. In ad-
dition to this, in 1910 179 dairies had grist mills
attached to them, and others had bakeries and
similar establishments. A considerable exemption
from taxation is allowed to those dairies which deal
only with their members, and details as to this will
be found in Mr. Cahill's Report, which should also
be consulted for statistics of share capital, liability,
etc.

Centralization of dairy societies has not developed
as rapidly as might be expected in Germany. There
are a few Unions notably one in Pomerania
which carry on auditing and advisory business and
also organize the purchase of dairy requisites and
dairy produce. Very little, however, has been done
on the whole in the direction of centralized selling



CO-OPERA.TION FOR FARMERS

of butter. Far the largest agency doing this business
is the North German Butter Selling Union, with
headquarters in Berlin. In 1910 the sales of the
Union totalled more than 8,000 and the average
price paid for butter was i3 - 8d. per pound, as against
the average Berlin quotation for No. i butter of
I3*5d. per pound. 1 The official figures for 1910, how-
ever, show that less than 5 per cent, of all registered
dairy societies were affiliated to central organizations
of this kind.

OTHER FORMS OF CO-OPERATIVE SOCIETIES.
i. Corn-selling and Granary Societies.

These societies have been largely promoted by
the State in various parts of Germany with the
obvious intention of creating depots from which the
Government might draw supplies in case of emergency.
150,000 was voted for this purpose in 1896 by the
Prussian Parliament, and a further 100,000 in
1897. With this money granaries were built and
leased to co-operative societies, but the results were
very unsatisfactory, and of recent years these
granaries have not, as a whole, been in a flourishing
condition. Mr. Cahill summarizes the defects as
follows : Technical defects in the machinery equip-
ment ; unnecessarily large sites ; bad choice of
sites ; too large areas for societies ; failure to insist
upon compulsory delivery ; and failure to combine
the grain business with other branches, such as the
sale of agricultural requirements. 3

The Bavarian Government has also given great

* Cahill, op. cit. p. 193. 2 ** PP- I93- 2O 4-

152



GERMANY

assistance to these societies, especially by giving
them preferential terms in doing business with State
Departments. One hundred and sixty-six granaries
have been built in Bavaria at an average cost of
1,000. They have several points of superiority to
the Prussian ones. In the first place, they serve
much smaller areas ; and in the second place, they
are managed by co-operative societies ; which have
other functions.

Steps have been taken also to centralize the sale
of grain as far as possible. In Bavaria there is a
Union of thirty-five granaries, and in other Provinces
the Provincial Central Trading Organizations are
usually willing to undertake the sale of grain in
bulk. The three outstanding examples of this are
the societies at Stettin, Dantzig and Posen in Eastern
Prussia, whose turnover in grain exceeds that of
practically all private firms in Germany. On the
whole, however, it may be said that the organization
of co-operative granaries has not proved a con-
spicuous success from the State point of view, and
still less is it to be recommended from the co-operative
standpoint.

2. Cattle-selling Societies.

It is claimed by German farmers that the organ-
ization of the cattle markets in Germany does not
allow them to obtain the proper price for their
animals, and attempts have been made to establish
co-operative slaughter-houses on the Danish model ;
but these have not met with success, owing, prob-
ably, to the amount of capital and business liability
required to conduct this business. At present efforts

153



CO-OPERATION FOR FARMERS

are confined to despatch of cattle direct to the markets
by organizations. Central depots have been estab-
lished by various Chambers of Agriculture and
co-operative organizations at large markets, particu-
larly at Berlin, where the Central Co-operative
Cattle-selling Society has a large market of its own.
In 1910 there were 145 local shipping societies with
a membership of more than 33,000. The principle
on which they work is similar to that of the live-
stock shipping associations in America, and is
sufficiently obvious not to require detailed explana-
tion. The success of the movement can be estimated
by the value of cattle sold through co-operative
agencies in Prussia, which increased from 1,200,000
in 1906 to over 3,000,000 in 1911. >

3, Egg-selling Societies.

These societies are not as numerous in Germany
as might be expected ; but it is probable that a
large number of eggs are sold through the agency
of co-operative societies, w T hich do not exist specially
for this purpose. The registered egg societies, in
addition to selling their members' eggs, also give
considerable attention to the improvement of the
breeds and the care of poultry.

4. Electricity Societies.

These are a very remarkable recent development
in the German co-operative movement. In 1907
there were only sixteen of them, and at the begin-
ning of the war there were probably more that 700.
Most of these societies represent combinations of
persons to obtain electrical supplies by guaranteeing

154



GERMANY

a minimum purchase of current. Some, however,
erect their own conductors ; and a few even go so
far as to produce and distribute their own current.
They seem to have been extremely successful in
reducing the cost of power in rural districts ; and
Mr. Cahill states that electric light and power for
the driving of various forms of machinery are common
even in the small villages in some parts of Prussia,
where this development has acted as a useful cor-
rective to the shortage of farm labour. He cites an
instance of one farmer, whose electric installation
saved him the labour of one man and one horse,
while costing him only I2S. 6d. a month. 1 In some
parts of the country the public authorities have joined
forces with co-operative societies in order to make
the use of electricity both possible and popular.

5. Co-operative Machinery Societies.

Of these there were 571 in 1910, most of which
were formed for the purpose of purchasing threshing
machines and steam ploughs for use in common.
In addition to these special societies, a large business
in agricultural machinery is done by the supply and
dairy societies.

There are also in Germany a certain number of
vine-growers' societies, distilleries manufacturing
spirit from potatoes, breeding societies, and land
purchase societies.

In spite of considerable differences in their objects
and in the details of their organization, all German
co-operative societies have some common features,

1 Cahill, op. cit. pp. 218-22.
155



CO-OPERATION FOR FARMERS

which are imposed upon them either by law or by
tradition. In the first place, the law lays down
as essential that every co-operative society should
have share capital, but no minimum amount is
specified for the shares. For this reason the societies
which follow the original tradition of Raiffeisen (who
believed in no share capital, but unlimited liability)
have still very small shares, in some cases not more
than one shilling each. The influence of the Haas
Federation has been directed to trying to increase
the size of the shares very largely, and to have them
fully paid up, but at present it does not seem that
this advice has met with much success, and even in
cases where the shares are of a large nominal value,
only a small part of them is usually paid up, the
remaining portion constituting the reserved liability.

Something of the same kind has taken place with
regard to the form of liability adopted by the co-
operative societies. Since 1889 it has been legal for
them to have either limited or unlimited liability,
or a third form called " unlimited contributory
liability/' which is not sufficiently common to need
discussion. The early tradition was entirely in favour
of unlimited liability, but recently the weight of
opirion is favourable to limited liability, particularly
in the case of dairying and trading societies. In
spite of this, however, the earlier form of society
still predominates.

With regard to auditing and supervision, the law
lays down that societies must submit to a complete
audit at least once every two years. This audit is
usually conducted by one of the Unions of the co-
operative societies, which have full legal powers for

156



GERMANY

the purpose, and is, as a matter of fact, carried out
at least once a year. If it is not undertaken by
such a Union, application may be made to the local
courts to appoint an official auditor ; but it is found
that the service of these officials is not nearly so
satisfactory or so sympathetic as that of the trained
co-operative auditors.

The Unions referred to are federations of co-opera-
tive societies which exist in every province purely
for the purpose of auditing, supervising, advising,
and organizing co-operative societies. They are
forbidden to combine these functions with any
trade, and should not be confused with the trading
federations, although both classes are combined in
the national federations previously referred to.
The audit given by the Unions is much more than
a mere technical accounting, and includes a thorough
examination of the position of the society, together
with the giving of all necessary advice.

The attitude of the State in Germany has been
favourable to the movement for the last twenty-
five years. There is no doubt that the Government
particularly in Prussia has wished to use the
societies as a means of organization which will
provide them with machinery in times of crisis like
the present. Particular attention has been paid
to the provision of capital for the credit societies
by means of state-controlled central banks ; and
in general it may be said that the Government has
tried, partly by direct, but still more by indirect
means, to gain a good deal of control over the whole
movement. The attitude of the central co-opera-
tive federations towards this development has

157



CO-OPERATION FOR FARMERS

varied considerably ; and of recent years the leaders
of co-operative thought have shown signs of wishing
to free themselves as far as possible from Government
interference, which has undoubtedly fettered the
liberty of the movement. It should be noted, how-
ever, that the Government has never directly taken
part in the organizing or management of local
societies. It is also interesting to observe that
there has always been an attitude of hostility on
the part of the Government to industrial societies,
particularly to the consumers' stores, which are
thought to have a socialistic tendency. In spite
of this, the German industrial movement has grown
so rapidly that it bids fair to rival the much earlier
movement in England.

In general it may be said that the modern German
movement could not be imitated, as a whole, in
England, partly because it is based on a system of
credit societies which would probably not find
favour among English farmers, and partly because
the attitude of the Government is very different
to any which would be likely to be adopted in Great
Britain.

The beginnings of the German movement were
largely based upon social and ethical motives which
seem to have died out, to a considerable extent,
and there is some reason to think that the future
will not show as healthy a development as has taken
place in the past.

Finally, it should be noted that the temperament
of the German agriculturist responds to organization
under discipline, in a way which could certainly not
be expected in England.

158



CHAPTER IX
IRELAND



APART from a few isolated experiments, the co-
operative movement in Ireland made its first
appearance in the year 1889, when Sir Horace
Plunkett returned from ten years' ranching in
America, and made up his mind to do something to
improve the conditions in his own country.

These conditions were particularly bad. Through-
out the greater part of the country districts in Ireland
the population were almost entirely in the hands
of a bad type of combined tradesman, publican, and
money-lender known locally as the " gombeen "
man. It was his practice to supply the peasants
with their requirements on a credit basis, and also
to take their produce from them by way of exchange.
As many of the persons concerned could not read
or write properly, and were absolutely unacquainted
with book-keeping, it can readily be seen that they
were entirely in the hands of the middleman. There
is no doubt that some of these gombeen men were
the only thing that kept the peasantry alive in times
of stress ; but, on the other hand, a large number
of them grew rich on extortion. In any case, whether
the gombeen man in a particular district was good

159



CO-OPERATION FOR FARMERS

or bad, it is obvious that no sound economic con-
ditions can exist under such a system.

Nor was this the only hardship which the Irish
farmer suffered. The land reform of the British
Government was at that time only in its infancy,
and a great part of the land of Ireland was used for
grazing ranches in the hands of absentee landlords.

Furthermore, there was no separate Department
of Agriculture for Ireland, and the technical instruc-
tion provided for the people was of the scantiest
possible nature.

Sir Horace Plunkett set himself to fight against
these conditions by means of a considered policy.
He foresaw that the time was not far off when the
land of Ireland would pass into the hands of small
farmers as indeed has happened as a result of the
famous Wyndham Act of 1903, which has already
brought about a transfer of nearly 80 per cent, of
Irish farm land to small owners.

He also realized that when this transfer took
place, it would not be satisfactory in its effect if
it was not backed by some system which would
enable the newly created smallholders to obtain
advice and assistance, not only in the cultivation
of their land but also in the actual conduct of their
business.

To meet this need he formulated a policy which
has been persisted in ever since and has had, as
will be seen, most beneficial results.

Briefly stated, this policy consisted in the creation
of two bodies a State Department of Agriculture
for the giving of technical instruction in the pro-
duction of crops, and a voluntary organization

160



IRELAND

whose business it would be, working hand in hand
with the State Department, to instruct the farmers
in the principles of combination for business purposes.
Sir Horace Plunkett was the first man to state
clearly the limitations of Government action in the
organizing of farmers, and to formulate a policy for
co-ordination between a State Department and a
voluntary agency. For this reason the Irish move-
ment, which has always maintained its original
theory, although the practice has been subjected to
many difficulties, has been the subject of much study
on the part of inquirers from other countries.

There is a certain element of tragedy in the actual
working-out of the situation. After five years of
effort, a voluntary body was founded in 1894 under
the name of the Irish Agricultural Organization
Society. Two more years culminated in the calling
together of the " Recess Committee/' so called
because it sat during the Parliamentary Recess.
This was a non-official body under the chairmanship
of Sir Horace Plunkett, which included well-known
Irishmen of all political parties and which met for
the purpose of formulating an agricultural policy
for Ireland.

Inquirers ' were sent to many foreign countries,
and a Report was produced which still ranks as a
classic among those interested in such questions.

As a result of this committee's work, a separate
Department of Agriculture and Technical Instruction
was given to Ireland in the year 1900, and Sir
Horace Plunkett was appointed its first executive
head.

For some years after this the original policy of
161 M






CO-OPERATION FOR FARMERS

co-ordination between the Department and the
Organization Society was successfully carried out ;
and the work received a new impetus and a new
justification on the passing of the Wyndham Act


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Online LibraryLionel Eldred Pottinger Smith-GordonCo-operation for farmers → online text (page 11 of 17)