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teachers, etc., throughout the Province are also active in
their support of co-operation.

In Bavaria particularly generous assistance has
1 See pp. 266-91 of the Report previously quoted.
207



CO-OPERATION FOR FARMERS

been given to the movement. The National Union,
in addition to various preliminary grants, receives
an annual sum of 1,700 towards auditing expenses,
while the Central Loan Bank received a grant of
200,000 for working capital in 1911, as well as
enjoying specially favoured terms from the Royal
Bank of Bavaria. The mortgage credit bank has
received 3,000 for establishment expenses, a loan
without interest of 50,000, and an open credit up to
200,000 at 3 per cent. In addition to these grants
trading societies have also been benefited to the extent
of some 600 a year, while co-operative granaries
have been able to borrow more than 50,000 at a
rate averaging 2 per cent.

Moreover, the State Railway Department provides free
sites, and links the granaries with the railway lines practically
at cost. In the matter of railway rates the granary societies
are accorded favourable treatment, and three Bavarian
Public Departments, of which one is the. War Office, give
substantial assistance by purchasing all their supplies of
grain from them, thus assuring them of large, steady, and
highly solvent customers.

In summarizing Mr. Cahill states that

Herr von Brettreich, late Minister of the Interior, wrote
in 1905 that in the years 1897-1904 close upon 25,000 had
been given by the Bavarian State in furtherance of rural
co-operation ; and during the years that have elapsed since
that time the liberality of the State has not diminished.

Similar assistance has been given, more particularly
to the central propagandist bodies and to the credit
societies, in Wiirtemberg and in Saxony.

Apart from these direct aids, the Prussian Govern-
208



AND THE STATE

mcnt has created a special machinery for the purpose
of carrying out a policy in which Governmental
and local agencies shall work harmoniously together
namely, the system of chambers of agriculture
(Landschaftskammern) . The functions of these highly
important bodies are, as defined by the Act of 1894,

The care of all matters pertaining to agriculture and forestry
within their districts, and, to this end, the furtherance of
all measures calculated to better the position of landowners,
with especial regard to the more complete co-operative or-
ganization of farmers.

Their constitution is semi-official, and their income
is derived from a tax which is levied on every agri-
culturist whose land is valued at a certain figure ;
grants are also made to them for special purposes
by the State. The part played by these agencies
is, in theory at least, a perfect example of the working
out of the dual policy of State and voluntary action ;
the Chambers of Agriculture, being constituted on a
semi-official basis, are able most advantageously to
act as a connecting link between the official and the
unofficial. The local chamber is in a position to
ascertain the views of co-operators and small farmers
with accuracy, while their central body, collecting
the sum of their opinions, can exert a very considerable
influence on the policy of the officials in charge of
agricultural legislation,by whom it is always consulted.
Thus, during the course of the present war the
Landwirtschaftsrat, or semi-official central organ of
the farmers, has been taken into the closest consulta-
tion in the framing of emergency measures regarding
agriculture and food control,

209 p



CO-OPERATION FOR FARMERS

The apex of the Prussian system of State aid to
co-operation must, however, be sought in the domain
of credit. In 1895 the Government, finding the
depression among agriculturists to be a serious
menace to agricultural prosperity, decided to take
energetic steps to provide a palliative by creating
facilities for the extension of cheap and easy credit
to small farmers, and incidentally to the smaller
craftsmen and traders who constitute the " middle
class " in the German sense of the term. As a result
the Prussian Central Co-operative Bank was called
into being by an Act passed in July 1895, and began
its operations in October of the same year. The
existing central credit societies at that time were
limited in their sphere and weak in resources, and they
suffered in the same way as the local societies, though
in a less degree, from the difficulty of equalizing the
seasonal supply and demand for money among the
agricultural population. The Preussenkasse, as it
is called for short, was designed to remedy this defect
by acting as a clearing-house for central institutions,
earning only 3 per cent, on capital, and taking
business from both town and country. Having
ample capital, and being in touch with the general
money market, it would be in a specially favourable
position for the performance of these functions.

The statistical records of the State Bank seem to
show that it has been very successful in accomplishing
its purpose. Its turnover increased from 55,866,750
in 1896 to the colossal figure of 819,905,528 in 1911,
and the membership of the societies doing business
with it was 303,000 in the former year, and over a
million in the latter. The initial capital, provided

210



AND THE STATE

by 3 per cent. State bonds, was 250,000, which
had been increased by 1911 to 3,820,000.

It would seem from this account that the policy
of State aid to co-operation in Germany had proved
an unqualified blessing. But there is another side
to the picture, and during the few years previous to
the outbreak of war this other side was becoming
more and more noticeable. It may be illustrated
most forcibly by further reference to the affairs of
the Preussenkasse. When this bank first came into
existence, the position of the central co-operative
credit societies was not a strong one. In addition
to the Agricultural Central Loan Bank, founded in
1876 by Raiffeisen, and Schulze's General Co-
operative Bank (which never entered into relations
with the State), there were in existence only a number
of weak institutions confined to one Province or State.
In 1894, however, the Imperial Federation had already
begun to take steps towards the creation of a central
bank. On the creation of the Preussenkasse these
efforts were abandoned in favour of relations with
the new body. Within three years grievances
developed owing to the State Bank raising its rate
of interest and adopting more stringent regulations
without consulting the co-operative leaders. This
discontent, first voiced at the Congress of Karlsruhe
in 1898, grew to such an extent that in 1902 a new
body was set up under the name of the Imperial
Co-operative Bank. Immediately the iron hand
was exhibited :

The Prussian Bank gave the Prussian central societies tha
option of doing all or none of their business with it. Owing
to the comparative weakness of capital of the new Bank,

211



CO-OPERATION FOR FARMERS

the societies could not hesitate in their decision, and the
Imperial Co-operative Bank agreed to renounce all banking
and credit business with Prussian societies.



It now only does business outside the Kingdom of
Prussia.

The Raiffeisen Federation from the first regarded
the new development with suspicion, but on receiving
in 1895 a guarantee that its independence and its
control of domestic affairs would be in no way inter-
fered with, it agreed to enter into relations with the
State Bank. In 1907 a pledge was exacted from it
to have no dealings of any kind with the Imperial
Co-operative Bank. In 1910 a number of differences
arose, the chief of which concerned the low rate of
interest paid by the Preussenkasse on credit balances,
and the position of the Central Loan Bank in its
dealings with other co-operative bodies. In 1911 the
State Bank proposed an agreement which appeared to
infringe the internal independence of the Raiffeisen
Federation and also attempted to impose unfavour-
able financial conditions. As a result the Central Loan
Bank broke off the relationship altogether, thereby
removing from the State body about one-third of
the agricultural societies among its customers. Of
the other three important federations, two, that
of the Schulze societies and the General Union of
Distributive Societies, stand aloof altogether, while
the Federation of Co-operative Industrial Societies,
which is composed of middle-class professional
associations and is of minor importance, is practically
dominated by the Preussenkasse.

It will thus be seen that the policy of the State
212



AND THE STATE

has not proceeded as smoothly as might be supposed.
In summing up the attitude of the State Bank, Mr.
Cahill writes as follows :



The general attitude of the State Bank appears to be that
the central banks should be organized on the basis of pro-
vincial independence, and that they should be in direct rela-
tions with itself. The existence of any such central bank
as the Raiffeisen Central Loan Bank is looked upon as
involving a duplication of functions, and the interposition
of a superfluous body between the Prussian Bank and the
provincial central bank. Such a central institution it regards
as a sort of competitor which, if allowed to gather sufficient
strength, would eventually render the State Bank super-
fluous. That such a consummation was not in harmony
with its views came to the surface in 1911, when the Central
Loan Bank the strongest of all the central banks made
a provisional arrangement with the Imperial Co-operative
Bank. The State Bank at once declared that it would cease
business with the Central Loan Bank if any such arrangement
were made. The relations contemplated between the two
banks even for minor purposes appeared to contain the
germs of a large central co-operative bank extending over
the Empire, and perhaps finally leading to the supersession
of the Prussian Bank, in so far as co-operative business was
concerned.



The guarantee of exclusive dealings demanded
by the Preussenkasse was a part of this policy, and
enabled that body to keep its rate of interest below
a competitive level to the detriment of strong
central banks. Further complaints are summed up
as follows :

It is also felt that, as a result of the foundation of the Stale
Bank, the sovereignty over Prussian co-operative credit has
been taken out of the hands of co-operatoys : that office has been

213



CO-OPERATION FOR FARMERS

assumed by the State. It is sometimes urged that the State
Bank is too bureaucratic in its methods ; that it is not
sufficiently elastic in its administration ; and that it requires
extremely minute and detailed information as a basis for its
granting of credits. Finally, there is the fact that the bank-
ing profits of a successful great central co-operative bank
would return to co-operation, whereas under present con-
ditions any resultant profits accrue to the State.

Though Mr. Cahill disclaims the power to pronounce
judgment, the first of these three sentences, which,
we have italicized, contains the whole gist of the
argument. State aid, carried to the point of direct
financial intervention, necessarily brings with it
State control, and what is controlled by the State
cannot be controlled by its own members and there-
fore cannot be co-operative. It was in order to
provide a practical illustration of this principle that
we have gone in so much detail into the history of
the Preussenkasse.

It is not alone in the domain of credit that results
of this kind have made themselves felt. The whole
organization of German agricultural co-operation
has been brought under the influence of the State
as far as it was found possible. The connecting link
has been the Imperial Federation, whose founder
and President, the late Herr Haas, stood high in
the favour of the most exalted persons. The Federa-
tion was undoubtedly designed to absorb or destroy
the older and more independent Unions and to
substitute for them a nation-wide State-controlled
system. How far this policy would have succeeded
the outbreak of war has prevented us from knowing,
for all the signs pointed to the probability of a crisis

214



AND THE STATE

arising within the last two or three years. But the
collapse of the central bank at Darmstadt and the
revelations of incompetence, dishonesty, and bad
auditing which accompanied it, opened the eyes of
all interested persons to the dangers of a large co-
operative movement unaccompanied by the true
co-operative spirit.

We may now return to the development of the
relations between the State and the* co-operative
movement in Ireland. We have already sketched
the policy laid down by the Recess Committee, and
in a previous chapter we have indicated the practical
breakdown of that policy in recent years. The
motives which brought about that breakdown afford
a complete illustration of the dangers and limitations
of Governmental assistance. In the year 1 1907 Sir
Horace Plunkett, who as the founder of both bodies
had been in an ideal position to control their joint
working, was displaced from his position as Vice-
President of the Department of Agriculture for
political reasons. His successor, Mr. (now Sir Thomas)
Russell was a nominee of the Nationalist Party
and felt himself bound to carry out their policy.
The chief supporters of this party, however, when
the solution of the land question had pacified the
farmers, were the country shopkeepers, and these
gentlemen had a strong objection to co-operative
societies engaging in trade which might be harmful
to their own vested interests. Thus we find that
within a very short time the harmonious relations
which existed and were necessary between the
State Department and the voluntary body were
broken down. Not only was all financial assistance

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CO-OPERATION FOR FARMERS

abruptly removed, but all manner of obstacles were
placed in the way of the work of the I.A.O.S., and
immeasurable harm has thereby been caused to the
Irish agricultural policy so carefully outlined by
the Recess Committee. When in 1911 the Develop-
ment Commissioners were entrusted with funds for
the development and encouragement of agriculture
by means, among other things, of grants to organized
farmers in aid of co-operative education, a deter-
mined effort was made in Ireland to prevent the
I.A.O.S. from participating in the benefits of this
fund. After a delay of two years the co-operators
were partially successful and the I.A.O.S. has since
been in the receipt of an annual grant for educational
purposes.

The restrictions which accompany this grant,
however, are far more irksome than those which apply
to the similar grants made to the sister organization
societies in England and Scotland, and their effect
in hampering free development has been sufficient
to justify the contention of those who hold that the
co-operative movement ought at all times to be
untrammelled by any dependence on Governmental
authority.

It may be urged that in pointing out the disad-
vantages of State control we have only shown that
it is not compatible with a certain academic definition
of co-operation. This may not be a fatal objection
if it can be shown that the organization of agriculture
as a practical matter of business can be handled by
the State on certain lines with efficiency even if
what co-operators understand as the ideal spirit is
not present. Such an argument can be met only

216



AND T.H E STATE

by pointing to practical results. We must compare
the results which have been arrived at in countries
where the State has taken the lead with those
achieved in countries where it has stood aloof.

Now if we consider the present condition of agri-
cultural organization in various progressive countries
there can be no doubt that it has reached its highest
efficiency in Denmark, Holland, Belgium and perhaps
Germany while it is comparatively backward in
France, Russia, England, and Hungary. And it
is just in those countries that the State has taken
what seems to us to be the proper attitude namely,
that of "evoking and supplementing, but not pro-
viding a substitute for, organized self-help." In
proportion as this attitude has been gradually
departed from in Germany, efficiency has declined.

That co-operative organization, unassisted by any
paternalism, does provide a practical way towards
at least a partial control of industry in the interests
of the people may be most clearly seen if we look
for a moment outside the agricultural sphere to
which this book has been limited.

The industrial co-operative movement, which has
developed in the United Kingdom practically within
the last sixty years, has reached a point of success
unparalleled by any other movement. It caters
at the present time for some fifteen million people
by means of about fifteen hundred retail shops, and
the English Wholesale Society has a turnover in
excess of a million pounds a week, and owns factories
of many descriptions and depots in all parts of the
world. From the purely material point of view the
achievement is a remarkable one, and it has been

217



CO-OPERATION FOR FARMERS

accomplished solely by the efforts of artisans relying
on their combined strength and not on the assistance
of the State. If it be compared with the spoon-fed
co-operation of France, for instance, there can be
no doubt of the verdict, alike on material and ethical
grounds. No doubt the difficulties of such an
achievement are greater in the case of an agricultural
population, but the example of Denmark proves
that they can be overcome.

It may perhaps be felt that too much time has
been devoted to the discussion of the attitude of
the State to the co-operative movement. It is possible
that if affairs had pursued their normal course during
the last few years this criticism would have been
justified. But conditions caused by the war have
brought the claims of agriculture into a new promi-
nence ; and now we find that even in England
which had been content for a century with a laisser-
faire attitude towards the farmer steps are being
taken to create an agricultural policy which will
be based to a very large extent on control by the
State. This being the case, it is urgently necessary
that those who believe in the superiority of the
voluntary method should state their case now, and
that steps should be taken by organization and
education to make that case a strong one.



218



CHAPTER XII

THE FUTURE OF THE MOVEMENT



THE evidence of the preceding chapters may be
held to establish the fact that agricultural co-
operation as a method of doing business has been a
thorough success and has come to stay. If, however,
we can say no more than this the subject loses a great
part of its interest. As much may be conceded of the
position of the joint-stock company : it is a com-
paratively recent innovation, and as a method of
business its success is undeniable. But no one feelsi
any particular enthusiasm for the joint-stock company
as part of a movement, or as pointing the way towards
a reconstruction of society. Co-operators, on the
other hand, regard their form of association as more
than a method for better trading or even a method
of increasing agricultural production. It is, as we
have seen, easy for the agricultural movement to
become merely an instrument for the carrying out
of the desires of the Government in relation to
improved production ; such an attitude has its prac-
tical uses but it does not fulfil the requirements of
the co-operative spirit. On the other hand, societies
which stand aloof from Government aid may
tend to become merely combinations of producers

219



CO-OPERATION FOR FARMERS

seeking their individual advancement and differing
little from trusts or rings. Co-operators will desire
their movement to avoid both these difficulties.

If this object is to be attained we must try to get
away from the hard-and-fast line which has too
often been drawn between co-operators in the towns
and those in the country. The phrases " agricultural
co-operation " and " industrial co-operation " have
been used too much in the past with an exaggerated
emphasis on the professional occupation of the co-
operators. As a consequence the two sections of
the movement tend to develop along lines of their
own, and to hold aloof from and even distrust one
another. No reorganization of society or industry
can be effected on such a foundation, and those who
aspire to the creation of a co-operative common-
wealth must come back to the realization that
co-operation is one and the same thing, whether it
be applied to the business of the farmer or the artisan.
.Illustrations of the truth of this principle may be
found in societies, now fairly numerous in some
countries, which cater for the needs of both classes
among their membership. A far more sound division
of the subject may be made if we abandon the phrases
quoted above and accustom ourselves instead to
thinking of co-operation for production and co-
operation for distribution, whether of agricultural
or non-agricultural articles.

Once this point of view is accepted it becomes clear
that those who co-operate for production require for
their complete efficiency to be in close, touch with
those who co-operate for distribution. Otherwise
their co-operation applies only to preliminary pro-

220



THE FUTURE OF THE MOVEMENT

cesses in the history of the article, and does not at
all point the way to the co-operative control of
industry which is desired. The defect in the policy
of the Guild Socialists, as it is outlined for us at
present, is that they have never formulated any
theory of distribution. There is too much tendency
on the part of those who co-operate for production
to fall into the same error ; in general they find it
easy to dispose of their produce (particularly where
it is of an agricultural character) and they are
indifferent as to the nature of the channels through
which it passes. As a consequence we find that those
who co-operate for distribution of whom the retail
stores of Great Britain and their federations may be
taken as an example are dissatisfied with their
fellow-co-operators. They find that in buying the
articles they need they cannot get better treatment
from co-operators than from private sellers, and they
do not consider the treatment they get from either
source to be adequate to the needs of the movement.
They feel that to bring their movement to full effi-
ciency they must control the sources of supply, and
the logical way of doing this is to enter the field of
production themselves and manufacture the articles
they wish to distribute.

Thus we find large distributive societies and their
federations gradually becoming producers on a very
important scale. , The Co-operative Wholesale Society
at Manchester and its sister society in Scotland own
factories whose total output amounts to over
25,000,000, and are rapidly becoming farmers of
many thousand acres. The same tendency in a
lesser degree (particularly with regard to farming)

221



CO-OPERATION FOR FARMERS

is to be observed in the larger individual societies.
In 1917 the total amount of land farmed in the British
Isles by the distributive societies and their federations
amounted to 25,000 acres, and there is every reason
to suppose that a steady and rapid increase will
take place.

Naturally these developments arouse a feeling of
resentment in those who already occupy the field and
believe that they should not be subject to the com-
petition of fellow-co-operators. Friction has arisen
on this point both in the industrial and the agri-
cultural world. The co-operative societies formed
for the purpose of manufacturing boots or shirts
have a strong objection to surrendering this sphere
to the competition of the manufacturing departments
of distributive societies, and between the Co-operative
Productive Federation and the Co-operative Whole-
sale Society in England feelings the reverse of co-
operative have been aroused. But the danger is
even more acute in the domain of agriculture. One
of the serious problems which lies before the world
is to find a means of bridging the chasm which has
gradually been created between the townsman and
the farmer and has undoubtedly been widened by
the conditions brought about by war. The townsman
has been taught for generations to regard the avarice
of the farmer as the principal cause for the increase
in the cost of living, while on the other hand the farmer
believes the townsman to be lazy, drunken, and


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