Wisconsin. Bureau of Labor and Industrial Statisti.

Biennial report of the Bureau of Labor Statistics of ..., Volume 14, Part 5 online

. (page 11 of 52)
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deposits or shares does not exceed £100, and a nomination
may be varied or revoked. If no nomination subsists in the
event of a member dying intestate, the committee of man-
agement becomes administrator of the fund.

Whenever upon the death of a member his investment
exceeds £80 the Commissioners of Inland Revenue are to
be notified.

Upon application to the registrar members may secure an
official investigation into the affairs of the society.

Every society must have a registered office with its name
conspicuously displayed outside. A change of location
must be at once reported to the registrar. It must have an
engraved seal bearing its name, must have its accounts
audited at least annually, and a copy of its last balance
sheet and auditor's report must be constantly displayed in its
office. Annual returns of its affairs must be made to the



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COMMISSIONER OF LABOR STATISTICS. 61

registrar, and a copy furnished, when applied for, to all
interested parties.

Its books may at any time be. inspected by any one inter-
ested in its funds.

Special returns are required if the society conducts a bank-
ing business.

Copies of its rules must be supplied by every society to
any applicant, at a price not more than one shilling.

The duties set forth in the act must be performed by the
society under penalties. These penalties afifect the soci-
ety and its officers and vary from £1 to £50, and are in some
cases cumulative during the time neglect continues.

THK RETAIL STORE.

The unit of the co-operative organization is the retail
store. In starting such a store in a new district in Great
Britain, it is considered desirable to make use of the advice
of the Co-operative Union. At the present day its work has
become so systemized through experience that its help is of
great benefit to the unpracticed co-operator. It has prepared
model rules for the administration of co-operative societies
which are in harmony with the requirements of the English
law, and it is ready at all times to aid every new enterprise
by showing those interested every thing essential to the suc-
cessful establishment of a store.

In the first place, after a few persons have become im-
pressed with the advantages of co-operative distribution,
and have determined to found a society, a meeting is usu-
ally held to awaken public interest and to secure members.
Speakers may be obtained from the Co-operative Union or
from the Southern Co-operative Guild. The advantages of
co-operation are explained and every effort made to stimu-
late interest in the movement. An informal organization is
effected, collectors appointed, and the work of securing the
required capital begins.

The co-operative scheme rests on the basis of cash pay-
ments. The outfit and goods are bought for cash and no
sales on credit ought to be allowed. Considerable capital,
therefore, must be paid in before the store opens. The



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62 REPORT OF THE

amount to be raised and the nnmber of members to be se-
cured before business is begun will depend on circumstances.
It is considered that 100 members, with £130 capital, and a
guaranteed trade of from £40 to £50 per week are required
to ensure expenses and a dividend if the store is to be con-
stantly open. But the beginning may be much more hum-
ble. The store may be open only at certain times, for
instance, evenings, or on particular days in the week, thus
reducing the expense of a storekeeper by employing only a
portion of his time. A member who is otherwise employed
may, if capable, serve as storekeeper in the evening, or a
member's wife may be selected for the position.

It is deemed essential that, however established, the store
should depend for its prosperity on the support of actual
members, and not rely upon loans or gifts from those who
may have a sentimental interest in the scheme. The ttade
of some members may at first be limited. If in debt to pri-
vate traders they can not at once transfer their entire pat-
ronage to the co-operative store. Slowly they may by
economy extinguish their debt and increase their trade. An
independent beginning of the store, no matter how humble,
and a gradual expansion as business increases is always ad-
vised.

The number of shares held by each member may be not
less than one nor more than 200, the value of each share
being £1. A fixed rate of interest is paid on capital invest-
ed, usually five per cent., and members are encouraged to
leave undrawn the dividends accruing on their purchases,
such undrawn dividends being added to the capital, thus
permitting an increase of the business. The store in this
way performs the functions of a savings bank of deposit,
thrift on the part of members is stimulated, and while on
one hand the evils of debt are prevented by adherence to the
rule of cash payments, on the other members form the
habit of saving, by the inducement offered to allow their
dividends to go on deposit at a fair rate of interest.

To determine the nature of the share capital, that is, when-
ever it shall be withdrawable or only transferable, opens an



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COMMISSIONER OP LABOR STATISTICS. 68

important question which the new society must meet and
settle. Its bearings are considered in the following:

Jn the geDeral rules three cases are provided for: — first, where €dl the
shares are withdrawable; second, where they are all to be traDsferable;
third, where some are to be transferable and some withdrawable. In the
early days of cooperative societies the law compelled them to make their
shares withdrawable. The early societies were accordingly all formed on
this principle; and the lar^ce majority of those formed after the alteration
of the law, when shares were allowed to be made transferable in the case
of joint stock companies, followed the example of their predecessors.
Cases, however, have occurred where rumors have been spread as to the
solvency of such a society; a run has taken place upon their funds, the
more selfish members seeking to secure themselves from Bhariog in any
loss, careless of the result to their members; and the society, having almost
aU its capital locked up in buildings, fixed stock and trading stock, has
had to stop payment, though perfectly solvent, so as to gain time to realize
its assets. Some of the older societies, hampered by the fact of their mem-
bers having been accustomed to withdrawable shares, have met this
difiSculty by altering their rules, and making a portion of their capital
transferable

It is, however, generally considered among co-operators that in the case
of new societies it is much the best plan to make all the capita) transfer-
able. To meet the case of members leaving the locality, or wishing to
draw out a part of their capital in order to provide for any given expendi-
ture, as in the case of illness, you should have a rule enabling the com-
mittee to purchase the shares of members at a price not exceeding their
par value, i, e., the sum paid up on them. In this manner the capital
becomes in fact withdrawable, except in the one case of a panic as to the
financial position of the society, in which case it is only fair that if there
be any ground for alarm, all the members should share equally in any Icss^
sustained. You may also very well have a rule empowering the com-
mittee to take money on loan from members, after they have contributed
some definite amount to the share capital, to be withdrawable on demand,
or after bo many days' notice according to the amount withdrawn.*

Many co-operators think that the matter is best settled by

making every member have one non- withdrawal transfera-
ble share of £1, and let his remaining shares, which he ac-
quires through undrawn dividends or by other investments,
be withdrawable.!

•Walter Morrison, Esq. Village Co-operative Stores (Ck>-operative Board
Pamphlets).

t Workingmen Co-operators, page 36.



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64 REPORT OF THE

Not all the money subscribed for shares need be paid up
at once. It is usual to make payments at the rate of 3d per
week. In some societies subscribers do not acquire full
membership until an entire share or even several shares
have been paid for in full. In general, however, after a
shilling has been paid in, members are^ allowed to have full
privileges. Concening this matter, Mr. Morrison, in the
pamphlet already quoted, says :

Urge your members to pay up their shares ia f uU if they can, in order
to simplify your accounts. It may be useful to this end to provide a spec-
ial rule that no interest will be allowed on any sum under £1,* so as to in-
duce a member who may have £1 ISs, invested to pay up the balance of
two shillings at once. You should also adopt the provision in the general
rules that no individual on purchases shaU be paid to any member until
he has some definite sum to be fixed by a special rule, invested in the share
capital; all such dividends being credited co him until this amount is made
up. You will require an average capital of £10 par member. If you can
rely upon the richer members contributing more than this sum, you might
Ax the minimum amount wliich each member must invest at perhaps £5.

Before beginning business the society must be registered
at the government registration office for industrial and
provident societies. No registration fei is charged.

The selection of the executive committee is a matter of
scarcely less importance than that of raising the required
capital. This committee appoints the storekeeper and other
employes, controls the purchase of the stock in trade, over-
looks the finances of the society, and is, in fact, entrusted
with the entire supervision of its affairs. The nature of
these duties suggests the care that ought to be taken in
selecting the men who are to perform them. The success
of the society will largely depend on the efficiency and
honesty of the committee. It may consist of from seven to
twelve members who are usually elected at quarterly meet-
ings, their terms of office being so arranged that part of the
committee goes out of office at each meeting, or in some
cases semi-annually or annually, although, as respects this,
many societies have no rule. Members of the committee



*0r, more explicitly, on any fractional part of a £, tha? swjplyla^ a
motive to cause subscribed capital to be fully paid up.



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CX)MMISSIONER OF LABOR STATISTICS. 65

may or may not be eliprible to re-election immediately upon
the expiration of their terms of office. Sometimes it is
provided that a member after having served a certain fixed
time must retire for an interval before becoming eligible
again. Generally speaking, experience in the duties of the
office should count in favor of the retention of a committee-
man, and sweeping changes ought to be discountenanced.
The president of the society is sometimes elected by the
members and sometimes by the committee, the secretary
and treasurer by the latter. Many societies dispense with a
treasurer. Members of the committee are usually paid a
small fee for attendance at the weekly business meetings.

It is most desirable, in fixing tha scale of pajmeat, to avoid tha likeli-
hood of men trying to get on to the committee simply for the sake of the
fees. This is a danger to be carefully watched in the co-operative move-
ment. The work of its managing men (not its paid officials, to who.n it is
a profession) should be that of volunteers, who are repaid in m )derationof
their expense or trouble, and who will withdraw or resiga their position at
once, without a mementos hesitation on the score of money, if that is be-
ing done of which they so strongly disapprove that they balieve this to be
the right course. Otherwise they are not independent, and may tend to
get into the hands of men more powerful than themselve.^*, who are well
aware that they will not resign if they can possibly help it. From 6d to
28. a time for weekly committee meetings, and 2iothing for sub-committees
or adjourned meetings, is a common rule in a moderate sized society.*

The secretary and the treasurer, if there be one, furnish se-
curity to the society for the proper performance of their
duties, either by deposit or bond, and are usually paid a sal-
ary proportioned to the labor devolving upon them.

The first duties which demand the attention of the com-
mittee will be the selection of premises in which to conduct
the business of the store and the engagement of a store-
keeper. As to premises, conditions of eligibility, rental,
etc., will effect their decision. The aim, of course, is to
make the store as convenient as possible to the majority of
members. If the beginning is to be quite humble the
dwelling house of a member may be selected as headquar-
ters, and more extensive, and consequently more expensive

* Workingmen Co-operations, page 49.
5— P. A. F.



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66 REPORT OF THE

q^uarters taken as business expands and the success of the
movement becomes assured.

The storekeeper should be a man of unquestioned integ-
rity and, if possible, not only a believer in co-operation, but
of some experience in co-operative trading. Now that co-
operative stores have multiplied a man possessing the latter
qualification is not hard to find if the committee exercises
proper care, and especially if the aid of the Co-operative
Union is sought. It is considered undesirable rather than
otherwise that a storekeeper has been trained as a private
trader. The average salary of a storekeeper in English
towns is about 25s. or 305. a week, besides rooms and gas; in
country villages, 185. to 255. suffices.

Premises and fittings having been secured and a store-
keeper engaged, a stock of goods must be purchased, and
here again, as well as in the future purchase of supplies, the
judgment of the committee will be put to the test. The
maxim that goods well bought are half sold, applies to co-
operative as well as ordinary stores. It is also well under-
stood, and so generally practiced as to become the rule, that
no adulterated or inferior goods are to be allowed upon co-
operative counters. No credit, it will be remembered, is to
be given purchasers, and stock in trade is to be bought for
cash upon the best terms.

A store in the beginning usually confines itself to the
staple articles of groceries, and increases the variety of its
stock as the demand of its patrons warrants. Thus to or-
dinary groceries, hardware, tinware, crockery, etc., may first
be added. Ready made boots and shoes, dry goods of the
staple sorts, clothing, hats, caps, etc., are eventually sup-
plied. As to the latter articles greater care and experience
in buying are, of course, demanded, so as to avoid loss by
depreciation owing to change of fashion.

In some instances a department for making boots to
measure and others for custom tailoring and millinery have
been successfully incorporated.

A bakery forms a favorite and generally profitable branch
of English co-operative stores. Many fully equipped co-
operative bakeries exist as departments of these stores and



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COMMISSIONER OF LABOR STATISTICS, «7

do a large business. Butchering, also, has been tried, and
with some profit, but, as this requires greater experience and
trained judgment on the part of the buyers, and as greater
difficulty hasbeen found in procuring efficient department
superintendents in this line than in the others mentioned, it
has not as yet been found equally successful.

The sale of coal, on the contrary, is common and profit-
able.

As to the advisability of conducting several departments
under one management, the following is to the point, and
the statistics give a glimpse at what heis been accom-
plished :

Speaking generally, make one department a succebs at a time, keep
the accounts of the departments separately, and publish the profits of
each department in the balance sheet, would be the advice of many co-
operators. The number of the chief departments carried on by societies
is as foUows : 1185 societies do business in groceries and provisions; 772
In drapery; 715 in boots and shoes; 333 in coal; 211 in butchery; 188 in
baking; 185 in furnishing; 137 in hardware; 76 in tailoring. The amount
of stocks should usually not exceed the amount of sales for three or four
weeks in groceries; for ten to fourteen days in provisions; for one month
in bakery; for three or four days in butchery; for ten to thirteen weeks
in drapery, boots and shoes, and furnishing.*

In sales the ordinary prices of the locality are charged, no
attempt being made to undersell private traders. It is not
in reduced prices but in division of profits that the pur-
chaser reaps his reward.

As dividends are to be declared on purchases, arrange-
ments must be made for registering the latter and enabling
each customer to prove quickly the amount of his purchases
in order to collect his share of profits. This is accomplished
quite dimply by giving each customer a check or token
either of metal or paper representing the amount of his
purchase. These are retained and presented at the end of
the quarter to secure pdyment of the dividend. Members
are from time to time during the quarter required to ex-
change tokens of small nominal value for those of higher
denominations, in order to reduce the number of tokens of

* Workingmen Co-operators, page 68.

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68 REPORT OF THE

small denomination required in circulation and to simplify
matters generally.

In the use of these tokens fraud may occur, as, for in-
stance, employes have been known to purloin them and
afterward secure their presentation through an accomplice
for exchange. On the other hand, purchasers have held
them back for presentation during a quarter subsequent to
that in which they were issued, when the dividend might
be larger, thus unfairly sharing in a larger division of profits
than was justly their right, besides disarranging the ac-
counts of the society.

The paper checks may be so made as to guard against the
latter evil by changing the color in each quarter, but the
paper checks may have their nominal value increased by
fraudulent alteration of the amounts borne upon them.

Great care is needed to insure against corrupt use of the
checks, and the ideal check system has yet to be devised.

Various methods are employed to check the operations of
the manager and to discover the amount of cash passing
through his hands. The system of dividend tokens just
described affords a partial check, but, for the reasons stated,
fraudulent use of the tokens may render this sort of check-
ing nugatory, and, if relied on, cause a perfectly honest
manager to be unjustly suspected. Among other plans one
is *^ giving the customer a ticket, who takes it to a boy, who
gives metal checks in exchange and registers each shop-
man's sales." This is of course applicable to the larger
stores only. No absolute check upon the manager's opera-
tions has yet been devised. The best safeguard is the
watchfulness of the committee. A dishonest manager can-
not long retain his place if the duty of the committee is well
performed.

The matters of detail to which we have alluded having been
attended to, the store is now ready tcropen its doors for trade.
All, whether members of the society or not, are welcomed,
and non-members are permitted to share in the profits, but
not to the same extent as members, it being usual to allow
them but one-half the regular dividend. It is always desir-
able to induce non-members to join the society, and some-



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COMMISSIONER OP LABOR STATISTICS. 69

times a full dividend is given them, one-half being paid in
cash on demand, and the balance credited to a share account
in their name, thus in time creating a deposit sufficient in
amount to create them full members.

The business of the society, now that the store is in active
operation, will depend upon the fidelity with which members
patronize it, refusing, as they should, to be drawn away by
the insidious solicitations of private tradesmen, who fre-
quently attempt to undermine co-operative stores by cutting
prices, offering liberal credit, running special lines of goods
at cost prices, and by other devices contrived to lure co-op-
erative customers into their shops.

These attempts are likely to be more effective in the in-
fancy of the co-operative store than later, for the participa-
tion in profits soon teaches the thoughtful patron of co-op-
eration that his position as a partner is of more benefit to
him in the end than any temporary gain which he may ap-
pear for the moment to reap by purchasing at under-rates
elsewhere.

But if the store is to be thoroughly prosperous each mem-
ber must do more than merely give to it his trade. He must
take a deep interest in its affairs, must exercise a watchful
supervision over its administration, attend the business
meetings, participate in the election of officers, carefully
study the financial reports, or balance-sheets, so-called, is-
sued quarterly,* and teach himself to criticise intelligently
the policy pursued by* the committee who are his servants
in immediate control of the enterprise.

At the business meetings all members have equal voting
power, so that the society in its organization is thoroughly
democratic. Women, too, are usually eligible to member-
ship on the same terms as men, and in some cases have been
given places upon committees.

Besides the quarterly business meetings it is usual to hold
monthly meetings at which it is customary to read the min-
utes of the meetings held weekly by the committee, and
discussion is permitted thereon. Social gatherings of the
members are also held annually, or even more frequently,

* Or semi-aiiDually if dividends are thuB deoUred.

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70 REPORT OP THE

as a means of welding together more firmly the interests of
all who are connected with the movement.

Account of stock is to be taken quarterly or half-yearly,
and profits divided, and this should be carefully and hon-
estly done, with no attempt at over- valuation or desire to
increase the dividends beyond the percentage fairly earned.
Accurate bookkeeping is essential to the pecuniary welfare
of the society, and a " Manual of Bookkeeping," giving full
advice upon this head, has been published by the Co-opera-
tive Union.

The Union has also published a " Manual of Auditing."
Great responsibility rests upon the auditors, who are to make
a complete examination of the society's affairs and who are
to assure themselves that the balance sheet is correct, and
to vouch for it by their signatures. They ought to be men
familiar with accounts and, if possible, of some financial
experience

They ma;y De of such number as the society may direct,
usually two. Provision is made for the appointme nt of a
public auditor in lieu of auditors elected by the society.
No employe of the society is eligible to the oflSce of auditor.
Auditors are paid such remuneration as may be voted to
them at ordinary business meetings.

Any member or person in interest has an individual right
of inspection of the accounts of the society under proper
regulations, but is not permitted, without special authoriza-
tion, to inspect the loan or deposit $iccount of any other
member without the latter's written consent.

In certain contingencies it is provided that the affairs of
the society shall be examined and reported upon by inspec-
tors appointed by the government registrar. The govern-
ment requires annual returns to be made from every society,
containing a general statement of its receipts, expenditures,
funds and effects.

The model rules provide for the following allotment of
profits: (1) Interest on loans, deposits and preferred shares,
if any; (2) Reduction of the value of fixed stock and plant
at such a rate as the society may direct (subject to change
by the society at the annual rate of ten per cent, on fixtures^



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COMMISSIONER OF LABOR STATISTICS. 71

and of two and one-half per cent, on buildings); (3) Reduc-
tion of expenses, if any, incurred in forming the society :
(4) Dividend on share capital; (5) Reserve fund; (6) Educa-
tional fund; (7) Congress fund; (8) Social fund; (9) Divi-
dend on purchases and bonus to employes.

The second item in the foregoing list relates to the amount
written off at each stock-taking to allow for the deprecia-
tion in value of fixtures and buildings owing to wear and



Online LibraryWisconsin. Bureau of Labor and Industrial StatistiBiennial report of the Bureau of Labor Statistics of ..., Volume 14, Part 5 → online text (page 11 of 52)