The Kenosha telegraph. [volume] (Kenosha, Wis.) 1860-1888, 1875-09-30
ENGLISH COOPERATION.
Growth of the Recommendation the Bust
ness is Managed.

Growth of the Movement How the Bust
ness is Managed.
[London Cor New York Worid.l
From the mustard-seed of cooperation
the great tree of ioint-stock cotton mills
has grown. Few subjects are possessed
of more interest than the history of this
development of an idea Ten or twelve
years ago the clerks in the General Post
Office at London began to club their
money together in order to buy their tea
and sugar at wholesale prices. Now
every department. of the public service
has Immense stores in which armies OF
clerks are employed to supply the myri-
ads of customers. The original CO.
operative societies in London have be-
conn iOint-stock companies, and, in
spite of themselves, as it would seem,
make profit on the goods they sell,
over and above the necessary cost OF
management. But in Lancashire the
| idea Of cooperation has been applied di-
rectly to production, and it has been car
ried out to such an extent that Id the
town of Oldham alone there are eighty
cooperative societies, which are really
ioint-stock companies, nearly all of
| which are engaged In manufacturing
cotton while in the whole of Lancashire
there are about one hundred and fifty
such companies, many of which have
gained ta1i standing, paying q good
and sometimes large profit and having
their shares quoted and dealt IN like
those of a railway company OF govern
ment. The shares of these companies
are always in small amounts or
/ 910- and by an ingenious process OF
borrowing money as part OF the working
capital, the shareholders have managed
to greatly increase their profits. A
company is formed, for example, with a
nominal capital of 100000, in 10000
shares Of se1O each. For the first year
only 95 on each share is called UP, SO
that the actual working capital is only
100000. Upon this the profit is found
to be 10 per cent, or 95, 900. The COM
pany sees that it can double It's business
by doubling its capital but instead OF
calling up the remaining f5 per share
on it's nominal capital, it goes into the
market and borrows 950,000 at 5 per
cent. At the end of the second year it
has made 10 per cent. profit on flOO, 600,
or G1O, 900, and the division Of profits is
to the shareholders, 97, 500; to the
lenders of the e50,OO0, 92, 800 This,
YOU will say with truth, is fnanciering
and not cooperation; but still the hold
ers of the shares, to a great extent, are
workers in the mill, and they get their
wages as well as their share OF the
profits. In not few instances, how
ever, this bright idea of making money
by borrowed capital is carried to dam
gerous extent. There is, for example,
one of these societies which has capt.
tai of ESQ, 900 subscribed and paid up
! e. it's shareholders, and which has bor-
rowed ESQ. 900 more at per cent. The
net profits for the year were 15 per cent,
E13. 500. IF the shareholders had owned
the whole of the $50, 900 working capt.
tai. each .G1O share would have earned
clio. But the actual result was that
after paving the 5 per cent. on the $780,
600 borrowed capital, the shareholders
had 91O,5 to divide among themselves,
93. 10 on each 910 share, or 30 per cent.
This is dangerous, because the sudden
/ withdrawal of the borrowed capital
would almost certainly throw this Won
derfully prosperous company into bank
ruptcy. And the borrowed capital is
generally lent upon call, liable to be
withdrawn at very short notice. The
companies, however, insist that there is
little danger of these calamities. The
borrowed capital which they work upon
comes chiefly either in very small sums
from small tradesmen and workmen, OF
from the surplus funds Of the old CO
operative societies, which latter are the
parents and patrons of the new compa-
MES. The companies say that they are
becoming the bankers of the manufac-
turing population-an SO they are.
They pay or per cent, while the saw
ings bank pays only 3 per cent. The
shareholders in the cooperative stores,
which always have money to lend, are
also in many instances the shareholders
of the mill companies, and they are quite
willing to lend money to themselves.
Thus the Industrial Cooperative So
ciety of Oldham" which has divided
94O,O 900 of profit in one year, has at
present no less than e45, 437 of its sur
/ plus funds lent to mill companies. This
society does business of about $780,
600 year, and all at profit.
Mr.. A. T. Stewart and His Clerks.