The Eaton Democrat. (Eaton, Ohio) 1875-1903, 1875-10-07
ENGLISH
Growth of the Movement-How the Bust
ness Is Managed.
London Cor. New YORK horId.l

Growth OF the MOven1ent-hoW the Busi-
ness is Managed.
London Cor. New York World
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 OF 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 supply7the myri-
ads of customers. The original CO.
operative societies in London have be-
como joint-stock companies, and, in
spite of themselves, as it would seem,
make a 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 IN extent that in 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 a tIIt standing, paying a good
and sometimes a large profit and having
their shares quoted and dealt in like
those of n railway company or a govern
ment. The shares of these companies
are always in small amounts-f5 or
e10- 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 910Q, 600, in 10000
shares of e10 each. For the first year
only e5 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 5000. The com
pany sees that it can double its business
by doubling its capital but instead OF
calling up the remaining e5 per share
ON its nominal capital, it goes into the
market and borrows 100000 at 5 pei
cent. At the end of the second year il
has made 10 per cent. profit on e100, 900,
or 10000, and the division of profits is
to the shareholders, 1880; to the
lenders of the ESQ, OO0, 60, 500. This
you will say with truth. is fnancierine
and not cooperation; but still the hold
ers of the shares, to a great extent, art
workers in the mill, and they get theil
wages as well as their share of the
profits. In not q few instances, how
ever, this bright idea of making money
by borrowed capital is carried to a dan
gerous extent. There is, for example
one of these societies which has a CAPT
tai of ESQ, 900 subscribed and paid VI
by its shareholders, and which has Dor
rowed ESQ, 900 more at 5 per cent. The
net profits for the year were Is per cent.
ELS, 500. If the shareholders had owned
the whole of the EGO, 900 working CAPT
tai, each 910 share would have earned
clio. But the actual result was tina
after paying the 5 per cent. on the EGO,
600 borrowed capital, the shareholder
had e10, 500 to divide among themselves
e3. 10 on each el0 share, or 35 per cent
This is dangerous, because the suddel
withdrawal of the borrowed capita
would almost certainly throw this won
derfully prosperous company into bank
ruptcy. And the borrowed capital i
generally lent upon call, liable to b
Withdrawn at very short notice. TIL
companies, however, insist that there
little danger of these calamities. Tn
borrowed capital which they work upol
comes chiefly either in very small sum
from small tradesmen and %workmen, o
from the surplus funds of the old CO
operative societies, which latter are tn
parents and patrons of the new compa
MES. The companies say that they ar
becoming the bankers of the manufac
turing population-and so they are
They pay 5 OF 6 per cent while the say
ings bank pays only 3 per cent. TIL
shareholders in the cooperative stores
which always have money to lend, al
also in many instances the shareholder
of the mill companies, and they are quit
willing to lend money to themselves
Thus the Industrial Co operative Sc
ciety of Oldham" which has divide,
$40, 900 of profit in one year, has q
present no less than e45, 437 of its SUI
plus funds lent to mill companies. Thi
society does a business of about $3.50,
600 a year, and all at a profit.