The true northerner. [volume] (Paw Paw, Mich.) 1855-1920, 1875-10-01
ENGLISH COOPERATION.
Growth of the Movement-How the Bust
ness Ii Managed.
London Cor. New York worid.l

Growth of the Movement-How the Bust
ness Is Managed.
London Cor New York World
From the mustard-seed of cooperation
the great tree of joint-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 ut London began to club their
money together in order to buy their tea
and sugar ut wholesale prices. Now
every department of the public service
has i"lmense 4 torres in which armies of
clerks are employed to supply the 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 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 in the
town of Oldham alone there are eighty
cooperative societies, which are really
joint-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 TAI. standing, paying good
and sometimes large profit and having
their shares quoted and dealt III like
those of a railway company or II govern
ment. The shares Of these companies
are always in small amounts-f5 or
60 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 II
nominal capital of 100000, 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 So, 600. The com
pany sees that it can double its business
by doubling its capital but instead of
calling up the remaining 80 per share
on its nominal capital, it goes into the
market and borrows $50, 900 ut D per
cent. At the end of the second year it
has made 10 per cent. profit on fl00, 600,
or eIO, 900, and the division of profits is
10 Uut ,cVO, w tiip
lenders of the 100000, 60, 500. This,
you will say with truth, is tinanciering
and not cooperation; but still the hold
ers of the shares, to a great extent, ere
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 dan
gerous extent. There is, for example,
one of these societies which has q CAPT
tai of $50, 900 subscribed and paid up
by its shareholders, and which has bor-
rowed $50. 900 more ut 5 per cent. The
net profits for the year were Upper cent,
f13, 800. If the shareholders had owned
the whole of the $4,000 working capt.
tai, each f10 share would nave earned
Ct. 10. But the actual result was that
after paying the per cent. on the &c.,
600 borrowed capital, the shareholders
had e10,5 to divide among themselves,
CD. 10 on each f10 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 De
withdrawn Mt 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, or
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-and so they are.
They pay or per cent, while the saw
ings bank pays only B 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 Co operative So
ciety of Oldham, which has divided
e40,000 of profit in one year, has at
present no less than f45, 437 of its sur
plus funds lent to mill companies. This
society does business of about $780,
600 year, and all at profit