By Jim Senter
The 2008 economic crisis has spurred interest in worker-owned cooperatives, but fewer Americans are familiar with consumer cooperatives and their rich history. The cooperative movement played a key role in working peoples’ lives during the difficult years of England’s industrial revolution. Many lessons from this history are relevant to our current struggle to invent a more equitable community-based economy.
Many books discuss the birth of capitalism as a miracle of invention –focusing on the power of the steam engine, and the productivity of new textile factories. Society was indeed transformed as wealth was concentrated and a new middle class emerged. But the new wealth of some was produced through new forms of misery for others.
Working people saw few of the benefits. The Enclosure Act of 1760 shoved peasants off the land, and workers were denied the right to vote, unions were illegal, and competition between mill owners drove down wages to starvation levels.
Beatrice Potter described this time in The Co-operative Movement in Great Britain: “Whole districts were transformed from a country of homesteads, bordering commons and scattered far and wide among pastures and corn-fields, into a land thickly planted with cities, towns and suburbs: a whole class of middling folk, small owners and tiny capitalists, had been changed into opposing armies– the rich and the poor…. Mobs of starving factory hands paraded the manufacturing towns; secret societies honeycombed with sedition and conspiracy sprang up with amazing rapidity among the better paid artisans.”
While investors organized money to build textile mills, working people organized themselves to address needs- primarily the need for healthy, affordable food– the for-profit wage system was unable to meet. They got together with their neighbors, pooled their pennies and bought what they needed- tea, sugar, bread, butter- in bulk at the lowest price they could. Many ran into problems with the wholesale merchants they bought from, who routinely sold bread laced with clay and sawdust, and shorted them on weights. Because of this, a number of these early co-ops built bakeries and mills to produce bread and flour for their own use.
Despite the problems, co-ops grew in number, and spread around the country. Many failed. Lessons were learned. The Rochdale Principles, on which many co-ops today are built, came out of that learning process. In the 1850s, the co-ops had become so numerous that they began to compete with each other for wholesale purchases.
To address this issue, the Co-operative Wholesale Society (CWS) was formed in 1863 to provide purchasing services for the nation’s co-operatives, and to organize and run the productive enterprises the local cooperatives had set up earlier. The Scottish Co-operative Wholesale Society (SCWS) was founded five years later.
Local, retail co-ops were their members. When the manager of the retail needed to buy 20 pair of work boots, he would place an order with the Wholesale. By collecting orders from around the country, the CWS and SCWS maximized purchasing power.
When demand for a certain kind of product, furniture for instance, became great enough, the Wholesales invested in setting up production facilities for those goods. In that way, things made for sale in co-op stores were made in co-op workplaces.
By the end of the nineteenth century, the CWS and SCWS were collaborating in the operation of a steamship line that carried tea from co-op tea plantations in India and Sri Lanka, wheat from Canadian farms, and fruit from Australia.
Through this system, funds which would otherwise be siphoned off into for-profit enterprises to pay for goods sold through the co-op, remained in cooperative hands, and this helped “close the loop” of co-operative finance. Production for use maximized the excess cash flow available to fund education and outreach, to expand membership, as well as to expand production into new product lines. It produced a not-for-profit marketplace whose stability was notable for over 75 years, building an engine whose power has rarely been recognized.
When Glasgow cattle merchants tried to shut co-op buyers out of the market by refusing to sell to them, production for use gave the SCWS the financial and organizational heft to buy land, and herds of cattle, and provide co-op butchers with co-op cows. This was militant co-operation.
Because English law made labor unions illegal for most of the nineteenth century, English co-operation focused on consumer cooperation By the end of the 1930s, co-operative production facilities were making everything, from furniture to barrels, all sorts of clothing and many other consumer goods. The Wholesales ran coal mines and print shops, as well as a daily newspaper and an engineering department to design factory and store buildings.
In the United States, things developed somewhat differently. The Workingmen’s Protective Union developed retail/consumer cooperatives in the late 1840s and at its height had some 1200 stores spread out from Massachusetts to the Illinois frontier. These stores failed in the hard times of the Civil War, and were replaced by workplace cooperative organized first by the Sovereigns of Industry and then by the Knights of Labor.
At their height, worker/owners operated factories producing cigars and tobacco products, shoes, boots, barrels, shirts, wagons. Union members operated laundries as well. When the Knights of Labor disintegrated in the depression of the 1890s, these enterprises lost their customers in the union, and competition among themselves and with for-profit enterprises forced them to close their doors.
While the CWS exists to this day- as the Co-op Group- there are no surviving remnants of the nineteenth century industrial workplace cooperatives in the United States.