The foundations for co-operation had been established in principle and in law by 1860 and the next century was to see the spread of co-operation both nationally and internationally and into all areas of life. Although each co-operative was to develop in its own unique way, it is useful to distinguish four major types:
Worker co-operatives
Here the workers each put in capital to start the organisation. Generally, there is no formal hierarchy so everyone participates in decision-making and, in its pure form, everyone is paid equally per unit of labour.
An example is Calverts13 print shop which has been a workers co-operative for 24 years. All of the current sixteen workers have a vote on decisions and everyone accepts the result. All are paid the same, regardless of what they do or how long they have been in the organisation, and share the profits (and the responsibilities) equally, too.
Producer co-operatives
These are prevalent in the form of agricultural co-operatives, both in Britain and internationally. Small producers co-operate in order to reap the benefits of being able to operate as a larger unit. They can buy in larger quantities then divide their purchases up between them, or buy expensive equipment and share it. They can also sell on a larger scale by pooling their output to gain bigger orders or to guarantee supply. There are also potential benefits from being able to organise management and administration more efficiently than if each did it alone. Similarly, producers also form marketing co-operatives, such as the dairy farmers organisation Milk Marque.14 Another example of a producer co-operative is Snaith Salad Growers15, an East Yorkshire venture by 15 families who all run glasshouse nurseries.
Retail co-operatives
This was where the Rochdale Pioneers began and is what people in the UK generally think of when they hear the term ‘co-op’16. Here potential consumers raise the money among themselves, typically through a £1 membership fee, in order to buy goods in bulk and avoid exploitation through poor quality and high prices.
It did not take long for the early co-operative retail societies to realise that even further economies could be made if they co-operated together and so the Co-operative Wholesale Society (CWS, which changed its name to the Co-operative Group in 2001) was formed in 1863. The Industrial and Provident Societies’ Act 1867 made it legal for one co-operative society to buy shares in another. Societies joining the CWS would take out one share for each of their members and have voting rights on decisions in proportion to the number of their shares i.e. members. Soon, shopping at the Co-op spread throughout Britain and co-operation truly became a national movement.
Financial co-operatives
In the early days banking was not included in the legal framework for co-operation. However, it soon became clear that financial activities such as banking and insurance were necessary. Banking was especially important as there was a need to free up the flow of money between societies so as to even out disparities in capital, dividend rates and interest payments. Whilst some societies were short of capital, typically if they had just started up or were in cities, others were much better off. Societies could accumulate capital if they had long-standing members who had not drawn their dividends. This was a popular way of saving for ordinary people who did not have bank accounts, often because they did not trust the small and insecure banks at that time. By lending this surplus money to less fortunate societies it could be put to good use until such time as it was needed.
Although the need for banking was obvious, there was some reluctance to establish a separate organisation. Instead the CWS was pressed into taking on the role of banker on the back of the idealism of its key figures and their drive for expanding the co-operative movement. However, a change in the law was needed as the existing Industrial and Provident Societies’ Acts had specifically excluded banking. The CWS went ahead nevertheless and in 1872 the forerunner of The Co-operative Bank began trading as “a loan and deposit business of doubtful legality”17 until the law was finally changed in 1876.
Although The Co-operative Bank remains an integral part of the Co-operative Group, as we shall see later other co-operative financial services have been established independently of this powerful body. For example Industrial Common Ownership Finance (ICOF18) which was set up to encourage successful common ownerships to lend money to new co-operative ventures through a revolving loan fund into which money is repaid and then lent out again. Credit Unions operate a similar system where subscriptions, deposits and loan repayments are paid in by members, who typically come together because of a shared bond, and the money is then lent only to members at advantageous rates of interest. An example is the CopperPot Credit Union Ltd19, a ‘Not for Profit’ financial co-operative, democratically owned and operated by its members, who have the common bond of being serving or retired uniformed officers and civilian staff of 20 British Police Forces.
The CWS diversified into many areas other than retailing and banking. Their activities included insurance, funeral parlours, and overseas ventures such as tea estates in what was then called Ceylon. It now had the capital available to fund new ventures, particularly in the producer co-operative sector. As supplier to the retail co-operatives, the CWS had a ready-made market for many products and this enabled members, as well as producers, to share the benefits of co-operation. Products as diverse as Co-op milk, Pioneer custard powder, CWS beds, CWS football boots and the aptly, if oddly, named Defiant radio were manufactured and retailed by and for co-operators. Such was the success of the CWS that it came to pervade working class life until the 1950’s by giving people quality, convenience, choice – and dividends. Indeed, ‘the divi’ was an important financial boost for many families who used it to fund Christmas celebrations, buy Whit Sunday and other holiday outfits, or to cope with unforeseen expenses and emergencies.
13 http://news.bbc.co.uk/hi/english/audiovideo/programmes/working_lunch/education 26 September 2001 Lunch Lesson Four - Cooperatives
14 http://www.milkmarque.co.uk/
15 http://www.snaithsalad.fsnet.co.uk/Leigh Morris
16 See, for example, http://www.lincolnco-op.com/ or http://www.yorkshireco-op.co.uk/
17 Bonner, A. (1961, Revised edition 1970) British Co-operation, Manchester: Co-operative Union Ltd. pp106.
18 http://www.icof.co.uk/
19 http://www.copperpot.org.uk/
