FABIAN TRACT No. 20 3 

The JX.sed for Federal 
~organisation ·tn the 
Co-operatilJe M olJement 


BY 

SIDNEY WEBB 

PUBLISHED AND SOLD BY 

THE FABIAN SOCIETY 

By arrangement with the Trustees of the Sara 
Hall Trust, in commemoration of the life and 
work of Robert Owen 

PRICE TWOPENCE 

LONDON: 


THE FABIAN SociETY, zs, ToTHILL STREET, WESTMINSTER, S.W. 1. 

FEBRUARY, I923. 


BASIS OF THE FABIAN SOCIETY. 

To BE SIGNED BY ALL MEMBERS. Adopted May 23rd, Igig.. 

The Fabian Society consists of Socialists. 
It therefore aims at the reorganisation of Society by the emancipation of Land 
and Industrial Capital from individual ownership, and the vesting of them in the 
community for the general benefit. In this way only can the natural and acquiredadvantages of the country be equitably shared by the whole people. 
The Society accordingly works for the extinction of private property in land, 
with equitable consideration of established expectations, and due provision as to the 
tenure of the home and the homestead ; for the transfer to the community, by constitutional 
methods, of all such industries as can be conducted socially ; and for the 
establishment, as the governing consideration in the regulation of production, distribution 
and service, of the common good instead of private profit. 
The Society is a constituent of the Labour Party and of the International Socialist 
Congress ; but it takes part freely in all constitutional movements, social, economic 
and political, which can be guided towards its own objects. Its direct business is 

(a) the propaganda of Socialism in its application to current problems; (b) investigation 
and discovery in social, industrial, political and economic relations ; (c) the 
working out of Socialist principles in legislation and administrative reconstruction ; 
(d) 
the publication of the results of its investigations and their practical lessons. 
The Society, believing in equal citizenship of men and women in the fullest 
sense, is open to persons irrespective of sex, race or creed. who commit themselves 
to its aims and purposes as stated above, and undertake to promote its work. 
The Society includes :


1. 
Member'!. who must sign the Basis and be elected by the Committee. Their Subscriptions are 
not nxed ; each Is expected to subscribe annually according to his means. They control 
the Society through the Executive Committee (elected annually by ballot through a 
postal vote), and at its annual and other business meetings. 

II. Associates, who sign a form expressing only general sympathy with the objects of the Society
and pay not less than 10s. a. year. They can attend a.ll except the exclusively members' 

meetings, but have no control over the Society a.nd its policy. 

Ill. Subscribers, who must pay at least 5s. a year, and who can attend the Society's Ordinary 

Lectures. 

The monthly paper, Fabian News, and the Tracts from time to time publishedin the well-known Fabian Series, are posted to all these classes. There are convenient 
Common Rooms, where light refreshments can be obtained, with an extensive 
library for the free use of members only. 

Among the Society's activities (in which it places its services unreservedly at 
the disposal of the Labour Party and the Local Labour Parties all over the country,
the Trade Unions and Trades Councils, and all other Labour and Socialist organisations). 
may be mentioned : 

(i.) Free lectures by its members and officers;

(ii.) The well-known Fabian Book-boxes, each containing about three dozen of the best books on 

Economics, Polltics and Social Problems, which ca.n be obtained by any organisation of 

men or women for 15s. per annum, covering an exchange of books every three months ; 

(iii.) Answers to Questions from Members of Local Authorities and others on legal, technical or 

polltica.i matters of Local Government, &c. ;

(iv.) Special subscription courses of lectures on new developments in thought;

(v.) Economic and social investigation and research, and publication of the results. 

Lists of Publications, Annual Report, Form of Application as Member or Associate, and 
any other Information can be obtained on application personally or by letter to the Secretaryat the above address. 


The Need for Federal Reorganisation. 

Bv SmNEY WEBB. 

T
T
HE Co-operative Movement in Great Britain, unlike that in 
some other countries, has always displayed a yearning for 
federal organisation. British co-operators, it has been said, 
have a "genius for federation." The early societies of a hundred 
years a~o were always forming short-lived federations of one sort 
or another. Co-operative congresses and conferences, attended 
by delegates from separate co-operative societies, either from 
the neighbouring counties or from all England or Scotland, seem 
to have been as well known, if not also as frequent, in the reignof George the Fourth as they are in that of George the Fifth. The 
Rochdale Pioneers had not been established many years before 
they and the other Lancashire societies had created almost a network 
of local federal bodies, for carrying on flour milling, for instituting 
joint bakeries, and for conducting various branches of 
manufacturing production ; even if we do not include as federation 
the establishment, with no little co-operative support, of cotton 
mills with £r shares-the so-called "Working Class Limiteds." 

The Uprise of the Wholesales. 

And Lancashire had no sooner demonstrated the success of 
the local co-operative society than we see the Rochdale Pioneers 
themselves making attempt after attempt at the larger federation 
which has, from ·r864, grown into the wonderful Co-operative Wholesale 
Society, with its world-wide organisation of merchanting,
manufacturing, growing, extracting, distributing, and bankingrooted in a dozen different countries, and dealing in literally hundreds 
of millions of ponnds annually. The Scottish societies made the 
same move five years later ; and to-day Scottish federation, 
measured in the trade per head of population served by the Scottish 
Co-operative Wholesale Society, seems to be proportionately 
greater even than that of England and Wales. 

The Co-operative Union. 

But federation on the trading side is, of course, only part of 
the tale. In Great Britain, unlike some other countries, co-operators 
have divided their federal activities into those that. we maycall material and those that we may regard as spiritual. From 
r869 onward the whole movement in the United Kingdom has been 
federated in what was called at first the Central Board, and became 
in 1872 the Co-operative Union, for the protection and promotionof the propagandist and the educational functions of the Movement, 

B 


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and for the solution of its legal and constitutional problems. 
And what with the activities of the ceDtral organs of the Co-operative 
Union, and the incessant local and district and sectional conferences 
and meetings of the eight separate sections into which 
the Union is divided-toe-ether with those of the Wholesale Societies, 
and those, again, of th; different regional federations for bakingor jam-making, or to maintain a laundry or a drapery emporium-there 
can be small doubt that the British Co-operative Movement 
is the most extensively and the most variously federated " Movement 
" for any purpose whatsoever, in any part of the world.* 

The Advantage of National Federation. 

How helpful to every co-operative society, and how useful 
to the Movement as a whole, have been, at least, the National 
Federations, we may partly estimate by contrasting, with our 
own continuous and relatively rapid growth, the backward condition 
of the Co-operative Movement in countries like the United 
States or Canada, Australia or New Zealand, or in other ways,
India and Japan. In all these countries co-operative societies 
have been, during the past half century, started by the hundred, 
and in some of them even hy the thousand, only to wither and die. 
Nevertheless, in all these countries co-operative societies exist 
to-day, sometimes actually by the thousand, struggling with their 
local difficulties. But, for one reason or another, the societies 
in these countries never succeeded in the past in forming a durable 
federation of national scope, which could weld together the scattered 
local societies into a powerful organisation, make itself felt in the 
national consciousness, and promulgate effectively throughoutthe length and breadth of the land the fact that co-operative societies 
were actually in existence in hundreds of places, and mightexist in every place if only people could be made aware of them. 
The result is that, even to-clay, when more or less of belated federal 
organisation is being established, there are in existence, in certain 
great countries, many isolated co-operative societies without there 
being much of the nature of a Co-operative Movement. Even in 
France and Belgium, where co-operation has become relatively 
strong, the Co-operative Movement as a whole does not succeed, 
I think, in sufficiently impressing itself on the national consciousness, 
because its federal organisation is still much less developed 
than that of the local societies. We in Great Britain have benefited 
enormously by the strength and manifold activities of the 
Co-operative Union and Co-operative Wholesale Societies. 

* It is curious that, of all the learned professors who have, during the 
past half century, written treatises on the subject of Federal Government, 
none have ever thought it worth while to study the extensive experience of 
the working of federal iJ;tstitutions in a modern Democracy, which the British 
Co-operative Movement affords. 

5 


The Creation of a Co-operative Consciousness. 


It is not merely that new societies have been started, infant 
societies nursed through their years of difficulty, weak societies 
protected, and helped to solve their legal or i1nancial or administrative 
problems, and a considerable amount of public. advertisement 
obtained for all societies. What the federal bodies specially 
achieve is the creation of a co-operative consciousness. They giveto Great Britain, to some small extent, a co-operative atmosphere. 
They make at least some progress in converting the four million 
co-operative households into citizens of the Co-operative State. 
To Abraham Greenwood and J. W. T. Mitchell, and others who 
in painful years of assiduous service built up the C.W.S. ; to Sir 
William Maxwell ann other leaders in the Scottish C W.S. ; and 
above all to Edward Vansittart Neale, followed by J. C. Gray,
for untiring devoted service in patiently creating the organisationof the Co-operative Union, every British co-operator owes unmeasured 
gratitude. 

The Shortcomings of the Federal Organisation. 

But with the great expansion of the British Co-operativeMovement, alike in member:::hip and in magnitude of its business 
transactions, in the range and variety as well as in the extent of 
its activities, it has become a matter for complaint among co-operator 
that the federal organisation is to-day in some respects not quite 
equal to its great task. I need only quote as an instance of this 
dissatisfaction the resolution passed, with virtual unanimity, at 
the Congress of I9I4 : 

" That this Congress, recognising the importance of efficiency and 
economy in its administrative work, and having a strong conviction that 
the progress of the Movement might be greatly accelerated, calls for 
a General Survey of the whole field of co-operative activities from its 
three main features, viz. : education, production, and distribution; 
and having due regard to their relative value, assign to each one its 
special sphere of action, and thereby give to the Movement generally that 
solidarity and flexibility so ob,;iously lacking at present ; and therefore 
instructs the Central Board to consider and report in terms of this 
resolution." 

In moving the resolution, it is reported, the Secretary of the 
Northern Section 
" pointed out that many co-operators were much dissatisfied with 
the rate of co-operative progress, and especially so because of the rapidgrowth of capitalist combinations. It was evident that the Co-operative 
Movement ought to be more closely organised, and that greaterefforts should be made to spread co-operative ideas and increase co-operative 
trade. The facts proved that there was much overlapping between 
the various types of co-operative society engaged in production, which 
ought to be avoided in order that greater progress might be made in 
production. The whole field of co-operative activity ought to be surveyed 
and new plans devised for co-ordinating and unifying the work of 
the Co-operative Movement." 


6 


The work of the General Survey Committee, which was greatlyinterfered with by the war, extended over a wide field; and we do not 
need here to do more than explore the position of the federal institutions 
of the Movement.* 

The Constitution of the C.W.S. 

With regard to the English Co-operative Wholesale Society-
governed by its full-time, salaried Board of 32 directors, responsible 
to a quarterly meeting of delegates elected by the Committees of 
Management of the 1,200 constituent societies-which quarterlymeeting is held simultaneously in eight parts in as many different 
towns, with a general assembly at Manchester a week later, at 
which the votes previously cast at all the local meetings are broughtforward and added to the vote of the general assembly, delegates 
attending whichever of these nine meetings that they choose--the 
dissatisfaction has taken the form of criticism, not so much of the 
constitution as of what is deemed an undue expansion of activities 
in certain directions, and of the relation in which this essentiallybusiness organisation stands to the remainder of the federal 
machinery. 

The constitution of the C.W.S., indeed, follows so closelv that 
of the individual stores that it affords little scope for criticism 
by their members. The final word rests with the quarterly meetings 
of delegates representing all the societies which are members. 
There is (unlike the practice of the Trades Union Congress) no 
"block vote." The number of delegates to which each society 
is entitled is definitely fixed, and each delegate casts a single vote. 
Down to 1921, the rule was for one delegate to be sent for everyfive hundred members. Almost the only criticism of the constitution 
related to this point, it being alleged that societies ought to be 
represented, not in proportion to their membership, hut in proportion 
to their purchases from the C.W.S. as had long been the 
practice of the Scottish C.W.S. In 1920-21 the principle of the 
Scottish C.W.S. was adopted by the English C.W.S., the new rule 
providing that, in addition to one vote as a member, each society 

* The General Survey Committee presented four reports to Congress,
three of which are included in the Annual Reports for 1916, 1917 and 1918; 
the fourth (together with a reprint of the third) being issued to the Congressof 1919 as a separate document. The first report does not seem to have 
been published separately. The Second Interim Report and The Third Interim 
Report are now published by the Co-operative Union. There is no edition of 
all four reports together. See also the pamphlets, A Review of the Report on 
Co-operative Education, by F. Hall; A Review of the Trade Report of the 
Survey Committee, by F. Hall; The Co-operative Survey Committee and its 
Work ; and The Report and Recommendations of the Survey Committee in regard 
to the Constitution of the Co-operative Union, by T. Horrocks (all published bythe Union) ; and the examination of the whole position in The Consumers' 
Co-operative Movement, by S. and B. Webb, 1921. 

7 

should have a second vote for the first £6,ooo of purchases in the 
preceding year, and an additional vote for every further £rz,ooo 
of purchases.* 

The Constitution of the Co-operative Union. 

The Co-operative Union (and from this fact some of the presentdifficulties may have arisen) has a wider and more loosely defined 
constituency than either the English or the Scottish Co-operativeWholesale Society. The Union, by its rules, is a federation, not 
of consumers' co-operative societies only, but "of all indushial 
and provident societies, joint-stock companies, and other bodies 
corporate, which shall be admitted " to membership by its own 
executive organ. At the date of its formation, and for many years 
afterwards-even now the confusion lingers-there was no clear 
idea as to what was meant by Co-operation. The door was purposely 
left open for the inclusion of all sorts of societies deeming 
themselves "Co-operative," whether constituted of consumers 
wishing to supply their own needs, or of producers aiming at manufacture 
for sale to others ; whether distributing their inevitable 
surpluses or profits among the members as a rebate or dividend 
proportionate to their several purchases, or as a bonus proportionate 
to their wages for work done, or as interest or dividend proportionate 
to their invested capital ; whether composed of householders 
combining in order to reduce their own expenditure on the 
necessaries of life, or of agriculturists seeking by association in partof their operations to increase the profits of their individual enterprises, 
or by manufacturing craftsmen intending to share among 
themselves the proceeds of the product of their combined labour. 
Societies of all these and other kinds, styling themselves Co-operative, 
were admitted from the outset and continue to be admitted ; 
but the common type of consumers' co-operative society, returningits surpluses to its members by the well-known " dividend on 
purchases," has increased out of all proportion to the others, and 
now contributes over 99 per cent. of the affiliated membership 
and the annual revenue of the Union. 

* The Scottish rule was as follows ·" 
Each society shall have one vote in virt ue of being a member of 
the society, one additional vote for the first one thousand five hundred 
pounds worth of goods purchased, and one other vote for every complete 
three thousand pounds worth of purchases from the Society thereafter. 
The representation of each society to be based on its net purchases for 
the quarter immediately preceding any general meeting." 
The movement within the English Wholesale Society to adopt the 

Scottish principle of votes according to purchases, which carried its way in 
rgzo, was due to some of the more loyal societies objecting to the electoral 
power of societies with large memberships but with comparatively small 
pur~hases. In July, rgzo, the rule of the Scottish Co-operative Wholesale 
Soctety was altered so as to give a maximum of 50 votes to the society havingthe largest net purchases for the immediately preceding quarter, all other 
societies to be entitled to appoint delegates in the same proportion . 


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In the complicated constitution with which t.he Union has 
endowed itself we may trace the influence, not only of the sturdy 
autonomy on which every co-operative society insists, and the 
intense localism of the Movement, but also of the ingenuity by which 
a national organisation has been created out of somewhat refractorymaterials-an ingenuity which has resulted in a veritable labyrinthof local associations and conferences, of sectional and central boards, 
of joint committees and joint boards with other organisations,
through which the inquirer wanders bewildered. The societies 
admitted to the Union are divided into eight geographical sections, 
according to their localities,* and the committees of managementof all the societies in each section annually elect the members of 
what is alled the Sectional Board. Even the method of electing 
these Sectional Boards is not uniform, the societies in each of the 
sections having been virtually allowed to choose their own plan. t 
Additional local autonomy is secured by the allocation of all the 
societies into maller districts, each of which forms a " Conference 
Association," electing its own local committee, which arrangesperiodical conferences of delegates from the societies in the district 
and organises the propaganda work. All the funds of the Sectional 
Boards and most of those of the Conference Associations are provided 
by the Union itself, the total amount to be spent in each 
case being annually limited by specific resolution. 

The responsible executive of the Union is found in the Central 
Board, which is made up of all the members o{ the seven British 
Sectional Boards, together with two representatives chosen by the 
Irish Sectional Board. This Central Board of seventy-six members 
has hitherto normally met twice a year, immediately before and 
after the annual Congress, but in recent years two or three additional 
meetings have been held. 

With so cumbrous an organisation much of the current administration 
has necessarily to be left to smaller committees. The 
chief of the e is styled the United Board, which consists of fifteen 
members appointed annually in different proportions by the eightSectional Boards. Subject to ratification or reversal by the 
Central B(')ard, and to any resolutipn of the Congress itself, it is 
the United Board, meeting about six times a year, which controls 
the funds ; appoints and dismisses the officers, fixes their salaries, 

* The Union extends to the whole United Kingdom ; and the Irish 
societies, which were at 011e time included in the Scottish section have now 
again been organised as an Irish section. ' 
t The Irish, Scollish, Midland, Western Southern and outh-Western 
sections elect their Sectional Boards as wh~les. The' Northern section is 
divided into seven electoral divisions, each comprising one or more " Conference 
Associations," and each electing one member to the Sectional Board. 
The North-Western section is similarly divided into sixteen electoral districts 
each choosing one member, but also it elects as a whole four "sectional 
representatives " to its Sectional Board. 


9 

and directs their work ; determines what are the powers of the 
several Sectional Boards; authorises publications, and appointscommittees and sub-committees. One of these latter, the Office 
Committee, deals with current business; but even this is composed 
of representatives from all the eight Sectional Boards, only one 
or two of whom are resident in or near Manchester; and it has 
necessarily to rely on a finance and other executive sub-committees. 
The salaried staff of the Union, which is by this elaborate machineryof committees kept down to a minimum, consists of the General 
Secretary. the Assistant General Secretary, the Educational Secretary, 
the Publications Manager, the Adviser of Studies, the various 
legal consultants, and the recently added Labour Adviser, with a 
quite exiguous force of office subordinates. 

The supreme authority of the Union is the Co-operative Congress, 
meeting annually, and composed of (a) all the members for 
the time being of the Sectional Boards; (b) representatives of all 
the Conference Associations ; and (c) delegates of all the societies 
belonging to the Union and subscribing not less than the sum 
prescribed.* Representatives of various " auxiliary societies," 
such as the men's and women's Co-operative Guilds, are also 
invited to the Congress, but without the right to vote, or even 
(except by permission) to speak; and there are, in addition, 
"fraternal delegates " .invited from the Trades Union Congress 
and other organisations. The principal business of the Congressis to receive and adopt the annual report laid before it by the 
Central Board, but any constituent society is entitled to send in 
resolutions and amendments which are circulated to all the societies. 

Where the Federal Machinery Fails. 

(a) IT IS CUMBERSOME AND DILATORY. 
The Co-operative Union has been of such great assistance to 
the Movement, and its half a century of work has been of so much 
value, that there is a natural reluctance to assume a critical attitude 
even with regard to its constitution, lest the critics should seem to 
be re:f'l.ecting on the self-sacrificing labours of those by whom the 
Union is directed. It is felt, however, that they are strugglingwith machinery which, besides being exceedingly costly, renders 
much of their labour vain. "The Co-operative machinery of 
to-day," said Mr. J. J. Dent, a veteran of wide experience in the 
Movement, " is much too slow and cumbrous. That ' gingermeeting' at Derby, for instance, shows that the Co-operative Union 
is not considered alert enough, not quick enough. Bringing subjectsbefore the Central Board, then referring them to the sections or 

• For " distributive " societies of the common type, a contribution of 
zd. per member per annum has latterly been prescribed by rule. Other 
societies have paid a sum fixed by the Central" Board. 

IO 

committees, then back again to the board-well, people lose all 
interest in the matter before it gets to Congress ; and should there 
be any objection, the matter is adjourned by Congress for another 
year-and there is nothing done. It takes all the heart and the 
enthusiasm out of people who are out for reform."* 

(b) THERE IS OVERLAPPING AND CONFLICT. 
On this point what is chiefly complained of is the relation in 
which the C.W.S. and the Union stand to each other, and to various 
subsidiary organisations. To take as an instance the Co-operativePress. The Movement itself publishes regularly a dozen different 
periodicals, but they are managed by four different bodies; they 
are edited separately with the very minimum of mutual consultation 
; and they are distributed to the same set of societies at 
unnecessary cost in separate parcels from different offices, at different 
dates, and upon varying conditions. Or take the function of 
Propaganda, especially in and through the constituent societies, 
which the Co-operative Union organises in close connection with 
"Education," whilst the C.W.S. is simultaneously promotingno small amount of it in connection with "Advertising," with the 
least possible concert between their several activities. A third 
example of imperfect co-ordination is afforded by the difficult 
problem continuously presented by the conditions of Co-operatiYe 
Employment and relations with the Employees' Trade Unions. 
The Co-operative Union has had to construct an elaborate organisation 
to enable the constituent societies to act together. The 
fact that the C.W.S. has its own separate organisation for dealing 
with the same Trade Unions in respect of the same problems has 
resulted in conflicting policies, inconsistency of action and some 
discomfiture. These three examples do not exhaust the list. 

(c) 
IMPORTANT WORK IS LEFT UNDONE, AND OPPORTUNITIES 
ARE MISSED. 
Whether because of the overlapping, or in spite of the redundancy 
of effort thus revealed, it is complained by not a few co-operators 
that both Propaganda among non-members and the Organisation 
of new societies or branches is imperfectly directed and 
insufficiently attended to ; that in particular no systematic attempt 
is being made to cultivate or at least to colonize the "co-operativedeserts " (which, after a generation of complaint, still remain 
even unmapped); that the literary output of the Movement is far 
from being commensurate with a membership equivalent to a 
quarter or a third of the whole nation ; that the work of education 
among the members (though greatly invigorated in recent years) 
is by no means adequate to the need ; that more requires to be 
done by vigorous action from the centre to stir up societies that are 
stagnant alike as regards trade and social life, and to deal with the 

• Co-oper~ttive News, rgth March, 1921. 

II 

apathetic section of the membership which is everywhere uncomfortably 
large ; whilst there is grave danger that the new forms 
of competitive trading will encroach seriously upon the domain 
already won by co-operation if the Movement is not more effectively 
co-ordinated. 

The Proposed Remedy of Amalgamating the 
Co-operative Union with the C.W.S. 


Now, so grave is the discontent with the federal machinery 
in some quarters that two drastic reforms have gained support.
One of these involves the complete fusion of the two great federal 
bodies into a single Co-operative Federation-in effect, the swallowing 
up, by the English and Scottish Wholesales, of the Co-operative 
Union. 

This view has been forcibly put to me by a co-operator of wide 
experience, whose words I will quote. 
"The present constitution of the Co-operative Movement," he 
writes," is unworthy of retention and should be scrapped. Itis unwieldly 
unsure, and dilatory. Divided between two authorities, neither of 
which is really authoritative, confusion arises which leads to impotence.
Consequently, the Movement, although based on principles of a sounder 
constructive nature than those of the Trade Union Movement, is less 
effective in national affairs, simply because it has no central authoritywilling to take the responsibility of announcing opinions, or taking sides 
promptly, in any cris1s which involves the interests of co-operators, and 
therefore the whole body of consumers. 
" There should be only one federation of societies for all purposes-
trading, educational, advisory, &c. With suitable adjustments, the 
Co-operative 'Vholesale Society (as is now the practice in other countries)
could become the central authority, and would be able to produce far 
better results than the Co-operative Union is able to obtain. 
''The Board should be enlarged to forty members, eight of whom 
would be specially elected for 'educational' work-that is, the work 
now being only half done by the Co-operative Union. They would be 
a sub-committee of the C.W.S. Board, having the right and duty of 
attending the full Board meetings to deal with all matters. Their 
function as a sub-committee would be to s1t as an executive for the 
educational side, and act towards an elected, voluntary Advisory Council 
in similar relationship to that of the present United Board and the 
Central Board. Tht>y would take the place of the proposed new executive. 
"The present. interim quarterly meetings of the C.W.S. could be 
devoted to ' Co-operative Union ' matters, which would not interfere 
with the trading of the C.W.S. Each of the eight executive personswould act as chairman of one of the divisional meetings, and would be 
supported by the appropriate ' elected ' representatives.
" The executive would present a budget each year giving an estimate 
of probable expenditure. They would provide for a much enlargedpropaganda by public meetings and canvassing, by a w1der publicitythrough the publication of daily and weekly newspapers, and an extension 
of education by all methods now known. There is no doubt 
that with a live executive the annual budget would shortly exceed 
£roo,ooo, and would also attract to the work a good deal of the retail 
societies' educational funds, now totalling more than £roo,ooo a year.
"This educational side could take over the auditing practice of the 

C.W.S. trading department, and thus be placed in a position to exercise 

I2 

a much closer supcrvi~ion and much greater authority over weak societies 

than is now possible to the Co-operative Union. 

"This fusion of forces at headquarters would have considerable 

effect upon the local societies. The example and the added authonty

could be used to bring together into ' District Societies ' numbers of 

small concerns which are of little benefit fmancially, educationally, or 

ethnically to their members, or to the general movement." 

So drastic a change does not commend itself as either desirable or 
practicable. It is true that co-operators in Sweden and Switzerland, 
Latvia and Lithuania, have preferred to combine in one their federal 
organisation for wholesale trading and that for propaganda and 
organisation, education and legal aid. It is, however. not altogetherclear that the latter functions have been even as effectively dealt 
with in these countries as by our separate Co-operative Union. 
We may feel uncertain whether, in England, what may be called the 
spiritual side of the Co-operative Movement would be best promotedby a salaried Board of Directors, concerned primarily with business 
interests. The difficulties in the way of such an amalgamationseem, however, to make it guile impracticable, even if it were 
desirable. In the first place, the great organisations which it is 
proposed to fuse in one have different constituents and different 
areas. Unlike the wholesale societies, the Union extends to the 
whole of the United Kingdom. It is hard to say which would be the 
more objectionable and the more difficult : the amalgamationinto one of the English, Scottish and Irish Wholesale Societies : 
or the dissolution of the Co-operative Union into three fragments, 
to be separately merged into the three national bodies. Moreover, 
excellent as the present quarterly delegate meetings of the Wholesales 
may be as business critics, it may be doubted whether theywould be satisfactory as the final authority for all purposes. On 
the other hand, the idea that the English and Scottish Co-operative 
Wholesale Societies, or their quarterly ch•legate meetings, or the 
Irish federal organisations, would consent to amend their rules so 
as to merge themselves in the Co-operative Congress, representing 
the co-operators of the United Kingdom, and make their business 
enterprises subject to the votes of "Congress week," seems 
fantastic. 

The Proposed Remedy of an All-Embracing National 

Amalgamated Co-operative Society for each Kingdom. 

An even more revolutionary proposal was once put forward 
by the late ]. C. Gray, the devoted Secretary of the Co-operativeUnion itself, with whom I had the advantage of many talks. t 

• Given in The Constmters' Co-operative Movement, by S. and B. \Vebb, 
1921, pp. 153-4, where the proposal is examined. 
t SPe Annual Report of Congress of 1906 ; The Proposed .Vational Society, 
by T. W. Mercer (Co-operative Union), 1920; The Consumers' Co-oper41il•e 
.Vloueme11t, by S. and B. \Vebb, 1921, pp. 73, 307-II. 


13 

He was so much impressed, not only by the overlapping and conflict 
in the federal activities of the Movement, but also by the growth 
of a like disease among the 1,3~0 societies themselves, and by the 
stagnation and apathy more or less prevalent in all of them, that 
he urged the merging of the entire Movement, from the C.W.S. 
down to the smallest village store into one gigantic National Cooperative 
Society, covering the whole of England and Wales, and 
having more than six thousand branches from Berwick-on-Tweecl 
to Penzance. Similar amalgamated National Societies could deal 
with Scotland and Ireland; and be linked up by any necessary 
joint committees for common purposes (as at present between the 
English and Scottish Wholesale Societies). 

Such a national amalgamated society for England and Wales, 
it was suggested, could be governed by a General Council of one 
hundred and fifty salaried and full-time members, elected by as 
many separate geographical constituencies of co-operators residing 
therein. With such a constitution, it was argued, the Co-operative 
"State within the State," could:


{I) Secure combined action and end all isolated and competitive 
activities hindering the progress of co-operation ; 

(z) Solve the problem of overlapping by ending all competition 
between neighbouring co-operative societies ; 
(3) 
Establish a uniform rate of dividend throughout the 
whole Co-operative Movement; 
(4) 
Prevent the loss of members caused by their removal 
from one part of the country to another ; 
(S) 
Encourage co-operative production by concentrating the 
purchasing power of the Movement at one centre; 
(6) 
Establish one code of rules and one system of account-
keeping throughout the whole Movement; and 
(7) 
Give the National Society power to extend its operationsuntil it covered the whole field of human activity and 
became a complete Co-operative State.* 
Now, it is impossible to deny the attractiveness of J. C. Gray's 
vision of highly organised co-operative efficiency. So deeply are 
co-operators of to-day impressed with the present shortcomings of 
their federal institutions, that, at the Bristol Congress of 1920, 
when this proposal of 1906 was revived, it met with considerable 
favour ; and I have been told that an actual majority of the delegates 

eemed, at the time, disposed to accept it as the way out. 

• It is, perhaps, not always realised that any such National Co-operative 
Society must necessarily take over, not only the wholesale trading and banking, 
but also (by absorbing all the present constituent societies o1 the Cooperative 
Union) all the functions of that body. The fusion would be complete. 

I4 


To speak plainly, however, I regard this idea of a National 
Co-operative Society, which has been cropping up since rgo6, as 
being detrimental to any clear vision of what is desirable and 
possible, and as diverting intellectual attention from any solution 
of co-operative problems. It is, in the first place, hopelessly impracticable. 
Not a century of propaganda would persuade either 
the great self-governing co-operative communities of Leeds or 
Plymouth, or such intensive little local democracies as are found 
at Desborough or Leek, to surrender their autonomous self-government, 
their freedom of initiative, and their pride in their own 
achievements. Any such abandonment of independence would 
be fatal to the Movement as a whole. Nor can I see any prospectof advantage from such a revolution. Whatever vigour and 
mechanical efficiency in the common trading departments mightbe brought about by a gigantic national society, the very loss of 
variety and of initiative, and the total destruction of emulation 
among the local groups of co-operators, would positively hinder 
co-operative progress, and actually delay the extension of consumers' 
co-operation to those " new fields of human activity " 
which J. C. Gray had in view. But the greatest disaster would, 
in my judgment, be the inevitable intensification of the most 
serious shortcoming of the present co-operative democracy, namely, 
the apathy of the average member. It is, as is well-known, difficult 
enough to arouse him to anything like active citizenship in what 
he knows to be his own society, dealing day by day with what he 
recognises as his own concerns. His practical interest, either in 
the gigantic C.W.S. or in the far-off Co-operative Union, is of the 
slightest. To the average member, whether of to-day or of tomorrow, 
the National Co-operative Society would seem as remote 
as does at present the Union or the C.W.S. The experiment of 
the People's Co-operative Society, which the English C.W.S. started 
a quarter of a century ago in the Metropolitan area, and that of the 
ten or twelve retail stores now being run by the Scottish C.W.S., 
are both significant of the deadening effect of an absence of local 
self-government. It is true that the advocates of a national society 
contemplate the existence of local advisory committees for all the 
six thousand branches; but the experience that has been gained 
of branch committees, divorced, as they must necessarily be, from 
financial responsibility, demonstrates the impossibility of entrustingthem with effective powers, not merely in connection with the 
general trading policy, but even with regard to appointment and 
control of the local staff or the ordering of supplies, the initiation 
of new developments, or the local policy as to prices or dividends.* 

A Parallelism of Federation. 

Ifwe can neither merge the Co-operative Union in the Co-operative 
Wholesale Society nor yet merge both Wholesale Society and 

* Sec this point discussed in The Constitutional Problems of the Co-operatil1e 
Society by Sidney Webb, 1922. 

IS 


Union, together with their constituent societies, in a National 
Amalgamated Co-operative Society, along what line should we look 
for a reform of our federal institutions? I have no sort of claim 
to offer any advice. But my membership of the Co-operative Movement 
dates, I believe, from about 1878. I have successivelybelonged to not a few societies of varying fortunes. I have given 
some study to the expPrience of the Movement in several different 
countries. And if I venture now to make some suggestions for the 
consideration of my fellow co-operators, I beg them to believe 
that I do so merely in order to set going a discussion which mayresult in something better being evolved. My main suggestion is 
that remedy is to be found in a much stricter parallelism of federation 
than we have yet put in operation. 

In a frank and cordial acceptance of this principle of parallelism 
of federation, I think that more is to be gained than might appear 
at first sight. Much of the present disharmony in federal relations 
(which underlies the overlapping and the occasional conflict) arises 
from the failure of some of the leaders to get what seems to me 
the right view of the functions of the Union in relation to those of the 
other federal institutions of the Movement, notably the Wholesale 
Societies. The Central Board has suffered in the past from the 
conception that the Co-operative Union is, not one among several 
federal institutions each created for its own particular function, 
but itself the ultimate authority of the Movement. vVhether or 
not it is desirable that any such supreme authority for all purposes 
c:;hould control the co-operative societies, wholesale as well as retail, 
is an open question. What is certain is that no such supreme 
authority has yet been established and is not at all likely to be 
established. · The representatives whom the societies send to the 
gatherings of the Co-operative Union, whet.her to the United Board, 
to the Central Board, or to the Congress itself, may, if they like, 
express their views about any part of the Co-operative Movement, 
but their decisions are binding only in respect of that part of the 
01 ganisation which is paid for by their contributions to the Union, 
namely, the constitution and rules, the premises and publications,
the committee and officers of the Union itself. Similarly, the 
representatives, whom not quite thE' same group of societies send 
to the quarterly meetings of the English and Scottish Co-operative 
Wholesale Societies respectively, may say what they like about 
other bodies; but their votes are authoritative only with regard 
to the particular Wholesale Society to which they belong and to 
its activities. Nor can this actually existing duality be done awaywith by any change short of a legal amalgamation of the Co-operative 
Union and the Wholesale Societies, which, it is suggested, is 
beyond the limits of the practicable. 

The beginning of wisdom in co-operative reform is a sincere 
recognition that the work to be don"! by the federal institutions 


r6 

of the Movement is not one job, but distinctly twofold ; and that 
neither side can properly be subordinated to the other. The 
boatd of directors and the delegate meetings of eithet the English 
or the Scottish Wholesale Societies, absorbed, as the e men must 
be, in the affairs of the market-place, could not conveniently under 
take the educational and propagandist work which is vital to th 
Movement. fo'ar from minimising or subordinating these latter 
functions of the federal institutionc, what is required is greatlv 
to expand and develop them. 

In contrast with the idea of amalgamating all the federal 
functions in one gigantic body, combining in itself the existing 
powers and duties of the Co-operative Union and the Wholesale 
Societie , it seems both simpler and preferable to retain two distinct 
and parallel federations, one for the business transactions of 
the Monment and the other for its educational and propagandi~t 
work. But it is vital that the two federal organisations should 
be definitely r cognised in theory and in practice, a independent of 
each other, co-equal in status and importance, and uniting, on 
equal terms, in joint committees for the management of jointdepartments. Nothing could be more unfortunate than the present 
position, in which, whilst the Co-operative Union claims to 
be the all-inclusive " premier body," summoning an annual Congress 
which regards itself as being, in some undefined way, the 
final authority for the Movement as a whole, the Engli h Co-operative 
Wholesale Society wields, in fact, immeasurably the greater 
power and influence, and necessarily holds itself to be accountable 
only to its own quarter!~' delegate meeting ; whilst the Scottish 
Co-operative Whole ale Society, having an essentially differenL 
constituency. naturally ignores any suggestion of sllbordination. 
The first step towards the neces ary reorganisation of the federal 
institutions of the Movement seems to he a full and frank recognition 
of their necessary parallelism. Incidentally, it is indi~pensable 
that the Movement sho1.,1ld regard them as equal in status 
and in the importance of their several functions ; and that it 
should accord to the directors and officers of the Co-operative Union 
salaries and amenities in every respect equal to those that theywould be enjoying if they were disc;harging duties of like responsibility 
and burden omeness in the service of the Engli'ih C.W. 

The General Survey Committee Recommendations. 

The General Survey Committee accepted as inevitable the 
continuance of separate federations; and suggested certain chanf..ts 
in the con titution of the Co-operative Union. But I do not feel 
sure that the ommith:e whole-heartedly accepted what I ha\'e 
called the paralleli m of the federations. The Committee recommended 
the establishment of a salaried, full-time board of director 
for the Co-operative Union, consisting of eight members, one being 


IJ 


elected by each of the existing eight Sections; a proposal subsequently 
amended to a board of five members only.* This recommendation 
seems to have met with general approval, though it 
was referred by the Scarborough Congress of 1921 to the Sections 
for further consideration, and it may be assumed that it will in due 
course be adopted. But though the Committee suggested entrusting 
full executive powers to the salaried Board of Directors, it could 
not bring itself to cut at the root of the present cumbersomeness 
and dilatoriness of the Union's management. The Committee 
could not see its way to get rid of the hampering machinery. It 
proposed to retain the present cumbrous Central Board of nearly 
seventy members, and even to add to it a no less cumbrous educational 
committee ("National Council of Auxiliary Bodies"). It 
is difficult to see the reason for such expensive adjuncts to the 
board of directors, which cannot but tend to enfeeble the executive, 
create delay, and involve no inconsiderable cost for the travelling 
expenses of the members. Probably it is not generally realised 
that every meeting of such a committee would cost several hundred 
pounds. 

A Twin Federation with Joint Committees. 

Now I do not know whether it will be thought fanciful on my 
part if I suggest-seeing that what it is vital to secure, in the pendingconstitutional re-organisation, is not this or that change of machinery-
in either of the parallel federations, but a unity of spirit in their 
mutual relations-that there would be a positive advantage in 
getting identity of form. If the Movement is to eliminate the overlapping 
and conflict that from time to time exist in its federal 
activities, and if it is, bv harmonious co-ordination, to raise these 
activities to a higher po\ver, there is no surer way of doing it than 
by making the two parallel organisations actually into a Twin 
Federation. By this I mean effecting such alterations in the constitution 
as would make each organ of the one federal body correspond 
as nearly as possible with a similar organ of the other federal 
body. With such a twin constitution, harmonious relations and 
cordial joint action-perhaps under Joint Committees on the 
subjects of common interest-would be. to say the least, greatlyfacilitated, and, as we may hope, actually promoted and ensured. 

A Constitution for the Twin Federation. 

Thus, I should be inclined to propose a close assimilation of 
the constitution of the Co-operative Union to that of the VVholesale 
Societies. Instead of continuing the cumbrous Central Board 
it seems preferable to make the new board of directors responsible 
to a quarterly meeting of delegates from the constituent societies, 

*For the scheme of a full-time salaried executive, presented to the 
Scarborough Co-operative Congress, see the Co-operative Union Report to that 
Congress, p. I,350. 


r8 


elected in proportion to their membership and contributions. 
This quarterly meeting might conveniently meet, like that of the 
C.W.S., in a number of separate divisions (there might be one for 
each Section, presided over by the director elected by the Section),
possibly, if thought necessary, with a general meeting on the 
following Saturday-identical propositions being put at all the 
meetings, and the decisions being made by the aggregate of votes. 

These quarterly delegate meetings of the Co-operative Union, 
which might be made in practically all respects parallel with those 
of the English C.W.S., would naturally exercise the powers at 
present vested in the annual Congress, so far as concerned the control 
of the Co-operative Union itself, its directors and officers, its finances, 
its rules, and its policy. There may be something to be said for a 
series of regional Congresses, instead of or in addition to the 
Annual Congress. But everyone will agree that the Congress.
should not only continue to be held, but should be made as influential 
and as imposing as possible, and should be led to concentrate 
attention on what are, in fact, its most important functions, 
namely, to make known the strength and progress of the Movement, 
not only to the outer world but also to its own members ; to generateenthusiasm for what must always be a national movement, with 
nation-wide and not merely sectional aims; and to serve as a discussion 
forum for the exhortations that are required, as well as for 
the ideas that emerge from time to time. The Congress is, in short, 
not a business meeting, still less a legislature. It is, and ought to 
be a gigantic sounding-board for national advertisement. The 
Congress should be definitely recognised as the Congress of the whole 
of the consumers' Co-operative Movement. It should therefore 
have no closer connection with the Co-operative Union than with 
the English and Scottish Wholesale Societies. Thus, all consumers' 
societies should deem it their duty to send delegates to Congress, 
the Wholesales as well as the Retails, and to contribute to its success 
; it should be attended by the directors of the Wholesales 
and the members of the national executives of the Men's and Women's. 
Guilds, as well as by the directors of the Co-operative Union ; and 
arrangements should be made for securing that the educational 
committees and the local guilds should share, in one or other way,
in the nomination of delegates from the local societies. Such a 

ongress might appropriately be summoned and managed by the 
Joint Committee presently to be referred to. The Co-operativeCongre s will, it is to be hoped, always be as large and, in its own 
world, as representative a gathering as the annual meeting of the 
British Association for the Advancement of Science. Like that 
meeting, it should express any opinion it may choose, for the information 
and guidance of those concerned ; but it should not 
exercise authority, or give orders to any part of the Movement. 
Like the British Association, too, the Co-operative Congress might 


do well to organise part, at least. of its discussions in sectional 
meetings, according to the subjects dealt with. 

The respective duties and functions of the two parallel federations 
of the Movement would, of course, need to be precisely defined. 
At present, those who are actively concerned in the one federation 
do not always adequately realise the importance of the other. 
To the Co-operative Union would belong, so far as federal organisation 
was concerned, the whole of the educational work (whichwe distinguish from propaganda among non-members).*

For each main department of the Union's work there might 
be a standing committee for discussion of policy, consisting of 
three of the salaried directors, together with a certain number-
possibly eight-of members elected either by the delegate meetings 
or by the several sections. The supervision and control of the 
Legal and Statistical Departments, like that of the office administration 
generally, might be entrusted, subject to the control of 
the quarterly delegate meetings, entirely to the board of directors, 
who might be left to distribute their own activities among such 
office sub-committees as are found to be required. t 

The Recognition of Duality.

There is, however, one feature in the reorganisation of the 
federal institutions of the Movement to which, as it seems to me, 
great importance should be attached. What we have to deal with, 
however much we may aspire to harmony, is not, and cannot be, 
unity. The activities of the parallel federations must remain 
distinct. Yet there are certain branches of the work which concern 
both the business federation and the educational federation ; 
and no small part of the weakness that is at present complainedof is due to a failure to recognise this duality. Neither federation 
can afford to leave these branches entirely to the other. There 
should be certain joint departments belonging both to the Cooperative 
Union and to the Wholesales, managed by joint committees 
of their boards of directors. Of such joint departmentsI see four, namely (a) Organisation and Propaganda, (b) Conditions 
of Employment, (c) Literature, Press, and Publicity, and (d) an 
entirely new one that might be designated the Department of 
Co-operative Progress. 

*It may be suggested that co-operators make a fundamental mistake 
in linking Education with Propaganda. These are two d1fferent functions, 
requiring not only different agents and different methods, but also different 
states of ntind. Propaganda goes with exaltation, self-complacency, pridein achievements, exaggeration and even boastfulness. Education demands 
humility, a sense of inferionty in face of the inexhaustible wonders and 
mysteries of the universe, a feeling that we are but picking up pebbles on 
the shore of an ocean of knowledge, and a saint-like patience with those who 
do not even recognise their own 1gnorance. It is doubtful whether a reallygood teacher can make a successful propagandist; whilst the most competent 
propagandist may fail in real education. 

t The questwn of how to organise the political activities of the Movement 
Is dealt with in a separate publication, The Co-operator in Politics, by Alfred 
Barnes, 1923. 


20 

The Joint Committee for Organisation and 
Propaganda. 


The duty of the joint committee for Organisation and Propaganda 
\>.rould be to deal with overlapping between societies, togetherwith all the varieties of " Co-operative Deserts " and of stagnation 
or arrested development, whether in particular societies or in the 
organisation of the relations among societies. Propaganda (whichshould be something distinct from the education of the co-operative 
membership) would naturally be directed by this joint committee 
in the quarters in which the needs and opportunities were 
found to be greatest. The arrangements connected with the 
annual Congress for the Movement as a whole might properlydevolve upon this joint committeP. 

The Joint Committee on the Conditions of 

Co-operative Employment. 

The need for a joint department to formulate and maintain 
a common policy for the Movement as a whole with regard to the 
conditions of co-operative employment has become very obvious. 
The conditions granted by the local societies cannot but affect the 
position of tht> Wholesale Societies, which may at present find their 
establi hn:ent'> upset in consequence of proceedings in which theyhave had no part. It is not suggested that this Joint Committee 
should impose rates of wages, or other conditions of employment, 
either on the local societies or on the !Wholesale. The jointdepartment would merelv act as the investigating agents of the 
:\fovement as a whole, bringing the information it possessed to 
the knowledge of the co-operative organisations concerned as 

mployers ; and undertaking the laborious and almost continuous 
work now necessitated by the Trade Boards and other outside 
influences affecting co-ol)erative employment. 

The Joint Committee on Literature, 

Press, and Publicity. 

In no branch of the federal work of the Movement is a greater 
unity of action more plainly necessary than in that of Literature, 
Pre s, and Publicity. The present publications of the Wholesale 
Societies and the Union should, it is urged, be placed in the hands 
of a joint department, directed by a joint committee, which mightwith great advantage absorb the existing r ational Co-operative 
~ewspaper and Publishing Company, with all its issues; and 
arrange for a -.ystematic re-organisation of the whole of the publishing 
and distribution work of the Movement. The writingand editing of additional books and pamphlets on Co-operation in 
all its phases could be taken up with great advantage. The whole 
problem of obtaining additional advertisement for the Movement, 
both of its commodities and of it ideas, needs to be grappled with. 


21 

The Joint Committee on Co-operative Progress. 

Finally, there is, as I have sought to show elsewhere,* urgentneed for the establishment of an entirely new federal department,
which has tentatively been styled "The Department of Co-operative 
Progress," which should have as its special function the constant 
watching of the progress of all the local societies, in order to 
apply stimulus and encouragement, to make known to all the 
societies the various advances that are being made by any of them, 
and to evoke the utmost possible emulation among them. In this. 
work of stimulation the Wholesales are at least as vitally interested 
as is the Co-operative Union. The Wholesales can bring to the 
question their own exceptional sources of information and their 
comparative knowledge. It has been suggested by experienced 
co-operators that it would be an advantage if the work of audit 
of the societies' accounts, so far as it can be done by the federal 
institutions, could be transferred by the English C.W.S. to this. 
joint department. It would be to this joint committee that would 
fall the organisation and development of the higher form of audit, 
the "efficiency audit," in which not merely the cash balances are 
measured and checked but all the work of the society, so that the 
results, the costs, and the expense-ratios are compared, not only of 
the several departments of each society, but also of each departmentfor different years, and even of the analogous departments of different 
societies. 

To have an Efficiency Audit of this kind will come to manyco-operators as a novel, and, in some respects, a disquieting idea. 
But I venture to ask them to give it consideration. It is importantnot only because it seems to remedy some of the present shortcomings 
of the Co-operative Movement, but because it affords an 
opportunity to the Movement to make a further advance on the 
Capitalist System. We all know how great and how dangerous 
is the apathy of the co-operative democracy. Many co-cfperators 
are already conscious of the loss of efficiency involved in favouritism 
in appointments, and of the dangers accompanying the habit of 
promotion by seniority. To correct these defects nothing would 
be more useful than an automatic, accurate, and impersonal analysis 
of each department of every society ; made by disinterested experts,
having no personal connection with the society reported on, and 
wielding absolutely no administrative authority ; strengthenedby comparison with other societies, other periods, and other departments. 
Even a merely statistical comparison on such points as 
percentage of working costs, proportion to capital of turnover in 
different branches, reserves, and rates of depreciation would be 
of great value. The more rapid the growth and the more successful 
the enterprise of a society, the more advantageous would be the 
indications afforded by comparative measurement and publicity. 

* The Consumers' Co-operative Movement, by S. and B. Wcbb, rg2r. 

22 
Without some such detailed investigation the very magnitudethe "hidden reserves" involved in the continuous "writing down" 
of fixed assets might permit of the losses consequent on 
administration in particular departments to go on for years 
obviously revealing themselves in aggregate deficits. And lOCikUilgl 
to the future, we may see both an additional need and a new value 
for some such Efficiency Audit as is here suggested. When over-
lapping between societies has been brought to an end, and the 
process of amalgamation has placed extensive areas within the 
service of great societies counting their memberships by the hundred 
thousand-still more when such societies have, by their very excel-
lence superseded, within their areas, the private traders-the in-
dividual customer will have lost his practical remedy of resorting 
to an alternative source of supply. Complaints at members' 
meetings might then afford an altogether inadequate protection. 
Even if, as may be suggested, the control of the members becomes 
strengthened by the establishment of a representative assembly-
to which, as described elsewhere,* the Leeds Co-operative Society 
is leading the way-the members of such an assembly would require 
the independent reports of an Efficiency Audit, as well as the 
financial guidance of the existing auditors, if they are to fulfil, 
intelligently and helpfully, their functions of criticism and control 
of the operations of what would necessarily be huge and com-
plicated business organisations. 
The system of competitive capitalism, depending on secrecy 
for the maintenance of exceptional profits, fights shy of measure-
ment and publicity; and therefore rejects any idea of an impartialEfficiency Audit, which would place in comparison all the separateenterprises in each industry, and reveal exactly how and where 
the profits are being made. The Co-operative Movement, on the 
contrary, has everything to gain by " accurate comparisons openly 
arrived at," so as to keep each co-operative administration informed 
of all the improvements introduced by any one of them ; and to 
make them promptly aware of any features in which any of them 
are falling behind. It is significant that the institution, under one 
or other form, of an Efficiency Audit, is the first improvement in 
business organisation to be made by every great capitalist trust. 
The whole administration of every far-reaching " trustified " 
industry is made dependent on a continuous stream of detailed 
reports as to the relative output, consumption and running costs 
of every part of the enterprise. The successful management of 
every " multiple shop " or " chain stores " company-now the 
strongest competitor of the consumers' Co-operative Movement-
depends on the accuracy and comprehensiveness of what is, in 
effect, a continuous Efficiency Audit, often inhuman in its crudity, 
to which each branch is subjected. 
* The Constituti~nal Problems of the Co-operative Soctety, by Sidney \Vebb, 1922. 
22 
Without some such detailed investigation the very magnitudethe "hidden reserves" involved in the continuous "writing down" 
of fixed assets might permit of the losses consequent on 
administration in particular departments to go on for years 
obviously revealing themselves in aggregate deficits. And lOCikUilgl 
to the future, we may see both an additional need and a new value 
for some such Efficiency Audit as is here suggested. When over-
lapping between societies has been brought to an end, and the 
process of amalgamation has placed extensive areas within the 
service of great societies counting their memberships by the hundred 
thousand-still more when such societies have, by their very excel-
lence superseded, within their areas, the private traders-the in-
dividual customer will have lost his practical remedy of resorting 
to an alternative source of supply. Complaints at members' 
meetings might then afford an altogether inadequate protection. 
Even if, as may be suggested, the control of the members becomes 
strengthened by the establishment of a representative assembly-
to which, as described elsewhere,* the Leeds Co-operative Society 
is leading the way-the members of such an assembly would require 
the independent reports of an Efficiency Audit, as well as the 
financial guidance of the existing auditors, if they are to fulfil, 
intelligently and helpfully, their functions of criticism and control 
of the operations of what would necessarily be huge and com-
plicated business organisations. 
The system of competitive capitalism, depending on secrecy 
for the maintenance of exceptional profits, fights shy of measure-
ment and publicity; and therefore rejects any idea of an impartialEfficiency Audit, which would place in comparison all the separateenterprises in each industry, and reveal exactly how and where 
the profits are being made. The Co-operative Movement, on the 
contrary, has everything to gain by " accurate comparisons openly 
arrived at," so as to keep each co-operative administration informed 
of all the improvements introduced by any one of them ; and to 
make them promptly aware of any features in which any of them 
are falling behind. It is significant that the institution, under one 
or other form, of an Efficiency Audit, is the first improvement in 
business organisation to be made by every great capitalist trust. 
The whole administration of every far-reaching " trustified " 
industry is made dependent on a continuous stream of detailed 
reports as to the relative output, consumption and running costs 
of every part of the enterprise. The successful management of 
every " multiple shop " or " chain stores " company-now the 
strongest competitor of the consumers' Co-operative Movement-
depends on the accuracy and comprehensiveness of what is, in 
effect, a continuous Efficiency Audit, often inhuman in its crudity, 
to which each branch is subjected. 
* The Constituti~nal Problems of the Co-operative Soctety, by Sidney \Vebb, 1922. 

23 


The Value of Publicity. 


But the results of the Efficiency Audit of the Capitalist Trusts 
and the Multiple Shop Companies are kept strictly secret. Theyare devised for the purpose of making ever larger aggregate net 
profits out of the personnel and the public. In the Co-operativeMovement, where the aim is not individual profit but common 
benefit, there woula be nothing but disadvantage in secrecy. The 
Movement has every interest in publicity, in order to stimulate, 
not only the several administrations but also the several memberships, 
to the utmost emulation in what is not an individual and private 
speculation but a public service in which the whole co-operative 
community has a real, if indirect, interest. It is thus within 
the power of the Co-operative Movement, because of its very nature 
-because, in short, it substitutes, as the motive for action and as 
the test of success, the service of the community for the amassingof pecuniary profit-to make, in the twentieth century, by applying 
the device of an Efficiency Audit, rendered effective by measurement 
and publicity, as great an advance on the competitive system 
as the advance made by that system in the seventeenth and 
eighteenth centuries, on the system of status and customary monopoly 
from which it emerged. 

The Efficiency Audit as a Guide for Promotion. 
But there is another reason why the Co-operative Movement 
needs to make much more use than at present of measurement and 
publicity, fo which an Efficient Audit would continuously supplythe necessary material. Co-operative societies are now often exercised 
in their minds, and agitated in their meetings, not only byuncertainty as to whether particular departments are not costingtoo much, but also by " questions of aiscipline," taking the shapeof discussions as to the rightfulness of the promotion or dismissal 
of particular employees. In any genuine democracy the supremeissue of the exercise of authority cannot be satisfactorily settled 
without the appeal to Justice, which necessitates a correct ascertainment 
of fact, irrespective of the personal equation on either side. 
To-day it seems, in the Labour and Socialist world, as if the vital 
question were who should give orders and who should obey them-
whether government should be " from above " or " from below." 
A combination of independent measurement with complete publicity 
is destined to sweep away the present arbitrariness alike of 
committee-men and of salaried superiors. The deliberate intensification 
of the searchlight of published knowledge is the corner-stone 
of successful democracy, not less in the Co-operative Movement than 
in State and Municipal government. The need for final decision will 
remain, not merely in emergencies, but also for policy; and it is of 
high importance to vest the responsibility for each decision. according 
to the nature of the case, in the right hands. But a great deal 


of the old graded subjection, once deemed to be indispensable in 
all administration, is ceasing to be necessary to efficiency ; and will 
accordingly, as democracy becomes more genuinely accepted,
gradually be dispensed with. A steadily widening sphere will, 
except in m1.tters of emergency, be found for consultation amongall grades and sections concerned, out of which will emerge judgments 
and decisions ~.rrived at, very largely, by common consent. 
This common consent will be reached by the cogency of accuratelyascertained and authoritatively reported facts, driven home by the 
silent persuasiveness of the public opinion of those concerned. 
The real authority will more and more be exercised by the publicopinion, alike of the democracy of consumers and of the democracyof producers-a public opinion which the adoption of an EfficiencyAudit, and the wide and gratuitous publication of disinterested 
reports will make both well-informed and all-persuasive. 

The Stimulation of Co-operative Activity. 

The greatest immediate step forward that the Co-operativeMovement can now take is the formation of a central department 
of research, audit, stimulation, and encouragement, to which the 
name of the Department of Co-operative Progress has been provisionally 
given. At present, in spite of the elaborate federal 
constitutions, this work is simply not done. One may imaginesuch a Dep3.rtment of Co-operative Progress setting itself, in the 
first place, to make really effective use of all the methods of measurement 
and publicity in order to arouse the attention and stimulate 
the em,tlation of the laggard societies. It would utilise to the full, 
not only the statutory returns, but also all the other information in 
possession of the Union and the C.\V.S. in such a way as year by 
year to bring home graphically to every committee-m2.n and everyoffici'll the position in which his particular society stood in comparison 
with others of similar size, locality, and circumstances ; 
incidentally revealing to every society without exception the pointin which it was falling behind the best that had been achieved. 
It is essential tliat such a central department should have no coercive 
authority. But every new line struck out by any society, great or 
small, would be competently reported upon, with illustrations 
from past experience and suggestion~ from the practice of co-operators 
in other countries, for the information of the Movement as a 
whole. By comp1.rative statistics, bv the development of the 
science and art of "costing," by special reports, by explanatoryprivate interviews, and by public lectures, every discovery that 
lnd been successfully m".de in any part of the Movement, at home 
or abro1.d, or in State, municipal, and capitalist enterprise, would 
be continuously pressed on the notice of local societies and federal 

establishments, in such a way as to induce them to perfect current 
administration, and voluntarily to initiate new departures. 


25 


How to Create a Department of Co-operative
Progress. 


The way in which such a Department of Co-operative Progress 
could best be formed must depend, of course, on the contemporaryorganisations and opinions of British co-operators. There are, 
in my judgment, certain principles to which, if it is to prove successful, 
its constitution must conform. It must be exclusively a source 
of light, and not an instrument of command. It must have vision ; 
and therefore it must combine the knowledge that springs from 
practical experience of co-operative business with the inspirationand enthusiasm rooted in co-operative theory. It must be independent 
and impartial, with reference alike to large societies and to 
small, to federal institutions and to their constituent bodies. Myown inference is that the Department of Co-operative Progress-
whatever may be its title-should be organised and directed by one 
of the standing joint committees of the Co-operative Union and 
the Co-operative Wholesale Societies to which I have alreadyalluded. It should appoint and control its own staff of highly 
qualified and well-remunerated investigators. Such a staff should, 
at any rate at first, not be wholly recruited from within the Movement, 
though the discovery and training of men and women of the 
necessary high qualifications would naturally be one of the aims 
of the post-graduate section of the proposed Co-operative College. 
And in this conception of a highly developed Department of Cooperative 
Progress, with its perpetual analysis of processes and 
comparison of results, widely published throughout the Movement, 
yet carrying no coercive authority, the experienced co-operator will 
see an additional reason against the project of amalgamating all 
co-operative enterprise in each country into one all-powerful national 
society. To have the decisions of the scientific experts at the 
centre actually enforced on each local community would be intolerable 
! Yet progress depends on knowledge. Mankind, or, at 
any rate, the Briton, will not accept and execute the novel and 
difficult dictates of science unless he feels himself free to remain, 
if he chooses, in the old ruts of ignorance ! But every group of 
men can be incited to strive voluntarily to excel other groups of 
men in any undertaking whatsoever, if only there are commonlyaccepted and widely published tests of success. The findings of the 
Department of Co-operative Progress as to the relative achievements 
of different societies or different departments might well become 
as thrilling in the co-operative world, and excite as keen an interest 
among all the committee-men and officials, as the results of the 
Football '' Final " or the test-match at cricket. 

Summary. 

Thus we have been led from a recognition of the advantages 
derived by the Co-operative Movement from its federal institutions 


z6 

to an ex;cmination of their shortcomings. We have seen how a 
consciousness that all was not well with the Movement led to the 
appointment, in 1914, of the General Survey Committee, and to 
the far-reaching proposals of its four Reports. Confining ourselves 
to the constitutions of the main federal organisations, we saw 
that the C.W.S. had effected an amendment at the only point definitely 
criticised, namely, the adoption of voting in proportion to 
purchases instead of to membership. With regard to the constitution 
of the Co-operative Union, as yet not appreciably changed, 
we noted the cumbersomeness of its Central Board and eight Sectional 
Boards, its United Board and its Office Committee. We 
next examined the points at which, as it is complained, the federal 

machinery fails; noting that 

(a) It is cumbersome and dilatory; 
(b) There is overlapping and conflict ; and that 
(c) Important work is left undone, and opportunities are missed. 
We then considered in succession 
The Proposed Remedy of amalgamating the Co-operativeUnion with the C.W.S. ; 
The Proposed Remedy of a National Amalgamated Co-operative 
Society for each Kingdom. 
We saw reason to think that the remedy was to be found in 
the adoption of the principle of parallelism in federation. Present 
shortcomings arise largely from a failure to recognise the necessary 
duality of the federal work. 

From this standpoint we considered the proposals of the Ge:1eral 
Survey Committee, and found them not very promising. We were 
led to the suggestion of a Twin Federation having Joint Committees. 
The constitutions of the Co-operative Union and of the Wholesale 
Societies might with advantage be assimilated in form. Just as 
the Board of Directors ot the English Co-operative Wholesale Society 
is responsible to quarterly delegate meetings, so it is suggested that 
the proposed Board of Directors of the Co-operative Union mightbe responsible to similar quarterly delegate meetings of its ;cffiliated 
societies. Provision might be made for a standing committee for 
each main department of the Union's work, on which there mightsit representatives of the Sections. But the cumbrous United 
Board and Central Board should be wholly dispensed with. 

For the common work of the Twin Federation there might be 
Joint Departments, administered under Joint Committees,--one for 
Organisation and Propaganda, including the Annual Congress ; 
another, a "Labour Department," on the Conditions of Co-operative 
Employment ; a third dealing with Literature, Press and 
Publicity ; and a fourth concerned with a branch of the work at 
present scarcely even begun to be thought of, the Department of 
Co-operative Progress. 


27 


This Department of Co-operative Progress would have, for its 
task, the stimulation of all the societies to further achievements. 
It might conduct a new kind of audit of the societies' work, an 
Efficiency Audit, designed to reveal to each society how it stood, 
in each branch of its undertaking, in comparison with its own past,
with other British societies, with private capitalism, and with 
analogous undertakings in other countries. The Departmentwould investigate every improvement made anywhere in the world, 
and bring it promptly to the knowledge of every British society.
Such a Department might be of the greatest possible assistance to the 
several societies, and might well become the source of a new bound 
onward of the British Co-operative Movement. But its establishment 
could not be undertaken successfully by either the Cooperative 
Union or the English C.W.S. alone. It would scarcely 
be possible except as the outcome of a reorganisation of the 
federal institutions of the Movement. 

Above all, it is to a systematic and parallel reorganisation 
of the federal institutions of the Movement, such as is herein 
submitted for the consideration of co-operators in all parts of the 
Kingdom, that we may confidently look for a fostering and 
deepening of the conception of the oneness of the Movement, 
which those immersed in the administration of each part of the 
Movement are always in danger of forgetting. 


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