down of this splendid old organization. Printing societies, iron foundries, cloth mills, glass factories, laundries, clothing factories, and box factories, have each passed into history.

Other producers' coöperative enterprises in the United States have made furniture, underwear, brooms, coal, nails, pipes, lumber, pottery, soap, stoves, tobacco, and most every other American product. At the organization of many of these, twenty-five, fifty and seventy-five years ago, the same language was used and the same plans were made as we find in the case of groups of workers now blindly planning producers' industries.

The Coöperative Stove Works of Troy, N. Y., founded as the result of a strike in 1866, developed a capital of $106,000 in twentyfive years, but by that time there were but ten of the original workers in the concern, and six men owned more than half of the stock. The same happened in the Coöperative Foundry of Rochester, N. Y.; organized in 1867, it grew till it had a capital of $200,000 twenty years later and was doing a business of $350,000 a year; but it ended by becoming a capitalistic stock company owned by thirty-five stockholders. A similar history follows the cigar and glove factories.

The Coöperative Hat industry of Philadelphia was started in 1887 and went the way of the rest. A coöperative hat factory in New York had capital, enthusiasm and idealism, but it failed for want of an organized market of consumers. The Coöperative Barrel Works of Minneapolis, organized in 1874, had by-laws which voiced ideal standards of industry, and every condition surrounded their enterprise to make for success; [but they ultimately failed).

In 1919 the Brotherhood of Maintenance of Way Employees and Railway Shopmen invested around a million dollars in factories for the manufacture of gloves, hosiery, and underwear. Although called coöperative, like all of the above enterprises, they were really not coöperative. The Coöperative League of America advised against the course they were entering upon; but oblivious of a hundred years of failure they went ahead, and the poorest paid of the Railroad Brotherhoods in less than a year have sunk their hardearned savings in a hopeless failure.

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72. The social benefits of coöperation As has been pointed out, one of the most significant forms of Benefits of coöperation is consumers' coöperation. Where practicable, this consumers'

coöperation. form of coöperation has several economic advantages, of which the two most important are probably the following: first, the coöperative store enables consumers to get commodities at a lower price than would be possible were they obliged to buy those commodities of a non-coöperative store. Second, to the extent that the coöperative store eliminates unnecessary middlemen, the productivity of the community may be increased. Aside from these and other economic advantages, the coöperative store confers a number of social benefits, which Mr. Fay outlines in the following passage: [In the management of the coöperative store,] every member The social

benefits of has one vote in the general assembly, and no one has more than one

the coöpervote. . . . No doubt, as a rule, only the few enthusiasts are regular ative store: attendants, but there is not here, as in an ordinary company's meeting, the same probability that the audience will be overawed by one or two big men. From membership to a seat on the committee, from the committee to the presidency, from the presidency to a directorship on the Board of the Wholesale Federation on the one hand, or on the Central Board of the Coöperative Union on the other, there is a ladder of responsibility which the intelligent working man may (1)

It teaches climb. . . . In proportion as industry generally becomes more cen

the workingtralized and the working man more rigidly fixed to the machine, the

man selfcoöperative society becomes more valuable as a corrective to the government. narrowness of his outlook as a worker. The chief business duties of the committee are to control the manager, who fixes prices and is generally given a fairly free hand so long as he makes the expected dividend, and to keep a watch over ingoings and outgoings. ... It is unfortunately considered among most classes a pardonable, (2)

It familif not a heroic, thing to trade on the credit of the storekeeper. The

iarizes the coöperative store, however, being an association of working men, working

classes with can forcibly impress on each working man, as he enters the society, that indebtedness at the store is an indirect form of dishonesty to- ments.

ness.

wards his working-class fellows. The first members of a store are generally seriously-minded men who recognize the risk of indebted

They know their members in a way that the ordinary shopkeeper cannot know his changing circle of customers. Since all members must hold at least one share, the store has a powerful lever for compelling obedience to its rules. As soon as the working class become habituated to cash payments, they continue because they realize its advantages. . .

[The payment of a dividend by a coöperative store encourages thrift on the part of members.] From the increased trade at the stores immediately after the payment of profits, [in the form of dividends], it is clear that many of the members depend on these profits as a means to re-clothe, re-furnish and add generally to the comfort of their homes. Thus the money saved at the stores and periodically spent gives a new fillip to trade. It is also well known that many coöperative working men depend upon the store profit to pay their rent. ... In many [English] towns building societies grant loans to working men for the purpose of purchasing their houses. The profit from the coöperative store is frequently used to meet the instalments of the loan. Many have in this way become the proprietors of their own homes without effort.

[An important social aim of coöperation is] the training of men and women to take part in industrial and social reforms and municipal life generally. The work done may perhaps be classified under three heads: (1) coöperation: instruction in its history and principles; (2) general: libraries and lectures; (3) recreation: readingrooms, concerts, recreation clubs, excursions. As I have said, the attention thus paid to social education distinguishes in particular British coöperation.

(4) It furthers the education of the coöperatives.

Questions on the foregoing Readings

4. Name some of the states in which these establishments were

located. 5. How did the National Industrial Conference Board test the practi

cability of profit sharing? 6. Give an instance of where profit sharing has resulted in increased

loyalty and coöperation on the part of the employees. 7. Illustrate the way in which profit sharing may reduce the labor

turnover in an industrial establishment. 8. Give an example of profit sharing being abandoned because of

the opposition of the trade union. 9. Give an example in which profit sharing has promoted thrift. 10. Give an example in which profit sharing has been abandoned be

cause of its failure to eliminate labor troubles. 11. What was the experience of Welshans and McEwans of Omaha,

Neb., with profit sharing? 12. What opinion was expressed by the Watertown (N. Y.) Steam

Engine Company with regard to profit sharing? 13. Has coöperation developed more or less slowly in the United

States than in Great Britain and on the continent of Europe? 14. What is the nature of the Tri-State Co-operative Society? 15. Give an example of successful coöperation in Illinois. 16. What can be said as to coöperation in the Puget Sound section? 17. Trace, briefly, the development of coöperation in California. 18. What are the two types of producers' coöperation? 19. Which, according to the Co-operative League of America, has

proved successful? Which has proved an almost universal

failure? 20. Give some examples of unsuccessful producers' coöperation in

the United States. 21. Name two economic benefits of the successful coöperative store. 22. Explain how the coöperative store teaches self-government. 23. To what extent does the coöperative store teach thrift? 24. What part may coöperation play in social education? In what

country does coöperation lay particular stress upon this type of education?

CHAPTER XIII

THE GENERAL NATURE OF SOCIALISM

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73. Socialist theory of value Nature of In spite of the enormous amount of time and energy spent in disthe socialist cussing socialism, astonishingly little attention has been paid to the theory of socialist theory of value. And yet this theory of value is the basis value.

and foundation of all socialist doctrine. This was recognized by Karl Marx, the “father” of modern socialism, and he accordingly began his great work Capital with a development of what has become generally known as the socialist or labor theory of value. Marx points out that all commodities have size, weight, color and other physical properties, but that these properties have no direct relation to the exchange value of commodities. He then declares that one property is characteristic of all commodities, i.e. they are produced by human labor. His reasoning soon becomes both complex and contradictory, but in essence it amounts to this: commodities tend to have exchange value in proportion as socially necessary labor has been expended upon them. In the following extract from his celebrated book Capital, Marx explains what he means

by this statement: Labor a

A... useful article, therefore, has value only because human

labor in the abstract has been embodied or materialized in it. How, of value,

then, is the magnitude of this value to be measured? Plainly, by the quantity of the value-creating substance, the labor, contained in the article. The quantity of labor, however, is measured by its duration, and labor-time in its turn finds its standard in weeks, days, and hours.

Some people might think that if the value of a commodity is determined by the quantity of labor spent on it, the more idle and un

measure