stock organization. In any case it is essential to a coöperative society that some sort of adequate provision be made to prevent the accumulation of the shares in a few hands.

Theoretically, it is considered more equitable to ascertain in one common denominator the value contributed by the workers, by the capitalists and by the customers, and to divide the profits in proportion to the amount of this value represented by each individual. Under such a system wages are considered as equivalent to interest, and purchases as equivalent to capital. In practice, either or both of the factors, capital and custom, are sometimes admitted to share in the profits of industrial coöperation.

(3). Individualist and Federalist Schools: In regard to the general method of procedure, there are two distinct schools of productive coöperators,-the individualists and the federalists. The first hold that individual bodies of workingmen should start for themselves in productive enterprises, obtaining their capital either from their own savings or by loan. The business should then be conducted independently of the distributive societies, and managed by the workingmen immediately interested, who may, if necessary, go into the open market and secure trade by superior energy or on account of the high quality of their product. The federalists, on the other hand, believe that the federated stores should provide the basis for productive effort; the capital saved in the stores should be used; the demand of the stores should supply the necessary market, and the management should be by

committee, precisely as the wholesale societies are managed. The individualist would permit individual shareholders; the federalist would not, believing such permission dangerous as tending to joint-stockism. Strict adherence to the federalist system, as usually presented, would exclude the worker from participation in profits, except in his function as consumer as a member of some store having capital invested in the works, and except as a bonus or gratuity might be given him for superior work or extraordinary skill. In the works at present conducted by the English Wholesale Society upon substantially this plan, the workers, as workers, do not share in profits at all."

This latter plan, though it avoids the peculiar difficulties and dangers of true industrial coöperation, is not, so far as the workers are concerned, in any sense coöperative. Even when, as in the Scottish Wholesale Society, the workers receive a liberal share of the profits, the plan is not producers' coöperation, but is simply profit sharing practiced by a consumers' coöperative association.

(c) Coöperative Credit: Coöperative credit, the third variety of coöperation, is of two kinds, (a) banking associations, such as the Credit Unions of Germany, and (b) Building and Loan Associations, which have attained their greatest success in the United States.

(1). Credit Unions: Credit Unions are designed to give to the poor and to those of small means the same

1 Seventeenth Annual Report of the (Massachusetts) Bureau of Statistics of Labor, pp. 122-123.

advantages in the use of credit that are enjoyed by the rich. Shares cost about $20 or $25 each, payable usually in monthly installments, and no individual can hold more than one share, though the number of stockholders is unlimited. Loans are made only to members and for a short period, but may usually be renewed if, at the same time, an installment is paid. The securities are in large part personal but, as all members are shareholders and are individually fully liable for debts, they take a deep personal interest in the welfare of the association and the tendency to speculate is kept at a minimum.

The first Credit Union was started in 1850, and by 1860 there were 300 in Germany, while in 1901 there were 12,140. Meanwhile, this form of coöperation has spread to other European countries, especially Austria, and has met with phenomenal success. In the membership of the Credit Unions, however, small employers and those having an independent business of their own predominate, and the wage earners constitute, in Germany at least, only about 10 per cent. of the members. These associations have been employed as one means of fostering small industries and of enabling them to compete successfully with large establishments.

(2). Building and Loan Associations: Building and Loan Associations, representing the second species of credit coöperation, are used, on the other hand, only to enable members to acquire homes, and the loans are seldom or never given to foster any form of industry. Their principle is concentration, and their funds are collected

from members and loaned to members. They thus serve, like the Credit Unions, as a combination savings bank and loan agency. Shares in these associations are comparatively high priced, being usually about $200, but they are paid in monthly installments, and the member is entitled to a loan as soon as his payments have begun. The security is, of course, the house upon which the loan is made.

The details of procedure are quite complex and technical, and vary with the different associations, but the principle is always the same. Each member pays a certain sum, perhaps $1 per share, each month, and the money so received, together with the interest on existing loans, is turned over to the highest bidder, who pledges in return a sufficient number of shares, and also gives satisfactory security on the property in which the money is to be invested. The borrower must hold a sufficient number of shares to cover the debt, and must continue to pay dues upon these shares, as well as interest, until through these payments and the accrued profits they have reached maturity, when the debt is cancelled. The margin between the actual sum which is turned over to the borrower, and the sum which he bids, is called the premium.

The payments usually last for about eight years, but in the meantime the member has the use of the house and, although he seems temporarily to be paying somewhat high rent, is eventually full owner. If he had bought on the usual installment plan he would probably have had a heavy first payment which it would have been difficult to

meet, and, in addition, would have had to pay considerably more than the cash price before he was through.

The Building and Loan Associations have attained far greater results in the United States than all other forms of coöperation combined, and have met with a fair degree. of success in Great Britain and other countries. In 19021903 there were reported to be in the United States 5,299 of these associations with a membership of 1,530,707, and total assets of $577,228,014. While the Building and Loan Associations, however, have doubtless aided many of the working class to obtain homes, they are patronized more often by small business and professional men, and by clerks, managers and other salaried members of the middle and lower middle class. Moreover, "the chief commercial profit of such societies goes to the outside investors, who do not intend to borrow." In general, Building and Loan Associations, although they have often encouraged workmen to save and to acquire real estate, and have thus placed such workmen upon the conservative side of many economic problems, have utterly failed to reach the great mass of the laborers, who are obliged to live from hand to mouth because to save would mean the deprivation of those minimum necessities which represent the standard of life.

Neither Credit Unions nor Building and Loan Associa tions, then, require any detailed treatment in a study of workingmen's coöperation. Though eminently successful in its field, credit coöperation reaches only the upper

1 Hadley, Economics, p. 389.