2 JULY 1910, Page 29


Ws congratulate Mr. Wolff on this third edition of his work. " Barring our own laggard country," he tells us in the preface, " since the author wrote last [Second Edition, 1896] there has been a remarkable advance and extension of Co- operative Credit throughout the world." Under the patriotic initiative of Sir Horace Plunkett, Ireland, a country other- wise backward in the arts of thriving, has made rapid progress. In India and in Egypt also new and promising fields of enterprise have been found. Our readers, we assume, are already acquainted with the story of the Raffeison and Schulze-Delitasch banks in Germany and on the Continent. These show how in countries where too frequently the lack of an appropriate system had in former times bred an un- scrupulous character in both lender and borrower, the intro- duction of Co-operative Credit has now established a more beneficent system of finance and put capital within the reach of the peasant and small trader. Not the least striking principle which we deduce from Mr. Wolff's copious detail is that to be thoroughly successful these banks must be the spontaneous effort of the members, and that the well-meant intervention of the State has an enervating and paralysing effect. The success of these popular banks is, in our judgment, the most interesting episode in the whole range of recent economic history. Why, then, is Great Britain, with the exception of • Peoples Banks : • Bawd of Social end Beonotnin SIACCAISS. By Henry. W. Wolff. Third Edition, Newly Revised and Enlarged. London P. S. King and Son. De. net.] Ireland, so much of a laggard. P We hesitate to say, but one or two considerations- are on the surface and may be recited.

The Friendly Societies, Trade-Unions, and Co-operative Societies of this country are quoted as outstanding examples of successful working-class initiative and organisation, yet none of them have the power of rendering service to their constituents at all comparable to what might be expected from the acclimatisation of popular credit on a sound basis. How is it that the Co-operators of the United Kingdom, to whom the task might have seemed appropriate, have done so little in this direction P The answer is suggested in a passage on p. 552 of this volume :-

" Once more, our Co-operative Societies—representing something like 2,500,000 members—eager for common action, but taught by their dog-in-the-manger distributive' leaders that `Co-operation' means Collectivism,' with a steady eye to 'Socialism,' and that

Co-operative Banking' is individualist, are racking their brains how to collect deposits from individuals for their Collectivist' Bank—which, naturally, in the interest of the movement, wants as much money as it can possibly scrape together The matter would be as simple as an elementary school problem, if they would only establish Co-operative banks, for they already possess sufficient powers and everything, except the necessary discernment."

'The allusion is to the Socialist leanings of the dominant Tarty, which wishes the movement to develop as a form of Collectivism. The material shape taken by the Co-operative movement has been a vast number of distributive stores supplied by a powerful and wealthy Wholesale Store. The " Wholesale" has successfully undertaken the manufacture of many of the articles for which there is a steady demand, but it rejects the Co-operative principle in what used to be its most attractive form. It gives no share of profit to the worker, and the theorists of the party are opposed to the encouragement of a small capitalist class which finds the capital for its own enterprise. The lot of the labourer, in their view, must be improved, not by his own exertions or by his ownership of capital, but by Trade-Unionism and a statutory Minimum Wages Act. The Co-operative movement, .therefore, is called on to abandon the individual to the proletariat condition from which, as formerly conceived, it .was its object to raise him. It leaves the labourer uninflu- enced by the socialising instincts of ownership, and merely transfers his allegiance from the capitalist to the oligarchs who for the moment are controlling the capital of the Whole- sale Association. So it comes that Co-operative Credit, that branch of the movement which seeks to make the labourer a capitalist, has received _what Mr. Wolff considers a dog-in- the-manger reception from those to whom the rank-and-file of the movement look for guidance. This unfortunate result is due to the sterility which is the outcome everywhere of the Socialist attitude towards life.

Other causes equally interesting but less sinister in their origin have been at work. The middle classes of this country have been admirably served by our commercial banks,—a fact which should remind us that commerce is co- operation automatically and, where there is some equality between the parties, equitably organised by the principle of Free Exchange. The oft-quoted and most remarkable instance of the making of the trustworthy character proper to industry, and of the successful organisation of industry, is the development of Scottish agriculture-by means of banking credit at the end of the eighteenth and the beginning of the nineteenth centuries. Previous to this date turbulence and poverty were the characteristics of the Scots, and the arts of agriculture were backward. The Scottish banks stepped in, and, aided themselves by their issue of a one-pound-note currency, put capital at the disposal of peasants, who in this school were taught to be successful farmers and honest men. The episode has been aptly compared by enthusiastic economists to the fertilising floods of the Nile. In this respect the action of popular credit banks has been antici- pated; but the field is by no means fully occupied. We are giving much attention to the creation of small holdings, but, as Mr. Wolff pertinently remarks, "the bare land without money is a white elephant."

Another important consideration arises from the fact that the ground is already covered by a ubiquitous Government Institution which unfortunately only performs one half of the -.functions of a banker. We mean, of course, the Post Office ' Savings Bank, which collects the thrift of the poor from all over the country, and, far from employing it as an aid to the creation of credit for its customers, carries it to London and uses it very conveniently, but as far as its depositors are concerned very sterilely, in financing the operations of Government.

Two small incidents are mentioned by Mr. Wolff as likely. by reason of the comparison which they suggest, to draw attention to the need of a poor man's banker who will perform all the functions of a bank. The Postmaster- General (p. 552) has been complaining that people use his banks for the purpose of keeping current accounts. Every entry has to be sent up to London and entered in ledgers at the Central Office. This involves much labour, and is not the purpose for which the Post Office banks are intended. The Postmaster-General appeals to the public to remedy this abuse, and perhaps it may be remedied and an opening given for a less cumbersome and more popular system of banking. The second incident arises from the amalga- mation of the smaller country banks with big London firms. The personal element tends to disappear, and small borrowers whose personal character was formerly accepted as security are unknown to, and consequently less considered by, the new class of bank official. This is exactly the honest struggling class to whom the organisation of Co-operative Credit would be a godsend.

Less important, but also regrettable, as it involves a loss of public discussion and recognition, is the neglect of the subject by social economists and philanthropists. Time was when few upper- and middle-class philanthropists recognised that the Friendly Society movement was a wholesome rival of the Poor Law and the busybody. We still few of us realise that credit is a form of capital which, given fiduciary probity and industries (and there are many such), like the agriculture of Scotland, appropriate for the small adventurer, can by the ingenious institutions described by Mr. Wolff be put at the disposal of the poorest. The organisation of the poor man's credit is a constructive policy, one of those harmonies of liberty and Free Exchange to which we should be eager to draw attention in answer to the Socialist criticism that we who favour liberty are a party of negation.