CO61'ERATIVE PRODUCTION. An attempt to solve the more difficult problem of doing away with the employer, the 'entrepreneur,' by having the workers furnish their own capital. Under our present economic system the distribution of wealth among the agents of production involves a grave conflict of interests, which may lead to industrial warfare and jeopardize the welfare of society by separating laborers and capitalists into distinct antagonistic classes; but the rela tion between capital and labor is most satisfac tory when there is no sharp separation into classes. Productive cooperation, therefore, by uniting men in the twofold capacity of workers and capitalists, has been recommended by many social reformers as a cure for our social ills. The voluntary union of a number of workers to conduct an enterprise collectively is by no means a modern invention. Schmoller and other economic historians have shown that it is, indeed, one of the earliest forms of industrial organization. The guilds of the Middle Ages were managed by associations of workmen, each one furnishing a small share of the capital re quired for the conduct of industry under medire val methods. But their conservatism of method led to their displacement by capitalistic industry, and it is not until the nineteenth century that we find widespread attempts to reestablish coopera tive productive enterprises; but only a few of them, notably among masons and piano-makers, were successful.
Ferdinand Lassalle (q.v.) believed that the foundation of cooperative societies of produc tion. with State aid in providing the necessary capital, would gradually transform present eco nomic society into a socialistic one.
The first productive association in the United States of which we have any record was that of the 'Boston Tailors' Associative Union,' which was formed in 1849, but did not last long. There were many other experiments of a like nature. the most promising of which seems to have been the stove foundry of the Iron Moulders' International Union, started in 1867 in Allegheny County, Pa. But the paid-up capital proved insufficient at a critical mo ment, and the enterprise failed. By far the most successful experiment in the United States is found among the coopers of Minneapolis. In 1868 a few journeymen coopers made an attempt to manage industry for themselves; they were so successful that in 1874 a strong organization known as the 'CoOperative Barrel Company' was formed, with a membership of about twenty coopers. They bought a shop for $3000, paying $1000 cash. The profits were to be divided in proportion to the work done. In 1835 the paid up capital amounted to $50,000; the membership hail reached 1•0, besides •0 employees working fur wages. The number has since been reduced.
This example has been followed by others, and frequently with success. Experience seems to show- that where articles are produced to order and not for the general market, cooperative pro duction may succeed, but that these enterprises fail when they are confronted with the difficulty of adjusting the supply to the variations of the market demands.
COoPERATIVE CREDIT AND BANKING ORGANIZA