#62. Joint-Stock Co-operation.# Another mode of co-operation consists in working men saving up their wages until they have got small capitals, so that they can unite together and own the factories, machines, and materials with which they work. They then become their own capitalists and employers, and secure all the profit to themselves. Co-operative societies of this kind are simply Joint-Stock Companies, the shares of which are held by the men employed. Of course the shareholders must choose directors from among themselves, and they must also have managers to arrange the business. The managers and directors ought to be well paid for what they do, and have a considerable share of the profits, in order to make them interested in the success of the works, and therefore active and careful. Incompetent or negligent management will soon ruin the best business.
A great number of co-operative companies of this kind have been formed in the last twenty years in England, France, America, and elsewhere; but most of them have failed from want of good direction. The working-men shareholders do not generally understand what a great deal of skill and judgment is required in the conduct of a business; they are accustomed to see work going on as if it went of its own accord, but they do not see the constant anxiety and the careful calculation which is requisite to make the work profitable. Hence they usually fail to secure good managers, and they do not sufficiently trust those whom they appoint. Moreover, many of the so-called co-operative companies are not really co-operative; they frequently employ men who are neither shareholders nor receivers of a share of profits, and they pay their managers by a small fixed salary. #Such co-operative societies are badly-managed joint-stock companies, and cannot be expected to succeed well.#
Another difficulty with such companies is, that they rarely have enough capital, and, when bad trade comes, they are unable to bear the losses which will sometimes occur for several years in succession. They can borrow money by the mortgage of the buildings and machinery belonging to the company, and this is usually done; but no banker will give credit to such companies without the security of fixed property. Thus they frequently fail when bad trade comes, and those who buy up their property cheaply reap advantage. It is to be hoped that at a future time all working-men will become capitalists on a small scale, and when education and experience have been acquired, co-operative factories of working-men may succeed. At present it would be better to leave the management of business in the hands of capitalists, who are not only experienced and clever men, but have the best reason to be careful and active, because their fortunes depend upon success.