538 



NA TURE 



[October i, 1903 



some of their capital to the excellent work of providing 

 homes for their members. It is also to be observed that 

 many societies are both distributive and productive. 



What have these societies done for their members? They 

 have reduced the price of the necessaries of life and have 

 thus enabled persons of limited means to enjoy some of its 

 luxuries ; they have provided a remunerative investment for 

 small savings ; they have done much to put an end to the 

 practice of giving and taking long credit ; they have done 

 as much as in them lies to ensure the purity of commodities ; 

 thev have discountenanced (though, perhaps, not with all 

 the success that might have been hoped for) the practice 

 of taking commissions and commercial bribery generally ; 

 they have raised the standard of comfort and have helped 

 inany members to obtain the coveted possession of a house 

 of their own ; they have devoted a share of their profits to 

 educational purposes with excellent results. Some of the 

 productive societies, by the practice of giving a bonus to 

 labour, have improved the economic position of the work- 

 man and contributed to the efficiency of his work. On 

 the other hand, co-operative societies generally have not 

 been so successful as was expected in realising some of the 

 aspirations of the founders of co-operation ; commercial 

 failure has not been unknown among them ; losses have 

 occurred, though the simple organisation of the societies 

 has made it easy to deal with them by adjustments of the 

 capital account ; they have not always had the best of 

 managers, and have sometimes failed to give their con- 

 fidence where it was deserved, and given it where it was 

 not. In many places they have had to contend with 

 opposition from the traders to whose business and profits 

 their success was unfavourable. Taking all things into 

 consideration, the progress they have made is surprising. 



Comparing the returns for the United Kingdom for the 

 years ending December 31, 1891, and December 31, 1901, 

 the increase in number of societies was from 1597 to 2175 ; 

 in number of members from 1,136,907 to 1,929,628; in 

 amount of funds from 16,545,138/. to 40,824,660/. 



It has been observed that the Co-operative Societies are 

 largely undertaking the work of providing houses for their 

 members ; and to that it may be added that the Friendly 

 Societies are more and more tending to adopt the practice 

 of lending money to members on mortgage as one of the 

 most remunerative forms of investment open to them. The 

 Building Societies, which were established for that purpose 

 only, are still carrying on the same work, and the combined 

 operation of all three ought to produce a material effect on 

 the prosperity and well-being of the industrial population. 

 Building Societies alone advance as much as 9,000,000/. a 

 year on mortgage. 



Building Societies have passed through a crisis. The in- 

 corporated societies reached their hio-hest point of prosperity 

 in 1887, when their capital amounted to fifty-four millions ; 

 by 1894 '*^ had fallen to below forty-three millions. The 

 Building Societies Act, 1894, required of societies a fuller 

 disclosure of the real state of their affairs than had pre- 

 viously been called for. The result was to show that, apart 

 from the special scandal caused by the fraudulent proceed- 

 ings of the Liberator Society, there were hitherto undis- 

 closed elements of weakness in the management of Build- 

 ing Societies that .justified the withdrawal of the public 

 confidence that had been reposed in them. The properties 

 in possession before the passing of the Act of 1894 were 

 not less than 7,500,000/. ; they are now less than 3,000,000/. 

 This points to the fact that the early prosperity of Building 

 Societies had led to the establishment of more societies 

 than the public demand called for, with the consequences 

 that societies competed against each other, and that in the 

 stress of competition and the anxiety to do business they 

 accepted unsatisfactory securities, which must lead to loss 

 upon realisation. From this point of view the effect of the 

 Act of 1894 has been wholly salutary. Year after year the 

 societies have reduced their properties in possession. The 

 evils which they dreaded from the disclosure of the facts 

 have not arisen. At this day it may be said that the 

 societies as a whole have regained the position they held 

 in public confidence, for the members now know the worst. 

 They know, too, that where the blight of properties in 

 possession still infests the business the managers are re- 

 solutely endeavouring to diminish its effect. 



I need hardly repeat what has so often been said of the 

 economic value of a sound Building Society. The man who 

 NO. 1770, VOL. 68] 



by its means gets a stake in the country mounts many steps 

 on the social ladder. When he has paid off the mortgage 

 on his own dwelling-house, and so liberated himself trom 

 the obligation to pay principal and interest, either in the 

 form of repayment annuity or of rent, what is to prevent 

 him from buying in the same manner, as an investment, 

 another house with the income thus set free, and so on? 



There are still sixty-eight Building Societies which re- 

 main under the operation of the Act of 1836, having been 

 established before 1856, and not having availed themselves 

 of the option of taking upon themselves the responsibilities 

 and the privileges of the Acts of 1874 and subsequent years. 

 One society (the Birkbeck) stands by itself, as, although 

 its business as a Building Society is considerable — the new 

 advances granted, on mortgage last year having been for 

 120,000/. — its main operations are those of a deposit bank, 

 and it keeps the far greater part of its funds in investments 

 on liquid securities. The other societies are pursuing the 

 even tenor of their way, just as they have done for the last 

 fifty years, and show on the average an increase of busi- 

 ness from year to year. But the great body of Building 

 Societies are those which are incorporated under the Acts 

 of 1874 to 1894, exceeding 2000 in number. They have so 

 far recovered from the effects of the depression that their 

 assets are now forty-eight millions, being midway between 

 the low-water mark of 1894 and the high-water mark of 

 1887. That and the fact that they have in about seven 

 years reduced their properties in possession by about 60 per 

 cent, leads to the inference that they are now, speaking 

 generally, in a fairly healthy condition, and that many 

 years of usefulness are still to be expected for them. 



The Friendly Societies Registry also registers and receives 

 returns from trade unions. These useful and necessary 

 bodies have, I think, been rather cruelly treated, not only 

 in past days, but also in more recent times. Without 

 going back to the bad old times when six poor agricultural 

 labourers were sentenced to seven years' transportation for 

 forming a trade union, or even to the time when they were 

 refused the protection of the law for the funds they had 

 accumulated, because, forsooth, they were for an illegal 

 purpose, it will be sufficient to mark the unexpected change 

 that has been worked in their position since the Act of 

 1871 purported to render them legal. Registry under that 

 Act authorised the trustees of a trade union to hold land 

 not exceeding one acre, vested the property of the union 

 in them, authorised them to sue and be sued on behalf of 

 the union, limited their liability, made the treasurers and 

 officers accountable to them or to the members, and enabled 

 them to take summary proceedings against any person 

 misapplying their funds. But it did not create the unions 

 corporate bodies, and did not enable any Court to entertain 

 legal proceedings for enforcing their contracts with their 

 members, recovering contributions due from a member, or 

 recovering from the union benefits due to a member or other 

 person, or for enforcing any agreement between one trade 

 union and another, even where any such contracts or agree- 

 ments were secured by bond. It was commonly thought 

 that the effect of all this would be that the unions, having 

 none of the privileges of incorporation, would escape the 

 liabilities which affect corporate bodies ; and so much was 

 this the general opinion that the Duke of Devonshire and 

 other members of the Royal Commission on Labour made 

 a minority report in which they suggested that the law in 

 this respect should be altered. 



It has recently been determined that, although unions are 

 not corporate bodies, they are responsible for the acts of 

 their agents as much as if they were. I do not presume 

 to question the propriety of this decision as a matter of law, 

 nor even to say that it is a decision which is contrary 

 to equity ; but only to point out that its result upon the 

 individual member of a trade union, who gave no mandate 

 to its agents to do any illegal or injurious act, but handed 

 over his savings to the trustees of the union, relying on 

 the stringency of the provisions of the Act as to mis- 

 application of funds, is very serious and was unexpected. 

 The contributions of workmen to their trade union represent 

 an amount of self-sacrifice and self-denial that is not readily 

 gauged or measured or understood by persons in easier 

 circumstances of life. Their object, which is primarily to 

 provide the sinews of war in any conflict that may be 

 necessary to secure their material welfare, and secondarily 

 to provide sick and funeral and pension and out-of-work 



