The Co-operative News (30/Sep/1871) - Dividend on Purchase: Who Discovered or Invented it?

The following is a transcription of a historic journal article and may contain occasional errors.

DIVIDEND ON PURCHASE.

WHO DISCOVERED OR INVENTED IT?

Having read what has been written on this question of recent years, and formed a somewhat settled opinion as to what credit was due to Alexander Campbell, of Glasgow, and Charles Howarth, of Rochdale (both of whom are now dead), and both of whom claimed to have invented the co-operative idea of dividing profits on purchase, I was no little startled in May last, when analysing a number of balance sheets and compiling a statistical table for the Reasoner of June, to find that a co-operative society had for 43 years existed at Meltham Mills, about four miles from Huddersfield, in Yorkshire, and which divided profits on purchase. I had frequently committed to memory almost all the figures relating to the oldest known societies in England, but had never in my travels come across this one. My first thoughts turned against the printer, whom I charged with committing a very serious blunder, but on examining the directors’ report I found it was the forty-second annual one, and that the society had undoubtedly existed for that period. I next turned to the annual return of co-operative societies issued in 1867, but could find ‘no such society there. The day being one of rest, and at my own disposal, I turned over the leaves of my railway guide to see if it were possible to visit that bewitching place, but found nothing but disappointment. The day was too far advanced, and I had to console myself with relating the fact to my wife, and addressing the following letter to the secretary, whose name I found, along with three others, on the balance sheets:—

To the Co-operative Society, Meltham Mills.
Oldham, May 24th.
Gentlemen,
I find from your balance sheet that your society has been established since 1827. May I ask if this be correct ? Could you oblige me with a copy of your last annual balance sheet, and may I also request a copy of your present rules; and if it be possible to procure a copy of your original rules I should be glad, and if required would return them. I feel very much interested in your society, it having existed go long, and I believe the world does not know it. Do you divide profits on purchase as most stores do, and if so how long have you done? Did you adopt it when Rochdale store first did, or some time after ? n what principle did you divide profits, prior to this period named, viz., 1844? I should think, judging from your assets, that you allow a little credit: is this so? How is it your society is not amongst the list given by the registrar of friendly societies; are you not certified under that act ? I find Meltham Industrial, but not Meltham Mills. I suppose this one is not yours. I shall be glad indeed to learn a little about your society. Will you therefore drop me a line, and if time permit please answer me the foregoing questions.

Meltham Mills, near Huddersfield,
27th May, 1871.
Dear Sir,
In your note you ask us for a balance-sheet and a copy of our rules present and original. We enclose them as far back as we can give you previous to 1863. We had only one copy and it was only written when we had them revised in 1853. They were then printed, but they are in substance the same then as they were in 1827. We have always divided our profits by the amount each member has purchased at the store. Now, when we commenced our store co-operation was becoming strong, but on a system of the profits accumulating, which we knew would never answer, so we adopted the plan of paying profits on the amount of purchase, and by so doing we stood firm when all the others fell. Now, you ask about credit: every member has a shop book and only pays off every fortnight, and we have a rule that they shall pay or lose their profits on the sum so left unpaid. I do not think we have lost £20 since the society was established. You ask about our society being registered. Now in 1853 we made an attempt to be registered, but we could not agree with Tidd Pratt. We sent him a copy of our rules, but they did not please him, and he wanted us to alter them to suit him, but our members said they had suited us for 26 years and they would remain as they were, and we have never attempted to register since. e have been a happy society and always traded with the first wholesale houses in the kingdom. We do all our business by letters, and have always been able to pay our bills on receipt of invoice. We have a banking account with the Huddersfield Banking Company, and we have at present in the bank between three and four hundred pounds, and our capital at present is under £900, so you may see by our statements that we are prosperous.

You will have no occasion to send the rales back. Any other information you want I shall be happy to give you.

I remain, yours truly,
Robert Wilson, Secretary.

Although the foregoing letter appeared very clear and positive, the writer had still some doubts on his mind as to the possibility of a mistake, and as it appeared to him that other information might be accessible, which would be both important, interesting, and useful, he wrote a second time, as follows:—

Oldham, May 29th, 1871.
Dear Sir,
I am very much interested in your society, and shall be most happy to learn a little more of it.
You may not be aware that at various times it has been very strongly disputed as to who first commenced to pay dividend on purchase, or, in other words, who first divided the profits in proportion to the amount of each member's purchase during each quarter or half-year, &c. No one ever appears to have claimed this idea as being adopted by

your society prior to the commencement of the Rochdale Pioneers. From your letter I should conclude that from the date your society began business you have always divided profits on purchase. Will you kindly say whether this is so, or whether I have misunderstood you? If you did not begin on this principle, when did you adopt it? I am very anxious indeed to know this, if you can let me know it. You say that when you commenced at first that it was the custom to allow the profits to accumulate, and that you knew this practice would never do, so that you adopted the one of dividing on purchase. Do you mean by this that some other stores divided profit on capital ONLY, and allowed it to remain in the society? I am glad to find that you are prospering so well as you state, and that you have such checks on the little credit you do permit your members. I thank you for your rules and balance sheets, but I should very much like a copy of your old rules. If they are still in existence I would copy them on paper entirely, or I would even come over some time to see them. It is quite a curiosity to see rules forty years old, especially to those who care for the history of co-operation. Could you not send me the old rules in writing to examine an hour or two? Do you never come to Manchester so that I could have a little talk with you on the subject? Do you not come to Oldham sometimes? I should very much like to have some chat on this subject. Was it you, or your father, or other relation, that was one of the revising committee in 1853? Could you let me have a balance -sheet, or see one and see your books if I came over some time, for a period prior to about 1840, or thereabout? I should dearly like to see your books for that time or before. Any expense that might have to be incurred I would gladly pay if I could see them. Please let me hear from you on these points.


Meltham Mills, near Huddersfield,
June 2nd, 1871.
Dear Sir,
When we started our store we commenced to pay profits to each member on the amount of their purchase: that was in 1827. We never did any other way. You say you could like to see our rules we had in 1827. Now, I can only find a part of the written copy, that is four rules, as the other leaves have been cut out and the book made use of for another purpose. I spoke to one of our founders of the society, he is now 73 years old, and you will see his name in both of the rules — that is John Broadbent — and he tells me that there is very little difference between the rules of 1827 and the rules of 1853. The substance of the rules is the same, only a little more grammatical. You want to know what relationship George Wilson is to me: he is a younger brother of mine. I have a a book in which I enter the profits due to each member according to the amount he has purchased at the stores. It was commenced in 1840 and is still in use yet. I was elected secretary in 1840, and the secretary we had before would not give his books up; he said they were his own, so I had to form a new book for the purpose, and that is the reason our dividend book goes no further back. You say you should like to see it. If you was at my house I would let you see it with the greatest pleasure. The reason I was not on the revising committee when the rules were revised in 1853, was that I was not in office at that time; I was in office as one of the committee from 1837 to 1840, and from 1840 to 1847 I was secretary; and during the next seven years — that is from 1847 to 1854 — I was out of office. In 1854 I was elected secretary again ; I have remained in the same office up to the present, and when I came into office in 1854 I found our store in such a state that I should never wish to see another in. I should say not one in a thousand would go through what our society went through at that time and come out purified, so you see it has pot been all pleasant work. Now, in 1827, or about that time, there were several co-operative stores started upon the principle of adding all profits to capital, but I only know of one now that is upon that principle, and it is in Huddersfield; all the others have died away. A good deal of them were not of long life. Now, about 1853 our society passed a rule to separate the profit on groceries and corn and pay each separate : the reason for so doing was the farmers purchase a large quantity of corn for the cattle and it ran away with the cottagers’ profits, as the corn made very little profit. In your note you want to know if I come to Manchester. I was at the Wholesale Society on Easter Saturday morning. I have been there several times, but I have never been at Oldham, only to walk through before the railway was made into Yorkshire. Some time about 1860 our store was rebuilt, and then all our books was burned. I should think we had a cart load of them. Any information I can give you I shall be happy to do so.
Yours truly,
Robert Wilson.

These letters created a desire not only to see the books and other documents of this ancient society, but to see the men, if they could be seen, who had originated it and carried it on, and therefore arrangements were made for an early visit, when much more might be learned than from correspondence. In company, therefore, with two other well-known co-operators, the writer spent one whole Sunday in search, not of a creed, bat of knowledge, and in our next number we shall furnish the result of his visit.