The beginnings of modern co-operatives can be found in the industrial revolution when workers, farmers and the owners of small businesses found a need to combine resources to ensure access to good quality food, efficient processing of agricultural products, marketing and finance. While many date the foundation of the modern movement to the Rochdale Pioneers in England in 1844, similar organisations can be traced back to 1769 when local weavers in Fenwick in Scotland formed the Fenwick Weavers’ Society to sell oatmeal at a discount, and even to 1498 with the establishment of the Shore Porters Society in Aberdeen.
However, Robert Owen (1771–1858), a Welshman, is usually thought to be the founder of the co-operative movement. Although he was a capitalist who had made a considerable fortune in cotton in Scotland, he believed that if workers were to achieve equality, they needed to first change their attitude. Owen believed that working men needed to understand, believe in and be ready to fight for the cause. Owen instigated the first co-operative store, which was successful, and he envisaged establishing “villages of co-operation” where workers could prosper by growing their own food, making their own clothing and become self-governing. Unfortunately the two communities he tried to form, in Scotland and the USA, both failed.
Others adopted and further developed Owen’s ideas. Dr William King founded a monthly periodical in 1828 called “The Co-operator”, aimed at the working class, which gave advice on the co-operative philosophy and practical information about operating a shop.
A number of co-operatives were formed in the late eighteenth century, and by 1830 there were several hundred co-operatives. By 1840, most had failed, but the following decade saw some enduring successes.
The Rochdale Pioneers are thought to be the founders of the current co-operative movement and the first model for modern co-operatives.
The Rochdale Equitable Pioneers Society was formed in 1844 by 28 artisans, working in cotton mills in Rochdale, northern England. The industrial revolution brought with it low wages and poor working conditions and the weavers could not afford to buy food and other household goods. They decided to pool their meagre funds, buy flour, sugar, butter and oatmeal at lower prices, and open a shop. Having learnt from prior failures, they designed the “Rochdale Principles” to operate their co-operative, expanded their product range and became renowned for selling high quality, unadulterated supplies.
The co-operative movement grew, and within six years there were close to 500 retail co-operatives.
Co-operatives also developed across North America, Western Europe and Japan in the midnineteenth century, and had spread across the world by the early twentieth century.
The International Co-operative Alliance (ICA) was founded in London in 1895 at the first ICA Cooperative Congress. Delegates represented co-operatives from Argentina, Australia, Belgium, England, Denmark, France, Germany, Holland, India, Italy, Switzerland, Serbia and the USA. The delegates established the ICA’s aims to provide information, define and defend the co-operative principles and develop international trade.
The ICA had 54 member organisations by 1900, and was one of the only international organisations to survive both world wars, due to its commitment to peace and democracy and by staying politically neutral.
While the interest in forming co-operatives in NSW goes back to 1839 when there was a concern with the price of bread and flour, the first known co-operative in Australia was established in Brisbane in 1859 for consumers. Interest in co-operatives in Australia over the years has risen and fallen. Many co-operatives have not survived due to a number of reasons, including pressure from non-co-operatives, changes in economic conditions, internal turmoil and changing government and trade union support.
Some co-operatives have managed to adapt and transform themselves to fit a changing environment. The Cobargo Co-operative Society on the NSW far south coast began in 1900 as a butter factory but today sells rural supplies, hardware and fuel.
The first registered consumer co-operative was the Brisbane Co-operative Society, established in 1859.
The Adelaide Co-operative Society, a Rochdale-style consumer co-operative, was established in 1868 and operated successfully for nearly a century. Rochdale-style consumer co-operatives have been important for the economic vitality of many urban and rural communities in Australia.
Until the end of World War II consumer co-operatives experienced cycles of growth and decline, with increased activity after an economic slump when consumers were seeking higher economic security. However, a long period of decline followed the war, and many did not survive the economic turmoil of the 1970s and 1980s, with increased competition from non-cooperative chain supermarkets and shopping centres. Few consumer co-operatives survived in metropolitan areas, and even those that had been prosperous in coal-mining, fruit-growing and poultry-breeding communities faltered.
In 1912, four NSW consumer co-operatives established the NSW Co-operative Wholesale Society, as a wholesale co-operative to group-buy goods for retailers in an effort to overcome competitor price-cutting and refusal of supply. This co-operative had an important role in advancing the consumer co-operative movement in Australia but, 67 years later, it ceased operating.
Consumer co-operatives have been in decline since the 1940s, with internal division and little support from the political and industrial arms of the labour movement. Perhaps the most notable collapse was of the Newcastle and Suburban Cooperative, which went from having 98,000 members, 1450 employees, 15 retail stores and 11 service stations in 1974 to closing seven years later.
Australia’s first agricultural co-operatives were formed in NSW and Victoria in the 1880s among dairy farmers to bypass agents, sell their products for a better return and raise capital to build factories for processing milk products. Since then, agricultural cooperatives have helped rural farmers process and market their products, improving profits for their members.
The Homeowner’s Co-operative Credit Society Limited was Australia’s first registered credit union in 1945, following the passing of the NSW Small Loans Facilities Act.
A large number of credit unions were formed and flourished until the 1980s, advantaged by tax incentives and unique legislative requirements. Several changes, including deregulation of the financial services sector, meant increased reporting requirements for credit unions, and several smaller credit unions needed to merge to survive. Credit union numbers fell from 549 in 1983 (Lewis, 2001) to 104 in 2011 (APRA, 2011).
Bank Australia became Australia’s first customer-owned bank in 2011.
Employee-owned co-operatives go back to at least 1861, when coal miners in the Hunter Valley formed a coal mining co-operative. The trade unions, busy with the formation of the Labor Party and the establishment of compulsory arbitration, did not see employee-owned co-operatives as a solution to economic issues, and employee-owned co-operatives were not even included in the 1923 NSW Co-operation Act.
Originally, employee-owned co-operatives were mainly formed to operate coal mines, but since the 1930s a number of employee-owned co-operatives have been formed when business owners sold their businesses to their workers. In the 1980s, the governments of NSW, Victoria and SA successfully introduced programs to facilitate worker buyouts to retain jobs.
The Australian Employee Ownership Association was established in 1986 to assist employeeowned enterprises. Following a strategic review, it was transformed into Employee Ownership Australia and New Zealand in 2011.
The Reverend Alf Clint developed a strong understanding of the value of co-operatives during his stay in Papuan villages in the 1940s. His belief in encouraging initiative in a culturally consistent way saw him appointed Director of Co-operatives for the Australian Board of Missions in 1953. He helped in the establishment of many Indigenous people’s co-operatives in north Queensland, Torres Strait and northern NSW. He also established Tranby Cooperative College in Sydney in 1958 which taught people the skills to run their own co-operatives.
Since the 1970s, many Aboriginal and Torres Strait Islander community co-operatives have been formed to provide housing, employment, health, training and outlets for art sales. Aboriginal organisations were able to access a simpler form of incorporation through the 1976 Commonwealth Aboriginal Councils and Associations Act, but many preferred the co-operative model and principles.
According to Joyce Clague MBE: “We choose the co-operative structure because we want to have an equal say, we want to share the responsibility and we want to work together to improve our living conditions and our life chances…”