PRELIMINARY REMARKS.

I. This publication is designed to serve as a guide to:

(i.)-The formation and management of Co-operative

Societies (whether as Land Societies or for general Co-operative purposes, including Banking), under the Industrial and Provident Societies Act;

(ii.)-The recent legal decisions of importance relating to the Formation and Operations of Companies for Land Investment or Local Improvements, under the Companies Acts.

With respect to Co-operative Societies dealing in Land, it may be mentioned that they were first specifically authorized by "The Industrial and Provident Societies Act, 1871" (34 & 35 Vict. c. 80), which is consolidated in "The Industrial and Provident Societies Act, 1876" (39 & 40 Vict. c. 45).

When the old Building Societies Act was framed (1836), the system of Freehold Land Societies (1847) had not been invented, and that Act, therefore, contained no provisions such as are required to meet the peculiar circumstances of land societies. Nor does the Building Societies Act of 1874 give the necessary powers. In consequence, many of these associations have, since the passing of the Limited Liability Acts (1855-62), been incorporated as Joint Stock Companies.

The particular Industrial and Provident Societies Act, which became law in 1871, related to the form of industrial investment popularly known under the name of Co-operative Land Societies. Up to that time the object of the societies had been merely the carrying on, in common, any Labour, Trade, or Handicraft; but the facility with which they had been able to raise and accumulate capital, and the earnest desire, on the part of the members, to become proprietors of their own houses and land, led the managers to invest large sums out of the surplus funds in that way, and finally to apply to Parliament for power to make the buying and selling of land one of the main objects. Accordingly, the statute of 1871 was framed, and has since been consolidated in that of 1876, so as to afford to these societies the fullest powers and the utmost facilities for dealings of the nature contemplated.

II.-Co-operative Farming and Land Societies.

Great success has, undoubtedly, attended the establishment of co-operative societies, whether for the purpose of retail sales, or for the equally important object of the manufacture of the goods intended to be sold.

A fresh extension of the principle has been suggested by persons, experienced in the subject, viz., that in those localities,—where farms on a large scale are found to be the most successful, and relatively the most economical to conduct, the profit which now goes to one person should, by the action of a Farming and Land society, be obtained for united individuals, each of whom should

bring his small capital into one common fund, to be utilised in the undertaking in the form of shares.

By the technical expression "farming" (proposed as one of the designations of such a society) it is not intended to confine the society's operations to any particular kind of farm culture. It is recognised that, in some articles of produce, this country may not be always able to compete with the inhabitants of other countries more favourable in respect to climate, or with greater freshness of soil. What is contemplated for the business of the societies in view is rather that general agricultural use of the land, which its position and character may render the most profitable.

The Industrial and Provident Societies Act, 1876, gives every facility for the establishment of such societies.

III. It is to be noticed that :

(i.)-It is not essential that a society, under the statute, should carry on any Labour, Trade, or Handicraft, other than the trade of buying and selling Land.

(ii.)-Such societies enjoy the peculiar and remarkable privilege (not afforded by the Joint Stock Companies Acts) of being able to issue shares, which are Withdrawable at will.

(iii.)-Apart from the Withdrawable shares, other shares can be issued, which shall be only Transferable after the manner of shares in joint stock companies, if such should be found more suitable for some investors' requirements.

IV. This "withdrawable" feature is one of the causes of the popularity of Co-operative Societies.

At the time when the House of Commons had under consideration the Bill to facilitate the safe investment of

the savings of the industrious classes, we pointed out that provident persons, with limited means, did not want joint-stock associations or companies with unlimited liability, nor with only transferable shares which often could not be got rid of.

That power was desired in co-operative trading societies to issue shares on the principle of building societies, viz. :

(i.)—Withdrawable and transferable at will.

(ii.)—Having limited liability, and not subject to many of the objectionable restrictions, which then disfigured the law relating to joint-stock companies' partnerships.

Hence resulted the peculiar feature of the Industrial and Provident societies' statutes. Each successive enactment has improved the constitution of these societies, and now they are, under another name, really "Limited Joint Stock Companies," with withdrawable shares and transferable shares. [See Digest, Part I., p. 29.]

V.-Of Co-operative Banks.

It is, also, provided by the Act of 1876 that societies may be registered for the purpose of carrying on the business of Banking.

They are, however, subject to certain special provisions, described in the Digest (Part I., p. 3), among which is the condition that Withdrawable shares shall not be issued.