r PACEMAKERS IN FARMERS' CO-OPERAllON Benson Y. Pref THE purposes of this study are to give a comprehensive account of the present extent of farmers' co-opera- tive enterprise, to explain various types of organi- zations and the methods used; to tell the stories of successful and typical local and federated co-operatives; to estimate the full significance of this important and rapidly growing movement. It includes the first extensive survey of local co-operatives, covering organizations in 202 representative counties in forty-four states. It is a narrative of some of the very recent efforts as well as of older tested organi- zations. The interest is solely in co-operation among farm- ers in buying, selling, and other steps in the distribution of supplies and produce. The author's sources have been personal investigation dur- ing the past two years, research into numerous state and national agricultural bulletins and journals, correspondence with organizations, and for parts two and four of Chapter II data gathered on rural life, including farmers' co-opera- tive organizations, during 1920-21 by the Town and Country Department of the Interchurch World Movement and of the Committee on Social and Religious Surveys. This last Landis II ace information, secured by trained field workers, or by volun- teer leaders under their supervision, covers the 2,575 rural communities in 202 counties well distributed over the various regions. They were selected from a total of 600 counties available, so as to get a fair representation from all dis- tricts. The aim was to get as near as possible to six or seven per cent of the total number of counties in each state. In these investigations the rural community has been, in a majority of cases, the trade area of the village or town. Nearly every town or village has a surrounding farming population, and the farmers have with it strong ties of trade and also some ties in social and recreational life, education and religion. In some sections the trade area does not in- fluence the grouping of people for other activities. Then the "social community" is the unit, centering around some institution or organization as the school, lodge or church. Though ordinarily the community with 5,000 people in a town, plus the surrounding farmers, is the largest studied, this limit has not been arbitrarily applied. The smaller communities, if altogether industrial, have been excluded, while the larger, if altogether rural, have been surveyed. Foreword Warren H. Wilson THE interest in agricultural co-operation among min- isters of religion, school men and women and the pro- moters of rural health and rural recreation is very definite. The reasons for this interest are positive. They constitute a conviction so strong that practically all the workers on behalf of an ideal country life are advocates of the organization of country people in co-operatives for buy- ing, selling, credit, manufacture and production. That is, better business thus defined is regarded as essential to better living. The first reason is that farming is a deficit occupation. Producing the major portion of the wealth of the country, the farmer receives a minus payment. This fact is now a matter of record verified by the Universities, undisputed among economists. Social workers, who are promoting in- stitutions that cost money, are baffled in their effort to per- suade the heads of families in a deficit occupation that they ought to spend more money. The second reason is the conviction that there must be a distribution of wealth among farmers, reasonably adequate to the service they render and to their social needs. We do not see any other economic machinery in the world that is capable of retaining among farmers a sufficient share of the wealth they produce. The distribution of wealth through co- operation will, we believe, avert the disguised pauperism which prevails, unrecognized and unnamed throughout whole counties and indeed in some entire states. In these counties and states farmers give no encouragement to ministers, health workers and school administrators. These men see on the economic and social horizon only one source of relief from social poverty. That alternative is economic co-operation. Co-operation will stimulate the motives which will make men produce, work and save. The country demands at the present time a better performance in these respects than the American farmer is giving. Social workers in the city as well as the country will welcome vastly increased production. It will avert, however, lower wages, increase our national pro- duction and stimulate every avenue of the life of the nation. the community and the individual. We need food and the farmer ought to produce more food than he is willing now to produce. Since we have this vast domain and have appro- priated it, we ought to develop the soil, the exploitation of which by scientific farming will be only a national good. We see no stimulation of these motives except in connection with economic agricultural co-operation. Another reason for this belief is that co-operation will pre- serve the present agricultural structure, which is based upon individual operation of the land by owners. If the farm is to be saved from exploitation by capital, there must be some form of combination of the operators of the land. None is in sight except agricultural co-operation, which seems to be a democratic way of doing what the trusts and corpora- tions do in business. We believe it is a good thing for the individual to own and operate a farm; morally good and edu- cationally good. However that may be, all our motives go toward the conserving of the individualistic industry of farming. If there were no such ethical motives, it still re- mains that the individual farm operator is the most produc- tive of all the forms of agriculture the world has ever known. To support that operator-owner, agricultural co-operation seems in the light of world-wide experience to be necessary. Two objections arise. One is that these social workers are all promoting institutions for consumption while co-operation is a form of production. That is true. The reasons just given, however, are in the minds of those who are concerned with better living in the country. Production must precede consumption. The second objection is the routine objection of the modern psychologists, to the effect that the spiritual gains of the co-operative processes will not "carry over" into ethical and educational reforms or into religious states of mind. That is probably true. To recite it, however, is onlv to face with greater clearness the real reasons which constrain the ideal- ists to believe in agricultural co-operation. They believe that the country people are starved, that farming is a deficit occu- pation which does not pay expenses, that without material gains its spirituality is deadened and its idealistic progress is aborted. The experience of western European countries in co-oper- ation furnishes the body of our hopes. There we have seen that the farming population, if wealth is distributed among them, will provide themselves with a reasonable supply of religious, educational and idealistic institutions. This is what we hope for America. Reprinted from HOME LANDS, .'August and October numbers, 1922. In lots of 25-100, 14 cents.each; 100 or_more 12 cents. Price 15 cents each, postpaid, from the author. Room 811, 70 Fifth Avenue, New Yorlc. 4^|^35 /•.::•*:•*.*:•*'•'•:: :*;...• Pacemakers in Farmers' Co-operation Z-3 CHAPTER I. Why Farmers' Co-operation? ONLY some unusual emergency or condition brought about co-operation among farmers in the first periods of the settlement of this country. The New Jersey Bay Companies are an illustration of such co-operation in the early days. Farmers living along the shores of the Delaware Bay needed protection from tides, and prior to the American Revolution organized co-operative companies for building dikes. The farmer paid a small sum per acre for the protection, and the bank masters of the co-operatives were paid by the hour for building dikes. Many companies are still in existence. New Jersey early made a law for their incorporation. They made productive thousands of acres of land which would otherwise have been mere tide marsh. The large development of agi-icultural co-operation which has taken place since 1900 and particularly since 1910 has had no slow, steady growth over our history. The principles of co-operation had their beginning from that little group of English wage earners called the Rochdalers, who, when out of work in 1844, decided to organize their own retail store on the basis of a one-man, one-vote plan and to dis- tribute profits on the basis of the amount of business done with the concern, instead of the amount of stock held, but these principles were applied only spasmodically and, com- pared with present developments, on no really large scale before 1895 or 1900. The first large attempt at agricultural co-operation was that of the Grange, or Patrons of Hus- bandry, in organizing stores among the farmers in the '70s. Organized in 1866, the Grange has been one of the powerful factors in our agricultural life. But few of the early stores lasted long. The members were not ready for co-operation. There were mistakes of management, and the move created fierce competition with which the new stores were unable to cope. The practice of selling goods to the consumer at as nearly wholesale cost as possible proved disastrous; the co- operative was forced to operate on too small a margin of profit, the competing retailer was forced to reduce his prices and most of the co-operative stores soon quit. There are memories or traces of most of them in many parts of the country and very few survive. Today the successful co- operative store sells at current market prices, not at cost, and the stockholder benefits through profits returned ac- cording to the amount of business done. The Grange and the Farmers' Alliance — the latter most successful in the Southwest— began, among other activities, the system of trade discounts, whereby the local farmers' organizations pooled their orders for supplies with certain favored wholesalers. Very great savings were thus effected, especially in buying fertilizer and implements. The Grange, and in some sections the Farmers' Union, carry on this method on a large scale today. THE upward swing of the present co-operative move- ment began about 1890. Then a few pioneer co-oper- ative grain elevators appeared here and there through the Central West. Creameries and cheese factories were very sparsely scattered throughout the country. The California fruit growers organized the California Fruit Union in 1886 and struggled onward to their goal. Fruit and truck ex- changes began to appear in the East. An attempt was made at livestock shipping on what was then a large scale in Illi- nois in 1899. By 1890 considerable legislation regulating co-operatives existed in some states. The California Fruit Growers' Exchange was organized in 1895, and it pioneered with the type of organization which is more and more prevalent today. This was a large selling and advertising organization, founded with capital stock, but later shifted to the non-stock plan. It was to sell the farmers' fruit to the city wholesaler, avoiding the packer and the speculator, vnthout profit to itself, without even a fixed charge, but for its own cost. The non-stock plan keeps out the investor, and confines the enterprise to producers. The organizations of the early days paved the way for many great organizations which are being built up in the twentieth century, and the lessons from their failures and successes have played no small part in making possible the success of the large co-operatives at work today. THOUGH the foundations were laid for the modern co- operative movement about the year 1890, no doubt the greatest results have been recorded since the year 1910. For instance, a survey made in 1916 by Professor Theodore Macklin, then of the Kansas State College of Agriculture, in regard to the date of organization of 199 local co-operatives in the state of Kansas, showed that only one had been organized as early as 1875. Only five per cent of the organizations had been launched before the year 1900, while 62.3 per cent were begun between 1910 and the first few months of 1916. A glance through the year books of the departments of agriculture reveals that little notice was given to co-operatives before the year 1910. Now we have accounts of sigfnificant enterprises which are passed on that farmers in other communities may do likewise, and thorough studies have been presented of methods of management and marketing, training of managers, keeping accounts, etc. The files of the agricultural journals tell the same story. Farmers were for the most part busied with production. But power machinery, agricultural science and experiments were making great strides in solving problems of production. If the main problems of production were solved, this would not greatly better the farmers' position. What if they raised the world's largest crop and could not sell it to advantage? Slowly farming became more of a business. The day of the household farmer and his more individualistic life passed. The time came to talk of saving handling costs in shipping grain, of pooling milk sales, of grading products, building warehouses, studying marketing and creating eflicient marketing organizations. The main problems still before the farmers have to do with our distribution system. There has been great dissatisfaction with the amount of money received by middlemen for services in the marketing process. The men who produced milk on the farms of New Jersey and received five and one-half cents a quart for it, less transportation, are not convinced that selected Grade A milk should sell, as it did, to the city consumer for twenty- one cents a quart. The men who raise wheat hold that some- thing must be done to prevent the brokers from selling and reselling, and taking sometimes several profits. And they are bold enough to believe they can build up at least one or two more economical marketing agencies. Prunes which sold to the consumer in Chicago for forty cents a pound in 1921 were sold by the California farmers for six and seven cents. According to figures of the Federal Department of Ag:ri- culture, farmers in general receive about 40 per cent of the price the consumer pays for farm products, the railroads and wholesalers get 30 per cent, and the retailers 30 per cent. Often the local dealers have not "played square" and have caused farmers to organize co-operative organizations. In f • • • • •" • » • » • • • » • Pacemalfers in Farmers' Co-operation '•.■ .•' ••. ?•. •. • • Center Valley, Pennsylvania, a group of Mennonite farm- ers, dissatisfied with the treatment they were receiving from local feed dealers, formed a feed store of their own, ran it on the principle of service rather than profit, and are gradu- ally doing more of the feed business in the neighborhood. The Country Gentleman in an editorial in its issue of May 28, 1921, tells this typical story: "The farmers in Limestone County, Alabama, built up a fine hog raising industry, but they were far from a central market and sold their animals to professional buyers. The returns were very disappointing to the farmers. They or- ganized the Better Farming Association and marketed their hogs co-operatively. On twenty carloads sold this way they received four cents a pound more than was offered by the local buyers. Their saving in one year was around $12,000." Leaders in the community sometimes educate the farmers to the advantages of co-operation. Dean Mann of the New York State College of Agriculture tells this story which shows how the beginning is sometimes made : "One of our students now studying agriculture is pastor of a Quaker church in a village about fifteen miles from Ithaca. Last week he took one of our professors home with him for an evening meeting, to consider with his farmers certain problems of buying and selling. After the address the pastor himself gave to the people some of the technical information he had gained at the college. Then he pro- moted a proposal for the introduction of pure clover seed, and took orders for some thirty bushels of seed as a pooled order." THE fall of wholesale prices of farm products which began in 1920 has for the most part increased the soli- darity among farmers. There seem to have been no more failures of co-operatives than during previous years. The drop in prices has hastened co-operative development. The man who raised 1.500 bushels of potatoes in 1920 at a cost of a thousand dollars, not including any interest on land or depreciation costs, and sold in early 1921 for twenty- two cents a bushel, less freight, then, is very likely to be a co-operator at a Grange or a Farmers' Exchange today. The fact that he read in the spring of 1921 that potatoes were selling for $2.50 a bushel in a nearby city, while thousands of bushels were rotting in Maine, rather aids such a process. No logic could convince him after transactions and news like that, that the food distribution process cannot be changed. This is only one illustration, but figures of the United States Bureau of Labor Statistics showed that in June, 1921, whole- sale prices of farm products were only thirteen per cent above the 1913 level, while all commodities at wholesale were still forty-eight per cent above. Chemicals and drugs — in- cluding farmers' fertilizers — stood at sixty-six per cent above, cloths and clothing at eighty per cent, lumber and building materials at 102 per cent, house furnishings at 150 per cent. Even metals and metal products going into farm machinery were thirty-two per cent above the 1913 level. Dire necessity has always been a big propeller of the co- operative movement. In the great corn belt, for instance, farmers received in 1921 perhaps five cents an hour for their long hours of labor. Some in less favorable circumstances received less per hour and some nothing. Studies in Indiana showed a return of only 2.05 cents per hour for man and 1.02 cents for horse labor. On this subject Professor Asher Hobson, formerly assistant chief in the office of Farm Man- agement in the Federal Department of Agriculture and now Associate Professor of Economic Agriculture at Columbia University, in an interview in the New York Times for Oc- tober 3, 1920, says the following: "Detailed analysis of farm incomes made by the Depart- ment of Agriculture of 8,712 farms in twenty-eight repre- sentative districts in the United States (and this analysis was continued for a period of years on many of these farms) shows that out of the total farm income, after paying 5 per cent on the investment and labor at minimum wages to the members of the farmers' family who actually performed farm labor with him, the farmer had left on an average less than $500 to pay for his own work and managerial ability for the year." Mr. Milo D. Campbell, President of the National Milk Producers' Federation — an organization representing various co-operative dairy interests — said at the National Dairy Marketing Conference in Chicago, May 4, 1921 "There are today 23,000,000 cows in the United States Not 3,000,000 of them are returning a profit to their owners." There appears to be a serious shrinkage in the pur- chasing power of farm products in the past decade. The gist of Bulletin 999 published in September, 1921, by the United States Department of Agriculture under the author- ship of Professor G. F. Warren, one of the ablest agricul- tural economists, is thus summarized in Wallace's Farmer of September 23, 1921 : "In 1919 the farmer had $1.06 to buy a dollar's worth of goods. Today he has seventy cents. How- ever, indications point to a marked improvement in the very near future." The bulletin contains much excellent infor- mation and many recommendations and suggestions deserv- ing further study. Farmers see industrial laborers, work- ing short days, paid ord'narily from five to ten times their rates for longer days. They are trying to increase their own incomes, and they are pulling together. Economic necessity is perhaps the strongest force in bringing co-operative or- ganizations. GLUTTED markets and unstabilized prices have long been causes of complaint. Hence the farmers want more storage facilities and more marketing informa- tion. They see the folly of trying to sell their crops within three or four months of the year and allowing someone else to do the storing. They want the storage in their own hands and, as far as possible, shipments regularly made throughout the year. The farmers wish to improve credit conditions. The in- dividuals who store non-perishable products in their bins have a hard time borrowing from banks in their present attitude. But with their products pooled in central ware- houses, the producers through their marketing corporations can ask loans on warehouse receipts. Experience has demon- strated that farmers successfully organized for a period of years can in many localities secure the necessary credit ac- commodations. The War Finance Corporation of the Fed- eral Government has during the past two years made loans directly to co-operative organizations against negotiable warehouse receipts for staple farm products. CHAPTER II. The Local Co-operative Associations IN view of the varieties of co-operative organizations, it is rather hard to describe briefly what a local co-operative association is. Types of organizations have been de- termined by local preference or by existing laws. Sometimes associations have been hurriedly formed and methods and management are later changed. The best opinion among leaders seems to cling to most of the principles of the English Rochdale pioneers. A local organization having the fol- lowing features is working very successfully and seems to be the goal toward which many associations not so organized are striving: 1. Every shareholder has one vote regardless of the amount of stock he holds. The fundamental thing is equal- ity and democracy. Farmers have developed some success- 4 Pacemakers in Farmers' Co-operation ful organizations with voting by shares, when these have been strictly limited per member. The aim is always to prevent easy control by a few. 2. Capital invested should receive a low fixed rate of in- terest. This is usually the prevailing interest rate in the community. Invested capital thus receives only these "wages." It does not receive profits or savings. 3. Profits or dividends are returned to the stockholder according to the amount of business he has done with the organization. This is the so-called "patronage dividend" as distinguished from the dividend according to shares which the ordinary business corporation returns. 4. The total number of shares should be small in number. Every member should hold only a restricted number. Mem- bership in the organization should be limited to co-operators — the producing farmer. The investor should be eliminated. The Rochdale principle of an educational fund, provided for before the dividend, has not been adopted by the co- operating farmers except in isolated cases. Reserve funds are often built up but mostly to take care of business losses. The above four Rochdale principles, have, however, been extensively used and are looked upon as the most desirable methods for conducting an organization. There is an increasing opinion, too, in favor of the mem- bership contract in a selling organization. The individual farmer agrees to deliver all his products for a certain period of years, usually five or seven. Often there is a penalty in case the contract is broken. Again, provision is often made for cancellation by the member on giving reasonable notice. Opinion seems to favor either a compulsory or voluntary pool, allowing for grading of products, assuring an equal return for the same grade of products, no matter by whom or in what quantity grown. Some organizations start with- out capital stock and others shift to this plan. By this method the farmer holds a membership and associations can easily be begun on the non-stock plan if members have signed contracts agreeing to deliver certain quantities of produce, against which the organizations can borrow money to start business or to build or purchase equipment. It is generally understood that an organization is co- operative when it is organized on the four cornerstones above mentioned. But there is such a lack of uniformity among our agricultural associations that usually an organi- zation having some of the strictly co-operative features passes as co-operative and is often very successful. The local associations among the California farmers measure up well to the highest standard which may be set. It seems that at least half of the local farmers' grain elevator associations, the creameries, cheese factories, the fruit and truck exchanges and most of the live stock shipping associations and dairymen's leagues and those organizations started by the Farm- ers' Union, the American Society of Equity, the Farm Bureau and the Grange, may well be classed among the more co-operative group. It would be very difficult to draw the line between the strictly co-operative farmers' organizations and those which merely follow the conventional private business. In the minds of most people the one-man one-vote feature and patronage dividends make a concern co-operative. But the Federal Trade Commission, in investigating the country grain business, classed as co-operative every local farmers' grain elevator run for the benefit of the group, in distinction to the privately owned which was operated for the profit of one or a few indi- viduals. The trend is undoubtedly toward the adoption of the more co-operative features. But at present stage of the movement the word co- operative is used loosely. I THE SITUATION IN WELL-DEVELOPED AREAS N September, 1920, the Federal Department of Agricul- ture reported at least 14,000 farmers' buying and sell- ing organizations. In the summer of 1921 the number of local co-operative enterprises in the United States was estimated at around 15,000 and the amount of business done at about two billion dollars per year. The number is in- creasing rapidly and there are no accurate figures. Out of 5,424 organizations which reported to the Bureau of Mar- kets of the Department of Agriculture in 1914, 1,637 were grain elevators and warehouses, 1,708 were creameries and cheese factories, 275 were stores, 871 handled fruit and vegetables, 213 cotton, 43 tobacco, 96 livestock, and 581 were miscellaneous organizations. The County Farm bureaus and county agricultural agents in the Northern and Western States helped to organize 1,988 local co-operatives in the year 1920. These did a business worth $40,000,000. The estimated saving to the farmers through these co-operative ventures was $2,899,764. Be- tween 1915 and 1920 the amount of business done by associa- tions started through the help of county agents in these states has increased from $3,764,783 to $375,714,660. The estimated saving to the farmers in these organizations is over $20,000,000 per year. In Minnesota, for instance, the county agents helped to form 114 marketing associations in 1921. Twenty handled potatoes, twelve wool, fifty-one livestock, nineteen butter, four grain, and eight were classed as miscellaneous. In addition the agents assisted many associations previously formed, and also rendered aid in marketing to 11,464 farmers not in associations throughout the state. "Livestock shipping associations in the Middle West are spreading faster than a prairie fire," writes Mr. Stuart O. Blythe in The Country Gentleman for July 10, 1920. That is a good figure when you consider that in 1916 the State of Iowa, for instance, had fifty-seven livestock shipping asso- ciations. In the summer of 1921 there were 647 and they handled one-fourth of the livestock sent out of the state. The number has grown from about one organization in every two counties to six or seven per county. That is prac- tically putting one within the reach of every farmer. The Federal Bureau of Markets had a list of five hundred asso- ciations in 1910. A majority of these had been formed in the State of Minnesota. In 1921, though no one knew the number of co-operative livestock shipping associations in the Central West, it was placed between 2,500 and 4,000. During There are 5,000 farmers' grain elevators in the United States Pacemakers in Farmers' Co-operation the same year it was estimated that about one-third of the shipments of stock arriving at Chicago were from co-opera- tive shippers. At South St. Paul the figure was said to be seventy-five per cent, at Detroit seventy per cent, and at other terminal markets in the Middle West thirty or forty ■ per cent. These local associations are sometimes on a county scale; again, there may be twelve or as high as eighteen or nineteen in a county which is a heavy stock producer. THE farmers' grain elevator is here in great numbers in the Central and Northwest. Several years ago there were said to be 4,000 local grain elevators. In 1921 the number was estimated to be 5,000, though some would claim 6,000. It is safe to say that the co-operative grain elevator is spreading. Most of them have been built during the last fifteen or twenty years. The Federal Trade Commission's latest published report, — for the crop year 1919-20, — states that co-operative grain elevators are being built at the country stations more rapidly than any other kind. Wallace's Farmer reports editorially that in Iowa half of the grain elevators have gone over to the patronage dividend system within the last few years, — showing the ten- dency of the old companies to apply more and more of the co-operative principles. These local associations are the basis of gigantic state and regional organizations to be dis- cussed in Chapter III. The Kansas State Branch of the Farmers' Union has 640 locals which have been formed in the past thirteen years. The Union runs elevators, stores and other organizations. In the year 1919 these locals did a business worth $150,- 000,000. In Nebraska all the co-operatives did a business worth $100,000,000 during 1920. There are 244 elevators classed as co-operative and 141 stores. In Minnesota one co-operative elevator was organized as early as 1876, and another in 1884. Here the early Grange stores failed as elsewhere. By the year 1890 the co-operative movement be- gan to make noticeable strides. By 1921 the state had 1,910 organizations for marketing alone, and 1,360 non-marketing associations. There were 650 creameries, 450 livestock ship- ping associations, 100 stores, 400 grain elevators, 100 potato shipping associations, 100 buying clubs, thirty wool pools. For the year ending June, 1920, all the co-operatives of the state did a business worth $200,000,000. The branches of the co-operatives which stood highest were the creameries ■ which did a $75,000,000 business and the shipping associa- tions which marketed $35,000,000 worth of cattle. The latter are handling about 70 per cent of the livestock produced in the state. Wisconsin in 1917 had 718 co-operative cheese factories and 380 co-operative creameries, in all 2,000 co- operatives of all kinds. The work of active organization be- gan about 1885. Much of the first promotional work failed. Since 1890 there has been a steady growth, and Wisconsin is one of the leading states in co-operative enterprise. A SURVEY OF 2,575 RURAL COMMUNITIES THE data in the previous section give some idea of high development in certain areas. Co-operative enterprises among farmers, especially those engaged in selling, are most numerous in areas where specialties or where one crop or one main crop predominates. It is hard for an or- ganization to sell a variety of products, and to receive these in small and uncertain quantities. A few of the truck and fruit exchanges succeed, but on the whole where there is greater diversification there is less co-operative selling. There are 2,575 communities in the 202 counties included in this tabulation, the counties having been selected, as be- fore stated, from 600 available, so as to get as equal as possible a representation from all sections. Six hundred and fifty communities, or 25.2 per cent of this total of 2,575 communities, have one or more local co-operative enterprises among farmers for buying, selling, shipping, packing or some first step in the distribution system as the making of butter and cheese. Sometimes there is in one organization a combination of the above functions. If two co-operatives of these types existed in the community, the one which pre- dominated in the region was chosen for study: for example, in the dairy sections the creameries or cheese factories over against the purchasing associations. If two or more similar organizations were in the same community, information was tabulated for only one. That one community in four already had at least one or- ganization in 1920 indicates a good beginning, but there were then some areas where co-operation had not yet obtained a real foothold. The proportion of communities which had one or more organizations is as follows: REGION 3 5 S50 Sfef 6»a ^1 Colonial 25 543 469 206 133 43 2202 233 630 117 2675 116 71 24 28 19 30 67 243 62 650 20. Southern 40 15. So. Highlands 14 24 12. 21. 46. Pacific 16 29 Middle West 44 39. 15 45. Totals 202 25.3 Dairy products are increasingly marketed through co-operative agencies There were many sections of the Middle West or Prairie where counties had nearly every com- munity organized, but for the entire region, for all sections, the more prosperous and the less, this gives a fair picture of co-operation among Ameri- can farmers in 1920. The regions which had the greatest proportions of communities with enter- prises were the Northwest, Prairie, Middle West and Pacific. There are some obvious and inter- esting reasons for the variations in the percent- ages. In the Southern Appalachian Highlands there are few co-operatives because of individual- ism, conservatism, poor transportation and the small amounts of produce grown. The Middle and Northwest and the Prairie are leading regions largely because they grow large quantities of one or a few crops which can well be handled co-oper- atively. The Pacific states have long been famous for their prosperous sections gnrowing large quan- Pacemakers in Farmers' Co-operalion tities of specialties, and these have always been most easily handled. In the South the proportion was low due to the handicaps in the way cotton and tobacco are grown, on plantations and by tenants. The figures for the Eastern states are to some extent low because of diversification. (In the South and the East undoubtedly most progress has been made since these figures were gathered in 1920.) IN these 202 counties are 359,204 farmers, according to the 1920 census figures on agriculture. In the 650 co- operative organizations studied there are 80,924 farmers. Thus 22.3 per cent of the operating farmers in these coun- ties are members. There are sixteen main varieties of or- ganizations, according to the kind of business done, or crop grown, or by what agency organized. The following table gives the names of these organizations: tent of co-operative buying and selling are somewhere be- tween these two extremes. THE STORIES OF TYPICAL LOCALS I HE accounts of the following eight local organizations have been selected to give an idea of the various types' of organizations, as to their form of management, as well as to variety of business done. They show the work- ings of local co-operatives at close range. T Name of Organization No. of Local Organizations Farmers' Unions '° Cheese Factories 64 Creameries ^^ Truck Growers' Assn's 16 Farmers' Exchanges 19 Dairymen's Leagues and Assn's 32 Stores "^ Granges * ^ Marketing Assn's 15 Livestock Shipping Assn's 40 Farmers' Clubs 13 Purchasing Associations 27 Grain Elevators and Com- panies 130 "Equities" 33 Fruit Growers' Exchanges... 39 Packing and Shipping Assn's. 9 Miscellaneous 37 660 The 1920 Federal Census figures, much lower than those taken from any other sources on the extent of co- operative buying and selling, may be thus summarized: 511,383 or 7.9 per cent of the farms of the United States report co-operative marketing of farm products in 1919. In Minnesota 43.9 per cent of all the farms reported co-operative selling. Figures for other states show- ing a high proportion of farms were as follows: South Da- kota 27.1 per cent, Nebraska 26.2 per cent, Wisconsin 22.6 per cent. North Dakota 22.4 per cent, California 21.9 per cent, Kansas 20.4 per cent, Iowa 20.3 per cent. The number of farms that reported purchasing through farmers' organi- zations in 1919 was 329,449 or 5.1 per cent of the total for the country. The states having the highest proportion of farms doing co-operative purchasing are Nebraska 22 per cent, Kansas 19.6 per cent. South Dakota 18.4 per cent, Min- nesota 16.6 per cent. North Dakota 16.2 per cent, Iowa 15.2 per cent. The large discrepancy between the census figures and those derived from co-operative organizations may be illustrated by quoting those from California. It has been very frequently reported in agricultural magazines that all California's co-operatives did a business worth $225,000,000 in 1919. According to the census figures the farmers them- selves report $127,990,981 as the value of crops co-operatively sold, and $4,321,129 as the value of supplies bought. There are two explanations, both of which undoubtedly are true: the co-operative organizations make exaggerated claims as to the value of business done; the census figures are un- doubtedly inaccurate and too low. The methods of conduct- ing the census could not but result in much confusion as to the use of the term co-operative. The real figures on the ex- ( Courtesy Rolit. A Mountain Store Wlghtman) The South Jersey Farmers' Exchange, Woodstown, N. J. ORGANIZED twelve years ago, the South Jersey Farmers' Exchange has been a profitable farmers' organization for selling potatoes and tomatoes, and purchasing fertilizer and other supplies. It is financed by the selling of stock to farmers mainly, though others may buy. Members are limited to fifteen shares. There are two thousand stock- holders, most of whom trans- act business through the ex- change, and voting is done by shares held. Dividends are also distributed according to the amount of shares held. By 1916 the exchange had succeeded to such an extent that it declared a dividend of one hundred per cent stock and four per cent cash. In 1917 and 1918 six per cent cash dividends were naid. In 1919, 1920 and 1921 the divi- dend was eight per cent. In all a total of $8.20 was paid in dividends during the last eleven years on every share of $5.00 invested in the con- cern. In addition, a surplus fund is maintained and now amounts to $145,425. The value of sales for and to farmers amounted to $363,- 249 in 1909. They steadily mounted until in the year 1920 the value of all sales was $2,844,833, and in 1921, $1,961,004.41. In 1921, 9,556 tons of fertilizer, 12,550 tons of feed, 950 tons of lime were purchased, and 845 cars of potatoes and 263 cars of tomatoes sold. The exchange is so equipped that it can ship potatoes and tomatoes from and fertilizer to any railroad station in South Jersey. Farmers' Store, Montvale, Tennessee IN the community of Montvale in the Southern Highlands a co-operative store was organized by the farmers in April, 1917. On the one hand its purpose was to sell part of the crops raised in the community. During the last four years it has sold part of the corn, oats, wheat and peas, buy- ing from local producers and then reselling to outside buyers. The store also buys groceries, machinery and general store supplies for sale to local farmers. A manager is employed on full time. In 1921 there were fifty-four stockholders who held a total of 308 shares at $10 per share. Each stockholder receives one vote and profits are distributed according to the amount of business done. The total business for the last fiscal year amounted to $35,000. This store has suc- ceeded though farmers are not pledged to market all their crops, but in a region where the farming is fairly well di- versified. Credit Union, Lowes Grove, North Carolina UNDER the North Carolina rural credits law of several years ago one of the first local unions to be formed was at Lowes Grove. The credit union performs in a lim- ited way the function of a local supply merchant. Since the farmers themselves own the credit union, they take for themselves the merchant's ordinary profit. Stock is sold, and farmers who expect to take advantage of loans buy stock and become members of the union. The banks have been friendly to the credit unions in most of the state, be- cause their formation has resulted in increased deposits, and Pacemakers in Farmers' Co-operation the committee of the credit union also is a help in approving applications for loans at the banks. The Lowes Grove Union was opened January, 1918, with fifty-six members. There was paid in shares up to the end of June 30, 1919, $1,012.50, and total short-time loans to the amount of $2,940.94 were made. There were in all twenty borrowers. The union it- self borrowed from the banks the sum of $1,000 during the period. It has continued to be an unusually useful organi- zation. This type of organization has been a big improve- ment over supply store credit. Under the North Carolina law another farmers' organization such as the Farmers' Union may do the actual purchasing, and the credit union serves merely as an agency to provide short time loans for the farmers. Grain Elevator, Spencer, Iov^a. ONE of the early grain elevator companies, with some co- operative features, was organized in Spencer, the county seat of Clay County, Iowa, in the j'ear 1907. It was capitalized at $25,000. One hundred and seventy farmers bought stock, each farmer being limited to twenty shares. It started its work by selling corn and oats, hogs and cattle, and buying coal, feed, flour and salt. A full- time manager was employed, and voting was done by amount of stock held. It was thought that limitation of the amount of stock held would keep control demo- cratic. A yearly dividend has been declared, according to the amount of stock held. Capitalization has been in- creased to $75,000. During 1920, 125 carloads of grain were sold, and 6,000 tons of coal, seven cars of salt, and twelve cars of flour bought for the members. Livestock shipping has been given up for the present. In 1920, despite the fall of food prices, a modest dividend was de- clared. Though there have been some strenuous days in the past, the elevator is on a sound basis, and there is all- around satisfaction, especially with results in selling grain. Livestock Shipping Association FosTORiA, Iowa THIS is the type of organization which has been spreading like a prairie Are throughout the livestock shipping areas of the Middle West. The county agents and various state organizations have fostered and encouraged this type in Iowa. The Fostoria co-operative was organized on Decem- ber 15, 1919, with ninety-five members, all being farmers who shipped livestock. No stock was sold to float the enter- prise; a membership fee of one dollar was charged, and at business meetings each man was to have one vote in the transaction. No local equipment is owned. A full-time manager was hired who was to receive a commission of eight cents per hundred pounds of all livestock shipped. One- half of one per cent of the gross receipts are put into a re- serve fund to be used to pay for losses of cattle in transit. At the end of one year's business the membership increased to 122. Eighty carloads of livestock had been shipped, valued at $180,000. The total saving to the shippers was estimated conservatively at a total of $6,400. The co-operative re- ceived slightly higher prices than the local dealers offered and was efficiently run. Selling Milk Direct to the Consumer at Wichita, Kansas DURING 1920 there had been some agitation in the city of Wichita, Kansas, for clean and better milk. The milk distributors who were buying up the farmers' product paid no attention to the appeals and kept on mixing milk though the farmers objected. City organizations were urg- ing a clean milk ordinance when a group of dairymen in the immediate vicinity took matters into their own hands. In April, 1921 they organized the Producers' Dairy Company of Wichita. They determined to kill two birds with one stone — they would give the city, or at least those in the city who purchased from them, clean milk, and they would keep for themselves the profit which ordinarily went to the milk distributor, and which had always seemed to them too large. Thirty-two farmers subscribed to a total of $20,000 worth of stock. One of the leading dairymen was elected manager; a $6,000 pasteurizing plant was built, and the thirty-two dairymen bound themselves to deliver every ounce of milk they didn't use on their own tables. A group of dairymen canvassed part of the city for orders and in one day of so- licitation secured enough orders for all the milk their four hundred Holsteins could produce. The aim of the organiza- tion is not to cut the price under that of the professional milk distributors, but to give the city better milk than the ordinary market affords at the same price, and that is a con- siderable advantage. Creamery, Stevens- ville, Montana A MOST successful co- operative creamery has been that located at Stevens- ville, Montana. The organi- zation was originally fi- nanced by the selling of stock, and profits are dis- tributed according to the amount of butter fat sold through the creamery. Each member has one vote. The creamery now handles 3,000 pounds of butter daily, manufactures ice cream and artificial ice, and also col- lects eggs. A dividend of from five to ten cents per pound of butter fat was dis- tributed to the member-pat- rons at different times dur- ing the year 1920. Organ- ized in 1908 with twenty-two members, it has grown until it now has 1,200 patrons. The co-operative creamery has not only brought profits to the members by keeping op- erating expenses within 8 per cent of the value of produce sold, but it has also raised their standards of preparing products for market. Only fresh eggs are received, and none but fresh milk or cream. The leadership and manage- ment has been good and there has been constant expansion of the creamery's business. During the past year a large cold storage plant was erected. By installing the refriger- ator and insisting on high standards, the creamery has solved the main problem of marketing its products — that of in- ferior products suffering most in the marketing process. Grain Elevator, Maize, Kansas ONE of the newer types of co-operative grain elevators, more "strictly co-operative" than the one at Spencer, Iowa, is in Maize, Kansas. It was organized in the year 1918, and one hundred farmers bought stock in the enter- prise, a total of $14,000 worth being sold. An elevator with a capacity of 25,000 bushels of wheat was erected, a full-time manager employed on salary, each stockholder given one vote and business begun. Beside selling wheat, the co-oper- ative was also to buy feed and coal. At the end of the first year, 1919, a dividend was declared equal to eight per cent of the amount of business done during the year. A small sum was put into a surplus account. Then came the year 1920 with its testing times for all farmers' co-operatives. Grain was marketed as wisely as possible but the year ended with a deficit of $800. This was paid by the stockholders who resolved to go on with the venture. They were con- vinced that the co-operative was an advantage over former methods. The farmers are here giving their new economic organizations a fair trial. (Courtesy The Co-operative League of Ameriea) A Co-operative Store in the Middle West 8 Pacemakers in Farmers' Co-operation THE RELATION OF THE SPREAD OF CO-OPERATIVES TO OTHER RURAL FORCES FROM a study of this large number of communities there appear a few conclusions. For instance, the co-oper- ative economic organization accompanies or follows the lodge and other social organization, that these social organizations perhaps help to create confidence or the type of community in which co-operative economic enterprises flourish best. Of the 650 communities with co-operative en- terprises, 430 or 69 per cent also have a lodge. Of the 1,925 communities without co-operatives, 924 or 42 per cent have a lodge. The communities with co-operatives thus have a much higher proportion of lodges. There is much the same story in connection with other social organizations such as clubs or civic associations: Of the 650 communities with co-operative enterprises, 236 or 36.3 per cent have other social organizations. Of the 1925 communities without co-opera- tives, 423 or 22 per cent have at least one other social or- ganization. The figures indicate the highest co-operative development in communities where a county agent has been on the field. Of the 650 communities with co-operatives, 86.3 per cent are in counties which have agricultural agents. Of the 1,925 communities without co-operatives, only 64.8 per cent are in communities which have the services of an agent. IT seems that the proportion of farm tenantry in the com- munity does not materially influence the spread of co- operative associations. The two groups — those with and those without co-opera- tives — have about the same proportions of communities with a high and low tenantry. The unorganized group has even a higher proportion of communities with the lowest tenantry. While the difference is hardly great enough to assert very positively that a higher proportion of tenantry is conducive to co-operative organization, the figures indicate plainly that communities with a very low proportion have not been more frequently organized. It seems that tenantry does not g:reat- ly figure. The tenant apparently joins the co-operative, if he does not join some other organizations in the community. That may be because the co-operative serves him in a more vital way. The type of farming may be an influence here, but in regard to this there is no accurate data. Of the 421 communities with less than 15 per cent of foreign population, and with co-operatives, 115 have prac- tically no foreign population at all. A comparison with the 1,925 communities without co-operatives reveals that only 51 per cent have less than 15 per cent foreign population, over against 64.8 per cent for the organized group. CommunitleB With With Co-operatives Foreign Born Per Cent Population of Number of Total 0-16^ 421 16-26^ 63 26-45^ 35 46-60^ 33 60;^ and over 98 Totals 660 100,0 Oommunities Without C'o-operativfs Per Cent. Number of Total 64.8 983 51.1 9.8 247 12.8 5.3 168 8.7 5.1 170 8.8 15.0 367 18.6 Communities With Co-operatives Per Cent, of Families Per Kealdent Fifteen Years Number Cent. 1-26 130 20.0 26-60 102 15.7 61-76 209 32.15 1 76 and over 209 32.15) Totals 660 100.00 Communities Without Co-operativts Per Number Cent. 485 25.2 439 22.8 489 25.4 512 26.6 62. 1925 100.0 THE results may be briefly expressed. Considering first the group of 650 organized communities, the table shows that 64.3 per cent of these had over half of their families resident fifteen years or over. Comparison with the group without co-operatives reveals that only 52 per cent claim such permanence of residence. Chapter III. Progress Toward Federation of Local Co-oper- atives and the Formation of Larger Co-operatives THE development of the local association in the rural community has been the first step of the farmer-co-operator. For many years he has been tak- ing the second step: forming fed- erations of existing local organi- zations, or building larger organi- zations, operating over consider- able territory, either without the local organization, or with the lo- cal or district associations created at the same time as the central agency. If the co-operator was to have a strong position as a marketer this step was necessary. Let us suppose that "Rectangle County, Illinois," has fifteen local co-operative associations in as many communities. They are made up of bands of fifty or a hundred farmers. If no other scheme of organization is developed, these small associations are apt to live unto themselves alone, so far as their dealings with city markets are concerned. Obviously they may easily compete with one another. Most of them may be shipping to one city when the market there is glutted, and some might more profitably ship elsewhere. Therefore their efforts must be co-ordinated. The evident thing to do is to form another marketing agency, operated and owned by the local associa- tions or by the individual members of the locals. This agency will be used by and serve the local groups. By means of it, the farmer supplants a second privately-owned marketing agency, or middleman, in addition to the buyer or dealer in "T^HE question is how far farmers will be driven to co-operate by our distribution system. — From an Editorial, "The Country Gentle- man," May 28. 1921. the local community, and gives to the co-operators the accustomed profit of the supplanted agency. THE CALIFORNIA GROUP PROBABLY the best known central agency of local co- operatives in the United States is the California Fruit Growers' Exchange. Organized in 1895, its business has constantly in- creased in volume and value until, during the year ending October 31, 1921, it handled for its 10,500 members over $61,000,000 worth of oranges, lemons and grape fruit. Two hundred and three local associations are organized in twenty district ex- changes, and these in turn form The California Fruit Grow- ers' Exchange. When the lemon and orange growers first organized, more than thirty years ago, they thought that the local association which did the packing, grading and ship- ping would solve their problems. But they were merely competing with one another and constantly shipped products to glutted markets. Beginning with the formation of the central organization in 1895 the following plan has been worked: Most of the local associations pick the fruit by employing bands of trained workers, thus avoiding damage to fruit from improper handling. All the local associations pack, grade, load and ship the fruit. The district exchange sells the fruit, in co-operation with the central exchange which acts as a clearing house. Fruit always remains the Pacemaliers in Farmers' Co-operation property of the local associations. Fruit is sold subject to the right of the shipper to say when and in what amount prod- ucts shall be shipped and to whom the product shall be sold, and, except at auction points, the local association can name the price at which it is willing to sell. In 1922 the cen- tral exchange has agents in fifty-three of the principal mar- ket cities. The agent of the central office communicates to the district office the best price he is able to obtain, and the district exchange may reject or accept the offer. The central organization is an efficient marketing association which pro- vides the facilities through which the fruit is distributed. It does not charge a fixed commission. It is the servant of the growers, and all money earned is returned to them, after all operating costs have been deducted. The central ex- change has a contract with the district exchange, the district exchange has the same relation with the local associations, and the association has a contract with the growers, binding them to deliver all their fruit for a period of years. The associations, however, reserve the right to withdraw from the district exchange by giving notice of withdrawal at a certain time each year, and the district exchange reserves the right to withdraw from the California Fruit Growers' Exchange in the same manner. These relations, plus the real co-operative spirit, are deemed necessary for success. The Central Exchange handles 72.5% of the citrus fruit pro- duced in California, taking it from the orchards to the whole- salers in the large cities. The California Fruit Growers' Exchange is a non-stock organization, having been changed to this plan, after it was launched with capital stock. Its greatest benefits have come through stabilizing prices, by an equitable distribution of the crop, by increasing the consumption of citrus fruits through a national advertising campaign, (it now sells al- most as much fruit in summer as in winter), and by reducing the cost of distribution. The total cost of all the selling and advertising, including operating expenses of the district exchanges, is equal to only 2.32 cents out of every dollar received. All in all, the California Fruit Growers' Exchange has achieved a most noteworthy place in the co-operative movement by its great success over a period of twenty-five years. GROWING raisins was a most unprofitable business in California until the organization of the California Associated Raisin Company in 1912. The first vine- yards were put out in 1884. By 1891 raisins sold for a cent a pound. Various types of organizations among the farmers failed. Even with better prices later on, there were years when, because of the methods of distribution which then ob- tained, crops could not be moved. Then came the Associated Raisin Company. At the end of its first year, 77% of the raisins produced in the state were marketed through this organization. The contract called for five years' delivery from the grower. This contract was upheld by the courts, after being fought by the private distributors, and this proved to be a great victory for the cause of co-operation among farmers in the state. The raisin crop has increased in volume from about 35,000 tons in 1912 to over 200,000 in 1920. In the latter year the co-operative company con- trolled 90% of the crop. It was known as the only farmers' trust in the world. But it has not been convicted of an illegal transaction, has not prevented competition and, after ten years of organization, production of raisins in the state has increased over 600%. Recently the company sold 320,000,000 five cent packages of raisins in six months, by means of a special advertising and selling campaign, and created increased consumption of their product, — when the spectre of overproduction loomed ahead. There are over 10,000 stockholders, and dividends of from 6% to 10% have been paid annually. Every member must own stock and the grower must also sign away his voting power to a board of trustees, twenty-five in number. They are elected by the stockholders, by districts. These men in turn elect a board of seven directors, who direct the company's affairs. This is real concentration of control, undemocratic, but apparently in most respects successful. THE co-operative third in size is the California Prune and Apricot Growers, Inc. It dates from the year 1917, and by 1921 had over 11,000 farmers as mem- bers and through its hands went over 70% of the prunes and apricots produced in the state. Results among prune and apricot growers have been practically the same as those among the citrus fruit and raisin producers. All of the state's co-operatives are said to have marketed $225,000,000 worth of products in 1919. In addition to the big three, Cali- fornia has thirty marketing associations, which are small only when compared to the size of the others. Among them are co-operatives which handle almonds, peaches, walnuts, berries, beans, pears, honey, dairy products, eggs, etc. The Association of Poultry Producers of Southern California is an example of these small organizations. It handles over $4,500,000 worth of eggs annually. IN a series of articles on "Farmers' Co-operation in Cali- fornia," appearing in "Wallace's Farmer" and the "Prai- rie Farmer," Mr. Herman Steen of the Standard Farm Pa- pers, Inc., thus summarized the four fundamental features which are carried out in most of the state's co-operatives: "1. These marketing associations are organized by com- modity and not by locality. Peach growers and orange grow- ers and bean growers may live in the same community, but they market their product through different co-operative associations. One man may sell different crops through three or four different commodity associations. All leaders in co-operative work in California no matter how much they differ on other points, are agreed that this is absolutely essen- tial. "2. The associations have an absolute binding contract with every producer who belongs, requiring him to market all his products through the association over a period of years. A California co-operative organization would no more think of starting now without this provision than it would of leaving its safe unlocked at night. The wisdom of years of experience in co-operation in California has burned the necessity of this provision into the very soul of co-operative enterprises. "3. Crops are handled on the pool basis, thereby giving every producer the same price for the same quality product, no matter when sold. This rule, with little variation, is in effect in practically every co-operative organization in Cali- fornia. It is the basis of true co-operation, and the wisdom and fairness of this provision have been proved through the years. "4. Organizations are without capital stock and operate on the non-profit plan. Most of the California co-operative associations are operating on the non-profit plan with no capital stock and others are rapidly changing to this plan or are endeavoring to do so." PROGRESS AMONG OTHER GROWERS OF SPECIALTIES IN the last ten years there has been a marked development among the citrus growers of Florida. In 1909 a group of fifty Florida Growers visited California to study the organizations which the California farmers had built up. The plan of organization in the South is somewhat similar to that of the California Fruit Growers' Exchange, including the non-stock feature. The Florida Citrus Exchange is a federation of twelve sub-exchanges, which in turn are made up of about one hundred local associations. The function of the three organizations is the same as in the California Fruit Growers' Exchange. The associations are without capital stock, are on the non-profit plan, and each acts as the servant of the growers. Over four thousand farmers are 10 Pacemakers in Farmers Co-operation banded together and are doing a constantly increasing busi- ness. For the year of 1921 they sold over 4,000,000 boxes of oranges and grape fruit. This was 65% of the citrus fruit grown in the state. The Exchange spends a quarter of a million dollars a year for advertising. It has two subsidiary companies, one through which the growers buy annually several million dollars' worth of supplies, the other a loan and guaranty company which lends money to the grower to help him produce his crop, or to enable him to carry it until the exchange has sold it. The exchange also owns its own fertilizer and box factories. In Florida large celery, berry and vegetable associations are being formed. The Michigan Potato Growers' Exchange was organized with the same methods as the California citrus fruit growers, except that the central exchange has more authority. In 1920 this recently formed organization marketed 3,150 carloads of potatoes, or more than half of the Michigan crop. In Southern Michigan there is a Fruit Growers' Exchange, made up of fourteen local associations, which sold a million dollars' worth of fruit in 1921. Four thousand carloads of various truck crops were sold last year by the South Carolina Produce Association. The asparagus growers of this state are organized and last year disposed of one hundred carloads of their product. The Arkansas Rice Growers' Co-operative Association has "signed up" over 90% of the rice acreage of the state. In 1920 $1,000,000 worth of grapes went through the Chautauqua and Erie Grape Growers' Association, operating in Western New York and Pennsylvania. In Georgia the Peach Growers' Exchange handles 7,500 carloads of peaches a year. 747 carloads of watermelons were sold in 1921 by the Southwest Georgia Melon Growers' Association. In New York state several thousand maple growers have organized, and they expect to have at least ten thousand members. In the Hood River Valley of Oregon there has been since 1914 the well-known Apple Growers' Association. Through it pass about 75% of the apples grown in the section. At Hood River the As- sociation operates a half-million dollar storage and refriger- ating plant. It has branches in four cities and sells through brokers in other large centers. $30,000 a year is spent for advertising. Farmers in Alabama were struggling with the production of the Satsuma, a small Japanese orange of the same family as the tangerine, from 1908 to 1914, when five growers formed the Gulf Coast Citrus Exchange. Now the co-operative has five hundred growers as members, and in 1920 it marketed a quarter of a million dollars' worth of oranges under three brands. There are eight local associa- tions with eight plants for sorting, grading and packing fruit. The Exchange takes six cents out of every dollar received for its operating expenses. MARKETING GRAIN IN Northern Idaho, Eastern Oregon, Eastern Washington and Montana, the North Western Wheat Growers' As- sociation has 20,000,000 bushels of wheat under contract for the 1922 season. There are sub-organizations in each of these states. The co-operative has gone through three suc- cessful years. The growers' association was founded with- out capital stock, on the one-man one-vote plan, and in order to build warehouses and elevators a subsidiary warehousing corporation has been formed. The common and voting stock in the subsidiary is held by the directors of the grain grow- ers' association, who are thus placed in full control. The warehousing corporation must do the work of marketing at cost. The preferred stock is sold to anyone willing to buy, and pays 8% cumulative dividends. The holder of the pre- ferred stock has no voice in the transactions of the company, unless dividends should not be paid for two successive years. A binding contract is held by the association with each grower; he agrees to deliver all wheat for a period of six years. A grower who violates the terms of the contract must stand all costs of suit and pay to the association a penalty of twenty-cents per bushel for all wheat marketed through other channels. Thus formation of five thousand local grain elevators is but the first step of the grain growers. The small grain elevator association eliminates one middleman, the local dealer, and gives to the farmer a few other marketing ad- vantages. But the saving is simply in reducing local hand- ling costs and in taking the dealer's profits. Most co-opera- tive elevators sell to the brokers on the city board of trade as do their private local competitors. The next step is to eliminate the broker and the speculator, and to form asso- ciations of the local grain co-operatives. These associations carry on business in the marketing centers and compete with the brokers. In October, 1920, the Michigan Farmers' Ele- vator Exchange was formed, with twenty-three affiliated lo- cal co-operative elevators. It is a central selling agency, following to some extent the principles of the California Fruit Growers' Exchange. In late 1921 one hundred of the state's one hundred and seventy-five co-operative elevators were members, and the Exchange was handling 25% of the grain, hay and beans leaving the farms of Michigan. In Cleveland, Ohio, there is a co-operative grain elevator, with a capacity of 300,000 bushels. Another conspicuous example is the Equity Co-operative Exchange, with headquarters in St. Paul, and with seventy-five branch elevators under its control. This is a line elevator system, the central agency operating the local elevators. The organization started in 1908, on paper, and struggled along until 1915, when it had a paid up capital of $45,000 and a debt of $95,000. But in 1920 the company had a paid up capital of $1,550,000 and since 1916, after the construction of the terminal elevator, divi- dends of 8% on stock have been paid. All stockholders have one vote, and no one man holds more than twenty shares. The Exchange did a grain business worth $20,000,00 in 1920. ALL the plans of marketing grain through associations of local co-operatives have culminated in the recom- mendations of the Committee of Seventeen of the American Farm Bureau Federation which were put into effect in 1921. The Farm Bureau Federation itself has a million and a quarter members, and aims to become the servant of other marketing organizations, especially in aiding in the formation of co-operative marketing associations, by commodity. Its Committee of Seventeen was made up of representatives of the main farmers' bodies and the previous associations of local grain elevators. The United States Grain Growers' Association, Inc., with its projected $100,- 000,000 Farmers' Finance Corporation, is the result. The Growers' Association is to be a non-stock, non-profit organi- zation. Under its powers it can establish numerous sub- sidiary corporations and hold their stock, as that of the Finance Corporation. United States Grain Growers, Inc., is to be a sales agency for the local co-operative elevators of the Grain Belt. The central agency will agree to sell the grain of the local association for a period of five years. There is no compulsory pool for the local grower; in fact, he has a choice of five methods: he may: (1) sell to the local co- operative elevator for the current market price and thus end the transaction; (2) consign to the national agency at the various terminals, through the local co-operative. In this case the central agency acts merely as a handling agent and sells the grain at the market price at its discretion or when- ever ordered to sell by the owner; (3) pool his grain with his neighbors and take the average price of all the grain in the pool; (4) agree to combine his local pool in a joint pool with Pacemakers in Farmers' Co-operation 11 other local pools to be marketed by the central agency; (5) pool one-third of his grain in a national pool to be marketed by the national agency in the United States or abroad. The grower pays a ten dollar membership fee, when the contract is signed, then the expenses of handling the grain. One per cent of the total receipts may also be deducted by the national selling agency for the buying of equipment and retiring obli- gations. Eventually, the Growers' Association desires to own all the equipment necessary for marketing grain. Only farm- ers can secure membership in the parent organization. Briefly, this plan is to prevent speculation, to stabilize prices, not to fix them, to study marketing conditions, to ship regularly over the entire year rather than during three months as has formerly been the case. A big advantage will lie in the fact that the selling agency will eliminate another middleman, and will sell grain to the miller and exporter. While the Grain Growers' Association hopes to control a large amount of the grain marketed in the country, it is not seeking a monopoly. It realizes it cannot fix prices, particularly because of the competition with foreign grain, including that of Canada, where the wheat growers are co-operatively or- ganized. It can accomplish no miracles, and in the immedi- ate future may not greatly remedy conditions. But after a while it may lower the prices in the retail market and at the same time by becoming an economical middleman it expects to secure a larger return to the wheat grower. On the whole it is the most ambitious co-operative venture that the farmers in this or any other county have ever launched. In January, 1922, 1,000,000,000 bushels of grain were un- der contract, but by September little progress had been made in marketing grain for the farmer. The original officers and directors resigned, after having incurred an indebtedness of $285,2&7. The largest creditors of U. S. Grain Growers are several midwestern state farm bureaus and these are natu- rally represented on the committee of reorganization. If this committee on reorganization can satisfy the creditors and can set up a sales organization to market some 1922 grain, then success may still come. The result, however, is doubtful and the grain men may have to begin over again. Another large federation of wheat growers looms up in the West. Plans are projected to form by federation of various large organizations the American Wheat Growers' Association. In the spring of 1921, these bodies are said to have 75,000,000 bushels of wheat under contract on the compulsory pooling plan. (This was not adopted by the United States Grain Growers.) The organizations to be merged into this new federation had a total of 35,000 mem- bers in two large co-operatives: (1) the Northwest Wheat Growers' Association, with its organizations in Washington, Oregon, Idaho and Montana (previously described) and (2) the National Wheat Growers' Association, made up of branches in Oklahoma, Kansas and North Dakota, with or- ganizations in process in Colorado, Nebraska and Texas. This new organization, by membership campaigns, hopes to have 50,000 members by the 1922 harvest, and to market about 12% of the country's wheat crop. • LIVESTOCK SHIPPING WITH the development of three or four thousand local livestock shipping associations have come farmers' commission firms in various midwestern cities. The packing plant itself is the goal of the co-operating livestock shipper. The local associations save costs in the marketing process by eliminating the local buyer. But when the farm- ers take the important second step and themselves operate a city commission firm, they are able to take their stock to the door of the packing plant with their own agencies. In early 1921 there were seven city firms in operation. The Equity Co-operative Exchange had houses in Chicago and South St. Paul. The Farmers' Union of Kansas operated firms in Kansas City, the Union in Colorado had a house in Denver, and the Union in Nebraska had organizations at Solith Omaha, St. Joseph, and Sioux City. The number of farmer-owned livestock commission houses will undoubtedly be increased in 1922. The Farmers' Union Livestock Commission of Nebraska, which is a part of the state farmers' union, began business in 1917 without selling stock and with $2,000 of borrowed money. It has become an outstanding success. Through its three branches at the Omaha, St. Joseph and Sioux City markets it sold in 1920 nearly seven hundred thousand head of livestock and returned to its patrons savings of $100,000. One local shipping association received in 1919 a check for $1,224 as its patronage dividend. The Committee of Fifteen appointed by the American Farm Bureau Federation to study the marketing of livestock, worked ten months and. formulated a plan which is going into effect in 1922. More city commission firms are to be estab- lished, probably in St. Louis, Chicago, Cincinnati, Detroit, Buffalo, Pittsburgh and other points. At each city a co- operative is formed by selling memberships at $10 each to individual livestock shippers and $50 each to local associa- tions. Patronage dividends will be returned. The Committee also outlined its greater task, which is to be taken up after the commission firms have been made a success. This task is to co-ordinate the efforts of all the asso- ciations, to secure orderly marketing. This would mean close co-operation, which would, among other things, enable the individual farmer or the local shipping association to use the facilities of more than one commission firm when possible. COTTON AND TOBACCO ASSOCIATIONS IT was long thought that the cotton growers could not be organized, but recent news from parts of the South tells a different story. Out of 114 local co-operative cotton gins formed since 1910 in Oklahoma, only fourteen are left in 1921. Great opposition and lack of knowledge put them out of business. Still, though co-operation had such a "black eye," word came in the fall of 1921 that the Oklahoma Cot- ton Growers' Association had signed up its 400,000th bale. When formed it had the endorsement of the Oklahoma Bank- ers' Association, the Governor, the State Board of Agricul- ture and the agricultural college. It has no capital stock, its capital being the cotton signed up from the growers on a seven-year compulsory contract, though it charges a ten dollar admission fee. It will be a sales agency on the non- profit basis. A large warehouse corporation is necessary, control of which is to be vested in the co-operative cotton growers' association through common stock. The preferred stock is sold to build equipment, and the plan of the associa- tion is to retire a small amount of the preferred stock of the warehousing company each year, so that eventually the cotton growers themselves will have full control. The real impetus for such an organization came when a few leading growers in the state attended a meeting at Montgomery, Alabama, in May 1920. One of the speakers told of success in co-operative commodity marketing in California. The Oklahoma men went home thinking hard about their own big problems in marketing one of the least perishable products in the country. They began to believe that what real co- operation had done in California in handling perishable products it could do in Oklahoma for cotton. In June, 1920, a meeting was held attended by representatives from thirty- two of the fifty-three cotton producing counties. They drew up their contract and began to employ field organizers. The $10 membership fee paid the expenses of organization and left a small surplus. The county agents aided in forming 12 Pacemakers in Farmers' Co-operation organization committees in every county, paving the way for the work of the field men. One county, McClain, signed up for 98% of its crop. Thirteen other counties signed up for more than 60% of their product. Some towns boast that the street buyer of cotton has been altogether driven out. Local associations have been formed by school districts. The Oklahoma Association has been successful in securing a loan from the War Finance Corporation to aid in selling cotton for export. The Texas growers are organized on the "Oklahoma plan" and were handling, in 1921, 200,000 bales. They too have secured an export loan from the War Finance Corporation, as has the Staple Cotton Co-operative Asso- ciation of Mississippi, to finance the exporting of 100,000 bales of long staple cotton. The Arizona Co-operative Cot- ton Growers' Association also received the same kind of a loan in August, 1921. About half the market value of cotton is advanced to the co-operatives, that they may hold the cotton in warehouses and proceed to organize for sales. The money is advanced for a maximum period of one year. Or- ganizations are also being started in New Mexico, North Carolina, Arkansas and California. They are already banded in the American Cotton Growers' Exchange with 80,000 growers as members. The state organizations handled 10% of the country's 1921 cotton crop. During 1921-22 there has been great activity along the tobacco growers. More than 55,000 growers of "Burley" tobacco in Kentucky have signed contracts to deliver their crop for five years to the Burley Tobacco Growers' Co- operative Association at Lexington. In Virginia and the Carolinas, 68,000 growers of "Bright" tobacco have signed similar contracts as members of the Tristate Tobacco Grow- ers' Co-operative Association. More than 85% of the "Bur- ley" crop and 70% of the "Bright'-' products may be co- operatively stored, graded and sold in 1922. The Kentucky organization was financed (1) with what was saved from the $5 membership fee after the preliminary organization and the membership campaign costs, (2) a substantial loan of $5,400,000 from banks in the section, and (3) a $10,000,000 advance against warehouse receipts from the War Finance Corporation. These loans enabled the association to pay to each grower half the value of the tobacco when he delivered it to the co-operative's warehouse. Through lease or pur- chase, the organization has the use of warehouses worth $6,000,000. Tobacco is carefully graded, packed and sold by the association for the grower. The area organized has been divided into a number of districts. Several large sales in the early days of the organization have given added impetus to an unusually enthusias.tic organization. DAIRYMEN'S ASSOCIATIONS ALSO outstanding among the achievements in co-opera- tion are those of the dairymen in various sections. In 1912 a group of Sheboygan County, Wisconsin, farmers engaged in producing American cheese, became dis- gusted with the deliberations of the Plymouth Cheese Board in fixing prices. The charge was that there was no fair competition in the method. From the summer of 1912 to that of 1913 efforts were made to remedy conditions. Forty-five local co-operative cheese factories were formed under the co-operative law of the state and they banded themselves together in the Wisconsin Cheese Producers' Federation. This was their selling agency. Its capital stock was only $2,000.00. Shares sold for $10 each and the local association operating the factory was allowed to hold not more than three. The warehouse and .storage company, while controlled largely by the men in the federation, was a separate organi- zation. The Federation, the farmers' middlemen, put sales- men on the road, and has from the beginning been successful. though it has had terrific competition and a very strenuous life. Only the sacrifices of the managers have kept the en- terprise alive through the worst periods. Cheese is now shipped to thirty-seven states; various brands have been standardized; and the total volume of cheese handled in- creased from 6,125,480 pounds in 1914 to 14,088,021 pounds in 1919. The value of cheese received from and sold for the local factories increased from $855,328.64 in 1914 to $4,- 243,938.56 in 1919. The number of local factories doing business through the federation increased from forty-five in 1914 to 129 in 1919. Three thousand farmers are engaged in this enterprise. The selling costs have been extremely low and have constantly diminished as the volume of busi- ness increased. Though the Wisconsin farmer pays his local cheese maker four cents out of every dollar received and pays 8.3 cents out of every dollar received for cheese for all the local expenses of the cheese factory, the Wisconsin Cheese Producers' Federation has taken only 1.4 cents out of every dollar received for all selling expenses and only two- fifths of one-tenth cent out of every dollar has gone for the salaries of managers. This low selling cost compares very favorably with the remarkable record of the California Fruit Growers' Exchange. The Federation does not buy the cheese from the local factories, nor does it pay dividends. It sells cheese for them and monthly sends each local factory the proceeds of sales, less the Federation's cost. Thus it is able to run on such small capital. The advantages for the farme:f have been in reduced selling costs and in eliminating one or two middlemen. In 1921 a federation of cheese factories en- gaged in making Swiss and Limburger varieties was formed in Wisconsin along similar lines to the Federation selling American brands at Plymouth. In Minnesota, in 1920, thirty co-operative cheese factories organized the Minnesota Cheese Producers' Association, with a capital stock of $25,000. In 1922 the number of factories as members had grown to three hundred and ten. The first duties of this federation are to grade, pack and standardize products. This accomplished among the factories, the central agency will become a selling organization. IN the field of marketing whole milk there is a growing list of federations of local co-operatives, or large organi- zations without locals, centering around large cities such as Boston, New York, Philadelphia, Pittsburgh, Chicago, Des Moines, Milwaukee, Detroit, Portland, Oregon, and the twin cities of Minneapolis and St. Paul. Some of the or- ganizations also supply milk to smaller cities in their regions. The work of all of these is vividly described in the Source Book of Co-operative Marketing of Dairy Products contain- ing the report of the National Dairy Marketing Conference held in Chicago May 3 and 4, 1921, at the call of the Co- operative Marketing Department of the American Farm Bureau Federation. This report gives the plans of a num- ber of co-operatives, mostly those handling whole milk, from the addresses of officials of the organizations. For instance, the New York Dairymen's League, Inc., reached a total of 93,000 members, with at least 70,000 pro- ducing milk, at the end of 1920. It was organized in 1907, incorporated in 1909, but did not operate on a large scale until 1916. Since 1909 about 23,000 farmers who no longer produced milk have kept a nominal membership in the League. There were 1,112 local organizations in six states, the big majority being in New York. Since 1916 it has been much heard of as a powerful factor in the wholesale milk market. It transports milk from as great a distance as 500 miles. Three-fourths of the milk received goes into the city for fluid consumption; the remaining one-fourth is manu- factured, being sold mainly to condenseries. As the Dairy- Pacemakers in Farmers' Co-operation 13 men's League was incorporated it was solely a bargaining agency acting for the local farmers' organizations in their dealings with the city milk distributors. It did not collect money for the farmers but received from them one cent per hundred pounds of milk sold. The locals of the New York Dairymen's League also mostly delivered their milk to plants owned by the city milk distributors at the country stations. After operating from 1916 to 1920 it became necessary, especially because of difficulties in disposing of surplus milk to condenseries, to reorganize so as to give the central agency full powers as marketing agent. It was to collect the money for sales and make as uniform as possible a return to the locals. New contracts were circulated among the pro- ducers and in 1922 the Dairymen's Co-operative Association, Inc., began to operate, with 50,000 out of the 70,000 producing members of the old League. 20,000 producers of the League have not signed the new contract. It is doing a business of $6,000,000 a month. The Dairymen's League as such will not desert the 20,000 farmers who have not entered the new organizatioii, but it is thought that soon the old organization will cease to operate. Prominent among these co-operatives are also the New England Milk Producers' Association organized on the non- stock plan, with 559 local units comprising 24,000 members. The central agency as sales agent receives one-half of one per cent of the amount received for milk or other milk prod- ucts. The Associated Dairymen of California has the usual non-stock, non-profit plan, with the subsidiary corporations for erecting and operating distributing plants and factories, with the binding contract and a $10 membership fee. A sim- ple plan is worked by the Interstate Dairymen's Association of Philadelphia, which acts as sales agent for 15,000 dairy- men, receiving one cent per hundred pounds for milk sold. OTHER federations, combinations or large organizations might be described. Some of the very recently organ- ized are mentioned in Chapter IV. Of the 265 na- tional, 143 interstate and 1,761 state agricultural organiza- tions, mentioned in the 1920 list of the Department of Agri- culture, approximately 300 are buying or selling associations. There is variety in the plans of the central agencies discussed in this chapter, but for most of those mentioned the methods may be thus summarized. 1. The local association of the individual has a large measure of control. Systems of local and district represen- tation in the central agency are mostly framed to keep the producer close to control. The local group or the individual usually has the same powers in the central agency as the individual has in the local enterprise. 2. The capital stock of the central agency is made as small as practicable, and the local associations or individuals take a limited number of shares. Or, as seems to be the most popular method, no stock is sold, the farmer holds a membership, and contracted products become the capital of the organization. One-man one-vote is the rule in a majority of cases. 3. In marketing some commodities, a subsidiary or aux- iliary company is formed to do the work of the parent or- ganization. "This is financed by preferred and non-voting stock. The common and voting stock is held by the parent company. This preferred stock is retired as soon as possible to give entire control to the agrricultural interests. 4. Savings and Dividends are most frequently distributed to the farmers or the local associations according to the amount of business they have transacted with the central agency. Or, no savings or dividends are sought for, the central agency merely serving as a more economical middle- man, receiving only its own costs. The savingrs come in the form of higher current income. 4. In many cases the central organization has a binding contract with the producer. Crops are frequently pooled, thus giving each producer an equal price for the same grade or quality of products. Chapter IV. Achievements, Problems, The Future (CONCLUSION) THE theory of my recommendations," writes Mr. Bernard M. Baruch, in an open letter to the Secretary of the Kansas State Board of Agriculture, "is that, in the marketing of his products, the producer must be placed on a footing of equal opportunity with the buyer." To achieve that place of equal opportunity has been one of the goals of the farmers ever since they began to give attention to the problems of distribution. They are nearer achievement to- day than ever before. To form fifteen thousand local co- operative organizations and several hundred federations or large co-operatives is a remarkable accomplishment. Cer- tainly its importance is not exceeded by any other event in American agriculture. On the whole the farmers' efforts are to emphasize demo- cratic control : — to give a man one vote regardless of the amount of stock he holds, or to limit the amount of stock one man may hold. This makes their organizations rather cumbersome, slow to act, in contrast to the uncanny speed of the centralized industrial corporation. But the ideal is to exalt individual preference, to put the producer in full control. The farmers have gone far in the matter of "taking the premium out of capital," though not as far as the city consumer co-operative movement. There is a noticeable ten- dency to form new organizations with the policy of patronage dividends, and half of the grain elevators in the state of Iowa are reported to have gone over to this plan in the past few years. Out of 1,208 local co-operative grain elevators investigated by the federal trade commission in 1919-20 67.62% distributed dividends by patronage. The latest re- ports of this commission — for the crop year 1919-20 — state that farmers' elevators paying patronage dividends made thirty-nine per cent on invested capital. Farmers' elevators not paying patronage dividends returned profits of twenty- six per cent. The independents realized twenty-three per cent and the line elevators eighteen per cent. The policy of paying patronage dividends leads to greater returns to the growers. The report for 1919-20 shows greater profits for co-operatives than that of the previous year. The farmers have a great body of experience in non-stock organizations, and with the great forces behind them, the co-operatives are able to start with the money realized from membership fees and the capital borrowed with contracts for products as security. The non-profit-making central agencies, or federa- tions, serving as economical middlemen, deserve heed and study. The large federations, when they have storage and warehouse facilities, have achieved much in stabilizing prices, in so far as this is possible. This is one of the big ideals of many of the organizations which are now federating and beginning to market on a large scale. The standard of grading and sorting products has been raised. Speculation in some products has been done away with by the methods of the federations. Through economical distribution and studying of marketing conditions, transportation costs have been lowered. In many sections the remarkable prosperity of the farmers is due directly to co-operation. For instance it is estimated that in 1921 among co-operating California 14 Pacemakers in Farmers' Co-operation farmers only 2% carried crop mortgages. This is a very low figure. The trend of the whole farmers' co-operative movement has not been to wreck or wildly eliminate the middleman. The effort is to supplant the privately owned middlemen agencies with the farmers' own. In a word, the farmers are changing agencies of marketing, while continuing to perform the fundamental services of the marketing process. In a few cases, however, as in that of the Wisconsin Cheese Producers' Federation, sometimes from two to four middle- men have been eliminated when the co-operative sells direct to the city dealers. But in the main the effort has been to take over the work of the country handler or dealer in the selling process, and then, through federation of local co- operatives, the work of the broker, wholesaler, and speculator. The ideal of the grain growers, for instance, is to supplant the broker and to sell to the miller and exporter. It is hardly possible that any of the farmers' organizations will attempt to build up distributing agencies farther along the road to the ultimate consumer. Production has in no case been cut, nor an unjust monopoly been sought for. Only a small number of co-operatives as- sert themselves at all in fixing prices. Several California co-operatives, controlling a large proportion of a special crop, do fix prices in advance of their selling season by taking into account the probable workings of supply and demand. This method has not been altogether successful. It is harder to estimate what demand will be than to adjust price to de- mand when it asserts itself during the buying season. The Dairymen's Associations naturally have a voice in bargain- ing, Ijut price fixing of milk is usually done now with three parties present: the state or public, the city milk distributor or dealer, and the association of producers. The California Fruit Growers, the Southern Cotton Growers or the United States Grain Growers could not attempt to regulate prices, much less try to set an arbitrarily high price on their prod- ucts. In the case of the last two there are foreign markets and supplies to be taken into consideration. One hears of no designs to exploit the consumer. Instead of cutting pro- duction and exploiting the consumer the great central agen- cies have, through advertising and improved selling methods, enabled the farmers to secure profitable distribution of con- stantly enlarging crops, and have enlarged consumption, whereas under the old system the large crop was nearly always a financial failure. The day of experimenting in co-operative marketing is passing. "The old mistakes are being avoided. At the head of the large organizations are far-sighted, trained men, planning in a scientific way to market products. The post- war period has brought new difficulties, and the drop of prices caused new obstacles to loom up, but the co-operatives are forging sanely and bravely ahead. In the early days of the Harding administration plans were being made by the Secretary of Commerce and the Secretary of Agriculture for aiding the grain producers through arranging for financial credits and providing better warehouses. But the grain growers' organizations were in the midst of plans for "self- help," and were not interested. Though there has been some call for government relief, the co-operatives with their tested organizations are relying in a commendable way on their own agencies to "pull them through." Finally, the co-operative agencies have given the farmer greater prestige as a political factor. The farmers' group is added to the so-called capital and labor groups in legisla- tive lobbies and halls, and this new group has become very powerful. "Agriculture," says part of a resolution of the National Dairy Marketing Con- ference held in May, 1921, "neither asks nor demands any special favors and will tolerate no unfair discrimina- tion against it, for the benefit of other branches of industry." A review of recent national legislation passed or that pending in the fall of 1921 is rather impressive : the emergency credit bill paving the way for larger credits to farmers; the packer control bill, placing large control of the meat pack- ing industry into the hands of the secre- tary of agriculture; the futures trading act, further regulating grain ex- changes, have all been passed after be- ing urged by the organized farm- ers. The emergency tariff was largely passed under pressure from, the farming states. The farmers are also in back of bills to stimulate road building and to correct certain undesirable features in Federal Aid road building in the past. The voice of the agricultural bloc becomes vehement when tax measures are being discussed, and the group is interested in other measures such as a truth in fabrics bill. ON the other hand, there are many problems within and without the organizations. State laws are sometimes barriers to the type of co-operative organizations that the farmers want. They are asking for the removal of hin- drances to the kinds of organizations they wish to build, and especially those to compulsory pooling. Trained managers are hard to find, though the agricultural colleges are now turning them out. Usually one of the natural leaders among the farmers is made the manager of the co-operative. He has enthusiasm, makes sacrifices and works hard, but lacks tech- nical training in keeping proper records as well as handling purchases or sales. This lack of trained men has added to the hard struggle of the organizations. Professor John R. Commons says: "We have had enough emotion in the co- operative movement of our country; our need nov/ is, above all, trained intellect." The local co-operative sometimes has difficulty in retaining an experienced manager. There is lack of vision and knowl- edge on the part of the farmers and they refuse to pay a trained man what his services are worth. The lack of real "co-operative spirit" and perseverance are great hindrances, for usually the co-operative must endure under great stress and handicaps, with little promise of great achievement dur- ing the first few months of the first few years. Sometimes the very men who are members of the organizations are the biggest stumbling blocks on the road to progress. Read from an article by a manager: "As I write this, I have letters on my desk from farmers who are bitterly complaining because their non-pooling neighbors received more money for May milk than they received: the line of reasoning is that the pool lost them money. Such men utterly forget that were it not for the pool, they would have received, as they did previous to 1916 when butter and cheese prices were the same as at present, less than $1 per hundred pounds (46 quarts) for their milk." Organizations in some states have gone on under too high pressure. Many locals fail because the organizer goes through a locality, lays an inadequate foundation, does not prepare the members for the problems they are about to meet. Failure results. If the organizing agency will pay more attention to an adequate follow-up, more local organizations will become permanent. There has not been enough survey of the reasonable amount of business available, for without enough volume the co-operative cannot live. Co-operation must really save money. Dr. E. G. Nourse, Professor of Agricultural Economics at the Iowa State College of Agri- culture says, for instance, of his locality: "Usually a hun- dred carloads per year is enough business for a livestock shipping association and 200,000 bushels of grain a year for an elevator." But he recommends 500 to 1,000 cars of stock for a shipping association and says many of those in his state must expand, combine or die. He goes on with this word of warning: "The co-operative marketing of livestock in Iowa has great possibilities but it is possible that one-fourth of the associations formed may go to pieces because of too small a volume of business, inefficient management, or lack of in- Wool is increasingly pooled in many sections of the country Pacemakers in Farmers' Co-operation 15 terest on the part of the members." And these three reasons for failure apply also to other regions and to other than live- stock shipping associations. THE problems without the movement are many. There is much discrimination and antagonism on the part of the organized private distributors. The Chicago Board of Trade had barred the really co-operative organizations until forced to admit them by Federal legislation. The pri- vate Grain Dealers' National Association is reported to have raised $250,000 at a meeting in Cincinnati in 1921, for the purpose of fighting United States Grain Growers and all farmers' co-operative grain marketing plans. The Grain Dealers attack co-operative plans by circulating a pamphlet entitled "Farming the Farmer," and Grain Growers retort with one "Fooling the Farmer." The organized private dis- tributors do not merely casually doubt the success of the co- operative marketing plans. Before the Committee of Fifteen studying live stock marketing had time to report to the American Farm Bureau Federation, the Chicago Live Stock Exchange opened fire. The farmers have often been accused of striking at the foundations of government, when they merely tried to mend a ragged distribution system. Through misrepresentations they have lost friends or have been pre- vented from making them, especially among city people. The farmers who endeavor to strike against the business men in the smaller towns do so needlessly. The larger cities contain the organized distributors who are fighting the farm- ers organizations. This antagonism toward co-operatives is as bad today as at any other time. "It is hard to tell who is the farmer's enemy and who is his friend," says many a co- operative manager. There are difficulties in enlisting outside capital, where this is necessary, because the co-operative organization usu- ally wishes to be democratic, and if it caters too much to the investor in forming auxiliary or subsidiary organizations, it is always in danger of losing co-operative features. "The future of the local co-operatives seems to be closely bound up, too, as we have seen, with a sound, sane, rounded out, healthy country life. Shifting population, lack of adequate community or social organization, lack of strong organizing leadership, have played a part in limiting the spread of the local organizations. There are two other large, outstanding problems. (1) Relationships between large farmers' organizations. "The splits and disagreements that occur are confusing and result mostly in weakening the whole cause. The lessons of co- operation have not all been learned. (2) Difficulties of "In- tegration." It is comparatively easy to get a closely knit organization with uniform contracts and plans for a limited locality. But when you strike the corn and wheat belts, fed- eration or integration becomes more difficult. There are more diverse groups. Starts have been successfully made with Relations between farmers and business men are in many localities little disturbed by co-operative organization differing methods of organization. It is a big task to har- monize these into one smoothly working federation. Greater distances separating locals have to be reckoned with. Even the present plans for the grain growers may not be the last word because of these serious obstacles. FUTURE prospects are good — if we are at al! to judge by the steady progress of the last ten years. Experi- ence, education, superior types of organizations are beginning to tell as never before. More managers are avail- able. There is more trained help from the colleges and depart- ments of agriculture. Some city bankers, financiers and business men look hopefully to this co-operative movement. The large packers have for years dealt successfully with co- operatives and the millers too are not fighting the type of organizations which sell them grain. More visible results are at hand. Farmers can see in cold figures that their new organizations have helped them more than have the private dealers. This is especially true since 1920. Some opponents of co-operation have ceased fighting, since they have seen what has happened in North Dakota. In some neighboring western states, the opponents of the farmers' efforts see co- operation as a less evil than the Non-Partisan League. In Minnesota it is claimed the League is failing of farmers' support because they are getting satisfactory results through their co-operatives. When the national Grain Dealers' As- sociation was organizing to fight co-operative grain market- ing, the representatives of the grain exchanges of Minne- apolis and Duluth, Minnesota, opposed this. They asked for a "campaign of education" in regard to the operations of grain exchanges. Now the most recent report is that Minne- apolis will be no party to a "war fund" to fight farmers' co- operatives. And in North Dakota, as one non-agricultural journal has pointed out, if the league be driven out of the door of the arena, that is no defeat. The co-operator is en- tering by the window. One conservative agricultural jour- nal has warned that if the plans of the co-operatives are un- justly fought, the farmers will be back in the arena under more radical leadership than ever before. IT is hard to forecast the extent or the consequences of this agrarian co-operative movement. There may be truth in the prediction that this peaceful agricultural revolution now going on in American agriculture will bring results as far-reaching as those of the industrial revolution which began in England in the latter part of the eighteenth century and inaugurated our present economic life. We may now be in the midst of only the beginning of the farmers' co-operative movement. The progress of very re- cent events continues good. The news of the past few months, does it not compare well with that of the past and promise much for the future? In South Dakota forty local potato growers' associations with two thousand members federated in the Potato Growers' Co-operative Ex- change to handle the 1921 crop. Ninety per cent of the cabbage growers in Colorado enlisted in the Co-operative Farmers' Exchange, Inc., which will be adequately financed and prepared to sell this year's production. In California the Fruit Grow- ers' Exchange marketed the largest volume of fruit ever grown, in the face of a thirty-three and a third per cent rise in freight rates which went into effect August, 1920. The Walnut Growers' Exchange disposed of 53,000,000 pounds of walnuts with gross value of $11,000,000 at a profit to the growers. The California Grape Growers also con- tinue in especial prosperity. The Prune and Apri- cot Growers have secured a government export loan. The Wheat Growers' Association of Wash- ington, Idaho, Oregon and Montana, with 13,500,- 000 bushels of wheat to dispose of, borrowed the sum of $10,000,000 from the War Finance Cor- poration to aid exporting. The War Finance Cor- poration has loaned a total of $63,000,000 to farmers' co-operatives. Says Aaron Sapiro, legal counsel of fifty farmers' co-operative marketing associations, on announcing these loans: "The evi- dence of business acumen, commercial stability and all-around efficiency shown by the co-operative as- sociations has brought with it the recognition of men and governments and has made possible these huge financial transactions." The large North American Fruit Exchange of New York was mu- tualized August 1, 1921, — perhaps a step toward a co-operative organization. The Exchange is a national sales agency of 16 Pacemakers in Farmers' Co-operation It may be a shorter step than some of us think from the boys' com or calf club to the co-operative grain elevator or livestock shipping association growers' associations, and in 1920 sold 30,000 carloads of fruit and vegetables valued at $40,000,000. The profits are to be limited to ten per cent of the capital stock, and net earnings above ten per cent will be divided equally among the exchange and the growers' associations it represents, the latter to be reimbursed according to the amount of fee paid for the service of the exchange. The Long Island Duck Association which started the Farmers' Commission House, Inc., in 1914 expects to sell this year 1,100,000 ducklings, the largest number it has ever handled. The American Farm Bureau Federation followed up its co-operative dairy market- ing conference by appointing a committee of eleven men to study the marketing of dairy products. One hundred and fifty thousand southern tobacco, cotton and peanut growers have signed co-operative contracts; or- ganizations have been perfected by six hundred potato grow- ers, five hundred poultrymen, and by representative peach growers in New Jersey. One of the first rewards of the Poultry Association is a special price upon fresh eggs under its brand in the New York market. In New York the newly- organized Empire State Potato Growers' Co-operative Asso- ciation expects to do a business of $1,000,000 at the close of the first year. The California Prune Growers' seven-year contract expired in 1921 and was promptly renewed by ninety per cent of the prune growers of the state. In 1921 farm bureaus in twenty-one states pooled their wool clip. This was twice the number of states in the wool pool of 1920. Also the amount of wool thus sold increased from 14,750,000 pounds to 27,093,466 in 1921. Farmers' and city consumer co-operatives may be able to get close together. The city organization handles a variety of products, though it could probably buy some necessities from the farmers' organizations. There are several examples of co-operation between dairymen surrounding cities and the city consumer, which have resulted with benefit to both. Al- ready a very sigfnificant move has been made in the city of New York. Fifty large restaurants have united in a pur- chasing association to buy their food direct from the farm. Farmer-labor co-operation is a possibility. Possibly the wall of prejudice existing between the two groups may be broken down, and the farmer may sell products to the labor union or the co-operative of the union. TO keep their organizations truly democratic and co- operative, to become indispensable in national service, are some of the big opportunities before the farmers' organizations. To remedy the distribution system, they have carried on a campaign of getting for themselves the profits which used to be taken by others. They may be doing a great service by building up their own middlemen, but they may do great harm if their middlemen become as burdensome as they claim those they have displaced have been. Thus far, however, it may be said that they have succeeded. They have measured up well. Mr. Bernard M. Baruch, a "city man" thoroughly familiar with the plans of the farmers' organizations, in an article on "Some Aspects of the Farmers' Problems" in the Atlantic Monthly for July, 1921, admir- ably sums up this whole matter. While giving his belief that "agriculture suffers from preoccupation and neglect (of bankers, financiers and industrial leaders) rather than from any purposeful exploitation by them, and that they ought now to begin to respond to the farmers' difficulties, which they must realize are their own," he also states em- phatically: "On the other hand, my contacts with the farm- ers have filled me with respect for them — for their sanity, their patience, their balance. Within the last year — and particularly at a meeting called by the Kansas State Board of Agriculture and at another called by the Committee of Seventeen — I have met many of the leaders of the new farm movement, and I testify, in all sincerity, that they are en- deavoring to deal with their problems, not as promoters of a narrow class interest, not as exploiters of the hapless consumer, not as merciless monopolists, but as honest men bent on the improvement of the common weal. "We can and must meet such men and their cause half- way. Their business is our business — the nation's business." 491235 UNIVERSITY OF CAUFORNIA LIBRARY UNIVERSITY OF CALIFORNIA LIBRARY BERKELEY Return to desk from which borrowed. This book is DUE on the last date stamped below. j4.. • ?'"* ' —