COOPERATION A STUDY IN CONSTRUCTIVE ECONOMIC REFORM BY GORDON S. WATKINS Associate Professor of Economics University uf Illinois 7 183i] CONTENTS PAGES The Meaning of Cooperation 5- 6 Conditions Out of Which Cooperation Develops 6- 7 The Forms of Cooperations 7- 8 Distinguishing Characteristics of Workingmen 's Co- operation 8- 11 The Development of Cooperation in the United Kingdom 11- 36 The Cooperative Movement in the United States 36- 50 Consumers' Cooperative Wholesale Societies in the United States 50- 65 Summary of the Recent Growth of Cooperation in Other ■Countries 65- 78 Conclusion 78- 81 Bibliography 82-83 Index 84- 85 4f* ■«j - U Q 1. \M'bZ PREFACE The period of price inflation incident to the World War has aroused a deep and widespread interest in the subject of co- operation and has stimulated the growth of cooperative move- ments throughout the world. So many requests for information were received by the University of Illinois that it was deemed expedient to prepare a brief study of the development and con- temporaiy status of the cooperative movement in various coun- tries, especially in the United Kingdom and the United States. Space did not permit an exhaustive study either of the his- torical or the contemporary aspects of the cooperative movement in the several countries. The major portion of the study, there- fore, deals with distributive cooperation. In order to give to those who are especially interested in this phase of cooperation a general idea of its growth and present status, a great deal of statistical information has been assembled and presented. In interpreting these data it is necessary to remember that the enor- mous increases in the value of turnover in recent years have more often been the result of the general inflation of prices than of increased production and distribution of goods. Moreover, it should be noted that conversions of foreign money values into American dollars have been made at par or at a figure approxi- mating par. The author wishes to take this opportunity of expressing his appreciation of the valuable services of his colleague, Dr. Ivan Wright, who read the manuscript and made very helpful criticisms. Gordon S. Watkins. COOPERATIVE ENTERPRISE A Study in Constructive Economic Reform During the years intervening between the outbreak of the "World War in 1914 and the present, our attention has been focused so intensively upon the unprecedented events incident to the great conflict that the peaceful elements and constructive forces in our economic life have developed and functioned prac- tically unnoticed. Among these constructive movements coopera- tion has assumed a position of first importance. The recent growth of cooperation has been phenomenal. There is scarcely a nation in which cooperative enterprises have not made unusual records in the production and distribution of goods during the last six years of world-wide readjustments. This significant growth has revived the interest of the general public in a move- ment which is founded upon a principle of economic activity diametrically opposed to the commonly accepted idea of competition. The development and present status of the cooperative move- ment should command thoughtful consideration for several rea- sons. First, it manifests the practical possibilities of the funda- mental principle upon which all such reformist schemes are established — the principle of mutual interest and cooperation; second, it reveals the persistence and determination of wage- earners to improve their economic status by controlling agencies of distribution ; third, it demonstrates the wisdom and sanity of peaceful, constructive, and deliberate action in the solution of the serious economic problems of modern civilization; and, fourth, it proves conclusively that workingmen can organize and operate successfully business enterprises. The Meaning of Cooperation Cooperation is defined as an organized, usually non-political attempt on the part of an association of persons to control the production and distribution of commodities for the satisfaction of their numerous wants. "It is devoted to the principle that 5 6 COOPERATION things should be done and commodities produced for use rather than for exchange."^ The basic principles of cooperation rec- ognize fully the necessity and importance of capital in the economic organization of society, and the wisdom of procuring for the common people the advantages of the production and distribution of commodities which now generally accrue to the private enterpriser. In one or another of its various forms cooperation aims to eliminate the middleman, the employer, and the private creditor, and to substitute for these the collective ownership and control of affiliated cooperators. The immediate purpose of cooperative enterprise is the reduction of the cost of living by a system of exchange which dispenses as far as possible with the services and profits of private enterprise in production and distribution of goods, the provision of credit and insurance, and the construction of homes. ''It tends to sub- stitute for the present system of private profit a condition of society under which eveiy need of life, social and economic, will be supplied by the united effort of all. ' '^ This statement suggests the ultimate aim of the cooperative movement which, while not so generally thought of and appreciated by the rank and file of cooperators, is no less significant in the minds of the founders and leaders of the movement — ^the development of a cooperative commonwealth organized and functioning in the interest of the community of producers and consumers. The ultimate purpose of the movement, therefore, is revolutionary in the sense that it seeks a reorganization of our economic society both in its struc- tural and in its functional aspects. The method of achieving this purpose, however, is evolutionary and peaceful. The movement is essentially economic, and becomes political only when parlia- mentary action is deemed necessary to safeguard the interest of the societies. Conditions Out of Which Cooperation Develops The existence of private profits and a high price level is not the only condition that stimulates the development of coopera- "Jaraes P. Warbasse, The Destiny of the Cooperative Movement, p. 1. ^Florence E. Parker, ' ' The Cooperative Movement in the United States, ' ' Monthly Labor Beview, United States Bureau of Labor Statistics, March, 1920, p. 138. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 7 tive enterprise. No less important is the fact that under modem conditions and methods of production, distribution and credit, the amount of capital required to organize and operate a busi- ness is usually so large that it is very difficult, if not almost impossible, for the average wage-earner or salaried man to engage in independent enterprise. Cooperation provides a medium through which the modest savings of these classes may consolidate to finance the production and distribution of goods and the con- struction of homes, and at the same time make possible the accumulation of additional capital to finance even larger scale operations. As the economies and efficiencies of large scale pro- duction and distribution are effected the cooperative enterprise becomes self-sustaining and self-perpetuating, yielding the bene- fits of business to those who patronize and support it. The Forms of Cooperation The above explanation of the character of cooperation sug- gests that cooperation in its functional aspects may assume one of several general forms. Generally these are known as (1) dis- tributive or consumers ' cooperation, or the sale of commodities by an association of persons who desire to eliminate the merchant middleman and his profits, thus appropriating for the consumers the advantages and benefits of the business; (2) producers' cooperation, sometimes referred to as labor copartnership, which is an organization of individual workingmen who seek to dis- pense with the private employer and his profits and to secure the benefits of the enterprise for the laborers themselves; (3) co- operative credit, which consists of associations of individuals who endeavor to obtain the advantages of collective capital and credit by eliminating the profits of the private financial institution. In addition to these three general types of cooperation two other forms have assumed sufficient prominence to entitle them to separate classification. These are (4) cooperative insurance, the purpose of which is to dispense with the private insurance com- pany and its profits, and to secure for the members of the asso- ciation the benefits of safe and reasonable insurance; (5) co- operative construction, comprising an association of persons, such as building and loan societies, \^o endeavor to make possible 8 COOPERATION economical construction and convenient payment in the building of homes. This classification of cooperation according to functions must not be interpreted too narrowly. In actual practice there is a great deal of duplication of functions and overlapping within the same society. In the United Kingdom, Russia, and other countries where cooperation has assumed an important role in the economic life of the people many consumers' associations own and operate factories; producers' societies often perform the functions of consumers ' associations by distributing commodities among their members ; and associations organized primarily to provide credit actually buy and sell goods. Insurance and dwellings are also frequently provided by one or another of these general types of cooperative societies. The above classification, however, sei'ves to emphasize the main purposes and functions for which each type of society was originally established. Opera- tions in addition to those planned originally are undertaken under the pressure of economic necessity and where these opera- tions are not already taken care of by other types of cooperative organization. Distinguishing Characteristics of Workingmen's Cooperative Societies Cooperation is essentially democratic in regard to ownership, methods of control and administration of the enterprise that is undertaken. In this particular cooperation differs from profit- sharing schemes with which it is sometimes confused. Profit- sharing plans are fundamentally paternalistic both in origin and in administration, and distribute profits primarily for the pur- pose of increasing efficiency. It should be noted also that profit- sharing accepts the present industrial system as the final stage in economic evolution, while cooperation aims ultimately to re- j)lace the competitive system with its wage-payments by associa- tive production, distribution, and credit. Brief examination of the distinguishing characteristics of true cooperation will suffice to reveal its democratic aspects. 1. In Their Organization and Constituency Cooperative So- cieties are Inclusive. Membership is open to all who desire to affiliate with the association, except that the administrative com- STUDY IN CONSTRUCTIVE ECONOMIC REFORM 9 mittee is usually given authority to deny admission to any per- sons regarded as undesirable and likely to injure the society. Apart from this qualification membership becomes the privilege of any one vs^ho desires to purchase shares in the organization. For this reason, cooperative societies are in no sense a closed corporation or joint-stock company. 2. Purchase of Shares is Easy and Convenient. The shares in a vsrorkingmen 's cooperative society are usually of small de- nomination and issued at par value. In the United Kingdom the value of a share is commonly £1.0.0. (about $5.00). This denomination is most common in the United States also, although here $10 and $20 shares are frequently issued or each member is required to subscribe for ten $5 shares. Not only are shares generally so small as to come within reach of the lowest paid wage-earner, but provision is made usually for payment on a weekly or quarterly installment plan, or even by the automatic accumulation of dividends which accrue to the holder as his share in the profits of the business. This plan renders cash payments unnecessary except for a small initial amount on allotment of shares. The steady growth of the cooperative movement is attributable in a large measure to this unusually convenient method of stock purchasing. 3. Shares are Easily Surrendered. From the standpoint of the ease with which one may enter or withdraw from the enter- prise, the cooperative society has all the advantages of a cor- poration and none of the disadvantages of a partnership. The major portion of the capital of a cooperative society is withdraw- able upon comparatively short notice. In the United States there is considerable variation in this regard, but in most countries the prevailing practice is to allow members to liquidate their shares by surrendering them to the society. Sometimes societies re- quire each member to hold not less than one transferable share, which can be disposed of only by sale to someone else. The ad- vantage of this requirement, especially in the case of the small, struggling society, lies in the fact that it helps to sustain the membership and to perpetuate the society. 4. Democratic Control and Administration is Guaranteed. In all true cooperative associations the principle of one-man- one-vote obtains. Almost without exception societies organized 10 COOPERATION on the Kochdale plan allow but one vote to each member, . irre- spective of the number of shares held by him. Where share capital is owned by other societies, these are usually given addi- tional votes in proportion to the amount of their holdings. Rigid adherence to the principle of one vote for each member regardless of the number of shares owned has been instrumental in pre- cluding that concentration of stock ownership and control which so frequently has deleterious effects upon the joint-stock com- pany. In cooperative societies voting by proxy is practically unknown. Taken together, these policies assure that democracy in administration which all true cooperative schemes are deter- mined to achieve and maintain. 5. The Rate of Return on Share Capital is Definitely Fixed. There is a fixed return on share capital, which in most cases is limited to about 4 per cent or 5 per cent per annum. The surplus profits that remain after the payment of this interest are usually distributed in certain agreed proportions. In some cases this surplus is divided among the customers of the association, both members and non-members, as a dividend on purchases, while in other instances it is distributed among shareholders, customers, and employees. Agricultural cooperative societies in the United Kingdom divide surplus profits among customers, employees, shareholders, and those who supply raw materials. It is unusual for the shareholders in any society to receive, by virtue of their holdings, the whole of the profits. 6. Publicity of Accounts is a General Feature. Much of the confidence in the cooperative movement has grown out of the practice of publishing at frequent intervals all of the accounts of the organizations, and the open and frank financial policy adopted by the societies. Financial statements are usually de- tailed and complete. 7. Trading Not Confined to Regular Members. The privilege of trading at cooperative stores is not confined to members, although the volume of sales to non-members is not usually very large. This may be attributed to the ease with which membership may be secured and to the fact that members are given a rate of dividend on purchases which is double that received by non- members. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 11 8. Cooperative Societies Generally Receive Special Legal Sanction. In countries where the value of cooperative societies is fully recognized, special provisions have been made for their incorporation. In the United Kingdom, for example, such soci- eties are incorporated under the Friendly Societies Acts, 1896- 1908, and the Industrial and Provident Societies Act of 1893, under which no one can hold more than £200 (about $1,000) in shares. In the United States special legal provisions are made for non-profit seeking corporations and associations. The Development op Cooperation in the United Ejngdom The United Kingdom is commonly referred to as the birth- place of successful cooperation and the outstanding example of its possibilities. It is doubtful if there is a more interesting chapter in the industrial and social annals of Britain than the story of her cooperative enterprises. The movement in those islands has not only captured the imagination of the idealistic social reformer, but it has enlisted the unselfish services of practically-minded men who see in such enterprises an immediate aid to the solution of the serious problems of distribution. Both in Great Britain and in Europe cooperation has achieved a dig- nity and degree of success unknown in the United States. The history of cooperation in the United Kingdom may be divided conveniently into five periods as follows : (1) The period of germination, 1825-1844; (2) the period of reorganization, 1844-1864; (3) the period of integration, 1864-1884; (4) the period of expansion, 1884-1914; (5) the period of political activity and supergrowth, 1914 to the present. 1. TJie Period of Germination, 1825-1844. Cooperation in the United Kingdom really began with Robert Owen (1770-1857), a preeminent employer and one of the greatest captains of in- dustry in his day. Although Owen is referred to as the founder of modern collectivism he never suggested that the wage-earners expropriate the owners of capital, but rather urged them to accumulate their own capital and organize their own business enterprise. At a time when the factory system was destroying and replacing the domestic or household industries and the work- ing class was suffering tremendously from the readjustments incident to the Industrial Revolution, Robert Owen proposed an 12 COOPERATION industrial commonwealth, a voluntary association of individuals, coordinating the agencies of production and distribution in order that they may function in the interest of the whole community rather than for the benefit of a few. Numerous social experi- ments were soon made in an attempt to achieve this ideal. In 1825 Owen himself organized his communistic society at New Harmony, Indiana, and his followers inaugurated similar colonies at Orbiston, near Glasgow (1825-1827), Ralahine, in Ireland (1830-1833), Monea Fen, Cambridgeshire (1838), and Queens- wood, Hampshire (1839-1844), not forgetting Owen's famous col- ony at New Lenark (1813). In this early stage the cooperative movement consisted of a series of productive colonies, commonly referred to as Utopias, such as those already mentioned. Almost contemporaneously with these Utopian experiments there was initiated a movement for the organization of cooperative workshops and stores. This movement met with considerable success, as may be seen from the fact that of 266 societies organized by 1830, 53 were estab- lished in the last quarter of that year, while in Manchester alone there were 16 distributive stores and one productive workshop founded between 1826 and 1830. The movement gained general prominence in the decade of the 'thirties.^ Cooperation assumed something of a national character when in 1834 Robert Owen organized the Grand National Consolidated Trade Unions for the dual purpose of raising the wages and shortening the hours of labor and organizing cooperative enter- prises on a prodigious and unprecedented scale. Within a few weeks the Union had enrolled approximately a half-million mem- bers, including many thousands of farm laborers and female workers, but legal opposition and an organized lockout crushed the young association. Moreover, through the lack of a solid financial foundation and proper business methods and policies the cooperative stores and workshops one by one succumbed to the pressure of competition. The productive colonies were sim- ilarly ill-fated, and the first phase of the cooperative movement — the period of genesis and experimentation — ended unsuccess- fully. 'The People's Year Book, 1919, p. 113. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 13 2. The Period of Reorganization, 1844-1864. The early movement expired, much to the satisfaction of its derisive critics, but the idea, the spirit of cooperation was as tenacious as it was new. The ideal of cooperative enterprise was destined soon to be given more definite, practical, and virile expression by the Roch- dale pioneers. A task of no mean magnitude awaited the prac- tical genius of the twenty-eight poor flannel weavers of the town of Rochdale, near the industrial city of Manchester. Legal and financial difficulties had defeated their predecessors, and a jeer- ing public prophesied the early demise of the new movement. The problem that challenged the persistent courage of the leaders of the new movement has been stated by Holyoake as follows : Societies were prohibited from holding more than one acre of land, and that not as house or farm land, but only for transacting the business of the societies upon Cooperative farming was difficult. No society could invest money except in savings banks or national funds. No society could help a poor society by a loan. No member could save more than £100 (about $500). The act prohibited funds being used for educational purposes, and every member was practically responsible for all the debts of the society — enough to frighten any prudent man away. Besides these impediments there was no provision compelling any member to give up such property, books, or records that might have been entrusted to him by the society, so that any knave was endowed with the power and secured in the means of breaking up* the society when a fit of larceny seized him.* Despite seemingly insurmountable difficulties the twenty- eight Rochdale pioneers were determined to initiate a successful cooperative enterprise. Emerging from an unsuccessful strike, cooperation appeared to them the most feasible remedy for their uncertain economic status. It was decided, therefore, to secure capital for the purpose of establishing a cooperative store for the benefit of the workers and ultimately to *'so arrange the powers of production, distribution, education, and government as to create a self-supporting home colony." There was every reason for regarding this scheme as visionaiy and Utopian, and it was generally so regarded. With practically no capital and no business experience back of it the future of such a plan was, to say the least, problematical. The beginning of the now famous Rochdale plan was very modest. The first shares were purchased by an insignificant fund *Quoted in the People's Year Book, 1919, p. 114. 14 COOPERATION accumulated at the rate of two pence a week. By permitting the dividend to accumulate until it reached £5 (about $25) per man, a total of £140 (about $700) was secured, which provided suffi- cient capital to rent a dilapidated old store building in a back street known as Toad Lane, in Rochdale. Small quantities of essential commodities like flour, sugar and butter were handled, the store being kept open on Monday and Saturday nights. The first week's sales totalled £2 (about $10). The work was dis- tributed among the members, one acting as salesman, one as cashier, another as secretary and a fourth as treasurer.^ The probability of an early demise was very real, both in the minds of the public and the sponsors of the enterprise. But the business prospered and grew, and became the genesis of a world-wide cooperative movement. The success of the early Rochdale experiment may be attrib- uted to the following principles to which there was strict ad- herence: (1) Abandonment of the system of credit accounts; (2) sound management and rigid attention to balance sheets ; (3) the apportionment of surplus earnings in proportion to patronage or purchases; (4) a persistent desire to benefit humanity by im- proving the system of distribution through the elimination of the profit-seeking middleman; and (5) the provision of an edu- cational fund designed to develop in the members the spirit and ideals of true cooperation. During the first two years — until 1846 — apportionment for educational purposes was prohibited by law, and for sixteen years thereafter the policy of the gov- ernment vacillated between leniency and legal interference. To evade legal obstinictions, however, the educational fund was in- corporated into the expenses of management.^ Gradually cooperative production was added to cooperative distribution. Clogging, shoemaking, tailoring, corn-milling, and cotton-spinning had been undertaken by 1854, and in 1855 whole- saling was commenced. The practical business sense of the pio- neers was manifested in the development of cooperative produc- tion and cooperative distribution, both of which were closely asso- ciated in the realization of their ultimate ideals. They promoted the North of England Cooperative Society, established in 1863, 'H. W. Laidler, The British Cooperative Movement, p. 3. 'The People's Tear BooJc, 1919, p. 115. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 15 which later developed into the famous English Cooperative Wholesale Society. The success of the cooperative movement in this period of reorganization exceeded all expectations. In 1864 the total cooperative trade was approximately £3,000,000 ($15,000,000), an achievement of no small importance for a movement which had been revived only twenty years previous, in 1844, and which was operating on an entirely new type of business basis. This success of consumers' cooperation was all the more remarkable when one recalls the general failure of earlier experiments in producers' cooperation. The growth of cooperative distribution in this period was due chiefly to the practical business sense of the founders, but the removal of legal restrictions which had always impeded the cooperative movement was also an important factor. In 1852 the Industrial and Provident Societies Act was passed, which afforded cooperative societies, for the first time in their history, legal protection for their funds and appur- tenances, and secured for their rules and regulations a legal status. Additional political pressure resulted in the Act of 1862, which promoted the interest of cooperation by enabling its mem- bers to invest £200 ($1,000) instead of £100 ($500) as previously, and permitted societies to purchase shares in other societies. The cooperative movement thus secured a double advantage: (1) An augmented financial strength, and (2) the power to form cooperative consolidations for wholesale and similar operations. As the movement developed serious difficulties arose for which existing laws furnished no remedy, and additional legislation became necessary. The movement secured relief under the Act of 1871, which made it possible for societies to hold and deal freely in land and real estate, and the Acts of 1876 and 1893 which resulted in the codification of cooperative law and allowed societies to start banking operations on the condition of giving to depositors the security of transferable share capital.'^ 3. TJie Period of Integration, 1864-1884. As the year 1844 marks the revival and reorganization of the cooperative move- ment, so the year 1864 designates the genesis of a period char- acterized by super-organization and integration. The vigor of its constructive forces is indicated by the fact that within six 'The People's Year Booh, 1919, pp. 115, 116. 16 COOPERATION years following the beginning of this period, the principal insti- tutions of the cooperative movement in the United Kingdom were founded. In 1864 the English Cooperative Wholesale began its auspicious business career; in 1869 the Scottish Wholesale began operations, and in 1871 the Cooperative News made its first appearance. The Women's Guild was organized in 1883, followed by the establishment of the Productive Federation. The progress made in this period is indicated in the following table. Table I. — Showing the Status of Cooperation in the United Kingdom IN 1864 and 1884* Tear Number of Societies Making Returns Membership Sales in the United Kingdom Net Surplus Share and Loan Capital 1864 1884 394 1,291 129,429 729,957 $14,183,030 $152,120,505 $1,122,300 $12,174,980 $3,866,520 $47,492,210 The statistics of the above table indicate that between 1864 and 1884 there were approximate increases of 227 per cent in the number of societies, 464 per cent in membership, 972 per cent in sales, 980 per cent in net surplus, and 1250 per cent in share and loan capital. The growth of cooperation in the United Kingdom in this and subsequent periods is undoubtedly the result of the estab- lishment of wholesale societies. It was by means of such societies that the process of integration and consolidation of the move- ment was facilitated. Between 1864 and 1884 the career of the English Cooperative Wholesale was such as to portend a permanently successful career. Premises and depots were established at Manchester, London, Liverpool, Glasgow, Goole, Leeds, and Bristol. Pro- ductive enterprises were undertaken in biscuit-making at Crumspsall, boot and shoe manufacturing at Leicester and Heekmondwicke, soapmaking in Durham, and coal production near Hindley. Banking operations were begun, and expansion led to the establishment of a half-dozen branch depots in Ire- land, and others in Rouen, France ; Hamburg, Germany ; Copen- hagen, Denmark ; and New York, United States. A fleet of four ^Compiled from the People's Year Book, 1919, p. 116. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 17 merchant vessels were acquired by the society. In 1864 the funds of the English Cooperative Wholesale Society totalled over three- quarters of a million pounds sterling, or about $3,850,520, and sales reached three million pounds sterling, or approximately $15,000,000. By 1884 the society's funds aggregated $47,000,000, and its sales $152,000,000, while the number of affiliated societies making returns increased from 394 to 1,291 in the same period. As already indicated, the membership of these societies in 1864 was 129,429, while in 1884 there was a total of 729,957. The Scottish Cooperative Wholesale Society was established in December, 1868, and within a decade places of business had been opened at Leith, Kilmarnock, and Dundee, in addition to the central premises at Glasgow. Two manufacturing enter- prises had also been undertaken. But this was not the beginning of cooperation in Scotland. Nearly a hundred yeara preceding the establishment of the wholesale house, the weavers of the Ayrshire village of Fenwick had organized a society for the purpose of providing themselves with ' ' meal and victual. ' ' Thus in 1769 cooperation was known to exist in that country. In 1777 Govan had a cooperative society which continued in opera- tion for a century, and in 1800 a society was organized in Glas- gow and this one still exists. Among the societies which hold shares in the Scottish Cooperative Wholesale is a society which had its origin in 1812. Robert Owen's communistic experi- ment at New Lenark, not far from Glasgow, is said to have enrolled many followers from the sponsors of collectivism in Scotland. The Reverend Alexander Campbell, a Glasgow divine, was preaching "profits in proportion to purchases" as early as 1827, and the earliest records of the Lennoxtown Cooperative Association show that it was dividing profits on this basis even in 1826. The eooperators were manifestly seeking a more equit- able system of distribution of salable necessities than appeared to prevail and to lessen the burden imposed upon the people as a result of the wars against Napoleon. In 1830 trade unionists of Glasgow attempted to establish a cooperative journal. In the north of Scotland cooperative societies were numerous.^ Producers' cooperation existed in Scotland prior to the eighteenth century, and records show that in 1801 certain baking •The People's Year Book, 1919, pp. 75, 76. 18 COOPERATION societies of Glasgow sold bread exclusively to their own members. These associations gave no credit and received no profit and generally sold their bread ' ' one penny, twopence, and sometimes threepence, or fourpence, on the quarter loaf, lower than the bakers' prices."!^ From this brief summary of the genesis of cooperation in Scotland it is apparent that the Scottish Cooperative "Wholesale Society at its inception in 1868 was not an entirely foreign ven- ture. In fifty odd years the growth of this society has been phe- nomenal, especially since the outbreak of the World War. "In distributive trading the society recognizes no commodity as out- side its scope except alcoholic liquor; and there are few other commodities it does not supply to its shareholding societies, "i^ Its genesis was by no means so encouraging. Three months of serious effort were required to amass a capital of £1,795 ($8,975) , and the total sales for that period amounted to only £9,697 ($48,485). The capital of the Scottish Cooperative Wholesale Society, including shares, deposits, reserve, and insurance funds, was only $8,975 in 1868, but this was increased to $415,865 in 1878, and $1,220,930 in 1884. The net sales in these respective years were $48,485 ; $3,002,950; $6,501,655; while the net profit increased from $6,515 in 1869 to $147,170 in 1884. The process of integration in the British cooperative move- ment was furthered also by the organization of the Cooperative Union and the Cooperative Congress in 1869. The Cooperative Union is a federation of cooperative societies in the United King- dom, which operates under the provisions of the Industrial and Provident Societies Acts. Its functions are to give legal advice, spread propaganda, stimulate education in cooperative enter- prise, and protect the general interests of the cooperative move- ment. The Annual Cooperative Congress is held under the direc- tion and auspices of the Union. The Cooperative Union embraces the whole industrial cooperative movement of the British Isles, with the exception of a minor fraction, and has been aptly described as the ' ' colossus among the world 's cooperative move- ments." The Cooperative Congress possesses all the character- istics and merits of a single legislative chamber without execu- ^"Ibid., p. 76. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 19 tive power to enforce its decisions, and it is unquestionably a deliberative body indispensable to the success of the British cooperative movement "whose mind it mirrors, whose policy it ratifies, and which it guides through the medium of resolutions embodying a moral appeal and obligation. "12 4. TJie Period of Expansion, 1884-1914. The period of thirty years following 1884 is a remarkable one in the history of British cooperation. It is a period characterized not only by unprecedented growth in fields of cooperative production and distribution, but also by the internationalization of cooperation through the organization, in 1895, of the International Coopera- tive Alliance, and the development of agricultural cooperation, indicated by the establishment of the Irish Agricultural Whole- sale Society in 1898, and the Agricultural Association for Eng- land and Wales in 1904.13 The growth of the cooperative movement in this period is indi- cated by the statistical data for 1914, which show a collective trade of $735,750,000, as compared with $152,120,000 in 1884. The membership of the Cooperative Union in 1914 was 3,200,000, the aggregate funds — share and loan capital and reserve funds — of its affiliated societies was $320,000,000, total annual sales amounted to $692,500,000, and net surplus equalled $75,000,000. The number of employees of the Union was 148,264 and the collective wage bill amounted to $46,068,320 for the year.i^ Wholesale operations manifested unprecedented prosperity. Statistics of the English Cooperative Wholesale Society in 1914 showed a total turnover of $175,000,000, and net profits of $4,200,000, as compared with sales amounting to $23,375,000 and net surplus of $272,500 in 1884. Both the productive and dis- tributive departments of the cooperative wholesale experienced great expansion. There was an extension of manufacturing establishments at home, an opening up of new sources of raw materials and supplies by the organization of overseas branches and depots in Denmark, Sweden, Spain, Australia, Canada, the West Coast of Africa, and the purchase of tea plantations in Ceylon and Southern India in conjunction with the Scottish Cooperative Wholesale Society. In 1912 the Cooperative Insur- *^The People's Year Book, 1919, p. 117. ^*Ibid., pp. 117-118. 20 COOPERATION ance Society was taken over by the English Cooperative Whole- sale. Added to these achievements was the establishment of sick and burial and thrift funds for emploj^ees, the extension of the minimum wage measure to all adult male employees in 1907, and the adoption of a minimum wage scheme for girls and women workers in accordance with the recommendation of the Coopera- tive Congress. 1^ The growth of the Scottish Cooperative Wholesale Society is shown by the statistics for 1914, which indicate 461,645 shares subscribed by societies and 18,669 by employees, a capital fund of $24,774,575, net sales amounting to $47,126,915, and net profit of $1,965,575.^^ The corresponding figures for 1884 showed 65,331 shares subscribed by societies,i^ a capital of $1,209,930; net sales of $6,501,655; and net profit of $145,170. The cooperative movement in the United Kingdom during this period was reenforced by the English Women's Cooperative Guild, organized in 1883, the Scottish Cooperative Women's Guild, established in 1892, and the Irish Cooperative Women's Guild, started in 1907, which have as their aim the organization of women as cooperators for the study and practice of coopera- tive enterprise and other methods of social reform and im- proved conditions of domestic life. 5. The Period of Political Activity and Super-GrowtJi, 1914 to the Present. The outbreak of the World War in 1914 marks a new epoch in the history of the British cooperative movement. The cataclysmic changes incident to that great struggle necessi- tated a break with traditional policies and methods. Several problems commanded immediate attention. First, there was the labor situation which during the war assumed a very critical aspect. To meet this problem the cooperative movement estab- lished hours and wages boards, and local and national concilia- tion boards to adjust controversies with employees. Second, the unusual inflation of prices constituted a serious problem, since the public naturally looked to the cooperatives to discountenance profiteering and to steady, if not abate, the price level. The Central Board of the Cooperative Union took a firm position "7&td, p. 118. "The capital fund consists of share capital, deposits, reserve, and in- surance fund. "In 1884 there were no shares subscribed by employees. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 21 against the abuse of the dividend system, and reeoimnended that there be no increase in dividends and a determined effort to re- duce prices wherever and whenever possible. Third, the applica- tion of the excess profits tax to the surplus accumulated by the cooperative societies resulted in the endorsement of direct political activity on the part of cooperators. Political activity and direct parliamentary representation were sanctioned at the Cooperative Congress at Swansea, Wales, in 1917. Fourth, the period of war and reconstruction revealed the need for a unified cooperative policy. The Swansea Congress declared in favor of a definite national cooperative policy and an economic and edu- cational program, including the dissemination of propaganda and general advertising. (1) TJie Contemporary Status of tJie Cooperative Union. The statistical data of the Cooperative Union given in the follow- ing table suggest the recent development in British cooperation. Table II. — Showing the Eecent Growth and Status of Cooperation IN THE United Kingdom" Class of Num- ber of Number of Share and Sn1pn Net Number of Salaries ' Society Socie- ties Members Loan Capital Surplus Employ- ees Wages Distributive $ $ $ $ Societies 1,357 4,131,477 372,056,530 994,652,185 101,954,165 130,621 71,096,600 Distributive Federations. . 5 61 232,560 768,675 50,185 33 18,785 Productive Societies 95 39,331 11,497,825 35,235,735 2,436,410 11,075 6,160,535 Supply Asso- ciations 3 8,351 2,360,445 11,191,560 372,025 1,732 1,261,460 Special Societies 4 736 413,470 4,771,420 264,040 1,154 527,675 Wholesale Societies .... 3 2,063 107,445,325 577,285,820 3,969,990 42,920 25,745,690 Total— 1919... 1,467 1,474 4,182,019 494,006,155 1,623,905,395 109,047,815 187,535 164,383 104,810,845 " 1918... 3,894,999 402,365,750 1,244,898,425 88,512,835 73,671,420 " 1917... 1,478 3,835,376 346,775,740 1,124,568,975 90,973,000 162,503 60,434,265 1916... 1,481 3,566,241 336,744,040 986,476,610 95,750,105 158,715 54,190,375 1915... 1,497 3,310,524 311,152,150 825,170,975 85,019,780 155,379 49,644,630 " 1914... 1,510 3,188,140 293,523,475 692,765,125 76,020,490 148,264 46,067,320 " 1913... 1,508 3,011,390 274,596,905 692,365,125 71,302,070 142,995 42,457,240 "Compiled from the People's Year Book, 1919, 1920, 1921. 22 COOPERATION It is seen from the above statistics tliat the growth of indus- trial cooperation in the United Kingdom in recent years has shown no recedence but in fact a phenomenal advance. In 1919 there was a collective membership of over 4,000,000, share and loan capital approximating $500,000,000, a collective turnover of commodities amounting to $1,623,905,395, a net surplus of $109,047,815, about 190,000 employees, and a wages and salaries bill exceeding $104,810,845. This means that for the year 1919, membership increased 287,000, or 7 per cent; share and loan capital about $92,500,000 or 23 per cent ; sales about $380,000,000, or 30 per cent; net surplus about $20,000,000 or 23 per cent; the number of employees, 23,000, or 14 per cent ; and wages and salaries approximately $31,150,000, or 42 per cent. Since 1913 the membership of the Cooperative Union has in- creased 1,170,000, or 19 per cent; share and loan capital, $220,000,000, or 80 per cent ; sales $975,000,000, or 150 per cent ; net surplus exceeding $37,500,000, or 53 per cent; the number of cooperative employees over 44,000, or 31 per cent; and the wages and salaries bill $62,500,000, or 147 per cent.^^ (2) The Cooperative Retail Distributive Societies. The retail distributive societies are the cells out of which the whole organism of cooperation is formed. In 1919 there were 1,357 of these societies associated with the Cooperative Union. These or- ganizations had a collective membership of approximately 4,200,- 000 ; collective share and loan capital amounting to nearly $372,- 500,000 ; sales approaching $1,000,000,000 ; net surplus of over $100,000,000; an employee force of over 30,000 persons; and wages and salaries of over $71,000,000. Of the total number of societies, 1,051 are located in England and Wales, 258 in Scot- land, and 48 in Ireland. The English and "Welsh societies have a membership of 3,477,056, the Scottish societies 617,069, and the Irish societies 37,352. The data for all these societies show that in 1919 there was an increase of 284,946 in the collective membership ; $65,082,990 in share and loan capital ; $223,862,370 in sales ; $19,475,940 in net surplus ; 10,992 in the employee force ; and $19,861,940 in wages and salaries. These figures represent increases of 7 per cent in membership, 21 per cent in share and loan capital, 29 per "The People's Yea/r Book, 1921, pp. 49, 50. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 23 cent in sales, 24 per cent in net surplus, 9 per cent in the number of employees, and 39 per cent in wages and salaries, over the year 1918. The progress made by these societies since 1913 is worthy of consideration. Table III. — Shovting the Development of the Cooperative Retahj Distributive Societies of the United Kingdom duking THE Period 1913-1919-" Year Num- ber of Socie- ties Total Member- ship Share and Loan Capital Sales Net Surplus Total Number of Employees Productive and Dis- tributive Total Salaries and "Wages 1913.. 1914.. 1915.. 1916.. 1917.. 1918.. 1919.. 1,387 1,390 1,375 1,362 1,366 1,364 1,357 2,878,648 3,054,297 3,264,811 3,520,227 3,788,490 3,846,531 4,131,477 $ 213,008,825 231,589,695 244,242,980 266,611,760 278,732,465 306,973,540 994,652,165 $ il7,951,870 439,821,145 512,788,895 808,442,750 710,018,060 775,789,815 994,652,185 $ 64,256,515 67,509,125 74,800,430 81,675,395 79,582,955 84,582,955 102,478,225 103,452 103,074 109,449 115,651 118,716 119,629 130,621 $ 29,519,715 31,599,835 33,748,625 37,263^080 42,328,315 51,234,660 71,096,600 The statistics of this table indicate that during the six years between 1913 and 1919 there were the following increases : mem- bership, 1,252,829, or 431/2 per cent; share and loan capital, $159,047,705, or 75 per cent; collective sales, $576,700,315, or 138 per cent ; net surplus, $37,697,650, or 59 per cent ; the num- ber of employees, 27,169, or 26 per cent; wages and salaries, $41,576,885, or 140 per cent. The contemporary financial status of the retail distributive societies is seen from the above data and information concerning reserve funds and other items in the balance sheet. The total reserve fund in 1919 amounted to about $22,486,295 as com- pared with $21,716,360 in 1918 ; the value of the stock-in-trade amounted to $154,777,520 as compared with $117,442,955; the value of land, buildings, machinery and fixed stock amounted to $84,669,775 as against $76,235,575 ; while the total investments were $203,160,890 as compared with $171,014,510. There were thirty less societies in 1919 than in 1913, and the average pur- chases per member in 1919 amounted to approximately $240 as compared with $140 in 1914. This means an increase of 67 per ^'Compiled from the People's Tear Book, 1921, p. 51. 24 COOPERATION cent in average purchases. Between July, 1914, and August, 1919, food prices advanced about 110 per cent and the general cost of living about the same proportion. If the average pur- chases per member had kept pace with price changes they would have exceeded the figure for 1919 by about $60 per member. Price advances forced economy.^i (3) Cooperative Productive Societies, Excliisive of WJiole- sale Societies. As already suggested, producers' cooperation has had a much more checquered and less successful career than con- sumers' societies. This has been generally true wherever pro- ductive societies have been organized. Yet, such societies still exist and frequently meet with a fair degree of success. In the United Kingdom there were 95 productive societies (exclusive of wholesales) associated with the Cooperative Union in 1919, with a total membership of ncjarly 40,000. The share and loan capital of these societies at that time was $11,500,000, and their sales exceeded $35,000,000. In the same year the net surplus of productive societies approximated $2,450,000, their employee force numbered over 11,000, and they paid over $6,000,000 in wages and salaries. For the period 1913-1919 the reports of these societies show the following increases : membership, 4,669, or 13 per cent; share and loan capital, $2,992,660, or 35 per cent; sales, $15,684,565, or 90 per cent; net surplus, $1,171,340, or 93 per cent; employees, 633, or 6 per cent; wages and salaries, $3,178,735, or 107 per cent. Complete data for this period are given in the table below. Table IV. — Showing the Growth of Cooperative Productive Societies IN THE United Kingdom, 1913-1919^ Year Number of Socie- ties Member- ship Share and Loan Capital Trade Surplus Number of Employ- ees Wages $ $ $ $ 1913.. 108 34,662 8,505,165 18,551,170 1,265,070 10,442 2,981,900 1914.. 108 36,880 9,111,745 19,003,135 1,383,960 10,725 3,067,775 1915.. 103 34,912 8,440,590 19,300,260 1,584,480 10,657 3,174,605 1916.. 101 35,142 8,858,020 22,307,455 1,669,210 10,284 3,660,530 1917.. 97 36,358 9,024,770 25,732,295 1,798,700 10,038 3,834,230 1918.. 95 37,393 9,872,395 28,570,205 1,993,010 9,745 4,563,925 1919.. 95 39,331 11,497,825 37,235,735 2,436,410 11,075 5,160,635 -CompUed from the People's Year Boole, 1921, p. 52. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 25 (4) Cooperative Supply Associations. Cooperative Supply Associations have not manifested promising development in the United Kingdom during the period 1913-1919. In several par- ticulars these societies have shown a marked decline. The data for 1913 indicated that there were four supply associations, with a membership of 95,061 ; share and loan capital equalling $2,816,200 ; a total trade of $10,393,305 ; a surplus of $246,155 ; a working force of 1,956; and a wages bill of $898,440. The report for 1919 shows three societies, with a total membership of only 8,351 ; share and loan capital amounting to $2,360,445 ; trade aggregating $11,191,560; surplus totalling $372,025; a working force of 1,732 ; and a wages bill of $1,261,460.23 Com- pared with the statistics for 1913, these figures show a decrease of 25 per cent in the number of societies and 91 per cent in membership. There was a decrease also of $445,755, or 15 per cent in share and loan capital, and 224, or 11 per cent in the number of workers. On the other hand surplus was increased $126,170, or about 51 per cent, and wages $363,020, or about 30 per cent. The phenomenal advance in commodity prices is un- doubtedly the cause of these increases in surplus and wages. (5) The Cooperative Wholesale Societies. In 1919 the three cooperative wholesale societies — the English Cooperative Whole- sale, the Scottish Cooperative Wholesale, and the Irish Agri- cultural Wholesale had a combined membership of 2,063 societies ; share and loan capital amounting to $107,445,325 ; sales aggre- gating $577,285,820 ; net surplus equalling $3,969,990 ; an em- ployee force of 42,920 ; and total wages and salaries amounting to $25,745,690. Compared with 1918 these figures indicate an increase of 31, or I14 per cent in the affiliated society member- ship ; $24,646,835, or 30 per cent in share and loan capital ; $145,277,385, or 35 per cent in sales; $389,700, or 10 per cent in net surplus; 10,340, or 32 per cent in the number of em- ployees ; and $9,026,910, or 54 per cent in wages and salaries. If we examine the recent growth of the English and Scottish Cooperative Wholesale Societies (apart from the Irish Agricul- tural Wholesale) we find the following increases for the period 1913 to 1919 ; society membership, 627, or 44 per cent ; share and loan capital, $57,359,435, or 1141^ per cent; sales, $375,- ^'The People's Tear Book, 1921, p. 52. ' 26 COOPERATION 605,775, or 186 per cent ; number of employees, 13,241, or 45 per cent; wages and salaries, $16,717,430, or 185 per cent. At the same time, there was a decrease of $914,255, or 19 per cent, in net surplus.24 (6) The English Cooperative Wholesale, 1913-1919. The work accomplished and the position taken by the English Co- operative Wholesale Society during the period of the World War was such as to command admiration. Its economic policy and its political and social cooperation exemplified the high princi- ples upon which the whole cooperative movement is founded. The record of the society was one of unselfish public service. In con- trast with the profiteering proclivities of many business enter- prises, the cooperative wholesale adopted a deliberate policy of conducting its affairs on the basis of minimum prices. To the extent of its pre-war purchases the society kept the price of commodities at the pre-war level, and when additional stocks were purchased at an increased price the wholesale disposed of them at a level much below prevailing market quotations. Even when the Government assumed control of food distribution the cooperative wholesale elected to be placed on the lowest footing as regards rates of commission, thus saving the country as much as from 4 per cent to 6 per eent.^^ In addition to its price stabilizing policy, the English Co- operative Wholesale placed its warehouses at the disposal of the Ministry of Food, and its buyers in foreign countries aided in providing supplies for the various governmental departments. Many of the officers of the society became advisers to various governmental committees on food supply and distribution, and its representatives secured the abolition of restrictions that were prejudicial to the consumer. Because of its excellent work in furnishing supplies to the military and naval forces and the nation, the cooperative wholesale became known as the "uni- versal provider." Practically 6,000 members of the staff of the C.W.S. enlisted and about 600 of these were killed in the service of their country. Ninety British and three foreign distinguished service medals were awarded various members of this staff. The cooperative wholesale paid a sum of approximately $3,500,000 ^Ilid., p. 53. *The People's Tear Book, 1920, p. 89. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 27 in wages to employees after joining the colors, and guaranteed equivalent reinstatement on return at the conclusion of the war. Thus the spirit, organization, and policy of the English Co- operative Wholesale were a constructive force in the greatest national crisis of centuries. With such a record of patriotic public service in a time when there was a strong temptation and unusual opportunity to profiteer, there is little wonder that the British cooperative move- ment in general, and the C.W.S. in particular, have experienced rapid growth during the last six years. This growth is mani- fested tellingly in the statistical data for the period subsequent to 1913. Between 1913 and 1919 there was an increase of 41 societies, or 3i/^ per cent, in the English Cooperative Wholesale. In addition, there was an increase of $47,258,960, or 1491/^ per cent, in its share and loan capital ; $289,888,710, or 185 per cent, increase in sales; 11,211, or over 53 per cent, in the number of employees ; and a total increase of $13,295,515, or 192 per cent, in wages and salaries.^^ The net surplus in 1919 was $1,949,755, or 61 per cent, less than in 1913. The data for each year of the period are given in the table below. In addition to its share and loan capital the English Co- operative Wholesale Society has reserve and insurance funds and other assets which in 1919 brought the total financial re- sources up to $118,203,585. Table V. — Showing the Growth of the English Cooperative Wholesale Societt, 1913-1919" Year Society Members Share and Loan Capital Wholesale Distributive Trade Net Surplus Number of Workers Wages $ $ $ $ 1913.... 1,168 31,603,815 156,859,880 3,180,595 20,994 6,916,270 1914. . . . 1,193 31,505,085 174,554,065 4.200,345 23,190 7,696,770 1915.... 1,195 33,207,99'0 215,508,735 5,434,810 23,924 8,887,030 1916.... 1,189 35,546,455 261,150,370 7,595,025 22,215 9,098,635 1917.... 1,192 34,686,625 288,550,665 6,575,775 22,777 9,919,045 1918.... 1,200 59,484,705 325,839,805 802,690 24,10'0 12,645,685 1919.... 1,209 78,862,775 446,746,590 1,240,840 32,205 20,211,785 ^The People's Year Boole, 1921, p. 53. "Compiled from the People's Year Book, 1921, p. 54. 28 COOPERATION The efforts of the Society are not confined to distributive cooperation; it has prosperous productive works as well. In 1919 the value of supplies from these productive enterprises amounted to $129,425,150, as compared with $88,647,840 in 1918, $92,907,775 in 1917, $81,317,500 in 1916, and $64,064,780 in 1915. The increased production in 1919 was valued at $42,438,435, or 48% per cent, over 1918. (7) The Scottish Cooperative Wholesale Society, 1913-1919. During the year immediately preceding the World War (1913) the Scottish Cooperative Wholesale Society was doing as much business in one day as it did in the whole of the first three months of its existence. When the war broke out and a general mora- torium was established, credit and trade were thrown into con- fusion. The grain dealers of Canada and the United States, for example, showed unwillingness to sell commodities except for cash. The buyers of the British milling trade, except the co- operative wholesales, were unprepared to meet this contingency. Because they were able to pay cash, the buyers of the S.C.W.S. were able to select their grains, command the best quality, and secure favorable terms. The advantages of these favorable bar- gains were not limited to the shareholders but extended to all consumers who desired to purchase flour and bread at the co- operative stores. ''All over Scotland, societies determined to sell at normal prices so long as possible; competitors could not charge more than the stores; and so the great mass of people, owing to the strength of the Scottish Cooperative Wholesale Society, were saved during a long period from an imposition they would have had to bear without any real reason save the natural desire of the profiteers to make profit whenever the slightest opportunity came to them."28 The Society was able to perform this patriotic service by means of a great network of organizations for collecting wheat all over Canada. It has grain elevators along the main railways and along the shores of the Great Lakes, in addition to its central depot at Winnepeg. Not only did the society take an active part in keeping down prices of commodities and in selling considerably under the market quotations whenever possible, but its representatives ren- dered valuable service to government committees in the distribu- =«The People's Year BooTc, 1919, p. 77. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 29 tion of food and in opening up new sources of supply. The society took an important part in the equipment of the forces with boots and clothing, and in supplying canteens with pro- visions, the total value of the contracts with the government de- partments amounting to $5,274,350 for the period from 1915 to 1919. In addition, 2,075 of the society's employees joined the forces, of whom 139 were disabled and 315 were killed. "The society also agreed that all men would be taken back into their situations at the close of the war, or when they were demobilized, and during the time they were absent and in army service the difference between their army pay and allowances received from the army and the wages which they were being paid on joining the service was paid to them by the society. ' ' Up to the end of June, 1919, the amount of wages thus paid was approximately $695,000. Considerable assistance was given by the society to the Belgian refugees, and Calderwood Castle, on the estate owned by the society, was equipped by it and was occupied by Belgian refugees for over four years, the total amount expended by the association being $32,590.^^ The Scottish Cooperative Wholesale has established produc- tive centers that are supplying goods to the value of over six million pounds ($30,000,000) annually. During the fifty odd years of its existence its sales have exceeded $1,080,000,000, upon which it has returned to purchasers in the fonn of profits over $35,000,000. During this whole period total losses from bad debts and investments have been only about four cents on each $500 worth of commodities sold.^'^ The society has no bank, like the English Cooperative Wholesale Society operates, but it has furnished loans to the city of Glasgow below the prevailing rate of interest. In 1919 the Scottish Cooperative Wholesale had 266 society members; $27,591,050 in share and loan capital; a wholesale distributive trade of $123,945,200 ; and net surplus of $2,683,310. In that year the society employed 10,523 persons who were paid $5,409,205 in wages and salaries, and $50,120 in bonuses. If we compare these statistics with those for 1918 we find the following increases : share and loan capital, $4,859,570 ; sales $26,347,775 ; »Tlie People's Year BooTc, 1920, p. 108. "^lUd., 1919, p. 81. 30 COOPERATION number of employees, 2,199 ; wages and salaries, $1,421,715 ; and bonuses, $3,380. At the same time net surplus showed a de- crease of $6,655. Detailed information for the period since 1913 is given in the following table. Table VI. — Showing the Growth of the Scottish Cooperative Wholesale Society, 1913-1919^ Share and Wholesale Number Year Society Members Loan Capital Distributive Trade Net Surplus of iVorkers Wages Bonua $ $ $ $ $ 1913... 268 18,482,075 44,820,165 1,703,650 8,685 2,029,075 82,915 1914... 266 20,650,850 47,126,515 1,965,575 8,877 2,651,890 93,915 1915... 264 22,323,065 56,815,375 2,282,580 9,103 2,773,170 65,085 1916... 262 22,823,185 72,512,050 2,507,655 8,307 2,965,825 63,070 1917... 263 21,289,090 85,399,210 2,504,575 8,522 3,279,370 50,080 1918... 261 22,731,480 97,597,425 2,739,965 8,324 3,987,550 46,540 1919... 266 27,591,050 123,945,200 2,683,010 10,523 5,409,265 50,120 It will be seen from the statistics of the above table that, as compared with the data for 1913, there were the following in- creases in 1919: share and loan capital, $9,108,975, or 49 per cent; sales, $79,125,035, or 76 per cent; net surplus, $979,660, or 57 per cent; number of employees, 1,838, or 21 per cent ; and salaries and wages, $3,380,090, or 169 per cent. There was a decrease of $32,795, or 3.9 per cent in bonuses. Moreover, in addition to its share and loan capital of $9,108,975, the Scottish Cooperative Wholesale Society had reserve funds amounting to $6,185,725, making its total resources in 1919 about $33,776,775. The output of the society's productive enterprises in 1919 amounted to $39,117,675, as compared with $27,462,640 in 1918, $31,494,285 in 1917, and $23,540,515 in 1916. (8) The Irish Agricultural Wholesale Society, 1915-1919. The progress of the Irish Agricultural Wholesale Society during the period between 1915 and 1919 is indicative of the important part which this organization is destined to play in the future economic history of Ireland. In 1915 the wholesale had a mem- bership of 327 ; share and loan capital approximating $141,125 ; wholesale distributive trade aggregating $1,876,895 ; surplus amounting to $15,705 ; an employee staff of 81 ; and a total wage ''Compiled from the People's Year Boole, 1921, p. 54. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 31 bill of $27,000. In 1919 membership totalled 588 ; share and loan capital, $991,500 ; wholesale distributive trade, $6,594,030 ; sur- plus, $45,840 ; a working force of 192 ; and a total wage bill of $124,640, In addition the society reported reserve funds of $65,035. (9) Cooperative Production. It has already been suggested that producers' industrial cooperation has met with very little success in comparison with consumers' distributive cooperation. This conclusion is not applicable to the productive works and enterprises owned and operated by distributive societies such as the English Cooperative Wholesale Society and the Scottish Co- operative Wholesale Society. These two British wholesales own and operate successfully factories and establishments for the production of clothing, cabi- nets and brushes, tobacco, preserves and groceries, biscuits, flour and meal, soaps, paints and varnishes, and numerous other com- modities. Iron works, tinplate mills, coal mines, woolen mills, weaving sheds, tanneries, creameries, tea plantations, and a mer- chant fleet are among the productive enterprises that contribute so largely to the success of the cooperative wholesale societies. The cooperative tea plantations in the East owned jointly by the societies had a total acreage of 58,989 in 1920, of which 5,373 acres were in Ceylon, 36,167 acres in South India, and 17,449 acres in Assam. The English Cooperative Wholesale alone has estates in Great Britain with a total acreage of 34,281, valued at $11,419,360, of which 33,232 acres are in farms and similarly pro- ductive holdings.^ 2 During the fifty-three weeks ending June 28, 1919, the value of supplies turned out by the productive works of the English Cooperative Wholesale Society amounted to $106,852,935. The net profit on this total production was only $174,265, or less than one penny (four cents) on the pound ($5). For the year ending June 26, 1920, the value of supplies turned out by these works was $150,495,165, and these were sold at $860,055 net profit, or a little over one penny (d 11/4) per pound.^^ For the entire year 1919, the goods turned out by the English Cooperative Wholesale Society productive works were valued at $129,425,150, as com- «='Tho People's Year BooTi:, 1921, p. 113. ^Uhid., p. 110. 32 COOPERATION pared with $88,647,840 in 1918; $92,907,775 in 1917; $81,- 317,500 in 1916 ; and $64,064,780 in 1915. The increase in the value of goods produced by these works in 1919 was $42,438,435 over the previous year.^^ In 1919 the output of the Scottish Cooperative Wholesale productive works was valued at $39,- 117,675, as compared with $27,462,640 in 1918 ; $31,474,285 in 1917 ; and $23,540,515 in 1916.35 (10) Cooperative Banking. The cooperative credit associa- tions of the United Kingdom are of recent origin as compared with the continental European societies organized to provide credit facilities for small producers. The organizations in the United Kingdom which are designed to develop cooperative credit and banking include the Cooperative Wholesale Society's Bank, Urban Cooperative Banks, Rural Credit Societies, the Cen- tral Cooperative Agricultural Bank, and Labor Loan Societies. There is space here only to review briefly the banking depart- ment of the English Cooperative Wholesale Society. After a series of conferences concerning the necessity and practicability of a cooperative banking department, the mem- bers of the English Cooperative Wholesale Society, in 1872, de- cided ' ' That in order to commence and gradually develop a bank- ing business, authority be given to the committee to receive sur- plus capital from the members, withdrawable at call, and sub- ject to the current bank rate of interest, the same to be used in our own business, or lent out on approved security.^^ The first years of banking experience were anything but suc- cessful for the E. C. W. S. This was due partly to the opposition of a minority of the cooperators who did not favor the step which had been taken by the society in this regard. These persons or- ganized an ' ' Industrial Bank ' ' which sustained heavy losses and failed after a brief existence. Losses were also sustained by the banking department of the cooperative wholesale society, but the department was continued and in 1887 there were 210 cooperative societies holding accounts in it, the receipts during that year ^liid., p. 54. ^Ilid., p. 55. '^Quoted in the British Board of Trade (Labor Department) Beport on Industrial and Agricultural Cooperative Societies in the United Kingdom, 1912, p. XII. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 33 amounting to $86,882,075, and the profits — after payment of interest — to $21,110. Besides, the department had accumulated a reserve fund of $32,185. By 1909 current accounts had been opened by 909 societies, while current accounts and deposits swelled the total receipts to $319,818,670. In that year the de- partment's profit amounted to $170,520, and its reserve fund totalled $248,345.37 At the end of June, 1920, there were 5,754 current accounts with the bank, of which 1,016 were held by cooperative soeieties, 3,347 by trade unions and friendly societies, and 1,391 by clubs and other mutual organizations. In addition there were 281 deposit accounts of trade unions and friendly soci- eties which had no current accounts with the department.^s Prior to 1921 the banking operations of the society were con- ducted in the department at Manchester, but the increasing volume of trade union and workmen's clubs' accounts has necessi- tated larger facilities, and the bank has now established a branch in London. This initial development of branch banking on the part of a British cooperative society promises much for the co- operative movement and the labor movement in Britain. A sys- tem of branch banks, subsidiary to the central department at Manchester will make it possible to take adequate care of the funds of cooperative societies and will doubtless result in an increasing volume of business from labor organizations and other associations. For the year ending June 26, 1920, the total de- posits and withdrawals reported by the banking department amounted to approximately $2,942,056,020 as compared with $2,248,354,920 for the corresponding period of 1918-1919. This was an increase of $693,701,700 for the former period, or 36l^ per cent for the half year from June 28 to December 27, 1919, over the same period in 1918, and 261/^ per cent for the half year from December 27, 1919, to June 26, 1920, over the corresponding period in 1918-1919.39 The profits of the banking department of the English Co- operative Wholesale Society are distributed among the customers in proportion to their patronage in a given period, non-members receiving a dividend of one-half the rate paid to members. "British Board of Trade, op. cit. pp. XII, XIII. **The Teople's Yem Bonlc, 1921, p. 108. 34 COOPERATION (11) Recent Growth in Cooperative Employmerit. The co- operative societies of the United Kingdom are assuming an in- creasingly important position as employers of labor. This posi- tion is indicated very clearly in the data on cooperative employ- ment since 1914, which are given in the following table. Table VII. — Showing the Growth in the Number op Cooperative Employees Associated with the Cooperative Union of Great Britain, 1914-1919« Total Workers Engaged in Wages Year Production Distribution Number Percent of Total Number Percent of Total Productive Distributive 1914... 148,264 63,275 42.68 84,989 57.32 $ 19,923,915 $ 26,143,405 1915... 155,379 66,486 42.79 88,893 57.21 21,345,085 28,299,545 1916... 158,715 62,401 39.32 96,314 60.68 22,734,370 31,456,005 1917... 162,503 61,404 37.79 101,'099 62.21 24,383,070 36,051,195 1918... 164,383 62,401 37.96 101,982 62.04 29,576,270 44,095,150 1919... 187,535 78,483 41.85 109,052 58.15 43,989,455 60,821,390 According to the statistics of the above table there was an increase of 39,271, or 27 per cent, in the total number of em- ployees in 1919 over the total for 1914, while in the same period the aggregate wage bill increased $57,743,525, or 125 per cent. In 1914 there were 63,275 persons employed in the productive works, while in 1919 there were 78,483 pereons so employed, in- dicating an increase of 15,208, or 24 per cent. Total wages paid to the workers in productive enterprises were $24,065,540, or 121 per cent, larger than in 1914. When we turn to the question of employment in distributive divisions we find that the total num- ber of employees increased from 84,989 in 1914 to 109,052 in 1919, an increase of 25,063, or 29 per cent, for the latter year, while the total wage bill for these workers was $34,677,985, or 132 per cent, greater in 1919 than in 1914. It is interesting to note fur- ther that the collective employee group of 148,294 persons in 1914 received aggi-egate wages of $46,067,320, an average of about $311 a year, while the 187,535 employees in 1919 received *°Tlie data in this table are compiled from the People's Year Boole, 1921, p. 55, STUDY IN CONSTRUCTIVE ECONOMIC REFORM 35 $104,810,845, which was an average of $559. This was an in- crease of about 70 per cent in the average for the period. Retail prices of food in the United Kingdom were 109 per cent higher in July, 1919, than in July, 1914, according to official reports, and similar advances occurred in the prices of other necessities. The average level of retail prices of all commodities included in the statistical report of the British Ministry of Labor (food, rent, clothing, fuel and light, and miscellaneous items) was 165 per cent higher at the close of 1920 than in July, 1914.*i Con- stant readjustment in wages, therefore, became a serious problem. (12) The Employment Policy of tJie Cooperators. The atti- tude of cooperative societies towards their employees is a subject about which all persons interested in the cooperative movement wish to know something. The data on cooperative employment presented in the preceding paragraph show that cooperative societies are large employers of labor. Moreover, it is interesting to note that if we take the total number of employees in connec- tion with the collective membership of retail distributive soci- eties we find that the proportion of the movement employing its own members runs somewhat as follows: 1914, 4.85 per cent; 1915, 4.76 per cent; 1916, 4.51 per cent; 1917, 4.29 per cent; 1918, 4.27 per cent, and 1919, 4.53 per cent.^s It is evident, therefore, that the percentage of employees who are also mem- bers of the cooperative societies is very small, and that the busi- ness activities are carried on by employees paid a salary or a wage, the same as in a private establishment. The engagement and discharge of the manager, shop assistants and other em- ployees is left to the committee, assisted often by a sub- committee. Profit sharing with employees has been adopted by only a few retail societies, and even plans introduced by the wholesales seem to have been unsuccessful. Both in productive and dis- tributive departments little progress has been made by schemes designed to divide profits with the workmen. In 1870 the Scot- tish Cooperative Wholesale Society introduced a profit sharing plan which provided that employees should receive a dividend on wages at a rate equal to twice the amount paid to members on *^The Labour Gazette, Vol. XXIX, No. 1 (January, 1921) p. 1. "The People's Year BooTc, 1921, p. 55. ; 36 COOPERATION purchases. In 1883 a distinction was made between distributive and productive employees and a differential rate introduced. In 1892 the plan was further modified, all employees being given a bonus on wages at the same rate as dividends on purchases to members, half of which was retained in a special bonus loan fund, bearing interest at 3 per cent per annum. Except ^vith the con- sent of the committee, deposits in this fund were withdrawable only after expiration of three months from date of employee's separation from the service of the society. The Scottish Whole- sale has continued to pay bonuses, as already shown, the total amount paid as bonus on wages during the period 1913 to 1919, inclusive, being $451,625. In 1873 the English Cooperative Wholesale Society adopted a bonus system, but this was discontinued in 1876 as unsatisfac- tory. In 1882 a kind of profit-sharing plan was adopted but this was abandoned in 1886. In 1907 a ''Thrift Fund" was estab- lished, in which all employees — productive and distributive — may participate after six months of service. The purposes of this fund are "to make provision for the retirement of its con- tributors through old age, or incapacity caused by infirmity of body or mind, the encouragement of thrift, and the creation of a bond of interest between the Society and employees which shall be mutually advantageous." Both the society and employees were designated as contributors to this. fund. In addition to these measures the English Cooperative Wholesale has introduced a minimum wage scale, and various welfare schemes in its pro- ductive works. The welfare work inaugurated in 1917 has since been extended to several of the society's enterprises, and includes social, recreational, educational, and medical facilities. Every, effort is also made to provide for amicable adjustment of dis- putes with employees. The Cooperative Movement in the United States 1. Historical Sketch of Cooperation in tJie United States. The cooperative movement which was revived by the twenty-eight Rochdale pioneers in an attempt to secure relief from poverty and unemployment incident to a strike, soon spread to the United States. In no other country has cooperative enterprise been launched more frequently. Until recent years, however, the STUDY IN CONSTRUCTIVE ECONOMIC REFORM 37 movement in this country has had a very cheequered and un- certain career, characterized by sporadic bursts of cooperative enthusiasm followed by dismal failure and eventual decay. But the ideal and spirit of cooperation have at no time vanished com- pletely. Failure has always been followed after a time by addi- tional experiments on the part of farmers and wage-earners, whose imaginations have been captured by the practical idealism of distributive cooperation. Brief review of the development of the cooperative movement in this country will help us to appre- ciate the serious difficulties as well as the possible successes of cooperative effort. (1) Tlie Genesis of tlie Movement, 1794-1861. The incep- tion of the cooperative movement in the United States dates back to a time preceding Robert Owen in England. In 1794 the journeymen cordwainers' union of Baltimore established a co- operative boot and shoe factory for the purpose of providing employment to its members. A second attempt was made by this same trade in 1806, after their trial for conspiracy. Periods of industrial depression and excessive prices of commodities con- tinued to force the attention of wage-earners to possible relief through cooperative effort. Cooperative stores were opened, but many, like those in Cincinnati and Philadelphia, failed chiefly because they sold goods at less than prevailing market prices. As early as 1836 a cooperative convention was held, and producers' cooperative enterprises were initiated in several trades, but these experiments, like their predecessors, were doomed to failure.^^ The real spirit of cooperation and true cooperative policies were lacking in these early experiments. Probably the first true example of consumers' cooperation in the United States was the ' ' buying club " or " division store ' ' or- ganized by a tailor in the city of Boston in 1844. Communistic communities had been established prior to that date and had practiced the principles of cooperation. This was true of the Shakers' colony established at New Lebanon, Columbia County, New York, in September, 1787. Many similar colonies were or- ganized and some still remain. But the genesis of consumers' cooperative societies as we know them today is found in the Bos- ton experiment. Out of this attempt among the members of the *^C. W. Perkey, Cooperation in the United States, p. 5. 71835 38 COOPERATION New England Association of Mechanics and Workingmen there developed in 1847 the Workingmen 's Protective Union, the gro'wth of which is indicated by the fact that in 1852, 403 branches and sub-divisions of the Union had been established, and 165 of these reported sales for the preceding year amounting to $1,696,825.46. *■* As a result of a schism in this movement, the American Protective Union was organized in 1853. By 1857 this organization was conducting business in ten states and re- ported the operation of 350 divisions, $291,000 capital, and an annual trade amounting to $2,000,000. In 1856 the original New England Protective Union reported 63 divisions, 3,584 members, $130,912 capital, and a trade volume for 1855 totalling $1,005,882.02.4^ Both of these associations succumbed with the outbreak of the Civil War in 1861, failure being attributed to the practice of selling commodities at cost, incompetent management, extension of credit, lack of intelligence, and the absence of a true cooperative spirit. ^^ In 1853, the International Industrial Assembly of America, having a membership of 200,000, promoted cooperation, and in 1866 the National Labor Union adopted the same policy, urging the establishing of cooperative stores and workshops in every kind of business in all sections of the country, but little or nothing of a practical experiment seems to have been started by these or- ganizations. Their influence was chiefly constructive in demand- ing legislation designed to aid the cooperative societies. The stores existing in this period were mere purchasing agencies.*^ (2) TJie Period of FurtJier Experimentation, 1866-1917. Immediately following the Civil War, in 1866, the Patrons of Industry, a farmers' association, was organized, and established a number of cooperative stores, some of which still exist. The early career of this movement was auspicious, but soon it declined and many of its stores lost their cooperative features. Remnants of this grange movement sui^ived, however, there being a whole- sale society and 150 retail stores in Texas in 1885, and in 1894- 1895 the wholesale reported sales amounting to $65,000 and a **Adams and Sumner, Labor Prohlems, p. 398. "Bemis, History of Cooperation in the United States, p. 23. *" Adams and Sumner, op. cit., p. 399. *'C. W. Perkey, op. cit., p. 6. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 39 commission business of $222,661.91, By 1896 the movement had suffered further decline, and little of it remains today. ''^ Like the Patrons of Industry, the Knights of Labor (organ- ized in 1869) established productive and distributive cooperative societies on a large scale, but lack of the cooperative ideal and vision soon caused the stores to degenerate into mere commission houses, and the movement became an aggressive labor movement using the strike and securing legislation to achieve the aims of the workers. The cause of cooperation was given great impetus by the Sovereigns of Industry, a purely cooperative association, organ- ized in 1874. Stores were established throughout the North Atlantic States, and in 1875 the association reported 101 Coun- cils, with 6,670 members, engaged in distributive cooperation. Fully one-half of the stores started by this organization were operated on the Rochdale plan, and this fact has earned for the Sovereigns of Industry the distinction of being the first to estab- lish firmly that system on the American continent. Poor meth- ods of administration and unsound business policies forced the dissolution of the association in 1879, although some of its stores continued as independent enterprises and many that suspended operation were not compelled to do so for financial reasons.^^ An innovation in cooperative experiments in America was made in the organization of the Labor Exchange at Independ- ence, Missouri, in 1889. Members of the association were privi- leged to bring to the exchange any commodity they desired, and received payment in the form of a labor check for an equivalent value in the local wholesale market, where goods could be pur- chased at retail prices. Non-members could trade at the ex- change, either by the use of labor checks or legal money. The movement had 135 branch exchanges spread throughout thirty- two states, with a membership of 6,000 in 1896. Following the death of its founder — Mr. G. B. De Bernardi — the experiment soon declined.^" Isolated experiments in cooperation continued in the United States during the first decade of the twentieth century. Move- ^'Adams and Sumner, op. cit., pp. 399, 400. "Ibid., p. 400. ""Ibid., p. 401. 40 COOPERATION ments of a more or less sporadic nature developed in New Eng- land, the Middle-West, the West, especially in Kansas, and in the Pacific Coast region. In the Central West and Northwest the movement was aided very materially by the Eight Eelation- ship League, organized in Chicago in 1898, to promote a plan of cooperation involving equal ownership of stock; one-man-one vote, and no proxy voting ; business conducted strictly on a cash basis, or produce or labor ; sale of commodities at current market prices; and an annual division of profits.^^ (3) The Period of Revival and Unification, 1914 to the Present. From what has already been said concerning coopera- tion during the nineteenth century it is evident that the coopera- tive movement, which has become so important a factor in the social, economic, and political life of Europe, has met with far less success and very severe reverses in the United States. Spor- adic movements have developed only to decline with more or less rapidity. The movement in this country lacked both unity and continuity. Recent developments in the American cooperative movement, however, give greater promise of success. There are now certain well-defined geographic centers of cooperative effort, including Seattle and San Francisco on the Pacific Coast; Minneapolis and St. Paul in the Northwest ; Chicago in the Central West ; and New York City in the East. Clustering around these centers of the movement are over three thousand consumers' cooperative societies operating stores. In several of these territorial divisions the purchasing power of the retail societies has become so large that a number of wholesale associations have been established to nourish and cement the isolated organizations. 2. The Contemporary Status of Cooperation in the United States. At no other period in the history of this country has the cooperative ideal been more generally accepted than in the years subsequent to the outbreak of the World War. The rapid ascent of the general price level since 1915 and the failure of wages to keep pace with prices have stimulated widespread experimentation in distributive cooperation in almost every state. Brief review of recent developments will suffice to show the extent to which the tide of cooperative enterprise, which had receded "/6td., p. 406. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 41 80 far, has returned to enlist the enthusiasm of American farmers and wage-earners. There are two fairly distinct co- operative movements in America today. One of these comprises farmers organized mainly as producers, the other is composed largely of workingmen who are organized mainly as consumers. We are concerned here especially with consumers' cooperation. (1) Farmers' Distributive Cooperation. Agricultural co- operation in the United States, influenced considerably by federal and state departments of agriculture and agricultural colleges, has experienced steady progress during the last decade or so, and today is being given unprecedented attention. Cooperative agri- cultural associations are now estimated to number several thou- sand, a large number of which, sponsored and guided by the American Society of Equity, the National Grange, and the Farmers' Educational and Cooperative Union, now promote the establishment of cooperative distributive societies. The National Conference on Marketing and Farm Credits established the Na- tional Agricultural Organization Society to promote cooperative enterprises. Several grain states of the Central West have fed- erated state associations into the National Council of Farmers' Associations. Other super-organizations have been established for the purpose of marketing farm products. The Farmers' Educational and Cooperative Union spread from Texas, where it was organized in 1902, into nearly every state. The Union is especially strong in Kansas where there are today 750 cooperative societies operating retail stores. In that state there are 300 cooperative associations conducting retail stores and exchanges for the sale of agricultural products and machinery. Cooperative elevatoi^ are numerous, as they gen- erally are throughout the grain states of the Central West and Northwest, and many societies own flour mills. The total busi- ness of 600 societies of the Kansas Union in 1919 amounted to $200,000,000, while the turnover of the 150 independent coopera- tive societies was estimated to be $20,000,000 in the same year. One farmers' society does a business of $5,000,000 annually, its retail store alone having an annual trade of $400,000. The John- son County Cooperative Association at Olathe, Kansas, which was organized in 1876, does a business of over $200,000 annually, makes a net surplus of $15,000 a year for its members, and has a 42 COOPERATION strong reserve fmid. The Shawnee Cooperative Association at Topeka has over 1,000 trade unionist members.^^ Cooperative production and distribution first assumed a posi- tion of prominence in Nebraska about 1915. In 1919 there were 150 grain elevators in that state operated cooperatively, the best one of which cleared over $20,000 in 1918, while shipments through the various elevators have resulted in a saving of from 2 to 5 cents per bushel for the farmers. A farmers' exchange for the cooperative sale of live stock and butter made a profit of $12,000 in 1918.53 xhe Farmers' State Exchange at Omaha is a central wholesale house doing an annual business of $3,000,000.^^ The membership of the various cooperative enterprises in Nebraska, including cooperative store societies, was over 40,000 in 1919, and in 1918 approximately $100,000,000 worth of busi- ness was done by these associations. ^^ Farmers' creameries have followed cooperative principles more closely than have farmers' elevators. It was estimated that in 1919 there were 2,000 cooperative cheese factories and 3,000 co- operative creameries in the United States. In that year "Wis- consin had 308 creameries and 718 cheese factories operated on a cooperative basis. Cooperative live-stock selling associations are increasing rapidly in number. In 1918 Wisconsin had at least 130 such associations which shipped in that year stock valued at $10,000,000. But farmers are not stopping with co- operative distribution of live stock and other products ; they are even going into the meat packing business. The Farmers' Co- operative Meat Packing Company of Madison, Wisconsin, had about 6,000 members in 1919. On the Pacific Coast cooperative meat packing plants and cooperative fish and fruit canneries are operated. In Olympia, Washington, producers were operating cooperatively in 1919 about 31 shingle mills, 2 laundries, 1 slaughterhouse, 1 packing plant, 1 fish cannery, 1 bakery, 1 milk condensary, 1 dairy, 2 printing plants, and a daily newspaper "^James Peter Warbasse, The Cooperative Consumers' Movement in the United States, p. 5. ^^Monthly Labor Eeview of the United States Bureau of Labor Sta- tistics, March, 1919, p. 134. "Warbasse, op. ait. p. 5. '^^Monthly Labor Eeview of the United States Bureau of Labor Sta- tistics, March, 1919, p. 134. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 43 with a circulation of 40,000. A cooperative lumber mill, a ship- yard, and a bank were organized in the same year.^'' Cooperative marketing of fruit has been made possible through fruit growers ' associations in various parts of the United States. Four-fifths of all the citrous fruit grown in California is sold through such agencies. The California Fruit Growers' Exchange, having a membership of about 8,000, shipped between 15 and 16 million boxes of citrous fruit in 1918. There has also been some cooperative effort among the cotton growers of the South, but they are less well organized than the fruit, grain, and dairy farmers. In 1917 there were in the United States 5,462 farmers' organi- zations of various kinds with an annual volume of cooperative business exceeding $625,000,000. In the order of the amount of business done they stood as follows : cooperative elevators, fruit and produce associations, cotton associations, retail stores, live stock shipping associations, and tobacco distributive societies.^''' (2) Consumers' Cooperative Societies. Agricultural asso- ciations are organized mainly for cooperative distribution of products, and they tell us nothing of the efforts of consumers to organize and operate retail and wholesale societies among other groups in our population. Producers' cooperation has never at- tained much success in the United States, but cooperative dis- tribution has periodically developed surprising strength, espe- cially in recent years. High prices, industrial depression, unem- ployment, and strikes result in a recurrence of cooperative effort on the part of wage-earners and other groups in America. Ex- amination of some of the more important and successful soci- eties and the general aspects of the cooperative movement in sev- eral states will indicate the recent development of consumers' cooperation in this country. (a) Michigan Cooperatives. The Ishpeming Consumers' Association of Northern Michigan dates back; to February, 1890. This association does a general business and conducts a store, having at present about 1,000 members and an annual trade of over $300,000. Since its inauguration thirty years ago the asso- ciation has refunded to its members in interest and savings on "76mZ., p. 135. "Ibid., p. 136. 44 COOPERATION purchases $320,000. In the same part of Michigan is the Tam- arack Cooperative Association, organized in 1890, which has about 1,700 members. Ever since it was organized this society has paid regularly interest on invested capital and its divi- dends on purchases have never been less than 8 per cent nor more than 13 per cent. In twenty years it has paid returns in cash aggregating $1,595,185 to its members. The Soo Mercantile Association was organized in 1912, and in 1920 it had a membership of 400. This association conducts five stores, a meat market, and a bakery, and does an annual business of $375,000. There are forty other societies in the same part of Michigan in which these larger societies are located, while in the southern part of the state there are a hundred additional asso- ciations.^^ With the encouragement of the State Federations of Labor and the United Mine Workers the miners and steel workers in other states are following the successful exemplification of co- operative enterprise in Michigan. (b) Tlie Cooperative Movement in Illinois. As in Pennsyl- vania, which has 200 cooperative societies averaging 150 members, and in Indiana, Ohio, and other states, organized labor has assumed the leadership in establishing cooperative wholesale and retail societies in the state of Illinois. Illinois had about 100 cooperative societies in 1920, of which more than one-half were connected with the Central States Wholesale Society, with head- quarters at Springfield and at East St. Louis. It is estimated that the annual business of cooperative societies in this state amounts to $10,000,000, Most of these societies are controlled by men who have come up from the mines and shops and assumed the general business and financial direction of the movement. Chicago is the center of much of this cooperative activity. The Palatine Cooperative Society of Chicago has a capital of $500,000, a membership of 1,200, and conducts a school with 400 Polish students. /in February, 1919, the Cooperative Society of (America was organized in Chicago for the purpose of cutting down the cost of living by establishing and operating a chain of retail and wholesale groceries in Chicago and vicinity. The plan of this society is to open 916 stores, with not less than 300 "^Warbasse, op. dt., pp. 6, 7. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 45 members each. Buying clubs are formed as soon as 100 members are found in any one district, and this is followed by a store as soon as 300 members subscribe for stock in the society. Secre- taries can order goods for buying clubs direct from the society's wholesale in Chicago, at a discount of 5 per cent on purchases. A large number of stores were opened in Chicago in 1920, espe- cially among the immigrant population. These stores gave one the impression of being well-managed, and they were doing a good business. Wholesale and distributive warehouses were operated in 1920, and were well stocked with goods. In addition to the wholesale and retail departments the society has an edu- cational department in which managers of stores and stock sales- men are trained. A regular school is operated, the mornings being devoted to class work for prospective managers and sales- men, and the afternoons to the practical work of managing and selling. Memberships were sold originally at a par value of $25.00, but these soon advanced to $37.50, and a rise to $100 was predicted by the administrative officers of the society. f^ The Cooperative Society of America is managed by a board \ of three trustees, who receive no salaries but are entitled to divide j 41^ per cent of the net profits among themselves. A large force i-^of experienced stock salesmen are employed. The society claims to operate on the Rochdale plan; to pay 6 per' cent on share capital; 5 per cent on actual food purchases; and to distribute the surplus, after deducting the trustees ' commission, among the members. The number of memberships or shares which any one may purchase is limited to twenty. In 1920 the society claimed a total of 20,000, but the goal is to enlist 400,000 members. The society designates itself as a ''common law tnist," which it de- fines as ' ' an equal partnership of people without any partnership liability .... formed for the purpose of growing, manufacturing, and distributing food to its members through a chain of retail stores. "^^ By comparing this society with the British societies already discussed the reader will see that the former is by no means a pure Rochdale organization. The concentration of ^"The data concerning this society were secured mostly through personal interviews with the trustees of the society and from its published pamphlets, "The Cooperative Society of America" and "Answers to Questions of Prospective Members." 46 COOPERATION power in the hands of a small body of three trustees is one of the I things that precludes the democratic control so conspicuous in^^ the British Rochdale plaii^^^^ In addition to the above, Chicago and other parts of Illinois have numerous other cooperative retail and wholesale societies. In an attempt to learn the status of these societies questionnaires were mailed to seventy of them and personal visits were made by the Avriter to a large number of the stores, including two whole- sales. Eleven of the questionnaires were returned unclaimed, which is fairly substantial evidence of the failure of that number of societies; twenty-four societies failed to answer the com- munication, and through other channels it was learned that these had either ceased to exist or had become ordinary non- cooperative business ventures; while for thirty-five societies fairly complete returns were received. Twenty-four of these thirty-five answered practically all questions. Of these, 3 had an original capital investment of less than $1,000 ; 10 had from $1,000 to $2,000; 3 from $2,000 to $3,000; 2 from $3,000 to $4,000 ; 1 from $4,000 to $5,000 ; 4 from $5,000 to $10,000 ; and 1 had $10,000. According to the reports concerning the capital of these societies in 1920, 2 had capital of less than $2,000 ; 4 from $2,000 to $4,000 ; 4 from $4,000 to $5,000 ; 7 from $5,000 to $10,000 ; 4 from $10,000 to $50,000 ; 1 over $50,000, while two did not report on this point. None of these societies were organized prior to 1911, and most of them are only a few years old. The total amount of capital invested originally by these societies was $67,027.84, while the total reported for 1920 was $400,336.17, an increase of 497 per cent within a few years. The monthly volume of business runs from $150 in the case of a purchasing club to $21,000 or $30,000 in the most successful stores. All of these societies are administered by a board of several members known as the Board of Directors, elected by the mem- bers. Voting power in the majority of the associations is dis- tributed on the basis of one vote to each member, although a considerable number adopt the principle of vote distribution according to the number of shares owned. In most cases the number of shares that any member may hold is limited to five, but the limit is ten in three societies, and in the case of two asso- STUDY IN CONSTRUCTIVE ECONOMIC REFORM 47 ciations there is no limit. The stores are under the direction of a paid manager who usually receives the prevailing union wage. Twenty-two out of the twenty-four societies reporting either refuse credit or limit the amount to about three-fifths of the value of shares owned, credit on loan capital being extended to the full value of loan capital invested. No credit is given non-members, except in one or two societies. Dividends on purchases range from 2 to 7 per cent. The membership is comprised chiefly of miners, farmers, and railroad employees. In six of the socie- ties the shareholders are reported as foreign born, in sixteen the members are native Americans, while in two the member- ship consists of both native and foreign born. The Cooperative Society of Bloomington, Illinois, which was opened June 12, 1918,^^ is typical of the successful societies in this state. The membership of this society consists of union workers, 75 per cent of whom are railroad men and 25 per cent are wage-earners in the building trades and miscellaneous crafts. There is nothing in the by-laws that prohibits any persons, not members of a labor union, from joining the society. Because the store is not located in the neighborhood where its shareholders live, fully 90 per cent of the orders are received over the tele- phone and are delivered by truck. The society has 10 employees, including a manager who is paid $200 a month, a bookkeeper, a cashier, 5 clerks, and 2 delivery boys. All employees are paid at least the minimum union wage. ''Honest weights and measures" is the slogan of the society, and all bulk goods are sold by weight, a policy which has proved advantageous to the customers. In 1920 the society purchased 75 per cent of its sup- plies from local wholesale houses and 25 per cent from the Cen- tral States Cooperative Society, located at East St. Louis. In 1921 this ratio is being reversed, fully 75 per cent of the com- modities being purchased from the Central States Cooperative. Like other cooperatives in this state, the Bloomington society handles a full line of groceries, overalls, shirts, and other sup- plies in general demand. Whenever possible union label goods are handled. All commodities are sold at standard prices, used in all other stores of the city, and no attempt is made to cater to ""The data concerning the Bloomington Society is from a special report issued in 1920. 48 COOPERATION cut price goods. The store has learned what most cooperative stores in the state have learned, namely, that the working class prefers goods of the best quality at standard prices to poor goods at low prices. "It makes a legitimate profit on each and eveiy article and does not emphasize 'specials' with a lower price than usual to attract trade." Credit is extended to members up to 75 per cent of the capital invested. Originally each member held five shares at $5, but by recent vote the stock was doubled and now five shares at $10 is the limit. No credit is given to non-members, so that there are no losses through bad debts, since no member can over-buy his capital stock. If a member finds he cannot pay, the amount he owes is subtracted from his stock, and the store makes a final settlement before he withdraws from the society. Such cases, however, have been rare. Many cooperative stores have failed because managers were inexperienced, especially in the matter of buying. In their eagerness to satisfy the varied demands of the general trade, cooperative stores have frequently purchased too wide a range of goods to use successfully. It has been found more advantageous to limit the number of brands and sizes and to acconunodate the trade only on articles in frequent demand, thus carrying as little "dead stock" as possible. Another mistake in buying has been the purchase of excessive quantities from expert solicitors and salesmen upon whose advice inexperienced managers have too fre- quently relied. The Bloomington society, like the others, has met these difficulties. Another common difficulty has been the limited amount of working capital which prevents the manager from taking ad- vantage of discounts for cash or payments in ten or thirty days. To meet this difficulty the Bloomington society did what a large number of other societies have done — increased its capital. On January 24, 1920, the capitalization was increased from $10,000 to $20,000, the shares advancing from $5 to $10 each, and the limit for any one member from $25 to $50. On February 21, 1920, a new building was purchased at a cost of $20,000. The society has a Committee on Education, consisting of ten members, which is aiding materially in meeting the difficulties that arise in the administration of the store. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 49 During a strike wage earners' cooperative stores in Illinois give aid to union men who are not members of the society. If a striker is not given credit by his local grocer he gets a credit slip from his organization, signed by the president and secretary, allowing him to purchase a certain amount of goods at the co- operative store. The union thus becomes security for the man, and the cooperative store presents the bill to the union and the amount is taken out of strike funds due the purchaser. The Bloomington society has rendered such aid to teamsters and shopmen out on strike. In the first quarter of its operation this store did a total business of $18,636.16, while its business now ranges from $30,000 to $50,000 a quarter. Generally speaking, the cooperative societies in Illinois are operated on the following principles : ( 1 ) Unrestricted member- ship, with shares of low denomination, usually $5 or $10, which may be paid for on the installment plan; (2) limitation of the number of shares to be owned by any one member, usually to five $5 shares or five $10 shares; (3) one member, one vote, irre- spective of the number of shares held; (4) the sale of all com- modities at standard prices, and nothing but first class goods offered for sale ; (5) cash sales whenever possible, with extension of credit when necessary, to about three-fifths of the value of share capital; (6) payment of not more than the legal rate of interest on share and loan capital, the remainder of the profits, after providing for depreciation, reserve, and educational work, to be returned as a dividend to members in proportion to their patronage. (c) Cooperation Among the Finns and Other Racial Groups in America. Among the most strongly established cooperative movements in America is the one which is associated with the Finnish Socialist Party. Here one finds the tradition, spirit, and loyalty that are indispensable to successful cooperation. There are over 150 cooperative societies among the Finns in this coun- try, including retail stores, mills, bakeries, boarding houses, pub- lishing houses, creameries, newspapers, and wholesale houses. It is estimated that a large majority of the 200,000 Finns in this country are affiliated with the cooperative movement. Local societies are established by socialist groups as a means of edu- cating the Finns in certain political ideals. 50 COOPERATION The Cooperative Central Exchange at Superior, "Wisconsin, which is among the most successful Finnish societies, is dis- cussed later in this bulletin. The Finnish societies of Massachu- setts have united with other cooperative associations in the dis- trict to form a wholesale with headquarters at Boston. The new association, which was organized in 1919, is known as the New England Cooperative Wholesale, and is composed of about thirty cooperative enterprises to which it sells about $2,000,000 worth of goods a year. Other national and racial groups in America are conducting cooperative societies, including the English, Scotch, Hebrews, Russians, Italians, Germans, Poles, Slovaks, and Franco-Belgians. At the 1920 convention of the Federation of Jewish Cooperative Societies, over 1,200 delegates were seated, representing associations that are operating restaurants, bak- eries, butcher shops and agricultural enterprises.® ^ Consumers' Cooperative Wholesale Societies in the United States If the history of cooperation in the United Kingdom teaches any definite lesson, it is that no cooperative movement can be permanently successful without unification and federation of the scattered, isolated, autonomous units — ^the retail societies. These retail associations are the cells that make up the organism of cooperation in any country, but isolated, disconnected cells do not make for complete organic structure and function. Definite intimate relations and connections must be established to assure growth and permanent activity. The Cooperative League of America has estimated that in 1920 there were about 3,000 consumers' societies in the United States, with a total membership of over 500,000, representing with their families 2,000,000 persons, and a combined purchas- ing power of $200,000,000 annually. The total capital of these societies is estimated to be $15,000, 000.*^ 2 Adequate statistical data concerning the movement in America are not available, but there is every reason to believe that these estimates are approxi- mately correct. **Warbasse, The Cooperative Consumers' Movement in the United States, pp. 8, 9. ^''Warbasse, op. cit., p, 5. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 51 Three thousand independent cooperative associations are at a serious economic disadvantage unless there obtains some agency to cement their interests and promote their welfare. Economy and efficiency in the purchasing of supplies can not be effected by small, independent, disconnected societies doing a retail busi- ness of only ordinary size. Eecognition of this fact led to the establishment of cooperative wholesale houses. A significant step in this direction was taken at the "First American Cooperative Convention" held in Springfield, Illinois, September, 1918, which provided for the organization of the National Cooperative Asso- ciation to assume charge of district wholesale houses and give unity to the cooperative movement. In November, 1919, the National Cooperative Association began operations in its offices and warehouse at Chicago. Branch wholesale warehouses were established in Seattle, Washington, and Hoboken, New Jersey, and plans have been formulated for additional wholesale houses at Los Angeles, Kansas City, Denver, and other important business centers. Besides the National Co- operative Wholesale Association there are the following district wholesale houses: the Cooperative Wholesale Company of San Francisco ; the Cooperative Wholesale Society of America at St. Paul; the Cooperative Exchange at Superior, Wisconsin; the Central States Cooperative Wholesale Society at East St. Louis, Illinois; the Tri-State Cooperative Association at Pittsburgh, Pennsylvania; the Cooperative Society of America at Chicago. In the cooperative movement among farmers several wholesale societies and exchanges exist, which increase considerably the total number of cooperative wholesale organizations in America. 1. The Composition and Functions of Cooperative Whole- sale Societies. Cooperative wholesale societies are organized for several reasons, namely, (1) To enable consumers' societies to make their purchases in an advantageous manner by avoiding competition among themselves in the open market ; (2) to defend cooperative retail societies from the opposition of private mer- chants who bring pressure to bear upon privately owned whole- sales to prevent the latter from supplying goods to cooperative stores; (3) to eliminate the profits of the commission house, jobber, and wholesaler; (4) to secure the economy and efficiency of large scale buying. The establishment of cooperative whole- 52 COOPERATION sales is not only sound business but is economically imperative if the cooperative movement is to succeed permanently. Coop- erative experience the world over has demonstrated this fact. Cooperative wholesales in the United States are conducted on the following basis : (1) Membership consists of cooperative soci- eties and clubs having the Rochdale ideal or something akin to it, and, sometimes, of individuals. Exclusion of associations desig- nated as operated for profit is general. (2) Affiliating societies are required to invest from $100 to $1,000 in the capital stock of the wholesale, the amount varying with the size of the local retail association. (3) Administration of the wholesales is en- trusted to a board of seven or nine directors elected from the membership of the affiliated societies. Member societies deter- mine the general business policies of the wholesale through their representatives or delegates at conferences held for this pur- pose. (4) Generally, all goods are sold for cash at current whole- sale prices, and savings are returned to the constituent societies in the form of a dividend distributed in proportion to patronage. Sometimes, as in the case of the Central States Wholesale, short- time credit is extended, and the policy of selling as near to cost as possible is adopted for the purpose of meeting, if not destroy- ing, local retail competition. There is a marked difference between American wholesale societies and the British wholesales. The latter are federations of distributive retail societies which are essentially independent, autonomous units, while many American cooperative wholesales have a tendency towards centralization, conducting both whole- sale and retail activities, with final control of retail branches remaining largely, if not completely, in the hands of the whole- sale. This is true, for example, of the Central States Cooperative Wholesale Society and the Cooperative Society of America, in both of which the retail stores are organized and sustained under direct control of the wholesale. To distinguish it from the British system some of the sponsors of this type of organization have named it the ' ' American Rochdale Plan. ' '^^ The Coopera- tive League of America is unalterably opposed to this tendency "'President John Walker of the Illinois State Federation of Labor, and Mr. Eobert McKeehan, manager of the Central States Wholesale, are prob- ably the originators of this name. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 53 towards centralization of authority and control in the hands of the wholesale organizations, while prominent leaders in Illinois see in it the hope of the cooperative movement in the United States. It will be seen from data already presented regarding cooperation in Illinois, that many stores which began their careers on the English Rochdale plan failed and were taken over by the Central States Cooperative Wholesale and operated successfully on the American Rochdale system. Like the wholesale societies of the United Kingdom, American cooperative wholesales perform definite educational functions in furnishing information, literature, lectures, stereopticon slides, and moving pictures relative to the organization and operation of cooperative enterprises. For this purpose the societies appro- priate annually from savings an amount ranging up to ten per cent of surplus after payment of interest on capital stock. Uni- form systems of accounting and bookkeeping have been intro- duced by the various organizations with very satisfactory results. In the case of the Pacific Cooperative League and the Tri-State Cooperative Association the general bookkeeping and auditing of accounts of member societies are done at the central office of the wholesale. The Cooperative Wholesale Society of America requires its member societies to adopt a uniform, prescribed sys- tem of accounting, and gives them the privilege of having their accounts audited by the wholesale association. The Central States Cooperative Wholesale merely recommends a specified system of accounting, which is generally adopted by subsidiary societies, while the Central Exchange does not designate any special system of bookkeeping, but merely assists the retail asso- ciations in introducing accounting and auditing methods. American wholesale societies have recognized the sound busi- ness practice of training prospective employees. The Tri-State Cooperative Society in Pittsburgh offers courses in ' ' store man- agement" and the "scientific principles of cooperation," which deal with such topics as the general nature and functions of co- operative enterprises, cooperative advertising, personnel admin- istration, principles and practice of accounting, and the princi- ples of efficient management. The first session of this school was held from January 30, to June 11, 1920. The Cooperative Cen- tral Exchange held a short course in 1919 and 1920 at Superior, 54 COOPERATION Wisconsin, in which about forty students were enrolled. The training department of the Cooperative Society of America has been discussed already. 2. The National Cooperative WJiolesale and Its Branches. The National Cooperative Wholesale Association was organized at the Cooperative Congress held in Springfield, Illinois, in Sep- tember, 1918, and was opened for business in November, 1919. The society is incorporated under the laws of Wisconsin, for $1,000,000, which is divided into 10,000 shares of $100 each. Wisconsin was chosen for incorporation because the cooperative laws of that state were deemed most secure and favorable to cooperative concerns. Membership is restricted to cooperative societies organized on the Rochdale plan, each member society being required to subscribe for three shares for each one hundred members or fraction thereof. For every 500 members the soci- eties are entitled to send a delegate to the meetings of the whole- sale association. An amendment adopted March 15, 1920, pro- vides that in the future a society petitioning for membership shall be required to subscribe to the wholesale a sum equal to 25 per cent of its (the petitioning society) capital stock. Trade unions, farmers' associations, and individuals may invest in loan capital. The methods of administration and the plan of development of the National Cooperative Wholesale are patterned after the Cooperative Wholesale Society of England, with its federated relationship of the retail societies, and conducted on the prin- ciples of one vote to each member regardless of the number of shares held ; payment of only the legal rate of interest on stock shares ; business conducted on a cash basis ' ' as far as possible ' ' ; distribution of profits in proportion to patronage.®^ Full control and administration of the National Cooperative Wholesale is vested in a board of nine directors elected by the stockholders for a term of three years. The volume of business during the first year of operation approximated $150,000. It is too early, however, to draw any conclusions concerning the prob- able future of this organization. 3. The Pacific Cooperative League. The cooperative move- ment in California centers around the Pacific Cooperative **Pamplilet of the National Cooperative Wholesale Association, p. 4. Study in constructive economic reform 55 League, with headquarters and a wholesale company at San Francisco. The Rochdale movement was initiated in California about twenty years ago, but because of the lack of mutual sup- port, experience, intelligence, and wholesale facilities, it resulted in failure. In 1913 the Pacific Cooperative League was organ- ized as a propaganda and sustaining organization.^^ The League organizes chain stores in California and neighboring states under the "American Chain Store Plan." Membership in the asso- ciation is open to cooperative stores, organized clubs, firms, and corporations upon the payment of $5 entrance fee, $100 share capital, and $900 loan capital. Associate membership is provided for at the nominal sum of $5, which entitles individuals to the privilege of the trading, social, and educational features of the League without the assumption of liabilities. Store societies join the association on their own initiative, but insolvent societies are often taken over "on probation" and made solvent by reason of the League's direct control of the business and accounts. Stores are organized by the League only when and where interest in cooperation is strong enough to give reasonable assurance of success. The requirements are that in the average community there shall be 200 members, each subscribing from $35 to $50 for capital and the expenses of organization. From $10,000 to $50,000 is the prescribed range of original capital, but $7,000 is often accepted as sufficient basis for the organization of a store society. Once organized, this store is given local autonomy with power to make its own by-laws, elect its own directors and a rep- resentative to serve on the Central Board of Delegates of the League. The affairs of the association are administered by a Central Board of Directors, consisting of seven members elected from the delegates. The manager of the retail store is selected by the League. After fulfilling the requirements of the League as to interest on shares and reserve, and educational funds, each store is privileged to declare its own dividends on purchases. Membership is transferable from one society to another, and life membership entitles an individual to buy direct from the nearest wholesale branch at wholesale prices. Such a member- ship is granted a person who moves from the vicinity of one of the association's stores, "Warbasse, op. cit., p. 8. 56 COOPERATION Expenses are required to be paid out of the actual earnings on sales, not out of invested capital, and a centralized system of accounting has been established which has proved only one-third as expensive as bookkeeping by the separate stores, and far more efficient. The charge made by the association for this service varies with the amount of business, the fee ranging from $15 to $50. Audits and inventories are made regularly and each store society holds monthly meetings. The wholesale does all the buy- ing for the League. The present status of the movement is indi- cated in the following excerpt from a letter which was received from the League on March 14, 1921 : We are at present operating 47 cooperative societies. About a dozen more are preparing to open for business in the near future. The combined business of the societies is now about $4,000,000 a year. The membership is approximately 15,000, and the average membership per store is 300. The Cooperative Wholesale Company is the property of the membership of the Pacific Cooperative Leagne. At present only about a fifth of the buying of the societies is done through their own wholesale, owing to the fact that many of them are so far distant. As rapidly as possible, however, branches of the wholesale are being established to serve the more distant."* The League operates in California, Arizona, and New Mexico. By October 6, 1919, there were branches being organized in 32 towns of California, seventeen of which had a total membership of 3,600. It will be seen from the above letter that the member- ship today is about 15,000, which indicates rapid growth. The League is a member of the International Cooperative Alliance, and acts as agent for the English Cooperative Wholesale and the Eussian Cooperative Unions. Ever since its inception the League has been able to meet all financial obligations and pay dividends, none of its stores having failed. This signal success is attributed to the policy of close federation of the constituent societies, which amounts really to amalgamation and extreme centralization of supervision and general control. 4. The Cooperative Wliolesale Society of America. In the autumn of 1917 the Cooperative Wholesale Society of America was established, with central offices at St. Paul, Minnesota. The society comprises cooperative associations operating in the Dakotas, Montana, and Minnesota. The original capitalization of Trom a letter to the author written by Alanson Sessions, Education Department, Pacific Cooperative League, March 14, 1921. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 57 $10,000 was increased to $100,000 in May, 1918, and to $1,000,000 in July, 1918. Membership in the society is open to all coopera- tive organizations operating on the Rochdale plan, cooperative corporations, and unincorporated cooperative societies, on the basis of the purchase of $1,000 worth of capital stock. Affiliated organizations, about 28 in all, include producers' and consumers' societies, prominent among which are farmers' organizations. The combined membership of these societies is estimated to be from 4,000 to 5,000. Current wholesale prices are charged, and surplus earnings, after meeting requirements for reserve and educational funds are returned to members in proportion to their purchases and to employees as a sort of bonus on wages. Non-members receive one-half the rate of dividend paid to members, according to the English practice. The society performs the dual function of purchasing for consumers and selling for producers through its buying and marketing departments, which are separately main- tain3d. Marketing farm produce constitutes a very important part of the society 's work. Although the Cooperative Wholesale Society of America maintains an organization department it does not establish stores except upon request from the members of a locality desiring a store, nor does it make any effort to induce cooperative societies to affiliate with the wholesale. Member associations must (1) have a certain minimum of capital, (2) sign a contract to purchase all their supplies through the cooperative wholesale, and (3) conduct their business on a cash basis. 5, The Cooperative Central Excliange. In July, 1917, a con- ference of 15 Finnish cooperative stores held at Superior, Wis- consin, organized the Cooperative Central Exchange. The con- stituent societies of this wholesale association are located in Northern Minnesota, Wisconsin, and Michigan. The Exchange is thus only a little more than three and a half years old, but ever since its inauguration it has grown steadily in membership and volume of business. The increase in the number of coopera- tive societies, including stores and buying clubs, affiliated with the wholesale is indicated by the following data:^'^ "All data relative to the Exchange presented in this bulletin are com- piled from the reports of the Exchange mailed to the author in March, 1921. 58 COOPERATION Year Society Membership 1917 15 1918 27 1919 40 1920 48 In addition to the regular member societies some societies are listed as purchasing supplies through the Exchange. The capital stock which member societies have invested in the Cooperative Central Exchange, and the sales of the Exchange are given as follows : Tear Capital Invested Sales 1917 $ 480.00 $ 25,573.62 (three months) 1918 4,020.00 132,423.00 1919 6,940.00 313,663.88 1920 10,890.31 407,373.84 It would seem from the foregoing information that the Ex- change, which is the only cooperative wholesale society in the important district at the head of the Great Lakes is destined to become an important agency in the American cooperative move- ment. The net gain recorded by the wholesale in 1919 was $7,330.21, and in 1920, $6,798.43. In 1921, $4,454 will be dis- tributed in the form of shares among member associations. Of the total net gain in 1920, $2,600 was distributed to member societies in proportion to their purchases, the remainder being transferred to the resei've fund. In October, 1918, the Cooperative Central Exchange pur- chased at the cost of $22,000, a three-story brick building in an excellent part of the business district of Superior, and in Octo- ber, 1919, the society opened in this building a bakery with two modern ovens costing about $10,000. The bakery is the first and so far the only productive establishment operated by the Exchange. This establishment employs nine persons, and pro- duces toast, hardtack, bread, biscuits, and cookies. The sales of the bakery averaged $4,028.54 per month for the first nine months of 1920. At the present time, (March, 1921) the Ex- change is planning to take over the milk distributing business and the creamery of the Central Cooperative Creamery Association, located in Superior and doing a business of $100,000 a year. This association consists of cooperative societies that are already mem- bers of the Cooperative Central Exchange. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 59 A very important phase of the activities of the Exchange is its educational work along cooperative lines. The following excerpt from the report of the society indicates the scope and success of these efforts. In the summer of 1918 the Exchange organized a course which lasted one week and which was attended by fifteen students. At this course book- keeping was the only subject taught. In the summer of 1919 the course was extended to four weeks and was attended by 43 students from Minnesota, Wisconsin, and Michigan. At this course different phases of cooperation were taught besides book- keeping, which still remained the main subject. In 1920, during the months of September and October a similar course was arranged lasting this time for six weeks and being attended by 34 students, men and women, some of them coming as far as from the state of New York and from Canada. In 1921 a similar course will be arranged in the fall. These courses have proved a very important factor in training for the cooperative stores bookkeepers, clerks and managers, who know something about cooperation and will be loyal to the movement.** At the third annual meeting of the Exchange, held in Superior, February, 1920, a resolution was passed providing for an educational department to be operated in connection with the wholesale. This department is in charge of an Educational Di- rector. Last year the department was supported by an educa- tional tax of 50 cents per member, which every afftliated society had to pay into the treasury of the Exchange. At the fourth annual meeting of the Exchange, held in Superior, March 4-5, 1921, this tax was modified to include one tenth of one per cent of the net annual sales of each affiliated society. It is estimated that for this year $2,000 will be derived from this source for edu- cational work. In addition, the recent conference voted to trans- fer $1,107.24 from this year's surplus to the educational fund, from which scholarships are to be given to students who have been active in the cooperative movement and who wish to attend the fall session in 1921.69 At present the Cooperative Central Exchange has about 5,000 members. Most of the affiliated societies are located in Northern and Northeastern Minnesota, the Upper Peninsula of Michigan, '■•Report of the Cooperative Central Exchange, 1921, p. 2. •"From a letter written by Mr. Severi Alanni, of the Educational De- partment of the Exchange, to the author, March, 8, 1921. 60 COOPERATION Northern Wisconsin, and Illinois, the largest number being situ- ated in Minnesota and only one in Illinois (at Waukegan). The financial statement of the Exchange for 1920 showed total assets of $72,548.10, and total liabilities of a similar amount, including capital, surplus, and undivided profits amounting to $21,911.67. Affiliation with the Exchange is left entirely to the initiative of the local cooperatives, although the work of the educational department undoubtedly exercises wide influence in this regard. Any cooperative society or organization conducting business on generally accepted principles of cooperation is eligible for mem- bership in the Exchange. Each affiliated society is required to take out at least one share in the Exchange, the face value of which is $100. If the membership of any affiliated society ex- ceeds 25, an additional share must be taken, and in case the mem- bership is higher than 50, one additional share to every 25 mem- bers must be subscribed. The bookkeeping system of member societies must conform to the regulations of the wholesale, and all accounts are open to examination by the authorized representa- tive of the Exchange. After making all reservations necessary to safeguard and promote its business, the Exchange pays not more than 6 per cent interest on the paid-in capital stock. Control of the wholesale association is vested in a board of nine directors, while administrative policies are carried out by the executive committee, comprising the officers of the society — the president, the secretary, the treasurer, and two additional members selected by the Board of Directors. The details of administration are looked after by a management committee of three members of the Board of Directors, chosen by the Board to serve for one year."^*^ Upon application, the Exchange extends aid to persons who wish to organize a cooperative store. Unlike some other Ameri- can cooperative wholesales, the Cooperative Central Exchange does not require affiliated societies to purchase all their supplies through the wholesale, although it expects them to buy through the wholesale whenever it is possible through this agency to pur- chase direct from producers and manufacturers. 6. Tlie Tri-State Cooperative Association. The Tri-State Cooperative Association functions both as a wholesale and a "By-laws of the Cooperative Central Exchange, pp. 2-10. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 61 retail, having about 22 retail branch stores in western Pennsyl- vania, eastern Ohio, and northern West Virginia. Ownership of these stores is vested in the collective membership of the asso- ciation, and their management is placed in the hands of the Tri- State Board of Directors, officers, and central operating force, assisted by local committees. Except when the wholesale depart- ment is unable to supply their needs, all branch stores must buy their supplies through it. Local stores are organized only upon the request of 10 or more families in any locality. Each store is entitled to send two delegates to the quarterly meetings of the association. Two kinds of stock are issued by the Tri-State, namely, ' ' per- manent ' ' stock which pays interest at the rate of 6 per cent, and "ordinary" stock which pays 5 per cent. The latter may be withdrawn on 90 days' written notice to the Board of Directors, Membership in the association may be acquired by the payment of a fee of $1.00 and the purchase of at least five $10 shares, two of which must be permanent stock. Stores that have already been established may affiliate with the Tri-State by accepting the latter 's stock for the value of the net assets of such stores. Local societies desiring affiliation must have a minimum membership of 100 and a capital of $5,000, and the stock issued to each member must consist of 2 shares of permanent and 3 shares of ordinary stock. These stores may surrender affiliation upon a majority request of their member- ship and the authorization by all the members of release and transfer of ordinary stock to the local society. Membership in the wholesale may be secured by independent stores upon the purchase of $200 worth of permanent stock. At present, over 20 independent stores are affiliated with the wholesale. The retail department is operated as a unit and a uniform dividend is returned to all local societies irrespective of their sav- ings. A bonus is paid to employees on their salarie^^ at the same rate as the dividend. Earnings of the wholesale are distributed among retail stores on the basis of patronage. Steps have been taken recently to separate the wholesale and retail departments and to secure a separate charter for the latter. 7. The Central States Cooperative Wholesale Society. The cooperative movement in central and southern Illinois is directed 62 COOPERATION largely by the Central States Cooperative Wholesale Society, organized in March, 1915. The wholesale warehouse of this asso- ciation was established in 1919, and, under the able management of Mr. Robert McKechan, has had a successful career. In the beginning the society was a very modest agency doing the col- lective buying for its members, but as early as 1917 the members were convinced that the organization of a cooperative wholesale department is a vital determinant of successful cooperation."^! From its inception the society has received the sujjport of or- ganized labor, chiefly the miners' locals, and it is for all prac- tical purposes an adjunct to the labor movement in Illinois. The Central States Cooperative Wholesale has increased its original capital of $300 to a paid-in share capital of $130,000 and a loan capital of $25,000. The original maximum limit for capital stock issues was set at $50,000, divided into 500 shares of $100 each. Rapid expansion of business operations led to a larger capitalization, and the present plans are to have ultimately a capital of $500,000. No affiliating society or individual can hold more than five shares of capital stock, which are $100 each. There is apparently no limit on the amount of loan capital that may be owned. On both share and loan capital an interest rate of 5 per cent is paid annually. In subscribing for shares three must be paid for at once, while the balance must be paid for within one year.'^^ Management of the wholesale society is vested in a Board of Directors of ten members, elected at the annual convention, for a term of one year. Each member has but one vote and voting by proxy is prohibited. The actual work of running the wholesale is done by a manager who has rather liberal authority. Mr. Robert McKechan, manager of the wholesale, stated on March 9, 1921, that there are now sixty mining cooperative stores in operation, directly supervised by the wholesale, while there are twenty-five regular Rochdale stores which are connected with and do some of their buying through this agency. '''^ Many stores that have failed under the Rochdale system have been taken over and "''^Proceedings of the Third Annual Convention of the Central States Cooperative Society, September, 1917, p. 8. "See the constitution of the Central States Wholesale Society, ^^n a letter to the author, March 9, 1921. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 63 operated successfully under the supervision of the wholesale, located at East St. Louis, Illinois. Where trade unions have requested it, the wholesale society has established stores and re- tained strict control of them. As already suggested, the society itself is owned and controlled directly by the miners ' unions. In establishing local societies the association specifies no definite membership or capital, but advises that there be 40 or 50 members contributing at least $50 each. Each manager of the stores directly controlled by the wholesale must make weekly reports of sales, over-head expenses, and other items of business. Frequently special conferences of managers are held at the wholesale headquarters to discuss business methods and policies. All these branch stores must purchase their supplies through the wholesale, except in the case of local produce or when the society can not fill the order. The amount of dividend to be returned by each local society is left to the individual society. Dividends are not a big item since few of these stores are operated on the pure Rochdale plan. Most of them are operated on the "cost plus" system, under which goods are sold at cost plus a small percentage estimated to cover expenses. This is true of both the wholesale and the retail societies. Such a plan makes possible active competition with local merchants even to the extent of undercutting their prices. This is done to secure trade, and grows out of the conviction of the leaders of the Central States Cooperative Wholesale that the interest of the American people in cooperation can best be enlisted by giving them dividends in the form of low prices. Two per cent profit on gross sales has been set by the society as the desired margin. '^^ At their regular meeting held in East St. Louis, Illinois, April 18, 1920, the Board of Directors adopted the following rules of administration for "American Eochdale Stores": (1) The Board of Directors shall be composed of a duly elected i-epre- sentative from each local union holding stock in the local store ; (2) the Board of Directors shall meet not less than once a month, and shall elect a president, vice-president, secretary-treasurer, and a committee to supervise the business of the society ; (3) the manager shall not be eligible to serve in official capacity and '*E€gulations adopted by the Board of Directors at the regular monthly meeting in E'ast St. Louis, April 18, 1920. 64 COOPERATION shall hold no vote on business matters ; (4) two per cent shall be retained from gross sales, and shall be turned over weekly to the secretary-treasurer, the said two per cent to cover expenses of operation and profit; (5) the local board and the Central States Wholesale shall have power to vote and supply equipment and goods for local stores.''^ The strictest supervision by the whole- sale is provided, and is actually exercised by the manager, who requires prompt weekly returns from each local store and insists on a low expense of operation. The sales mark set by the manager of the wholesale for 1920 was $3,000,000. This goal was exceeded by $600,000. In 1919, the first year of its existence, the wholesale society created from its surplus a reserve of $18,000, and today claims a total of $300,000 capital resources.'^^ The following data indicate the amount of business done by the retail stores.''"^ Week No. of Aggregate Approxi- Percentage Average ending stores sales mate range of percent- report- average operating age of ing sales expenses operating expense March 6, 1920.. 20 $26,375.23 $1,319 4% - 11% 7%% March 20 , 1920. 25 36,178.68 1,500 3% - 13% 6%% March 31 , 1920. 25 24,376.54 1,000 5% -23% 9% April 19, 1920.. 27 29,914.63 1,100 4% - 14% 7% April 24, 1920.. 29 40,189.11 1,400 4% - 10% 5% The sales and expenses for other weeks in 1920 were about the same as the above, which suggests that the weekly turnover of the retail stores averages from $1,000 to $2,000, and operating expenses about 7 per cent on the weekly turnover. During the last three months of 1920 and the first quarter of 1921, the whole- sale did a business of $1,500,000. This would undoubtedly have been much larger except for prevailing unemployment. The "Proceedings, issued April 20, 1920. ■"Warbasse, The Cooperative Consumers ' Movement in the United States, 1920 edition, p. 7. ■"Compiled from wholesale manager 's weekly circulars relative to sales and expenses of operation of the retail stores. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 65 wholesale pays 4 per cent per annum on all share and loan capital, and retains a reserve fund of not less than one per cent of the net surplus. Profits are distributed among members in proportion to patronage, but before any division of earnings is made deductions must be made for expenses of operation, in- terest, depreciation, and reserve fund. In theory goods are to be sold for cash, but in actual practice credit is widely extended upon the approval of the Board of Directors. Where no retail cooperative store exists orders are solicited from local union stockholders. In the case of a strike, shut-down, or lockout, the Board of Directors may direct the manager to sell at cost to local, sub-district, district, national, central, or international unions holding stock in the society, upon the request of such bodies. No profit is exacted on such sales until the request is withdrawn or the distress is ended. Where non-members are on strike or lockout these privileges may be granted at the dis- cretion of the Board of Directors. Summary of the Recent Growth of Cooperation in Certain Countries'^^ In every important country in Europe cooperation has pro- gressed rapidly since 1914, and in many countries that have been torn with civil and international wars and social revolutions the cooperatives have appeared as the most constructive agencies in economic and social life. There is room here only for the briefest resume of these significant advances of cooperation. In 1919 the 19 leading cooperative wholesales of Europe had a total volume of sales amounting to $1,047,538,645, while 10 leading retail societies had a total turnover of $141,549,160. 1. Austria. Prior to the war the Central Union of Austrian Consumers' Societies included about 500 societies with a total membership of $370,000, and an annual turnover aggregating approximately $33,000,000. As a consequence of the great war Austria has been reduced to a minor European state, and the old Central Union of Austrian Consumers' Societies has become the Central Union of German Austrian Consumers' Societies, func- tioning in a much less extensive manner. The post-war status "Most of the data on these countries are oonipilpd fiom the rejiorts of the English Cooperative Wholesale Society, especially the Year Book. 66 COOPERATION of the Union is, therefore, not so promising as its condition in pre-war days. The Union includes 112 consumers' societies, 17 building and dwelling societies, 17 productive associations, 4 credit associations, 4 regional federations, 3 purchasing federa- tions, 1 wholesale and 1 insurance society. Of the 112 consumers' societies in 1919, 103, with a membership of 370,866, reported collective sales of $119,327,350. The cooperative wholesale business is taken care of by the Wholesale Society of Consumers' Societies Ltd., which, although a distinct organization from the Union, is controlled by a common board of directors. In 1919 the turnover of the Wholesale So- ciety amounted to approximately $145,000,000. The enormous increase in the aggregate value of annual sales, which reflects the unprecedented inflation of prices in recent years, is seen from the following data: 1914 $ 5,583,780 1916 10,435,995 1918 30,641,195 1919 145,833,330 It is an achievement worthy of note that the Union has more than regained its pre-war collective membership, despite the loss of a large number of societies through disruption of the Empire. Although less comprehensive in the field of its operations, the Union has become more consolidated under the stress of the seri- ous conditions incident to the war, and apparently faces a success- ful future. 2. Belgium. The fundamental principle of cooperation in Belgium is unique in that surplus savings are used for social welfare purposes rather than being returned as dividends to members. These social welfare activities include old age pensions, life insurance, insurance against sickness and unemployment, maternity benefits, and medical and nursing care. Community centers called "the houses of the people" are owned by the co- operative societies, and are used for meetings, dramatics, schools and recreation. Sometimes these centers are surrounded by parks. ''The Maison du Peuple in each district is the sjnnbol of the triple alliance of the cooperators, socialists, and trade STUDY IN CONSTRUCTIVE ECONOMIC REFORM 67 unionists — three movements which have grown, trained and organized together. "'^^ In 1912 the Federation of Belgian Cooperative Societies (La Federation des Societes Cooperatives beiges) comprised 205 societies, with a collective membership of 170,748, and aggre- gate sales of about $9,514,715. The Federation comprised two- thirds of the members and three-fourths of the turnover of all the cooperative associations in Belgium. General data for later years will not be available until the issue of the new census by the Belgian Cooperative Office. There has been an amalgama- tion or federation of forces in several districts. The Union Co- operative de Liege, an association of 50 societies, had a turnover in 1919 amounting to $7,000,000, while Les Magasins Generaux at Philippeville, an amalgamation of 11 societies, had a turnover of $2,000,000. Other district fusions indicate similar growth. The wholesale operations reported by the Federation of Belgian Cooperative Societies for the period since 1913 show excellent progress. They are : Value of Annual Turnover 1913 $2,310,185 1914 1,083,000 1915 400,000 1919 3,173,855 In addition to the distributive functions many productive works have been planned, some of which have been purchased already. 3. CzecliO'Slovakia. The cooperative distributive societies in this new republic are said to number between 2,000 and 2,500 altogether, including the German societies — a separate racial group — which in 1919 consisted of 285 societies. In 1919 the reports of 194 of the latter societies showed a membership of 182,236, and a collective sales amounting to about $34,654,545. The wholesale operated by these German societies showed a turn- over of $28,330,000 for the first nine months of 1919, and about $15,000,000 for the first five months of 1920. The recent growth of the Central Union of Czccho-Slovak Cooperative Societies in Prague is shown by the fact that whereas in 1914 there were 285 affiliated societies, with a total member- '"Agnes D. Warbasse, The Story of Cooperation, p. 9. 68 COOPERATION ship of 71,405 and a total turnover of $5,555,160, the member- ship of societies in 1919 was 708, total membership reached 300,000, and total sales $68,750,000. The statistics of the co- operative wholesale identified with the Union showed a turnover of $674,670 in 1914 and $60,465,510 in 1919. 4. Denmark, Norway, and Sweden. In no country of sim- ilar size has cooperative enterprise been more successful than in Denmark which leads the world in the number of cooperators in proportion to population. Her cooperative agricultural purchase and sales societies, dairies, bacon factories, and slaughter houses are known everywhere as excellent associations. The official cen- suses show that in 1914 there were 1,470 cooperative distributive societies with a collective membership of 244,000, and an annual turnover of $28,611,110, while in 1919 there were 1,690 such societies with a total membership of 317,000 and a turnover of $41,666,665, which indicates an increase of 220 in the number of societies, 73,000 in total membership, and $13,055,555 in sales. The Danish Wholesale Society, whose affiliated societies com- prise seven-tenths of the distributive cooperation in Denmark, had in 1914 an affiliated society membership of 1,407, with 219,492 individual members, and total sales of $19,330,230. In 1919 there were 1,604 affiliated societies, a collective membership of 250,224, and total sales of $36,424,135. Productive enter- prises operated by the Wholesale include hosiery, ready-made clothing, bicycles, soap, rope, margarine, mustard, chocolate, and sweetmeat manufactures. The society also o^^^ls seed-testing and seed-growing grounds. The value of commodities from these productive operations in 1914 was $4,905,945, while in 1919 it was $7,672,070. The Danish Cooperative Bank operates as a central organiza- tion for cooperative savings and loan banks in Denmark, of which there are about 70 with limited liability. The Bank has over 100 branches, and its total business increased from $256,945,000 in 1915 to $2,222,000,000 in 1919. The two other Scandinavian countries, Norway and Sweden, have also had substantial progress along cooperative lines in re- cent years. The statistics of the Cooperative Union of Norway show that in 1914 there were 149 societies, a total membership of 31,000, and total sales of $2,783,220, while in 1919 there were 294 STUDY IN CONSTRUCTIVE ECONOMIC REFORM 69 societies, a total membership of 80,000, and a turnover of $19,782,000. This indicates an increase of 97 per cent in the number of affiliated societies, and 158 per cent in the collective membership. Wholesale distributive operations increased from $860,275 in 1914 to $3,350,930 in 1919. The productive opera- tions of the Wholesale comprise the manufacture of margarine and tobacco, and coffee roasting. The output of the tobacco factory in 1919 amounted to $300,000, as compared with $92,625 in 1918, while the production of the margarine factory increased 50 per cent in 1919. In 1913 the Swedish Cooperative Union, which is an associa- tion of four-fifths of the distributive cooperative societies in Sweden, had 560 affiliated societies, with a collective membership of 103,369 for 409 of these societies giving returns, and a total sales of $9,086,340. In 1916 there were 785 affiliated societies, of which 737 reported a collective, membership of 169,063 and a total turnover of $22,683,835. The statistics for 1919 show 916 societies, of which 879 reported an aggregate membership of 225,423 and sales amounting to $60,032,775. In addition to these distributive societies the Union comprises four insurance companies. Similar success has been achieved by the Union's Wholesale, which, in 1913, the end of the first decade of its existence, had total sales of $2,117,030. In 1916 the total volume of sales was $6,114,785, while in 1919 the total was $19,208,230. The increase in the turnover for 1919 was 147 per cent over 1918. In addition the society has established a margarine factory at Norrkoping, at a cost of $850,000, with a productive capacity of 140,000 to 160,000 pounds per day. 5. Switzerland. Switzerland has long since been noted for her cooperative enterprises, and the spirit of loyalty to her republican institutions has been reflected in these voluntary associations for the production and distribution of commodities. The Union of Swiss Consumers' Societies (Verbond schweiz, Kon- sumvereine) comprises about four-fifths of the distributive co- operative membership and trade of the country. Statistics of the Union show that in 1914 there were 396 affiliated societies with a collective membership of 276,431 and total sales amounting to $28,730,195. In 1918 there were 461 societies, of which 433 70 COOPERATION reported a collective membership of 341,826 and total sales of $47,519,155, while in 1919 there were 476 societies, of which 443 societies reported a total membership of 353,811 and a collective turnover of $57,933,275. The Union's wholesale operations show steady development and prosperity. Total sales amounted to $9,143,415 in 1914, $19,237,200 in 1917, and $28,288,365 in 1919. The productive enterprises of the wholesale comprise a boot and shoe factory, spice mill, coffee roastery, and a cabbage pickling establishment. In 1916 farming and general agricultural activities were started. In addition, the movement has a cooperative dairy at Basle, corn mills at Zurich and Vevey, a mutual insurance society, a coopera- tive society for the supply of furniture, and a cooperative garden village or colony (at Freidorf) for the housing of 150 families included among the Union's employees. 6. Hungary. The reduction of Hungarian territory under the terms of the Peace Treaty at the close of the "World War, coupled with the civil strife between the revolutionary forces of communism and the protagonists of more conservative policies seem not to have retarded the growth of cooperation in Hungary. The establishment of new societies and the consolidation of forces represented by the amalgamation of the Central Organization of Christian Cooperative Societies with the ' ' Hangya ' ' or Coopera- tive Wholesale Society of the Federation of Hungarian Farmers, in 1918, are indicative of a very constructive program on the part of Hungarian cooperatives. The prosperity of distributive retail associations is shown by the fact that there were 1,276 societies in 1914 having a collective membership of 190,555 and a total turnover of $15,413,810. In 1917 there were 1,707 soci- eties Avith a collective membership of 467,077 and total sales of $37,971,095, while in 1918, the last year for which data are avail- able, there were 2,140 societies, a total membership of 658,267, and a total volume of trade amounting to $51,604,175. The ultra-abnormal inflation of prices is unquestionably a responsible factor in the tremendous increase in the value of sales, both in regard to wholesale and retail operations. The wholesale operations of the "Hangya" in 1914 amounted to $6,295,605. The value of total turnover in 1918 was $26,411,485, and in 1919, $43,709,815. The capital of the society was almost doubled in STUDY IN CONSTRUCTIVE ECONOMIC REFORM 71 1919 over 1918, and new establishments were opened. In addi- tion, there are a dozen productive concerns managed by the "Hangya," ten of which in 1919 had a collective capital of over $7,310,000. 7. Italy. In 1913 there was in Italy one member of a co- operative society to every twenty-three inhabitants, as compared with a ratio of one to every sixteen in Great Britain, and one to every thirteen in Germany.^*' The cooperative movement in Italy embraces every phase of cooperation, including cooperative trade unions of builders, navvies and day laborers who "spe- cialize in labor contracts for the erecting of public buildings, road-making, canals, and railways." The cost of construction by cooperative syndicates is reasonable and the work is well done.^i In the period subsequent to 1914 the cooperative movement in Italy had made notable progress. It is estimated that Italy now contains about 10,000 cooperative societies of all classes. In- formation collected in 1920 by the National League of Cooperative Societies came from 3,814 distributive societies, 2,351 labor syn- dicates and productive societies, 425 agricultural societies, 425 miscellaneous organizations, and 234 federations, making a total of 7,249 societies and federations. Among the distributive organizations the National League of Cooperative Societies (Lega Nazionale delle Cooperative) is the most prominent. In 1914 it comprised 2,182 affiliated societies, or about 90 per cent of the total, and at the end of 1919 there were 2,923 societies. The Italian Wholesale had a turnover of $282,000 in 1914, and $1,080,000 in 1917. The Italian Coopera- tive Bank, organized in 1913, is an important reenforeement of the whole cooperative movement. In 1918 the Italian Govern- ment decided to establish government cooperatives that are now working in conjunction with local societies in the larger cities. 8. France. For almost a century various kinds of coopera- tive enterprises have been conducted in France, and just before the World War thousands of productive and distributive societies were doing an enormous business. In 1914 there were 3,261 cooperative distributive societies with a collective membership '"Agnes D. Warbasse, op. cit., p. 12. 72 COOPERATION of 880,000 and a total turnover of $64,200,000. In 1919 there were 4,000 such societies with a total membership of 1,300,000 and a collective turnover of $200,000,000. These data indicate approximate increases of 22 per cent in the number of societies, 47 per cent in membership, and 211 per cent in total sales during the period. Fully one half of the 4,000 distributive cooperative societies in France are represented in the National Federation of Con- sumers' Societies. Eeports from 1,196 of these show a total mem- bership of 724,494, while 1,080 of them reported total sales of $88,764,040 in 1919. Recently the Union of Cooperators was formed as a fusion of two unions in the region of Paris. The Union possesses 300 branches, and has a turnover of approxi- mately $14,000,000. The French Wholesale (Magasin de Gros), in Paris, has at least nine establishments including three boot and shoe factories, three canned goods establishments, and a coffee roastery, and has had remarkable growth in recent years. In the fiscal years 1914-1915 and 1915-1916, respectively, the turnover was $1,800,000 and $2,400,000. Reports of the Whole- sale's operations show that in the fiscal year 1917-1918 there were 670 societies with total sales of $8,254,135; in 1918-1919, 1,088 societies with a total turnover of $15,723,235 ; and in 1919-1920, 1,435 societies with a total volume of sales amounting to $30,401,785. Moreover, in 1919-1920 the output of the Whole- sale's productive departments was valued at $2,517,035, as com- pared with $1,363,620 in 1918-1919, and $759,510 in 1917-1918. The wholesale cooperative movement rendered invaluable service to the country in the recent war, and the Government entrusted many problems of distribution to the societies. 9. Ger77iany. Unlike France, where many cooperative estab- lishments were destroyed in the devastated areas of war, Germany suffered practically no setback in the cooperative movement ex- cept the loss of societies through the recent political readjust- ment of frontiers. The Central Union of German Distributive Societies (Zentralverbond deutscher Konsumvereine) is much stronger today than at any other time in its career, and is by far the most powerful organization among consumers' movements west of Russia. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 73 In 1914 the Union had 1,109 societies, of which 1,094 re- ported a total membership of 1,717,519 and collective sales of $123,245,130. The data for 1918 show 1,090 societies, of which 1,078 reported a collective membership of 2,231,917, and total sales of $167,688,285, while in 1919, 1,132 societies had a total membership of 2,308,407 and a collective turnover of $268,895,315. The German Cooperative Wholesale (Grossein kaufsgesell- schaft deutscher Konsumvereine) is a prosperous institution both in its distributive and productive departments. Its productive establishments now comprise three cigar factories, a tobacco fac- tory, a match works, two soap works, a weaving shed, a clothing factory, a box factory, a sweetmeat and chocolate establishment, a mustard works, a spice mill, a brush works, a wood works, etc. In 1914 the distributive department had a turnover of $39,- 381,010, and the productive department a turnover of $2,618,815. The report 'for 1919 shows a turnover of $88,174,515 for the former, and for the latter $7,170,380. In Germany, as in the other countries, especially European, the increase in the value of annual turnover is due not so much to the increased volume of commodities produced and sold as to the unprecedented inflation of values. 10. Finland, Estlionia, Poland, Georgia, Yugo-Slavia, and Ukraine. Russia 's neighbors, like Russia, have learned the value of constructive economic effort in the midst of political and economic disorganization. Cooperation has appeared as a ray of hope promising to bring economic stability out of chaos and disorder for the struggling Slavic peoples. A glance at the co- operative movements in these countries will suffice to demon- strate the potent economic influence of the cooperative ideal. The General Cooperative Union of Finland had in 1914 about 415 societies with a collective membership of 97,000 and a total volume of sales amounting to $14,200,000, while in 1919 there were 567 societies with an aggregate membership of 201,307 and a total turnovier of $123,154,145. During the same period the Finnish Wholesale Society made remarkable progress despite the difficulties incident to civil war. The Wholesale in 1914 had 244 societies and a turnover of $4,857,200, and in 1919 a total of 503 societies with a collective turnover of $40,997,180. Besides 74 COOPERATION several agricultural estates, the wholesale owns a match factory, a saw mill, a brick works, a tar distillery, a cooperage, a coffee roasting establishment, and a fruit packing enterprise. The value of the total output of these productive works increased from $135,545 in 1915, to $1,037,395 in 1919. The Socialist Societies have seceded from the Central Coopera- tive Union (the neutral union) and have formed the Central Union of Consumers' Cooperative Societies, which embraces the minority of distributive societies in Finland. In 1919 the Cen- tral Union had 103 affiliated societies with a collective member- ship of 123,817, and total sales of about $54,613,060. The Whole- sale had 91 affiliated societies with a total membership of 119,615 and total sales of $10,829,720. The Republic of Esthonia, formerly one of the Russian Baltic states, possesses 140 cooperative societies with a total member- ship of 16,000, and a total turnover of approximately $2,500,000, according to the data for 1919. The Reval Society has 4,000 members and an annual turnover of $1,000,000. A wholesale, which was established in 1919 had a turnover of $1,000,000 for the first year. The distributive cooperative movement in Poland is central- ized in the Warsaw Union of Consumers ' Societies, established in 1911. The Union, like similar organizations elsewhere, combines the necessary operations of wholesale business, propaganda, edu- cation, and protection. The Union's recent growth is shown by the fact that in 1917 there were 327 affiliated societies with a total membership of 40,553, of which 308 societies reported a collective turnover of $9,927,030, while in 1919 there were 628 societies with a combined membership of 186,824, of which 412 reported a collective volume of sales valued at $51,321,690. The wholesale operations have also sho^vn remarkable progress. In 1913 there were 274 affiliated societies with a total membership of 36,909, and a turnover of $1,040,455, while in 1919 there were 628 societies affiliated with the wholesale and the total volume of sales equalled $36,361,020. In addition to its affiliated soci- eties the Union has trading relations with over 1,000 non-affiliated associations. In 1918-1919 seven new branch warehouses were opened for business, making a total of sixteen now operating in the chief centers of the Republic of Poland. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 75 Georgia, Transcaucasia, formerly one of the subject states of the Russian Empire but now an independent republic, has had a successful distributive cooperative movement since 1907. In 1916 the first Central Cooperative Union was established at Tiflis, comprising 174 affiliated societies. In that year the collective membership was 66,605, but this increased to 260,612 in 1917 and 464,845 in 1918, while the number of societies was 518 in 1917 and 880 in 1918. Collective sales amounted to $29,178,800 in ]917 and to $110,787,117 in 1918, an increase of about 200 per cent. It is estimated that the membership of distributive coopera- tive societies in Georgia (calculated on the basis of families repre- sented) constitutes about 74 per cent of the total population of 2,500,000. The youthful Republic of Ukraine (in South Russia) has over 18,000 cooperative societies, including distributive, credit, and agricultural associations, each of which has its separate national union fusing the district federations of local societies. The Dnipro Union embraces the district federations of consumers' societies and its aim is to bring within its supervision all of the 4,000 or 5,000 distributive societies in Ukraine. Another new state — Yugo-Slavia or the Kingdom of the Serbs, Croats, and Slovenes — founded in 1919 a comprehensive organization known as the General Cooperative Federation of the Kingdom of the Serbs, Croats, and Slovenes, consisting of 11 cooperative unions with a total of 3,800 cooperative societies with nearly a half million members. 11. Russia. There are in Russia three general types of co- operative associations, namely, consumers' societies, producers' societies, and credit societies, each with a varied history of alternative encouragement and obstruction first under the czarist regime and later under the proletarian dictatorship of the Bolshe- veki. These societies have surmounted all barriers of this kind and have developed from modest buying and selling groups until at present ' ' they extend into almost every phase of Russian rural life, which is 87 per cent of the whole, and include in their scope production, transportation, distribution, banking and credit, and foreign trade. "^^ *=Fre(Ieric E, Lee, The Russian Cooperative Movenwnt, U. S. Depart- ment of Commerce Publications, Miscellaneous Series No. 101, p. 10. 76 COOPERATION The origin of Russian cooperation dates back to 1865, when the Government approved the first consumers' society. Credit associations formed a union in 1901, were encouraged by legisla- tion in 1905 which gave the Zemstvos power to open such insti- tutions on their own authority, and by a new statute in 1911 which gave them banking privileges. The Moscow Narodny (People's) Bank, founded in 1912, is the great financial institu- tion of the cooperatives. Between 1900 and 1905 agricultural cooperative associations commenced and have assumed an im- portant position in Russian life. In 1918 the Russian cooperative unions had 20,000,000 indi- vidual members (heads of families) and comprised S0,000 local societies and 500 local unions. On the basis of five to a family this means that cooperative organizations represented 100,000,000 of the Russian population. The capital was 230,000,000 rubles, or $117,300,000, if reckoned at par, the number of industrial plants owaied by the unions numbered 5,000, and the number of employees 50,000. Of 80,000 societies on January 1, 1919, 26,500 were credit and loan savings associations; 40,000 were con- sumers' societies; 8,500 were agricultural societies; while 5,000 were peasant groups or artels for making butter, etc.^^ Much promise for Russian cooperation is found in the growth of re- gional unions of societies and the affiliation of these with the All- Russian Central Union of Consumers' Societies, the "Centro- soyus," whose total turnover at the end of 1918 was approxi- mately $500,000,000, and the value of whose productive output was about $75,000,000.^'^ The incorporation of the cooperative system into the Soviet State organization is a step which has been bitterly opposed by cooperators. Whatever else one might say in eulogy of the Russian cooperative movement, it is unquestionably the brightest ray of hope in Russia 's economic and political dis- ruption. 12. CaTuida. In Canada, as in the United States, cooperation has never enjoyed so auspicious a career as have the movements in Britain and Europe. The Canadian movement began in 1861, seventeen years after the opening of the store of the Rochdale pioneers, by English and Scottish immigrants. The first store 'UUd., p. 12. ^The People's Year BooTc (British) 1921, p. 347. STUDY IN CONSTRUCTIVE ECONOMIC REFORM 77 was the Union Association of Stellarton, Nova Scotia. Under the able direction of James Mitchell, who was connected with the society for fifty-three years, the store has been successful. The association was begun with 30 members and a capital of $1,000, while in 1914, when Mr. Mitchell retired, there was a membership of 202, a capital of $16,145, a turnover of $41,275, and a trading surplus for the year of $4,160. During the soci- ety's long career the dividend has been between three and twelve per cent. Of ten other cooperative stores establishd in Nova Scotia during the last forty years of the nineteenth century, only one survived. A conference of Canadian cooperative societies which was held at Hamilton, Ontario, March 6, 1909, organized the Co- operative Union of Canada. At the end of 1919 there were 21 societies affiliated with the Union. Of sixteen societies from which reports were received, eleven are industrial, four are agri- cultural distributive societies, and one an agricultural marketing and distributive society. Statistics of the fifteen distributive societies showed that in 1919 the aggregate trade turnover had been increased from $644,185 to $2,347,725 ; share and loan capital from $49,700 to $212,060 ; loan deposits from $9,765 to $148,775 ; reserve funds from $9,205 to $47,465 ; and net trade surplus from $33,510 to $156,870. There was a collective mem- bership of 6,306, an increase of 1,560 over the previous year. The United Grain Growers, Ltd., had in 1914, 34,503 members, share and investment capital of $2,415,185, a reserve fund of $1,756,- 430, and a net trading surplus of $148,550. During the year the society handled 5,257 cars of livestock, 22,203,007 bushels of grain, and did a distributive business of $6,180,360. Throughout Canada hundreds of other retail societies, pat- terned somewhat after the Rochdale plan, are functioning. In 1917 there were 304 agricultural cooperative societies in Saskatchewan, with a membership of 12,459, a paid up capital of $151,805, a turnover of $3,076,465, and a trading surplus of $110,920. There are 65 incorporated agricultural cooperative societies in Alberta, and 9 in Manitoba, while in British Columbia 13 retail societies have be«n organized. One of the most inter- esting phases of cooperation in Canada is the credit bank system in Quebec province and French-speaking districts of Ontario. 78 COOPERATION The first bank was established by Mr, Alphonse Desjardins at Levis, P. Q., in 1900. Since then 167 such parish banks have been established in Quebec alone, with an aggregate membership of 60,000 and assets of over $10,000,000, while the annual turn- over is $30,000,000. An average of 18,000 loans, totalling several million dollars, are made annually. Conclusion No one can study the cooperative movement in Europe, even in the light which the present brief outline throws upon that subject, without recognizing the grasp which the cooperative ideal has upon the minds of the polyglot peoples of the Old World. The recent phenomenal growth of the movement in coun- tries whose political, social and economic structure has been shaken to its very foundation, if indeed the very foundation itself has not been destroyed as in Russia, is striking evidence of the practical possibility of the fundamental principles of coopera- tion. Of one thing we may be assured, namely, that the coopera- tive movement has become a permanent phase of the economic life of Europe. A second fact of no less significance is that cooperation stands supreme among the movements that seek economic reform and readjustment in a peaceful, evolutionary, and constructive manner. The immediate program of coopera- tion — the elimination of the middleman — has been achieved on an unexpected scale. Whether, out of the political and economic chaos of Europe, the cooperators' ideal commonwealth, founded on mutual aid and functioning in the interest of all, will ulti- mately emerge, is a question which only time can answer. At present there appears to be little ground for thinking that this ultimate program of cooperation will be realized in the immediate future. When we turn to the United States and Canada, in which conditions of life are quite similar, we find cooperation holding a relatively inconspicuous position in economic life. The achieve- ments of the movement in these countries in recent years give some promise of greater stability and continuity, but it cannot yet be said that cooperation has become a very potent factor in their productive and distributive systems. It may not be that the present period of unemployment and price recession will STUDY IN CONSTRUCTIVE ECONOMIC REFORM 79 result in an ebbing of the tide of cooperative effort, but for a long period to come cooperation will attain no such prominence in the United States and Canada as it has achieved in the Old World. There is every reason to believe, however, that the movement in these countries will experience a steady growth. What has just been said suggests the inquiry as to the reasons why cooperation has developed so tardily and achieved so little success and permanence in North America. Generally speaking, there has been a higher degree of individual comfort here than in Europe, which has made people less cognizant of the need for small economies and so has retarded the expression of the asso- ciative spirit and the development of cooperative action in pro- duction and distribution of commodities. In new countries, as the United States and Canada, the abundance of economic re- sources and the prevailing opportunity for economic prosperity have developed a spirit of individualism and competitive achieve- ment. There has been neither the economic necessity nor the individual inclination to develop a system of cooperative enter- prises. As free access to the soil and the open door to in- dividual enterprise are closed to the masses of our people, we shall doubtless have a greater measure of cooperative effort in production and distribution. In regard to the acquisition of land we are rapidly reaching that status, and the growth of corporate organizations and industrial consolidations indicate a narrowing of the field of individual enterprise, but for a long time to come America will, in all probability, continue to reward so generously individual enterprise and initiative that the co- operative movement will have difficulty in enlisting leaders and managers with business acumen and ingenuity. ■Careful examination of cooperative associations in America reveals the following specific reasons for their slow development and frequent failure on this side of the Atlantic : 1. Geographic isolation of individual societies, which has pre- vented the development of solidarity of interest and pro- tective measures. 2. Isolated societies have been organized frequently by people wholly ignorant of essential principles of business organi- zation and inexperienced in sound policies of business administration and operation. 80 COOPERATION 3. The absence of a spirit of thrift among the common people which precluded the appeal of small economies in pur- chasing. 4. The polyglot or heterogeneous character of the population which has made cooperative effort difficult. National and racial prejudices have destroyed the good-will so essential to successful cooperation, consequently much of our pros- perous cooperation is found among distinct racial and na- tional groups, such as the Finns, the Russians, the Ger- mans, and the Jews. 5. Unscrupulous managers who, lacking true loyalty to the cooperative ideal, have either administered the stores for selfish purposes or conducted the business carelessly and inefficiently. 6. The excessive extension of credit on sales, a serious de- parture from pure Rochdalism, has resulted in the accumu- lation of bad debts and bankruptcy. 7. The unwise practice of attempting to sell commodities at cost rather than at standard or prevailing prices. 8. The strong competition of immense chain-stores, depart- ment stores, and mail-order houses, capitalized at millions of dollars, and frequently able to undercut prices in order to lead customers from the small enterprise. The presence of "Kash and Karry, " "Atlantic and Pacific," "Piggly Wiggly, " and other self-service stores, together with Sears Roebuck, Montgomery Ward, and other mail-order com- panies offers stiff competition to the cooperatives. 9. The unrelenting opposition of private retailers and whole- salers who bend every effort to crush the cooperative enter- prises. 10. The degeneration of cooperative movements into aggressive labor organizations, placing more faith in strikes and boy- cotts and collective bargaining than in cooperative business ventures. 11. The mobility of American wage-earners, a frequent migra- tion of the population either from one section of the country to another or to and from the mother countries, is not STUDY IN CONSTRUCTIVE ECONOMIC REFORM 81 conducive to permanent interest in a cooperative society in a particular place. 12. The lack of a unified policy and the failure to centralize administration of educational and publicity work. A be- ginning has now been made in this regard by the organiza- tion of the National Cooperative League of America, with headquarters in New York. 13. The absence of adequate cooperative wholesale facilities, a difficulty which is rapidly being eliminated through the new movement for cooperative wholesale societies, already discussed in this study. The advantages accruing to the working classes from coopera- tive enterprise are many. Aside from the monetary benefits de- rived, cooperation acquaints its supporters with the practical methods and policies of business administration, develops an awakened and intelligent interest in the political and economic life of the nation, promotes the spirit of mutual social service and altruism, and creates a financial reserve and an economic organi- zation which are always beneficial to the laborers in periods of unemployment and industrial depression. For these reasons the ideal of cooperation will never be totally absent from the minds of wage-earning groups. Nor is it desirable that such an ideal should be absent from the minds of our citizens. In these days when forces of readjustment seem to degenerate easily into revo- lutionary agencies, the wisdom of encouraging peaceful, con- structive business ventures owned and operated by wage-earners and salaried groups cannot be overestimated. BIBLIOGRAPHY AcLAND, A. H. D., and Jones, B., Workingmen Cooperators: what they have done and what they are doing. Manchester, 1898. Adams & Sxjmnee, Labor Problems. Ninth Edition, New York, 1919. AvES, Ernest, Cooperative Industry. London, 1907. Bemis, Edward W., Cooperation in New England. Baltimore, 1888. Blondford, Thomas, Cooperative Workshops in Great Britain. London, 1896. BUBNOV, I. v., The Cooperative Movement in Bussia: its history, significam;e and character. Manchester, 1917. Cooperative Wholesale Society, Annual of, 1883-1918. (Absorbed by The People's Year Book since 1919), Fat, Charles R., Cooperation at Home and Abroad. New York, 1908. Copartnership in Industry. New York, 1913. FoED, James, Cooperation in New England, Urban and Bural. New York, 1913. GiDE, Charles, Les Societes Cooperatives de Consommation. Paris, 1910. Great Britain, Board of Trade (Labor Department), Eeport on Work- men's Cooperative Societies in the United Kingdom. London, 1901. Beport on Industrial and Agricultural Cooperative Societies in the United Kingdom. London, 1912. Ministry of Labor (Intelligence and Statistics Department), Be- port on Profit-Sharing and Labor Copartnership in the United Kingdom, London, 1920. Haggard, D. R. Bural Denmark and Its Lessons. London, 1913. Harris, Bmerson P., Cooperation : the hope of the consumer. New York, 1919. Holyoake, George Jacob, The Cooperative Movement Today. London, 1891. Johns Hopkins University, (Studies in Historical and Political Science), History of Cooperation in the United States. Baltimore, 1888. Lee, Frederic E., The Bussian Cooperative Movement. Publications of the United States Department of Commerce, Bureau of Foreign and Do- mestic Commerce, Miscellaneous Series No. 101. Washington, 1920. LiNDECKE, Otto, Bos Genossenschaftswessen in Deutschland, Leipzig, 1908. Lloyd, Henry D., Labor Copartnership. New York, 1899. Michell, Humpfrey, Profit-Sharing and Producers' Cooperation in Canada. Kingston, 1918. 82 BIBLIOGRAPHY 83 People's Year Book, The, Manchester, 1919, 1920, 1921. Eeport of the Proceedings of the First American Cooperative Ck)nvention, Springfield, Illinois, 1918. EiCHTER, EugeNj Cooperative Stores; their history, organization, and man- agement. New York, 1867. Shaw, Albert, Cooperation in the Northwest. Baltimore, 1888. Shinn, Charles H., Cooperation on the Pacific Coast. Baltimore, 1888. Smith-GtORDON, L. E. p., and Staples, L. C, Rural Beconstructvon in Ire- land; a record of cooperative organization. New Haven, 1919. SoNNicHSEN, Albert, Consumers' Cooperation. New York, 1919. United States Department of Labor, Bureau of Labor Statistics, Monthly Labor Review, Vols. VIII, IX, X. Washingtoii, 1918, 1919, 1920. Warner, Amos G., Three Phases of Cooperation in the West. Baltimore, 1887. Webb, Beatrice, The Cooperative Movement in Britain. London, 1893. Webb, Catherine, Industrial Cooperation: the story of a peaceful revolu- tion. Manchester, 1904. Williams, Aneurin, Copartnership and Profit-Sharing. New York, 1913. Wolff, Henry W., People's Banks: a record of social and economic s^ic- cess. London, 1893. A Cooperative Credit Bank Handbook. London, 1909. Cooperative Credit for the United States. New York, 1917. WooLF, Leonard S., Cooperation and the Futxire of Industry. London, 1919. Wright, Carrol D., A Manual of Distributive Cooperation. Boston, 1885. PAMPHLETS Laidler, Harry W., The British Cooperative Movement. New York, 1918. Perkey, Cheves West, Cooperation in the United States. New York, 1917. Sonnichsen, Albert, Consumers ' Cooperation Btiring the War, New York, 1917. Warbasse, Agnes D., How to Start and Run a Cooperative Store. New York, 1919. The Story of Cooperation. New York, 1919. Warbasse, James Peter, The Cooperative Movement in the United States. New York, 1919. The Cooperati/ve Consumers' Movement in the United States. New York, 1920. INDEX American Protective Union, 38 American Rochdale Plan, 52 American Society of Equity, 41 Austria, Cooperation in, 65, 66 Belgium, Cooperation in, 66, 67 Belgian refugees, 29 Bloomington Cooperative Society, 47 Boston, 37 California Fruit Growers' Ex- change, 43 Canada, Cooperation in, 76-78 Central States Cooperative Whole- sale Society, 44, 47, 51, 52, 61-65 Chicago, Cooperative movement in, 44 Cincinnati, 37 Communistic communities, 17, 37 Congress, Cooperative, 18 Consumers ' Cooperative Societies, 43 Cooperation, definition of, 5; con- ditions of, 6; forms of, 7, 8 Cooperative agricultural associa- tions, 10, 42 Cooperative banking, 32-34 Cooperative Central Exchange, 50, 53, 57-60 Cooperative employment, 34, 35 Cooperative League of America, 50, 52 Cooperative production, 31 Cooperative productive societies, 24 Cooperative retail distributive so- cieties, 22, 23 Cooperative Society of America, 45, 46 Cooperative supply associations, 25 Cooperative Union, 18, 19, 21 Cooperative wholesale societies, 25, 50, 51 Cooperative Wholesale Society of America, 51, 53, 56, 57 Cordwainers, 37 Czecho-Slovakia, Cooperation in, 67, 68 De Bernardi, 39 Democratic control, 8, 9 Denmark, Cooperation in, 68 Employment policy of cooperators, 35, 36 English Cooperative Wholesale So- ciety, 15-17, 19, 20, 25, 28 English Cooperative W^oman 's Guild, 20 Esthonia, Cooperation in, 74 Farmers' distributive cooperation, 41 Farmers' Educational Cooperative Union, 41 Farmers' State Exchange of Ne- braslca, 42 Finland, Cooperation in, 73, 74 Finnish cooperators, 49, 50 Finnish Socialist Party, 49 France, Cooperation in, 71, 72 Georgia, Cooperation in, 75 Germany, Cooperation in, 72, 73 Glasgow, 16 Holyoake, 13 Hungary, Cooperation in, 70, 71 Illinois, Cooperative movement in, 44, 49 Industrial and Provident Societies Act, 11, 15 84 INDEX 85 International Cooperative Alliance, 19 International Industrial Assembly of America, 38 Irish Agricultural Wholesale So- ciety, 19, 25, 30, 31 Irish Cooperative Woman's Guild, 20 Italy, Cooperation in, 71 Kansas Cooperative Union, 41 Knights of Labor, 39 Labor Exchange, 39 Manchester, 13 Michigan cooperative societies, 43 Ministry of Food, 26 Ministry of Labor, 35 National Agricultural Organization Society, 41 National Conference on Marketing and Farm Credits, 41 National Cooperative Wholesale Society, 54 National Council of Farmers' As- sociations, 41 National Grange, 41 National Labor Union, 38 New England Association of Me- chanics and Workingmen, 38 New Lenark, 12, 17 Norway, Cooperation in, 68 Owen, Eobert, 11, 12, 17 Pacific Cooperative League, 53-56 Patrons of Industry, 38, 39 Pennsylvania, Cooperation in, 44 Philadelphia, 37 Poland, Cooperation in, 74 Price inflation, 20 Eight Relationship League, 40 Eochdale, 10, 13, 14, 52 Russia, Cooperation in, 75, 76 Scottish Cooperative Wholesale So- ciety, 17, 18, 20, 25, 28-30 Scottish Cooperative Woman 's Guild, 20 Shares, Conditions of, 9, 10 Sovereigns of Industry, 39 Swansea, 21 Sweden, Cooperation in, 68, 69 Switzerland, Cooperation in, 69, 70 Tri-State Cooperative Society, 53, 60, 61 Ukraine, Cooperation in, 75 United Kingdom, 8, 9, 11, 22, 24 United States, Cooperation in, 36- 65, 78-81 Utopias, 11 Welsh cooperative societies, 22 Workingmen 's cooperative socie- ties, characteristics of, 8-11 Workingmen 's Protective Union, 38 World War, 5, 26 Yugo-Slavia, Cooperation in, 75 s 4 THE UNIVERSITY LIBRARY This book is DUE on the last dave stamped below 1}^) '■^ m 2 8 1954 ^9'^ o- nooTioration. 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