Co-Ops

On the shores of Minnesota's Lake Minnewaska is a little town called Glenwood, which is 26 miles west of Sauk Center, birthplace of Sinclair Lewis. Glenwood is also near Cottonwood, birthplace of the first U. S. oil & gas cooperative. Because Cottonwood could not accommodate a convention which observed the 15th anniversary of the founding of its filling station, because Minnesota is the most co-operative State in the Union and because International Co-Operative Day falls on the first Saturday in July, Glenwood played host last week to nearly all the leading cooperators in the U. S.

Headquarters were at the second best hotel, for almost by definition cooperators are not affluent. Since Co-operation is a Cause as well as a system of economics, the delegates did not go in for the usual convention revelry of profit-making businessmen. They swam with their ladies in Lake Minnewaska. They celebrated at Glenwood Park. They inspected the only co-operative in Glenwood, a filling station. They stayed away from the slot-machines in the hotel bar, one cooperator crisply observing: "Slot-machines are distinctly not co-operative." They were there to talk the theory & practice of cooperation, and that is what they did, day & night.

Alarm, Marketing co-operatives like California Fruit Growers Exchange, Farm ers National Grain Corp. and Land O' Lakes Creamery were not included in the conference, which was solely concerned with consumer cooperatives. Though marketing co-operatives often get into the consumer field by purchasing for their farmer-members, their fundamental inter ests are directly opposed to those of consumer cooperatives.

Never had the future of consumer co operation looked brighter than it did last week. Consumer co-operatives expanded throughout Depression, now boast some 3,000,000 members, annual sales of $400,000,000. That was only about 1% of last year's total retail sales in the U. S.. but enough to cause Printers' Ink to note : "If co-ops are to be viewed with alarm as poaching on the preserves of private busi ness, there is plenty of room for alarm.".

Next Rabbit? Interest in co-operatives was undeniably rising. Wisconsin passed a law last year requiring courses in co operation in colleges, high schools and normal schools. That old Boston cooperator, Edward A. Filene, recently gave $1,000,000 to assist the establishment of co-op department stores. Japan's No. 1 Christian, Cooperator Toyohiko Kagawa, completed a triumphal tour of the U. S. a fortnight ago, preaching the gospel of co-operation to hundreds of thousands of rapt churchmen (TIME, July 6). The Kansas City Star was already warning the country that a co-operative system would be the "next New Deal rabbit to be pulled from the hat."

There was no doubt that the New Deal was showing a sudden interest in cooperation. An outright endorsement of consumer co-operatives was originally drafted for the Democratic platform, though the plank was finally whittled down to an innocuous statement about narrowing the spread between producer and consumer prices. In Scribner's, Secretary of Agriculture Wallace lately suggested cooperation as the answer to the title of his article, "The Search For An American Way." Elaborating an a book called Whose Constitution? published last week, Secretary Wallace declared: "Producer cooperatives are not enough. . . . The co-operative way of life must pervade the community, and this means there must be consumer co-operatives as well. ..." Referring to industrial cooperatives, Iowa's Wallace added: "In the U. S. . . . we cannot have a co-operative commonwealth without dealing with the question of our great industries, which make up the chief part of our economic life."

Sweden's Way. Impressed by Marquis W. Childs's Sweden, The Middle Way, President Roosevelt has just dispatched a commission to make a special study of European cooperatives. In Sweden the President's commission will find the world's most efficient cooperative, Kooperativa Foerbundet (union), known throughout the land as "K. F." K. F. accounts for 10% of all manufacturing in Sweden and, through its thousands of member co-operative societies, for 20% of all retail and wholesale trade. Swedish co-operative stores are the most modern in the country. Their wages are high, their salaries low. One by one, K. F. has cracked the tightest cartels in Europe, notably in margarine, electric bulbs and galoshes, a Swedish necessity. Its combat tactics are simply to go into manufacturing, and by now K. F., rather than private business, tends to set prevailing prices, thus bringing the benefits of lower prices to the entire population instead of to cooperators alone.

Co-operatives are even bigger business in Britain, where about half the families are co-op members, and co-operative stores do about one-eighth of the total British retail business. As a whole the British co-operatives employ about 300,000 people, sell more than $1,000,000,000 worth of goods annually. The English Co-Operative Wholesale Society, corresponding to Sweden's K. F., is the biggest distributing organization in the British Empire. It has a $700,000,000 bank, a $100,000,000 insurance company. It owns its own steamships, coal mines, olive groves, and, with the Scottish Wholesale, the world's biggest tea plantations. It is the No. i buyer of Canadian wheat, the No. 1 British miller, No. 1 shoemaker and second only to Lever Brothers in soapmaking. Its factories turn out everything from corsets to oil cake, from automobiles to saddlery.

From Toad Lane in the Lancashire textile city of Rochdale dates not only the amazing growth of British co-operation but all modern consumer cooperation. There in 1844 amid the energetic jeering of local shopkeepers a little co-operative store was opened with a stock of flour, butter, sugar and oatmeal. The society's -L-28 capital had been put in by its 28 members, most of whom were weavers. What these cooperators lacked in capital was more than made up in vision, for within twelve years their society was doing a $100,000 annual business, and the so-called Rochdale system is still standard for all true cooperatives. That system:

Having decided to form a coop, a group of people charter an association, buy at least one share of stock each to provide capital. Membership is open to all. Each member has one vote irrespective of the number of shares owned, and he may not vote by proxy. Return on his stock, which usually costs from $5 to $25 per share, is limited usually to 5% or 6%. The store sells at prevailing prices, strictly for cash. A record of each member's purchases is kept, sometimes in a little book like a bankbook carried by the member. If the co-op is successful, a periodic "dividend" from the "profits" is paid in proportion to patronage. Thus a member might buy $100 worth of goods in a year, get back $10 as a rebate.

Aside from taking profit out of price, the strongest co-op appeal is quality. The quality may be low, though it is usually high, but the buyer knows precisely what he is getting. In most standard lines the product is manufactured to specifications laid down by the cooperators. This is one reason why co-operative buying has be come rooted so firmly among U. S. farm ers, who well know that fancy brand names do not alter the tested formulas for fertilizer or laying mash. One-eighth of all U. S. farm supplies are now sold through coops, the volume having doubled from $125,000,000 in 1929 to $250,000,000 in

1934.

Profitless Oil. Unlike Britain, the U. S. has only a few communities cooperatively self-contained, notably Maynard, Mass., where co-ops can furnish nearly all consumer needs. There are two small co-op mail-order houses. Co-operation has been adapted to rural telephones, power plants, personal loans (credit unions), groceries, trucking, insurance, undertaking. But except for farm supplies the most conspicuous success has been with oil & gas. Co-op gas stations have multiplied two-thousand-fold since the first was founded in Cottonwood, Minn, in 1921.

First wholesale oil co-op to supply retail outlets originated among a group of embattled Minnesota farmers at the State Fair four years later. It was this organization, Midland Co-Operative Wholesale, that was the official host in Glenwood last week. After losing its first capital in a bank failure, Midland started business in 1927 with cash-in-advance orders under the management of Edwin Galiton Cort, who was to get a salary if he could make any money. Now 51, short, shaggy-browed, he has never collected his pay for the first six months, though last year he did a $2,500,000 business and returned nearly 3% in patronage dividends to his 147 member coops. For running one of the most successful wholesale co-ops in the U. S. he gets only $300 per month. Like other hard-headed cooperators he has expanded into tires, accessories, paint, lubricants and has bought an oil compounding plant. More gasoline is sold in Minnesota by co-ops than by any single private company except Standard Oil of Indiana.

Serving Midland as well as ten other U. S. co-op wholesalers is National Co-Operatives Inc., a central organization which last year handled $25,000,000 worth of oil. gasoline and other co-op products. Opposition from private oil companies has forced the co-ops into compounding and blending and though there are always companies willing to supply them, some cooperators believe the day will soon come when they will have to have their own oil wells in the field, just as the British co-operatives have their own tea plantations.

Source of Supply. Big corporations in general consider it bad business to advertise co-ops by public attack. Almost without exception their efforts to coerce co-ops by shutting off supplies has served only tc make cooperators mad clean through, inspire greater loyalty on the part of mem bers and has ended with the co-ops in control of their own source of supply.

Usual cry is that Co-Operation is Communism. Some of the philosophic cooperators from Minnesota and Wisconsin do think that co-operation is a peaceful path to Socialism. The individualistic cooperators of Ohio, however, would probably snort in derision at even Secretary Wallace's talk of a "co-perative commonwealth." Official interpretation of co-operation at the moment is that co-operation is the only way to avoid the encroachment of the state, either through Socialisn or Fascism, upon the individual. Co operators believe that they can furnisl production and distribution for use instead of profit, but preserve private property rights intact.

Curiously, the least familiar face at Glenwood last week was that of James Peter Warbasse, head of the Co-Operative League and leading U. S. prophet of Co-Operation. Born in Newton, N. J. 69 years ago, he was a Brooklyn surgeon until after the War. Having already made a fortune, he started searching for a satisfactory political philosophy. After a year in Europe he was converted to Co-Operation. Ruddy, white-haired, slim-waisted, he summers at Woods Hole, Mass., winters in Brooklyn, sports a wisp of a goatee, is kindly, earnest, sometimes pontifical. Said he last week: "In my book, Co-Operative Democracy, I have refrained from using any terms that scare people."

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