American Co-ops' Native Origin

...Today the International Cooperative Alliance, of which the Cooperative League of the U.S.A...

...The matter is one which turns not upon label but on substance...

...C) limited fixed interest SB capital, ia ronlraat with variable and unlimited dividend...

...Subsequently, many other states have enacted similar laws...

...The American cooperative movement, however, is not by any means a recent foreign importation...

...The most vital of these principles are (A) one vote to each member, in contrast with profit-rom¦ i psny practice ef one vote to each share of stork...

...As the net result of this very simple and economical procedure, theae farmers' groups were enabled to provide fire insurance at amazingly low cosi, com-psred with the rates which commercial companies with large expenditure for salaries, commissions, advertising, legal services, rent and incidentals, were able to offer...

...This was virtually the group's working capital, which cost it nothing and was deposited in a bank at intereat...

...But the Toad Lane group has come down in history as the first to establish and conduct a store on just the right cooperative basis to prove successful and enduring...

...Best of all...

...In years when there were no fires or when damage was minor, the policyholders got their insurance for very little...

...Being fsmilisr with local conditions, property values, snd the character, habits and trustworthiness of other farmers in the srea, they admitted es additional policyholders only those who bore a good reputatin...

...It will net derogate from plenitude of credit to the Rochdale Pioneers, but it will help to remedy in s good msny Americsn cooperstors, especislly urban ones whoss feet sre not Irmly on the ground, whst the present writer wosld disgnose ss s Tosd Lane complex...

...lion...

...Furthermore, the way in which they were organized and conducted really embodied, though in a form applying to insurance, the same fundamentals which in due course after the 1844 event in England, attained fame as the Rochdsle Principles...

...But that is another American epic...

...Now this international body and likewise the nstionsl organizationa are planning to take a large part in helping to reconstruct cooperatives in the countries where war's ravages have destroyed or crippled them, and to crests nsw ones whsrever the cooperative spirit and technique are best fitted to meet local needs in war-torn landa snd to bring ordsr, freedom snd well-being out of war-caused chsos...

...In short, these nstionsl and international cooperative forces went to collsborsts to the utmost: with the United Notions in the enormous job of postwsr rehabilitation...

...So it wss fitting that under present world conditions the American gathering at Chicago should sound the internstionsl motif, snd pay all due tribute to those Rochdale pioneers who a hundred years sgo Isid whst wss destined to become the cornerstone in consumer cooperation's internstionsl office By the snms token it wss in keeping that Murray D. Lincoln, president of the League, in his preview rsdio sddress, begsn with Koarhdsle snd sketched the movement's growth in Britain, Europe, Canada, and even China...

...Their mortality down through the years has been surprisingly low and their longevity remarkably high...

...Instead of collecting insurance premiums in advance, theae farmera' mutuals followed the simple plan of collecting at first only a small service fee, and then waiting until a fire occurred, when they would assess the policyholders pro rsta to make up whatever sum had to be paid to the one whose property was damaged or destroyed...

...The fact that these insurance units have their own separate state and national affiliations outside the Cooperative League is quite natural and understandable in that they long antedated the League, which wis formed only twenty-eight years ago...

...Coming together within township or sometimes county areas, they orgsnized local fire insurance groups of their own...

...The amount of inaurance which all these companies combined now have in force has reached tha astounding total of more than $12,000,000,000 and coven considerably mora than half of all the fir$-insurable farm properly in America...

...I N essential substance, though not in name, American cooperatives arose—if we omjt mention of a few prior but Isolated and inconsequential instances—in the early 1820's, when what proved to be a momentous development got started...

...From twenty-five to fifty leading farmers living in a given township or county and owning a substantial total of farm property, would form s nucleus snd tskfe out the first policies...

...gathered in Chicago last month in an snnusi censon...

...B) distribution of net savings to patrons is proportion to their hxdividnsl patronage, is contrast with distribution of profits to stockholders is proportion to their stockholdings, irrespective ef whether or not they sre patrons of the esterprise...

...is a constituent and increasingly influential member, is a worldwide organization...

...Victor N. Valgren, of the Cooperative Division of the Farm Credit Administration in Washington who for years has made a continuous study of these groups and traveled about the country to observe them, went to the crux when in a letter to the present writer he expressed himself as follows: "It is still my view that members' or policyholders' participation in the actual running of these fire insurance mutuals is such as to justify our classifying at least the great majority of them as being cooperative in fact as well as in form...

...It is a record to which all American co-ops msy justly point with warrantable pride—nor should they let the mere difference in name deter them from claiming their birthright...

...Some of them are now more than a hundred years old, and the average age of the entire number is fifty years...

...C) carrying limited interest on capital—i.e., the aefety fund-to the point of having to pay no intereat at all for it, but banking it to draw interest...

...This was recognized when the State of New York in 1867 became the first to enact special laws governing organization and operation of these groups and designated them as "town (that is, township) fire insurance companies...

...Not only were they the first American cooperatives, but by getting farmers accustomed to working together for common benefit they effectually prepared, the way for the next evolutionary advance in the American cooperative movement, which was the rife of farmers' cooperative marketing and puvfc«mg associations...

...these local groups were first-rate eo-opsratives in that the individual policyholders, living in the same small mea and having so much in common, took an active part in the meetings and tbs group's affairs and progress...

...A reserve, called the ssfety fund, to cover operation and contingencies, was crested by setting aside a certain percentage of the service fees and assessments...

...At that time the term cooperative, as applied to a specific form of organixstion, was barely beginning to emerge, snd state laws did not provide for incorporation of a group of persons under that name...

...The average cost of thia coverage ia about 26 cents per $100 of inaurance, as compared with commercial farm fire insurance rates ranging from twice to eight times that figure...

...Gradually the practice was substituted of collecting estimated normal assessmenta on an annual basis in advance and making supplementary assessments from time to time if necessary...

...Fuller recognition of this fsct will not detract from but enhsnce this coantry'a distinctive contribution to the internstionsl cooperative movement...

...That turned out to be the beginning of Britain's now tremendous large and diversified structure of consumers' cooperation...

...Their total membership is around 3,500,000, and includes nearly half of all the farm-heads in the United States...

...Os the contrary, it is a fact that American co-ops are of native origin and had their beginning among Ameriea'a farmera while the nation was still in its infancy...

...r— What is most important in the present context about these local groups is that they were—and with few exceptions are today—cooperatives in everything but name...

...Overhead expenses were extremely modest, ss different farmers usually served in rotation without pay as officers and directors...

...Heretofore, its chief function lias been to foster closer relations and teamplay between the national orgaoizationa of which it is composed, and to promote cooperation's general advance...

...it had been preceded by a few still earlier . ones in Scotland...

...American farmers who wanted protection from fire losses for their homes, farm buildings, livestock and crops, but could not possibly pay the prohibitive commercial rates in those early days when fire-fighting facilities in country districts were almost nil, somehow conceived the ides of providing such insurance for themselves through concerted sction...

...Theirs was not the first cooperative store-society in Britain...

...Indeed, commercial competition could make no headway at all in areas thus covered...

...So theae farmera quite naturally chose the term mutual, which was slready uaed in connection with insurance, and incorporated their small local groups under the rather big-sounding nsms of farmers' mutual Are insurance companies...

...Ttience the movement spread to the continent of Europe and gradually to many other landa...

...B) distribution to each policyholder, in proportion to the amount of his policy, of advance savings in the form of comparatively low cost of insurance...

...This is a record without parallel, so far as the present writer is aware in the whole field of American cooperation—and, for that matter, on the part of cooperatives of comparable character anywhere in the world...

...Note now how these basic cooperative principles were virtually anticipated and applied by the farmers' insurance groups: (A) one vote to each policyholder...

...Todsy there sre spproximstely 2,000 of these farmers' insurance units widely distributed over the country...

...This gsthering wss called the Centennial Cooperative Congress, not because the League itself is a hundred years old, but because one century ago a handful of working folk opened on Toad Lane in Rochdale, England, a aimple little grocery store...

...Thereby they minimized the hazard of fires caused by intent or carelessness and kept down to a low figure any such insurance claims...

...Such participation distinguishes these local groups from the Isrge and rapidly growing regional mutual inaurance compa-niea which, have in recent years been established under cooperative auspices but lack any comparable participation and are almost of necessity highly centralised in operation...

...Co-operators thus effected sre prone to think snd set in terms of that little) store of 1844 in Rochdale, inatead of looking about them and proceeding realistically and adequately in terms ef 1944 in the United Ststee...