5. U. S. COOPERATIVES: TRENDS AND PROSPECTS
Daniels, John
r». II. K. i ooperalIves:Trends ini* I^o^Hs The Political Aspect of Co-ops—7hey, Too, Can Be Undemocratic By John Daniels THE molt striking cooperative trend today is in processing and...
...Economic success Is the body of cooperative progress, but democratic success is its spirit...
...Of course, it must hare a sound economic foundation of business seeeeaa, but unless it also hss s sound foundation of democratic success it fails of fulfillment, snd becomes only s business system, somewhat different from the prersiling sue, but tending to become less different ss business ssotirstions drive it on...
...Such instances have been played up in some cooperative quarters for dramatic and propagandist effect...
...True, each member has an equal vote...
...Such plowing back is now th* usual practice...
...and really got into their stride in th* two's and 30s...
...Not only jn petroleum but ia various other linaa of production, cooperative savings arc to substantial that if plowed back into the productive enterprise they will soon pay back its capital coat For instance, three rational wholesales built Jointly aa up-to-date food mill at capital cost of I860,000...
...There are instances in which th* entry of co-op wholesales into production has been precipitsted or hastened by hoatility and discrimination on the part of profitbusiness concerns...
...In varying degree* the other cooperative insurance companies supply similar financial aid...
...That is ia lino of tradition...
...Such a mere;at would bring to the mov*m*nt th* greater mam strength of th* marketing cooperative*, whose total operating volume i* now well above $3,000,000,000...
...Experience has proved that when cooperstives opcrst* producing plants of their own, they can supply themselves with processed and manufactured goods at costs much lose than the prevailing prices they would have to pay profit-business concern* for equivalent goods...
...The regional wholesale association which has gone farthest in petroleum products had a total sales volume in 1942-43 of approximately $16,000,000...
...In any event, th* prospect is good for continued cooperative progress in purchasing, marketing and production...
...plants lead in seniority and number...
...Indeed—speaking now of their regional and national business organizations—there is sn evident rush-snd-race to pile up volume and go as fast and far as possible, with more than a willingness— almost a compulsion—to' short-circuit democratic processes for the sske of speed, efficiency snd materisl results...
...but if, »* ft*" quently the ease, only a small percentage of the members take an active interest, attend meetings and use their votes constructively—what of it...
...tiv* st*p would be to m*rg* th*t n*w body and th* National Council, and thus brine...
...In the last five years cooperative production has forged ahead with quickening tempo and cumulative maaa...
...Today, farmers' regional purchasing associations (seventeen major and some half dozen minor) and one national purchasing association, own and operate about 126 processing and manufacturing establishments of various kinds...
...Strongest of them are the Farm Bure*a Insurance Companies, initiated by the Ohio Farm Bureau Federation, and its offspring Cooperative Association just beginning to branch out widely from the central headquarters in Columbus...
...But the total cooperative savings of $860,614 accrued in reverse proportions, fully three-quarters coming from petroleum production and only one-quarter from the other operations...
...Profit-business concerns want to sell things, and in competing keenly with on* another they are quit* unlikely to refuse for ideological reasons to sell things to co-ops...
...To one who obscrres cooperative developments in s friendly but objective way, there ia reason to feel that by and large the co-ops are not doing sny where nesr so well democratically aa they are economically...
...Of similar nature are hatcheries, where superior chicks are produced...
...These canneries function either aa suijliaiies of marketing co-opt which handle the farm products thus processed or are run independently...
...It will work with and for th* regional purchaairig associations which hold its common voting stock, but through them it will also affect their local unite...
...But due account should be taken of the fact that marketing associations too are going increasingly into production...
...Up to the present they are doing to mainly through cooperative canneries which pack fruit, vegetables, dairy and poultry products, and such specialties aa fruit and vegetable juices, mushrooms, syrups, nuts, et cetera...
...Th* eompsnies also make mortgage loans to co-ops and invest In cooperative Stocks and bonds...
...Then naturally and gradually the wholesales, singly or in combinations, moved into the third stage of cooperative evolution—that of owning and operating processing and manufacturing plants themselves, and supplying goodt for distribution to retail units and thence to individual members...
...grease, paint and soap miseries...
...lumber and shingle mills...
...Two-thirds of that sales total accrued from its distributive operationt (plus tome minor productive activities) and one-third from its main productive operations in petroleum...
...That is the most critical fact which cooperatives and individual cooperators must fete squarely at this juncture when quick and big material advance la so alluring...
...tractor, milking machine, cornpicker and other farm-machine factories...
...Having started with local fir* insurance units away back in the 1820's, they pientred in distribution and production of commoditioa ia th* 1870s...
...quality and price, and to effect the maximum savings renuilhig from such control...
...printing and publishing plants...
...If thia should b* don*, a* appears likely, th* next natural sad eonttro...
...But this is certain—the rate of taring it much larger in production than in dittribution...
...flour and cereal mills...
...From the saving* which accrued to these three wholesale* front producing livestock feed in their own mill, instead of buying it from profit busineit producers, that cost was completely liquidated in seventeen months...
...And the motive snd practice of working for savings are gradually making the spirit of marketing co-opt more like that of their purchasing counterparts, t oncurrently, more and more marketing co-opt (55 percent already > are taking on some purchasing of supplies in order to serve their members snd utilise their overhead.facilities not only in crop-selling seasons, but throughout the year...
...Now a new source of help fat available in th* National Cooperative Finance Association, organised last Jut* snd designed to serve th* movements as financial keystone and clearing hous...
...coffee roaster its...
...cos metics laboratory...
...The production described thus far in this article has been'that undertaken by purchasing associations to supplement and sustain their wholesale and retail distribution and make for economic self sufficiency...
...In both cases they provide s fortunste outlet for an otherwise non-marketable turpiut of quickly perishable fruits and vegetables...
...There are now a doxan or so that are siseable...
...Plants of the foregoing kinds are two-thirds of the entire number...
...In those tWO decades, farmers' purchasing associations progressed from their primary stag* of unrelated local units, to tho second stag* of regional federations, with wholesales owned and controlled by th* local unite which they supplied with good...
...Livestock feed mills and fertilize...
...No breakdown is available to show the total volume of production of all purchasing association...
...combined...
...The writer knows of many instances of mutually cordial and beneficial trade relations, and few of contrary character...
...K. i ooperalIves:Trends ini* I^o^Hs The Political Aspect of Co-ops—7hey, Too, Can Be Undemocratic By John Daniels THE molt striking cooperative trend today is in processing and manufacturing...
...As our second article noted, not only marketing- co-ope but most of the regional purchasing associations are affiliated in the National Council of Farmer Cooperatives, and are collaborating to good purpose...
...What the total savings are is anyone's guest...
...The other third is a miscellany which ia becoming constantly more variegated...
...canneries...
...Centralised management and decentralised control" is all right ss a formula...
...They have thereby been spurred to go Into production on their own account Th* main long-t*rm reason for their doing so has been positive and constructive: namely, to control the whole vertical line of producing- wholesalingretail inar ss respects quantity...
...But there is a net her siee ef equal importance—the democrat ir Ia principle and supposedly in practice, cooperation ia net only an economical but s democratic wsjr ef conducting business, and...
...and a few oddments...
...Here is a concrete example...
...Though aa yet no primarily marketing groups are members of the Cooperative League, so many of its constituent purchasing groups are now engaged in marketing that inclusion of marketing associations is inevitable...
...3 O, ia view of all tk« progress wkieh Amm...
...But owing partly to managerial propensities, and partly to absenteeism, indolence or other deficiencies in governing boards, centralised management also tends to acquire, or hsve thrust upon it, centralized control...
...the bottom and too much autocracy at th* t°P...
...But seldom have cooperative* actually been compelled by outright refusal of goodt to crest* their own sources of supply...
...What has occurred frequently, however, is that cooparativa wholesales have found thoy could not always depend on profit-business processors and manufacturers, because of various exigencies, for a steady flow of good* of satisfactory quantity, quality and price...
...The payments mad* to state and regional associations which serve the** companies as sponsors snd agents, add substantially te th* income of those associations...
...In test analytit, the inertia of rank and file member* of local unite it mainly retpontlble for too little democracy at...
...Aa yet urban co-ops are contributing to it only in slight measure...
...coal mine...
...The distributive rate of saving wss less then 2%, while th* productive rat* was 14...
...into Oil* wholly, integrated coop*r»ti v* mov*m«nt what heretofore bar* bean two separate and competing movement...
...A propos.l is now under *ctiv* con»id*r*tlon to merge the** two „,,.,„_ cations into OM with OVSi function...
...It now includes a timber tract...
...This observation applies likewise to National Cooperatives, th* League's business *id*-p*rtn*r...
...Also, about 25 percent of the purchasing co-ops are taking on some marketing of their members' farm products...
...farmers' cooperative associatione are its pro* pulsive fores...
...Of whst avsil te magnify the body and atrophy the soul...
...There are some signs that marketing cooperative* msy go more eiteaaively into production, and may also aet up retail outlet* of their ewe in essentiaHy the same way that centralised purchasing wholesales do...
...As appeared in the first and second artiest* ef this aariaa of five, farmers w*r* responsible for th* origin and grassroots growth of cooperatives in the United States...
...Is that oven they would cease iato cetapetities with purchasing wholesale* aad retail...
...Both must carry on together...
...This trend is BOW so actively promoted that it amounts to a drive...
...Thus far these intra mural resource* for broad use have been built up mainly by cooperative insurance companies, which are growing in number and stature, (These should not b* confused with th* local farmers' fir* insurance units...
...Its principal functions will be to set standards of cooperative finance, appraise financial statements as base* for loans, and act as discount agency in order te pool cooperative credit needs and resource...
...Such savings contribute surely to the farmer's net income, whatever prices are obtained...
...Moat costly, spectacular and rapidly growing of co-op enterprises are petroleum refineries, compounding plants, wells and pipe lines...
...furthermore, is net only a way ef conducting business, but potentially a truly democratic way of life...
...aa cooperative* are making in their business operatiesja, their futere leeks bright ea the economic *ide...
...Meaawhile, however—aad this is another important carrent tread—various factor* are bringing marketing and purchasing c**p*rstiv*s a**r*r together instead of pushing them farther apart The marketing assoeistiont, having learned from aad experience that they cannot control price* for farm product*, are putting more stress oh savings through soil conservation, better crop teed and fertilizers, reduction of loss from past* and disease*, mora efficient cultivation, harvesting, sorting, packing and transporting...
...Then come places where seed for raising better cropa ia grown, sorted, tested, and sometimes hybridized or otherwise cultured...
...This group comprise* four companies which between them provide lift, fir*, automobile, and workmen's compensation and various forma of casualty insurance...
...Just as in corporate profit-business, the actual running of nearly everything tends to pass into the hsndt of management...
...Sometimes centralized wholesale organisations v/tre established first and proceeded to tat up their own retail outlets, alto tupplying some independent local ro ops and Other country stores...
...Another leading trend which contributes much to that prospect is growing provision within th* movement itself of financial re«ource* to facilitate axpansioa all along th* Tin*, including production, wholesaling, retailing and such non business sctiviti** as publicity and education...
...But for the agricultural year 1942-43 their total volume of wholesale and retail production and dittribution was $600,000,000...
Vol. 28 • February 1945 • No. 6
