AMERICAN COOPERATIVES MOVE AHEAD
Daniels, John
American Cooperatives Move Ahead Part 2 — Problems of Urban Organization By Joint Daniels TM* U the second and final article on law «mwrI condition of American CsepsraHTee by John Daniels. A...
...1,111,000,000 dollar volume, the growth of the urban co-ops has been very small...
...The present article' will deal with urban consumer co-ops, whose story is very different...
...Their model is the cooperative "Society formed by a handful of working folk who in 11)44 opened a little grocery store on Toad Lane m Rechdale, England...
...The cooperators of Toad Lane were very poor in worldly goods...
...On the basis of these facts it appears probable that local units too small to succeed will bo...
...Without deliberation our urban co-ops — which have arisen mostly since the first World Wan ¦y- likewise began with groceries...
...In the eastern regional area alone 31 units folded up between January and August of last year...
...They get no patronage refunds...
...Their continued existence is a drag on the movement...
...Those sturdy cooperators have come down in the annals as the "Rochdale Pioneers," and their lines of organization are known as the "Rochdale Principles...
...IN BRITAIN...
...These roseate outgivings can be made up only by adding to the small number of urban co-ops the much larger number of somewhat consumer-complexioned local units of farmers' purchasing associations...
...And furthermore, instead of pricing shares at $25 or $50 or requiring members to take five or ten $5 shares, these devoted mimics have usually accepted a single one of those tiny shares as the key to their co-op...
...As regards the regional federations, whose boards are composed of representatives elected'by .area groups, of local units, absenteeism among these representatives has been a crippling weakness...
...high hopes and big predictions, dismal disappointments and depressing failures, redundant lofty talk about Rochdale ideology without abundant down-to-earth successful practice...
...New units have sprung up but others have dropped out...
...These are National Cooperatives, Inc., wholesale distributors, and the Cooperative...
...Their present situation—again by and large—is financially and practically insecure...
...Though the dollar volume may have increased substantially since then, owing largely to price inflation, it is doubtful whether the number of local units and their combined membership have registered much net increase, if any...
...So they have not obtained enough working capital even to make a good start...
...today...
...Sweden, Finland and other countries of western Europe, the largest and most spectacular development of cooperation has been achieved in cities and towns...
...Daaiais.hei writtan many books and articles on the SUbtoct, In 1*44 ha wrote a series of articles for The /Vrif Leader entitled "American Cooperative*: Yesterday— Today—Tomorrow," a few copies of which are st'U on hand and may be purchased from The Xew Leader at 25 cents each...
...Thein boards of directors have usually been people with no end of Rochdalian ideology but virtually no experience in guiding a business undertaking...
...SO MUCH FOR the background and operating plan of urban co-ops...
...and these district federations will be closely coordinated with and efficiently serviced by /he regional wholesale...
...There are four main principles...
...Our urban cooperators, though mostly rank and file middle class people, have nevertheless acted as though they tog were very poor...
...Why have urban co-ope not been correspondingly successful in America, whose urban population is so much greater than that of those other countries...
...First, open membership — which means that anyone, irrespective of economic status, race, color or creed, may join a co-op...
...IF THE URBAN cooperative movement advances consciously and deliberately along the course of centrifugal consolidation and control, it will probably become much more efficient in a business way...
...combined mto...
...Third, equal voting rights of members, with only one vote each, regardless of the number of shares owned...
...One of their vita...
...Estimated total membership came to 185,000 and wholesale dollar volume to about $11,000,006...
...local co-ops most of which were loimded by immigrants from Finland...
...But if generally not more than 5% of the members attend meetings and exercise their vote, and if under these conditions a few members and the manager really run things, howmuch actual derpocracy is there...
...The same thing is happening in cooperative business that has already come about in profit-business, where it is now generally recognized that management is in control...
...The good-sounding formula "centralized management and decentralized control" is being foreshortened, in that control is being absorbed by management...
...Superior is the seat of the Central Cooperative Wholesale regional federation, composed of about 22...
...In the light of my own observation of and experience with cooperatives, which began about thirty 'years ago, I havo gradually come to the conclusion that there is one reason which underlies all the others: Urban cooperators in America have been held in the psychological grip of a Toad Lane Complex, which has narrowly limited and largely stultified their endeavors...
...It is a .checkered tale of ups and downs...
...But the profuse mass of oral and printed propaganda emanating from promotive Quarters has fatted to reveal the number of truly urban coops—those originating with end guided by urban people...
...Signs indicate that substantially the same course will be followed elsewhere...
...But compared to the farmers' purchasing associations (without the much larger figures for marketing Co-ops): 2,857 local units...
...Frankness must recognize that co-op democracy has become-— with notable exceptions here and there — a matter more of theory than of fact...
...True, every member of a local unit has one vote...
...Here, too, there has been a tendency to let the general manager and his staff, plus a few board members, do the job...
...It is therefore imperative, if urban consumers' cooperation is to survive permanently in the United States, that two things hard to hold together must be firmly united...
...IN MY FIRST ARTICLE I discussed American cooperatives as regards their regional and national a filiations, setting forth the remarkalrie growth from native grassroots of farmers' marketing and purchasing co-ops, which are far larger in this country than anywhere else in the world...
...That over-all criticism can readily be reduced to particulars...
...There are many which should have gone long ago, if judged by any sensible business tost...
...Second, the employment of working capital obtained through the purchase of shares by persons wno, after the formality of election, become members, and who receive on their shares a low fixed interest...
...A VITAL QUESTION, however, is whether the basic democracy of eon-* turners' cooperation, which to of the) essence of its ideology, will alse be) preserved...
...needs is to visualize themselves by themselves, and take realistic account of their distinctive •urban character, problems and potentialities...
...Thus these) little co-ops have crept and crawled along, sometimes growing but often staying infantile or passing out...
...They have been the strongest array of consumer cooperatives in America, but even they are facing rcrious practical and financial problems...
...To become a voting member of the company, a person need simply buy stock...
...Fourth, the distribution to members of periodical .sopiups refunds proportioned to their patronage during the period...
...They have sought out cheap locations on back streets — sometimes in cellars — and there they have opened their often dingy and uninviting little stores...
...If democracy shrivels up at the cooperative base, the interest of individual members may decline, and working share-capital required by the local units might decrease to the breaking point...
...good-sized units will be brought together in district federations with, centralized service and management...
...Second, it must surely foster and conserve democracy as its foundation...
...Such bunching in "statistics" retards the progress of urban co-ops by obscuring their view of themselves and impeding their constructive self-criticism...
...Answers many and various, more or less perttoent, have been attemted...
...But in due course it may also become only an economic variant of ordinary business, with less and less noticeable differences...
...Their imitators here have usually priced co-op shares at $5, disregarding the fact that in current America $25 or $50 would probably be required to equal the purchasing power of a pound in England a hundred years ago...
...Under these trying circumstances the Cooperative Builder has not evaded or obscured the brute facts, but has lMought them out into the open in full view and discussed them objectively and frankly...
...Such propagandist material speaks largely but loosely of some "thousands" of "consumer co-ops" which dot the land from coast to coast...
...With local units disappearing the regional federations would totter, and the whole cooperative edifice might cave in from the top...
...The first manager has too frequently been a willing but incompetent person who happened to be -at hand...
...Several years ago I dug into the facts and found that with very liberal allowance there could be perhaps some 600 urban 'co-ops, all told...
...And our urban co-ope have seemingly insisted on starting in as little a way as they could...
...2,058,000 members...
...First, it must become competitively efficient...
...What a way of trying to build urban eo-ops capable of competing successlully with profit-business enterprise in the U.S.A...
...Most encouraging of all is the emergence of a willingness to face facts realistically and get away from the fixation that a Rochdale consumer co-op is something of a higher nature, sacrosanct and pure, which should be kept going at any price, philanthropically...
...An official review of developments in 1948 admitted - - to its credit for factual i importing — that "about 50 co-op food stores were closed during that year...
...Now for their story, briefly, in the U.S.A...
...Thus its double problem is part and parcel of the problem of the American nation as a whole: Binding democracy and efficiency together in lasting and fruitful union...
...This question has long been a puzzler...
...They did so in spite of the fact that even then, and increasingly from year to year thereafter, the grocery business in this country was so efficiently organized and highly competitive that it offered only the slightest margin of saving for little co-ops...
...Drastic questionings, overhaulings, reorganizing* and replannings have taken place recently or are now under way in regional federations, which maintain wholesales to supply local units, and in the two national organizations with which the regionals are affiliated...
...This means that it must not confine itself to its present field of wholesale and retail distribution of things most of which it is still dependent on obtaining from profitbusiness sources, though they come up to standards and bear the CO-OP label Consumer cooperatives must emulate the farmers' purchasing association by branching out from distribution into the processing and manufacturing of consumer goods, a field which as yet it has barely scratched...
...Today, more than a century after the Toad Lane pioneering, American urban co-ops—by and large—are not firmly established with their future assured...
...groups...
...He does not have to be elected...
...Instead of emulating the Rochdale Pioneers in a way suited to modern American conditions they have slavishly, unenterprismgly and unimaginatively imitated tliem...
...League of the U.S.A., whose functions are educational and promotional...
...Though heretofore the note of local self-government has been sounded most loudly, there is now a rapidly growing trend toward eonsolidation as a must for cooperative self-preservation...
...A student far many years of iha Cooperative Movement, Mr...
...Shares of the Rochdale co-op were priced at a pound...
...In stock companies voting is based on shares, with one vote per share...
...Stockholders receive profits distributed as dividends on their shares...
...Ux-al units which arc too far gone to resuscitate will be helped to make a decent exit, with some salvage for shareholders if possible...
...The bigger and more complex a co-op enterprise is, the less democratic it becomes — almost necessarily...
...i> + FORTUNATELY, under stress* of acute financial compulsion, American in ban cooperators are waking up and giving promise they will stay awake...
...The outstandingly best job of fact-facing is being done by the Cooperative Builder, an excellent weekly paper published in Superior, Wisconsin...
...The original Toad Lane group began with groceries, which was fitting under their circumstances...
...The basic differences between consumer cooperatives and business stock companies becomes evident in comparisons...
...A stockholder with one share has only one vote, while another with 1,000 shares has 1,000 votes...
Vol. 32 • March 1949 • No. 10
