Dear Editor
Dear Editor The Cooperative Way I was very pleased to read Richard J. Margolis' account of the cooperative movement in the United States, and I hope your April 17 special issue, "Coming...
...He points out that if the money now devoted to farm subsidies were made available for long-term interest-free loans to establish new cooperatives-In accordance with the I. M. Kaplan proposal referred to by Richard J. Margolis-the new cooperatives would receive undue favoritism compared with existing cooperatives...
...The necessary money is available, if we divert it from the unproductive system of farm subsidies and into the creative system of loans to cooperatives to establish new ways of satisfying the needs of the American public...
...There would be no need for constant replenishment...
...Los Angeles Ruth Harmer, author, "The High Cost of Dying" The New Leader and Richard J. Margolis are to be commended for an objective analysis of cooperatives...
...Obviously those who, like myself, have been involved in cooperatives for a long time might have chosen different emphases than your author here or there, or interpreted some of the problems in a different way...
...I am all for digs at Republicans or Democrats as long as they are well founded, but it is not quite fair to charge the Nixon Administration with hostility to REA...
...Last year a 25 cent load of bread brought the farmer 3.5 cents for the wheat used in it...
...This is where the U.S...
...But this characteristic is hardly peculiar to the cooperatives, as any examination of the record of Penn Central or Lockheed would remind us...
...Would producers now receiving price support loans receive the same benefits from co-ops...
...Would existing law, including antitrust, have to be amended to achieve the purposes stated in the issue...
...Farmers themselves are not asking for any favoritism on rates...
...My congratulations to Mr...
...A populist approach is great, but in the business world it may be short-lived if the operating base is not carefully guarded...
...True, in theory, and many times in fact, through cooperative purchasing and marketing, farmers are able to secure the benefits of large-scale cost reduction...
...If a producer did not wish to join a co-op, would he be excluded from such benefits...
...In this respect, the increasing interest and activity of students on college campuses is most encouraging, as is the growing number of young people now becoming involved professionally in cooperatives after they leave college and the Peace Corps...
...Unfortunately, it requires commitment and real dedication from consumers who are quick to complain but are also willing to leave the solution of their dilemma to others...
...All the other health co-ops have remained small and weak, or have gradually faded away-as in the case of Elk City...
...By the end of a quarter of a century, the agricultural cooperatives would be able to provide their own self-generating fund...
...Jerry Voorhis Farming Richard J. Margolis' detailed examination of the cooperative idea in America-where it stands, how it got here, and what it could do-Is a brilliant piece of journalism...
...Do we abandon our price support program altogether...
...I believe that emphasizing the social implications of cooperation offers the best opportunity for attracting to the movement those who are seeking such alternatives...
...Last fiscal year this bank made loans to cooperatives in the amount of $2.8 billion...
...Would existing privately-owned enterprises be required to sell out to co-ops...
...As Margolis pointed out, and as the Department of Agriculture experts know, cooperatives have had a spotty record...
...Most cooperatives are a part of, and function within, this structure...
...As is obvious from the special issue, there are considerable differences between cooperatives about their role in society...
...Kaplan...
...Would, or could, they exist side-by-side...
...On the whole, I liked the special issue on cooperatives very much...
...That has certainly been true of our funeral cooperatives, which have only 325,000 members but are a major force in protecting people all over the country from gross abuses by undertakers...
...These are minor criticisms, however...
...Thor says, "We believe that retail marketing is such a specialized business and margins are so low that farmer cooperatives have little, if any, opportunity to increase farmers' income through this route...
...Harold F. Newman, M.D...
...The payments are made to induce a farmer to comply with a crop control program designed to achieve an approximate balance between supply and demand...
...During that period many of the farm co-ops achieved their greatest growth, the electrical co-ops expanded markedly, so did credit unions, and so did cooperative insurance-a field Margolis hardly touches...
...New York City Harold Ostroff Executive Vice President, United Housing Foundation continued on next page Dear Editor In traveling across the country to gather material for his well-researched study of cooperatives, Richard J. Margolis found them to be a combination of vision and integrity, grounded in solid economic operations...
...He says that loans to farmers on their crops so far this year total $14 billion...
...For reasons that I do not understand this subject has been ignored by most newspapers and magazines, and it is gratifying that The New Leader has corrected the neglect...
...Most of it would be used to acquire the best available processing and marketing companies, which are now listed on the stock exchanges...
...The proposal to use Federal crop payments to finance cooperatives, however, is to be rejected because it is based on an erroneous understanding of the farm programs administered by the U. S. Department of Agriculture...
...Or stifle competition...
...Farmers in Hawaii recently joint-ventured with the Hawaii Sugar Company...
...More to the point, and most significant, is what Margolis has to say about the new wave of interest in cooperatives in the United States...
...I cannot see, however, how a cooperative effort in and of itself will guarantee that small farmers will achieve the efficiency and growth of large farms on a competitive open-market basis...
...Claremont, Calif...
...But what we have in some respects is a movement searching for a common philosophy and mutually compatible objectives...
...He builds a very good case...
...It is highly regarded by all familiar with its operation...
...This successful business has prospered because its leadership and its members have worked closely together to achieve this goal...
...As a result, Mr...
...Cooperatives now must operate within the framework of the free-enterprise system and compete on an equal basis with other similar enterprises...
...The best way to do this would be to arrange a two- or three-day Ar-den House conference, and go into the whole idea with open, inquiring minds...
...Washington, D. C. W. R. Poage Chairman, House Committee on Agriculture Richard J. Margolis' study is both enlightening and entertaining...
...That these programs have been working is evidenced by the fact that Americans today are getting their food for a smaller percentage of the family income (16.5 per cent after taxes) than ever before in history...
...Let me say at the outset that I am sympathetic with the cooperative movement...
...Would such a move increase competition...
...Should it be our national policy to provide such interest-free loans...
...Farmers who handle their own operations seems to be more productive than those who work together as a group...
...While the number of persons involved may be small, the impact of their work has often been great...
...Would farmers be required to join co-ops to receive such aid...
...fruit growers in California recently joint-ventured with Stokeley Van Camp...
...Gold Kist, from my own state of Georgia, one such cooperative mentioned in the issue, is a prime example...
...These are just some of the questions raised in my mind regarding the proposal...
...The established, strong, well-financed agricultural cooperatives must be revitalized...
...A movement can develop only if common principles are widely accepted, if each group succeeds in making its own operation successful, and if the people of the United States accept a service concept as opposed to the profit motive as a major basis for conducting their affairs...
...He talked to the Western Sugar Beet Growers in the Colorado-Wyoming-Montana area last year and encouraged them to buy out the Great Western Sugar Company and expand it much as the Welch Grape Juice Company, with which he was associated, is being expanded...
...Unfortunately, too many of them are satisfied to be merely successful businesses...
...In discussing the prospects for the future, I wish Margolis had examined the potential for cooperative development if organized workers recognized how they could help themselves by establishing consumer cooperatives...
...According to the Corporation's own data reports, about $7.5 billion have thus far been loaned or lost...
...As Mr...
...I was surprised, though, to see him say that in the period following World War II cooperatives virtually stopped growing...
...Earlier this year I received disturbing news about oversized dairy cooperatives which may run into trouble with antitrust laws unless they are careful...
...I believe there is a growing understanding between rural and urban cooperatives, and that we realize we have a better chance of achieving our common goals by working together rather than going our separate ways...
...Within the limitations of space, Margolis managed to present an accurate account of some of the strengths and weaknesses of the groups he studied and of the cooperative movement-If, as he points out, there is such a movement...
...But the idea of interest-free loans goes against current thinking...
...As for the role of cooperatives in aiding the small farmer and perhaps helping to keep him on the land, the Department of Agriculture has frequently encouraged farmers to band together in the purchase of equipment...
...According to the Summary of Loan Activity and Operating Results of the Commodity Credit Corporation, total loan and purchase transactions on 1971 crops as of March 31, 1972, amounted to $3,126,568,410...
...producers of the various crops, livestock and poultry...
...Personally, I'm still intrigued with the idea of health co-ops as a means of setting up medical delivery systems in areas where the usual resources are lacking...
...Such stability, eliminating wasteful surpluses and the inevitable shortages that would follow, works to the advantage of both the farmer and the consumer...
...The organizing and financing of the Council for Self-Help Development in New York is but one example of this recent, exciting trend...
...There may be less agreement on the advisability of putting all our eggs in the Washington political basket to achieve our objectives...
...And, as a matter of fact, how do cooperatives feel about this...
...How do farmers feel about this...
...That means there must be huge amounts of working capital-so huge, they can only come from government...
...As Margolis points out, the cooperatives' potential is scarcely tapped...
...The establishment of such a bank has high priority on our agenda...
...That would be a worthwhile outcome of the fine job your magazine has done in reporting on "coming together" in America, and it might also advance the stability and worth of farming in the United States...
...The health cooperatives have set new standards for medical care...
...From observation and personal experience, I consider the cooperative way the only realistic answer to most of the social and many of the psychological problems that afflict all of us...
...So there is a source of funds and additional sources are being considered...
...This is particularly true in medicine, since people naturally look to the doctor and don't seem to realize the advantage of a "partnership in health" with him...
...I'm sure taxpayers could make better use of them...
...Although there appears to be increasing recognition of the urgent need for successful expansion of agricultural cooperatives, critics of government participation in such an effort in the Department of Agriculture and the Congress generally contend that this would smack of "favoritism...
...Washington, D. C. Hal R. Taylor Deputy Director of Information, Department of Agriculture First, I would like to point out an incorrect statement by Richard J. Margolis in continued on next page Dear Editor continued your April 17 issue...
...but the main thrust is admirable...
...But one of the best hopes at the moment for the future of the cooperative movement, in my opinion, rests with the effective implementation of the newest cooperative principle, "cooperation between cooperatives...
...Part of the money would be used to train talented young people for cooperative management, and to encourage independent farmers to join the cooperatives and strengthen them...
...A $20 billion fund for this purpose, spread over 25 years at no interest, would be sufficient...
...The $438 million made available this fiscal year is the largest REA expenditure since 1949, and the Secretary of Agriculture personally assured me sometime ago that there would be additional funds this year if needed...
...A major challenge facing cooperatives today can be summed up in a question: Will the lay leadership-the policymakers-have the perspective and collective judgment to select capable managers and leave the detailed operations to these specialists...
...For example, during debate on the Tax Reform Act of 1969, I led the successful fight against an amendment offered on the Senate floor to require co-ops to pay increased taxes...
...housing cooperatives are revitalizing inner cities and making it possible for the poor and the aged particularly to live decently...
...He also suggests that several farmer-owned cooperatives have had unfavorable experiences with owning retail outlets and were unable to compete with the large supermarket chains...
...But this has little to do with farm economics of scale...
...For cooperatives to "coalesce into a movement," each segment must expand from its present small base and become more vigorous and active...
...As one who has supported REA since its inception, I would strongly oppose an attempt by any President to short-change this important program...
...Washington, D. C. Herman E. Talmadge Chairman, Senate Committee on Agriculture and Forestry Richard J. Margolis replies: Both Senator Talmadge and I are mistaken about the Commodity Credit Corporation's total transactions for fiscal '71...
...It seems to me that this whole matter, now that it is at last in the open, ought to be further analyzed and discussed by the Secretary of Agriculture and his key officials, by members of the Senate and House, by leaders of the cooperative movement, by economists, by enlightened businessmen, and by others who have knowledge and common sense to contribute...
...They must give up any dependence on government subsidy, any direct or indirect tax exemption on cooperative income, and any reluctance to be consumer-oriented as well as producer-oriented in the effort to provide food, housing and services at lower retail prices...
...Time probably prevented the exploration of some of the other efforts being made today to spread "the good news," particularly in poverty areas...
...Unfortunately, too little is now known about cooperatives-even by those who are enjoying their benefits, including many members of credit unions...
...I especially liked Richard J. Margolis1 excellent definition of cooperatives, his clear explanation of their tax status, and his two concluding paragraphs...
...But no favoritism is being proposed-Certainly none that could compare to the commodity subsidies which have by now become so deeply ingrained in this country...
...Here is the chance to give all of America a new "Head Start...
...The fundamental objectives of these programs is to effect a balance between the production and the demand for various crops, thus stabilizing supplies and market prices...
...Judging by the financial condition of several of the biggest food retailers, neither are some of those who have been engaged in this complex business all their lives...
...That is equal opportunity-the very opposite of favoritism...
...I feel that this proposal should receive widespread consideration, hearings, and deliberations before and if it were to be taken seriously...
...At the present time, as is pointed out in the issue, there is a Bank for Cooperatives, wholly owned by its members, whose sole purpose is to provide credit to cooperatives...
...Seattle, Wash...
...Many other farm groups are doing the same thing...
...Thor pointed out, low interest rates to some farm groups while others have to pay commercial rates would be unfair competition...
...Cooperatives should be ready to reappraise and devise not only new ways of helping farmers to flourish, but of keeping them intensely interested in farming rather than migrating to the crowded cities...
...The provision of long-term no-interests loans would be directed both to existing and to new cooperatives, the only criterion being the essential worth of the projected enterprise itself...
...One of these days this will happen on a broad scale...
...Richmond, Calif...
...Most of us are in full agreement with Margolis about the need for an urban bank for cooperatives, similar to the banks that have been helpful to farmer cooperatives...
...Department of Agriculture enters the picture, and I think it has a great opportunity to bring American agriculture into modern times...
...It is essential to make the expanded cooperative movement attractive to bright, imaginative, competent young people...
...Such loans could become the finest investment the Department of Agriculture has ever made...
...The report raises some important questions about the growth of cooperatives to conglomerate proportions...
...Farmers who are acquiring or joint-venturing with food companies at this time are doing so at commercial rates, mostly through the Bank for Cooperatives...
...Suppose the Department of Agriculture were to provide a fund of, say, $20 billion for long-term loans to agricultural and housing cooperatives...
...It is true that government capital was originally provided for the farm credit institutions, but it should have been noted that every dime of that money has been repaid and those institutions are now completely owned by the cooperative borrowers...
...It is true that most cooperatives, as they now exist, are not equipped to cope with the complex demands of retail marketing...
...It is my opinion that there is no simple answer here...
...No doubt farmer cooperatives have made a major contribution to the economic well-being of this nation...
...too few see themselves as catalysts for changing the socioeconomic system by providing people with viable alternatives to the so-called "free economic capitalistic system" and to statism...
...Washington, D. C. Paul Findley Member of Congress REA I have read the report on cooperatives in the April 17 issue of The New Leader, and enjoyed the reference to spite lining in Vermont during the early days of the Rural Electrification Administration (REA...
...Dear Editor The Cooperative Way I was very pleased to read Richard J. Margolis' account of the cooperative movement in the United States, and I hope your April 17 special issue, "Coming Together-the Cooperative Way," will be made required reading in every high school and college in the country...
...There is no reason why a cooperative shouldn't be big if it continues to give fair representation to the members it is supposed to serve, and as long as it does not abuse its privileges as some other conglomerates have done...
...I hope the "spirit" it takes to form them is not dead, and we at Group Health Cooperative of Puget Sound are willing to give consul and advice to any community interested in helping itself...
...It not only guarantees member participation but it affords a mechanism for building health maintenance organizations in areas where other types of support-Such as government, unions or industry-are lacking...
...In contrast, I think he overstresses somewhat the dependence of cooperatives on the government...
...And I think the experiences of existing cooperatives at home and abroad support this view...
...Perhaps the best indication of the psychological and social value of cooperatives, though, is that many alienated young people are dropping back into society through membership in food and nursery school co-ops that have been springing up on college campuses across the country...
...I, for one, do not believe completely that "the fight is going to be won or lost in Washington...
...Undoubtedly cooperatives also could make use of this money, particularly in the creation of favorable market conditions for members...
...My figure of $14 billion, it turns out, represents the amount the CCC is permitted to borrow from the Federal treasury...
...Over the years I have supported legislation enabling farmers to get together in self-help enterprises when conventional means of support are not available to them...
...The main objective should be to eliminate the parasitic, unproductive farm subsidies, which continue to cost the taxpayers billions of dollars each year, and to make available instead government loans-long-term and interest-free-for the purpose of helping both new and existing cooperatives to enlarge their scope and engage in producing, processing, distributing and retailing the food supply of the American consumer...
...I think the key to the spread of cooperative organization throughout our economy still lies in agriculture...
...Certainly funds now allotted for farm subsidies could be better spent elsewhere...
...They can be in the future also, particularly with low-interest loans, subsidies, grants, and so forth, but I would not underestimate the value of cooperatives maintaining their independence by continuing their historical political position of neutrality...
...Yet despite some rather formal attempts to organize farmers-even to the extent of organizing them to farm collectively almost as is done in some of the Eastern European countries-the experience in the United States has been unfavorable...
...Here is the strongest base, though it has the weaknesses Margolis pinpoints...
...my thanks to you...
...These payments are not a form of relief, as many mistakenly think...
...Be that as it may, the suggestion that funds now used for price support loans instead be used for interest-free loans to cooperatives has many implications...
...Yet there is a unique potential in the health cooperative movement which deserves attention...
...When they are well conceived and have capable management, they have been remarkably successful-and as financially sound as the best private corporations-whether in agricultural production or in health services...
...Because other worthy requests for Federal funding for loans of 2 per cent interest or more have been denied, acceptance of this idea would hardly be fair...
...New York City J. M. Kaplan Secretary Butz has asked me to respond to your special issue on cooperatives, and I have asked Eric Thor, administrator of the Farm Cooperative Service, for his comments...
...Last year this was 38 cents, down 1 cent from 1970, and in 1950 it was 47 cents...
...Washington, D. C. George D. Aiken Member of the Senate Health I am sad to say 1 agree with Richard J. Margolis' impression that in spite of the success of Group Health Cooperative of Puget Sound, Group Health Association of Washington, D. C, and Group Health Plan of Minnesota, the growth of health cooperatives has been a slow and painful process...
...The idea of people working together to help themselves escape various forms of economic tyranny may seem simple enough, but its practical application requires solid education, economic democracy being no different from political democracy in that respect...
...Director, GHC of Puget Sound...
...There is no doubt that it will continue to grow because service to its members is of paramount importance to its leadership...
...When it does, cooperatives will become as important in our cities as they are in rural America...
...That is wrong...
...While this method of achieving assured supplies of food and fiber for a continually expanding American population is not perfect, it is the best that we so far have been able to devise...
...And total investment, which includes loans and inventory, amounted to $4,176,989,000...
...To attract such qualified young people, it is necessary to persuade them that this kind of calling meets basic human needs within the spirit of democracy-and also that it is practical, feasible, and large-scaled...
...There is no doubt that a structure exists, complete with local, regional, state, and national organizations...
...Further, the Rural Development Act of 1972, when enacted, would expand the FHA authority to permit loans to cooperatives unable to obtain credit elsewhere...
...There is danger of co-ops losing some of their existing capabilities authorized under present law...
...I have doubts, too, about cooperatives being the panacea for everything ailing agriculture...
...There has been much progress in other areas, however, along the lines envisioned by Mr...
...When they are poorly run, when their management has lost sight of their purpose and the need for administrative efficiency, they have languished...
...Naturally, I recognize that the administrations of both political parties have been helpful to cooperatives...
...The growers are now in the process of doing that...
...Robert Neptune General Manager, Associated Cooperatives, Inc...
...Cooperatives-that is, progressive and aggressive institutions-have grown and become viable economic industries over the years without such special benefits...
...The so-called Kaplan plan, as described by Richard J. Margolis, has a worthy objective in that it would seek to increase the producers' share of the dollar spent by the consumer on food...
Vol. 55 • June 1972 • No. 12
