Coming Together: Origins
MARGOLIS, RICHARD J.
COMING TOGETHER THE COOPERATIVE WAY: ITS ORIGINS, DEVELOPMENTS-PROSPECT&PROSPECTS BY RICHARD J. MARGOLIS Origins One night in New Orleans recently, while traveling from cooperative to...
...Indeed, anyone who seeks to understand the cooperative idea in America, and to learn whether its time has come, must first understand American farm cooperatives and how they grew...
...In 1933, for example, the government put up cash for a network of cooperative banks—a central bank with 12 regional branches —to be owned and operated by farmers...
...Thousands had perished for lack of capital, credit and political influence...
...With their strong urban base and their relatively large assets, credit unions have helped other types of urban co-ops to get started...
...The reasons may be found in its history, here and in England, and particularly in co-operatism's uncertain and often feckless stance toward both capitalism and socialism, the two economic systems that have shaped our Western world...
...In 1915, for example, a delegation of North Dakota farmers called on their state representative, one Treadwell Twichell, hoping to enlist his support...
...It is worth noting how, because many urban cooperatives today face problems identical to those that plagued farm co-ops 50 years ago...
...Yet when Owen, in 1817, began to promote his scheme for Villages of Cooperation—small, self-sustaining communities of farmers and workers-his following quickly melted away...
...Still, the cooperative idea is as American as apple pie, and has beeen ever since Benjamin Franklin founded a mutual-assistance fire-fighting association in 1736, each of whose members was required to furnish "six leather buckets" and "two stout linen bags...
...Owen," though a friend and benefactor of the Rochdale workers, did not participate in this pioneering venture...
...and the implicit desire among cooperatives for coexistence with the larger economic framework—that is, a willingness to compete with the system on its own terms...
...as Apple Pie Will the cooperative revival grow until it offers a genuine alternative to our present corporate system, or will it merely flounder and recede, as it did in the '30s...
...Still, populism was in the air-especially the rural air—and to many people "The Cooperative Commonwealth," as Edward Bellamy called it, seemed just around the corner...
...These proved to be a hedge against Depression panic (farmers were understandably reluctant to foreclose on themselves...
...once again there was a motion toward cooperation...
...It wasn't much of an organization—just five persons coming together for five hours—but it filled an urgent economic and social need, which is what cooperatives are supposed to do...
...World War II and prosperity, followed in close order by more prosperity and McCarthyism, drove cooperatism out of the political arena and out of most people's minds...
...poor people in need of humane credit and economic leverage...
...Farmers Unite After the Civil War the cooperative impulse quickened among American farmers seeking a common front against the railroads, the banks and "the moneychangers of Wall Street...
...He was too Utopian, too given to social fantasies, to suit the pragmatic needs and plans of future cooperators...
...We are a co-op of about 3,000 people," writes a man in Vermont...
...According to estimates supplied by the various cooperative trade associations, the approximate membership breakdown, by types of co-ops, is as follows: Type Number Membership Credit 24,000 22,000 Electric 1,000 6,700,000 Farm 7,700 6,400,000 Consumer 900 1,000,000 Student 800 800,000 Telephone 235 650,000 Housing 900 500,000 Memorial 105 325,000 Health 5 250,000 Nursery 1,440 45,000 Fishing 80 9,500 Perhaps several millions more belong to rudimentary co-ops—the buying clubs, the hole-in-the-wall food stores and the communes...
...We came together at the airport, awaiting a Trans-Texas International airplane to Lafayette, Louisiana...
...Most of the customers walked off in search of a few hours' sleep...
...From Kaneohe, Hawaii: "You may be aware of the relatively high cost of living which prevails in Hawaii...
...Corporate capitalism...
...The politics of cooperatives also contrast with that of almost all other types of corporate entities: Personal rights take precedence over property rights...
...Federal Assistance At about the same time the Federal government began to pump technical assistance and credit into the farm cooperatives...
...No one can precisely measure the extent of this latest cooperative surge, but it appears to possess both force and depth...
...It was, to be sure, a manic Depression...
...their policies and personnel interlock at nearly every point and in thousands of mutually beneficial ways...
...The next plane leaves tomorrow morning at 5:20...
...By the turn of the century, only about 1,200 farm marketing cooperatives—four-fifths of them creameries or cheese factories—remained in business...
...The reason was that private power companies were charging anywhere from $2,000-$3,000 for the installation of lines in sparsely populated areas-this during a period when gross farm income averaged $1,800 a year...
...It was a credit union, for instance, which co-sponsored the nation's first housing cooperative, built in New York City in 1926...
...We have issued some membership receipts and have rented a small space for a store and have a small stock of materials and merchandise...
...The division endured several reshufflings and mutations, until in 1953 it became the Farmer Cooperative Service (FCS), a constituent part of the Department of Agriculture...
...As Tocqueville noted in 1835, "As soon as several of the inhabitants of the United States have taken up an opinion or a feeling which they wish to promote in the world, they look out for mutual assistance...
...Socialism...
...If it is a consumer or purchasing coop, savings are distributed at year's end lo member-owners in proportion to their patronage...
...The national credit union movement, launched in 1909 by the Boston department store baron Edward Albert Filene (another cooperative-minded millionaire), appealed to urban workers...
...and as soon as they have found another out they combine...
...From the beginning, cooperatives lacked a grand theory, a wide-gauged rationale, that would explain "the system" and their place in it...
...COMING TOGETHER THE COOPERATIVE WAY: ITS ORIGINS, DEVELOPMENTS-PROSPECT&PROSPECTS BY RICHARD J. MARGOLIS Origins One night in New Orleans recently, while traveling from cooperative to cooperative, I helped organize one...
...Today 98 per cent of America's rural homes have electricity, most of them supplied by the nation's 1,000 electric cooperatives...
...American cooperatism, with its history of frantic hopes and false starts, seemed at last to be giving up the ghost...
...Sometimes the bank said Yes...
...The five of us stayed, agreeing to pool our resources and rent a car...
...The weavers should own a cooperative mill, he said, but not a cooperative store...
...seldom are they accused of Communist machinations, or even of Socialist leanings...
...At the outset, what cooperatives sought from government was simply legitimacy, the right to exist in a capitalistic world...
...Before long he was being widely acclaimed as the "benevolent Mr...
...A few die-hards, though, kept plugging away...
...each member gets a single vote, regardless of how many shares he holds...
...if it is a marketing or producing co-op, savings are distributed in ratio to each member's participation in the enterprise...
...Across the Atlantic Even cooperatives that operate in slightly different fashion tend to distribute wealth and power more widely and fairly than do standard profit-oriented corporations...
...area, and another in the California Bay region...
...And in America, at least, a new component—the state—was also to play a major role...
...We . . . have not incorporated our cooperative...
...they remain significant even now...
...Wheat farmers should be permitted to build cooperatively owned grain elevators, argued the delegation, so they could bargain more effectively with the railroads and the big mills in Minneapolis ?the urban oligopolies against which farmers had been struggling for decades...
...Soon after New Harmony disbanded, other Utopian communities, all pledged to abolish the evils of industrial competition, appeared in many sections of the country...
...In this last goal they differed not at all from their competitors, the private corporations...
...Its main purpose is to generate not corporate profits but member savings...
...These people are doing what the Rochdale weavers did more than a century ago and what American farmers have been doing ever since they invented the Grange—trying to get their combined hands on the capitalistic wheel in hope of making it turn for them...
...We are at a loss as to where to turn," writes the manager of a new consumers' natural food co-op in Rhode Island...
...Marquis Childs had a best-seller among liberals in his Sweden: The Middle Way (1936), a compelling plea to replace American capitalism with Swedish cooperatism...
...Members shirked their duties, fought with each other and, in some cases, made off with community funds...
...About 38 million Americans belong to traditionally based cooperatives...
...later they sought equality...
...Treadwell Twichell heard them out, and then—so the story goes-advised them to "go home and slop the hogs...
...Actually, they are taxed like any other business, but not on refunds...
...Into the Cities The cooperative idea was also gaining a precarious foothold in the cities...
...Amortization was a luxury few could afford...
...young people in search of "alternative lifestyles...
...While they preached individualism to the common people, they went ahead to form joint stock companies, corporations, and . . . international cartels...
...The theory behind cooperative credit unions, as Filene pointed out, was very simple: If workers had to borrow in an emergency, they need not be "harassed by loan agents": They could "borrow among the men with whom they are working and who will help them get on their feet and keep steady...
...Unfortunately, it has not...
...It has been the role of cooperatives to restore a measure of free will, to light up for citizens a few possibilities previously concealed in the long, mechanistic night...
...And credit union members during the '30s were in part responsible for two of the nation's largest supermarket co-ops-the Greenbelt chain in the Washington, D.C...
...Assets totaled about $250 million...
...These elements were to shape the cooperative struggle for more than a century...
...Certainly not...
...If farmers found technical assistance useful, they found reasonable credit indispensable...
...For what American cooperatives have been learning over the years, starting with the post-Civil War farm co-ops, is that the government names the game, makes the rules and umpires the play...
...The workers lived in decent houses and the children did not work: They actually went to school...
...All thoughtful men agree that the present aspect of society is portentous of great changes," Bellamy wrote in 1888...
...farmers grown gray and weary continued to preach cooperation as "the salvation of the family farm," while their children ran to Chicago...
...These principles included patronage refunds, open membership, constant expansion, continuing education in the cooperative way and, most important of all, democratic control by the membership...
...Then, without warning, all that cooperative energy, all that momentum, was scattered to the winds...
...Magna Carta The work that went into organizing the Non-Partisan League and similar politically minded groups began to pay off...
...He was a self-made millionaire, an incurable optimist, a dreamer of dreams and an organizer of men...
...With Senator Arthur Capper of Kansas he sponsored a bill giving farmers the right to form cooperatives without fear of violating antitrust laws...
...Cooperatism's history in this country has not been encouraging...
...In fact, they operated on the assumption that all social arrangements, being the products of men, were alterable by men...
...But the times themselves were outlandish, full of grandiose schemes and grinding poverty...
...So angry were these cooperative pioneers with the capitalist mill to which their fates had hitherto been tethered that they called their own mill the Hull Anti-Mill Society...
...The farmer simply paid the interest on his loan, and when the loan came due, he went hat in hand to the bank for another short-term extension...
...What seems now to be taking place is a new wave of cooperative foregathering similar to the one that swept the farm belt at the turn of the century and again during the '20s and '30s...
...Conversely, if Macy's were a cooperative, its profits would be savings, to be refunded each year to customers in proportion to their patronage...
...Farm co-ops grew affluent, forgot their origins and stopped recruiting new members...
...But all the traditional elements that go into the making of a cooperative were present: a chance for economic gain through cooperation (the car-rental cost us $7 apiece, compared to $17.50 air fare...
...the tendency to organize first and ask questions later, to work from need rather than theory...
...Groping for the Light So the unequal struggle continues, in many places and among a variety of sufferers: tenants displeased with their dwellings and landlords...
...Owen of New Lanark"—a new kind of capitalist millionaire, whose wealth generated light rather than darkness...
...Anyone who had read Adam Smith knew that the road to hell was paved by planners...
...Once again we were living through a time "portentous of great changes...
...It is our plan to establish a cooperative store...
...We have no legal talent here...
...And Moses M. Coady (1882-1959), Canada's eloquent guru of cooperatism, complained about "the inferiority complex of the masses," which kept them from wresting control of their lives from "the well-to-do...
...Several new health co-ops and housing co-ops got started during the postwar period...
...but Rochdale has grown to be a sacred symbol, the Mt...
...disgust with the performance of a private monopoly (sic Trans-Texas International...
...In addition, farm co-ops at that time often had to battle for their legal lives...
...The large total suggests that cooperatives are here to stay...
...The cooperative idea, he declared while President, was "the best plan of organization wherever men have the right spirit to carry it out...
...Had I organized a private chauffeur service that night in New Orleans, instead of a co-op, I would have pocketed a chauffeur's fee for a tidy profit, and everyone else would have paid more for the ride...
...The classic cooperative is a business enterprise owned and controlled by the people who use it...
...But if he was coopera-tism's inspiration, he was not its prime architect...
...We presently sell food only one day a week...
...Typically, he saw his villages as a humane alternative to the squalid, misery-ridden milltowns spawned by industrialism...
...patients disenchanted with their doctors and hospitals...
...Brook Farm near Boston, the best known of these experiments, was the brainchild of New England intellectuals —Emerson, Hawthorne, William Henry Channing, and Margaret Fuller, among others...
...The Golden Age lies before us...
...the incipient differences in views and values between producer co-ops and consumer co-ops...
...The marketing process is complex, the margins narrow, the competition rugged...
...and still later, subsidy...
...This is a bootstrap effort...
...This is cooperation with a vengeance...
...after more than a century of struggle, cooperatives remain weak, marginal and, in the eyes of many Americans, slightly far-out...
...Ironically, the "benevolent Mr...
...The proliferation of cooperative buying clubs in many cities, the modest gains in cooperative housing, the poor people's co-ops, and the young people's communes all suggest a rudimental tide of mutuality...
...It lasted more than a century...
...He needed to look no further than his kitchen, equipped with wood-burning stove, hand-pump and kerosene lamp...
...From that time on, "Go home and slop the hogs" has been an ironic battle cry among cooperative-minded Midwest farmers...
...In due course Owen went to America, there to create an instant Utopian community, New Harmony, Indiana, on the banks of the Wabash...
...The Capper-Volstead Act, passed in 1922, is still hailed as the Magna Carta for American farm cooperatives...
...There was a general feeling in state capitals that cooperatives were at once "communistic" and "monopolistic," and this feeling was carefully encouraged by that tireless defender of laissez faire: the railroad lobby...
...Big-city consumer co-ops, never very strong, now had to struggle against slick supermarket competition tailor-made for a new, transient populace that had never read Upton Sinclair...
...They believed neither in the automatic perfection of a free market society nor in the inevitable triumph of the proletariat...
...Owen started by making his New Lanark textile mill, bought while be was still in his 20s, into a model community...
...Edison had lit up lower Manhattan in 1882, but by the mid-'30s nine out of every ten farms were still without electricity...
...It also set up a Division of Cooperative Marketing in 1922, and began to grind out an infinite procession of self-help pamphlets on such subjects as "Producers Cooperative Milk-Distributing Plants," "Legal Phases of Cooperative Associations," and "Development of a Cooperative Citrus Marketing Agency...
...We had little in common other than our destination...
...New Harmony was one of America's first communes—shared property and "shared" marriages were among its featured principles—and it was a disaster for Owen and all concerned...
...they are groping for the light...
...A group of concerned citizens have banded together and are attempting to do something about these conditions...
...These early agricultural co-ops, like so many of their successors, were neither all business nor all ideology, but a pragmatic mixture of each...
...They were as impatient with determinism as they were with injustice...
...They are viewed as a reasonably respectable way of doing business, so long as they do not get too big or competitive...
...That is what those plaintive letters to the League are all about...
...the frequent reliance on strong individualists like Owen, ready and eager to give their lives and their fortunes to the cause...
...FCS today operates on an annual budget of nearly $2 million and has a professional staff of 50...
...is information so that we can educate ourselves...
...During the '20s most of them were unable to obtain anything but short-term loans at usurious rates...
...Among those spearheading the cooperative drive was Senator Andrew J. Volstead, the Minnesotan who brought us Prohibition...
...Accordingly, the New Deal in 1935 established the Rural Electrification Administration (REA), to lend capital at low interest to groups of farmers ready to organize their own electric cooperatives...
...Not likely...
...In short, it was to be a planned community, and that is why Owen's contemporaries hooted it down...
...While the elite of Great Britain and America were quoting Adam Smith's immutable laws of laissez faire in expectation of "that universal opulence which extends itself to the lowest ranks of the people," the poverty-stricken citizens of Hull, England, were building a cooperative flour mill (1795) to protect themselves "from the invasions of covetous and merciless men"—that is, the local elite...
...But corporations were made for the modern state...
...Rochdale Principles The main currents of cooperatism, as it turned out, would not flow through Brook Farm or New Harmony...
...As the farmer began to appreciate the advantages of cooperatism, he looked for new ways to apply it...
...But he gave that endorsement a decidedly capitalist twist, observing that a cooperative "develops individual responsibility and has a moral as well as a financial value over any other plan...
...It lasted a scant five years, but its optimistic message still reverberates...
...Some of the Rochdale rules are honored today mainly in the breach...
...Brook Farm is the tinted paradise to which hundreds of today's youthful communes aspire...
...Freezing weather in Houston," a uniformed girl behind a counter kept explaining to would-be passengers...
...namely, a critical shortage of capital and a crippling lack of technical know-how...
...consumers trapped by rising prices...
...Rochdale was a town in England, 50 miles west of Hull, where 28 weavers established a consumer cooperative in 1844...
...Even Theodore Roosevelt caught the mood...
...The difference is that most new co-ops are off the farm...
...Cooperatism was less a philosophy than a technique of organizing, and cooperative leaders were less philosophers than doers...
...They are clustering in cities, on campuses and, to a lesser degree, among the landless peasantry...
...In some respects these new co-ops have a leg up on their predecessors...
...Cooperatives had lost their outward appeal, and quite a few had abandoned their inner raison d'etre, the mystique of "the cooperative way...
...In finances, therefore, the big difference between a cooperative and a conventional corporation is not how much money is made but how much is kept...
...the Cooperative League of the U.S.A., spokesman and clearinghouse for many major American co-ops, took comfort in "cooperative stirrings abroad," in places like India and Ethiopia...
...no group can thrive without its help...
...They were to feature cluster housing, with each cluster forming a parallelogram and offering a combination of private family space and cooperative living space...
...Similarly, while Marx and Engels were laying the theoretical groundwork for their Communist Manifesto ("Let the ruling classes tremble at a Communist revolution . . ."), an extraordinary capitalist named Robert Owen was improving labor conditions, preaching cooperatism and attempting to establish cooperative colonies in both England and America...
...They long ago resorted to group action...
...A New Wave Coady didn't live to see it, but at some point in the '60s people began to heed his advice...
...Sinai of cooperatism, and rare is the cooperative leader who will openly shatter its commandments...
...The government changed that by establishing, in fits and starts, a farm credit system that assured farmers a less arbitrary flow of credit at more civilized rates of interest...
...Nevertheless, the weavers persisted with their consumer co-op, and in the process they established a litany of guiding principles...
...and a craving to control, if not our own destinies, at least our own itineraries...
...In some respects one sees Owen, who was born in 1771 of poor Welsh parents, as the ideal father of modern cooperatism...
...rather they would take the Rochdale route...
...Our children will surely see it...
...Neither Sinclair's folk-utopia nor Childs' vision of a Swedenized America seemed particularly outlandish at the time...
...We should take a leaf out of the book of wisdom of the smart men who have been running the economic world," Coady urged...
...No group, be it co-op or corporation, can survive without its blessing...
...And since a great majority of Americans have little money to invest and little power to assert, one might have expected "the cooperative way" to have become the American way...
...By mid-19th century, then, most of the big pieces in the cooperative puzzle were firmly in place: the notion of one man, one vote...
...Presumably they did just that...
...What we need...
...Economics made them...
...They were made, simple as it may seem, for people—an innocent idea which frequently finds co-ops without friends at court...
...From Lodge Grass, Montana (a Crow Indian community): 'This will be a combination consumer and producer cooperative for marketing Indian arts and crafts...
...sometimes it said No, preferring to call in the note and seize the farm...
...That same year, in a novel he called Co-op, Upton Sinclair conjured up a 20th-century, Western version of Brook Farm—a cooperative community of fruit-growers, canners, carpenters, and tradesmen who shared their property, printed their own cooperative currency and lived happily ever after...
...By 1940 there were some 9,000 credit unions in the United States, serving close to 3 million members...
...It never arrived...
...They did not stop with mere rugged individualism...
...Nor does the consumer pay a tax on his refund, for it is considered in the same category as a saving in household expenses...
...On the other hand, public acceptance is only half the battle...
...Because co-ops do not accumulate profits, the myth has persisted that they do not pay taxes...
...As cooperatism spread, its philosophic underpinnings became increasingly shaky...
...In many states co-ops had trouble coaxing charters out of their legislatures...
...They also organized a new political party, the Non-Partisan League, and finally forced Twichell and many of his colleagues out of public office...
...Each week the Cooperative League receives scores of letters from young co-ops trying to stay afloat...
...Alas, it would take more than Presidential benedictions to save the fragile network of farmers' coops...
...Their objectives, then as now, were to afford farmers higher prices for produce in the marketplace and to secure lower purchasing prices for supplies and equipment...
...Soon, however, cooperatives began to do some lobbying of their own...
...There has been nothing like it since Depression days...
...Cooperatives, on the other hand, were made for . . . what...
...Today many economically and politically stranded Americans are putting their hopes and their cash into cooperatives—some as a way into the system, others as a way out...
...This is especially true of consumer ventures—a supermarket, say, or a hardware store—where much of the new cooperative impulse seems to be channeled...
...We should like to buy snowshoes from the Indians in Canada but you can't bring more than $250 worth of goods across the border unless you are bonded...
...Grain and dairy cooperative associations like the Grange and the Farmers' Alliance flared up in dozens of states, to glow brightly for a time and sputter out...
...Economic survival is the other half, and starting a new business today, whether a co-op or not, is a far more perilous venture than it was 30 years ago...
Vol. 55 • April 1972 • No. 8
