NATION NEEDS ECONOMIC CO-OPERATION
Brookhart, Smith W.
Nation Needs Economic Co-operation System Can Be Adopted as a Basis of Progressive Thought and Action; New Banking Plan Required By SMITH W. BROOKHART (United States Senator from Towa) Senator...
...To while away the time, he carries material into another hole and begins to build a nest...
...The vote to control was in proportion to the membership of each store...
...They transacted the business at a profit, held a portion for surplus, and distributed the balance back to the member stores in proportion to the amount of business they transacted with the wholesale...
...and the third, will it command the support of the American people...
...That night, another fall uf snow obliterated all marks, but...
...The logic is irresistible, that as against these profiteers, the interests of the farmers, the laborers, the little business men and the brain workers are identical, and they should cooperate together and not fight each other...
...The English membership has increased from three million to almost five million...
...They did not operate the wholesale long until they perceived the idea they could do better if they had their own factories...
...A fair mind would perhaps say that a fifty-fifty division would be reasonable, but for the sake of the argument I mean to be more than reasonable to capital and will give it two-thirds of all our wealth increasa as its rate of return...
...conditions would be exactly reciprocal, there would be no cause for disagreement or conflict, but rather every economic reason for harmony...
...They produced a gross value of $L2,:i4K,000,00...
...A. B. Klugh, of Cornell University, tells a story of a red squirrel that buried nine nuts in the snow of his house balcony...
...Perhaps, some day, scientists will find a magic perfume which, sprinkled on hay ricks, may render them fvreproof...
...This sometimes subjected them to criticisms of inconsistency upon grounds that were only appearance and not reality...
...Squirrei came along and dug up every one of the nine nuts...
...Their business is world-wide, and successful he-yond comparison...
...Depression in Agriculture THERE NOW exists a great depression in agriculture in contrast with other business...
...Other countries suffer similarly...
...Some botanists claim that very bright light checks plant growth to some extent, although too little light Is still worse...
...If we could contemplate a state of complete cooperative economics, we would find the farmer asking and receiving the cost of production for his products, a just wage for his labor, and a cooperative profit for his capital...
...Three Basic Principles Ci>{)OPKRATION is based upon three econo--* mic principles: !.st...
...They noticed that many of their failures were due to the difficulties of credit...
...The chief cause of this is the escape, of the plant's juices through the leaveB, an escape which accompanies darkness mote than it does light...
...When it is established we would be ready to take over the farmers' export, corporation as a cooperative...
...This cooperative credit system is the logical foundation for cooperative economics in the United States...
...This was not the first attempt at cooperation either in England or the United States, but it was the first based upon all three of the foregoing propositions...
...They own less than one-fifth of the national wealth, and they are getting about one-tenth of the national income...
...Practically all are assured of success from the beginning...
...It has been said we need no law for this, that cooperative banks are being organized now...
...In the winter of 1920, when I first became a candidate for the Senate, the principal plank in my platform was for economic cooperation...
...The farmers want high prices for their food products, and the laborers want cheap food...
...It is used largely as a football of politics...
...The other three-fourths should fee distributed to the members In proportion to t>hfl amount of business they transact with tJie enterprise...
...earth...
...Such a discovery would result in a tremendous annual saving...
...Now what is a profiteer...
...It took them a year and a half to save a pound each, and on the 21st of December, 1844, the shortest, darkest day of the year, they opened their little store with four articles of food and attended it turn about...
...In the same way this export corporation would ultimately become a great cooperative financing institution that would federate both farmer and labor cooperatives...
...It is surrounded by enemies on every hand, and no friends...
...The world would find cooperative economics to be a reality, and we would have peace instead of war...
...These are three simple and unpretentious principles of business organization, but they are far-reaching in their consequences...
...3rd...
...Corn and cotton stalks and peanut hulls are, each year, cast aside in huge quantities...
...He was compelled to organize a national bank, because there was no law oven to permit the organization of a cooperative bank...
...About one-third of the American people are farmers...
...HE progressive cause in the United States would malce more rapid progress if it could be organized around a complete economic system...
...In single organizations there is nothing to rely upon except the loyalty of the membership...
...The Wall Street Journal of April 27, 1927, characterized this as the biggest news of the week...
...It is this broader phase that I desire to develop and consider in this article, and thus answer the propounded questions...
...Then the country banks and the labor banks should have the right to amend their charters ami become members of this cooperative reserve when they so choose...
...The earning.-of the capital were limited...
...Each had the expert advice of the financial department as to its feasibility, and each knew it would have adequate credit support for its operation...
...Miter'* Note, by K. M. l^a Follette...
...It would probably require $1,500,000,000 of government money to handle all of the exportable surplus of agriculture...
...Now it gets into every platform, but most of this acclaim is mere lip service...
...Wren has acquired a second mate and the fated triangle in his life is completed...
...System A Success ADISTINGUISHED United States Senator has said that 92 per cent of American business ultimately fails, but the great system of the weavers of Rochdale is 99% per cent success...
...Before this could be done it would be necessary to enact a cooperative banking law...
...There was about 40 billions of capital, only two-thirds as much as in agriculture...
...There is no economic war among labor on the farm, in the factory, or on the railroad, but they all have a just cause of economic war against the profiteer...
...or to say Vr.at the transportation laborer, the carpenter and the ' machinist have divergent interests and should fight each other when in fact they should all stand together for a just wage...
...Hoover has told us that from 1©12 to 1922 it was at the rate of about 5% per cent per year...
...They applied to it the same three basic principles...
...There is a like increase in business development...
...In cooperation sometimes they say "men hire capital, and not capital hires men...
...By and by several hundred of these stores had succeeded, although each was floundering by itself, while of course many had failed...
...Next would follow the support ( of labor's cooperative stores and factories...
...They estimated the amount of capital required, and the stores subscribed it all...
...A loss would occur and an assessment become necessary...
...It always follows the leader and never deviates...
...There is an immense amount of vegetable fibre ha this waste material and scientists are convinced good use can be made of It...
...JSutureland AFINE family of processionary caterpillars has arrived at the New York Zoo...
...The farmers and laborers and afl who believe in cooperation are entitled to this cooperative banking system as fully as the conv mercial interests are entitled to their competitive banking system...
...PRENTISS BALDWIN has been making in-tensive studies of the daily life of Mr...
...that the engineers, for instance, organized a great cooperative bank...
...On the other hand, the laborer gets less than one-fourth of what the farmer pays for the products of labor...
...Very often another lady wren notices this and soon Mr...
...There are other rules of operation such aa, ail goods are sold for cash or its equivalent, but fee above principles are basic...
...International cooperative exchang* would follow...
...The turnover of the reserve bank was over 2% billion dollars in 1922, and their factories had increased to 158, including the biggest automobile factory and 11 flour mills that grind more than one-third of all the flour in Great Britain...
...On the other hand, we would find labor receiving the cost of production for its products, a just wage for its labor, and a cooperative profit for its capital investment...
...The most remarkable fact in reference to the cooperative movement is its growth since the war...
...90 Per Cent Interested TT IS therefore important to determine what portion of our people have a genuine economic interest in cooperative development...
...If then, capital is entitled to two-thirds as its rate of return, it would get less than fouv per cent...
...All other Income goes for operating expense and living...
...All the work of all the people, all the earnings of all our capital, all Increase in property values and all depreciation of the dollar amount to only 5% per cent per year in this great American pool...
...Spontaneous Combustion MILLIONS of dollars are lost, each year, by spontaneous combustion causing fires in hay stacks all over the world...
...It represents every fourth family in Great Britain, every fifth family in Sweden, every third family in Switzerland and three out of every ten families in Russia...
...They get this vast sum for speculation at 3 per cent or 4 per cent, while farmers, laborers and small business generally must pay from 6 to 12 per cent for bank loans...
...If therefore, an economic system can be adopted as the basis of progressive thought and action, it will be easier to define the movement and to give it accelerating momentum for the future...
...Their own cooperative banking and insurance system followed, and failures have almost ceased, Tbey put a deposit bank in most of the stores, and a reserve bank as a department in the wholesale...
...Capital does not Vote This is sometimes called democratic control 2nd...
...It is a reserve bank, but a dehorned and denatured reserve...
...Cooperative credit is the foundation of every successful cooperative system in the world...
...Both the farmers and the laboring people of the United States are already convinced that such a cooperative system would be to their greatest advantage...
...They would Aange the biggest corporation in the world to a cooperative if its articles were amended to include them...
...Jenny Wren herself appears to be a busy, earnest little party, faithful to her nest, her eggs and her fledglings...
...This is no exorbitant demand when we know that by law the government gave the railroads $620,000,000 for the first six-months after they were turned back after the war, and has loaned them $850,000,000 since...
...Tfaos* who make this argument ignore the fact that under the present system the farmer gets less than one-third of what the laboring man pays for his product...
...Comparison with transportation and with banking finds a similar result...
...It is my belief that it should be less in the United States than the rate of wealth production...
...Thus organ of big business in...
...Success became contagious, and others followed the example...
...In H*2H, after deflation, the capital invested in agriculture still amounted to about $60,000,000,(100...
...Such a system does exist, but it has never been named as a system, and I will now oatne it "cooperative economics...
...It therefore follows that the profiteer Is the combination of capital that is taking trom the people more than four per cent for its rate of return...
...Since there was no definite economic test as to progressive principles, the result was a "state of mind" test that sometimes resulted in dissensions...
...Then he had to remove them, before they fell off, dead from fatigue...
...They succeeded...
...Perhaps silk will be made from corn stalks, oil from peanut hulls and hair tonic from cotton growers' waste...
...Reliable estimates place the annual loss in Germany, alone, at nearly five million and Switzerland is not far behind this amount...
...The wholesale was a success from the start, and it lessened failures among the individual stores...
...It requires a persistent loyalty to achieve any sort of a success...
...A similsft- story is found in almost every country in Europe, and in the United States the farmers transacted 2% billion dollars of cooperative business last year...
...In the cooperative enterprise one man has one vote for control...
...The weavers of Rochdale decided to do business at a profit and distribute the profits on the plan of the trade dividend...
...It has been said that the farmers and laborers have antagonistic interests and cannot cooperate together...
...Such fires continue, year in and year out, ami the only recommendation ever given to farmers seems to be: "Spread your hav the minute abnormal temperature is noted.-' Recent studies in France have revealed the fact that hay stack fires are most common after a good season...
...The unlimited possibilities «f cooperative development are strikingly illustrated by the news that a great combination of the cooperatives of 13 European nations with assets of more than two billion dollars is now being worked wut...
...The great water power and public utility question could be solved in the saro^ system...
...The first question is, does such a system ejriat...
...But when Jenny starts to "sit," he Joses interest and his song becomes mechanical...
...The United States is the only civilized country in the wovlc that by Jaw prohibits the farmers and laboring people from organizing their own savings in a cooperative banking system with .reserve- bunk and ail under their own control...
...On the other hand, Dr...
...Surely anybody will concede that labor is entitled to some portion of our country's growth...
...Single organizations are succeeding, but there is no system...
...They have already established world-wide operations with a success unequalled in business history...
...He was also compelled by law to join the Federal Reserve Bank when he would have preferred a cooperative reserve bank...
...The earnings of capital are limited...
...Before the Federal Reserve law passed, the speculative loans to the New York Stock Exchange were $766,000,000, and it was passed to reduce them...
...All of the business of this bank is reserve bank business, dealing only with cooperatives, other banks or credit corporations...
...A brief description of the Rochdale system in Great Britain which I visited in 1923 would be more comprehensive than any abstract discussion of principles...
...The second, is it sound...
...Instead of a reduction, they are now over $3,000,000,000...
...W'ren is a wonderful singer during the courtship, and apparently feels that that lets him out of most of the work...
...The workers numbered H million 778 thousand, or less than three-fourths as many...
...New Banking Plan Required By SMITH W. BROOKHART (United States Senator from Towa) Senator Brookhart's article on Co-operative Economics covers a field to which he ha« devoted years of study, and is a valuable contribution to progressive thought sad program...
...The factories are against it, the wholesalers are against it, and the banking system i.- against it...
...This vague and indefinite idea has always had wide-spread approval and support, but it was rarely defined in concrete terms and never regarded as a complete system, efficient for the transaction of business in general...
...At the same time, the law has admitted that this Federal Reserve Bank is inadequate for agriculture, and created another reserve bank commonly called the Intermediate Credit Bank...
...It is my belief that over 90 per cent of our people have such interest...
...They are writing more than half of all the life, accident and unemployment insurance in England, Ireland, Scotland and Wales, and they have over six thousand stores...
...Sweden, Norway and Denmark have established an international cooperative exchange, and in Germany 2,400,000 farmers have joined the movement with 3,750,000 laborers...
...They were the joke of the neighborhood, but they had persistence, loyalty and real genius in their combination of principles...
...Others attempted to transact their business at cost...
...If that is shaken, the enterprise fails...
...NATURAL histories say that the squirrel forgets all about most of the nuts he buries, and that to this fact is due most of our nutbearing trees...
...One day, he placed a string of the critters, head to tail, around the rim of a barrel and for four days and nights the procession kept going around that barrel, ceaselessly...
...Since all of these other industries are protected by law while agricultural prices are fixed mainly by the sale of its surplus in the competitive markets of the world, the government owes agriculture the same support and protection of the law...
...In other words, capital is paid a wage the same at, men for labor...
...There would Be just as much reason in saying that the cotton farmer, the corn grower and the livestock farmer all have divergent interests and should fight each other, when in fact they should all stand together for their cost of production a >d a just profit...
...Wren at the Bird Sanctuary, Gates Mil*, Ohio...
...Last year they established 170 new enterprises...
...It is my purpose in this article to point out the necessary legislative steps to permit and encourage a complete cooperative system...
...There were about 12 million workers on the farms, not counting women and children...
...from Southern Europe...
...I was in his first convention that considered the bank...
...Thus far, efforts to prevent such hay fires have not proved very successful...
...Even under all of these adverse conditions there is a less percentage of failure in cooperatives in the United States than in competitive business enterprises...
...The rate at which the return for capital should be fixed is a subject of much controversy, but the problem i3 no more difficult than the problem of wages...
...This is the trade dividend...
...They raised the cooperative capital with its limited earnings, and started a soap factory, now the largest in the world...
...and Mrs...
...A few big profiteers through transportation laws, credit laws, patent laws, protective tariff laws, public utility laws and economic combination, dip so much from this pool of production that little is left for farmers, laborers and smaller business men...
...Fabre, the noted French naturalist, bred a lot of them...
...I shall give you a specific definition...
...Congress has appropriated the necessary funds and work will be be* gun this summer...
...Avoiding Wastv THE Bureau of Standards, ever intent on reducing waste to a minimum, is soon to begin an exhaustive study of methods for utilization of waste materials from the corn, cotton and peanut industries...
...For many yearn people have talked of "cooperation...
...THE horticulturists' meter, called the auxa-grffph, shows that most plants, when ten*, perature is the same, grow faster at ni£hl thati in day time...
...Then they met together in convention and decided they could do better if they had their own wholesale...
...Nobody will claim that capital is entitled to all of the wealth increase of our country...
...Cooperative laws have been enacted in nearly all of the states, but all of these have omitted the foundation—cooperative credit...
...Its purchasing power will be enormous...
...Until experiments are made, no one can tell exactly what scleneo will ui...
...This is the most remarkable caterpillar in the world...
...Need Cooperative Bank Law TUTS would be only a temporary or emergency measure...
...At the same time, it has by law created the Federal Reserve Bank for the commercial interests, and controls it with a government board...
...the next day Mr...
...In the beginning the government furnished all the money for the federal land bank, but the farmers have already subscribed for enough cooperative stock and the government is fully repaid...
...reporting this combination states: "¦This cooperative combine, when it is fully organized, will be the biggest aggregation of chain stores in Europe, if not in the world...
...Shoe factories, flour mills, textiles, jewelry, furniture, autotnobile factories, almost everything in human civilization, have followed...
...But after reducing the raw material bill to 27 per cent for comparison with agriculture, the gross production of manufacturing was 44 billion dollars, ox nearly three and two-thirds times as much as agriculture with its greater capital and greater number of workers...
...This is certainly true of all who earn their living with honest work, of hand or brain...
...Then what is our i*ate of wealth increase...
...You may have heard him condemned many times, but never described in specific terms...
...All cooperatives should be permitted to subscribe for cooperative stock in this export corporation, as the farmers" did in the federal land bank...
...If as much in proportion were used for agriculture, it would amont fo over $4,000,000,000...
...This is because hay grown during a good season is rich in hydrocarbons which decompose and cause combustion...
...I helped organise that bank...
...At present, there are only suggestions as to what may be done but, before the Bureau has exhausted the available study fund, some concrete ideas should reward their labors...
...Such is not the fact...
...The profiteer is a third factor ignored in such arguments...
...Both have done much in organization to bring it about...
...It is no longer a vision and a dream, but a practical economic system that demands equal recognition before the law...
...It is a new Cooperative League of Nations, which has sprung up without the aid of any government...
...In the past the great progressive leaders have stood for a series of propositions* of vital importance and of kindred nature, but with little thought of federating them together in a coordinated system...
...Profiteers Wreck Business THIS explains why 92 per cent of the buM-ness men ultimately fail, why farm bankruptcies have increased more than 1,000 per cent since 1910, and why labor gets less than 26 per cent of the production value of industrial products...
...Dissatisfaction resulted, and final failure...
...Starting Co-Operative Store IT WAS in 1813 that '.28 poor flannel weavers began saving their pennies to start a little cooperative store...
...About 27 per cent of this was in the nature of raw material, like feed, seed, work animals and breeding animals that must remain on the farm for operation and can never go into its income...
...It is based neither upon an intelligent understanding of cooperation as an economic system, nor a sincere desire to see it become an economic success...
...Both have failed in a large degree and will continue to fail under the laws as they now exist...
...If it takes more by economic power or by favor of the laws, it is a profiteer...
...The business should be transacted at the usual profit, and after the operating expenses and the wages of capital- are paid, one-fourth of the net earnings should be kept in the business for safety, soundness, growth and development...
...Compare this with manufacturing for the same year...
...It has grown to .such proportions as to challenge the statesmanship of the world...
...And yet this great system with its millions and billions of money never made a millionaire, and it never made a pauper...
...It is my demand that the Intermediate Credit Bank be enlarged into a complete cooperative reserve bank, with all of the powers of the Federal Reserve Bank, including the power to issue money upon the same security...
...So far as I know, this is the first time it was made an issue in a campaign for Congress...
...Warren Stone was from my home county, and my best friend...
Vol. 19 • June 1927 • No. 6
