Mutual Service – Chapter 4

COOPERATION

Cooperation Defined

Dr. James Peter Warbasse, President of The Cooperative League of the United States,

defines cooperation as follows: “A cooperative society is a voluntary association in

which the people organize democratically to supply their needs through mutual action,

in which the motive of production and distribution is service, not profit, and in which it is

the aim that the performance of useful labor shall give access to the best rewards. In

the Cooperative Movement the ultimate tendency is toward the creation of a new social

structure that shall be capable of supplanting both profit-making industry and the compulsory

political state by the cooperative organization of society.”

Cooperation is a voluntary method; no true advocate of cooperation believes in promoting

it by compulsion. From the first advocate to the last, they have all stood for the principle

of equal freedom.

Dr. warbasae says on this subject: “Dr. Wiliam King, a physician of Brighton, England,

from 1828 to 1830, published a little magazine, ‘The Cooperator,’ in which he set forth

and formulated a philosophy of Cooperation and the methods necessary for success. If

anyone can be designated as ‘the father of British Cooperation’ it is he. He said: ‘Cooperation

is a voluntary act, and all the power in the world cannot make it compulsory; nor

is it desirable that it should depend upon any power but its own.’ ”

Cooperation is the only method that will permanently reduce the price of goods to their

cost. “But there have been so many cooperative failures in the United States that it does

not seem to be the way out,” is the usual reply to this statement, and there is a lot of

truth in it. There have been many failures of cooperative business ventures, but there

have not been as many cooperative failures as there have been bank failures in the

United States during the same period, or, let us say, a quarter of a century. Yet the banking

business is considered the most stable of all businesses.

There have been few cooperative failures compared with corporation failures. Yet big

business is made up out of these incorporated stock companies, and the records are

clutted up with their failures, notwithstanding the fact that much capital is invested in

them with state charters and public approval, while the cooperative businesses have but

little capital and small influence in financial or big business circles.

The government reports on incomes issued for 1926 show that two out of every five

corporations make no money but finish the year with a deficit. Statistics for 1925 show

that there were more than 140,000 corporations in the United States that showed deficits

instead of profits.

Dun’s reports show that commercial failures have averaged 21,000 during each of the

last three years with liabilities averaging fully $465,000,000 a year. During 1927, there

were 23,146 failures. The liabilities were $520,804,208. There were 608 failures among

banks in 1927. Only one automobile company in every ten survives.

These reports are about the stock corporations, and the unincorporated enterprises

have a much greater death rate. Senator Brookhart reported that: “ninety-two per cent

of the people who go into business in the United States ultimately fail,” and they call this

capitalist system a success, but cast reflections on cooperation because there have

been a number of failures.

What percentage of cooperative enterprises fail? There are no complete government

reports covering the United States, but those states that have had reports make a fine

showing compared with other business ventures. To cite just one state as a fair example,

we will take that of Michigan: The Department of Agriculture made a careful analysis

of the cooperative business failures in the state of Michigan and shows the following

results for a period of eleven years: “Seven hundred and fifty organizations were investigated.

Of this number 539, or 72 per cent, are still alive; 72 associations, or 9 per cent,

are listed as out of business, and information regarding the remaining 140, or 19 per

cent, is not sufficient to permit their being included either as active or dead.”

This showing of 9 per cent failures against 92 per cent failures of capitalistic concerns is

a fine showing for cooperation. Many of the failures credited to cooperation are downright

frauds. Under the banner of cooperation, unscrupulous men have organized people

who sympathized with the theory into profit-making schemes of their own. when the

people learned they had been deceived and withdrew, failure followed, and each such

failure counted against true cooperation. Some of the crooked leaders have been sent

to prison, but that did not reimburse the investors, and those defrauded, who do not understand

the difference between the genuine and the fake kind, are embittered against

cooperation.

One of the main reasons for cooperatives failing is that big business has seen fit to

stamp them out of existence when they interfered with their profits. This was simple and

easy at times and at certain places, but there were occasions when the enemy failed to

down them, and they are the living examples of cooperative success as a solution of the

economic problem.

One method used by big business to down a cooperative store is to refuse to furnish it

with any products which it controls, and as the wholesale enterprises are mostly in the

hands of big business, it can cut off the supply to the cooperative store. If it permits the

cooperative store to have goods at all, it fixes the price at which those goods must be

sold, thus preventing a lowering of prices.

The government has failed in price fixing, but big business has succeeded in fixing

prices on most stable goods at a high profit rate. Not that the little retail merchant makes

such large profits, but those in control of the supply fix rates profitable to them.

The cooperative idea is to fix prices also, but to fix them at a reasonable rate; to fix them

at cost if possible, and they have succeeded in doing so in some cases, demonstrating

the practicability of their plan.

But the success of a cooperative enterprise does not depend on its ability to fix a selling

price at cost. The way they reach an equivalent is by returning to the customer the profit

on his purchase in the form of a bonus. When these profits are returned to the consumer,

it means the abolition of profits. Profits are not the proper name for this, and they

are not called profits by cooperationists. The French call them “overcharges” or “repayments.”

The English used to call them “dividends,” but they now call them “surpluses.” It

is as though they said’ to their consuming member that they had been charging a little

too much, and find they have a surplus, and recognizing that it belongs to the customer,

they hand it back.

In his masterly book, “Cooperative Democracy,” Doctor Warbasse sums up in the following

statements the number of cooperative societies in the United States, their membership,

and amount of business:

“A general view of the distributive societies in this country shows in the New England

States, in 1923, about seventy-five distributive societies. A few are the old societies.

Most. however, were established in the present century. The largest single group is that

of about thirty organizations in eastern Massachusetts; most of these are composed of

Finns. They have stores, restaurants, bakeries, and consumers’ creameries. In the Middle

Eastern States are 250 distributive societies located chiefly in Pennsylvania among

the coal and iron workers and in and near New York City. The Central States have about

100 societies in Illinois. A lesser number are in Ohio and Indiana. Most of the Illinois organizations

are in the coal mining districts. Societies of this type average about 250

members, have a turnover of $160,000 a year. and pay savings-returns of from 2 to 7

per cent quarterly. The Illinois societies have a wholesale.

“In northern Michigan, Wisconsin, and Minnesota, are over 100 societies composed

largely of Scandinavians. The Cooperative Central Exchange at Superior. Wisconsin, is

a wholesale composed of fifty of these societies. Besides supplying general merchandise

it manufactures the peculiar bread and biscuit products required by the Finnish societies

all over the country. This organization conducts a school for the training of cooperative

executives. Its educational work is most effective.

“There are few large societies. Most societies in the United States have under 1,000

members. Two societies in northern Michigan, established in 1890, have more than that

number. One of the successful younger societies of that district. organized in 1912, has

over 400 members, owns its own three-story stone building, operates a bakery, two

meat markets, and four branch grocery stores, and has a turnover of $300,000 a year.

“Among the northern and western agricultural states are scattered societies. In 1923,

Kansas had 275 consumers’ societies; Nebraska about the same. The Farmers’ Exchange

at Omaha is the central wholesale of Nebraska.

These societies distribute seeds, flour, feed, coal, groceries, dry goods, clothing, hardware,

machinery, and all kinds of goods. The Kansas Union alone, 1922, bought for its

members 2,403,150 pounds of twine (120 car-loads) for harvest binding, and 191 cars

of coal. “Retail distributive stores are the most common cooperative enterprises in the

United States. There are about 3,000 of these, with a total membership of about

750,000 and a total turnover of about $100,000,000 a year. They find many difficulties. It

is possible that the largest development of cooperation in this country must begin in

other fields – banking, housing, coal, milk, bakeries.

“Cooperative insurance in the United States is found especially among farmers. They

have been particularly successful with insurance. There are in the United States about

2,000 cooperative fire-insurance companies among the farmers. They carry insurance

exceeding $5,250,000,000 on property valued at nearly $7,000,000,000. This insurance

is carried at one half the rate charged by the profit-making companies. Hail insurance is

also provided.”

Cooperation is a successful business method. As an investment, it is far safer than the

general run of business. Besides, it has numerous fine elements that capitalist enterprises

exclude. Cooperation tends to an equitable distribution of wealth, while capitalism

tends toward concentration of wealth in few hands.

General cooperation is a guarantee of the future welfare of its members. Capitalism is a

gamble with chances of ten to one against a successful future for its votaries. Cooperation

has demonstrated its ability to lower prices to cost, and keep them there. Where

cooperation has become generally operative, the hazardous speculative profit system is

replaced by a safe and sane method which is a guarantee of the future.

The craze of this century is the gospel of success. Dozens of magazines are devoted

exclusively to “How to get there.” How to sell the other fellow something at a profit which

he doesn’t want or need. But the chances are one to ten for success, as we have already

seen. Although cooperation is forced to face the ferocity of business competition,

its possibility for success is nine out of ten. Cooperation is a method of mutually ministering

to each other.

The ethical effect of cooperation has been demonstrated in sections of countries where

the cooperatives are in control of affairs. Poverty and crime have about disappeared.

Crime is largely the result of poverty on the one hand, and the “greed for gain” or the

struggle for wealth on the other. In cooperative countries, wealth is not an insignia of

honor, but a reputation for service is. Where this is true, crime to obtain wealth diminishes,

and crime of deprivation goes with it.

When honest effort obtains all that is needed for comfort, stealing ceases. When honor

is bestowed on the individual who discovers or achieves something beneficial to the

race, crimes caused by greed of wealth go for lack of incentive.

Cooperation is not attractive to those who want a revolution over night to transform a

capitalist state of society into the cooperative commonwealth. To them, the slow patient

economizing method of accumulation is too slow, and they express disgust with it. The

revolutionists generally believe in the exporpriation of property, not in its slow accumulation.

They generally believe in the philosophy of misery as the compelling force to revolution.

That is, bad conditions, such as low wages, unemployment, poverty and misery

will bring about revolt, therefore they invite and welcome those conditions in aid of the

revolution which they believe will remedy everything.

The cooperationists hold to the opposite theory. They advocate and practice saving and

gradual accumulation. They hold to the progressive improvement of conditions instead

of the cataclysmic method of remedy. This of course is not spectacular. It seems unheroic

to the revolutionist. He wants many to die so that some may Jive properly. He believes

in fighting for a thing rather than working for it, although usually he pretends to be

a great friend of labor and opposed to militaristic methods.

Cooperation is a peaceful method of production and distribution. It is an equalizing of

opportunities and a mutual interchange of products. Cooperation is rational and intentional,

in addition to being instinctive.